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McDonald's Australia Holdings Pty Limited

McDonald's Australia Holdings Pty Limited is a foreign-owned proprietary company that operates

and franchises the McDonald's chain of family restaurants. The company employs approximately

6,580 staff across Australia and is headquartered in Thornleigh, New South Wales. McDonald'sAustralia is part of the US based McDonald's Corporation.

The principal activity of McDonald's Australia is the establishment and operation of a chain of quick

service family restaurants, operating throughout Australia. Approximately eight y percent of

McDonald's restaurants in Australia are owned by franchisees, who pay the company rent and

service fees. The remaining twenty percent of restaurants are operated by the company.

McDonald’s (MCD) is a fast food, limited service restaurant with more than 35,000 restaurants inover 100 countries. It employs more than four million people. McDonald’s serves 70 million

customers per day, which is greater than the population of France. According to IBISWorld, in

2014, McDonald’s had the largest share in the fast food restaurant industry of 17% in the U.S. The

closest competitor, Yum! Brands (or YUM), had a market share of 11%.

Industry Overview

The fast food industry provides quick-service food products to consumers. Customers usually pay

before eating. The purchases are usually consumed on-site or taken out for home consumption.

These companies are involved in retail, transport, distribution, and food services. The key

economic drivers for the industry are global consumer spending, consumer sentiment, and world

price volatility of agriculture. The industries that supply the food industry are the global agriculture,

hunting, forestry and fishing industries. 3 According to the National Restaurant Association, the full-

service restaurant segment is projected to post its third consecutive year of real sales growth

during 2013. Total sales are expected to be $208 billion, up 2.9% from $202.2 billion last year.

During the past 5 years, the global fast food industry has expanded despite changing consumer

tastes and the struggling economy. During recessions consumers cut down on luxuries like eating

out, but fast food restaurants like McDonalds were not greatly affected. On the other hand,increasingly health conscious has hurt the demand for greasy foods provided by these restaurants.

Restaurants have responded by increasing the number of healthy option on their menus. Moreover,

the growing demand from emerging economies boosted the industry’s overall performance. In

many developed nations the industry is approaching saturation levels. The reason for this is the

oversupply of fast food businesses and extensive franchising. This results in weaker revenue

growth and intense price-based and product-based competition.

PESTEL ANALYSIS

Pestel is an analysis of the external macro and micro environment in which a business operates.

Pestel stands for political, economic, social, technological, environmental and legal factors


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Political Factors Affecting McDonald’s Business

McDonald’s considers the impacts of the political environment on its industry. This aspect of the

PESTEL/PESTLE analysis refers to the effects of governmental action on the remote or macro-

environment of businesses. In McDonald’s case, the most significant political external factors are

as follows:

Increasing international trade agreements (opportunity)

Pending tax reform (opportunity)

Evolving public health policies (threat and opportunity)

McDonald’s has the opportunity to expand its business based on improved international trade,

which can enhance global supply chains. McDonald’s also has the opportunity to reform itspractices and strategies to lessen the impact of taxation on the business without violating the law.

However, public health policy increasingly tends to discourage people from consuming fast foods

from firms like McDonald’s. Nonetheless, the company has the opportunity to address this external

factor by improving the healthfulness of its products. In this aspect of the PESTEL/PESTLE

analysis of McDonald’s, the political external factors present opportunities that outweigh threats.

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Source 2:

Generally, McDonalds are affected by government policy on the regulations of Fast Food Company

such as health and hygiene policy. Government realized health problem have been a big concern

for everyone, people are having diseases such as cardiovascular and cholesterol because they are

eating too much fast food. Furthermore, hygiene policy also is a big concern for a fast food

company. Good relationship with government will bring McDonald on a better position to service in

this industry

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Economic Factors Important to McDonald’s

Economic changes around the world influence McDonald’s industry environment, considering its

global nature. This aspect of the PESTEL/PESTLE analysis pertains to the effects of economic

conditions and trends on the remote or macro-environment of firms. In McDonald’s case, the

following are the most notable economic external factors:


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Slow but stable growth of the U.S. economy (opportunity)

Stable but risky European economies (threat)

Slowdown of the Chinese economy (threat)

McDonald’s has the opportunity to grow, even slowly, in the American economy, which is the firm’s

biggest market. However, the current economic conditions in Europe could threaten McDonald’sgrowth in the region. Also, the slowdown of the Chinese economy threatens the company’s growth

in Asia. In this aspect of the PESTEL/PESTLE analysis of McDonald’s, the economic external

factors mainly threaten the business.

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Source 2:

The recent economic recession was incredibly disruptive for firms in many industries, reducingrevenues and profits across the board, and decreasing consumer demand for many goods and

services (Kliman, 2012). However notall firms and industries were adversely affected – some

actually saw revenue and profit opportunities increase during the economic downturn due to higher

demand - these tend to be firms and industries that are seen to provide ‘value for money’, of which

the fast food industry is one (Bems et al, 2010). Fast food restaurants can be seen as imperfect

substitutes for more traditional restaurants; many consumers prefer to eat out at a fast food

restaurant as a cheaper alternative to a more expensive traditional restaurant. In 2008, near the

height of the crisis, the fast food industry in the UK actually saw increased growth in terms of

revenue of 4.5%, with an overall increase in demand for McDonald’s products of around 4% (Key

Note, 2009). Other countries that saw similar increases in demand in the fast food industry in

general and McDonald’s in particular include Japan, France and Belgium (Economist, 2010).

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Source 3:

McDonalds stores have to take a great deal of consideration with reference to their

microenvironment. The company's international supply as well as the existing exchange rates ismerely a part of overall components needed to guarantee success for the foreign operations of

McDonald's. Moreover, it is imperative that the company be cognizant of the existing tax

requirements needed by the individual governments on which they operate .This basically ensures

smooth operations of the McDonald's franchises. In the same regard, the company will also have to

consider the economic standing of the state on which they operate on. The rate at which the

economy of that particular state grows determines the purchasing power of the consumers in that

country. Hence, if a franchise operates in a particularly economically weak state, hence their

products shall cost higher than the other existing products in the market, then these franchises

must take on certain adjustments to maintain the economies of scale.


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http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html

Social/Sociocultural Factors Influencing McDonald’s Business Environment

McDonald’s must respond to sociocultural changes in its remote or macro-environment. Thisaspect of the PESTEL/PESTLE analysis refers to the social conditions that support or limit

businesses. In McDonald’s case, the most significant sociocultural external factors are as follows:

Widening wealth gap (opportunity)

Increasing cultural diversity (opportunity)

Healthy lifestyle trend (threat & opportunity)

Based on the external factor of the widening wealth gap, McDonald’s has the opportunity to grow

because the company’s target consumers are mostly from medium and low-income households.

