M&S takes a walk in McDonald’s shoes

I think M&S’s evolving international strategy invites a comparison with McDonald’s: the value sits partly in the platform behind the product. A brand, a supply system and an operating model can become assets that partners help bring to market.

McDonald’s early financial strategist Harry Sonneborn is famously associated with the observation, “You’re not in the burger business. You’re in the real estate business” (Kroc, 1977, cited in Love, 1986). It is a useful provocation: what business does the business actually make its money from?

For M&S, the strongest part of the comparison is franchising and brand control. Its 2024 reporting describes partnerships in the UK travel and forecourt sector with operators such as SSP, Moto and BP, combining partners’ operations with M&S products and branding (Marks & Spencer Group plc, 2024). International arrangements, including SandpiperCI’s operations in the Channel Islands and Gibraltar, offer another example of extending the brand through a local operator (SandpiperCI, 2024).

That does not make the two companies identical. A retailer’s presence as an anchor tenant does not establish that it earns the same kind of property income as a landlord. The comparison is most useful when it asks how a firm earns returns from its brand and distribution relationships, rather than assuming a shared real-estate model.

These partnerships connect with Dunning’s (2000) account of multinational firms’ ownership advantages and Grant’s (2016) discussion of strategy: a business can use established capabilities across markets without owning and running every outlet itself. But lower direct investment is not the same thing as effortless control.

Which brings me to the trade-off: does an asset-light strategy make the business more resilient, or less agile?

Franchising can spread operating commitments and reduce the capital tied up in an expansion. That is an appealing response to costly experiences abroad (Business Week, 1998; Financial Times, 1999). Read through Dunning’s (1988) OLI framework, the attraction is keeping a valuable brand advantage while working with partners who understand the location. I picture sipping Champagne on the balcony while someone else handles the restaurant’s plumbing. Lovely—until the plumbing affects your guests.

Local partners can bring responsiveness, but divided control also creates coordination problems. In a fast-changing market, the question is whether decisions can travel quickly enough between the brand owner, suppliers and the people running stores. Transaction-cost thinking makes that tension visible: the benefits of a partnership sit alongside the costs of governing it (Anderson & Gatignon, 1986; Bartlett & Ghoshal, 1989).

Then there is the adaptation wildcard. I have always been curious about the detailed choreography behind McDonald’s operations: layout, employee movement and the attempt to make a familiar experience repeatable (Porter, 1985). M&S needs its own version of that discipline, without pretending that every market wants the same thing.

Even a strong brand promise can unravel in a small, ordinary encounter. The underwire in one of my M&S bras did not survive the second wash. That is the sort of experience a customer remembers, regardless of how elegant the expansion strategy looks. Too little control and the promise gets diluted; too much standardisation and the offer can lose local relevance (Johanson & Vahlne, 2009; Hofstede, 1984).

My conclusion is conditional: franchising can support resilience where partners and markets fit the model, but agility depends on the quality of governance and the freedom to respond locally. It is like touring a band internationally. The contracts matter, but someone still has to learn the local playlist.