McDonald’s Expands Globally While Adjusting Its Local Recipe
McDonald’s Corporation is a fast food legend whose famous golden arches can be found in 118 different countries. The company is the undisputed leader in the quick service restaurant (QSR) segment of the hospitality industry, with more than twice the systemwide revenues of Burger King. McDonald’s built its reputation by promising and delivering three things to customers: inexpensive food with consistent taste regardless of location; quick service; and a clean, familiar environment. The company was also a pioneer in the development of convenience-oriented features such as drive through windows and indoor playground for children. Today, thanks to memorable advertising and intensive promotion efforts, McDonald’s is one of the world’s most valuable brands. The golden arches are said to be the second most recognized symbol in the world, behind the Olympic rings. In the United States alone, McDonald’s typically spends about twice as much on advertising as Burger King and Wendy’s. Today, however, the company faces competitive attacks from several directions. During the 1990s, a wide range of upscale food and beverage purveyors arrived on the scene. For example, consumers are flocking to Starbucks coffee bars where they spend freely on lattes and other coffee-based specialty drinks. The “fast-casual” segment of the industry that includes companies such as Panera Bread, Cosi, and Baja Fresh is attracting customers seeking higher-quality items in more comfortable surroundings. Meanwhile, Subway overtook McDonald’s as the restaurant chain with the most outlets in the United States. Some industry observers suggested that, in terms of both food offerings and marketing, McDonald’s was losing touch with modern American lifestyles. Until recently, the picture appeared brighter outside the United States. Thanks to changing lifestyles around the globe, more people are embracing the notion of fast food. McDonald’s responded to the opportunities by stepping up its rate of new unit openings.
Table 1: McDonald’s Sales by Region: Increase (Decrease)
| |United States |Europe |APMEA |Latin America |Canada |Total | |2005 |4.4% |2.6% |4.0% |11.6% |0.3% |3.9% | |2004 |9.6% |2.4% |5.6% |13.0% |5.4% |6.9% | |2003 |6.4% |(0.9%) |(4.2%) |2.3% |0.0% |2.4% |
Table 2: Total Number of Systemwide Restaurants
| |United States |Europe |APMEA |Latin America |Canada |Other |Total | |2005 |13 727 |6 352 |7 692 |1 617 |1 378 |1 120 |31 886 | |2004 |13 673 |6 287 |7 567 |1 607 |1 362 |1 065 |31 561 | |2003 |13 609 |6 189 |7 475 |1 578 |1 339 |942 |31 129 |
As shown in Tables 1 and 2, McDonald’s International is organized into four geographic regions: (1) Europe; (2) Asia/Pacific, Middle East, and Africa (APMEA); (3) Latin America; (4) Canada. In 2005, the offices of the country heads for Europe and Asia were moved from headquarters to their respective regions; now, for example, the head of AMPEA manages his business from Hong Kong. Commenting on the change, Ken Koziol, vice president of worldwide restaurant innovation, explained, “McDonald’s was built on a strong foundation of a core menu that we took around the world but we need to make sure we are more locally relevant. Taste profiles and...