Also, McDonald’s has the opportunity to improve its products mix to satisfy a more diverse targetmarket. However, the healthy lifestyle trend is a threat because many of McDonald’s products are

often criticized for their negative health effects. Nonetheless, the company has the opportunity to

improve the healthfulness of its products. In this aspect of the PESTEL/PESTLE analysis of

McDonald’s, the social external factors create mostly opportunities for business development.

Source2:

Articles on the international strategies of McDonald's seem to function on several fields to

guarantee lucrative returns for the organisation. To illustrate, the organisation improves on

establishing a positive mindset form their core consumers. McDonald's indulge a particular variety

of consumers with definitive types of personalities. It has also been noted that the company have

given the markets such as UK, an option with regards to their dining needs. McDonald's has

launched a sensibly valued set of food that tenders a reliable level of quality for the respective

market where it operates. Additionally, those who are aged just below the bracket of thirty five are

said to be the most frequent consumers of McDonald's franchises.

http://ivythesis.typepad.com/term_paper_topics/2009/02/pestle-analysis-of-mcdonalds.html

Source 3

While McDonald’s and the fast food industry in the US has manage to dodge most proposedregulation aimed at reducing the unhealthiness of many of their products, they have been perhaps

less successful in dodging the negative public opinion over the same issue. Fast food in general

has seen its public image decline as society in general becomes more health conscious –the

preceding decades have seen a rise in many societal health-based food initiatives, such as

increased demand for unprocessed and organic foods, and a growing public awareness of obesity

and heart disease and its links to high-fat foods.

In 2004 Morgan Spurlock, an American social-commentary filmmaker in the same vein as Michael

Moore, created the documentary Super-Size Me (2004), where he ate only McDonald’s for 30 days,

for 3 meals a day (breakfast, lunch and dinner). He did not allow himself to have any other food


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during that time, and had to upgrade to a super-size meal whenever asked, which had double the

amount of fries of a medium sized meal, and also came with a 42 ounce coke. After the 30 day

period, he had gained 1 stone and 10.5 pounds of extra weight which represented a 13% body

mass increase, had a cholesterol level of 230 (where levels below 200 are considered healthy) and

had developed cirrhosis of the liver (Spurlock, 2004).

There have also been many damaging reports made about the fast food industry in general and

McDonald in particular, including a number of studies that have suggested fast food addiction

shares many of the same characteristics as drug addiction (Garber and Lustig, 2011; Volkow and

Wise, 2005). A paper by Johnson and Kenny (2010) found that high-fat food triggered many of the

same dopamine receptors in rats as those triggered by cocaine or heroin, and can override

standard eating responses and lead to bout of compulsive, addictive-like eating

In response to this, McDonald’s has phased out the super-size option for all of its US meals (the

UK supersize meal option had been phased out in 2001 due to very low demand, and had notbeen introduced in any other countries) and began offering more healthy menu options, including

fruit smoothies, salads, milk, water and fruit (Pompper and Higgins, 2007). They have also

launched a number of innovative marketing campaigns aimed at highlighting the new range of

healthy alternatives, a policy that is estimated to cost an additional $35million in marketing costs

(Vizard, 2013). Such an approach appears to have been effective, with no sales decline reported in

any month over the last 10 years (Vizard, 2013).

From

Technological Factors in McDonald’s Business

McDonald’s success partly depends on technological applications. This aspect of the

PESTEL/PESTLE analysis pertains to the impact of technologies and related trends on the remote

or macro-environment of companies. McDonald’s must address the following technological external

factors:

Moderate R&D activity in the industry (opportunity)

Increasing business automation (opportunity)Increasing sales through mobile devices (opportunity)

McDonald’s has the opportunity to increase its research and development investments to improve

business effectiveness and efficiency. Also, McDonald’s can apply more automation to maximize

productivity, based on the external factor of increasing business automation. Furthermore,

McDonald’s can improve its mobile services to tap more consumers via its website or mobile app.

In the technological aspect of the PESTEL/PESTLE analysis, McDonald’s has major opportunities

for growth.

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Source 2:

The advent of the internet has opened up many opportunities for low-cost, high-impact marketing

across a range of firms and industries. Increasingly, firms are being judged more and more strongly

on their online presence and perceived technological savvy – it can seriously harm a business’image if they are seen as out-of-touch with the modern technological world (Chaffey, 2009).

Marketing opportunities using the internet are many and varied and can range from intricate,

involved, multi-layered viral campaigns, through website design and functionality to a simple social

media presence. While the fast food industry was slow to catch on to the benefits of internet

marketing in the beginning, most firms have now embraced its potential, and McDonald’s is at the

forefront.

As well as taking the (now somewhat standard) step of establishing a strong social media

presence, with the creation of both a Facebook page and twitter account in 2009, McDonald havealso run a number of successful online marketing campaigns, including an ‘Ask McDonald’s

Youtube campaign in 2012, where over 20,000 questions from the public were answered, with most

being based around the quality and supply chain of McDonald’s food and burgers. Many of the

questions were answered through short Youtube videos, some of which have gathered over 10

million views, and most of which were received very positively (Macmillan, 2012).

However, as with most other firms, the internet has proved to be a double-edged sword in terms of

marketing success for McDonald’s. There have also been a number of negative articles posted on

Facebook and Twitter about the company and its products, including an obvious hoax post that

claimed a batch of McDonald’s hamburgers in Oklahoma had been found to have been

contaminated with ‘human meat’ (Hooton, 2014, p1). Despite the obvious falseness of the claims

(the posts were taken from a joke news site, satirising the Tesco horse meat scandal of 2013)

many people online believed the stories, claiming to be sickened by them, and declaring they would

boycott McDonald products from now on (Hooton, 2014). Such false information is easily spread

online with little to no information regulation; firms can be at the mercy of false accusations and

internet pranks. Also, in direct contrast to the successful Youtube campaign was a perhaps less

successful Twitter campaign, where McDonald’s promoted the #Mcdstories hashtag for twitter

users to post their stories and positive experiences with the firm. However, as there was no ability

to either control or properly interact with the responses as with the Youtube campaign, thecampaign collapsed almost immediately with a glut of negative anti-McDonald’s tweets,

outweighing the positive responses by around 10 to 1 (Kolowich, 2014). Careful monitoring of the

company’s online presence and quick response to such incidents will go some way to mitigating

the potential damage.

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Ecological/Environmental Factors

Ecological external factors affect McDonald’s consumers and, thus, the company’s performance.

