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McDONALD’S: THE HAMBURGER PRICE WARS

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In 2001 McDonald’s was the largest restaurant chain in the United States, with domestic
sales of almost $15.9 billion. However, in the first three quarters of 2002, same-store sales
(relative to the same quarter in the previous year) declined. To reverse this negative sales trend,
McDonald’s CEO Jack Greenberg announced plans for a national dollar menu, beginning in
November 2002. The centerpiece of the new menu was three premium sandwiches: the Big N’
Tasty, the Double Cheeseburger, and the McChicken sandwich. McDonald’s franchisees

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wondered how the new menu would affect their profits.

McDonald’s History

In 2001 Americans spent $132 billion on fast food, including $47 billion at hamburger
restaurants.1 Each day about 25 percent of all Americans visited a fast-food restaurant. Heavy
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users, who represented 20 percent of fast-food customers, accounted for 60 percent of visits to
fast-food restaurants.2 The popularity of fast food could be traced back to 1948, when Maurice
and Richard McDonald opened the first self-serve McDonald’s in San Bernardino, California.
Six years later Ray Kroc, a milk shake machine salesman, convinced the brothers to let him
become their franchising agent. In 1961 Kroc paid $2.7 million for the brothers’ share of
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McDonald’s System, Inc. To raise money for expansion, Kroc took the company public in
1965.3 At the time of Kroc’s death in 1984, the company had 7,500 restaurants in 32 countries.4

By October 2002 McDonald’s corporation had over 30,000 restaurants located around
the world. About 1.56 percent of U.S. McDonald’s restaurants were company owned.5 Each
day over 20 million Americans visited McDonald’s. Each month over 90 percent of American
children aged 3 to 9 went to McDonald’s at least once.6 Table A summarizes the company’s U.S.
No

performance in the first three quarters of 2002.7 Breakfast and lunch accounted for about 25 and
37.5 percent, respectively, of McDonald’s restaurant sales, while dinner and snacks accounted for
25 and 12.5 percent of sales.8
Do

This case was prepared by Mark E. Parry, Professor of Business Administration, Darden Graduate School of
Business Administration, University of Virginia. It was written as a basis for class discussion rather than to
illustrate effective or ineffective handling of an administrative situation. Copyright  2004 by the University of
Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to
sales@dardenpublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a
spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or
otherwise—without the permission of the Darden School Foundation. Rev. 12/04.

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Table A
McDonald’s Financial Performance in 2002
(in millions)
Q1 Q2 Q3
U.S. system-wide sales $4,793 $5,253 $5,359
Number of U.S. restaurants 13,148 13,223 13,447

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Company store revenues $725 $816 $846
Franchisee store revenues $4,067 $4,437 $4,512
Company revenue from franchisees $541 $586 $600
Company store profits $122 $145 $144
Operating income before SG&A $547 $615 $618
Operating income after SG&A $424 $518 $484

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Franchisees

When Ray Kroc began selling McDonald’s franchises in the 1950s, most franchisors
made their money selling territorial rights, equipment, and supplies. Kroc chose a different tack,
selling single-store franchises to individual entrepreneurs, not absentee owners, for $950 and 1.9
percent of gross sales. In part, these terms reflected Kroc’s belief that the best way to make
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McDonald’s profitable was to do everything possible to make the franchises profitable.9

From his franchisees Kroc demanded exact compliance with his pricing structure and
guidelines for food preparation, customer service, and cleanliness.10 In 1958 Kroc told the
McDonald brothers, “The only way that we can positively know that these units are doing what
they are supposed to do . . . is to make it so that they have no alternative whatsoever.” He
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continued, “You can’t give them an inch. The organization cannot trust the individual; the
individual must trust the organization [or] he shouldn’t go into this kind of business.”11

McDonald’s determined store layout, specified seating, lighting fixtures, music, napkins,
and cleaning soap. Company procedures even covered bag folding and presentation.12 The spirit
of these directions was articulated in the 1958 operations manual by future CEO Fred Turner,
No

who wrote:

YOU MUST BE A PERFECTIONIST! There are hundreds and hundreds of

details to be watched. There isn’t any compromising. Either (A) the details are
watched and your volume grows, or (B) you are not particular, not fussy, and do
not have a pride or liking for the business, in which case you will be an also-ran.
If you fall into the “B” category, this business is not for you!13
Do

Quality, service, cleanliness, and value

Ray Kroc built McDonald’s on one simple formula: quality, service, cleanliness, and
value, or QSCV for short. The company’s success at implementing this formula was reflected in
one competitor’s 1984 assessment: “Do they have great french fries? Yes. Is the service quick?

