McDonald’s Case Study
G. Scott Truman
MGMT 1451 Capstone: Business Management
March 22, 2011
In 1955, Ray Kroc founded the McDonald’s Corporation after partnering with Richard and Maurice McDonald to franchise a small restaurant that sells burgers, french fries, and beverages (Dess-Lumpkin-Eisner, 2009). Kroc bought out the McDonald brothers in 1961 for 2.7 million dollars and began a campaign to open McDonald’s restaurants around the nation and ultimately around the world (Dess, et al., 2009).
McDonald’s has grown to become the largest restaurant chain in the world (Dess, et al., 2009). It all started with a vision by a milkshake machine salesman from Oak Park, Illinois (Dess, et al., 2009). He envisioned a chain of restaurants selling burgers and fries and more milkshakes than one could have imagined (Benvenuti, Dosija, Georgiev, Shah, & Wu, 2003). As a multi-mixer milkshake machine salesman, his idea was initially an innovative way to sell his product (Benvenuti, et al., 2003). Little did he know at the time how popular the franchise business would become as it expanded rapidly throughout the country, the fast food industry was born (Benvenuti, et al., 2003).
Ray Kroc’s contribution to the McDonald’s corporation was his sales ability and his experience in the franchise business (Benvenuti, M, et al., 2003). In the beginning, Kroc and the McDonald brothers charged a fee of $950 per restaurant and a fee of 1.9 percent of restaurant sales, of which .5 percent went to the McDonald brothers (Benvenuti, et al., 2003).
After buying out the McDonald brothers in 1961, Kroc founded Hamburger University in a basement of one of the restaurants (Benvenuti, et al., 2003). He wanted to ensure that his franchisees had the proper management skills and had been trained well in the McDonald’s system (Benvenuti, et al., 2003). Kroc established quality standards within his system that were the basis to his success and he wanted to maintain these “standards of quality, service, cleanliness, and value” throughout the system (Benvenuti, et al., 2003, p 6). Over the years of McDonald’s existence, they have consistently grown and rapidly expanded (Dess, et al., 2009). McDonald’s has done very little to modify the basic offerings on the menu from the beginning, but over the years, they have added specialty items to slowly grow their menu with great success (Dess, et al., 2009). The “Big Mac”, a specialty burger, was added in 1968 (Dess, et al., 2009). A breakfast menu was added in 1976 and “Chicken McNuggets” were introduced in 1980 (Nelson, 2010). All were very successful campaigns, but in the early 1990’s business started to slide (Dess, et al., 2009). Do to changing public demand McDonalds attempted to add healthier offerings to their menu (Dess, et al., 2009). The “McLean Deluxe” burger was introduced in 1991 and was a failure (Dess, et al., 2009). Over the next few years, McDonald’s would add a few more items that would ultimately fail such as “Shaker Salads” and the “Arch Deluxe” burger as they attempted to target and increase specific customer bases such as the adult population (Dess, et al., 2009). Another issue McDonalds found themselves dealing with was environmental in nature. Again, public perception was the issue and as the public became more aware of ecological problems, McDonalds found themselves addressing this issue (Nelson, 2010). In the late 1980’s, McDonalds realized that each store generated approximately 238 pounds of solid waste every day (Nelson, 2010). The polystyrene clamshell burger containers became an issue with customers as they began to wonder just how environmentally friendly these containers were (Nelson, 2010). McDonalds partnered with the Environmental Defense Fund to help find ways for their restaurants to cut down on their environmental impact (Nelson, 2010). Solutions to reduce environmental waste included paper wrappings and cardboard containers made from partially...
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