McDonalds

Corporation
Case Study

Group logo:
NKBMA
Team members:
-Noor Alshehabi
-Khadija Altublani
-Badriya Ali
-Marwa Ismail
-Ahmed Malalla

BH10500452
BH10501127
BH10501761
BH10500268
BH10500241

Case Study
Business Insider
McDonald's has a new competitor no one is talking about
FEB.4,2015,3:23
Publishedby:ASHLEYLUTZ
Everyone is talking about how fast-casual chains like Chipotle and Five Guys
are stealing McDonald's customers.
But there's another huge competitor no one is talking about.
Gas station/convenience store businesses like Sheetz are taking market share
from the fast food giant, Michelle Greenwald, a marketing professor at
Columbia Business School, told Business Insider.
"Gas stations like Sheetz have gone through the effort to make sure people
like the food," Greenwald said. "They're also very convenient for families
and have a one-stop shop advantage."

Case Study
And unlike Chipotle, which is much more expensive than McDonald's, gas
stations are closer to the Dollar Menu price point.
Sheetz offers a variety of food, including pizza, wings, sub sandwiches,
pretzel melts, hot dogs, salad wraps, and more.
President and CEO Joe Sheetz has been open about the emphasis the
company places on food.
"When were new to the area, gasoline gets their attention," he
told PennLive.com. "Once you get their loyalty, we get them to eat. We
are really a restaurant advertising a bunch of other stuff."
The chain has about 500 locations concentrated in Pennsylvania, Virginia,
Maryland, West Virginia, and Ohio and is expanding fast.
Sheetz also has a full-service espresso and smoothie bar for those who might
frequent the McCafe. The bar is staffed by trained baristas.

Case Study
"Their Made-To-Order Espresso bar is actually comparable to Starbucks, but
with half the price," writes one Yelp reviewer.
Greenwald also notes that the customer service at these chains tends to be
better than McDonald's.
"Workers at Sheetz are encouraged to smile and greet people as they come
in," Greenwald said. "This makes people comfortable and keeps them
coming back."
The convenience is another huge factor for customers.
Sheetz is open 24 hours a day, 365 days a year.
"Cheapest gas prices... combined with 24-hour service and proven to satisfy
your [Made-To-Order] fixes every time. Really, why go anywhere else?"
Yelp reviewer wrote.
US customers have been fleeing McDonald's as the company faces a growing
perception problem and slow customer service. CEO Don Thompson will
leave the brand in March.

Who We Are ?

HeadquarteredinOakBrook,Illinois.

Worldslargestfoodserviceretailingchain.

Knownforitsburgersandfries.

Offersastandardmenuatalllocations,thoughsomelocationsmayhavesome
variationbasedongeographicvariationsintastepreference.

Operatesover31,370fastfoodrestaurantsinover118countries,employing
390,000people.

Amajorityoftherestaurantsareoperatedbyfranchisees.

McDonaldsownsthelandusedforeachofthefranchises,thenbuildsand
securesalong-termleasefortherestaurantsite.

Mcdonalds Timeline

Dec1948:ThefirstMcDonaldsrestaurantisopenedinSanBernardino,Californiaby
brothersRichardandMauriceMcDonald.Offersburgers,fries,milkshakes,soft
drinks,andapplepie.

1954:RayKroc,amilkshakemachinesalesman,suggestsnationwidefranchisingand
actsasafranchisingagentforthebrothers.

1955:ThefirstrestaurantrunbyRayKrocopensinDesPlaines,Illinois.Several
problemsariseinadaptingthesystemusedbyRichardandMauricetothenew
restaurant.Firstlogo,Speedee,isintroduced.

1956:KrochastorepurchasethefranchiserightsfortheCookCountyrestaurant.
TheyhadbeenpreviouslysoldtotheFrejlackIceCreamCo.FredTurnerishiredto
oversee
operations.

1957:Year-endsalesforcloseto40restaurants-almost$4.5million.

1958:The100millionthhamburgerissold.Salestop$11million.Thereare34
restaurantsinexistence.

1959:Krocopens67newrestaurants,bringingthetotalto100franchises.They

Mcdonalds Timeline

1961:KrocbuysouttheMcDonaldbrothersfor$2.7millionandopenshisfirst
Hamburger University,forthetrainingoffranchisees

1962:TheSpeedeelogoisreplacedbytheGoldenArchesasthecompanylogo.
Advertisesnationally,forthefirsttime,inLifemagazine.

