McDonald’s Corporation

Strategic Analysis

Raul Andino
April 14, 2015

Dr. John Cirone

Strategic Organizational Leadership
BA 680
 Table of Contents
Company Background ............................................................................................. 3
Overview ................................................................................................................. 2
Strategies and Objectives ........................................................................................ 4
Current Challenges .................................................................................................. 6
Situational Analysis.................................................................................................. 7
Environmental Scanning ......................................................................................... 7
Stakeholder Analysis ............................................................................................ 10
Industry/Competitor Analysis .............................................................................. 12
Porter’s Five Forces Model................................................................................... 13
Perceptual Map ..................................................................................................... 15
Competitive Intelligence Matrix ........................................................................... 16
Best Practices Benchmarking ............................................................................... 16
Internal Assessment ............................................................................................... 18
SWOT Analysis .................................................................................................... 18
Company/Product Portfolio (BCG Matrix) .......................................................... 22
Competitive Advantage Continuum ..................................................................... 23
Balance Scorecard ................................................................................................. 24
Organizational Structure ..................................................................................... 27
Recommendations .................................................................................................. 29
Bibliography ........................................................................................................... 33

2
 McDonald’s Corporation
Company Background
Overview

McDonald’s is a leader in the quick-service food industry. As a leader McDonald’s is

committed to providing the highest quality food, superior service, great value and a clean
welcoming environment (QSC&V strategy). McDonald’s concentrates on a sustainable business
model energy focused on energy conservation, and waste reduction.

Founder Dick and Mac McDonald opened the first McDonald’s restaurant in San Bernardino
California in 1948. The location opened as a self-service drive-in restaurant serving only 9 basic
items including: hamburgers, cheeseburgers, soft drinks, milk, coffee, potato chips and a slice of
pie. The most popular item was the classic hamburger sold for $0.15 (About $1.50 in 2015). It
was not until 1 year later that McDonald’s introduced their World Famous French Fries in
1949.1 McDonald’s was reorganized as a corporation with the opening of its second location in
Des Plaines, IL on April 15, 1955 by Ray Kroc. Kroc purchased the chain from the McDonald
brothers and was the head of its successful growth for years to come (Until his death in 1984).

McDonald’s is currently headquartered in Oak Brook, IL. Ray Kroc concentrated on

expanding the private business until 1965 when it made its first initial public offering (selling at
$22.50 per share). At this time McDonald’s had already expanded to nearly 700 locations
throughout the United States. The first international restaurants opened in Canada and Puerto
Rico in 1967. Today there are more than 36,000 McDonald’s restaurants located in more than
100 countries (80% of these locations are franchised).

Vision/Mission Statement

McDonald’s mission is, “to be our customer’s favorite place and way to eat and drink.”2

Values

To accomplish its mission McDonald’s has also developed the following core company values:

We place the customer experience at the core of all we do. Our customers are the
reason for our existence. We demonstrate our appreciation by providing them with high quality
food and superior service in a clean, welcoming environment, at a great value. Our goal is
quality, service, cleanliness and value (QSC&V) for each and every customer, each and every
time.

We are committed to our people. We provide opportunity, nurture talent, develop

leaders and reward achievement. We believe that a team of well-trained individuals with diverse
backgrounds and experiences, working together in an environment that fosters respect and drives
high levels of engagement, is essential to our continued success.

3
 We believe in the McDonald’s System. McDonald’s business model, depicted by our
“three-legged stool” of owner/operators, suppliers, and company employees, is our foundation,
and balancing the interests of all three groups is key.

We operate our business ethically. Sound ethics is good business. At McDonald’s, we

hold ourselves and conduct our business to high standards of fairness, honesty, and integrity. We
are individually accountable and collectively responsible.

We give back to our communities. We take seriously the responsibilities that come with
being a leader. We help our customers build better communities, support Ronald McDonald
House Charities, and leverage our size, scope and resources to help make the world a better
place.

We grow our business profitably. McDonald’s is a publicly traded company. As such,

we work to provide sustained profitable growth for our shareholders. This requires a continuous
focus on our customers and the health of our system.

We strive continually to improve. We are a learning organization that aims to anticipate

and respond to changing customer, employee and system needs through constant evolution and
innovation.3

Strategies and Objectives

Growth Strategy

In the past McDonald’s focused aggressively on expanding to new international emerging

markets. These efforts were accomplished mainly through a successful franchising model. Today
McDonald’s serves more than 69 million customers worldwide on a daily basis. Through its
presence in 118 countries McDonald’s derives almost 68%4 of its sales from its international
markets and hedges some of the risk involved with the highly competitive US market.5 Still
McDonald’s is mindful of the importance of keeping its position as a leader in the developed
markets it participates in. McDonald’s has stated that their current strategic focus is geared
toward developing the markets where they already do business in. This is being done by reaching
out to customers in the area through aggressive marketing campaigns, changing the physical
image of stores, and appealing to current market trends in the population.

