mcdonalds information system case study

Digital Innovation and Transformation

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Committing to the Core: How McDonald’s Innovated to Survive (and Thrive) During the COVID-19 Pandemic

During the COVID-19 pandemic, McDonald's emerged as the winner in fast casual through digital innovations along their core competencies for their core consumers.

Though the impact of COVID-19 has been felt across the business community, the fast-casual restaurant industry has faced especially high adversity in the face of rapidly changing consumer behavior caused by the pandemic. According to Crunchtime , US fast-casual same store sales dropped to 56% of pre-pandemic levels by April 2020, with social distancing and restrictions on indoor capacity especially hurting fast-casual restaurants whose business models relied more heavily on larger dine-in crowds than its quick service restaurant (QSR) counterparts. 

And though many fast-casual chains quickly adapted to stay afloat during their industry’s most trying time — one in particular not only adapted to the short-term challenges presented by the pandemic, but positioned itself to emerge as the true winner in the post-pandemic future: McDonald’s . Although the pandemic hit McDonald’s hard and prevented customers from dining in most of their restaurants throughout the year, McDonald’s rose to the occasion and managed to deliver its strongest financial performance of the year in Q420 — announcing that it had recovered 99% of Q419 global same store sales, a tremendous feat. 

So how was McDonald’s able to make such a rapid recovery? In the recent Q420 earnings call , CEO Chris Kempczinski attributed McDonald’s success to its new growth strategy encompassing all aspects of McDonald’s business, “ Accelerating the Arches .” Kempczinski explained that at its core, the “Accelerating the Arches” strategy is about “leveraging our competitive advantages,” providing increased value to its current customers and ensuring their continued loyalty. Tactically, this meant significant investment and innovation in what McDonald’s believed to be their key comparative advantages with their core customers — what McDonald’s calls the “three D’s”: digital, drive-thru, and delivery . 

Going into the pandemic, McDonald’s actually found itself well positioned to build on its prior digital innovations to create a user experience well-suited for the constraints posed by the pandemic. McDonald’s recent technology innovations — including the development of the McDonald’s mobile application, acquisition of personalization technology provider Dynamic Yield , Mobile Order and Pay, and self-order kiosks — together have transformed customer experiences in and around their restaurants, giving customers more ways to securely pay and personalize their orders to meet their needs. Digital sales exceeded $10B, or nearly 20% of systemwide sales, in 2020 across the top six markets. 

Such digital innovations paid off tremendously for McDonald’s drive-thru channel. In the Q320 earnings call , Kempczinski highlighted the strategic opportunity of drive-thru for McDonald’s, noting that “a world with less dine-in and more takeout plays to our significant long-time strength in drive-thru…We have the most drive-thrus. We know how to do it best.” Accordingly, as indoor dining took a plunge during the pandemic, McDonald’s made significant drive-thru technology investments (such as dynamic menu boards — leveraging personalization technology from Dynamic Yield) and operational improvements (such as a staffing overall and dramatically cutting menu items to their “core menu”) to ultimately deliver the value their customers cared most about: speed. These innovations enabled McDonald’s to cut 30 seconds from its drive-thru times on average and move “300 million additional cars” through McDonald’s drive-thrus during the pandemic. Such focus on innovations targeting their core customer enabled McDonald’s to recover sales more quickly than anticipated and become one of the few fast casual restaurants to sustain demand for drive-thru .

Pathways to a Just Digital Future

In addition to drive-thru, enabling delivery perhaps not surprisingly became a significant focus for McDonald’s to provide customers with additional safe channels to order food. Ozan mentioned that delivery has “become a meaningful part of our business” very quickly, scaling up its delivery platform and rapidly expanded the number of restaurants to offer delivery to 28,000 of 41,000 global restaurants. The result — delivery sales have more than tripled. 

By focusing innovation on the company’s comparative advantage, the three D’s, McDonald’s was able to create a faster, easier, and better customer experience — even in the face of tremendous change. By improving the customer experience for their core customers, McDonald’s in turn ensured they maintained loyal customers in the face of adversity and successfully recovered sales in a challenging year for the industry. 

McDonald’s will continue to build on the “Accelerating the Arches” strategy and is well positioned to continue seeing gains in the coming years. Recently, McDonald’s unveiled a series of changes that will change how the company’s restaurants interact with customers for years, designed to integrate digital ordering more fully into the McDonald’s ecosystem, increase loyalty through a new rewards program, expand its advantage on drive-thru ordering and double down on delivery. Lucy Brady, McDonald’s chief digital customer engagement, said that “technology has changed our expectations as consumers,” and Kempczinski further said that “the needs of our customers coming through the pandemic are going to be different than they were coming in…the restaurant experience we offer must change to meet those evolving needs.” McDonald’s continues to demonstrate a unique focus to meet those evolving needs of their core consumers, and expect McDonald’s to emerge a winner in the evolving fast casual industry. 

CrunchTime!. 2021.  Restaurant Chain Industry Sales: Tracking US Recovery . [online] Available at: <https://crunchtime.com/blog/restaurant-industry-sales-tracking-us-recovery> [Accessed 10 February 2021].

Hospitality Technology. 2021.  McDonald’s Sees Sustained Demand for Drive-Thru . [online] Available at: <https://hospitalitytech.com/mcdonalds-sees-sustained-demand-drive-thru> [Accessed 10 February 2021].

Hospitality Technology. 2021.  McDonald’s to Acquire Dynamic Yield . [online] Available at: <https://hospitalitytech.com/mcdonalds-acquire-dynamic-yield> [Accessed 10 February 2021].

McDonald’s, 2021. [online] Corporate.mcdonalds.com. Available at: <https://corporate.mcdonalds.com/content/dam/gwscorp/assets/news-articles/2020/November2020/MCDN-ATA-InfoSheet.pdf> [Accessed 10 February 2021].

Meatpoultry.com. 2021.  McDonald’s doubles down on digital, delivery and drive-thru . [online] Available at: <https://www.meatpoultry.com/articles/24456-mcdonalds-doubles-down-on-digital-delivery-and-drive-thru> [Accessed 10 February 2021].

Restaurant Business. 2021.  Inside McDonald’s digitally-focused future . [online] Available at: <https://www.restaurantbusinessonline.com/financing/inside-mcdonalds-digitally-focused-future> [Accessed 10 February 2021].

Transcribers, M., 2021.  McDonald’s Corp (MCD) Q3 2020 Earnings Call Transcript | The Motley Fool . [online] The Motley Fool. Available at: <https://www.fool.com/earnings/call-transcripts/2020/11/09/mcdonalds-corp-mcd-q3-2020-earnings-call-transcrip/> [Accessed 10 February 2021].

Transcribers, M., 2021.  McDonald’s Corp (MCD) Q4 2020 Earnings Call Transcript | The Motley Fool . [online] The Motley Fool. Available at: <https://www.fool.com/earnings/call-transcripts/2021/01/28/mcdonalds-corp-mcd-q4-2020-earnings-call-transcrip/> [Accessed 10 February 2021].

Student comments on Committing to the Core: How McDonald’s Innovated to Survive (and Thrive) During the COVID-19 Pandemic

Would it be fair to say that the automation McDonald’s was bringing in to deal with demands for a better minimum wage helped it deal with the pandemic better? Also, the “Accelerating the Arches” strategy though profitable for McDonald’s will cause more automation, leading to loss of jobs in the future. This could lead to McDonald’s have a public perception issue in the future which might in turn end up negatively impacting their profits.

Hi Vikram — yes this is a great point. I should note there is tremendous risk with the approach McDonald’s is taking. You’re right that the future they’re proposing would fully automate the drive-thru experience (e.g. AI for taking orders and making the food, building conveyor belts to deliver the food to cars). Further, another risk they are facing has to do with franchisees. Similar to our Domino’s case, McDonald’s will mandate the technology changes and charge additional fees. Franchisees were apparently caught off guard with the Accelerating the Arches announcement. It’ll be interesting to see how they adjust given these challenges.

