McDonald’s

History• 1948 – McDonald brothers open the first McDonald’s and names

Speedee as their company image.

• 1954 – Ray Krock, a multimixer salesman becomes the franchising agent.

• 1955- Ray Kroc opens the Des Plaines restaurant. The 1st day’s revenues - $366.12

• 1957 – Ray Kroc hands out free hamburgers to Salvation Army guests

• 1958 – Sales grow 151%

• 1961 – Ray Kroc buyout the McDonalds brothers for $2.7 million

• 1963 – Ronald McDonald is introduced

• 1965 - McDonald’s goes public with the company’s first offering on the stock exchange for $22.50 per share.

– First television commercial is aired

• 1966 – McDonald’s stocks split for the first time.

• 1967 - Big Mac invented

– McDonald’s in Canada and Puerto Rico open

• 1971 - “Makadonaldo” (Japan)

• 1973 - Egg McMuffin invented

• 1974 - Ronald McDonald House opened

• 1979 - Happy Meals introduced

• 1979-present - Continued growth

Cont….

Problems• Customer Service

– McDonald’s is currently ranked last amongst its top competitors in the FFHR subsector.

• #1 – Burger King• #2 – Wendy’s• #3 – McDonald’s

– This may not sound bad at first glance, but when you look at the fact that these three competitors hold 73% of the FFHR market, it puts it into perspective.

cont….

• Health Issues

SWOT Analysis - Strengths

• Worldwide Brand Recognition

• 41% of all fast-food visits are for hamburgers

– McDonald’s has 44% of US fast-food hamburger business

• Over 70% of the restaurants are independently owned

• Ranked number one in Fortune magazine’s 2008 list of “most admired food service companies.” Overseas market

• Over 31,000 restaurants in over 120 countries.

• Quality measures through supply chain management

• Encourage new ideas from within– Big Mac– Egg McMuffin

• Large available amounts of capital for future restaurants due to holding a limited number of corporate owned restaurants.

• Economies of scale

Strengths (cont)

SWOT Analysis - Weaknesses

• Weak product development

• Poor relationships with franchisees

• Fluctuations in profit (which has been improved in 2008 after the franchising of many corporate owned restaurants)

Revenues & Profitability: McDonald's Corporation

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• International expansion through continued franchise opportunities

– Only serving 1% of the world’s population

• Growth in the beverage industry (by 2011 - $71.4 billion in sales with 70.8% being coffee drinks)

• Introduction of local offerings (i.e. Tech Burger with special condiments and toppings)

SWOT Analysis - Opportunities

• Mature industry

• Strength of competition

• More health-conscious consumers

• Changing demographics

• Fluctuation of foreign exchange rates

• Increasing commodity and fuel prices

SWOT Analysis - Threats

Competition

• Top– Burger King – 14%– Wendy’s – 13%

• Other strong competitors– Sonic – 6%– Jack in the Box – 4%– Hardee’s – 3%– White Castle – 1%

Marketing Techniques

• Product “Image”• Customers associate with the brand• Domestic• Global

cont….

• Original symbol “Speedee”• Golden Arches• Building structure and colors• Local advertising

Slogans

• “Your kind of place” (1967)• “You deserve a break today” (1971)• “We do it all for you” (1965)• “Have you had your break today”

(1995)• “I’m lovin it” (2003)

Marketing Mix

• Five P’s• Marketing and Communications• Responsibility• McSpirit Nights• Commercials• Atmosphere

Management In McDonald’s

Ray Kroc• “The quality of a leader is reflected in

the standards they set for themselves”• “We take the hamburger business more

seriously than anyone else”• “You're only as good as the people you

hire”• “If there is time to lean there is time to

clean”

Hamburger University“McDonald’s Center of Training Excellence”

• Created by Fred Turner and Ray Kroc in 1961

• All levels of managers in the McDonald’s family go through training at this facility.

“At McDonald’s, our training mission is to be the best talent developer of people with the most committed individuals to Quality, Service, Cleanliness and Value (QSC&V) in the world. Our strong commitment to the training and development of our people has resulted in many “firsts” and honors.”

Cont…

• Hamburger University has given emphasis to consistent restaurant operations procedures, service, quality and cleanliness.

• Because of it’s success H.U. has become the global center of excellence for McDonald’s operations training and leadership development.

• With this training it creates unity for the CEO to the local store manager, they all have the same goals in mind which is…………….

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

that we make every customer in every restaurant smile. And by doing this we are our customers' favorite place and way to

eat."

“Get the kids…and the parents will follow.”

Past Strategies

• Product Development

– Hits: Fries, Happy Meal, Big Mac, Egg McMuffin, Salads, Apple Slices, Yogurt Parfaits, & Promotions

– Misses: McPizza, Fajita, Carrot Sticks, McLean, and the Arch Deluxe

cont…• Market Development

– Hit: International growth– Miss: Over-expansion in US

• Alternative locations

• Forward Integration– Distribution through franchisees with

control over store presentation, menu items

New Strategies

Product Development: Focus on core business– Quality and taste issues

• Food delivery methods

– Family Value Meal• Thursday’s $1.59 Happy Meal

cont…

• Redevelop Franchisee Relationships

• Market Penetration and Development– Continue International expansion

• Cost Reductions– Home office cost reductions

– Franchising corporate owned restaurants

Recommendations

• Improvements in:– Customer Service

• Focus on team, not individuals• Reward the behavior that you want

– Training/Compensation• Training in customer service, speed and accuracy• Increase pay to attract more qualified applicants

– Technology• Improvement of order verification system

– Continued Growth of International Market

Thank you