McDonald’s goal is “to become the customer’s favorite place and way to eat and drink by
serving core favorites such as our World Famous Fries, Big Mac, Quarter Pounder, and Chicken
McNuggets.” To accomplish this goal “McDonald’s worldwide operations are aligned around a
global strategy called the Plan to Win, which center on an exceptional customer experience-
People, Products, Place, Price, and Promotion. We are committed to continuously improving our
operations and enhancing our customers’ experience.”6 The Plan to Win is described below:

People: From its beginnings founder Ray Kroc stated that “we are not in the people
hamburger business, we are in the people business”. McDonald’s strives to serve its customers

4
through high quality food and exceptional customer service. From the moment a customer walks
in, McDonald’s wants the customer to feel at home from the way they are treated to the food
they taste. McDonald’s also states they provide opportunities for their employees to receive on-
the-job training and advance in their careers. Correctly approaching consumer relations is key to
the continued success of the business.

Products: One of the key elements of McDonald’s success, and in fact any quick-service
restaurant, is the consistency of product offerings. By offering the same quality, and taste in the
products McDonald’s has been able to achieve immense brand recognition around the world.
McDonald’s has also been able to break cultural barriers by expanding their menu to give
product offerings that appeal to the specific culture where the restaurants are located. This is
done by giving different franchise operators freedom to give input on new product ideas that can
be successful.7 Some examples include the Indian market where McDonald’s offers the Maharaja
Mac instead of the renowned Bic Mac for customers who do not eat meat. In the Latin American
market, specifically in Honduras, McDonald’s offers refried beans and tortillas since it is a
popular breakfast item in the country.

Place: Global operations demand that McDonald’s implement a global supply chain
strategy to ensure standardized product offerings. The chain is committed to balancing the
interests of suppliers, employees, and franchise owners. McDonald’s treats its suppliers with
loyalty and trust and expects the same back. McDonald’s also oversees that the 3 E’s of supply
chain management are implemented in all their relationships (Ethics, Environment, and
Economics).8 Through these efforts McDonald’s works with local suppliers to increase their
capacity, develop sustainable practices, and promoting environmental friendly practices. The
result is a strong bond of loyalty between local chains, suppliers, and employees.

Price: Price is one of the most important factors to consider when looking at
McDonald’s. As a quick-service chain McDonald’s has opted to adapt a low-cost leader strategy.
Being a low-cost leader can be tough especially during recessions and inflationary periods.
McDonald’s has showed they can focus on low cost strategies with the implementation of saving
menus such as the Dollar Menu. When going into new markets McDonald’s needs to be aware of
the price differences for different goods, and price their products accordingly.

Promotion: McDonald’s has several product offerings, and has also developed seasonal
products that help heighten costumer interest. Examples of these promotions are the seasonal
offerings of the McRib and the Shamrock Shake. Additionally successful marketing campaigns
have helped McDonald’s achieve the position it is at today.

Marketing Strategy

On January 2015 United States Chief Marketing Officer (CMO) Deborah Wahl
announced that McDonald’s is taking new strides to meet customer demands. McDonald’s is
shifting from a Billions Served strategy to a Billions Heard perspective. With the Billions Heard
perspective McDonald’s will try to meet customer demands for change for their products. These
demands will be addressed with new products offerings and having an open door policy
regarding food practices.

5
 To battle the negative customer perception McDonald’s is emphasizing the Our Food
Your Questions program. McDonald’s is communicating with customers through blogs and
educational videos to inform them of their business practices. Emphasizing healthier options like
salads and wraps to please health conscious consumers is a key focus for the future of the
business.

On December, 2014 McDonald’s also announced a plan to develop a Create Your Taste
platform. Customers in restaurants will have the option to build their own burgers from scratch
without having to decide from specific items on the menu.9

Wahl also highlighted the importance of McDonald’s motto I’m Lovin’ It. McDonald’s is
reminding customers that they are the life of the company, and that their satisfaction is their
mission. This love for the customer will be communicated through product enhancements
(Through upcoming changes to the Big Mac and Quarter Pounder with Cheese) and having open
communication with consumers of where their food is coming from.

Financial Strategy

The Financial strategy McDonald’s is approaching is geared towards creating a leaner

organization with a focus on key business processes. In order to focus on growth initiatives and
create customer value McDonald’s plans to continue refranchising its restaurants. This year
(2015) McDonald’s plans to refranchise 400 restaurants from its 3 year plan of 1500. This
refranchising plan represents a more than 50% increase compared to the prior three year period.10

The 2015 capital expenditures are forecasted to be $2 billion. This figure represents
nearly a $1 billion decrease from 2014. The reduction in capital expenditures is driven mainly by
an $800 million reduction in new restaurant openings. The reductions will be implemented in the
following markets facing challenging times: China, Russia, US, and Germany. From the $2
billion budget, half of the amount will be invested in new restaurant openings. The other half of
the apportionment will be used for restaurant reinvestment, mainly restaurant reimaging.

