Dossier New

8/8/2019 Dossier New

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HISTORY

McDonalds was started as a drive-in restaurant by two

brothers, Richard and Maurice McDonald in California, US

in the year 1937.The business which was generating

$200,000 per annum in the 1940s got a further boost with

the emergence of a revolutionary concept called self-service.

The brothers used assembly line procedures in their kitchen for mass production. Prices were kept

low. Speed, service and cleanliness became the critical success factors of the business. By mid

1950s, the restaurant revenues had reached $350,000.

As word of their success spread, franchisees started showing interest.

At this point, Ray Kroc, distributor for milkshake machines expressed

interest in the business, and he finalized a deal with the McDonald

brothers in 1954.


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Later Kroc established a franchising company, the McDonald System Inc.

and appointed franchisees.

In 1961, he bought out the McDonald brothers share for $2.7 million and

changed the name of the company to McDonalds Corporation. In 1965,

McDonalds went public.

TODAY.

McDonalds has more than 32,000 local restaurants serving more than 60 million people in 117

countries each day.

McDonalds is the worlds largest chain of hamburger fast food restaurants.

The McDonald's headquarters complex, McDonald's Plaza, is located in Oak Brook, Illinois.


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MISSION STATEMENT

McDonald's vision is to be the world's best quick service restaurant experience.

Being the best means providing outstanding quality, service, cleanliness, and value,

so that we make every customer in every restaurant

smile.

VALUES

Our values summarized in Q.S.C & V. Provide good quality, services to the customer.

Provide a clean environment ,where the food is served fast and fresh so that the

customers enjoy their meal. The value of food product should make every customer

smile.


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LEADERSHIP

Jim Skinner, the present McDonalds Vice Chairman and Chief

Executive Officer, has set three top priorities for his leadership: long-

term sustainable growth for the company; talent management and

leadership development and promoting balanced active lifestyles.

Skinner is one of the three architects of McDonalds worldwide

revitalization plan launched in 2003 that turned the company around and

re-focused on customer strategies, business disciplines and close global

alignment. He was named Skinner CEO of the Year, and has won

many awards like the "2009 CEO of the Year.


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FRANCHISING

McDonalds best epitomizes the incredible power of franchising by implementing successfully

the business format franchise model since 1955.

A pproximately 15% of McDonald's restaurants are owned and operated by McDonald's

Corporation directly. The remainder are operated by others for a period of 20 years, through a

variety of franchise agreements and joint ventures of McDonald's Corporation and other, local

entities or governments.

One will need a minimum of $500,000 in non-borrowed, personal resources which include cash

on hand; securities, bonds, and debentures; vested profit sharing (net of taxes); and business or

real estate equity, exclusive of your personal residence to be considered for a franchise..

Most Owner/Operators enter the System by purchasing an existing restaurant directly from

McDonalds or from a McDonald's Owner/Operator. A small number of new operators choose to

purchase a new facility, but that requires an initial down payment of 40% as opposed to 25% for

an existing restaurant.

While McDonalds does not offer financing, McDonalds owner/operators have access to the


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companys established lender relationships with some of the lowest lending rates in the industry.

McD has an idiot proof system with a very high degree of systemization.

The follow up mechanism ensures that the systems and procedures are properly executed. If a

franchisee doesnt adhere to McDonalds high standards, McDonalds has the contractual power

to force the franchisee out of the system.

Every aspect of their business from exactly how many seconds the french fries are cooked to the

exact words the employees use when addressing the customers is carefully planned. Everything is

done the McDonalds way.

McDonalds owns the land and building for all the franchise units. So, in addition to ordinary

franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald's also

collects rent, which is a percentage of the gross sales of the unit.

The interest of the franchisee and McDonalds are absolutely intertwined, the better the

franchisee does, the better McDonalds does.

As a matter of policy, McDonald's does not make direct sales of food or materials to franchisees.

It instead organizes the supply of food and materials to restaurants through approved third party

logistics operators.


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McDonalds has a very strong franchise agreement that is biased in favour of McDonalds.

Intensive training of its franchisees and others at Hamburger University in Oak Brook, Illinois

and working experience at a running McDonalds-restaurant addresses all aspects of operating a

McDonald's restaurant.

Product consistency- by developing a sophisticated supplier network operation and distribution

system, the company has been able to achieve consistence product taste and qualities across

geographies.

Act like a retailer and think like a brand- McDonalds focuses not only on delivering sales for

the immediate present, but also protecting its long term brand reputation.

In return the franchisee agrees to operate the business in accordance with McDonalds standards

ofQSC&V.