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Case Study: McDonald's - Implementing a Global BI Strategy at McDonald's

About mcdonald's.

McDonald's restaurants are found in 118 countries and territories around the world and serve 68 million customers each day. McDonald's operates over 35,000 restaurants worldwide, employing more than 1.7 million people. The company also operates other restaurant brands.

Business Drivers & Challenges

An initial implementation done by "Big 5" consulting company left significant gaps in McDonald's desire to have a global 24x7 BI strategy. Performance issues were impacting user adoption and 24x7 availability. Oracle E-Business Suite was the primary data source and several complex data quality issues were exposed.

McDonald's needed to ensure that business intelligence best practices were followed during their simultaneous ERP system implementation. McDonald's also needed to ensure that the ERP implementation was of the highest quality. 

KPI Partners completed a thorough health check of McDonald's existing business inteligence environment that had been customized for their finance department. A strategic road map was constructed to help guide McDonalds along a path towards achieving their goals:

• A customized strategy for 24x7 business intelligence at McDonalds
• Optimized performance for modern analytics
• Scalability
• Efficient strategy for data integration and extract-transform-load (ETL)
• Proof-of-concept solution for global financial analytics

KPI made the recommendation to McDonald's for a simultaneous enterprise resource planning (ERP) and business intelligence (BI) deployment using Oracle E-Business Suite (EBS), Oracle Business Intelligence Enterprise Edition (OBIEE), and Oracle BI Applications (OBIA). With the strategic consulting expertise of KPI Partners, McDonald’s was able to:

• Utilize their BI platform to validate conversion data
• Expose data quality issues in their Oracle E-Business Suite instance
• Elevate the quality of their Oracle E-Business Suite implementation
• Apply industry best practices for ERP implementation 
• Fill significant performance, data quality, and scalability deficiencies left following an initial implementation completed by a "Big 5" consulting company
• Implement a global 24x7 business intelligence strategy
• Resolve performance issues that had been impacting user adoption 
• Accomodate 24x7 availability to increase user adoption

Tags: Oracle , Restaurants , ERP Analytics , Business Intelligence , Systems Implementation , Delivery Leadership , McDonalds

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McDonald's Drives Cloud-Enabled Digital Transformation on AWS

McDonald’s Corporation , an American hamburger and fast food restaurant chain, serves 69 million customers each day. Using Amazon Web Services (AWS), it transformed itself into a digital technology company that was able to beat performance targets by up to 66 percent and complete 8,600 transactions per second via its point-of-sale (POS) system.

In 2016, McDonald’s Corporation CTO Tom Gergets joined Andy Jassy on stage at re:Invent to talk about becoming a modern, progressive burger company—providing customers with more personalized, convenient experiences. He also talked about choosing AWS and AWS Professional Services to help McDonald’s build a scalable, secure digital platform.

Since then, McDonald’s has scaled its digital capabilities across the globe through Kiosks, Digital Menu Boards, Mobile Order and Pay, and Delivery. In 2019, McDonald’s acquired Dynamic Yield and is using state-of-the-art decision-engine capabilities, including machine learning and predictive algorithms, to help personalize the customer experience in their Drive-Thrus. The company is also building out its Global Data Platform on AWS, using Amazon Redshift , Amazon Athena , and Amazon EMR , and has started a pilot with Amazon Elastic Kubernetes Service (Amazon EKS).

For cloud we found a partner in AWS. We knew they had the reliability and the cat capacity to support the needs of our digital platform.”

Tom Gergets Chief Technology Officer, McDonald’s Corporation

AWS Services Used

Amazon redshift.

Amazon Redshift uses SQL to analyze structured and semi-structured data across data warehouses, operational databases, and data lakes, using AWS-designed hardware and machine learning to deliver the best price performance at any scale.

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Amazon Athena

Amazon Athena is a serverless, interactive analytics service built on open-source frameworks, supporting open-table and file formats. Athena provides a simplified, flexible way to analyze petabytes of data where it lives.

Amazon EMR is the industry-leading cloud big data solution for petabyte-scale data processing, interactive analytics, and machine learning using open-source frameworks such as Apache Spark, Apache Hive, and Presto.

Amazon Elastic Kubernetes Service (Amazon EKS) is a managed Kubernetes service to run Kubernetes in the AWS cloud and on-premises data centers. In the cloud, Amazon EKS automatically manages the availability and scalability of the Kubernetes control plane nodes responsible for scheduling containers, managing application availability, storing cluster data, and other key tasks.

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McDonald's Corporation

By: Frank T. Rothaermel, John Kim

McDonald's newly appointed CEO Chris Kempczinski, who assumed office on November 4, 2019, is the protagonist of the case. With $21 billion in sales (in 2019) and 45,000 restaurants globally (thereof…

• Length: 20 page(s)
• Publication Date: Nov 4, 2019
• Discipline: Strategy
• Product #: MH0065-PDF-ENG

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McDonald's newly appointed CEO Chris Kempczinski, who assumed office on November 4, 2019, is the protagonist of the case. With $21 billion in sales (in 2019) and 45,000 restaurants globally (thereof 27,000 in the United States), McDonald's remains the largest quick-service restaurant (QSR) chain. Attempting to be "everything for everybody," McDonald's fell victim to being "stuck-in-middle," without a clear strategic position. Kempczinski must confront several challenges if he is to return the company to its former glory, including: 1) How to balance the need to introduce new items while addressing "menu bloat"? 2) How to re-establish the reputation for quality products? 3) How to appeal to Millennials? 4) How to upgrade the customer experience through all channels and locations (in-store, delivery, and drive-through)? 5) How to reignite growth?

Learning Objectives

Vision, Mission, and Values; Core Competency; Business Model; Business Unit and Corporate Strategy; Industry and Competitor Analysis

Nov 4, 2019

Discipline:

Geographies:

United States

Industries:

Real estate industry, Restaurants and food service industry

McGraw-Hill Education

MH0065-PDF-ENG

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How McDonald's Became The Benchmark For Fast Food

Table of contents.

The McDonald brothers developed a system to make it all happen. Yet we know them for Ray Kroc, who created one of the world's largest chains of restaurants, real estate and toy retailers, while 'outmaneuvering' the founders. 

Although McDonald's has not been the largest fast-food chain in the world since 2011, it is still the best-known brand. Even in Israel's Negev Desert, 100 kilometers from the nearest city, there is a restaurant, because franchising has given the company such a huge boost worldwide. 

A few key facts about McDonald’s:

• The Kellogg Company was founded in 1940. 
• McDonald’s and its franchise partners employ more than 200,000 people globally.
• McDonald’s reported $8.1 billion in sales by corporate-owned restaurants and $10.7 billion by franchise partners .
• The gross profit in 2020 was $4.7 billion .
• Global comparable sales decreased 7.7% in 2020 , mainly due to the COVID-19 pandemic.
• McDonald’s spent over $100 million on the international markets to boost marketing in hope of recovery. 
• McDonald's operates more than 39,198 restaurants in more than 100 countries around the world .

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You Don’t Sell Burgers! It’s A Real-Estate Business! 

The first burgers.

Richard (Dick) and Maurice (Mac) McDonald opened their first diner together, a hot dog stands in Monrovia, California, in 1937. Later, in 1940, they moved to nearby San Bernardino and opened McDonald's Bar-B-Que. Over time, the eatery became more popular and profitable, but the brothers realized they could cut a lot of costs if they rethought their concept. They developed a series of revolutionary ideas and strategic measures that proved to be closely linked: reducing the range of products, preparing ingredients properly, keeping potatoes warm with an infrared lamp, and building a kitchen where food could be prepared more quickly. They also encourage people to take their orders and target families rather than young people.

In 1948, the McDonald brothers closed a well-established restaurant and reopened it a few months later with a slimmed-down menu - and by then under the McDonald's name. They realized that most of their income came from selling burgers, so they reduced the selection to almost nothing. (To give you the full picture, the fries and milkshakes were replaced with French fries and patties for a short time.)