To return value to its stockholders, McDonald’s is planning to return between $18-20

billion during the 2014-2016 period. These returns will be in the form of dividends and the
continuation of a stock repurchasing program.

Current Challenges
Intense competition in the restaurant industry has caused the worst sales decline of the
past 10 years for McDonald’s incorporated (2014 Revenue Growth -2.4%). New restaurants in
the industry seem to have more attractiveness to the modern consumer (Millennials). A more
health conscious and price sensitive population is shifting from McDonald’s seemingly
unhealthy offerings compared to other competitors with healthier options at similar price points.
McDonald’s needs adapt to changing customer demands. McDonald’s needs to find a way to
restore trust in customers regarding the origin and quality of its products. Recent supplier

6
scandals have driven a decrease in consumer confidence for McDonald’s products in Asia, which
could also affect customer perspectives in the US market.

Situational Analysis
Environmental Scanning

Demographic

Emerging Economies such as India, China, and Latin America are contributing to an
increase in middle class population. This creates new opportunities for US businesses to enter
developing markets. According to the OECD middle class growth will surge from 1.8 Billion in
2009 to 3.2 Billion in 2020 and 4.9 Billion by 2030.11 Homi Kharas from the Brookings
Institution estimates that European and American middle class will shrink from 50% of the
global total to just 22% by 2030.12 By this year Asia is estimated to house 64% of the global
middle class. Stagnant living conditions and declining middle class for OECD countries will
influence future growth as companies look for new opportunities in developing markets.

United States Population Projections

Population growth in the US is projected to grow from 314 million in 2012 to 400 million
by 2050.13 Population aged 65 an older will grow from 43.1 million in 2012 to 83.7 million by
2050. An aging population will bring new challenges to public welfare, Medicare, and Social
Security systems in the United States with effects in businesses and health care providers.

Ethnically, the United States will continue to become more diverse in the years to come
with declining non-Hispanic white population. The biggest portion of growth from 2010-2017 is
expected to be from the Hispanic population. Hispanic population will grow from 12.55% of the
total to 18.40% in 2017.14 Other ethnicities are also expected to grow but in more modest
amounts.

Economic

7
 Global economic performance can affect the price of commodities, and adversely impact
McDonald’s cost structure. There are positive cost reduction opportunities in 2015 related to the
decrease of fuel costs. At the end of 2014 the cost of crude had fallen to a 4 year low of $66 per
barrel (WTI crude). The prospects for the year also look favorable for fuel consumers; the 1-year
futures prices for WTI (NYMEX) closed at $50.79 per barrel on 4/9/2015.15

Global GDP growth is projected to be 3.3% 2015, an increase of 0.1% from 2014. The
United States is forecasting a 2.9% GDP growth (2.4% 2014).

With improving living condition and growing emerging economies global food
consumption is also expected to change in the coming years. In US food consumption is
estimated to grow 4.1% per year (2014-2018).16

The FAO is projecting per capita growth of meat and dairy products could increase by
more than 44% by 2030 creating trade deficits. The deficit of in meat products is predicted to rise
from 1.2 million tons per year (1997-1999) to 5.9 million tons by 2030. Milk products deficit
will also increase from 20 million tons to 39 million tons for the same time period.17 These trade
deficits could cause changes in the economic climate bringing an increase in the price of these
commodities.

Political/Legal

The political and legal environment is extremely important for the operations of any
business. Particularly for the quick-service restaurant category there are risks inherent with the

8
possibilities of new or changing regulations. McDonald’s can face risks worldwide with legal
demands of different governmental institutions. The areas where McDonald’s can be affected
are:

 Change in laws regarding packaging and accurate food labeling.

 Changes regarding property, franchise, tax, and employment regulations.
 Food standards imposed by regulators (FDA in the US)
 Changes in accounting and financial practices can affect the financial condition of the
business.

McDonald’s needs to ensure compliance with regulations in the various markets where
conducts its business. For example in the United States McDonald’s has to comply with FDA
regulations regarding food sourcing, preparation, and accurate labeling. Examples of regulations
are stated below:

 On August, 2010 the FDA released guidelines to food producers to accurately represent
nutritional information to its customers (FR Doc No: 2010-1630).18
 McDonald’s needs to abide by General Accepted Accounting Principles (GAAP) in the
United States, and by IFRS standards in its international locations when preparing
accounting statements.

Sociocultural

McDonald’s is facing pressures from a changing customer perspective. There is a health-

conscious movement today in the United States, and a greater concern for sustainable methods of
food production. Customers are now realizing the importance of a balanced diet and are
gravitating towards “healthier” options and restaurants that source their food from sustainable
suppliers (ex: Shake Shack).