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The fastest. Are the restaurants clean? Immaculate. You have to give McDonald’s credit for
knowing exactly what they’re doing.”14

Quality: From McDonald’s perspective, quality was inseparable from consistency. In

1996 one McDonald’s executive said that McDonald’s customers were not looking for “the best
burger I’ve ever had” but rather “the same burger I’ve always had.”15 The objective of

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McDonald’s management was “to look for new, innovative ways to create an experience that is
exactly the same, no matter what McDonald’s you walk into, no matter where it is in the
world.”16 The result, according to Fortune, was that McDonald’s had become “a symbol of
stability. A McDonald’s meal tastes pretty much the same everywhere.”17

With the growth of competitive chains, however, many customers became more sensitive

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to the taste of McDonald’s hamburgers. In a 1997 survey of 300 customers, 41 percent of
respondents said that Burger King had the best-tasting hamburgers, while 23 percent preferred
Wendy’s and 18 percent preferred McDonald’s.18

To improve quality perceptions, McDonald’s began installing a new production system

designed to permit made-to-order sandwiches that incorporated precooked meat stored in a
temperature- and humidity-controlled holding bin. Executives hoped that the new system would
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improve perceptions of product quality and freshness, reduce waste, and improve margins.19

Unfortunately, the new system did not appear to help quality perceptions. In a 2000
national survey that assessed consumer satisfaction with eight national fast-food chains,
McDonald’s finished last in five of six categories, including perceived food quality.20 Table B
summarizes the results of a 2001 survey involving 50,000 customers and assessing 60 fast-food
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restaurants: 21

Table B
Respondents Rating McDonald’s as Excellent
Average McD
Taste or flavor 37.9% 18.5%
No

Quality of ingredients 32.5 14.8

Temperature of food 39.3 23.2
Availability of healthy/nutritious food 17.8 9.6
Speed of service 27.5 22.0
Accuracy in filling orders 43.1 28.8
Cleanliness of restaurant 32.7 23.1
Overall appeal to kids 19.1 60.2
Value for money 27.1% 29.6%
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Service: In the Ray Kroc credo, service meant minimal customer waiting time. By the
1990s, however, service had become a problem at McDonald’s. In 1990 U.S. president Ed Rensi
said, “We are working on service now more than anything.”22 A new customer service initiative
introduced in late 1995 included the following goals: (1) all orders filled in 90 seconds or less and

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(2) all waiting times less than 3.5 minutes (including customers served at drive-through windows).23
Despite this and similar initiatives, speed continued to be a problem in the latter half of the 1990s.

The “made-for-you” system made service problems worse. Table C shows the decline in
the average speed of service at McDonald’s drive-through windows from 1997 to 2001.24

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Statistics on front counter service times were unavailable, but some analysts argued that
“assembled-for-you” had to be slower than filling orders from an inventory or preassembled
sandwiches.25 Others agreed, noting that the new system was vulnerable to production bottlenecks
when demand was heavy or when restaurants were understaffed.26

Table C
Drive-Through Service Time (seconds)

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97 98 99 00 01
McDonald’s 161 178 167 170 171
Wendy’s 174 171 150 142 135
Burger King 189 178 171 178 162

In a 2002 survey of 27,000 people, only 22 percent rated McDonald’s service as

excellent, down from 24 percent in 1999.27 In another survey McDonald’s ranked 22 out of 25
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drive-though restaurants in order accuracy.28 McDonald’s internal research indicated similar
problems. For example, according to a September memo sent to franchisees in Raleigh, North
Carolina, the company’s mystery shopper program indicated that (1) local stores were “meeting
our speed of service standard only 46 percent of the time” and (2) 3 of 10 customers waited
“more than four (4) minutes to complete their order.”29
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Cleanliness: In a television interview, Phil Donahue once asked Ray Kroc, “Did you really
clean the johns?” Kroc replied, “You’re damn right I did, and I’d clean one today if it needed it.”30
Kroc had no patience with dirty restaurants. According to one McDonald’s executive:
a
When Ray read out an operator with a dirty store, you could hear him six blocks
away. “You’re in the wrong business, and you ought to sell out,” he would tell
No

them. After he got through reaming a guy out, he would talk to him like a son,
and tell him he knew he could do better.31

After Kroc’s death, the obsession with cleanliness continued under McDonald’s USA
President Ed Rensi. When Rensi was asked “What’s on your mind these days?” he replied:
“We’ve got some 20,000 bathrooms that need to be cleaned every day.”32 Asked where
McDonald’s would be in the year 2020, he replied, “I can’t tell you; I just want to make sure that
all the bathrooms are clean tomorrow.”33 To this end, top executives like Rensi spent 70 percent
of their time visiting McDonald’s restaurants.34 Rensi had “one simple but fail-safe way to grade
Do

a store on its Q.S.C.: ‘All you need to do is walk into a McDonald’s restaurant—or any
restaurant, for that matter—and walk toward the rest rooms. If you can smell them before you
get there, you know there’s a problem.’”35

a
The phrase “read out” is a variation of the slang expression “to read the riot act to.”