Effectiveness above all

Kitchen work was sped up by having only two things to bake. Washing up was also kept to a minimum, as the food was served in disposable packaging. In 1952, the restaurant was closed again for several months to remodel the kitchen so that food could be served more quickly and efficiently than before. The new kitchen and associated system allowed all orders to be filled in as little as half a minute. Since the operation was supported by the "fast system," it's not hard to guess where the term "fast food" came from.

McDonald's goal at the time was to get people to store there, but not to eat there, but to take something there. This was achieved not only by the packaging of the products but also by the fact that there was no built-in canteen in the first restaurant; if you did not want to take what you bought home with you, you could either eat your lunch in your car or sit on a bench nearby. For a while, they also experimented with serving drinks in cone-shaped cups that customers could not put down, which encouraged them to eat faster.

Thanks to this incredibly efficient and fast operation, they were able to sell burgers for 15 cents - about half the price of other places. The fast service, consistent quality, and low price amply compensated customers for the inconvenience. Soon, the McDonald brothers wanted to open more restaurants, but they were not nearly as successful as their first location. The reason was simple: they could not be everywhere; they could only be personally responsible for quality assurance at the first restaurant. At the same time, the oldest McDonald's still in operation today opened in Downey, California.

The arrival of Ray Kroc

The brothers realized that they did not necessarily have to open new locations themselves to expand, but that others would do it for them. So in 1948, they began to reform their business model and set up a franchise system. By 1954, they had sold the royalties from 21 franchises. 

1954 marked a turning point in the McDonald brothers' lives. To further speed up service, they ordered a new type of mixer that could ensure the preparation of multiple servings at once. The order put them in contact with Ray Kroc, a travel agent. Kroc was amazed at how efficiently the restaurant operated. He wanted to get into the business and eventually convinced the brothers to make him their franchise representative. From then on, he was in charge of who and where they could open new restaurants.

The new buildings were now built the way the McDonald brothers envisioned their dream restaurant. A clean, red and white exterior with a neon yellow golden arch on either side of the building attracts potential clients (aka bypassers) to the restaurant. The juxtaposition of these two golden arches became the familiar Meki logo, which also forms an "M," a reference to the initials of their name. It took on a similar look to today's image after Ray Kroc became the owner, or rather founder, of the company.

In 1955, Kroc founded the forerunner of today's McDonald's Corporation (McDonald's System, Inc.) and opened its first new restaurant. The first was followed by the second, the third, and within a year, the 18th. Kroc was entitled to 1.9% of gross sales for each of these restaurants, but under his agreement with the brothers, they were entitled to 0.5%. He could barely cover his expenses with the remaining amount. Then he met Harry Sonnenborn, who gave him a new perspective: McDonald's was in fact a huge real estate business.

Turn of events

Sonnenborn encouraged Kroc to buy the land on which he wanted to build restaurants and then lease it to operators. Kroc listened to him and took the biggest step toward owning the entire chain. This way, he received a steady stream of income and did not have to give any of it to the McDonald brothers. The latter, of course, was not happy about this situation. Everything in the restaurants had to continue to be done the way the brothers wanted, although Kroc tried to introduce several innovations. Finally, in 1961, Kroc bought out the brothers for $2.7 million. To raise this sum, he had to take out loans, 14 million of which he was later able to repay.

Years of rapid expansion

As part of the agreement, the brothers would continue to own the restaurant in San Bernardino, but they had to change the name because Kroc already owned the naming rights to McDonald's. So they continued to run the restaurant under the name "The Big M," but Kroc was upset that he could not have it. Soon after, he opened a Meki just around the corner from the M, which allowed the McDonald brothers to close the location in a few years. They probably regretted the deal for life, because, with their 0.5% share at the time, it would have guaranteed them $15 million a year until the late 1970s, while their heirs would have received $305 million in 2012. And Kroc probably got a good deal on that loan.

By 1965, the company was operating more than 700 restaurants. That year, they went public. McDonald's stock started at $22 a share, but within a week the price had risen to $49. By the end of the decade, they had 1,500 restaurants worldwide and has started at Sonnenborn's suggestion, they continued to own the land on which the Meccas operated. Now they are looking for new land with fairly high standards: it should be about 4,600 m2, with the possibility of building on 370 m2, and located on the corner of at least one, but preferably two, busy roads.

Also in 1965, the then very limited offer was expanded: the Filet-O-Fish sandwich was added to the national menu. The fish burger was invented to give Catholic customers a choice during Lent. In 1968, the Big Mac, the iconic double-decker burger, was introduced. The Egg Muffin was introduced in 1975, the Happy Meal in 1979, and Chicken McNuggets in 1983. Of these, the Happy Meal is perhaps the most interesting, as it has made McDonald's one of the largest toy sellers in the world: 1.5 billion toys are sold each year thanks to the Happy Meal.

Ray Kroc never stopped working for McDonald's until he died on January 14, 1984. To this day, McDonald's provides its customers with great-tasting, affordable food, franchisees and crew members with job opportunities, and suppliers with reliable ingredients and products.

Key takeaways

Successful market penetration does not always require a complete upheaval of the rules of the sector. The McDonald brothers did not invent any truly new dishes, but they did let awareness guide the design of their restaurants. So the number-one success factor for McDonald's is professional design and process management.

The second success factor is sales behavior. While other restaurants were slower to offer their products, the excellent policies encouraged employees to sell customers as many extras as possible. Even today, "go big" accounts for a significant portion of restaurant profits (industry rumors say 40%). 

The third approach is the real estate-based approach. The franchising system that Ray Kroc perfected is still used today, and we know from the annual report that the company makes more revenue from franchisees than it can generate itself.

The McDonald’s Products

Core products.

McDonald's core products include burgers, which typically consist of a slice of beef, cheese, and sauce sandwiched between two halves of a bun - in all combinations and sizes. The smallest product is the standard burger, while the largest is the Big Mac. The sandwiches are available with chicken and fish, as well as localized versions in many countries around the world.

Core products include French fries, which also come in a variety of sizes. In addition, the Happy Meal menu specifically for children, as well as shakes and soft drinks, continue to be an integral part of fast food restaurant menus in almost all countries. According to market research , an average McDonald’s menu includes around 145 items. 

Seasonal products

National holidays, Halloween, Christmas, or even Easter - whatever the occasion, McDonald's introduces new seasonal products every month in every country around the world. Some are country- or region-specific (for example, the foie gras sandwiches are made specifically for the European audience), but most products are available in other countries after a limited local testing period. 

Typically, a traditional product, such as a standard burger, is enhanced with additional ingredients (e.g., spices, additional meat, or a special design) to reflect the seasonal event.

Localized products

McDonald’s has achieved this global success through maximizing localization techniques and appealing to local audiences. The company manages the menus to fit culturally and socially accepted norms; tailoring their traditional Big Mac meals to suit a local audience with specific requirements.

• Argentina: McFiesta burgers are available at McDonald's restaurants in Argentina, which are quarter pounders with mayo instead of ketchup. There are typical US sides here like French fries and Coca-Cola. Consider getting ice cream in an Oreo cone for dessert.
• France: Typically, you'd find the McBaguette combo at Mcdonald's in France - a sandwich that is topped with two hash browns and includes breaded chicken, ham, and cheese. The 'Le McWrap' and the 'Le Menu Happy Meal' are also available. Try their apricot and lime macarons for dessert, or their cherry tomatoes as a side dish.
• Hungary: In Hungary, specialized seasonal menus are very common, both in terms of ingredients and appearance. This is also facilitated by the fact that, since 2019, Hungarian McDonald's restaurants have been managed by a centralized, Hungarian-owned company, while the American McDonald's company provides only the brand and franchise rights. Foie gras is a regular item on Hungarian menus, as is "Dotted McFlurry" (a cottage cheese-based ice cream) made in cooperation with a very popular local dairy supplier. ‍
• India: McDonald's has created the Maharaja Mac by substituting chicken patties for the traditional beef patties in its Big Macs. In India, cows are regarded as sacred animals, thus the reasoning behind this change. Indians also enjoy the Vegetable Pizza McPuff, a unique side dish. However, fries and Coca-Cola are just as popular here as they are everywhere else.

