BACKGROUND OF THE BUSINESS

McDonald's Corporation is an American fast food company, founded in

1940 as a restaurant operated by Richard and Maurice McDonald, in San
Bernardino, California, United States. They rechristened their business as a
hamburger stand, and later turned the company into a franchise, with
the Golden Arches logo being introduced in 1953 at a location in Phoenix,
Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise
agent and proceeded to purchase the chain from the McDonald brothers.
McDonald's had its previous headquarters in Oak Brook, Illinois, but moved its
global headquarters to Chicago in June 2018.
McDonald's is the world's largest restaurant chain by revenue, serving
over 69 million customers daily in over 100 countries[11] across 37,855 outlets
as of 2018. Although McDonald's is best known for its hamburgers,
cheeseburgers and french fries, they feature chicken
products, breakfast items, soft drinks, milkshakes, wraps, and desserts. In
response to changing consumer tastes and a negative backlash because of
the unhealthiness of their food, the company has added to its
menu salads, fish, smoothies, and fruit. The McDonald's Corporation revenues
come from the rent, royalties, and fees paid by the franchisees, as well as
sales in company-operated restaurants. According to two reports published in
2018, McDonald's is the world's second-largest private employer with
1.7 million employees (behind Walmart with 2.3 million employees). As of
2020, McDonald's has the ninth-highest global brand valuation.
 HOW IT STARTED
The first McDonald’s restaurant was started in 1948 by
brothers Maurice (“Mac”) and Richard McDonald in San
Bernardino, California. They bought appliances for their
small hamburger restaurant from salesman Ray Kroc, who was intrigued
by their need for eight malt and shake mixers. When Kroc visited the
brothers in 1954 to see how a small shop could sell so
many milk shakes, he discovered a simple, efficient format that permitted
the brothers to produce huge quantities of food at low prices. A basic
hamburger cost 15 cents, about half the price charged by competing
restaurants. The self-service counter eliminated the need for waiters and
waitresses; customers received their food quickly because hamburgers
were cooked ahead of time, wrapped, and warmed under heat lamps.
Seeing great promise in their restaurant concept, Kroc offered to
begin a franchise program for the McDonald brothers. On April 15, 1955,
he opened the first McDonald’s franchise in Des Plaines, Illinois, and in
the same year launched the McDonald’s Corporation, eventually buying
out the McDonald brothers in 1961. The number of McDonald’s outlets
would top 1,000 before the end of the decade. Boosted by steady
growth, the company’s stock began trading publicly in 1965.
The public face of McDonald’s was created in 1963 with the
introduction of a clown named Ronald McDonald, while the double-arch
“m” symbol became McDonald’s most enduring logo in 1962, lasting far
longer than the tall yellow arches that had once dominated the earlier
restaurant rooftops. Other products and symbols would define the
McDonald’s brand, including the Big Mac (1968), the Egg McMuffin
(1973), Happy Meals (1979), and Chicken McNuggets (1983).
The chain continued to expand domestically and internationally,
extending to Canada in 1967, reaching a total of 10,000 restaurants by
1988, and operating more than 35,000 outlets in more than 100
countries in the early 21st century. Growth was so swift in the 1990s that
it was said a new McDonald’s opened somewhere in the world every five
hours. It effectively became the most popular family restaurant,
emphasizing affordable food, fun, and flavours that appealed to children
and adults alike.
TYPE OF BUSINESS: CORPORATION

CORPORATORS/OWNERS:
Chris Kempczinski
President and CEO

Founders:
Richard and Maurice McDonald (1st restaurant)
Ray Kroc (Founder of the McDonald's Corporation)

PRODUCTS
McDonald’s sells a wide range of fast food products such as hamburgers
and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish,
several chicken sandwiches, Chicken McNuggets, wraps and french fries. The
company also offers salads, oatmeal, shakes, McFlurry desserts, sundaes, soft
serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages.
With an aim to minimize obesity trends and criticism, the company often
change its menu.