A franchisee owner must significant business experience, the ability to develop a business plan

and grow rapidly, good management skills, training, exceptional customer experience and a good

credit history


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Pros

World Class Training

Use a well known name and logo

Gains from national advertising

Gets an immediate business with national help and support

Quick and simple, low risk route to expansion

Recession Proof Market - McDonald's serves more than

60 million individuals daily according to 2010 statistics.

Cons

Cost - McDonald's does not provide financing or assistance

other than the special incentives for minorities.

NoAbsenteeism - McDonald's franchises are open only to individuals who are involved with the

day-to-day operations of the restaurants-no absenteeism allowed.

Limited freedom

Total dependency on skills of franchisor

Franchisee may not achieve required standards


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Franchise rights include:

McDonalds trademarks

Restaurant decor designs

Signage and equipment layout

Formula and specifications for menu items

Use of McDonalds method of operation

Inventory control

Accounting and marketing


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OPERATIONS & TYPES

Implement restaurant-specific review policies to identify opportunities to improve QSCV

Independent mystery shoppers to evaluate performance & give a customer's perspective

Improve speed of service and efficiency

Better kitchen organization, front counter and drive-thru areas

Emphasize on hospitality, accuracy and cleanliness

McDonalds offer both counter service and drive-through service,

with indoor and sometimes outdoor seating.

Drive-Thru,Auto-Mac, Pay and Drive, or "McDrive" as it is known in many countries, often

has separate stations for placing, paying for, and picking up orders.

Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-

roll themed restaurant.

Some locations are connected to gas stations/convenience stores.

The ones called McExpress have limited seating and/or menu or may be located in a shopping

mall.


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McStop is a location targeted at truckers and travelers which

may have services found at truck stops.

Some McDonald's have large indoor or outdoor playgrounds.

McCafe

McDonald's introduced McCafe, a coffee-house-style food

and drink chain, owned by McDonald's.

Created and launched in Melbourne,Australia in 1993 to

meet the consumer trend towards espresso coffees.

Largest coffee shop brand inAustralia and New Zealand

Currently 1,300 McCafes worldwide including the ones in

Japan, SouthAfrica, Tasmania and the United States. Unlike

in other countries, McCaf in the US is just a drink, not afull coffee shop due to space limits.

McDonalds had announced the launch of McCafe in India in

2012.


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PRODUCTS &MENU

To cater to the needs and tastes of the local population of a country, McD offers a regionalized

menu.

Food offered at most McDonald's outlets include:

Vegetarian and non-vegetarian burgers, including the Big Mac, Mc Aloo Tikki, Mc Veggie,

Chicken Mc grill, fish and chicken Maharaja burger

McGriddle, pancake like bun with a crispy outer texture, hamburger with griddle cheese topped

off with a taste of maple syrup throughout.

McChicken a mildly spicy Cajun chicken-burger.

Chicken McNuggets small chicken pieces served with a dipping sauce.

Chicken Selects premium chicken breast strips served with a dipping sauce.

Egg McMuffin bacon and egg sandwiches, served only in the morning.

McRib a pork sandwich released annually on a temporary basis

French fries

Salads


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McLeans-An attempt at a lower calorie Big Mac.

Milkshakes

Carbonated soft drinks such as Coca Cola

Ice cream: simple cone, sundae, "McFlurry"

Coffee and Tea

Big and Tasty

Product adaptations and variations

In India Maharaja Mac replaced Big Mac, Chicken Patty instead of Beef. Pork is also not

available in India and vegetarian and meat dishes are prepared in separate areas of the restaurant

in respect for vegetarians.

In Thailand the Samurai Pork Burger, flavored with teriyaki sauce, is served.

In Japan rice dishes are served and a chicken sandwich flavored with soy sauce and ginger.

The Australian McDonald's menu features the McOz which is similar to the Big Mac and

features beetroot, a popular addition to burgers inAustralia.

Names of other international dishes include the Kiwi Burger, the McHuevo, the McNifica, the

McAfrika and the McLaks.


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In Canada, McDonalds sells poutine, which is a Canadian dish of french fries, cheese curds and

gravy.

In Muslim countries like Malaysia, bacon is not served in McDonalds burgers or in its breakfast

menu, as pork is haram.

In Israel, the nature of kosher dietary laws, forbidding the mixture of meat and dairy products,

means that cheeseburgers are not popular among Jewish customers; furthermore, all meat not

prepared in a certain manner is considered unkosher by strict observers of the dietary laws.McDonalds has taken steps to cater to Jewish customers by opening a kosher McDonalds in

Jerusalem and by offering a 'Passover Bun' for the eight-day period in which practicing Jews

abstain from leavened bread.