Technological

Technological innovations in the transportation industry open up possibilities to reduce

costs in the area of fuel consumption and create a good brand image through the use of
sustainable fuels. The current trend in the market is headed towards the use of Natural Gas as a
main source to power trucks. In September 2014, Clean Energy Fuels Corp (US) made an
agreement with Bimbo Bakeries to provide the first natural gas powered trucks reducing
greenhouse gas emissions by 580 metric tons after initial deployment.19 This brings new
opportunities for other industries in the use of natural gas powered vehicles in supply chain
operations. The US Department of Energy, there are currently 15,129 (December 2014)
alternative fuel stations, with more expansions planed.

McDonald’s is always at the front when it comes to innovation within its restaurants.
With the newly hired Chief Digital Officer Atif Rafiq McDonald’s is looking to implement new
technologies in their restaurants. The advent of the Smartphone era brings new technologies and
possibilities for fast-food ordering. McDonald’s can look to develop applications to speed
ordering and even create ordering platforms to order food before the customer arrives at the

9
restaurant.20 Using touch-screen technology could also speed up the process, and allow customer
to order food with touch-screen kiosks instead of having to order at the counter.

Stakeholder Analysis

Internal Stakeholders

Owners/Operators (Franchisees)

Most of McDonald’s locations are franchised. McDonald’s needs to ensure that a positive
relationship exists within its franchise system to ensure food quality and exceptional service.
Successful franchise operations are crucial for creating a positive brand image. Franchisees are
also interested in the well-being of their investment to achieve a positive return.

Employees

Employees have an important stake in McDonald’s since this is the major source for their
income. Company employees working worldwide totaled 420,000 in 2014.21 Total employees
including franchise employees totaled 1.9 million, the second largest employers behind
Walmart.22 McDonald’s employees are looking to have a safe working environment,
opportunities for advancement, and fair wages.

External Stakeholders

Customers

For McDonald’s correctly engaging the customer is pivotal for successful operations.
McDonald’s Plan-to-Win is focused on maintaining the customer as the center of all new
initiatives. For any quick-service business, customer taste, preferences, and views of the business
are key drivers for success. To remain relevant to its customers McDonald’s focuses on:
 Optimizing its menu offerings
 Modernizing the customer experience. This can be seen with the new initiatives
McDonald’s has taken to establish a new technology strategy with the leadership of Atif
Rafiq, former head of amazon’s kindle growth strategy.
 Broadening accessibility to its brand (ubiquitous)

Community

The community also has a stake in McDonald’s. Being the second largest employer and
the largest fast-food chain, the community looks to McDonald’s to enact socially responsible
behaviors. One of these examples is the creation of the Ronald McDonald House Charities. The
charity mission is to “find and support programs that directly improve the health and wellbeing
of children.”23 These efforts are important to show that McDonald’s is placing importance in
being a positive change for the community.

10
Suppliers

Beef/Poultry Suppliers and others have a huge stake at McDonald’s. Having a positive
relationship with McDonald’s is important and can mean a big revenue stream for different
suppliers. McDonald’s is interested in creating strong relationships with its suppliers who are the
backbone of their supply-chain.

Competitors

McDonald’s is the biggest fast-food chain in the world, and as such several competitors look
to McDonald’s to assess their competitive environment and benchmark practices. McDonald’s
competitors are divided in the following way:

 Fast-Casual Competitors like Panera Bread and Chipotle Mexican Grill.

 Specialty Burger Chains Five Guys, In-N-Out Burger, Shake Shack.
 International Restaurant Brands Yum Brands, Chick-fil-A, Subway, Wendy’s.

Governments

Governments have a stake in McDonald’s because it can the business in several ways.
The Government can issue legislation that can either be favorable or unfavorable to McDonald’s.
McDonald’s is also one of the biggest private employers and compliance with wage and working
standards is an important measure governments will want to keep an eye on the company.

Stockholders

Along with social responsibility and sustainability practices providing an attractive return
(ROI) to stockholders is one of McDonald’s primary goals. Through excellent economies of
scale and successful expansion McDonald’s has been able to satisfy stockholders and provide
excellent returns. However, in recent years (2012-2015) McDonald’s has been struggling to keep
up with market trends and has been experiencing lackluster financial performance (US Same
store Sales Decline of 4% for 02/2015). Stockholders are wary of the steady decline in sales
McDonald’s has experienced, and are expecting a solution from the business to regain market
share.

Environmental Groups

Environmental groups like PETA, and Natural Society are interested in the fast-food
industry and the supply chain practices of these businesses. Environmentalists are interested in
pushing legislation for the use of hormone/antibiotic free products including, poultry, meats,
fruits, and vegetables. McDonald’s has to consistently review its supply chain practices and
consider adapting organic and sustainable sources food. Acting in a socially responsible manner
will further inspire confidence in the McDonald’s brand and its products for the general
population.

11
Labor Unions

McDonald’s uses the franchise model to expand its business and as such is not currently
liable for the labor practice of the franchise owners. However Labor Unions are interested in the
labor practices (benefits, pay, hours, and work practices) of McDonald’s and its franchises.
Workers of fast-food restaurants such as McDonald’s would be in favor of unionizing to have
greater bargaining power in the employee/employer exchange.