• Middle East: Specifically for Middle East dining, Mcdonald's has created the McArabia Pita, which is served with beef or chicken patties (pork is not allowed in the predominantly Muslim diet), onions, and tahini sauce. 
• New Zealand: Despite being removed from the permanent McDonald's menu in New Zealand, the 'Georgie Pie' is still available in some restaurants. With fries and frozen Coke, a square pie topped with steak and cheese is served.
• Sweden: Scandinavian countries tend to favor healthy diets, especially vegetarian food. McDonald's capitalizes on localization with its vegetarian McBean Patty. Served in a bun with lettuce, tomato, and sauce, it has cannellini and kidney beans, onions, green peppers, and carrots.
• Thailand: There is a Samurai Pork Burger on Thailand's national McDonald's menu, which is a pork patty dipped in teriyaki sauce with lettuce, onions, tomato, and mayonnaise. Besides the usual apple pie, you'll also find corn and pineapple pies that aren't available anywhere else.

Partnerships with other companies

• Coca-Cola: The story of McDonald's and Coca-Cola began in 1955 when the fast-food restaurant was looking for a soft drink supplier. The partnership has continued ever since, with Coca-Cola selling not only soda but also other products to the restaurant chain.
• Oreo: Oreo is a worldwide popular dessert brand that mainly produces biscuits. The filled biscuits have become so popular that McDonald's has become a major supplier of Oreo to Mondelez International. In most countries, the biscuit pieces are served with ice cream, but in 2019, McDonald's China team tested the market with a burger with spam and Oreo biscuits . (It was not a global hit.)
• Beyond Meat: The trend toward vegetarian diets is spreading like wildfire around the world, and McDonald's is no stranger to it. According to the BBC , the McPlant burger will be available in British and Irish outlets as early as next year. The beef patty, made with pea protein, is available in 10 restaurants in Coventry, England, in the first round since the end of September, and then throughout the United Kingdom next year. The product's main ingredient is made for McDonald's by Beyond Meat, a publicly-traded startup.
• Local suppliers: Whether we're talking about the US or any other country in the world, one of McDonald's main and most forward-thinking efforts is to source its ingredients from local suppliers. To ensure that the fish, meat, or burger bun is always made to the same standard, McDonald's applies incredibly strict and centralized guidelines. 

Healthy or not healthy?

The restaurant chain has made great strides in the area of healthy eating in recent years: think supply chain with only local suppliers or the introduction of gluten-free, lactose-free, and vegetarian options. The calorie content of a hamburger today is much lower than that of a burger from 1980. In addition, the McDonald's team places great emphasis on healthy living - and they are trying to recruit new colleagues who will promote this corporate image. But that's just one side of the big picture.

A very interesting post came to light in 2008 when Karen Hanrahan revealed a shocking picture. Out of curiosity, she had set aside a McDonald's burger she bought in 1996 to see how quickly it would disintegrate (since there were theories about "plastic" foods in the past). After 12 years, the burger looked exactly like the one she had just bought, except it had shrunk a bit.

Although this is not part of the company's strategy, the following sources have been criticized the company:

• Jamie Oliver and his legal battle against the company
• Super Size Me , a movie in which the protagonist eats only McDonald’s products 
• In 1986, Greenpeace distributed flyers against obesity, naming McDonald’s among the ones responsible.
• There are also a lot of myths (most of them already busted) around the company’s procedures and products.

The product portfolio is the company's strength, so it's no wonder McDonald's is constantly improving and perfecting its recipes. Although the company has yet to build its healthy food image, its fast service and delicious, robust flavors win over millions of customers every month. 

The range includes flagship products available in all restaurants (except were banned for religious or legal reasons). These include traditional burgers, fries, and cola.

The company also diversifies its menu with seasonal and localized items. In the latter category, offerings vary from country to country and region to region, usually in partnership with local businesses and brands.

Franchise System

What is a franchise system.

Franchising has spread throughout the world not as a separate form of business, but as a special kind of business.

Franchising is a form of business based on close cooperation in which the franchisor or the owner of the system sells a complex system that has been carefully designed professionally and commercially in every respect and successfully tested in a market environment. The system is handed over to the franchisee with full training, branding, and ongoing support and supervision. Franchisors operate the franchise system to the specifications of the transferor, in the agreed territory, for a fee, for a fixed period.

McDonald’s Franchise Costs & Requirements

When purchasing an existing restaurant or a new restaurant, an initial down payment of 40% is required. Down payments must be made from non-borrowed personal resources, such as:

• cash on hand
• vested profit sharing
• business or real estate equity

The down payment amount will vary depending on the total cost of the restaurant. McDonald's generally requires $500,000 of non-borrowed personal resources before considering a new franchise partner. With less cash available, most opportunities to participate in the program are limited and depending on the transaction's specifics, financial requirements may be much higher. Additional or multi-restaurant opportunities may be more available to those with additional funds.

Franchise financing

To purchase a McDonald's restaurant, the buyer must pay a down payment of at least 25% cash. It is possible to finance the remainder of the purchase price for a period of up to seven years. Although McDonald's does not offer funding the project, McDonald's Owners/Operators benefit from established relationships with many national lenders.

Franchise - Ongoing Fees

• Service fee: Currently, a service fee of 4.0% of monthly sales is based on the restaurant's sales performance. 
• Rent: Rent that is based on a percentage of sales monthly.

Other costs of setting up a new franchise

Costs usually range from $1,2 million to $2,2 million. Most of the costs are related to the construction of the restaurant, such as building and interior design, but the franchisee also pays for equipment, furniture, and kitchen appliances.

General franchising strategy in 2021

McDonald's restaurants provide quality food and beverages in 119 countries, which are franchised and operated by the company. At year-end 2020, McDonald's will have 39,198 restaurants, of which 36,521 are franchised, or 93 percent.

McDonald's franchise restaurants fall into one of the following categories: conventional franchises, development licenses, and affiliates. Optimal ownership structures for restaurants, trading areas, and markets (countries) depend on a variety of factors, including financial resources and entrepreneurial abilities, as well as legal and regulatory frameworks in key areas such as property ownership and franchising. McDonald's business relationship with independent franchisees is governed by standards and policies, which are of fundamental importance to the company's performance as well as its brand protection.

McDonald's franchise partners are not financial investors, but committed partners who not only put up the capital to open a restaurant, but are also willing to participate in the day-to-day operations and running of the restaurant. They know all the ins and outs of the business, but they also reinforce the McDonald's brand through their involvement in the local community.

The potential partner does not have to have a suitable location, as the location of the restaurants is always determined by the company and handed over to the franchisee.

The Company’s Old/New Strategies

Accelerating the Arches is the Company's new growth strategy for 2020. As the leading global omnichannel restaurant brand, McDonald's Strategy encompasses all aspects of the company's business as well as updated values and new growth pillars that leverage the company's competitive advantage.

Growth Pillars

• Marketing: Investing in new, culturally relevant marketing approaches to effectively communicate the brand's story, food, and purpose. Customers will be provided with more personal services through enhanced digital capabilities. 
• Products: Focusing on serving delicious burgers, chicken, and coffee. Chicken and beef will be the company's primary focus as they represent the largest growth opportunities. McCafe’s brand, experience, value, and quality will be leveraged by the markets to drive long-term growth for McDonald's.
• Digital, Delivery, and Drive-Thru: McDonald's plans to accelerate technology innovation to meet the needs of customers as they interact with the company.
• Digital Experience: Known as "MyMcDonald's", the new digital experience platform will transform the company's digital offerings across drive-thru, takeaway, delivery, curbside pickup, and dine-in options. Through the digital tools available on the platform, customers will receive tailored offers, will be able to enroll in a new loyalty program, and will have the option to order and receive McDonald's food using their preferred channel. 
• Delivery expansion: McDonald's has expanded its delivery service to nearly 30,000 restaurants in the last three years and plans to expand further.
• The increasing importance of Drive-Thru: More than 25,000 restaurants globally have drive-thrus, including nearly 95% of the over 13,000 in the U.S. This channel has gained in importance since the COVID-19 outbreak, and leadership expects that it will play an even greater role as customers demand more flexibility and choice. In the U.S. and International Operated Markets, the vast majority of new restaurants will have a drive-thru. In addition to automated order taking, the Company plans to test a drive-thru express pick-up lane for customers with digital orders and a restaurant concept that offers drive-thru, delivery, and takeaway only for customers to enjoy a faster and more convenient experience.