Soft drinks on offer also vary from country to country, with local brands available on tapalongside Coca Cola, Fanta, etc. For example, Irn Bru in Scotland and Guarana in Brazil are

more popular in those countries than the leading international brands

The first McDonalds in Italy is considered as the most luxurious McDonald's restaurant. It

features indoor fountains, marble walls and floors among other luxuries not enjoyed by customers


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in other restaurants owned by the company. It also features Wi-Fi.

Japan menu list


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EMPLOYEES & WORK CULTUREServe a valuable role as an employer of the marginal members of the work force: ghetto youths,

undergrads working their way through college, displaced homemakers and retired people.Highly flexible work hours and on-the-job training

McDonald's is the biggest trainer of workers in the U.S., having employed at one time or

another an estimated 7% of all current U.S. workers, or about 8 million people.

Each outlet is headed by a Restaurant Manager. He is responsible for the daily operation and

customer interaction.

Delivery Crew Member carries basic operation of a restaurant. Ensures customer satisfaction at

the restaurants.

In order to motivate the employees, McD gives them stars as per their performance.

Store managers typically earn $25,000 and junior managers $12,000 to $17,000

McD prefers to retain employees and tries to offer promotion opportunities and salary

increments.

Jim Skinner, McDonalds CEO began working as a crew member, 20 of its top 50 managers

began work as regular crew members.


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Hamburger University trains all managers in the corporate culture of the restaurant.

McDonalds is currently the only restaurant organization to be recognised by theAmerican

Council of Education (ACE).

Management and decision making is very centralised. Lower levels are rarely asked to make

inputs or ideas.

The McD Culture

The punch line Imm loving it is an attempt to show that the employees are loving their work

at McDonalds and will love to serve the customers.

Strong corporate culture

Strong sense of organizational history, proud of their single store, humble beginning.

Supports global youth employment

Every procedure has very specific rules and regulations of how it should be carried out.

Adherence to work groups is a must, individuality is not encouraged and differences are not

discussed.

McDonalds does not take risks. It still offers the same menu as when the chain opened. The only

time McDonalds changes is when it is forced to make a change due to regulation or public

scrutiny.


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SEGMENTATION

Demographic

Kids, Teen, Youth, students, Urban upper & middle class families, business adults, tourists

Geographic

Global & local, urban towns and cities, 2 & 3 tier cities now, malls, independent franchises

Psychographic

Convenience, Lifestyle, Emotional values, distinct identityBehavioural

Occasions like birthdays, reunions, etc


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TARGETINGKids : Happy Meals (healthier option) with free toys and access to kids playground

Families: weekend outings or meals, drive-thrus and expressways

Teens and students

Sports fans

Coffee drinkers

Working adults

Travelling and visiting tourists


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-attract both price-sensitive and

health-conscious consumers

PRICINGMcDonalds leverages economies of scale to minimize costs while maximizing value to

customers.

Traditionally - value-pricing as competitive weapon. Now, offer products at range of price points

Extra Value Meal- Chicken McNuggets+coke+fries

Happy Meal- Small Burger+coke+ toy

Medium Meal Combo- Burger, fries, coke

Maharaja Mac meal- Rs 129

Mc Donald's vegetarian burgers are priced between Rs 20 and Rs 48.

Wrap paneer salsa is priced at Rs 45-50.

The non vegetarian burgers are priced between Rs 30 and Rs 80

Wrap chicken Mexican is priced at Rs 55.

Medium French fries are priced at Rs 25 and Rs.35

potato wedges at Rs 20, soft serves at Rs 35

mc swirl at Rs 12

medium soft drinks at Rs 20 & medium shakes at Rs 45.


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BRAND POSITIONING

The two most memorable are the development of the "GoldenArches

and "Ronald McDonald". These two icons have given customers a

mental image of what to look for when they want quality food for a

low price fast.

Prime focus is on targeting children. For this the Ronald

McDonald, playgrounds or play places brand strategy was used. In

happy meals too which are targeted at children small toys are given

along with the meal.

Family via Im Loving It brand strategy

Teenager via the introduction of the McCafe


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STRATEGIESSome customers go to its stores to take a quick break from their day's activities and not because

McDonald's made the food ten seconds faster than their competitors could. Therefore,McDonald's marketing executives then put together the phrase, "Have you had your break

today?" They continued to develop this idea with "You deserve a break today," and now are in the

"I'm Lovin' It!" mantra.