Industry/Competitor Analysis
Industry Definition

NAICS Classification: 722513- Limited Service Restaurants

McDonald’s is classified as a fast-food restaurant under NAICS code 722513. This industry
includes establishments that provide food services to customers who pay before eating.24 Limited
service restaurants like McDonald’s differ to full service establishments because customers do
not order food and served by others in the restaurant.

Included in the limited service restaurant category are businesses such as: Drive-in restaurants,
pizza delivery shops, and any restaurant that does not offer full service amenities (waitressing
services).

Competitive Structure

McDonald’s competitive structure is most closely resembled by monopolistic

competition. Fast-food restaurants are characterized by different product offerings and some
limited power to influence price depending on customer price elasticity. Some economists might
argue that McDonald’s is an oligopolistic business due to its market size and would include big
players such as Wendy’s, Burger King and Yum Brands (KFC). Even so the fast-food market is
much larger and McDonald’s also faces competition from other fast-food categories such as the
fast-casual chains (Chipotle), and better burger chains (Five Guys, Shake Shack).

12
Industry Life Cycle

McDonald’s is the biggest

quick-service restaurant in the
world. With its current structure
and product offerings McDonald’s
is in the mature stage of its
lifecycle. This does not mean that
McDonald’s will enter the decline
stage anytime soon as it can
continue to profit and be
successful.

McDonald’s is facing new

challenges as it has reached the
maturity stage. In order to keep
market share McDonald’s needs to
emphasize customer service and
improving product quality. In the maturity stage McDonald’s can also keep increasing profits by
tapping unexplored markets, new opportunities may arise as emerging economies are starting to
flourish. McDonald’s is also trying to revitalize the brand with new marketing approaches such
as a change from the marketing campaign of “billions served” to “billions heard”.

Porter’s Five Forces Model

New Entrants (Low)

Initial entry to the fast-food industry is not capital intensive. Opening a single chain can
be relatively accessible to many. There are also several suppliers willing to negotiate prices for
materials and crate new relationships to meet the demand of new businesses.25 However,
competing with globally established brands can be challenging. Companies such as McDonald’s
and YUM Brands enjoy economies of scale related to extensive and efficient supply chains. The
competitive nature of the fast-food industry brings expected retaliation from incumbents. Big
global companies can wage price wars in saturated markets to cut out the competition.

New entrants have the opportunity to gain advantages through new offerings and
differentiating their products. As seen from the growing success of fast-casual chains, it is
possible to start new trends, enter the market and threaten established competitors. To do this
extensive planning and market exposure is needed. Even though restaurant customers face no
switching costs the strength of new entrants is considered to be low. This is related to the global
reach and retaliation from larger chains and the established economies of scale these companies
enjoy.

13
Bargaining Power of Suppliers (Moderate)

There are two key suppliers for McDonald’s and all other players in the food industry,
suppliers of food and suppliers of labor. Establishing an initial relationship with suppliers can be
costly and it also takes time to build an efficient supply chain. Even though suppliers have
several sources for generating profits they are also looking for key relationships with major
players in the food industry. These major players include global brands such as McDonald’s,
Yum Brands, and Wendy’s. McDonald’s is able to cultivate good relationships and dictate much
of the supplier relationship due to its market size and influence. McDonald’s relies heavily on
labor to run efficient operations. Legislation regarding minimum wages in the US can affect
costs and further reduce margins for the chain creating a moderate power for employees.26
Maintaining a good relationship with labor unions and meeting laws and regulations regarding
fair pay is important for McDonald’s. The power of suppliers is low to moderate because of the
power of the labor supply, and the relative low bargaining power of suppliers.

Bargaining Power of Buyers (High)

The power of buyers (customers) for the industry is high. The main reason for this is that
customers have non-existing switching costs. A customer can decide to go to a different fast food
restaurant every day depending on what he/she feels like eating. Since customer tastes can sway
from one preference to another fast-food chains have to compete in terms of offering quality
menu items and price.27 Maintaining a loyal customer base in the fast-food industry translates to
high marketing expenditures, and careful consideration in pricing strategies to be competitive. If
a customer senses a price discrepancy they can simply switch to another competitor with a better
value offer.

Threat of Substitute Products (High)

The force of substitute products for the fast-food industry is high. Substitute products are
widely available and can consist of a customer selecting another product from a wide variety of
choices. These choices can range from the customer deciding to eat home-cooked meals to
purchasing frozen dinners, and choosing to eat out in other fast-food chains. The main
attractiveness of fast-food is the desire for convenience, availability and value.28 Customers can
compare the different prices between restaurant options and chose the most attractive one. Even
though it does take more time, customers can also decide to make home cooked meals which can
be an increasing trend do to a drive for health conscious activities. The increasing popularity of
healthy and sustainability trends brings challenges to the fast-food industry and a need to
reimage brands. McDonald’s faces moderate to high threat from substitutes.