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Despite this focus on cleanliness, problems persisted at some franchise restaurants. For
example, one mother posted the following complaint about the McDonald’s restaurants in
Victoria, Texas: “What grosses me out the most is when I take my 2-year-old to an extremely
dirty play place that smells like pee. Not to mention filthy floors and unattended to
bathrooms.”36 Table B indicates this mother was not alone: only 23.1 percent of survey

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respondents rated McDonald’s cleanliness as excellent.37 To improve both cleanliness and
service, McDonald’s initiated a mystery shopper program in February 2002.38

Value: From the time Ray Kroc began franchising, he viewed the 15-cent hamburger as a
core component of McDonald’s image. Price discounting, however, was traditionally considered
the province of local franchisees. Moreover, by the late 1980s, corporate headquarters was

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preoccupied with environmental (e.g., foam packaging) and nutritional issues. As one executive
later explained, these issues “were not front-burner issues for heavy consumers of our products.”
He continued, “If we had paid more attention to our research, we would have realized that our
number-one problem was value.”39

During the summer of 1990, McDonald’s responded to competitive prices with a $1.99
promotion on kid-oriented Happy Meals.40 According to McDonald’s: Behind the Arches, “The
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results were eye-opening to the system—transaction increases ranging from 40 to 50 percent
when the Happy Meal was priced under $2.”41 By 1995, Extra Value Meals (combination meals
that included a sandwich, fries, and a drink) accounted for almost half of all menu transactions at
McDonald’s, up from only 20 percent four years earlier.42 Table D indicates prices and gross
margins for five popular value meals. (The storewide margin was 66%.)43
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Table D
Value Meal Prices and Margins
Food & Gross
Value Meals Price Paper Cost Margin

Quarter Pounder with Cheese $3.74 $0.71 81%

No

Big Mac 3.95 0.75 81

Grilled Chicken 4.24 1.06 75
Double Cheeseburger $3.78 $0.68 82%

Despite the addition of Extra Value Meals, McDonald’s continued to feel price pressure
from competitors. In April 1997 the company introduced Campaign 55, a promotional program
that featured a rotating menu of 55-cent sandwiches; however, the discounted price was only
available to customers who also purchased a large order of fries and a large drink. This
Do

qualification was not clearly communicated to customers in ads and signs. The unhappy reactions
of surprised customers led McDonald’s to cancel the program after two months.44 A senior vice-
president for marketing at McDonald’s commented, “We thought it was best to just walk away and
start fresh.”45

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Promotion

McDonald’s relied heavily on promotions such as Happy Meals to attract children. The
first Happy Meal, introduced in 1977, combined a hamburger, french fries, and a soft drink
packaged in boxes designed to look like cars in a circus train. The first national Happy Meal

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promotion, Star Trek, followed one year later. Happy Meals soon became the company’s most
important promotion. During a 1983 Happy Meal promotion, featuring Hot Wheels die-cast cars,
the company purchased 44 million toy vehicles.46 Although McDonald’s initially offered one or
two Happy Meal promotions each year, the company was forced to add additional promotions
because “kids were disappointed when they didn’t get a Happy Meal.”47 In 2001 Happy Meals
constituted about 25 percent of U.S. system-wide sales. The average check that included a Happy
Meal was 50 percent higher than the average check that did not include a Happy Meal. 48

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In 1997 McDonald’s began selling Teenie Beanies—miniature versions of a popular line
of animal-shaped bean bags known as Beanie Babies—for $1.49 to anyone who purchased a
Happy Meal.49 McDonald’s ordered 100 million Teenie Beanies, but many stores exhausted
their allotment before the five-week promotion ended.50 A McDonald’s marketing executive
called the promotion “our most successful Happy Meal of all time.”51
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The following year McDonald’s ordered 250 million Teenie Beanies. During the first
week of the four-week spring promotion, the company set a record for U.S. franchise sales.52 By
2000, some observers believed that McDonald’s had “become more of a toy promotion company
than a fast-food company.”53 Unfortunately, by that time the Teenie Beanies craze appeared to
be dying out. McDonald’s scheduled only one Teenie Beanies promotion in 2001, down from
three in the previous year.54 After McDonald’s reported its second consecutive quarter of
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declining profits in April 2001, Business Week criticized McDonald’s reliance on Teenie Babies
and other promotions to boost sales, concluding that, “after years of the same toys and games,
these gimmicks are falling flat with consumers.”55

Premium Hamburgers
No

To improve consumer perceptions of quality and taste, McDonald’s introduced a series of

new hamburgers, featuring lettuce and tomato. The McDLT was launched in 1985, followed by
the McLean Deluxe, the Arch Deluxe, and the Big N’ Tasty.