Use of the GoldenArches and I'm Lovin It slogan as a very successful way of differentiating

the restaurants from other fast food competitors.

Ronald McDonald, the second most recognizable character in the world, and local Olympic

athletes got together to help children adopt good physically active habits early in their lives


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through "Get Moving with Ronald McDonald."

In fact, the various economic meals and value meals also signal to the customer that buying

separate items results in greater value for money for the customer. (The Dollar

Menu features some of the McDonalds foods for only a dollar everyday as

a part of the Extra Value Meal )

Various schemes for winning prices by way of lucky draws and also scratch

cards are given when an order is placed on the various mean combos

McDonald's has taken price competition out of the picture and concentrates on quality,

convenience, service, and value.

With the rise of health consciousness McD decided to add

healthier items to their menu and promote and offer health-conscious

alternatives to the "would you like fries with that" legacy. In addition,

McDonald's has modernized their advertisements, pamphlets,

and website to include nutritional information and addressing diet

restrictions.


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McDonald's launched Shrek-Themed Happy Meal to Motivate

kids to eat more fruits, vegetables and dairy. Shrek, Donkey and

Puss In Boots encourage kids to Shrek Out their Happy Meals

around the world with menu options like fruits, vegetables, low-fat

dairy and fruit juices.

McDonald partnered with sci-fi epic, Avatar. Happy Meal toys of the Avatarcharacters that light

up via sound and touch, and more grandly of online experiences available on local McDonalds

websites and in some of their restaurants. Big Mac Avatar Thrill Card was also another

promotional strategy.


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The release ofWalt Disney Pictures 102 Dalmatians with a spot-

studded promotion that includes 102 Happy Meal(R) toys

resembling the irresistible Dalmatian stars.

AMcDonald's promotion that included Teenie Beanie Babies with the purchase of a Happy Meal

was extremely successful. This year's Teenie Beanie Babies promotion featured 12 all-new

Teenie Beanie Babies based on the immensely popular full-sized original Ty Beanie Babies(R).And, for the first time , a special edition of four Teenie Beanie Babies International Bears was

also be offered to consumers.

McDonald's joined the LONMARK Board of Directors, as a sponsor member.

$1 sweet tea campaign


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McDonalds partnered up with FarmVille a special FarmVille-branded McCafe cup for a

special in-game item, a branded flag or coffee cup, etc.

FarmVille McDonalds Bakery FarmVille McDonald's Crop Grown

Another promotional strategy McDonald's uses is the huge investment in sponsorship. This is

also a central part of the image building process. Sponsorship of the Olympics, FIFA football

World Cup, the Premier League and the European Championships increases awareness of

McDonald's brand .

McDonald'sAllAmerican High School Basketball Games

Over the years, McDonald's has supported a wide range of amateur athletes, and is still involved

with legends like Wayne Gretzky, Silken Laumann and Cassie Campbell, and Canadian


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championsAlexandre Despatie and Karen Furneaux.

Smart PR: McDonalds brings back the MONOPOLY Game at McDonalds,

which will give customers the chance to play for huge prizes featuring the daily

$1 Million Dollar Dice Roll and a $100,000 Online Jackpot Sweepstakes.

Other prizes include McDonalds food, US$50 or US$500 Shell Nitrogen

Enriched Gift Cards, Xbox 360 Entertainment Systems, free Boingo Wi-Fi at

more than 11,000 Wi-Fi enabled McDonalds restaurants in the U.S. and My

Coke Rewards Points. This smart PR campaign will bring McDonalds massive

exposure online not only via social networks, but also on television given the

daily $1 Million Dice Roll on NBC.


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ADVERTISINGMcDonald's spend over two billion dollars each year on advertising.

Over the years, McDonald's has developed TV advertising campaigns that have become, like

McDonald's, a part of our lives and culture. McDonald's commercials have focused not only on

product, but rather on the overall McDonald's experience, portraying warmth and a real slice of

every day life. This "image" or "reputation" advertising has become a trademark of the company

and created many memorable television moments and themes, including:

McDonald's is Your Kind of Place (1967)

You Deserve a Break Today (1971)

We Do itAll for You (1975)

You, You're The One (1976)

Nobody Can Do It Like McDonald's Can (1979)

Renewed: You Deserve a Break Today (1980 & 1981)

Nobody Makes Your Day Like McDonald's Can (1981)

McDonald's and You (1983)

It's a Good Time for the Great Taste of McDonald's (1984)


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Good Time, Great Taste, That's Why This is My Place (1988)

Food, Folks and Fun (1990)

McDonald's Today (1991)

What You Want is What You Get (1992)

Have you Had your Break Today? (1995)

My McDonald's (1997)

Did Somebody Say McDonald's (1997)

We Love to See You Smile (2000)

There's a little McDonald's in Everyone (2001) - Canada Only

I'm lovin' it (2003- current)


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CORPORATE SOCIAL RESPONSIBILITYMcDonald's still follows Ray Kroc's community beliefs today, supporting the Tidy Britain Group

and the Groundwork Trust, as well as local community activities.