Intensity of Rivalry Among Competitors (High)

The fast-food market is highly fragmented with many independent restaurants and chains
that compete nationally and internationally. The intense competition is also fueled by and
absence of exit costs and readily available expansion in capacity.29 Restaurant chains can also
expand easily because of the attractiveness and convenience of the franchising model. In this
industry price competition is intense with high competition for value offerings (McDonald’s and

14
Burger King’s Value Menu). Brand presence and promotion is also strong and is one of the main
sources of driving business for fast-food restaurants. Rivalry among competitors is high due to
the amount of price competition and marketing exposure needed to stay competitive.

Perceptual Map

The dimension measurements for the perceptual map (Price, Quality) were chosen
because fast-food restaurants such as McDonald’s generally position themselves as restaurants
with low-price offerings. Quality was chosen as the next measurement because customers today
care about quality and not just the price. Newer chains such as Panera and Shake Shack have
tackled the quality perspective with high success, and McDonald’s is battling to change negative
customer views on its food quality. With the finished perceptual map it is evident that traditional
fast-food chains such as Burger King and Wendy’s fall closely in line with McDonald’s. While
newer chains such as Chipotle and Five Guys are more expensive but improve in the quality
department. For the benchmarking purposes McDonald’s should look at best practices from
newer competitors (Five Guys, Chick-Fil-A, Chipotle, Shake Shack) in terms of quality, and at
best practices of its closer counterparts (Wendy’s, YUM Brands, Burger King) for pricing and
organizational structures.

15
Competitive Intelligence Matrix

Brand Image: Based on data from BrandZ who conducts brand valuations every year, and is
responsible for an annual study of the best 100 global brands. According to BrandZ and Statista
McDonald’s brand value for 2014 was 85.7 billion, Burger King’s valuation was at 2.6 billion
and Chipotle Mexican Grill brand valuation was 7.3 billion.30

Value (Price): Fast food restaurants focus on value offerings, such as McDonald’s $1 menu, and
Burger King’s value menu. Chipotle offers good value but its price offerings are still above
McDonald’s and Burger King.

Food Quality: Food Quality is based on consumer sentiment and perceptions of food offerings.
Currently fast-food restaurants like McDonald’s and Burger King are associated with lackluster
quality, while new fast-casual chains like Chipotle are considered to be of higher quality.

Range of Products: McDonald’s had about 145 items on its menu in 2013.31 From the
nutritional information provided by Burger King, the menu offers around 97 different choices
which is still a considerable amount.32 Chipotle has 16 basic ingredients, but the advantage is the
customer has freedom to customize food items any way they want at the counter.33

Market Share: Market share was based on US market share for 2014 only. According to Statista
McDonald’s held 21.7% market share, Burger King 4.1%, and Chipotle at 2.68%.34

Revenue per Location: Revenue per location for fast-food restaurants average $1.2 million.
According to QSR magazine McDonald’s averaged $2.5 million per store. Burger King average
$1.2 million, and Chipotle $2.1 million per store.35

Best Practices Benchmarking

With more than $27 Billion in global sales for 2014, and 21.7% of the fast-food market in
the U.S. McDonald’s is the undisputed market leader. However, McDonald’s has been
experiencing declining sales for the past nine months with weaknesses in customer quality
perceptions and restaurant experience (customer service). In terms of customer service Chick-
Fil-A is the leader, being considered the fourth best chain for customer service in 2014.36

16
Benchmarking Customer Service

Chick-Fil-A had revenues of $5 billion in 2013. Average sales per location were $2.8
billion the highest in the fast-food industry.37 Part of Chick-Fil-A’s success can be attributed to
the exceptional customer service provided by every restaurant that is franchised. Dan Cathy,
Chick-Fil-A’s CEO, stated in an interview that, “If anyone force you to go one mile, go with
them two miles –Matthew 5:41.”38 The chain displays this value by going the extra mile when it
comes to customer service displaying behaviors that are not commonly seen at fast-food
restaurants. Customer service experience can be divided into several attributes. Among these
attributes the most commonly considered are: Employee Courtesy, Service Accuracy,
Cleanliness, and Food Quality.39 Employees make the name for the company in stores and
having satisfied employees is also key to providing exceptional customer service.40

According to Cathy Employee Courtesy is at the heart of Chick-Fil-A and credits much
of the chains success to the way the employees treat customers. Chick-Fil-A aims to treat
customers with the utmost respect; the way they would be treated in a fancier establishment like
the Ritz Carlton hotel.41 And customers seem to agree that employee courtesy improves customer
service. In a survey conducted by Zagby Analytics 38.6% of respondents rated the chains
customer service as excellent, compared to top rating of barely 20% for chains like McDonald’s
and KFC.42 The most common example experienced at Chick-Fil-A is the use of language of
employees towards the customer. Chick-Fil-A employees do not say “you’re welcome,” instead
they say “my pleasure” to elevate the customer experience. Other examples of employee
courtesy are:

 Calling customer orders by first name instead of a number.