For decades, McDonald's sales efforts focused on the cash register and drive-thru. One of the strongest elements of this was the introduction of the "Go Large" theme. By sizing and pricing the products, even those who had no real need chose the largest product, believing it to be the best and most appropriate offering. 

Today, in addition to physical sales, digital sales have become a priority. An app developed by the company not only speeds up the ordering process but also offers additional discounts that can further increase the cart value per customer.

With the introduction of home delivery, McDonald's has begun working with several partners including UberEats, FoodPanda, and Wolt. For a long time, these online marketplaces did not offer fast food products like McDonald's, but they have now become serious players in the market. The company's offering is particularly strong when it comes to speed: on average, food is delivered in 15-20 minutes, compared to 50-80 minutes for a traditional restaurant.

There are several cornerstones of the company's marketing strategy that have contributed greatly to McDonald's success:

• The Ronald McDonald figure: An owner of a McDonald's franchise introduced Ronald McDonald in 1967. To appeal to children, franchise partners decided to use a clown icon as an advertising tool. 96% of American children knew the name Ronald McDonald by 1973. Ronald McDonald is the second most recognizable fictional character among US schoolchildren, behind Santa Claus.

• The McDonald’s logo: There's no doubt that McDonald's golden arches are one of the most recognizable logos in the world. It was created in 1940. During the '60s, McDonald's decided to simplify their logo and focus on branding the company. A brilliant move was choosing the golden arches as the logo for the fast-food restaurant. The McDonald's logo looks very much like two golden-brown French fries bent into a letter M, and this is one of the most effective design features of the logo. McDonald’s is advertising one of its most popular menu items without viewers even noticing it.

• “Para PaPa Paaaa… I’m lovin’ it”: McDonald's has been using this jingle for a very long time. McDonald's jingle highlights a positive dining experience. The musical theme makes the diners feel at home during their meals there, as well as conveys how friendly and helpful the staff is.
• Promotion campaigns: Television advertising has become a favorite field for all fast-food restaurants with the proliferation of TVs. To this day, McDonald's is a loyal advertiser on channels aimed at children and their parents. Its campaigns focus on delicious food, fun, natural ingredients, and health. 

The company is one of the biggest innovators in the food industry and is credited with inventing or perfecting the following:

• McDonald's put in place order-taking kiosks in 2015, making it one of the first fast-food chains to do so. A touchscreen machine located near the front of restaurants lets customers place their orders without the need for a cashier.
• The introduction of specialty coffee at McDonald's changed McDonald's from a fast-food restaurant to something more. McDonald's introduced its specialty coffee line in mid-2007.
• The company separated a part of larger restaurants and re-branded it as McCaffes, a place where customers can buy coffee and desserts. Now it competes with Starbucks for coffee-lovers.
• McDonald's was one of the first fast-food chains to organize even the smallest details of its operations in a manual. This manual is still being improved today.

The 2020 growth plan contained nothing new compared to the path taken a year earlier. The key elements were digital customer access, which was a key driver of the company's continued growth during the COVID epidemic.

Sales and marketing go hand in hand at McDonald's: over the past 80-plus years, the techniques used have been perfected, all aimed at getting customers to buy. Advertising builds on this image of cheap and healthy food.

Final Thoughts And Key Takeaways

Growth by the numbers.

McDonald's has seen steady growth since its founding. Because of the relative cheapness of its products, it is a truly crisis-proof company, which even COVID could not bring to its knees - unlike millions of small catering businesses.

The company has emerged from the crisis as a winner, thanks in particular to digital developments, drive-thru, and the spread of home delivery.

Key takeaways from the McDonald’s story:

• Real estate business: The McDonald's business model has evolved from a restaurant to a complex system in a relatively short period, with some revenue coming from franchise fees, some from land leases, and some from food sales. 
• Thoughtful processes: While other restaurants are constantly experimenting with food, McDonald's has focused on improving its production technologies from the beginning. In addition to innovative machinery, internal processes have also been organized to ensure that products reach customers as quickly and consistently as possible.
• Franchise system: Behind the amazingly dynamic growth of McDonald's has been a well-constructed franchise system, the foundations of which were laid by the McDonald brothers, but perfected by Ray Kroc. 
• Core, seasonal and localized products: The main feature of the company's product range is that it is extremely consistent, as we can also get fries and cola in the farthest corners of the world. At the same time, local companies, at their discretion, can launch the menu with seasonal and localized products, enabling them to engage their customers even more.
• Strong marketing: Mcdonald’s has consciously built up the dining experience - regardless of whether we’re eating a hamburger in the car, in a restaurant, or at home. The logo, the iconic clown figure, the company’s theme song, the packaging, the internal design, and many other elements add up to become an unforgettable experience.
• Home delivery: Delivery was the largest innovational step from McDonald’s for decades, and partnering with food delivery startups, like UberEats or Wolt helped the company not only to survive the pandemic but get in shape for rapid growth.

Consumer opinion on McDonald's is certainly divided: some say it's plastic, others say it has grown up to meet consumer expectations. As a publicly-traded company, the owner of the golden arch has no choice but to march forward, pioneering innovation as it has throughout its history. What does the future hold for the company? An even broader product range, a stronger home, and digital experience - and, investors expect, continued revenue growth.

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Home » Management Case Studies » Case Study on Business Systems Planning And Implementation : McDonald’s Corporation

Case Study on Business Systems Planning And Implementation : McDonald’s Corporation

McDonald’s has worked hard to be more than a restaurant chain. It has become a marketing icon and is part of the routines of millions of people. Its success is so far reaching that it has developed its own culture and identity. It has become a symbol of the success and desirability of American popular culture.

McDonald’s operates more than 24,000 restaurants in 114 countries. It has a 21 percent share of the very competitive US fast food industry. Overseas restaurants now account for half of the company’s profits. McDonald’s plans to open 10,000 new restaurants by the year 2005. It has been the forerunner in the recent industry trend of co-branding and satellite locations.

What has set McDonald’s apart from the average hamburger restaurant is its ability to recognize customers’ needs and desires.   It seems customers want fast, friendly service in a clean and orderly environment.   McDonald’s sees this as its main objective and addresses it as its primary business function.   One of McDonald’s most important critical success factors has been the ability to apply manufacturing functions to service activities.   McDonald’s has used this approval to bridge the dichotomy between service and manufacturing.

The McDonald brothers identified simplicity as being important.   Dick McDonald explained,

                      We said let’s get rid of it all.   Out went dishes, glasses and silverware.

                      Out went service, the dishwashers and the long menu.

                      We decided to serve just hamburgers, drinks, and French fries on paper plates.

                      Everything prepared in advance, everything uniform.

                      All geared to heavy volume in a short amount of time.

This simple system was felt to be ideal for franchising as it was ideal to duplicate.   A strong system of operations was conceived.   The system consists of four distinct parts:

• Develop supplier relationships.
• Train and monitor franchises.
• Improve products.
• Improve equipment through technology.

Networks are particularly important to McDonald’s because they provide a mechanism to manage the franchises spread over large geographic areas. Networks reinforce the centralization of power by enabling headquarters to communicate with the franchises. This ensures standardization and quality control through the analysis of inventories and franchises. Networks achieve these functions at a comparatively low cost and without the time constraints of more mainframe-based communications.