This aspect of the PESTEL/PESTLE analysis refers to the environmental issues in firms’ remote or

macro-environment. In McDonald’s industry, the following are the most significant ecological

external factors:

Rising interest for corporate environmental programs (opportunity)

Increasing emphasis on sustainable business strategies (opportunity)

Climate change (threat)

McDonald’s can expand its corporate social responsibility strategies to reach even high

performance in addressing environmental concerns. However, climate change remains a threat

because of its negative effects on farms and, thus, McDonald’s supply chain. In this aspect of the

PESTEL/PESTLE analysis, the ecological external factors highlight corporate social responsibility

opportunities, although McDonald’s also needs to further diversify its supply chain to address theeffects of climate change.

From

Source 2:

In recent years, environmental issues have come to the forefront of public consciousness with the

rise of many green initiatives and movements. In response, many businesses now include some

form of environmental damage mitigation to counteract the negative environmental aspects of their

typical business production methods; typical methods include the replanting of trees to offset

carbon emissions caused by the transportation of goods, a reduction in the amount of paper used

in the administrative side of the business, energy-saving initiatives such as the turning off of lights,

electrical appliances and computers when facilities are not in use, and a reduction in the amount of

packaging used in the production process (Satya, 2002).

Environmental concerns about a business’ operations are particularly pronounced in the food

industry, as food production techniques are often associated with poor environmental controls,

particularly in emerging third world economy producers, and budget meat suppliers (Foster et al,2007). Indeed, a number of protests have been levelled at many fast food firms in general, and

McDonald’s in particular – on 19th July 1985, Greenpeace in the UK declared an “anti-McD Day of

Action” (Veggis, 2014, p1) which involved demonstrations, protest marches and pickets of many

McDonald’s stores across the UK. The ‘Day of Action’ has been repeated every year on the same

date, and protests against “the promotion of junk food, the unethical targeting of children,

exploitation of workers, animal cruelty, damage to the environment and the global domination of

corporations over our lives” (Veggis, 2014, p3). In 1997, two of the protestors were sued by

McDonald’s for libel, after repeating some of these claims in many McDonald’s restaurant. The

judge found in favour of McDonald’s for some of the allegations of libel, but found others had some

truth to them and could not be considered libellous, including claims that they “falsely advertise


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their food as nutritious, risk the health of their long-term regular customers” and “are culpably

responsible for cruelty to animals reared for their products” (Justice Bell, 1997, p13).

In response to this, McDonald’s have initiated a number of Corporate Social Responsibility (CSR)

policies centred on reducing the environmental impact of the business; they currently participate in

‘Earth Hour,’ an initiative that encourages many businesses to turn off their lights and unusedequipment on a specific hour each year, to reduce their carbon footprint. They have also sought to

reduce the environmental impact of their packaging, seeking out more biodegradable packaging in

many markets; they have initiated paper-reduction policies in many of their administration centres,

and they have also instigated investigations into the care and management of the animals reared

for their product supply, with a view to ensuring no unnecessary cruelty or inhumane treatment is

taking place (McDonald’s, 2014c)

From

Legal Factors

McDonald’s must follow legal requirements imposed on its remote or macro-environment. This

aspect of the PESTEL/PESTLE analysis pertains to the impact of laws or regulations on firms. The

most significant legal external factors for McDonald’s are as follows:

New legal minimum wage levels in the U.S. (threat)

Local health regulations in workplaces and schools (threat)

Animal welfare regulation (threat & opportunity)

McDonald’s faces the threat of higher minimum wages, which lead to higher costs and prices. Also,

local health regulations impacting food service in workplaces and schools could reduce the

company’s revenues from these areas. In addition, McDonald’s must address animal welfareregulatory effects on its supply chain. For example, the company can implement new policies to

ensure animal welfare among meat producers. McDonald’s faces mainly threats based on legal

external factors in this aspect of the PESTEL/PESTLE analysis.

From

Source 2:


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The specific legal environment in which McDonald’s operates is highly dependent on the specific

country and market in question; however, most of the markets that McDonald’s operates in have

some form of a Health and Safety legal framework, particularly with regard to food preparation.

Many, if not all of the countries McDonald’s operates in has some form of public health inspection

system with regard to food producers - in the UK, it is the Food Standards Agency, while in the US,

it is the Food and Drug Administration (Campbell et al, 2008). In both markets, any employees withfood-handling capabilities must take part in food-hygiene training at the company’s expense.

McDonald’s has implemented a system that adds additional controls to those required by either

health agency, and as their customer-facing website states, “there are at least 70 safety checks on

beef and chicken every day. In fact, McDonald’s rigorous standards have been used by

government agencies as models for their own regulations” (McDonald’s, 2014d, p1). In this way,

their dedication to food safety over and above that required by law can be used as a marketing tool,

to emphasise their commitment to quality (Campbell et al, 2008).

There are also a number of employment laws to consider in each market, including thoseregulating the maximum length of an employee’s daily and weekly working hours, the requirements

for employee breaks and facilities, tax and payroll requirements, business registration and

accountancy standards for reporting profit and loss (Jones, 2013). McDonald’s tends to adhere to

the same legal standards across markets for each of these areas, even in markets with less

stringent regulations or legal requirements than those of the UK or US markets (McDonald’s,

2014a)

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Industry environment (5 forces)

McDonald’s Five Forces Analysis

In this Five Forces analysis, McDonald’s experiences the effects of external factors at varying

intensities. The company must implement strategies to meet these external factors and minimizenegative impact. In summary, McDonald’s Five Forces analysis yields the following intensities of

the five forces:

Competitive rivalry or competition (strong force)

Bargaining power of buyers or customers (strong force)

Bargaining power of suppliers (weak force)

Threat of substitutes or substitution (strong force)

Threat of new entrants or new entry (moderate force)

Competitive Rivalry or Competition with McDonald’s (Strong Force)


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McDonald’s faces tough competition because the fast food restaurant market is already saturated.

This element of the Five Forces analysis tackles the effect of competing firms in the industry

environment. In McDonald’s case, the strong force of competitive rivalry is based on the following

external factors:

High number of firms (strong force)

High aggressiveness of firms (strong force)

Low switching costs (strong force)

The fast food restaurant industry has many firms of various sizes, such as global chains like

McDonald’s and local mom-and-pop fast food restaurants. Also, most medium and large firms

aggressively market their products. In addition, McDonald’s customers experience low switching

costs, which means that they can easily transfer to other restaurants, such as Wendy’s. Thus, this

element of the Five Forces analysis of McDonald’s shows that competition is among the most

significant external forces on the business.