McDLT

In 1985 McDonald’s responded to three years of attacks from Burger King and Wendy’s
Do

with its first new burger since the Quarter Pounder, which debuted in 1972. The new hamburger,
dubbed the McDLT, was a quarter-pound hamburger served in a double-cup foam-box package
that separated the hamburger from its condiments (lettuce, tomato, mustard, ketchup,
mayonnaise, onions, and pickles). Although as many as 1,800 restaurants offered the sandwich
by mid-1985, McDonald’s launched the McDLT nationally in the first week of November

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1985.56 Television ads claimed that the “hot stays hot” and the “cool stays cool” and added that
the McDLT “could be the best-tasting lettuce and tomato hamburger ever.”57

By the end of March 1986, promotional spending for the McDLT was approaching $100
million.58 During a public speaking engagement in April, McDonald’s Corporation President

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and COO Michael Quinlan admitted that the McDLT was nothing more than a Quarter Pounder
with lettuce and tomato. Then how could McDonald’s call the McDLT a new product? Quinlan
responded, “Were we selling it two years ago? No. Now we’re selling it. It’s a new product.”59

In October 1986, Advertising Age reported that McDonald’s was “putting heavy pressure
on the Leo Burnett Company advertising agency to buttress McDLT sales.” One source said the
sandwich was “heavily media dependent,” meaning that when advertising slowed down for the

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sandwich, so did sales. Several months earlier, McDonald’s had “forced a change in the
personnel handling its account” at the Burnett agency. The result was that a new series of ads
that employed celebrities proclaiming the McDLT was misnamed, because it contained more
than a burger, lettuce, and tomato.60 By the end of the year, however, ADWEEK was predicting
that the McDLT “could be headed for a McFlop.”

McLean Deluxe
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In the spring of 1991, McDonalds replaced the McDLT with the McLean Deluxe, which
featured a hamburger patty mixed with carrageenan (a seaweed derivative). The new sandwich
contained 320 calories and 10 grams of fat, 16 grams less than a Big Mac.61 Early reports from
some franchisees indicated that the McLean Deluxe accounted for 3 percent to 4 percent of sales,
but others questioned the value of a product that “requires high promotion, offers questionable
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sales growth and mixed taste results.” As one franchisee said, “I’ve been in this business since
the day I walked out of college 24 years ago, and I’ve never had a customer say to me, ‘Gee, I
wish you guys had healthful food.’”62 One analyst agreed, noting that “People talk thin and eat
fat.”63 When McDonald’s finally discontinued the McLean Deluxe in January 1996, Vice
President Starmann offered the same explanation, “People talk thin and eat fat.”64
No

Arch Deluxe

To replace the McLean Deluxe, McDonald’s began testing a new hamburger called the
Arch Deluxe. The May edition of Mac Today reported that the Arch Deluxe was a new flagship
brand with a “brand new taste that’s paving the way for a dramatic refreshening of our entire
menu.” Mac Today continued, “While the Arch Deluxe will help regain the balance between
being special for kids and being special for adults, an entire line of Deluxe sandwiches will be
aggressively tested to capitalize on the tremendous adult momentum it generates.” Objectives
Do

for the launch included (1) creating a $500-million brand by the end of 1996; (2) inviting “adults
back to McDonald’s by enhancing our adult and food image”; and (3) generating “system unity
and pride.”65

The Arch Deluxe was created by Andrew Selvaggio, who spent two years developing the
new sandwich. Before joining McDonald’s, Selvaggio had served as the head chef at the Pump

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Room, an upscale Chicago restaurant. According to Selvaggio, the Arch Deluxe was a “home-
style” burger that would bring back memories of “when I was a kid.” A reporter who
interviewed Selvaggio noted that the new sandwich had “leaf lettuce that looks torn, rather than
shredded lettuce that looks processed, and two mustards, as if the refrigerator had been raided.”
Selvaggio called the potato roll bun “soft and nurturing.” He continued, “Black pepper and

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hickory-smoked bacon give this sandwich an outdoorsy taste. . . . The sandwich has an adult
taste. But it’s not any one bite. . . . It’s how the sandwich makes you feel.”66

The national launch of the Arch Deluxe began with teaser ads featuring Ronald
McDonald playing golf, shooting pool, and disco dancing. All featured the tag line,
“McDonald’s is becoming a little more grown-up.”67 On the launch date, May 9, McDonald’s
placed ads on the four major networks and several cable channels. In addition, the company

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staged events in a number of major cities. At Radio City Music Hall in New York City,
reporters, suppliers, and franchisees tasted the new burger while sipping champagne and
watching a tuxedo-clad Ronald McDonald dance with the Rockettes.68