COMPETITORS
McDonald’s faces significant competition from other quick-service brands,
such as Burger King, Wendy’s (WEN), Taco Bell, KFC, and Subway. Fast-
casual restaurants are also close competitors, with names like Chipotle
Mexican Grill (CMG), and Panera Bread Company. Starbucks (SBUX) is a
specialty quick-service brand that has some offerings that overlap with
McDonald’s.
In the Philippines, the primary competitor of McDonald’s is the Jollibee
Corporation, a Filipino fast food chain.
 BUSINESS STRATEGY

McDonalds business strategy utilizes a combination of cost leadership and

international market expansion strategies. Franchising and licensing forms of
new market entry is utilized within McDonald’s business strategy to a great
extent.

Moreover, product and service standardization lies in the cornerstone of

McDonalds business strategy. McDonald’s restaurants offer substantially
uniform menu that comprises  hamburgers and cheeseburgers, Big Mac,
Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches,
Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry
desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé
beverages and other beverages.

It is important to note that along with maintaining product and service

standardization, McDonald’s takes into account local tastes and preferences,
when developing its menu and engaging in marketing efforts.

McDonald’s competitive advantage is based on the following points:

1. Cheat prices is McDonald’s main competitive advantage. The company is

engaged in an extensive utilization of economies of scale to achieve the
cost advantage.
2. True to ‘fast food’ format of its restaurants, McDonald’s is famous for the
speed of customer service without compromising the quality of the service.
3. Universality of the taste to a great extent represents another base of
McDonald’s competitive advantage. Big Mac tastes almost all over the
world due to the use of the same ingredients in the same quantities and
application of the standardized ways of cooking around the globe. Such a
consistence in taste has positive implications on consumer loyalty.
 

BUSINESS STRUGGLES
 Unhealthy food image: McDonald's has been impacted by negative press
like the documentary "Supersize Me" by Morgan Spurlock in which he
contributed our society’s obesity to McDonald's and other fast food chains.
In fact, each McDonalds dishes provides large amount of calories but not
too much nutrition.
 Customer looses due to fierce competition: McDonalds has to compete
with many strong brand name in fast food industry such as Wendy’s,
Burger King or Yum!Brands. This fierce competition makes McDonalds
loose a large number of customers who prefer favor of other brands.

 Problem related to health issue: McDonalds use Trans—fat and beef oil in

their food. Although it is not illegal, it affects badly on customer’s health
because Trans—fat is causes of some kind of cancer. Consequently, a
number of customers who care about their health stop eating at
McDonalds restaurants. It makes revenue of company decrease.
 Legal action: McDonald’s has been involved in a number of lawsuits and
other legal cases in the course. For example, there are many case which
involved with trademark issue. McDonald’s force many others restaurant,
company of just a coffee shop to change their brand name because of
keeping “Mc” letters.
 Unbalance meals: Although McDonalds tries to update its menu by healthy
criteria, McDonald’s meals are still unbalance. For example, there are
many dishes with chicken (both grilled and fried), bacon, beef, rib or egg.
Besides, just several dishes are salad with vegetable and fruit. Moreover,
amount of fruit or vegetable is not much.
 High employee turnover rate: Although McDonalds has many good
managers as well as skillful employees, the turnover rate is still high.
Every year many of their employees are fired out of the restaurants.
Moreover, many others quit their jobs, especially part time employees
because of low salary as well as too high working pressure.
 Action related to environmental issue: McDonalds uses HCFC – 22 to
make polystyrene that is contributing to ozone depletion. The company
has to repair this weakness if doesn’t want to be criticized.
 Dissatisfied Franchisees: Franchisees are beginning to become very
dissatisfied with the fees that McDonald’s are forcing them to pay. As the
company continues to expand, they are also increasing the amount of fees
franchisees have to pay for the use of the notorious fast-food brand. Many
people are not very happy about this and as a result many franchisees are
selling their businesses.

NET PROFIT
McDonald's annual/quarterly revenue history and growth rate from 2006 to
2021.
 McDonald's revenue for the quarter ending March 31, 2021 was $5.125B,
a 8.7% increase year-over-year.
 McDonald's revenue for the twelve months ending March 31, 2021
was $19.618B, a 6.82% decline year-over-year.
 McDonald's annual revenue for 2020 was $19.208B, a 10.09% decline from
2019.
 McDonald's annual revenue for 2019 was $21.364B, a 0.5% increase from
2018.
 McDonald's annual revenue for 2018 was $21.258B, a 6.85% decline from
2017.