Bargaining Power of McDonald’s Customers/Buyers (Strong Force)

McDonald’s must address the significant power of customers. This element of the Five Forces

analysis deals with the influence and demands of consumers. In McDonald’s case, the following

are the external factors that contribute to the strong bargaining power of buyers:


Large number of providers (strong force)

High availability of substitutes (strong force)

Because of the ease of changing from one restaurant to another (low switching costs), customers

can easily impose their demands on McDonald’s. In relation, because of market saturation,

consumers can choose from many fast food restaurants other than McDonald’s. Also, there are

many substitutes to firms like McDonald’s. These substitutes include food outlets, artisanal

bakeries, as well as foods that one could cook at home. Based on this element of the Five Forces

analysis, McDonald’s must develop strategies to increase customer loyalty.

Bargaining Power of McDonald’s Suppliers (Weak Force)

Suppliers also influence McDonald’s. This element of the Five Forces analysis shows the impact of

suppliers on firms. In McDonald’s case, the weak bargaining power of suppliers is based on the

following external factors:

Large number of suppliers (weak force)

Low forward vertical integration (weak force)

High overall supply (weak force)

The large population of suppliers weakens the effect of individual suppliers on McDonald’s. This is

especially so because of the lack of regional or global alliances among suppliers. In relation, most

of McDonald’s suppliers are not vertically integrated. This means that they do not control the


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distribution network linked to McDonald’s facilities. Also, the relative abundance of materials like

flour and meat reduces suppliers’ influence on McDonald’s. Thus, this element of the Five Forces

analysis shows that supplier power is a minimal issue for McDonald’s.

Threat of Substitutes or Substitution (Strong Force)

Substitutes are a significant concern for McDonald’s. This element of the Five Forces analysis

deals with the potential effects of substitutes on firm growth. In McDonald’s case, the following

external factors make the threat of substitution a strong force:

High substitute availability (strong force)


High performance-to-cost ratio (strong force)

There are many substitutes to McDonald’s products, such as products from artisanal food

producers and local bakeries. Consumers can also cook their food at home. It is also easy to shiftfrom McDonald’s to these substitutes (low switching costs). In addition, these substitutes are

competitive in terms of quality and consumer satisfaction. In this element of the Five Forces

analysis of McDonald’s, substitutes are a major issue that the company must address through

approaches like product quality improvement.

Threat of New Entrants or New Entry (Moderate Force)

New entrants can impact McDonald’s market share. This element of the Five Forces analysis refers

to the effects of new players on existing firms. In McDonald’s case, the moderate threat of new

entry is based on the following external factors:


Moderate capital cost (moderate force)

High cost of brand development (weak force)

Because of the low switching costs, consumers can easily move from McDonald’s toward new fast

food restaurant companies. Also, the moderate capital costs of establishing a new restaurant

makes it moderately easy for small or medium-sized firms to affect McDonald’s. However, it is

expensive to build a strong brand that could match the McDonald’s brand. Thus, this element of the

Five Forces analysis shows that the threat of new entrants is a considerable issue for McDonald’s.

From

Source 2:

Bargaining power of McDonald’s suppliers is low.


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McDonald’s works with a number of large suppliers such as Coca-Cola Company, Clorox

Company, Dr. Pepper Snapple Group Inc. McCormick & Company Inc., International Paper

Company, Sealed Air Corporation and others.[5] McDonald’s Corporation and its affiliates and

subsidiaries generally do not supply food, paper or related items to any McDonald’s restaurants.

The Company relies upon numerous independent suppliers, including service providers for the

supply of food and other related items.[6] A set of important factors such as an abundance ofpotential suppliers, low level of uniqueness of products provided by suppliers and the importance of

volume of order for each supplier reduce the bargaining power of McDonald’s suppliers. Rivalry

among existing firms is fierce. McDonald’s faces competition from quick-service eating

establishments, casual dining full-service restaurants, street stalls or kiosks, cafés,100% home

delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie

bars[2] According to Euromonitor International, the global informal eating out segment comprised

about 8 million outlets and generated USD 1.2 trillion revenues in 2013. McDonald’s outlets

accounted for0.4% of those outlets and 7.5% of the sales.[3] As it is illustrated in Figure 2 below,

McDonald’s also maintains a leadership position in terms of the brand value among its majorcompetitors.

Rivalry among existing firms is fierce. McDonald’s faces competition from quick-service eating

establishments, casual dining full-service restaurants, street stalls or kiosks, cafés,100% home

delivery/takeaway providers, specialist coffee shops, self-service cafeterias and juice/smoothie

bars[2] According to Euromonitor International, the global informal eating out segment comprised

about 8 million outlets and generated USD 1.2 trillion revenues in 2013. McDonald’s outlets

accounted for0.4% of those outlets and 7.5% of the sales.[3] As it is illustrated in Figure 2 below,

McDonald’s also maintains a leadership position in terms of the brand value among its major

competitors

Threat of new entrants is moderate. On one hand, fast-food market is near the point of saturation in

many locations and the economies of scale derived by major market players such as McDonald’s,

Starbucks Coffee, Burger King, KFC and Subway can be a significant barrier for new entrants. On

the other hand, opening a fast-food restaurant does not involve huge capital requirements

compared to many other types of businesses and there are no legal or regulatory barriers to start a

business in this industry. Moreover, a new fast-food restaurant may have a descent chance of

becoming successful if it adopts product differentiation as its competitive advantage in an efficient

manner…

From

Source 3

Threat of Competition – High The competition in the fast food industry is high and the trend is

increasing. Operators compete on the basis of price, location, food quality and consistency, style

and presentation, and food range. New products are constantly being introduced because variety

greatly affects consumer demand. Service is also expected to increase in quality. Restaurants are


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constantly implementing strategies such as drive-thru. The competition between franchises and

locally operated fast food restaurants adds to the competition. Even though the single-location fast

foods account for a small share of restaurants their share of industry revenue is larger. They have

successfully established their restaurants in high traffic locations and at the same time in marketing

their brands.

Threat of New Entrants – Low The fast food industry is made up of large chains that already count

with economies of scale, distribution channels, and technological advances. On the other hand, low

start-up costs make it easy to compete in the industry. Although there are many competitors

entering the market, on the global scale the giants like McDonald’s are still in advantage. It is very

unlikely that the new entrants will take any significant market shares. Fast food giants like

McDonald’s count with brand loyalty that makes it hard for new entrants to pose a threat.

Threat of Substitutes – High Fast foods are discretionary items that are easily substituted by other

types of meals. These might include meals prepared at home, dine-in restaurants, deliveries, andmeals supplied at convenient stores. Since customers have become more aware of the health

effects of fast foods other substitutes are becoming more and more attractive. Vast amounts of

money have been spent on marketing and promoting healthier fast foods to be able to compete

with healthier options. Restaurants need to change the image customers have and at the same

time increase brand awareness.