The estimated $75-million advertising campaign featured children recoiling at the

thought of the Arch Deluxe.69 One billboard ad showed “black-and-white photos of kids making
faces at the prospect of having to eat the adult-oriented burger, with such comments as:
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‘Blackeyed peas. Spinach. Cauliflower. Now Arch Deluxe.’” A second pictured a young girl
eating a burger and copy that read, “It’s true. We do mature faster than boys.”70 Television
ads emphasized similar themes. In addition, the company distributed over “$50 million worth
of coupons for free Arch Deluxes.”71

By the end of June, McDonald’s executives reported that the Arch Deluxe launch had
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replaced the Big Mac as the most successful launch in the company’s history.”72 Unfortunately,
same-store sales (measured relative to the same quarter in the previous year) failed to respond to
the new burger, as Table E illustrates.73 The 1996 decline in same store sales suggested that
either (1) the Arch Deluxe was not selling well or (2) it was cannibalizing sales of other items on
the menu. One analyst said, “It was never realistic to think the Arch Deluxe would be some kind
of silver bullet. It’s a hamburger offering and not too different from what’s already out there.”74
No

Table E
Changes in Same-Store Sales at McDonald’s
Year Q1 Q2 Q3 Q4
1993 3.5% 5.4% 3.8% 2.8%
1994 2.2 1.6 1.4 -0.6
1995 2.6 3.2 -2.0 -1.2
1996 -3.0 -3.0 -3.0 -2.0
1997 3.0 -2.0 2.0 -1.0
Do

1998 0.5 8.5 2.5 3.0

1999 2.5 3.5 3.5 3.0
2000 3.0 -2.0 2.0 1.5
2001 1.5 -2.5 0.5 0.5%
2002 -0.1% -1.6% -2.8%

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Big N’ Tasty and the MBX

In late 1996, McDonald’s restaurants in Southern California began offering the Big N’
Tasty burger, which featured a quarter-pound burger with a thick slice of tomato, leaf lettuce,
and slivered onions, all served on a sesame-seed bun. The new burger was priced individually

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for 99 cents or as part of a Value Meal (which included french fries and a large drink) for
$2.99.75 During the summer of 1997 McDonald’s expanded the test to Cleveland.76 By
September, one out of ten McDonald’s restaurants was selling a version of the Big N’ Tasty,
which many saw as an imitation Whopper.77 Nevertheless, McDonald’s denied plans for a
national launch of the Big N’ Tasty. One executive said, “Adding lettuce and tomato to a
hamburger is not rocket science.”78

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In late 1997, McDonald’s began test marketing the Big Xtra (MBX), which featured a 4.5
ounce beef patty on a sesame seed bun, along with lettuce, a slice of tomato, onions, and
pickles.79 By April 1998, the new burger was available in over 1,000 restaurants on the east
coast.80 By the following August, over 3,000 restaurants offered the MBX.81 Some observers
saw the MBX as an attempt to outdo the whopper. But the product failed to generate much
interest from consumers. Some analysts suggested that the problem was price. In addition, the
MBX created operational challenges for franchisees, because the bun and meat patty were
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significantly larger than those used in other sandwiches. In October 2000, McDonald’s CEO
Greenberg announced that the MBX would be replaced by the Big N’ Tasty. 82

In February 2001, McDonald’s announced a national advertising campaign to promote

the Big N’ Tasty. Ads featured Laker star Kobe Bryant and carried the tag line, “The next big
thing.” In one execution fans chanted Kobe’s name while he sat in the locker room eating a Big
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N’ Tasty. In a second execution, Kobe argued with his agent over the division of the Big N’
Tasty.83 A follow-up spot featured Kobe filling in for an absent player in a summer youth camp
championship game.84

The Dollar Menu

No

In the first eight months of 2000 the McDonald’s Northeast division—2,400 restaurants
ranging from Maine to Maryland—recorded an average same-store sales decline of 0.4 percent,
while customer counts declined by 2.6 percent. The New York region responded with a menu of
items priced at or under one dollar. The new menu produced a 25 percent decline in sales of
Extra Value meals, but increased total sales and the number of customer transactions.85

In November 2001, a memo to 550 McDonald franchisees in Southern California

Do

outlined plans for an “overtly aggressive value tactic.” During the year the number of daily
transactions had fallen by 35, a decline that cost the average Southern California franchisee $155
per day. The memo attributed this decline to the company’s poor performance in the a la carte
segment, which consisted of those customers who ordered individual menu items as opposed to
complete meals.