 Chick-Fil-A will carry customer’s trays to their tables.
 Employees go to individual tables to ensure customers are having a good experience
and to meet any requests such as the need for a refill or other amenities.
 Escorting customers to their cars with umbrellas when it rains.43

An important aspect for customers going to fast food restaurants is the degree of Service
Accuracy. It is true that fast-food drive-thru should be as fast as possible to be convenient, but
accuracy is also important, and it is accuracy at which Chick-Fil-A excels. For 2013 figures
Chick-Fil-A average drive-thru wait time was 203.9 second, the longest wait time of the
industry. In comparison McDonald’s average wait time was 189.5 seconds. However, Chick-Fil-
A’s order accuracy was the best in the industry in 2013 with 91.6% accuracy compared to the
industry average of 87.2%.44 Customers do not seem to mind the long wait since they are getting
the right orders most of the time. In the area of Food Quality and Cleanliness Chick-Fil-A also
received the highest marks in the fast-food industry according to Consumer Reports.45 Training
employees to always be on the lookout is important in having a clean environment. Chick-Fil-A
also employees special touches that add to the clean feeling of the environment such as placing
fresh flowers at each table every day.

17
 Internal Assessment
SWOT Analysis

Strengths

McDonald’s continuously places in the top spots for brand value. According to studies
conducted by Statista McDonald’s brand value for 2014 was about $85.7 billion. Such a high
brand value shows the success the chain has had with international expansion. One key strength
for the chain is the characteristic of being ubiquitous. McDonald’s is the restaurant with the most
locations with 14,339 U.S. locations and more than 36,000 worldwide.46 This helps epitomize the
fast-food ideal of convenience and location. McDonald’s has also been successful with its
marketing campaigns. From the inception of Ronald McDonald, to the I’m Lovin’ it campaign
the chain has greatly benefited from the resulting market exposure to potential customers.

McDonald’s has been recognized as a low-price food leader, where offerings like the
value menu ($1 items) bring in cost conscious costumers. The great marketing campaigns driven
by the company also help the customer perceive the value received relative to price.

Due to its size, McDonald’s has been able to leverage its relationships with different
suppliers and establish efficiencies in the supply-chain. Suppliers seek to establish profitable
relationships with food giants. McDonald’s also stresses trust and collaboration with its
suppliers. 99% of suppliers signed a code of conduct agreement with McDonald’s in regards to
the maintenance of their facilities.47

McDonald’s has strong cash flow due to the successful implementation of the franchise
model. With more than 80% of McDonald’s locations being franchised, the chain does not worry
about operating costs in these locations and collects franchise fees based on a percentage of
sales. This model has been extremely successful for McDonald’s and it has allowed the chain to
expand globally at a fast rate.

18
Weaknesses

McDonald’s biggest weakness is the prevalent decline in sales experienced during the
2013-2014 period. McDonald’s US restaurant sales open for more than a year (Comparable
Sales) declined 4% (February 2015). This turnout in US stores also contributed to the 1.7%
global decline in sales. The decline was a steeper than expected by analysts (0.7% for US stores
and 0.3% for global sales).48 February marked nine consecutive months for global decline in
sales for McDonald’s. Customer traffic at US stores also dropped by 4.1% in 2014 (1.6% decline
for 2013). These financial results demonstrate continued weakness in performance and could be
a signal that McDonald’s efforts have not yet created a comeback or are not working at all.

McDonald’s has been expanding its menu to include healthier options with the
expectation of appealing to a newer customer that prefers “healthy” options. Expanding menu
offerings has created more complexity for kitchen restaurant setups slowing down production,
and causing an increase in wait times for McDonald’s drive-thru.49 In the past decade the
company said it added more than 100 items to its menu.50 To increase customer satisfaction in
drive-thru operations McDonald’s needs to focus on food quality (freshness), preparing the
correct order, and speed.

An increase in the price of

consumer goods is a weakness to
McDonald’s structure. McDonald’s offers
lower priced items in its $1.00 value-
menu with the hopes of customers
purchasing higher value items when they
go to the restaurant (Such as the McWrap,
and Big Mac). McDonald’s increases
prices yearly to adjust for inflation just
like any business would, but keeps the
value-menu priced at $1.00 with other
Source: http://fortune.com/2014/11/12/can-mcdonalds-get-its-mojo-
back/ value meals priced higher than a dollar.
The issue with this model today is the fact
that there is a widening gap between the value menu and premium offerings.51 In 2002 a Big
Mac cost $2.49, in 2014 a Big Mac’s cost was $4.80. As prices keep rising McDonald’s risks
losing customers to more attractive offerings with similar prices such as Panera, Five Guys, and
Chipotle.

19
 Don Thompson announced he would be stepping down as CEO in March 1, 2015. Steve
Easterbrook (Former Chief Brand Officer) replaced Thompson. A change in leadership can be
positive as new perspectives are needed to advance the organization, but it also portrays the
difficult challenges McDonald’s is facing right now. From the Asia supply-chain scandal to
competitive pressures in the US investors are wondering if the change in leadership will steer the
company in the right direction.