McDonald's has become a known community partner with Ronald McDonald Houses across the

world for the use of families whose children are hospitalized and getting treatment far from

home .

We have a responsibility to lead. But more important, we can

and will make a difference. Jim Skinner, Vice Chairman & CEO

McDonald's food packaging gives customers essential nutrition information in an easy-to-

understand icon and bar chart format.

Produce for Better Health has been a valued resource to McDonalds by helping to provide

customers with a wide menu variety and quality choices that lend well to Balanced, Active

Lifestyles. In 2008, McDonalds became a sponsor of Produce for Better Healths Campaign to

provide parental know-how, resources, and motivation that will make increased fruit and

vegetable consumption a reality among children today.


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To help motivate and engage children in physical activity, McDonalds has developed a unique

physical education curriculumPassport to Play for eleven million children in grades 35 from

15 countries around the world, including Australia, Congo, France, Mexico, India,and the

Netherlands.

Serving a variety of nutritious, high-quality food products and portion sizes, including premium

salads, fruit & yogurt parfait, and apple dippers in Happy Meal choices.

Motivate kids to be active by engaging Ronald McDonald as their ambassador for play and

activity.


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Support local youth sports programs.

National presenting sponsor of Breast CancerNetwork of Strengths Mothers Day Walk to

Empower events taking place in 16 cities across the country Chicago, Cleveland, Washington,

D.C., New Haven, Atlanta, Chattanooga, Miami, Houston, Tulsa, Denver, Phoenix, San Diego,

LosAngeles, Sacramento, San Francisco and Seattle.

Ronald McDonald House Charities Chapters and their core programs RMHC U.S.

Scholarship Program, Ronald McDonald House, Ronald McDonald Family Room

McDonalds provide jobs for local residents, opportunities for local suppliers, and revenues for

local projects and services.

Restaurants are often key elements in neighborhood stability and revitalization


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SWOT ANALYSIS

Strengths

McDonalds has built up huge brand equity. It is the No. 1 fast-food company by sales.

Good innovation and product development. It continually innovates to retain customers in the

business.

The McDonalds brand offers consumers choice, reasonable value and great service.

Large amounts of investment have gone into supporting its franchise network, 75% of stores arefranchises.

Loyal staff and strong management team.

It has a strong global presence and is considered as a market leader in both the domestic as well

as the international markets.It uses economies of scale for reducing the cost, as its huge expansion diversifies the overall risk

involved with the economic performance.

They own an active childrens charity by the name 'The Ronald McDonald House.

It takes steps in adjusting the Ingredients and product offerings in order to comply with the


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upgraded health standards deemed necessary by the USDA.

It earns revenue by fast food sales as well as a property investor and a franchiser of restaurants.

It has a firm real estate portfolio.

It has branded menu items ie Big Mac, Chicken McNuggets, which further promote McDonalds.

Its recognized as one of the worlds most recognized logos.

It is recognized as a socially responsible and community oriented firm.

It adds to the cultural differences regarding the region where the restaurant is set up.

It has located itself in major airports, cities, highways, tourist locations, theme parks.

It has an efficient food preparation style that follows the process in a systematic way.

It takes food safety extremely cautiously.

It was the first to provide the customers about nutrition facts.

Weaknesses

Core product line out of line with the trend towards healthier lifestyles for adults and children.

Product line heavily focused towards hot food and burgers.

Quality issues across the franchise network.

It uses advertising that mostly targets children.


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High employee turn-over.

It has yet to accomplish going on the trend of organic food.

Price competition with the competitors resulting in low revenue.

Lack of innovative products.

Opportunities

Joint ventures with retailers (e.g. supermarkets).

Consolidation of retailers likely, so better locations for franchisees.

Respond to social changes - by innovation within healthier lifestyle foods. Its move into hot

baguettes and healthier snacks (fruit) has supported its new positioning.

Use of CRM, database marketing to more accurately market to its consumer target groups. It

could identify likely customers (based on modelling and profiles of shoppers) and prevent brand

switching.

