McDonald’s Case Study
Karan Savardekar - 103
Nikita Thakur - 113
SwapneelVaidya - 117
‘Beef Fries’ Controversy
McDonald's is the world's largest chain of hamburgerfast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald. In 1948 they reorganized their business as a hamburger stand using production line principles. McDonald’s was started as a drive in restaurant by two brothers, Richard and Maurice McDonald, in California. The business was generating US $200000 per annum in 1940’s. They introduced a new concept called self service and designed their kitchen for mass production with assembly line procedures. Prices were kept low; speed, service and cleanliness became the success factors for business. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee". Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs. As word of their success spread, franchises started showing interest. Ray Kroc finalized a deal with McDonald brothers in 1954. He established a franchising company the McDonald System Inc and appointed franchises. By the end of 1960’s Kroc had established over 400 franchising outlets. In 1965 McDonald’s went public.
By the end of 1970’s, McDonald’s had over 5000 restaurants with sales exceeding three billion US dollars. By 1998, McDonald was operating 25,000 restaurants in 116 countries, serving more than 15 billion customers annually. However controversies started erupting one after the other for the company. The biggest controversy was the McDonald’s Beef Fries controversy. The lawsuit which was filed in Seattle, US alleged that the company had, for a decade, duped vegetarian customers into eating French fries that contained beef extracts. This issue caused a great furoreamong the customers.
Q1. Analyse the various allegations levelled against McDonald’s before the French fries controversy. What perpetual processes contributed to so much hostility and criticism despite McDonald’s being the number one fast food chain in the world?
McDonald’s has a long history of lawsuits being filed against it. It had been frequently accused of resorting to unfair and unethical business practices.
Some of the allegations are as follows.
* In the late 1990’s the company had to settle over 700 incidents of scalding coffee burns. McDonalds kept the coffee at 185° F which is 20° F hotter than the standard temperature at other restaurants. An 81 year woman suffered third degree burns on her lower body that required skin grafts and hospitalization for a week. After McDonalds dismissed her request for compensation for medical bills she filed a lawsuit against the company.
* Another case was filed by a woman who was permanently scarred by an extremely hot pickle slice in a hamburger.
* A customer who found the crushed head of a rat inside his hamburger also filed a lawsuit.
* Nutrition: It was alleged that Mc Donald’s sell high-fat, low fibre food which can cause diseases such as cancer, heart problems, obesity and diabetes. But McDonalds refuted the allegation saying that scientific evidence has never been conclusive and that it had a right to sell junk food just like chocolate or ice-cream manufacturers did.
* Environment: It has also been accused of destroying tropical forests to facilitate cattle ranching.
* Advertising: It was alleged that the heavy advertising by McDonalds was exerting a negative influence on children and exploiting them.
* Employment: McDonalds is accused of offering low wages and forcing local food outlets out of the business. Charges of...
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