Supplier relations are very important to this industry. The prices charged by suppliers are the major

factors that affect net income. Although the supplies are commodities and suppliers do not have

the ability to charge more than the market, operators do not have the chance to bargain for cheaper

products or large quantity discounts. Good relationships are crucial to this particular industry so

that large quantities of supplies are available when needed. Lastly, although there are many

suppliers, location is extremely important. So suppliers closer to the operators substantially

influence transportation costs. The fact that suppliers do not have the ability to increase prices but

operators do not have the ability to bargain makes supplier power moderate in the fast food

industry

Power of Buyers – Moderate Although customers do not have the power to influence price directly,

they influence it greatly. With the social media and health concerns customers can readily supply

opinions and influence others with these. All companies in the fast food industry must adhere tosocial regulations; spend in enhancing their brand reputation, and promoting quality standards so

that customers feel safe and content when consuming their products.

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KHbBTA9IQFghUMAs&url=http%3A%2F%2Fwww.neeley.tcu.edu%2FAcademics

%2FEducational_Invest__Fund%2FPDFs

%2FMcDonalds_MCD.aspx&usg=AFQjCNHapZa3WNDndU9YwdAwvgAEIUDduQ&sig2=OfDmsa_

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The competitive environment

For businesses to understand adequately the nature of the competition they face, they must define

their market accurately. This involves recognising a broad base of competitors. McDonald's has

thousands of competitors, each seeking a share of the market. McDonald's recognises that it is up

against not only other large burger and chicken chains but also independently owned fish andchips shops and other eat-in or take-out establishments. A company like McDonald's therefore, has

to develop competitive strategies that differentiate it from its rivals

All organisations need to be in touch with their business environment in order to make sure that

what they do fits with customer expectations. These expectations change over time. Moreover, the

IEO market in which McDonald's operates is becoming increasingly competitive, as the chart below

illustrate

Recently, in this crowded market place, McDonald's competitive lead came under pressure largely

because many fast food outlets have either:

copied the trail-blazing ideas that previously set McDonald's apart and put it ahead of the field

promoted new ideas of their own e.g. urban supermarkets and petrol stations that sell convenient,

portable mealtime replacements

McDonald's recognises the need to respond. It is looking to increase the competitive gap by:

adding greater value through innovation

making the process of visiting a McDonald's less routine and controlled

enhancing the overall in-house experience.

http://businesscasestudies.co.uk/mcdonalds-restaurants/staying-ahead-in-a-competitive-

environment/the-competitive-environment.html#axzz49RREBqRB

Source 2

Quick-service eating establishments

Casual dining full-service restaurants

100% home delivery or takeaway providersStreet stalls or kiosks

Specialist coffee shops

Juice or smoothie bars

Self-service cafeterias

From

The IEO segment excludes establishments that primarily serve alcohol and full-service restaurants

other than casual dining.


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Based on data from Euromonitor International, the global IEO segment was composed of

approximately 7.0 million outlets and generated $1.05 trillion in annual sales in 2011, the most

recent year for which data is available. McDonald’s companywide 2011 restaurant business

accounted for approximately 0.5% of those outlets and about 8% of the sales.

Management also on occasion benchmarks McDonald’s against the entire restaurant industry,including the IEO segment defined above and all other full-service restaurants. Based on data from

Euromonitor International, the restaurant industry was composed of approximately 14.8 million

outlets and generated about $2.11 trillion in annual sales in 2011. McDonald’s companywide

restaurant business accounted for approximately 0.2% of those outlets and about 4% of the sales.

On a broader basis, we could include Starbucks Corporation, Yum! Brands, Burger King, Panera

Bread, Wendy’s, Chipotle Mexican Grill, Whitbread, Darden Restaurant, Tim Horton’s., and

Bloomin’ Brands as McDonald’s competitors.

From

Broader competitive dynamics

On a broader basis, McDonald’s restaurants compete with international, national, regional, and

local food product retailers. The company competes on the basis of price, convenience, service,

menu variety, and product quality in a highly fragmented global restaurant industry. The company’s

primary competition, which management refers to as the “informal eating out (IEO) segment,”

includes the following restaurant categories defined by Euromonitor International.

From

Internal Analysis

Resources and Capabilities

A firm’s resources and capabilities can be measured through identifying its tangible and intangible

resources and capabilities within. Tangible and intangible resources are significant in implementing

firm’s strategies. It ranges from financial, physical, technological and organizational; while

intangible can be human, innovation and reputational assets. In case of Macdonald’s, is the world’s

largest chain of hamburger’s fast food restaurants, serving nearly 47 million customers daily. The

restaurants are found in 119 countries and territories around the world. McDonald's operates over

31,000restaurants worldwide, employing more than 1.5 million people. Looking at the increasing


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popularity especially in South-Asian region it is predicted Macdonald’s would expand even further

in new countries and unexplored territories.

https://www.scribd.com/doc/35419896/Internal-Analysis-on-Mcdonalds

Source 2:

Tangible Resources

Tangible resources are the easiest to identify and evaluate: financial resources, human resources,

physical resources and organizational.

Tangible Resources

Physical

The physical resources of McDonalds include the restaurant location which will be at UCTI building

with an average sitting capacity of 50 persons. The restaurant is equipped with the latest cooking

and storing equipment. The restaurant has the facility of Play Place for students and has one

television.

Human resource

Human resource is most important resource of any business unit wherever in the world. The

strength of any organization is not the machine, equipment or its cash flows; rather these are

employees that make an organization great and competitive.

McDonald's recognizes that employee satisfaction is a critical component in its goal of achieving

100 percent customer satisfaction. Its employees are offered world-class, award-winning training

and the opportunity for career development.

Hiring Personnel

There is no criterion as such for the selection of employees, what is important is integrity,motivation and some educational qualifications.

In the workforce, qualities, which are sought, are anatomy, motivation and ability to work more

hours. While for manager the characteristics required are leadership, energy and attraction

Financial

McDonald's is concerned, now information is available about its financing activities. McDonald's is

working with two banks namely CIMB and MayBank. These two banks are taking care of any


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financial activity for McDonald's inside and outside the country and also provide short-term loans to

the company.

Organizational

McDonald serve as training center where day-to-day coaching and shoulder-to-shoulder interactionbetween managers and crew are emphasized. Training begins with one-on-one instruction before a

crew-person cooks the first French fries and for new entrants to the workforce, the company offers

an important foundation:

Teaching interpersonal and organization skills.

Crew-members can also learn the importance of teamwork.

Discipline and responsibility.

From

Core competencies

Core competencies are all about providing increase customer value. This numerous opportunity to

the company; it can be about innovative new products or exploring the new market niche.