1963:The500thMcDonaldsisopened.Thefishfiletsandwichisaddedtothemenu.
RonaldMcDonaldisintroduced.
1965:Stockgoespublicincelebrationofthe10thanniversaryofthecompany.Ads
startshowingonnetworktelevision.

1966:Thefirstpublicshareholdersmeetingisheld.Saleshit$200million.

1967:ThefirstrestaurantsoutsidetheUSopeninCanadaandPuertoRico.

1968:TheBigMacisaddedtothemenu.The1,000thstoreisopenedinDesPlaines.

1969:Internationaldivisionofthecompanyisformed.McDonaldsislistedonthe
MidwestandPacificstockexchanges.

Mcdonalds Timeline

1970:The1,500threstaurantisopenedinNewHampshire.Newadvertisingslogan
becomes,You deserve a break today, so get up and get away to McDonalds.

1972:McDonaldsisa$1billioncorporation.SurpassestheArmyasthenations
biggestdispenserofmeals.

1973:TheEggMcMuffinisaddedtothemenuasabreakfastitem.

1974:ThefirstRonaldMcDonaldHouseisopened.Salesapproach$2billion.Fred
TurnerisnamedPresidentandCEO.

1976:Salesexceed$3billion,andthe4,000thstoreisopened.Directorsdeclarethe
firstcashdividend.

1977:Avarietyofbreakfastfoodsareaddedtothemenu.
1979:HappyMealsareaddedtothemenu.Halfofallstoreshaveadrive-thru

Mcdonalds Timeline

1983:ChickenMcNuggetsareintroducedonthemenu.

1984:RayKroc,founderandseniorchairmanoftheboardofdirectors,dies.

1984:Yearendsalespass$10billion.EdRensibecomespresidentofMcDonalds
USA.OpenrestaurantsinAndorra,Finland,TaiwanandWales,andthe8,000 th
restaurantisopened.

1985:TheMcDLTisintroduced,ahamburgersoldwithlettuceandtomatoina
separatecompartmenttokeepthemcool.

1987:Tossedsaladsareaddedtothemenu,tosatisfythepublicsdesireforlighter,
morenutritiousfast-foods.

1990:TheworldsbiggestMcDonalds,withseatingfor700,isopenedinMoscow.

1994:StellaLiebeckfromAlbuquerque,NewMexicosuesMcDonaldsforalmost$2.9
millionforburnsfromspillingahotMcDonaldscoffeeonherlap.Shereceives
$640,000fromthesuit.

McDonald's Timeline
1997:Developplanstolowerpricesinordertoprotectmarketsharefromfurther
encroachment,mostlybyBurgerKing.Newpromotion,theTeenieBeanieBabies,
isthemosteffectivemarketingplaninMcDonaldshistory.
1998:Thecompanydiversifiesoutsideofhamburgersaleswithitspurchaseofa
minoritystakeinaDenverbasedchainofcasualMexicanrestaurants,Chipotle
MexicanGrill.
1999:ContinuesdiversificationwiththepurchaseofDonatosPizzaInc.Thiswas
laterboughtbackbytheoriginalownerin2003.
2000:Initslargestacquisitionever,McDonaldspurchasesBostonMarket,Inc.for
$173.5million.RestaurantisopenedinFrenchGuiana.

Mcdonalds Timeline

2004:IntroducestheGoActive!HappyMeal,consistingofasalad,water,
stepometer,andanexercisebooklet.
2005:Netincomeincreases14%to$2.6billion,withrecordannualsalesof$20.46
billion.
2005:ChipotleMexicanGrillInc.,inwhichMcDonaldshasa92percentownership
stake,filesaninitialpublicofferingwiththeSecuritiesandExchangeCommission.
2006:Plansareestablishedtoopen125restaurantsperyearinChina,bringingthe
totallocationsthereto1,000by2008.
2008:McDonald'sIntroducetrans-fat-freemenuitems,executesaglobalpacking
redesigneffort,andopensits1000threstaurantinchina.
2009:Thecorporationscampusofficereceivesoneofthecountry'smostprestigious
greenbuildingawardsbeingpresentedLEEDEBPlatinum.McCafeisaddedtothe
menu.
2010:The300thRonaldMcDonaldhouseopens,andMcDonald'sbeginsofferingfree
Wi-Fiinover11,000locations.Oatmeal,fruitsmoothiesandfrappesareaddedto
themenu.
2011:ChipotleBBQisaddedtothemenu.Plansareannouncedforalarge-scale
restaurantremodel.