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To improve performance within the a la carte segment, the memo outlined plans for a 99-
cent Big Mac promotion in December, followed by the introduction of an Everyday McValue
Menu. Featured items included a 59-cent hamburger and 99-cent double cheeseburgers, drinks,
and fries. The memo also indicated that McDonald’s viewed the Southern California area as a
test market for a possible national dollar menu.86

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A January 2002 memo to franchisees reported that in the first three weeks of the 20-item
McValue Menu, same-store sales fell 7 percent.87 Three months later a McDonald’s executive
reported that the Southern California McDollar Menu had failed to produce positive increases in
same-store sales. He added, “We think the value menu is having a positive incremental sales
effect.”88

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In September 2002, McDonald’s announced a new national value strategy. On October
4, the company planned to begin advertisements for a Dollar Menu featuring the Big N’ Tasty
and the McChicken Sandwich for $1.00. On November 1, the company planned to expand the
Dollar Menu to eight products.89 The following table reports the gross margins for each item.90

Table F
Dollar Menu Costs and Margins
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Food &
Item Paper Cost Margin
McValue Fries 0.12 88%
Soft Drink 0.17 84
Big N’ Tasty 0.64 36
Double Cheeseburger 0.52 48
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McChicken 0.46 54
Pies (two) 0.34 67
Sundae 0.10 90
Fruit N’ Yogurt Parfait 0.35 65%

McDonald’s expected to spend $20 million advertising the new menu in the fourth
quarter of 2002.91 To encourage franchisee participation, McDonald’s promised to absorb 30
No

percent of any gross profit reductions incurred by franchisees with above-average sales of the
Big N’ Tasty.92 CEO Jack Greenberg estimated that this down-side protection would cost
McDonald’s between $4 and $9 million.

In a September statement to analysts, McDonald’s USA President Mike Roberts said,

“We expect the Value Menu to generate a sustaining sales increase, and our experience has
shown virtually no impact on the average check.” Greenberg added that the Dollar Menu was
“in about 4,000 restaurants” and was “performing well from a profit point of view.”93
Do

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Endnotes
1
Jeff Omohundro, Katie Willet, John White, and James Borges, “Restaurant Industry Report: Industry Overview
and Outlook,” Wachovia Securities, February 24, 2003, 7.
2
Jennifer Ordonez, “Cash Cows: Hamburger Joints Call Them ‘Heavy Users’—But Not to Their Faces,” Wall
Street Journal, January 12, 2000, A1.

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3
Charlie Bernstein, Allen J. Bernstein, and David Q. Maler, “McD at 35: Unparalleled Success; Clouds on the
Horizon,” Nation’s Restaurant News 24 (34) (August 27, 1990): 60.
4
“Death of a Salesman,” The Economist (January 21, 1984): 66.
5
Larry Miller, “McDonald’s Appears to Be Turning Around and Investors Could Be ‘Lovin’ It,” Prudential
Financial Research, August 27, 2003, 29.
6
George Will, “Americans Stuffing Selves to Early Graves,” Chicago Sun-Times, February 28, 2002, 29.
7
Michael Sherrick and Joshua Zelig, “Moving in the Right Direction, but Not Fixed Yet,” Morgan Stanley, October
23, 2002.

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8
Miller, “McDonald’s Appears to Be Turning Around.”
9
“McDonald’s; Kroc’s Gold,” The Economist (February 28, 1987): 108.
10
Lisa Bertagnoli, “McDonald’s Company of the Quarter Century,” Restaurants & Institutions 99 (18), July 10,
1989, 22.
11
John F. Love, McDonald’s: Behind the Arches (New York: Bantam Books), 144.
12
Stephen Drucker, “Who is the Best Restauranteur in America?” The New York Times, March 10, 1996, Section 6,
45.
13
Love, McDonald’s, 144.
op
14
Monci Jo Williams, “McDonald’s Refuses to Plateau,” Fortune (November 12, 1984): 34.
15
Drucker, “Who is the Best Restauranteur in America?”
16
Herma M. Rosenthal, “Inside Big Mac’s World,” Newsday (June 4, 1989) 8.
17
Penny Moser, “The McDonald’s Mystique,” Fortune (July 4, 1988): 112.
18
Jennifer Waters, “Way to Go, McDonald’s: Consumers Like Discount News, But They Don’t Think Much of
Your Food,” Crain’s Chicago Business, March 10, 1997, 1.
19
Shade Elam, “Equipment Not Cooking Big Sales for McDonald’s; Stock Down 30 Percent in Last Year,”
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Chicago Sun-Times, October 8, 2000, 47.

