What I know : McDonalds has been of the most successful fast food chain for several years now and is loved by millions of people all over the world.
What I want to know : How it has retained its position of being number 1 despite the several competitors that it has come across?
Research Question : How has Mc Donalds maintained its position of being the number 1 fast food chain in the world despite its several competitors?
McDonalds is one of the most well known fast-food chains of America and is also one of the largest in the world. It is mainly known for its hamburgers. The brothers Maurice McDonald and Richard McDonald started off with a hot dog stand near the Santa Anita racetrack in Arcadia. They later transformed their hot dog stand into a drive-in barbecue restaurant in San Bernardino, California. Their restaurant was first discovered by Ray Kroc where he noticed that the restaurant had a limited menu that concentrated only on a few items like burgers, fries and beverages. This allowed them to focus on quality of the food and quicker service. The McDonald brothers were looking for a new franchising agent and thats when Ray Kroc saw an opportunity, he founded McDonald’s System, Inc. in 1995 and six years later bought the exclusive rights to the McDonald’s name and operating system.
Ray Kroc had a vision and aimed at building a restaurant system that would be famous for providing food of consistently high quality and uniform methods of preparation. In order to ensure that its employees are well trained and capable of management of the restaurant, Kroc launched a training program that was known as Hamburger University. Employees of the McDonald franchisees were trained and taught proper methods of cooking, freezing, storing and serving of their breads and patties. There were some of the methods taught to them in order to ensure successful running of the McDonald’s restaurant. Current there are more than 275,000 managers and employers that have graduated from the program. The acceptance rate of Hamburger University in Shanghai is less than 1 percent according to Bloomberg – Harvard University’s acceptance rate is 5.9 percent.(1) Ray Kroc never stopped working for McDonalds, his legacy continues till date and proves to be an inspirational and integral part of McDonalds as it has been providing its customers with affordable meals of good quality. The crew provide their customers a good service and look forward to opportunities for growth and development of their franchisees. Ray Kroc always had a passion for innovation, efficiency, quality and generous charitable contributions due to which he was able to run such a successful fast-food chain.
Willard Scott featured as Ronald McDonald in an ad in the Washington, DC market. Ronald McDonald is the character of a clown and is used as the primary mascot of the McDonalds fast food chain. In the first advertisement Ronald McDonald magically pulled out burgers out of his belt, while wearing a nose made out a McDonald’s cup. His hat was a tray holding a Styrofoam burger, a bag of fries and a milkshake. The character Ronald McDonald has its own charity organization called the Ronald McDonald House Charities, which ensures that children all around the world live a better and happier life.(2) Ronald McDonald may seem like just a character but it is an integral part of McDonalds and brings about responsible fun. The character does this by focusing on a holistic approach to children’s well-being.
It has been proven by a reliable source that the greatest challenge faced by McDonalds is in its home market. In recent years, as stated by critics the company has been unsuccessful in coping with the growing restaurant business. Upstart rivals are making every attempt to capitalize on consumer demands for food such as healthier and fresher natural ingredients. McDonalds has been able to set up a global empire based on the consistency and quality of its dishes. Steve Easterbrook was not only the chief brand officer of McDonalds but was also its former head in the United Kingdom and northern Europe. He became the CEO of McDonalds on the 1st of March 2015, and succeeded Don Thompson who stepped down on the 28th of January 2015. Over the years McDonalds has managed to retain its number one rival position despite its several competitors like Burger King Corporation, Kentucky Fried Chicken or more popularly known as KFC, Starbucks and other local burger selling restaurants. KFC that comes under Yum Brands is the second best global brand in the fast food market. Yum Brands is the parent company of KFC, TacoBell and Pizza Hut, yet its most popular fast food brand is KFC as it satisfies its customers with their food quality. The main reason why KFC is standing strong in the fast food market is because of its original chicken recipe made with 11 different herbs and spices. KFC has about 4000 outlets and China and thereby collect majority of revenues from there. KFC has still been ranked as the second best fast food brand after McDonalds and that is solely because of the criticism received by an organization called People for the Ethical Treatment of Animals (PETA). The organization drafted a report and criticized the conditions in which the chicken were raised, high amount of calories in their meals, untrustworthy suppliers of chicken and most importantly the fact that KFC was serving chicken wings with kidney. Moreover due to lack of menu innovation they are losing several customers. Starbucks on the other hand is an overhyped brand, its biggest strength is their experience in serving high quality coffee that has been blended perfectly. Starbucks has been mainly popularized due to the tumblr ambiance of the cafes and its instagram worthy drinks.