Strengthen its value proposition and offering, to encourage customers who visit coffee shops

into McDonalds.

The new formats, McCafe, having Wi-Fi internet links should help in attracting segments.

Also installing childrens play-parks and its focus on educating consumers about health, fitness.


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Continued focus on corporate social responsibility, reducing the impact on the environment and

community linkages.

International expansion into emerging markets.

It can adapt to the needs of the societies and undergo an innovative product line.

It can research ways to use green energy and packaging which will work as a part of their

promotional effort as well as fulfil their social responsibility.

It can create new product offerings, use mobile text messaging to offer services that appeal to

consumers.

It can upscale some of its restaurant settings at luxurious locations to attract more customers.

It can provide optional items that are regarded to be the basis of allergy for some.

It can slow down the level of expansion in order to increase the profitability of the organization.

Threats

Social changes - Government, consumer groups encouraging balanced meals, 5 a day fruit and

vegetables.

Focus by consumers on nutrition and healthier lifestyles.

Competitive pressures on the high street as new entrants offering value and greater product


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ranges and healthier lifestyles products. E.g. subway, supermarkets, M&S.

Recession or down turn in economy may affect the retailer sales, as household budgets tighten

reducing spend and number of visitors.

Pressure groups - environmental.

The recession negatively impacts the holding position of the firm regarding its revenue streams,

even though they are quite diversified

Foreign currency fluctuations are regarded to be a major problem as

it uses standard pricing for its food items.

Health issues regarding the fast food chain.

Heavy investments on promotional campaigns which decrease the

gaining of market share.

Some parents criticize the firms cradle to grave marketing strategy that focuses on kids, who

later on take it as a trend to their adulthood.

Sued various times for unhealthy food, usually with addictive additives.

Emergence of major fast food competitors: Burger King, Starbucks, Wendys, Taco Bell, KFC.

The expansion has made the firm vulnerable to the slow economies of the other countries.


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CRITICISM& CHALLENGESAs the world's largest fast-food company, McDonald's has been the target of criticism for

allegations of exploitation of entry-level workers, ecological damage caused by agricultural

production and industrial processing of its products, selling unhealthy food, production of

packaging waste, exploitative advertising (especially targeted at children), and contributing to

suffering and exploitation of livestock.

McDonald's historic tendency towards promoting high calorie foods such as French fries has

earned it the nickname "the starchy arches".

During the late 1980s the production of beef to feed the hamburger giant supply chain lead to the

charge that McDonalds devastates the rainforest. Animal rights activists were incensed by how

McDonalds promotional weight and availability promoted a meat-based diet that resulted in the

poor treatment and slaughter of masses of animals. Yet, by and large press coverage reveals that

the biggest environmental nightmare for McDonalds is its waste and packaging.

In the high profile McLibel Trial McDonald's took two anti-McDonald's campaigners, Helen

Steel and Dave Morris, to court for a trial lasting two and a half years - the longest in English

legal history. McDonald's won the case. Despite the fact that many of the campaigners' criticisms


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of the company were found to be libellous, the suit created a great deal of bad publicity for the

company.

McDonald's has also been criticised for its approach to preserving its image and copyrights - in

one case suing a Scottish cafe owner called McDonald for infringement of the name McDonald's,

even though the business in question was a family business dating back well over a century.


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In another case, McDonald's enjoined the creator of Ronald McDonald from performing as, or

displaying the likeness of, the character in any form. McDonald's also replaced the performer

who portrayed Ronald in the first three television ads (Willard Scott, a former Bozo) which

featured Ronald McDonald. In South Africa, however, McDonald's had to battle against the

country's trademark laws, which stated that a registered trademark had to be used within a certain

period of time. This resulted in a local company announcing plans to launch its own fast food

chain using the McDonald's name, although the South African High Court eventually ruled in

McDonalds' favour.

In June 2004 the UK's Private Eye reported that McDonald's was handing out meal vouchers,

balloons, and toys to children in paediatric wards. This was especially controversial as the report

was made within weeks of a British Government report stating that the present generation may be

the first to die before their parents due to spiralling obesity in the British population.In 2004, Morgan Spurlock's documentary film Super Size Me produced negative publicity for

McDonald's, with suggestions that McDonald's food was contributing heavily to the rash of

obesity in American society. Subsequent to the showing of the film at the Sundance Film Festival,

but before its cinematic release, McDonald's phased out its Supersize meal option and began


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offering several healthier menu items though no link to the film was cited in this decision.