Mission Statement
McDonald's brand mission is to "be our
customers'favoriteplaceandwaytoeat."
Our worldwide operations have been
aligned around a global strategy called
the Plan to Win centering on the five
basics

of

an

exceptional

customer

experience People, Products, Place,

PriceandPromotion.Wearecommittedto
improving our operations and enhancing
ourcustomers'experience.

Vision Statement

Weaspiretoendhungeronemealatatimeby
providinglowcost-highqualitynutritionalfood
globally.

CorporateResponsibilityStatement

McDonald's2008CorporateResponsibilityReport

Itallcomesdowntothefood.Thatswhat
McDonaldsisallabout.Thefoodweservehow
andwhereweserveitthewelfareofour
employeesandoursuppliersemployees
wherethefoodcomesfromandsomuchmore.
Runningrestaurantsisamulti-facetedendeavor,
butultimately,itallcomesbacktothefood.

Looking back on 58yrs of

McDonald's slogans

Early 1960s: LookfortheGoldenArches

Early 1960s: RealGood,andStillOnly15Cents
Mid 1960s: Let'sEatOut!
Late 1960s: TheClosestThingtoHome
Early 1970s: YouDeserveaBreakToday
Early to Mid 1970s: GetDownwithSomethingGood
Mid 1970s: TwoAll-BeefPatties
Mid 1980s: MacTonight
Late 1990s: DidSomebodySayMcDonald's?
Early 2000s: WeLovetoSeeYouSmile
Early 2000s to Present: I'mLovin'It

Values
We place the customer experience at the core of all we do
Ourcustomersarethereasonforourexistence.Wedemonstrateourappreciationbyprovidingthemwithhighquality
foodandsuperiorservice,inaclean,welcomingenvironment,atagreatvalue.
We are committed to our people
Weprovideopportunity,nurturetalent,developleadersandrewardachievement.Webelievethatateamofwell-trained
individualswithdiversebackgroundsandexperiences,workingtogetherinanenvironmentthatfostersrespectanddrives
highlevelsofengagement,isessentialtoourcontinuedsuccess.
We believe in the McDonalds System
McDonaldsbusinessmodel,depictedbythethree-leggedstoolofowner/operators,suppliers,andcompany
employees,isourfoundation,andthebalanceofinterestsamongthethreegroupsiskey.
We operate our business ethically
Soundethicsisgoodbusiness.AtMcDonalds,weholdourselvesandconductourbusinesstohighstandardsoffairness,
honesty,andintegrity.Weareindividuallyaccountableandcollectivelyresponsible.
We strive continually to improve
Wearealearningorganizationthataimstoanticipateandrespondtochangingcustomer,employeeandsystemneeds
throughconstantevolutionandinnovation.
We grow our business profitably
McDonaldsisapubliclytradedcompany.Assuch,weworktoprovidesustainedprofitablegrowthforourshareholders.This
requiresacontinuingfocusonourcustomersandthehealthofoursystem.
We give back to our communities
Wetakeseriouslytheresponsibilitiesthatcomewithbeingaleader.Wehelpourcustomersbuildbettercommunities,
supportRonaldMcDonaldHouseCharities,andleverageoursize,scopeandresourcestohelpmaketheworldabetter
place.

McDonalds Franchise

MostOwner/OperatorsentertheSystembypurchasinganexistingrestaurant,either
fromMcDonaldsorfromaMcDonaldsOwner/Operator.
FinancialRequirements/DownPayment

Initialdownpaymentisrequiredwhenpurchasinganewrestaurant(40%ofthetotal
cost)oranexistingrestaurant(25%ofthetotalcost).

Thedownpaymentmustcomefromnon-borrowedpersonalresources,which
includescashonhand,securities,bonds.

Generallyrequireaminimumof$300,000ofnon-borrowedpersonalresourcesto
consideryouforafranchise.

Remainingbalanceofpurchasepricemustbepaidoffwithin7years.McDonalds
doesnotofferfinancingbuttheyworkwithmanynationallendinginstitutions.

McDonaldsownsallbuildingsandproperties.

Popular Promotions

ToyswithHappyMeals
Cars
Pirates of the Caribbean
Games-Monopoly/UnoWin
variousprizesandtrips
Collectibles-CocaColaGlasses,
BeanieBabies
OlympicGames-Globalpartnerof
theOlympicgames-reflectsour
commitmentoftheimportanceof
sportsandphysicalactivities.
WorldChampions-1,400children
from51countrieshadthe
opportunitytomeettheworldsbest
soccerplayersatthe2006FIFA
WorldCup.

