Essay: McDonalds analysis – dairy free products

According to Business Insider NL, globally speaking, the fast food industry generated over $570 Billion in 2018. The industry however is not projected to grow exponentially, the average revenue from quick service restaurants (QSR) brands is only projected to see a 2% increase per year through 2020. In order to stay in the game QSR must take into account the different industry trends. A major consumer trend is that customers are becoming much more aware of ingredients, most trying to find healthy alternatives in the fast food industry. The restaurant consulting company Baum and Whiteman reported last year that they believed the top trend of 2018 would be plant-based foods.
For the past few years McDonald’s has been recreating itself in order to appeal to the health conscious consumers, a large growing consumer group. As one of the largest QSR, McDonalds has expanding product assortment and updating their current menu, their goal was to increase relevance and popularity while keep their prices low and convince high. McDonalds is the largest fast food restaurant chain in the world, both in terms of revenue generated and customers served.
There are 36,000 individual restaurants across 120 countries, employing around 1.5 million people. The do not have a large competitor at this moment. Although there are other similar QSRs such as Wendy’s and Burger King, they just simply do not generate enough income to even compare to the brand giant McDonalds
McDonald’s Brand Value
In 2017 McDonald’s was valued at $97.723 Billion dollars
Product Review
As a fast food service business, McDonalds offers mainly food and beverage products. Besides that, McDonalds serves healthy food, but this will effect on the taste and consumers eating experiences. Their major product line includes a variety of burgers, sandwiches, French fries, chicken and fish, ice cream (dessert and shakes), soft drinks and hot beverages (e.g. McCafe). As well as breakfast items such as, the McMuffins, pancakes and bagels. Statistics show that the global revenue of McDonald’s has decreased annually since 2013, hitting 21.03 billion U.S. dollars in 2018 (Statista, 2019).
On the UK McDonalds official website, they refer to milk that is only used from UK dairy farms and not mentioning other alternatives. Product such as frothy coffee, tea, warming porridge and the milk bottles in the Happy Meals are from milk that is from organic semi-skimmed. This also counts for their dessert and shakes line (McFlurry, milkshakes and sundaes), which are British whole milk (McDonalds UK, 2019).
Nonetheless, there is a gap in McDonalds milk product, where a question is answered on the official website, asking: “Do you offer dairy-free alternative to your milk product?”. McDonalds answered that they currently don’t offer dairy-free alternatives to their milk products but are always looking at new menu options (McDonalds UK, 2019).
Some of their classic items are dairy-free by ingredients, but may have potential cross contamination with dairy. One of the products would be the McChicken and Chicken Nuggets, since they are cooked in a shared fryer with their Buttermilk Crispy Chicken, which contains milk. Whereas in the U.S, their McDonald’s French fries also contain a very small amount of milk, same for the English Muffins, Bagels and other breakfast breads that are buttered (Fleming, 2018).
The New Product
As mentioned above from their FAQ answer, McDonalds is always looking at new menu options and innovates new products to attract more customers and improve its business stability. To diversifying its product line and satisfies market demand, selling non-dairy products, starting with ice cream and shakes that can improve its revenues and interest new target. To invest or invent new machines that produces only non-dairy ice cream and milkshakes, using almond, coconut, soy or oatmeal milk instead of organic cow milk.
Target Audience
McDonalds main target group includes parents with young children (families), teens, males and females of the age between 2 to 45 years. Customers who are easy going, cost benefits, time efficiency and regularly eats fast food. McDonald’s targets lower, working and middle class people and mainstreamer individuals (Dudovskiy, 2016). However, the majority of their campaigns are communicated to everyone to ensure they have a broad reach (McDonalds, 2018).
The second target audience are vegans, lactose intolerant people and people who like to buy and taste lactose free milk or choosing a healthier lifestyle. According to Food Revolution Network (2018), there is a global demand for vegan and plant-based foods. “It is worldwide growing and this trend is here to stay.” There is been a 600% increase in people, who identifying themselves as vegans in the UK in the last three years. Plant based are products that are free from animal products (dairy, eggs, meat) and made with for instance, whole grains, nuts and seeds etc. This trend is widely recognized as a positive, healthy lifestyle choice for people who are looking to enjoy a balanced diet. Thus it is no longer of those who have intolerances (Alpro, 2017).
‘Vegan desserts’ pins on social media platform Pinterest were saved up to 329%. Regarding of dairy, dessert can be produced without animal products, which the platform said to trade coconut oil for butter and flaxseed for eggs (Sutton, 2017). It is made it into mainstream. According to Alpro, the number one plant-based brand in the UK (2017), 1 in 3 people regularly buy plant-based drinks and consumers would visit and buy more often if their favourite plant-based drink was available.
Approximately 65 percent of the human population has a reduced ability to digest lactose after early childhood. It is most commonly diagnosed adverse reaction to cow’s milk among adolescents and adults (Genetics Home Reference, n.d.).
Also, the demand for non-dairy milk is seeing a rapid increase, while the demand for dairy milk is declining. The global plant-based milk market is expected to reach $16 billion in 2018, up dramatically from $7 billion in 2010 (Food Revolution Network, 2018).
Political