20
Marc Ballon, “McDonald's Looking for a Break,” Los Angeles Times, December 15, 2001, 1.
21
Bruce Horowitz, “10 Things McDonald’s Must Do to Get Its House in Order,” Los Angeles Times, December 12,
2002; see also http://www.usatoday.com/money/industries/food/2002-12-11-mcmess_x.htm, accessed December 13,
2003.
22
Bernstein, Bernstein, and Maler, “McD at 35.”
23
Richard Gibson, “McDonald’s Resolves to Improve Service, Acknowledging a ‘Lousy’ Track Record,” Wall
Street Journal, December 28, 1995, A4.
No

24
Miller, “McDonald’s Appears To Be Turning Around.”
25
Mitchell Speiser, “McDonald’s Corp (MCD - $17.50) 3-Underweight,” Lehman Brothers, October 17, 2002, p. 2.
26
Vivan Chu, “McDonald’s Fights Perception Its Service Is Slow,” Reuters, April 3, 2002;
http://pages.zdnet.com/rodahkt/newsformcdonaldslicensees/id34.html, accessed on December 12, 2003.
27
Elam, “Equipment Not Cooking Big Sales for McDonald’s.”
28
Mark Tatge and Brandon Copple, “Just When McDonald's Should Be Thriving, It's Starting to Lose Its Grip,”
Forbes ( December 10, 2001) 47.
29
“Fast Food, Slow Service: The McDonald’s Memo,” Fortune (September 20, 2002);
http://www.licenseenews.com/news/news83.html, accessed on December 13, 2003.
30
Moser, “The McDonald’s Mystique.”
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31
Love, McDonald’s: Behind the Arches.
32
Lisa Bertagnoli, “McDonald’s Company of the Quarter Century,” Restaurants & Institutions 99 (18) (July 10,
1989) : 22.
33
Peter Berlinski, “Edward Rensi: President and Chief Operating Officer McDonald’s U.S.A., Chief Operations
Officer McDonald’s Corp,” Restaurant Business Magazine, 87 (7) (May 1, 1988): 200.
34
Bertagnoli, “McDonald’s Company.”
35
Berlinski, “Edward Rensi.”

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36
“Virtual Victoria: Restaurants in Victoria, Texas: McDonald’s Restaurants,” Virtual Victoria; http://
www.victoriatexas.net/dining/mcdonalds.html, accessed on December 13, 2003.
37
Mitchell Speiser and Jeffrey Bernstein, “Virtual Victoria: “McDonald’s Corporation: Biennial Review—Need
To Do Better,” Lehman Brothers, November 13, 2001.
38
Miller, “McDonald’s Appears To Be Turning Around.”
39
Love, McDonald’s: Behind the Arches.

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40
Richard Martin, “McD Bruised by Upstarts in Sandwich Market War,” Nation’s Restaurant News, 24 (31)
(August 6, 1990): 1.
41
Love, McDonald’s: Behind the Arches.
42
Carol Casper, “Cutting the Mustard; Hamburger and Sandwich Fast-food Restaurants,” Restaurant Business, 94
(3) (February 10, 1995) 138.
43
Miller, “McDonald’s Appears To Be Turning Around.”
44
Bruce Horovitz, “McDonald’s Withdrawing 55-cent Deal,” USA Today, June 4, 1997, 1A.
45

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Martha Hamilton, “McDonald’s Withdrawing 55-cent Deal,” Washington Post, August 17, 1997, H1.
46
Love, McDonald’s: Behind the Arches; see also Applegate, “Good for Tots.”
47
Love, McDonald’s: Behind the Arches; see also Applegate, “Good for Tots.”
48
Miller, “McDonald’s Appears To Be Turning Around.”
49
Laurel Campbell, “Retail—Public Eating Up Beanie Babies; McDonald’s Collectibles Cash In,” Commercial
Appeal (April 12, 1997) B3.
50
Ibid.
51
Felicia Haynes, “McDonald's Beanie Baby Promotion Sparks Fervor in Lawrence, Kan.,” Journal-World (May 9,
op
1998).
52
Cindy Loose, “Did Somebody Say Teenie Beanie Babies? McDonald’s Offer Lures Parents,” Washington Post,
June 8, 1998, C1.
53
Elam, “Equipment Not Cooking Big Sales for McDonald’s.”
54
Kate MacArthur, “McDonald’s Varies Menu, Promos,” Advertising Age, January 22, 2001, 4.
55
Michael Arndt, “Shakeup Under the Gold Arches,” Business Week Online, May 1, 2001.
56
“Top 100 Advertisers,” Advertising Age (September 26, 1985): 110.
57
tC

David Zuckerman, “Burger Giants Launch New Product Assaults; McD Speeds Rollout of McDLT Sandwich,”
Nation’s Restaurant News 19 (November 18, 1985): 1; see also Barbara Lippert, “McDLT’S Wheel of Fortune,” The
Record, November 23, 1986, 8.
58
Brian Moran, “Herb Helped BK Visibility, But Little Else,” Advertising Age, March 24, 1986, 1, 120.
59
Ibid.
60
Scott Hume and Patricia Winters, “Fast Foods on Grill,” Advertising Age, October 20, 1986, 1,110.
61
Drucker, “Who is the Best Restauranteur in America?”
62
Milford Prewitt, “McLean Triggers Sales, Questions; McD Licensees Enjoy Traffic Surge, Ponder Long-term
No

Outlook,” Nation’s Restaurant News, 25 (20), (May 20, 1991): 1.