Both McDonald’s and Burger King are testing smart card technology in selected markets. The cash value of each card is stored on a computer chip or a magnetic strip on the back of each card. Value can be added to the card through machines that accept cash or through ATM-like machines that add value by transferring funds out of a customer’s bank account. Customers can use the cards, instead of cash to make their food purchases. Corporate goals for smart card implementation include cost savings in relation to money handling, reduced shrinkage, and increased loyalty through incentives and premiums. Smart cards eliminate the need for merchants to communicate with banks for the authorization of purchases.

McDonald’s is testing this technology at 870 restaurants across Germany. McDonald’s Deutschland continues to use smart card terminals in 55 stores. During the first 10 weeks of the trial, 30 thousand transactions were conducted, using Hewlett-Packard Co.’s VeriFone unit, which provides the terminals. McDonald’s is hoping to lead a trend toward the wide-scale acceptance of smart cards in Germany. Technologically, smart cards were designed to function in place of credit cards in the fast-food environment. Historically, credit card transactions were too slow. Their associated costs were too high in the face of small margins.   Smart cards are an important step in resolving these issues. They enable restaurants to leverage sales and enhance the ease of credit card use. Authorization and settlement technology are rapidly improving. The costs of network connectivity are decreasing.

McDonald’s first announced a web presence in 1994 with McDonald’s interactive, an area in NBC Online on America Online. In 1995, the company developed and implemented a web site called McFamily (www.mcdonalds.com). It is aimed at families, perceived by McDonald’s as its most important target market. The site features “seasonal ideas for fun family activities such as block parties, travel games, and household safety information.” The Auditorium sponsors monthly guest speakers, including celebrities and parenting experts, and a Hey Kids area houses a gallery with McArt submitted by children with downloadable games and contests. The goal of all these web pages is to enhance the brand image that McDonald’s is for families. McFamily includes a section on “helping others”. This section features information on Ronald McDonald House and other related children’s charities. This section also features information on McDonald’s efforts to preserve the environment.

The McDonald’s web site cannot be used to sell food. However, it can capture revenue through sales of merchandise related to McDonald’s sponsorships. The “McStuff for You” section offers gear from McDonald’s racing teams and the Olympic Games. The web site is used to collect customer information and profiles through on-line surveys.

Decision makers at McDonald’s Corporation realise that customer preference is paramount. The chain is implementing a restaurant-level planning system, dubbed “Made For You.” This enables each restaurant to eliminate its inventory of foods prepared in advance. Instead, workers make sandwiches based on actual demand without sacrificing any of the efficiency.

About 800 McDonald’s restaurants use the system, which consists of PC-based cash registers running in-house software. Orders are routed to monitors at different food preparation tables to balance the workload among employees. In McDonald’s restaurants without the new system, workers must anticipate demand for each type of sandwich in advance and place them in bins. When a customer wants a sandwich that is not ready-made or one with a different topping, the person at the register shouts out the order and workers move out of the assembly line for the special request. This slows the process and extends the customer’s wait.

McDonald’s introduced the new system in March at a meeting for its franchisees. The company is encouraging its 12,400 US restaurants to incorporate the system, but the actual decision is left to each franchise. The technology eases the workload and could add up to a percentage point to the company’s profit margin because it enables it to sell more food faster.

Wal-Mart and McDonald’s have jointed together to share retail space.   These two companies have been partners since 1993, with over 800 restaurants in Wal-Mart stores around the US.   Now, McDonald’s has taken this one step further.   It actually uses Wal-Mart clerks and registers to sell McDonald’s food.   In several test locations, when Wal-Mart shoppers pull their carts up to the checkout, there is a mat on the counter displaying the McDonald’s products, much like what you would see at one of the restaurants.   Each product, from hamburgers to Happy Meals, has a code number that the clerk scans into the Wal-Mart system while ringing up the customer’s purchases.   The orders are automatically relayed from the register to the kitchen using software jointly developed by McDonald’s and Wal-Mart.   The food is brought to the customers as they leave the store.   Since the food appears on Wal-Mart’s registers and receipts, customers can pay for it with a single credit card purchase.   At the end of the day, the companies balance McDonald’s portion of the proceeds.   Individual organizations are starting to use one another’s environments and skills to reach as many potential customers as possible.   To better manage its inventory , McDonald’s has implemented supply-chain software that enables better management of inventory by sharing demand and supply information among its restaurants, suppliers and distributors.

McDonald’s appears to be at a crossroad.   The company can continue on its traditional (and very successful) path of consistency and quality through standardization, or it can alter the basic strategies by allowing franchisee autonomy and continuing to provide a variety of offerings and service.   As a company noted for standardization, emphasis on flexibility is quite a feat.   This new outlook includes granting more freedom for franchisees to experiment with food and marketing, test new venues, such as satellite locations and co-branding, and develop new menu items.

These changes are innovative and risky.   Current management is not considering minor adjustments.  Experimenting with the much copied system of operations is a gamble. The system is a precisely organized machine; by introducing flexibility, the machine is in danger of becoming mired down with complexity. The danger lies in straying too far from what McDonald’s has done in the past.

(Source:   Adapted and condensed from Anderson, D. 2000, Managing Information Systems , Prentice Hall, NJ)

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A descriptive analysis of McDonald's Information System.

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McDonald's Corporation: The World's Leading Fast Food Chain [Case Study]

Devashish Shrivastava , Anik Banerjee

McDonald's Corporation is an American fast-food organization established in 1940 as a café by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a burger stand and later transformed the organization into an establishment; the Golden Arches logo being presented in 1953 at an area in Phoenix, Arizona.

Ray Kroc, a businessperson, joined the organization as an established operator in 1955 and continued to buy the chain from the McDonald's siblings. McDonald's had its base camp in Oak Brook, Illinois, and moved its worldwide base camp to Chicago in mid-2018.

McDonald's is worth $185+ bn today. It is the world's biggest eatery network by revenue. It was last registered to be serving 69+ million customers each day in more than 120 countries across over 39,000 outlets.

Although McDonald's is best known for its burgers, cheeseburgers, and french fries, its menu also includes chicken items, breakfast things, sodas, milkshakes, wraps, and sweets. In light of changing buyer tastes and a negative backfire on account of the wretchedness of its food, the organization has added mixed greens, fish, smoothies, and natural products to its offerings.

McDonald's Corporation's income originates from leases and charges paid by the franchisees. According to two reports distributed in 2018, McDonald's is the world's second-biggest private manager with 1.7 million representatives (behind Walmart with 2.3 million workers).

Here's bringing you the McDonald's company profile that will present to you McDonald's company overview, when was McDonald's founded, McDonald's growth over the years, about McDonald's, McDonald's owner name, founder of McDonald's corporation, McDonald's history and background, McDonald's case study marketing, and more.

McDonald's - Company Highlights

McDonald's - Startup Story and History McDonald's - Mascot/Logo McDonald's - Business Model And Market Strategy McDonald's - Target And Mission McDonald's - Growth McDonald's - Restaurants And Services McDonald's - Future

McDonald's - Startup Story and History

Richard and Maurice McDonald in 1940, opened the primary McDonald's at 1398 North E Street at West fourteenth Street in San Bernardino, California; however, it was not the McDonald's you know today. Ray Kroc made changes to the siblings' business and modernized it.

The siblings presented the "Speedee Service System" in 1948 by extending the standards of cutting-edge drive-thru eatery that their antecedent White Castle had tried over two decades earlier. McDonald's emerged with a delivery model where it made its food on a supply belt and delivered it within 2 minutes.

It looked like a fantastic and impossible eatery that had:

• Only burgers, fries, and shakes on the menu • No plates or waiters to serve the customers

However, when Ray Kroc came, he was astonished by the never-ending waiting lines that were there waiting for their orders from McDonald's.

Kroc was then 50 already and was selling milkshake mixers door to door. Ray Kroc had earlier tried his hand in many things but never had attained success in his whole life. He already worked as a musical director, pianist, and had also worked as a real estate guy, in the paper cup industry, and as a seller of kitchen appliances, but he couldn't hold on to one thing among them all. Thus, Kroc was a person who lived from paycheck to paycheck.