Competitors

Competitors
Subway
"SubwayOvertakesMcDonald'sWithMoreThan
34,000Global...

Burger King
"Inresponse,BurgerKingintroducedanumberof
newmenuitems,includingreduced-calorieFrench
friescalledSatisfiersandtheBigKingtwo-patty
burger,whichcompeteswithMcDonald'sBigMac.

Shake Shack
ShakeShackisbetterthanMcDonald'sbecauseit
costsmore?"

SWOTAnalysis

FunFacts

McDonaldsoriginallysoldhotdogs,not
hamburgers.

In 1937, brothers Dick and Mac

McDonaldlaunchedtheAirdromehotdog
stand
witha$5,000loan.Itwasntuntil1948
thattheyrevampedtheirbusinessand
turneditintoaburgersandmilkshakes
joint.

1in8Americanshasbeen
employedbyaMcDonalds.

McDonaldsisnotthe
worldslargestrestaurant
chain.Subwayis.

McDonald'shas
761,000employees
worldwide,that'smore
than
thepopulationof
Luxembourg

Thecompanysellsmore
than75hamburgersper
second.

MacDonald'shiresaround1millionworkersintheUSevery
year

Thisestimatefrom
Fast
FoodNationassum
esa700,000dome
stic
workforcewith150
%turnoverrate.

TheQueenofEnglandownsaretailparkinSlough,
whichhasadrive-thruMcDonald's

Accordingtocompanyestimates,oneineveryeightAmerican
workers
hasbeenemployedbyMcDonald's

Conclusion
Overall,McDonaldsisastrongcorporationthatisinagrowing
industry.Itsbecomingapartofeveryculturebyadoptingthe
foodhabitsofeachcountrytheyoperatein.
Thecompactionisraisinginthefastfoodindustryaroundthe
worldbutMcDonaldshaveawideandstablebasebecauseofit
wellknowbrandandtheirstrongbusinessmodelcanbeusedin
manyinternationalbusinessestoinsuregrowandprofit.They
haveatransnationalbusinessmodelthatallowsthemtohavea
universalproductthatcanbetailoredtofitnationalneeds.
McDonaldskeeponinventingnewmeals,Desertsordrinksto
attractmorecustomersandenabletheirexistingcustomerstotry
newFlavorsfromaroundtheworld.

Conclusion
McDonaldssystemofcorporatelearningallowsthemtogain
knowledgeofnewmarketingorproductideasastheyareoneof
theleadingfast-foodindustriesthatcanthenbetransferredto
othernationalareas.
Theresearcherdiscoveredoverthenextfewyearsthepercentage
offoreignstoreswillescalateasthefastfoodindustryisgrowing
duetopresentlifestyle.McDonaldsishandlingthetransitionfrom
adomestictointernationalcompanyverysmoothly.Itistaking
therightstepstoallowittosucceedinitslongtermgoals.

 Economiccrashesandpoliticalinstabilitycanruinabusiness
market.McDonaldshastobeawareofthechangesinthe
governmentandcultureinordertobetterforecasttheproblems
thattheywillbefacing.ItisimportantforMcDonaldstocontinue
itsstrongsystemofcommunicationinordercontinuegrowingas
abusiness.

References
1.JessicaMisener.(2014).17 Things You Didnt Know About McDonalds.Available:
http://www.buzzfeed.com/jessicamisener/things-you-didnt-know-aboutmcdonalds#.xs7aLeKlQL.Lastaccessed6thapril2015.

2.GUSLUBINANDMAMTABADKAR.(2012).8 Facts About McDonald's That Will Blow

Your Mind Read more: http://www.businessinsider.com/19-facts-about-mcdonalds-thatwill-blow-your-mind-2012-4?op=1#ixzz3WYGfHW15.Available:
http://www.businessinsider.com/19-facts-about-mcdonalds-that-will-blow-your-mind2012-4?op=1%00.Lastaccessed6thapril2015.
3.KRISTINHUNT.(2013).LOOKING BACK ON 58YRS OF MCDONALD'S SLOGANS.
Available:http://www.thrillist.com/eat/nation/looking-back-on-58yrs-of-mcdonaldsslogans.Lastaccessed6thapril2015
4.spiderbookAuthors.(2015).MacDonalds Competitors.Available:
http://spiderbook.com/mcdonalds-competitors.html.Lastaccessed6thApril2015.