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AROUND THE WORLD 3: McDonalds hoping to lure customers with McMovies

McDonalds Corp. is hoping customers would like fries and a McDVD with their Chicken McNuggets after last month’s announcement that the company will post its first-ever quarterly loss.

Last summer the company ventured into renting DVDs and selling convenience store items via machines located outside restaurants in several cities, but questions of the machines success remain unanswered.

McDonalds set up the one and only Tik Tok Easy Shop, a convenience store mounted in the wall, last summer in the Adams Morgan district of Washington, D.C., to the dismay of many residents.

Fourteen of the Tik Tok DVD shops have cropped up in the Maryland-Virginia area, including the one in the Adams Morgan, plus four in the San Francisco Bay area and four more coming soon, according to the Tik Tok Web site.

The one Easy Shop and the DVD machines were only built in select cities to predetermine if they will be a success and so far, the feedback has been positive, said company spokeswoman Lisa Howard.

“People seem to be really pleased with it,” Howard said, adding that the company can’t yet give out much information on the shops.

The DVD machines, manufactured by Automated Distribution Technologies, a Pennsylvania company now owned by McDonalds, charge a customer’s credit card a low nightly fee - about $1.50 - and the DVD must be returned to the location where it was rented.

If the DVD is not returned, the customer is charged for the cost of the DVD.

After the first-ever projected loss from McDonalds, the corporation is hoping the shops bring new profits. Late in 2002, McDonalds cut jobs and closed some restaurants.

The DVD machine can hold about 1,000 DVDs, with new release movies added weekly, no late fees, no membership cards, but residents may deem the machine an “eyesore,” as many did when the Easy Shop arrived.

The Easy Shop can hold around 200 products, from tampons to milk, and it’s always - and they do mean always - open.

“It offers another convenience for our customers,” Howard said.

But is the convenience worth the eyesore?

No, said Alan J. Roth, a government relations consultant and 20-year D.C. resident who lives just around the corner from the Adams Morgan Easy Shop and DVD counterpart.

Roth said comments from area residents fall into two categories.

“Those who live in the vicinity of the machine, who look out the window and see it, hate it,” he said. “They feel it is an ugly blight on the neighborhood.”

But other residents who live farther away feel it’s a “fantastic convenience,” he said.

Adams Morgan has a bustling nightlife over the weekends and many times residents who live near the machine are awakened by the sound of “drunken revelers” watching the machine dispense its product, Roth said.

Occasionally people will purchase from the machine or rent a DVD, but it’s “more of a curiosity,” Roth said.

“People stare at it, and push a button to see if it works,” he said, relating an occasion when the machine malfunctioned and dispensed a dozen candy bars at the request of one.

The machine has been vandalized “a couple of times,” Roth said adding that “you gotta sell a lot of breakfast cereal or razor blades or orange juice” to finance the rent and maintenance of the machines.

But has he purchased anything from it or rented a DVD?

“No, I was tempted once, but decided against it,” he said. “I’d rather patronize the human businesses.”

After the Easy Shop or “Shop 2000” arrived, Adams Morgan resident Michael Rodgers started a “Stop the Box” Web site, encouraging local residents to “boycott McDonalds” and the plaza where the box is located.

“Yes, the famed burger purveyor is now ready to turn its real estate and marketing geniuses loose again, this time hoping we didn’t notice that they don’t need people to help collect profits,” Rodgers wrote in a letter to the New York Times.

The 160-square-foot store is the only operating automated convenience store in the United States and Howard could not say whether the DVD or Easy Shop machines would show up in other cities yet.

“Right now it’s a very limited test,” Howard said. “So we can’t really predict the future on what will happen.” But McDVDs will not be without competition.

A New York based company called DVDXpress also has rental kiosks located inside area businesses. The company has three locales in New York City with a program similar to McDonalds.

DVDs can be rented for $1.99 a night, for 10 days, but if the movie is not returned within 10 days, the customer’s credit card is billed $30 - double the Tik Tok charge of $15.

DVDXpress machines, however, are only open as late as the outlet in which they are located.

DVDXpress announced Jan. 6 that it had received $5 million in financing commitments which the company plans to put toward opening 4,000 new locations in 22 states, said Jason Tanzer, managing director for DVDXpress.

By Katie McFarland -- Scripps Howard Foundation Wire, Washington, D.C.

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