McDonalds pulled cadmium contaminated Shrek glasses from the market. The promotional

glasses sold at the worlds largest fast food chain to promote the animated film Shrek Forever

After, were found to have cadmium at levels higher than allowed by the CPSC. McDonalds

voluntarily pulled some 12 million in collaboration with the CPSC.


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CRISISMANAGEMENT & PRMcDonalds treatment of its young workers emerged as one of its earliest and most challenging

public relations concerns. Critics argued that youths lack of experience and eagerness to please

left them vulnerable to corporate exploitation. McDonalds public relations experts have sought

to legitimize its labour practices with articles about employee incentive programmes. They have

also been careful to feature happy and helpful servers in their marketing campaigns.

In 1969, when a black community in Cleveland boycotted McDonalds restaurants, in protest

over the corporations denial of franchise opportunities for black people, McDonalds value of

mass inclusiveness was challenged. In 1974, the urban residence of Greenwich Village, New

York, loudly protested that a second McDonalds chain would threaten local family owned shops,

create more traffic congestion, encourage loitering, and contribute to litter problems. Protestersfrom Hells Kitchen New York, to Belmont in the Bronx, rallied against the opening of

McDonalds restaurants. Every location McDonalds failed to secure was more than simply a loss

of income; it was a blemish on corporate image. Public relations staff worked tirelessly to turn

around community opinion.


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McDonalds Moms Quality Correspondents a group of moms that McDonalds invites to

check out where their food is made, ask questions to their nutrionists, see the ingredients and

much more. Its a great example of a company that identified a crucial challenge to their success

opinions of moms who visit their restaurants every day and decided to open the door wide open

and invite them in to have a look. McDonalds provided an example of transparency through this

PR effort.

McDonalds campaign that took place on location based social media company Foursquare

actually saw results of foot traffic to MacDonalds stores being increased by 33% in just one day.

The campaign which, consisted of 100 randomly distributed $5 and $10 gift cards for checking

on Foursquare cost McD just $1000. This simple idea resulted in huge media exposure for

McDonalds and an influx of customers to the stores eager to gain their rewards. Also over

600,000 customers then began to follow the brand online. Its an incredible payback for a $1000gesture, compared that with the millions that McDonalds spend on usual forms or marketing, and

certainly signifies the benefit of teaming up with a social media company such as Foursquare to

increase profits.


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Voice of McDonald's II contest. McDonald's staff battled it out in Orlando for the top $25,000

prize in their employee singing contest. McDonald's nailed big media coverage by adding the

following:

BuzzKits for any entrant to help promote their perfomance and garner more consumer votes

A social media optimized experience that made it easy to share, bookmark and cross-post video

Google maps locating entrants with their store locations

Videoblog entries from the finalists

Aggregated all the conversation in blogs about the contest into a single display.. This unbiased

collection rewards blog coverage demonstrates the power of word of mouth.

McDonalds is a leader in social media usage. Through

the use of devices such as Facebook, Twitter, and other

social mediums, McDonalds connects directly with itscustomers and allows them to stay up to date and

interact with the company.


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Company Revenues (M) Net Income (M) Net Margin Restaurants Franchised %

McDonald's

(MCD)$22,745 $4,551 20.0% 32,478 81%

Yum! Brands

(YUM)$10,836 $1,083 10.0% 37,000

Starbucks

(SBUX)$9,775 $391 4.0% 16,635 47%

Darden

Restaurants

(DRI)

$7,218 $372 5.2% 1,773 0%

Brinker

International

(EAT)

$3,621 $79 2.2% 1,689 40%

Wendy's

International

(WEN)

$3,581 $4 0.1% 6,451 80%

Burger King

Holdings (BKC)$2,537 $200 7.9% 11,925 88%

Jack in the Box(JACK)

$2,471 $131 5.3% 2,212 46%

CKE Restaurants

(CKR)$1,419 $48 3.4% 3,141 71%

Domino's Pizza

(DPZ)$1,404 $80 5.7% 9,339 91%

Panera Bread

Company (PNRA)$1,353 $87 6.4% 1,380 58%

COMPETITIONMajor direct competitors in the (hamburger-based) fast food industry include:

Burger King Holdings is the second largest hamburger fast food chain. Although more of Burger

Kings restaurants are franchised than McDonalds restaurants, Burger King franchise revenues

trail behind that of its competitor, mainly due to the McDonalds size advantage.

Wendy's is the third largest hamburger fast food chain. It has a lower operating margin that

McDonalds, so it is likely to be more negatively impacted during a recession.