Kroc came to McDonald's to deliver an absurd order of 8 milkshake mixers for just one area. He wondered "why would someone want to make 40 milkshakes at a time?" This is why he drove to California, at McDonald's to see the place himself.

Seeing the huge demand for McDonald's burgers, fries, and shakes, Kroc sensed a huge opportunity. He soon pushed the founders of the store to embrace a franchise model. The McDonald's brothers who owned the business, were living a comfortable life then, getting rich by the day, and buying Cadillacs as they filled their pockets. They didn't have vision nor they were eager to expand. However, Ray convinced them and rushed to work, as soon as he did that.

He assumed the role by taking 2 major steps back to back:

• Mortgaging his house when he was already 52
• Opening 18 new outlets in the very first year

This has helped the company scale big time, and McDonald's now boasts of:

• Serving 2.3+ billion burgers a year
• Serving 39,000+ restaurants across more than 120 countries
• Being the 4th largest employer in the world
• Being the largest toy distributor in the world

Though it was Ray's idea and the expansion was promising, the McDonald's brothers made an unfair deal with him. Kroc was allowed only 2% of the profits. McDonald's being to scale aggressively but the founders of McDonald's wasn't really happy with Ray and his scaling. This is why Ray borrowed and bought them out for $2.7 mn, thereby becoming the 100% owner of McDonald's.

The organization attributes its success to Ray Kroc. Kroc later bought the McDonald siblings' value in the organization and was responsible for McDonald's overall reach. He was seen as a forceful colleague, driving the McDonald siblings out of the business. Kroc and the McDonald's siblings battled for control of the business, as recorded in Kroc's life account.

The San Bernardino eatery was torn down (1971, as indicated by Juan Pollo) and the site was offered to the Juan Pollo chain in 1976. This zone currently fills in as central command for the Juan Pollo chain, and a McDonald's and Route 66 museum.

With the development of McDonald's into numerous universal markets, the organization has turned into an image of globalization and the American lifestyle. Its unmistakable quality has additionally made it a regular point of open discussions about heftiness, corporate morals , and shopper obligation.

McDonald's - Mascot/Logo

The first mascot of McDonald's was a cooking cap over a burger who was alluded to as "Speedee" . In 1962, the Golden Arches supplanted Speedee as the all-inclusive mascot. The image of jokester Ronald McDonald was presented in 1965. Ronald McDonald showed up to promote amongst children.

On May 4, 1961, McDonald's initially petitioned for a U.S. trademark on the name "McDonald's" with the portrayal "Drive-In Restaurant Services". By September 13, McDonald's, under the direction of Ray Kroc, petitioned for a trademark on another logo—a covering, twofold curved "M" image.

Before the twofold curves, McDonald's used a solitary curve for the design of its structures. Even though the "Brilliant Arches" logo showed up in different structures , the present form was not utilized until November 18, 1968, when the organization was given a U.S. trademark.

McDonald's - Business Model And Market Strategy

The business and revenue model of McDonald's includes almost 37000 outlets which spread to more than 120 nations. Today, McDonald's is the biggest eatery network on the planet in terms of income.

Initially launched as a Drive-In Hamburger Bar, the idea was advanced in 1940 by The McDonald Brothers, Richard James (Dick), and Maurice James (Mac) McDonald. It was after the presentation of the Speedee Service System with shakes, fries, and burgers costing as low as 15 pennies that the McDonald Brothers started the establishment of McDonald's Hamburgers.

In 1954, Ray Kroc turned into the establishment operator of the McDonald Brothers. The main McDonald's eatery was opened by Kroc in 1955 in Des Plaines, Illinois, USA. It was in the year 1961 that the rights to the eating joint of the kin were obtained by McDonald's for a powerful total of $2.7 million.

You may likewise be astonished to realize that when the first McDonald's eatery opened, the extremely well-known McD french fries were eaten with no ketchup! The revenue model of McDonald's, the world's quickest developing food chain, is an interesting one.

McDonald's - Target And Mission

McDonald's endeavours hard to be its clients' "most loved spot and approach to eating". McDonald's plan of action is fixated on the ground-breaking strategy "Plan To Win", which is placed into requests around the world.

With the mission of "Quality, Service, Cleanliness, and Value", McDonald's has clung to each of these characteristics. Client experience is improved by the selection of five fundamentals: people, products, place, price, and promotion.

Additionally, McDonald's plans to give high-review nourishment, at effectively reasonable costs to individuals over the globe. The deals at McDonald's are furrowed through an efficient deals channel which guarantees remarkable consumer loyalty on all occasions.

Astounding Vision

When Ray Kroc opened the Original McDonald's in Illinois, he had a dream of expanding the franchise across the globe with more than 1000 outlets in the States itself. Remaining consistent with its guarantee, McDonald's widened its worldwide handle by opening joints outside the US as early as 1967.

The first international outlets were opened in Canada and Peurto Rico. By January 2018, McDonald's was situated in 120 nations and had about 37200 cafés with 1.9 million workers. It was serving more than 69 million individuals every day. At one point in time, McDonald's was opening a new outlet every 14.5 hours!

Significant Growth Strategy

McDonald's has clutched a promising development technique to serve customers and spread its wings. The presentation of the "Speed Growth Plan" in March 2017 enhanced the development of the business.

McDonald's development system depends on retaining, regaining, and converting. McDonald's strives to hold on to its old clients, recapture the lost trust, and convert easygoing clients into ordinary ones.

What's more, it has additionally embraced three quickening agents: digital, food delivery, and experience of things to control its monstrous development. It keeps on reshaping cooperation with clients and raising the level of consumer loyalty and experience through innovation and human endeavours.

Decent Variety

Monetarily, McDonald's has affected the world more significant manner than some other organizations. McDonald's adheres to the conviction "Decent variety is Inclusion" and doesn't leave a solitary opportunity to make each person from every network feel regarded. Its suggestion of "Decent variety is Inclusion" has affirmed its situation at the top position.

The McDonald's way of life revolves around the following: customer-obsessed, better together, and committed to lead. These coupled with its conviction has caused the fast-food chain to exceed expectations in the field of business enterprise and showcasing.

McDonaldization

McDonald's can appropriately be named as one of the best organizations to be involved in the worldwide system. The worldwide broadening of the McDonald's is regularly alluded to as "McDonaldization." Its accomplishment in more than 120 nations can be credited to its hierarchical structure.

The hierarchical structure of McDonald's mulls over expanding localization, and in this way, the entire plan of action of McDonald's is normally redone thinking about the mass intrigue in different nations.

Fruitful Acquisitions

The McDonald's Corporation Mergers and Acquisitions (M&A) have, since its inception, entertained itself with cautious acquisitions. Donato's Pizza which is a Midwestern chain of 143 eateries was obtained by McDonald's on 6 May 1999. Aside from securing Donato's, it acquired the Boston Market on 18 May 2000. Boston Market is a drive-through eatery chain that essentially focuses on home-style sustenance.

Supporting Employees

McDonald's doesn't, in any capacity, hamper the development of its workers. It bolsters its representatives in every possible way and empowers them to set up business systems.

At McDonald's, the work environment is brimming with positivity, connections are advanced, professional openings are supported, and business development is sustained.

Coaches, good examples, and backers are accessible at all times to direct the employees on successful initiatives, professional procedures, and prosperous business.

Engagement Of Community And Education

Aside from being one of the best good-quality fast food options, McDonald's investigates every possibility to endeavour for the network it serves. It effectively takes part in network administration and continues to have a critical effect on assorted networks.

The Global Diversity, Inclusion, and Community Engagement Team alongside its key accomplices have fabricated cherished relations with different network-based associations. McDonald's Hamburger University readies its workforce to maintain the multi-billion dollar business and worldwide initiative improvement programs.