Same is the case with McDonalds selling burger is not their core competence instead providing

convenience and customer oriented policy is their strongest point.

Following are the McDonald's core competencies which makes it stand ahead among its

competitors in industry:

McDonald's play area: McDonald's introduced the play area of students, like playing chess titans

till.

Product variety: McDonald's keeps on changing a bringing innovation in to burger, salads,desserts, drinks and sandwiches variety.

For growth McDonald's have to experiment with new product line. It is suggested that McDonald's

should rely on test marketing to check new menu if it wants to maintain a constant growth.

From

Source 2:


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Secret Recipe

McDonalds has got a unique recipe which cannot be easily imitated by its competitors. Only very

few people knows the secret recipe of McDonalds. Strict confidential contracts are signed while

handing out the secret information to the concerned people. This recipe accounts to its corecompetence.

Core intellectual assets-

The experienced and well trained staffs are the strength of McDonalds. The operating practices are

systematically internalized within the workers' cognition and attitude through high level training

standards. Formal training programs are conducted at Hamburger University and individual training

is done within the restaurant outlets itself. Quick service is one of their strength in the fast food

industry.

Product line enhancements-

The McDonalds exhibits a long range of product varieties and segmentations are made on the

basis of demographics too. The company recipes vary from country to country based on the

cultural and social factors. This is the source of their competitive advantage as they are able to

market their products by blending with the cultural differences while maintaining the international

standards. Example- Lamb burgers are served in India and separate entrances are provided for the

families and single women in the Arabian countries.

Economies of large scale and cost leadership-

As the company enjoys economies of large scale, it is successful in large scale operations and

reducing the per unit cost by making the product cheaper while maintaining its quality.

Market leadership and unique brand recognition across different geographical location-

McDonalds is one of the top multinational companies the world has ever seen. Its partnership with

the industrial giant coca cola made it more reputed. It has made its presence in more than 122

countries with thousands of outlets. Competitors are few having the same advantage and it reigns

as the market leader.

Replication of capabilities-Replication essentially requires systematization of the knowledge through standard operating

procedures. Distillation of business system is done in McDonalds through functioning procedures

and training manuals which help to control all aspects of the restaurants.

Appraising resources and capabilities through assessing the relative strength-

The strength to circulate millions of burgers from vast number of outlets around the world with

remarkable uniformity in the production quality and customer satisfaction accounts to its relative

strength.

Technological, financial and physical assets-


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McDonalds posses huge assets that makes it even more powerful in extending its presence across

the globe. Area managers use modern technological innovations to communicate, motivate and

make comparisons in order to improve the performances of each outlet.

9. Good locations-

McDonalds outlets are mainly located in the very crowded city centres, airports, theme parks etc.

This gives the opportunity to attract lot of customers during peak hours. Location itself account to

its competitive advantage.

10. Strong value chain-

Value chain primarily deals with the development of maximum value for customer as a result of

series of activities which includes logistic operations and services. McDonalds' value chain is

strong as it meets its objectives which fortify its competency.

11.Franchising-

To get the products to be leveraged to international and national markets, franchising is the best

tool which aids the rapid business growth.

Threats that exist which undermine McDonald's success are as follows;

Growing health conscious customers-

The modern people are becoming more health conscious which results in reducing the intake of

sugar and the foods which contains saturated fats. They are switching to healthier options. Change

in consumer preference has a negative impact on profitability.

Growing foreign and local competitors-

The company is facing intense competitions from the retail food structures like 'subway' which

market themselves over fresh vegetable and other healthy food options. Though the McDonalds

recipe is unique, the company has got rivals who makes up the identical products and increase

their market share.

Sued for unhealthy foods-

McDonalds was sued couple of times for serving unhealthy foods allegedly with additive addictives

which gave birth to a possible threat of losing loyal customer base.

Contamination of food-

Food can be contaminated at anytime with the presence of e-coli, bacteria etc. It is a possible

threat associated with any retail food industry.

Negative impact of global economic turndown-


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Consumer confidence has been driven down by the global economic downturn. The spending

began to limit which resulted in profit fluctuations for McDonalds. The money for discretionary

purchases was dramatically declined due to job losses, bankruptcies and very weaker access to

credit.

Outbreaks of avian flu-Many countries in the world have experienced the outburst of dangerous avian flu which was

capable of affecting the availability of poultry across the world. As the people has got a tendency to

eat less chicken due to awareness of flu company was affected negatively. Moreover in the

countries like India where a greater population are not consuming beef products, chicken is very

important to be in production. So such unanticipated outbreak remains as a threat.

Criticism from parents of small children-

The McDonalds have been criticized by many parent advocates for their focus upon the children as

a part of their marketing strategy. It was analysed to be marginally ethical.

Social and Cultural barriers-

The attitude a country holds for United states can also influence an American based company's

performance while extending their business globally. In Pakistan, the anti-American sentiments

gave birth to many protests when McDonalds was first introduced. Beside this, if a country's

religious and cultural setups will not allow any particular McDonalds product to be marketed,

McDonalds will be subject to threats.

Weak relationship with franchisee dealers-

The McDonalds' lack of control over the widespread geographical locations gave way to weaker

bonding of control with the franchisee which resulted in weaker performance.

Contributions to health issue-

Consumer activist and fitness experts accuse McDonalds for their part in various health issues

which includes cholesterol, heart attacks, diabetes etc. (McDonalds and health issue 2011)

Examine the fast-food burger industry with reference to the Product Life Cycle model. What does

your answer tell you about McDonald's future business strategy?

The fast food burger industry passes through different stages of product life cycle in differentcountries. The food consumption trend depends upon location based social and economic factors.

Even globalisation has influenced the idea of fast food burger to be propagated across different

geographical locations. Thus product life cycle can be explained mainly in context of developing

and developed countries.

Fast food burger industry in developed countries-

Fast food burger industry is in maturity stage in the developed western European countries. The

burger is one of the favourite fast foods of America. The competition is intense and the demand is

more or less levelling in these locations now. The industry in the developed countries is now

struggling to meet the consumer expectations on the grounds of a healthy life style. The


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necessities of re-invention or product development are unavoidable as the business cycle has to

start again.

The maturity stage is characterised by the market saturation and sales remains to enhance in a

slower pace. The main concentration is put forward to increase the market share. All distribution

outlets are filled and the identical producers are competing intensively on the basis of price to meetits profit targets. Producers are focusing up on its distribution outlets as maintenance of sales is

very important at the stage. No more considerable intense effort is put forward in the expansion of

new outlets as the take aways are densely distributed in almost all areas. The producers are

competing with each other to get others customers through various sales promotion techniques.