After conducting a survey, I found out that eleven out of fifteen people went to McDonalds at least
once in the last seven days. America has always dominated trends, McDonalds is one of them and it gives you a feel of living the American lifestyle. McDonalds serves more than 40 million people each day and gets about 82% of its revenue from 8 different countries which include Japan, Korea, Australia, France, Germany and USA.(3) The success of McDonalds in these countries has led to the creation of a good name and brand image for the company. People’s main concern with all fast food selling restaurants has been hygiene, and McDonalds’ main driving advantage has been the companies overly cautions attitude with respect to their food quality thereby resulting in the attraction of several new customers. McDonalds has been successful in creating a corporate symbol and with the help of a saturated advertisement it has been able to create a good image in the minds of million’s of people.
Business strategy of a company can be defined as its long term plan of a running a business by reaching specific goals or targets within a specific time frame with the resources available to them. It is a plan constructed by the management in order to that is make the business run in profit. The business strategy formulated by McDonalds is very clever. Their intention is to make fast-food available to all its customers at a very low price in comparison to other fast food chains. Nonetheless at the same time they get profit by reducing the cost of the product and expanding their world wide business. Operation management strategies in McDonalds are being formulated by the chairman along with other members of a higher rank. These strategies are implemented in the branches of McDonalds and are distributed to all its franchisees and branches in the form of a written document. Therefore, operational managers are appointed in all the branches, in order to control all operational activities. McDonalds has adopted a strategy which is based on three sections, this strategy has emphasizes on customer importance and customers satisfaction. The company has come up with new ideas to improve the operational activities of the business. With the introduction of a stock control data base system, it avoids unnecessary ordering and is successful in keeping the stock up to date their branches. It has become very easy and time saving now to order the stock. Stockrooms are directly attached to point of sale system and the manager is aware of which product is moving fast and what amount of the product needs to be ordered.
The main challenge faced by the global equipment suppliers when they design the fryers for restaurants is to develop energy efficient equipment that uses less cooking oil, gives better taste to the food and at the same time improves the efficiency of the crew. LOV improves cooking efficiency, simplifies filtering and cleaning, and provide enhanced environmental benefits. The LOV’s ground-breaking design allows restaurants to roast the same sum of produce by using 40% less oil. In McDonalds uses fluorescent low consumption lighting in their kitchen so as to reduce the cost of its operations. Tests revealed that each McDonalds saves 11,000kWh of electricity each year. Packaging plays an important role in the McDonalds brand not only for quality, integrity and safety but also to appeal to its customers. These factors help McDonalds in being more productive, getting more revenue and improving its services. In order to achieve its business strategy goals, McDonalds is excessively emphasizing on reducing its cost of operational activities. Vegetables especially potatoes are purchased directly from the farmers, this helps the company to not only cut the cost of production of french fries but also helps them get fresh vegetables for the salads that they serve to their customers. This helps McDonalds to not get effected by the fluctuations in the market prices.
McDonalds is said to be a very well established organization. The success of the McDonalds is solely based on the extensive research of the market internal and external forces. It has done extensive or in-depth research on the behavior of people of a specific country, on their food related demands, on their culture, buying power and social issue. McDonalds has paid special attention on the location of the business, its interior and exterior looks and most importantly the types of technologies that is going to use the maximum production at a short time. The most important thing which it focuses on was the quality of their products and the market forces which directly impacts their business, this has been a feather in their cap and has ensured that McDonalds has been the number one fast food chain in the world.