RAMSHA QADIR JYOTSNA SINGH VIJAYALAXMI ANKIT RATHI
“The Mc Donald’s type fast food isin’t relevant to today’s customer.” -A Mc Donald’s Franchisee
“The world’s has changed. Our customers have changed. We have to change too.” -JAMES R. CANTALUPO, CHAIRMAN AND CEO, Mc Donald’s, 2003
Two brothers Richard and Maurice McDonald opened the first restaurant in San Bernardino, California in 1937. • Opened a drive-in restaurant- relatively new concept. • Single store- sold hamburgers and fries. • Strong business in milk shakes.
SUCCESS FACTORS IN MID 1950s Invented a revolutionary new
concept- “self service” • Reduced menu from 25 items to 9. • Prices kept low. • Success factors- speed, service, quality and cleanliness.
• First franchisee- Neil Fox in Phoenix, Arizona(1952) • Franchisee restaurant located in a gleaming red and white tiled rectangular building. • Most distinctive feature- “ two bright yellow arches” which later evolved as the symbol for McDonald’s.
MCDONALD TO MCDONALD’S CORPORATION
• Ray Kroc- multimixers distributorstepped in to change McDonald’s history. • Small investment for $75000 made business ideal for franchising. • In 1955- Kroc established a franchising company. • In 1961- changed the company name to McDonald’s Corporation.
1960 1963 1965 1967 1968 1975 1979 1991 Indication of competition- Domino’s first telephone order to deliver a pizza McDonald’s debut as Ronald corporate “spokesclown” McDonald’s stock went public at $22.50 a share McDonald’s went International “Big Mac”, the basic burger, made its debut- an immediate hit First “Drive- Thru” operations in Sierra Vista, Arizona Introduced “Happy Meals”- gave working moms a break Introduced low-fat McLean Delux Burger- flopped and withdrawn
Since 1994 McDonalds ranked at the bottom of fast food industry. Stock plummeted 60% over a period of 3 years Lost $20 billion in market capitalization Quarterly loss of $344 million
Dec 2002 2002
One of the main reasons was the changing customer preferences. Customers preferred eating at home. Became more health conscious and selected fresh food over fatty, fried food and red meat. According to an industry expert, the ageing population behaved differently than they did 10, 20, 30 years ago.
Obesity became a major health problem in late 1990s. According to a report by American Medical Association, 30.5% of Americans were obese and 15% of the children aged between six and nine were overweight. McDonald’s had to face legal suits over claims that its high calorie food was responsible for health problems. Some of these foods should not be consumed more than once a week which
Depended heavily on US tourism, but with the September 11,2001, terrorist attacks, McDonald’s’ sales suffered. In the late1990s, it faced stiff competition from fast food chains like Wendy’s, Burger King, Pizza Hut, KFC and Subway. According to a research conducted by Business Week, consumers rated both Wendy’s and Burger King better, as far as the quality of food was concerned.
In the late 1990s, McDonald’s faced a slow down in domestic sales. International sales had also fallen due to economic turmoil across Europe and Asia. Market share had also reduced Domestic operating income had also declined. Relationships with franchisees also
o For every new restaurant that was opened, a McDonald’s store in the vicinity lost anything from 6% to 20% of its revenues. o Its continuous expansion had an adverse effect on service and quality. o It stopped grading its franchisees by mystery shoppers on parameters such as cleanliness, speed and service.
o In 1999, it introduced a made-to-order system called ‘Made for You,’ to counter custom made food systems at Wendy’s and Burger King. However, both the systems stretched the time required to...