(Harvard Business Review)

McDonald's future business strategy

The business strategy which is to be framed to retain their market share is as follows;

Future strategies to be framed in specific to developed countries

The strategic goal should be defending the market position from the rivals and making more out of

the existing product. Product line and product differentiation should be enhanced to include more

healthy and environmental friendly products. Price should be decreased as competition is intense.

Defensive price policy is the best strategy that can be adopted to withstand the competition.

Future strategies to be framed in specific to developing countries

The strategic goal should be maintaining the existing market share and promoting the brand more

intensively to attract more consumers. More pressure should be placed on the distributions and

value chain should be systematically developed. The pricing policy should be re-estimated and

price can be maintained high for some period if the product demand tends to be high. The products

should be developed to ward off the competitors' pressure. More service enhancement and menu

innovations should be made according to the developing countries' cultural and social food

preferences.

Some other common future business strategies that can be implemented are as follows;

Inclusion of low-calorie meals and reduction of trans fats can eliminate the unhealthy food providerimage of McDonalds among the public. A health tag should be provided to regard its quality.

To ward off the franchisee problems arising out of mismanagement and lack of quality

preservation, it is recommended that regional managers should be more intensively trained and

placed.

McDonalds should capitalise on hot drink market as it is booming out at present and it will continue

its growth in future too.


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It can provide allergen free products so that company can reap the benefits from the concerned

segment too.

Trend towards organic foods should be encouraged as a part of healthy diet style.

More focus should be concentrated in developing the brand image in the developing countries byidentification of strong value chain. More outlets should be opened and promotional activities

should be given room for brand acknowledgement.

Junk food tag of the McDonalds products should be strategically wiped out through imparting more

research on the existing products leading to new healthy product innovations. The need of research

and development has to be essentially included in the strategic planning of McDonalds.

(McDonalds and health issues 2011)

Identifying the BCG growth matrix, the company should invest more on the product which has gothigh demand as the market share grows over it. Thus for future cash generations star has to be

sorted out and proper product differentiation should be done to reach the top line. (Thinking

Managers 2010)

Examine the advantages and disadvantages of the modes of entry adopted by McDonald's in order

to internationalise their business.

McDonalds' international strategy is propelled with expansion of production through franchising. An

agency relationship is been created associated with expansion of business in an amalgamated

manner which runs the company to top line in international market. McDonalds sells the right to

other company to use the trade name along with the process techniques. The company to which

McDonalds sell their right should meet some criteria which is set up by the McDonalds itself and a

contract will govern the agency relationship.

The advantages of mode of entry adopted by McDonalds are as follows;

McDonalds gets the benefit of the fees or royalty from the franchisee. Benefits can also be derived

from sourcing specialized McDonalds machines or products to franchisee. They are unique in the

way that the cooking materials used itself determine the product standard McDonalds possess.

Franchising helps in significantly faster growth in the brand identity across various geographical

locations. The company can use the franchisees' assets, talents and location advantage to prosper

its brand image.

As more and more outlets are opened by franchising, McDonalds can gradually reap the benefits of

economies of scale.

By maintaining a healthy relationship with the franchisee, firm will get more ideas or inputs into the

necessary menu innovations needed in concerned areas. This will help in the proper blending and

adaptation of cultural and social trends which prevails in the particular market.


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As the company can start a venture with small investment, McDonalds can facilitate more funds

towards the promotional activities. This will in turn contributes towards driving the brand name to

the top line of the business (business link 2008).

The research and development can be propagated as there is reduced operating and distributioncost. McDonalds is giving more importance to product innovations and the research and

development happens to be the unavoidable part of business strategy.

Quality control is expected to maintain while in the operation of a reputed brand's business as the

franchisee has invested lot of money and much time in it. So the franchisee is expected to be self-

motivated to work hard in escalating the financial and organizational results.

By multiplication of locations, McDonalds can spread the risk through the franchisees' investment.

If one location is not doing well the benefit can be derived from some other good going location.

One of the most important advantages of the franchising is that the franchisees' initial capital is not

needed to be repaid.

As the operations are done by the franchisee itself, McDonalds doesn't impart much time in the

routine management of the small workforce in an outlet but just close observation and superior

supervision.

McDonalds' income depends upon the gross sales and not upon the profitability of the firm. As in

this case it is very much convenient to monitor as monitoring profit is a hard job to be done.

Disadvantages of mode of entry adopted by McDonalds to internationalize their business are as

follows;

There is a greater risk associated with franchising as it breeds the possibility of getting the

McDonalds brand image to be spoiled by inefficient management and lack of quality.

As the secret recipe of McDonalds accounts to its competitive strength, the disclosure of the

confidential information can comprise risk to the business.

Lack of control over each outlet as there is geographical boundaries in facilitating supervision.

Brand name has to be taken care all the time as the issues will erupt out at any one outlet can

adversely affects the performance of McDonalds all over the world.

Laws and rules can differ from country to country. The laws associated with the franchising are also

subject to change across the world. McDonalds can confront many legal formalities while

implementing the international strategies.


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The peripheral work force is not maintaining the original work standard expected by McDonalds in

some outlets. The lack of control in franchising might be the probable reason for this.

There are chances that the franchisees learn the production techniques and set up a business of

their own by acquiring the knowledge of production. When the franchisees are not loyal to the

McDonalds, it will give raise to serious of problems.

Lower performance of outlets leads to lower gross sales which ultimately affects the profit of

McDonalds.

From

Value Chain of McDonald’s (Michael Porter)

Primary Activities

1. Inbound Logistics

1) “McDonald’s purchases raw vegetables and other raw materials from its fixed, pre- defined

suppliers only, therefore by increasing capital and labor, their production will increase

proportionately.”

Source and further information:

“McDonald’s has practiced a backward vertical integration,

by replacing most of its suppliers. It has done so for two reasons, 1) To reducecosts, and 2) To ensure that its products are of top quality. These supplies

include beef and milk to be used in its products, which it gets from its farms.

Other suppliers include local grocery stores that supply McDonald’s with fresh

vegetables. Soft drinks are supplied exclusively by Coca-Cola, which is also its

ally. McDonald’s supplies also include raw material such as flour, sugar, yeast,

etc.”

2) McDonald’s own information:


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“We import some beef raw materials from Australia and New Zealand. And those plants have to

meet all our same requirements that we hold our U.S. plants to; which includes animal welfare and

food safety, testing — everything.”

2. Operations :

McDonald’s Backgrouds for Operation Management

Before the McDonald’s brothers invented their fast-food operations system, some restaurants did

make food pretty quickly. These restaurants employed short-order cooks, who specialized in

making food that didn’t require a lot of preparation time.

Being a short-order cook took skill and training, and good cooks are in high demand. Thesespeedee system, however, was completely different. Instead of using a skilled cook to make food

quickly, it used lot of unskilled workers.