Yum! Brands runs Kentucky Fried Chicken, Taco Bell, Pizza Hut, Long John Silvers, and A&W

All-American Food Restaurants. Currently, Yum! brands are dominating the China market,

posing a challenge to McDonald's attempts to enter the market. While McDonalds Corporation


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focuses on its flagship brand, Yum! splits its resources among a wide variety of restaurants.

In addition to the above competitors, McDonalds also competes with non-hamburger-based fast

food restaurants (such as Panera Bread Company (PNRA), Panda Express and Qdoba), local and

national dine-in restaurants (such as Red Robins and Sharis), pizza parlors, coffee shops

(Starbucks), street vendors, convenience stores and supermarkets.



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McDonald's (MCD) $22,745 $4,551 20.0% 32,478 81%

Yum! Brands (YUM) $10,836 $1,083 10.0% 37,000

Starbucks (SBUX) $9,775 $391 4.0% 16,635 47%

Darden Restaurants(DRI)

$7,218 $372 5.2% 1,773 0%

Brinker International(EAT) $3,621 $79 2.2% 1,689 40%

Wendy's International(WEN)

$3,581 $4 0.1% 6,451 80%

Burger King Holdings(BKC)

$2,537 $200 7.9% 11,925 88%

Jack in the Box (JACK) $2,471 $131 5.3% 2,212 46%

CKE Restaurants (CKR) $1,419 $48 3.4% 3,141 71%

Domino's Pizza (DPZ) $1,404 $80 5.7% 9,339 91%

Panera Bread

Company (PNRA)$1,353 $87 6.4% 1,380 58%


McDonald's (MCD) $22,745 $4,551 20.0% 32,478 81%

Yum! Brands

(YUM)$10,836 $1,083 10.0% 37,000

Starbucks (SBUX) $9,775 $391 4.0% 16,635 47%

Darden Restaurants

(DRI)$7,218 $372 5.2% 1,773 0%

Brinker International

(EAT)

$3,621 $79 2.2% 1,689 40%

Wendy's

International (WEN)$3,581 $4 0.1% 6,451 80%

Burger King

Holdings (BKC)$2,537 $200 7.9% 11,925 88%

Jack in the Box(JACK)

$2,471 $131 5.3% 2,212 46%

CKE Restaurants

(CKR)$1,419 $48 3.4% 3,141 71%

Domino's Pizza

(DPZ)$1,404 $80 5.7% 9,339 91%

Panera BreadCompany (PNRA)

$1,353 $87 6.4% 1,380 58%

S SS C CS


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McDonald's (MCD) $22,745 $4,551 20.0% 32,478 81%

Yum! Brands (YUM) $10,836 $1,083 10.0% 37,000

Starbucks (SBUX) $9,775 $391 4.0% 16,635 47%


$7,218 $372 5.2% 1,773 0%



$3,581 $4 0.1% 6,451 80%


$2,537 $200 7.9% 11,925 88%




Panera Bread

Company (PNRA)$1,353 $87 6.4% 1,380 58%

BUSINESS & FINANCIALMETRICSIn 2009, McDonalds had revenues of $22.7 billion and operating profits of $6.8 billion.

Sales across all of its company-owned and franchised restaurants totaled $56.9 billion.

Over 5 years, McDonalds has seen company revenues increase at an annual rate of 4.9%, while

profits increased by 14.0% and storewide sales grew by 9.0%.

Strong International Growth is Driving Sales

Majority of sales occur outside of the United States. In addition to developed markets like the

U.K., Canada, South Korea andAustralia, McDonald's operates in fast growing emerging markets

like China, India, Russia and Eastern Europe.China is a particularly promising opportunity.

As a result, MCD's June 2010 sales have shown a continuous uptrend in international markets at

7%.SpecificallyAPMEA (Asia/Pacific, Middle East andAfrica).

These results have emphasized the importance in MCD's core value menu offerings and variety

in its breakfast menus.

Specifically, MCD's move to expand to international markets means that it can tap into a less

health-conscious market segment that will allow MCD to utilize a menu that relies less on costly

constant product changes.


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McDonald's (MCD) $22,745 $4,551 20.0% 32,478 81%

Yum! Brands (YUM) $10,836 $1,083 10.0% 37,000

Starbucks (SBUX) $9,775 $391 4.0% 16,635 47%


$7,218 $372 5.2% 1,773 0%



$3,581 $4 0.1% 6,451 80%


$2,537 $200 7.9% 11,925 88%




Panera Bread

Company (PNRA)$1,353 $87 6.4% 1,380 58%

SUBMITTED BY:

Aiswarya BabuRoll No: 27

Public Relations

Xavier Institute Of Communications

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