63
Richard Turcsik, “McDonald’s Beefing Up Taste of McLean Burger,” Supermarket News 42 (22) (June 1, 1992):
43.
64
Drucker, “Who is the Best Restauranteur in America?”
65
Louise Kramer, “McD Targets Adults with New Menu Line,” Nation’s Restaurant News, 30 (18), May 6, 1996, 1.
66
Drucker, “Who is the Best Restauranteur in America?”
67
Terry Fiedler, “Ad Biz Is All Abuzz about Fallon’s Burger Campaign; Arch Deluxe Ads Draw Fire,” Star
Tribune, June 22, 1996, 1D.
68
Nancy Millman and Mike Dorning, “Making McSplash in News Media; Hamburger Hype-Fest Shows U.S.
Firms’ Burgeoning Appetite for Free Promotion,” Chicago Tribune, May 10, 1996, 1.
Do

69
Laurel Campbell, “Advertising – Golfers Get $1 for Arch Burger Effort,” The Commercial Appeal (Memphis),
May 12, 1996, 1C .
70
Louise Kramer, “McD Targets Adults with New Menu Line,” Nation’s Restaurant News, 30 (18), May 6, 1996, 1.
71
Bruce Horovitz, “The Arch Deluxe is Not a McMiracle,” USA Today, June 14, 1996, p. 1B.
72
Associated Press, “New Burger Is Called a Blockbuster,” Marketing News, July 1, 1996, 11.
73
Janice Meyer and Stacy Brodbar, “February Same-Store Sales,” Credit Suisse First Boston, April 2003, 19.

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74
Richard Gibson and E.S. Browning, “As New Burger at McDonald’s Fails to Make Menu Sizzle, Some Grow
Cool on the Stock,” Wall Street Journal, September 4, 1996, C2. .
75
“McDonald's Serves Up New Taste and Value All Day, Every Day,” Business Wire, December 26, 1996.
76
Greg Lefevre, Stuart Varney, and Lauren Thierry, “McDonald's Dumps Arch Deluxe,” CNNFN, August 21, 1997.
77
“McDonald's Limits Latest Burger To Regions,” Plain Dealer, September 18, 1997, 3C.
78
Bloomberg News, “McDonald's Has No Plan for New Burger,” New York Times, September 18, 1997, D8.

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79
“McDonald's Introduces Something Big in Delaware and Lehigh Valleys; New Sandwich Featured Only in Local
McDonald’s Restaurant,” PR Newswire, December 26, 1997.
80
Donald Van De Mark and Lauren Thierry, “Changes at McDonald’s,” CNNFN, March 27, 1998.
81
Associated Press, “McDonald’s Is Testing Shake ’N Eat Salad, New Burger, For Its New Menu,” St. Louis Post-
Dispatch, March 15, 1999, Section: Business Plus, 1.
82
Jennifer Waters, “Mcdonald’s Meets Estimates, But Shares Fall,” CBS MarketWatch, October 19, 2000.
83
“McDonald's Plays Host to the ‘Next Big Thing’—Teams Up With NBA Superstar Kobe Bryant to Launch Big

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N’ Tasty,” Business Wire, February 9, 2001.
84
“Kobe Bryant Starring in New McDonald’s Commercial,” Business Wire, March 19, 2001.
85
Richard Gibson, “Tales of the Tape: A Rare Peek Under McDonald’s Tent,” Dow Jones Newswires, January 11,
2001.
86
Richard Gibson, “McDonald’s in Southern California Hopes Cheap Food Will Revive Sales,” Dow Jones
Newswires, November 27, 2001.
87
Kate MacArthur, “New Tone at McD’s,” Advertising Age, February 4, 2002, 8.
88
Richard Gibson, “McDonald’s Expects ‘Significant’ 2nd Half US Gains,” Dow Jones New Service, April 18,
op
2002.
89
Richard Gibson, “Mcdonald’s Looks to Add $1 Items,” Chicago Sun-Times, September 10, 2002, 51.
90
Miller, “McDonald’s Appears To Be Turning Around 12.”
91
Joseph Buckley and Ashley Reed, “McDonald’s Corporation (MCD-18.91)—Peer Perform; Downgrade to Peer
Perform,” Bear Stearns, September 18, 2002, 2.
92
Gibson, “McDonald’s Looks to Add $1 Items.”
93
“Event Brief of McDonald’s Investor Conference Call – Final,” FD Wire, September 17, 2002.
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No
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