The McDonald’s Brothers changed the design of restaurant kitchen. Instead of having lots of

different equipment and stations for preparing a wide of variety food, the Speede kitchen had:

– A very large grill where one person could cook lots of burgers simultaneously

– A dressing station where people added the same condiments to every burgers

– A fryer where one person can made french fries

– A soda fountain and milkshake machine for desserts and beverages

– A counters where customers placed and received their orders.

The Process

The mass-production process requires each restaurants chain to have a distribution network to

carry the food to every restaurant. Warehouses store enormous amounts of everything a restaurant

needs. Including foods, paper products and cleaning supplies. The warehouses the ship supplies

to each restaurant by truck. Warehousing and distribution, just like the management of chain, is

centralized rather than handled by each restaurant.

In some chains, managers track the restaurants’s inventories of food, wrappers, cups, and other

necessary items. They often order everything the restaurant need from the distribution center,

which ships it to them.


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In other chains, it is automated, which means, a computer keeps track of what the restaurants

have and should have on hand, or the distribution center ships the necessary items on a regular

schedule instead of waiting a request from the restaurant.

McDonald’s is always keen to take the charge of crucial task of turning the company around tomeet customer demands. One of thefirst steps that it prposeshas been to inovate the process of

manufacturing and logistics.

This had been done with the view to increase efficiency of the supply chain in terms of capacity,

technology selections, and buying policies.

3. Outbound Logistics

McDonald’s is committed to providing the highest quality food and superior service, at a great

value, in a clean and welcoming environment. That’s why we work with our employees,

franchisees, and suppliers to serve a balanced array of food choices and provide the nutrition

information needed for customers to make sound decisions.

At the restaurant level, McDonald’s is focused on energy conservation, sustainable packaging, and

waste management. We are dedicated to innovation and improving our operations in order to build

an even more sustainable, environmentally friendly, and profitable business. And we will continue

to reoptimize our menu, modernize the customer experience, and broaden accessibility to our

brand, so that consumers will always enjoy the maximum McDonald’s experience.(

4. Marketing and Sales

McDonald’s restaurants are found in 119 countries and territories around the world and serve 58

million customers each day. McDonald’s operates over 31,000 restaurants worldwide, employing

more than 1.5 million people. The company also operates other restaurant brands, such as PilesCafé.

Focusing on its core brand, McDonald’s began divesting itself of other chains it had acquired during

the 1990s. The company owned a majority stake in Chipotle Mexican Grill until October 2006,

when McDonald’s fully divested from Chipotle through a stock exchange. Until December 2003, it

also owned Donatos Pizza. On August 27, 2007, McDonald’s sold Boston Market to Sun Capital

Partners.


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Notably, McDonald’s has increased shareholder dividends for 25 consecutive years, making it one

of the S&P 500 Dividend Aristocrats In October 2012, its monthly sales fell for the first time in nine

years.

McDonald’s Competitive Advantage

1. Cost Leadership

– Supply chain: McDonald’s buys supplies in bulk and, to get lower prices

– Real Estate: McDonald’s leases land and property they own to franchises

– Marketing: McDonald’s is such a well known brand name and Ronald McDonald such a well

known mascot McDonalds has to do much less advertising than many other chains to maintain

awareness of their brand.

– Strategic/predatory customer selection (see “Supersize Me”) Mc Donalds purposefully aims

their brands at kids who can be taught to over-eat fast food and, in addition, serves things like ultra-

fatty sauces with salads and fatty foods in general with sugar baked into breads and often soda-

only drink selections, all designed to make McDonalds customers unhealthily addicted to

compounds in their food.

2. Differentiation

McDonald’s does no t believe in opening its restaurant without any knowledge of the local culture

and tastes.

The company caters to a large customers market with varying tastes and thus can’t afford to

introduce products without familirizing itself with provincial prefences in food. For this reason,

McDonald’s distributes its products in foreign locations with the hel of franchises who are well

aware in of that works in their country.

This is an exremely inteligent distribution method because on the one hand, it doesn’t create rifts

between governments and McDonald’s official, and on the other hand, it helps in providing people

with the kind of products they desire. It is important to understand that Mcdonald’s doesn’t change

its basic product range for any country but tries to introduce certain changes in secondary products

in order to make them suitable for local tastes.

McDonald’s predominantly sells hamburgers, various types of chicken sandwiches and products,

French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald’s offers salads

and vegetarian items, wraps and other localized fare. On a seasonal basis, McDonald’s offers the

McRib sandwich. Some speculate the seasonality of the McRib adds to its appeal.Various


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countries, especially in Asia, are currently serving soup. This local deviation from the standard

menu is a characteristic for which the chain is particularly known, and one which is employed either

to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or

to make available foods with which the regional market is more familiar (such as the sale of McRice

in Indonesia). In Germany, McDonald’s sells beer.

Types of restaurants

Most standalone McDonald’s restaurants 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,

though the latter two steps are frequently combined; it was first introduced in Arizona in 1975,

following the lead of other fast-food chains. The first such restaurant in Britain opened at

Fallowfield, Manchester in 1986.

In some countries, “McDrive” locations near highways offer no counter service or seating. In

contrast, locations in high-density city neighborhoods often omit drive-through service. There are

also a few locations, located mostly in downtown districts, that offer Walk-Thru service in place of

Drive-Thru.

To accommodate the current trend for high quality coffee and the popularity of coffee shops in

general, McDonald’s introduced McCafé, a café-style accompaniment to McDonald’s restaurants in

the style of Starbucks. McCafé is a concept created by McDonald’s Australia, starting with

Melbourne in 1993. Today, most McDonald’s in Australia have McCafés located within the existing

McDonald’s restaurant. In Tasmania, there are McCafés in every store, with the rest of the states

quickly following suit. After upgrading to the new McCafé look and feel, some Australian stores

have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafés

worldwide.

Some locations are connected to gas stations/convenience stores, while others called McExpress

have limited seating and/or menu or may be located in a shopping mall. Other McDonald’s are

located in Wal-Mart stores. McStop is a location targeted at truckers and travelers which may have

services found at truck stops.

Since 1997, the only Kosher McDonald’s in the world that is not in Israel, is located in the Abasto

mall, in Buenos Aires, Argentina.

From


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McDonalds Competition

McDonalds (MCD) is a global company facing national and international competition form other

restaurant operators. The management has identified its competitors to be “quick-service eating

establishments, casual dining, full-service restaurants, street stalls or kiosks, cafes, 100% home

delivery or takeaway providers, specialist coffee shops, self-service cafeterias, and juice or

smoothie bars.”

From

asi maccas

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