McDonalds Case Study
McDonald’s is the most famous and well-known fast-food company in the world. It was started by Dick and Mac McDonald’s in 1940. Their concept of the restaurant was based on speed and therefore called ‘Speedee Service System’ in 1948, which in today’s times is known as the fast food concept (Wikipedia, 2009). McDonald’s serves fast food to approximately 47 million people in more than 30,000 restaurants located in 121 countries (Bized, 2009). The product offering has chicken, beef, bread, milk, vegetables as the main ingredients which are composed into burgers (chicken, ham, beef, and vegetable), French fries, milk shakes, soft drinks, breakfast items, juices, and desserts. The major marketing moment for McDonald’s was provided by Ray Kroc, and the brand continues to be a major success by the hard work of its family of employees, suppliers, and franchisees. McDonald’s for years have continued with an extensive advertising campaign targeting children, healthy food, and convenience. The advertising is done through television, radio, newspaper, billboards & signage, sponsoring sport and charity events, many local events throughout the world. ?
Question 1 – Summarize the strategic situation confronting McDonald’s In 1973 Richard Steinig (27 years) became a junior partner in McDonald’s Corp. Franchisee in his 2 stores that generates 80,000 in annual sale and earns 15% from the profit. But since 1999, sales haven’t budged, but instead costs kept rising. (McDonald’s began advertising the Big N’ Tasty burger). Instead of living the American Dream, Steinig says: ‘The business just isn’t nearly as profitable, I don’t think that McDonald’s has the waiting list it used to, and part of that reason is that the return on investment just isn’t what it used to be’. Prospective franchisee were once eager to get into the 2 year training program by waiting in line for hours, but no line exists today, and the current franchisee start to feels alienated. The problem of McDonald’s is beyond cleaning up restaurant, but by facing rapidly fragmented market, and by fast growing restaurant called “Fast Casual” segment like Cosi & Quinzo. Immigrant made exotic food like sushi, barrios. Some quick meals of all sort can be found in supermarket, convenience store, vending machine. The Mickey D’s heyday didn’t help, 194 franchisees left the system, with 69 restaurants forced out for poor performance, the other 25 left seeking greener territory. McDonald’s buys back franchises if they cannot be sold. Opening a McDonald’s franchise costs $500,000 to $800,000. McDonald’s would rent them the location and demand high corporate standards and in return, franchisees could become very rich. But many franchisees says that ownership of a McDonald’s restaurant is no longer the reliable cash cow it once was. In the past, franchisees who beat McDonald’s national sales average were typically rewarded with the chance to open or buy more stores. McDonald’s gave millions of Americans their first jobs, and has long symbolized to some people the American way of eating, it is now struggling with an identity crisis. Even though it is still the nation’s most visited fast-food (more than 20 million people eat at McDonald), the company is facing a decline in its portion of the fast-food market and in the estimation of many of its customers, Jack M. Greenberg (60 years) introduce 40 menu items that creates no differences, instead he let the burger business deteriorate. Surveys shows delay in service & quality compare of those of rivals. Back in the 90’s McDonald’s had done so well in capturing market share through their growth and perception of cleanliness and service The solution was to bring back James R. Cantalupo (59 years) who saw in the 80’s & 90’s the international success. But unfortunately McDonald’s recorded its first quarterly loss in the company 47 years history as a publicly traded business. Cantalupo & his team...
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