McDonald's - Growth

McDonald's eateries are found in 120 nations and serve 69 million customers each day. McDonald's operates 39,000 restaurants/cafés around the world, utilizing more than 210,000 individuals as part of the arrangement. They help operate 2,770 organization possessed areas and 35,085 diversified areas, which incorporates 21,685 areas diversified to regular franchisees, 7,225 areas authorized to formative licensees, and 6,175 areas authorized to remote affiliates.

Concentrating on its centre image, McDonald's started stripping itself of different chains it had gained during the 1990s. The organization possessed a large stake in Chipotle Mexican Grill until October 2006 when McDonald's was completely stripped from Chipotle through a stock exchange .

Until December 2003, it likewise claimed Donatos Pizza, and it claimed a little portion of Aroma Café from 1999 to 2001. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.

Outstandingly, McDonald's has expanded investor profits for 25 back-to-back years, making it one of the S&P 500 Dividend Aristocrats. The organization is positioned 131st on the Fortune 500 of the biggest United States companies by revenue.

In October 2012, its month-to-month deals fell without precedent for nine years. In 2014, its quarterly deals fell without precedent for a long time, when its deals last dropped for the whole of 1997.

In the United States, McDonald's accounts for 70% of sales in drive-throughs. McDonald's shut down 184 eateries in the United States in 2015, which was 59 more than what they wanted to open.

Starting in 2017, the income was roughly $22.82 billion. The brand estimation of McDonald's is more than $88 billion; outperforming Starbucks with a brand estimation of $43 billion. The total compensation of the organization in 2017 was $5.2 billion; this worth saw an ascent of about 11% from the previous year.

McDonald's is, without a doubt, the quickest developing drive-thru eatery chain on the planet. In 2018, McDonald's developed as the most profitable inexpensive food chain with a brand worth nearing $126.04 billion. Also, the all-out resources of McDonald's were almost $33.8 billion.

The world's quickest developing cheap fast food chain partitions its market into four unique areas: U.S., International Lead Markets, High Growth Markets, and Foundational Markets and Corporate.

According to the report set forth by the organization in the year 2017, the market in the U.S. created the biggest measure of income at $8 billion. The International Leads Markets which includes Australia, Canada, France, Germany, and the U.K. created an income of $7.3 billion.

The High Growth Markets which incorporate China, Italy, Korea, Poland, Russia, Spain, Switzerland, the Netherlands, and comparative brought in about $5.5 billion in revenue.

The Foundational Markets and Corporate incorporate the rest of the business sectors. Furthermore, it additionally incorporates a wide range of corporate exercises. The income created by this section of the market represented roughly $1.9 billion.

McDonald's - Restaurants And Services

In certain nations, "McDrive" areas close to roadways offer no counter administration or seating. interestingly, areas in high-thickness city neighbourhoods frequently preclude pass-through service. There are likewise a couple of areas, found for the most part in the downtown locale, that offer a "Walk-Thru" administration instead of a Drive-Thru.

McCafé is a bistro-style backup to McDonald's cafés and is an idea conceived by McDonald's Australia (likewise known, and promoted, as "Macca's" in Australia), beginning with Melbourne in 1993. As of 2016, most McDonald's outlets in Australia have McCafés situated inside the current McDonald's eatery.

In Tasmania, there are McCafés in each eatery, with the rest of the states rapidly following suit. After moving up to the new McCafé look and feel, some Australian eateries have seen up to a 60% expansion in deals. There were more than 600 McCafés around the world some time back.

Create Your Taste

From 2015–2016, McDonald's attempted another gourmet burger administration and eatery idea dependent on other gourmet cafés, for example, Shake Shack and Grill'd. It was taken off without precedent for Australia in early 2015 and extended to China, Hong Kong, Singapore, Saudi Arabia, and New Zealand with progressing preliminaries in the US showcase.

In committed "Make Your Taste" (CYT) booths, clients could pick all fixings including a kind of bun and meat alongside discretionary additional items. In late 2015, the Australian CYT administration presented CYT servings of mixed greens.

After an individual had requested, McDonald's prompted that hold up times were between 10–15 minutes. At the point when the nourishment was prepared, the prepared group ('has') carried the sustenance to the client's table.

Rather than McDonald's typical cardboard and plastic bundling, CYT nourishment was exhibited on wooden sheets, fries in wire bushels, and servings of mixed greens in china bowls with metal cutlery. A more expensive rate connected. In November 2016, Create Your Taste was supplanted by a "Mark Crafted Recipes" program intended to be increasingly proficient and less expensive.

McDonald's Happy Day

McHappy Day is a yearly occasion at McDonald's during which a portion of the day's deals goes to philanthropy. The collections on this day go to Ronald McDonald House Charities.

In 2007, it was celebrated in 17 nations: Argentina, Australia, Austria, Brazil, Canada, England, Finland, France, Guatemala, Hungary, Ireland, New Zealand, Norway, Sweden, Switzerland, the United States, and Uruguay. As indicated by the Australian McHappy Day site, McHappy Day brought $20.4 million up in 2009. The objective for 2010 was $20.8 million.

McDonald's Monopoly Donation

In 1995, St. Jude Children's Research Hospital got a mysterious letter stamped in Dallas, Texas, containing a $1 million winnings McDonald's Monopoly game piece. McDonald's authorities went to the medical clinic, joined by a delegate from the bookkeeping firm Arthur Andersen, inspected the card under a diamond setter's eyepiece, took care of it with plastic gloves, and checked it as a winner.

Although game guidelines disallowed the exchange of prizes, McDonald's deferred the standard and made the yearly $50,000 annuity instalments for the full 20-year time frame through 2014, even in the wake of discovering that the piece was sent by an individual associated with a theft plan meant to cheat McDonald's.

McRefugees are destitute individuals in Hong Kong, Japan, and China who utilize McDonald's 24-hour cafés as transitory lodging. One out of five of Hong Kong's populace lives underneath the destitution line. The ascent of McRefugees was first archived by picture taker Suraj Katra in 2013.

McDonald's - Future

The reported objective is to source all visitor bundling from inexhaustible, reused, or ensured sources, reuse visitor bundling in 100% of eateries, and overcome framework challenges by 2025.

McDonald's turned into the principal eatery organization on the planet to set an endorsed Science-Based Target to lessen ozone-depleting substance emanations. It also joined the "We Are Still In Leader's Circle", driving activity to relieve environmental change.

McDonald's USA completed five years as the sole worldwide café organization to serve MSC-ensured fish in each U.S. area. It united with Closed Loop Partners to build up a worldwide recyclable and additionally compostable cup arrangement through the NextGen Cup Challenge and Consortium. Official pioneers called for atmosphere activity and offered arrangements at the primary Global Climate Action Summit (GCAS).

McDonald's co-facilitated the "Way to Greenbuild" occasion with Illinois Green Alliance at its new worldwide home office. The structure, a collaboration among Sterling Bay, McDonald's, and Gensler Chicago, got USGBC LEED Platinum accreditation.

McDonald's is establishing the tone for other inexpensive food organizations to pursue. Given the present want by numerous buyers to spend cash on organizations that are doing great on the planet, where McDonald's leads, others will pursue.

Who is the founder of McDonald's?

McDonald's was founded by Richard McDonald and Maurice McDonald on 15 April 1955 in California, United States.

Who is the CEO of Mcdonald's?

Chris Kempczinski is the CEO of Mcdonald's since Nov 2019.

Who is the owner of McDonald's in India?

In India, McDonald's is a joint-venture company managed by two Indians- Amit Jatia (M.D. Hardcastle Restaurants Private Ltd) and Vikram Bakshi ( Connaught Plaza Restaurants Private Ltd).

When was the fast-food chain McDonald's founded?

Mcdonald's was founded in 1940 in San Bernardino, California.

How much does a Mcdonald's franchise owner make?

An average Mcdonald's franchise generates $150,000 annually.

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More about Case Study Of Mcdonald's Information System

Related topics.

• McDonald's
• Fast food restaurant
• Burger King
• French fries

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