it may not come as a surprise that the fast food industry is quite often a target for government initiatives aimed at enhancing health and reducing obesity, particular in European countries. In 2003, after the publication of a report by the Scientific Advisory Committee on Nutrition (SACN) on the link between general levels of salt intake among the British population and heart disease, the United Kingdom government introduced initiatives to reduce the quantity of salt in many foodstuffs, including many products within the fast food industry in general. McDonald’s responded by reducing the overall salt content of its UK menu by around 14% (food Standards Agency, 2005)
Economical
the economic recession from 2008 was extraordinarily disruptive for firms in many industries, reducing revenues and products across the board, and decreasing consumer demand for many goods and services (Kliman 2012). Nonetheless not all firms and industries were adversely affected – some actually did see revenue and profit opportunities increase during the economic downturn due to higher demand – these tend to be firms and industries that are seen to provide ‘’value for money’’, of which the fast food industry happens to be one (Bems et al, 2010). Fast food restaurants could be seen as imperfect substitutes for more traditional restaurants. The majority of consumers prefer to eat out at a fast food restaurant as a cheaper alternative to a more expensive traditional restaurant. In 2008, near the height of the crisis, the fast food industry in the United Kingdom actually saw increased growth in terms of revenue of 4.5%
Sociological
A paper by Johnson and Kennedy (2010) concluded that high-fat food triggered many of the same dopamine receptors in rats as those triggered by heroin or cocaine, and can supersede standard eating responses and lead to bout of compulsive, addictive-like eating. McDonald’s responded by phasing out the super-size option for all of its supersize meal in 2001 due to very low demand, and began offering healthier options, including salads, fruit smoothies, mile, water and fruit (Pompper and Higgins, 2007)
Technological
the introduction of the internet has opened up many opportunities for high-impact, low-cost marketing across a range of industries and firms. Increasingly, firms are being judged more frequently and strongly on their online presence and perceived technological savvy – it can serious harm a business’ image if they’re seen as out-of-touch with the modern technological world (Chaffey, 2009). Marketing opportunities using the internet are many and varied and can range from, involved, intricate, multi layered viral campaigns, through website design and functionality to a simple social media presence. While the fast food industry was rather slow to catch on to the benefits of online marketing in the beginning, almost all of them have now embraced its potential, and McDonald’s is at the forefront.
Environmental
In recent years, environmental topics have come to the forefront of public awareness with the rise of many green initiatives and movements. Environmental apprehensions about a business’ operations are predominantly pronounced in the food industry, as food production techniques are frequently associated with poor environmental controls, predominantly in emerging third world economy producers, and budget meat suppliers (Foster et al, 2007)
On 19thJuly 1985, Greenpeace in the United Kingdom declared an ‘’anti McD day of Action’’ (Veggis, 2014), which involved demonstrations, protest marches and pickets of a high quantity of McDonald’s restaurants across the United Kingdom. In response to this, McDonald’s concentrated on a number of Corporate Social Responsibilities policies centred on reducing the environmental impact of the business.
Legal
The specific legal environment in which McDonald’s operates is highly depended on the specific market and country in question. However, the majority of the markets that McDonald’s operates in have a form of a Healthy and Safety legal framework, predominantly with regard to food preparation. Almost all of the countries McDonald’s operates in has some form of public health inspection system with regard to food producers – in the United Kingdom, it’s the Food Standard Agency. Any employees with food-handling capabilities must take part in food-hygiene training at the company’s expense. McDonald’s has implemented a system that adds additional controls to those required by either health agency. Their customer-facing websites states the following: ‘’There are at least 70 safety checks on beef and chicken every day. In fact, McDonald’s rigorous standards have been used by government agencies as models for their own regulations’’ (McDonald’s 2014d, p1)
SWOT Analysis

• McDonald’s is the second largest restaurant chain in the world giving it a strong market share and financial strength.
• It’s a worldwide brand and is a sponsor of international sporting events, such as the Olympics and the football world cup.
• Whilst there are some national and regional differences in its menu, McDonalds has high levels of regulation which seek to guarantee that the product and service are of the same levels.
• Strict food preparation.
• McDonald’s menu is quite complex and covers loads of products, including some with a very high fat content.
• It’s a franchise hence it can mean that there are differing levels of service at McDonald’s outlets, which may impact on the brand.
• Operations have been impacted as a result of equipment maintenance at the older restaurants.
• It doesn’t provide a national delivery service
• McDonalds needs to make better use of technology to enhance its service delivery and connection with customers
• Very little appropriate recycling facilities.

Threats

• The ever-continuing concerns regarding obesity levels may lead to higher levels of taxation on fast food which could impact profit margins.
• The slowing growth in the world economy may also be seen in the fast food sector.
• The lack of a franchise friendly framework in certain national contexts will also prevent this strategic objective from happening.

Update from McDonalds’ website 24.01.22:

Do you serve any meal that’s totally dairy free?