Opportunities

McDonald’s is positioned to take advantage of a growing food service market. According

to the NPD group, in 2014 the consumption of burgers from fast-food and casual restaurants
increased by 3%. There were 9 Billion burgers served at US restaurants. This presents an
opportunity for McDonald’s as the chain’s main product is concentrated on different burger
offerings.

The international’s chain Franchise model is excellent for rapid expansion in new
markets. With intense competition in the US market, McDonald’s can look at continued efforts
to expand operations on developing markets. Middle class growth in China, Brazil, and other
developing markets offer new opportunities for McDonald’s.52

New technological advances in recent years bring opportunities to the fast-food industry
including McDonald’s. Hiring Atif Rafiq is a great move to bring technological expertise to the
chain and continue expanding global initiatives to renovate and reimage restaurants. McDonald’s
can start to look at smartphone technology to speed up the ordering and payment process.

Threats

As the biggest fast-food chain McDonald’s has been criticized by negative media reports and
has impacted customer perceptions on food quality. Morgan Spurlock’s documentary, Supersize
me (2004), is an example that shows possible negative effects fast food can bring if consumed
too often. Environmental organizations have also targeted McDonald’s and its food production
practices. Consumer today are increasingly interested in promoting antibiotic and GMO free
foods. Organizations such as the Natural Society have published articles ranging from the way
suppliers such as Purdue Farms raise their animals to the unnatural ingredients McDonald’s food
contains. The Natural Society posted ingredients such as polydimethylsiloxane used as an anti-
foaming agent when frying, and tertiary butyl hydroquinone (TBHQ) found in McDonald’s
French fries as a preservative.53 This type of media exposure raise questions about McDonald’s
food quality and can further damage brand reputation and contribute to declining sales.
McDonald’s among other fast-food organizations have been accused of engaging in
Greenwashing. Deceptively marketing healthy options, and sustainable food when in reality
customers believe McDonald’s does not care for the environment and sustainable practices.54

According to a study conducted by Consumer Reports, McDonald’s burgers were ranked the
worst tasting burgers out of 20 other competitors.55 Customers might be starting to look to other
alternatives that provide greener, and higher quality products as prices keep getting closer
together and margins are shrinking.

20
 McDonald’s is facing pressures from its employees, as numerous strikes have occurred
asking for increase in labor wages. In September 2014 employees from several fast-food chains
protested to request a minimum wage of $15/hour.56 Protests for better wages have been
prevalent in the fast-food industry which also creates a negative perception for McDonald’s and
their employee relationships. Labor wages also depend on government legislation and the
decision to raise minimum wage rates.

During July 2014 a supply scandal broke out related to a supplier Chinese
(Shanghai Husi Food Co Ltd). According to Forbes magazine the Chinese suppler had been
processing expired meat. Workers from the plant were also spotted grabbing chicken that had
fallen on the ground and put it back on the processing machines.57 McDonald’s Japan division
reported to have sourced about one-fifth of its chicken McNuggets from Shanghai Husi, and
halted sales for this product. The scandal contributed to McDonald’s lackluster performance for
2014, and influenced negative perceptions for consumers.

International markets are also experiencing period of political and economic instability.
Russia is currently facing economic challenges related to unstable political relationships with the
US and other members with the actions of President Vladimir Putin, and the decision to annex
the Crimean Peninsula. The European Euro has also been weakening and Greece is facing
economic turmoil. Declining productivity for the EU countries can signify a big risk for
McDonald’s operations and could contribute to declining profits.

Perhaps the biggest threat is the intense competition McDonald’s is facing in the U.S.
market. New fast-casual chains are generating growth, increasing profitability and are beginning
to chip away at McDonald’s middle to upper-middle class consumers.58 The creation of a new
category restaurant category named “Better Burger” is a direct threat to McDonald’s core
competency as a burger joint. New competitors such as Five Guys, Shake Shack, and
Smashburger threaten to take a larger size of the pie from McDonald’s, and bring new challenges
for McDonald’s and the issues it has been having with food quality. Changing customer tastes
towards healthier and fresher options are also a threat as popular chains like Chipotle and Panera
are positioned to target these types of customers.

21
Company/Product Portfolio (BCG Matrix)

McDonald’s has enjoyed years of steady growth, but the fast-food industry is reaching
maturity especially in the U.S. market. With 27.1% share of the U.S. fast food industry
McDonald’s as a business is positioned as a cash cow. With several of its well-branded items
McDonald’s can now focus on increasing product quality, and using cash flows from cash cow
products to finance star and question mark offerings.

Several of McDonald’s products have been successful due to aggressive marketing

campaigns. Products such as the Big Mac and the Egg McMuffin are so well-known that they
could be a brand by themselves. Current Cash Cow products include products such as: Big Mac,
Filet-O-Fish, Egg McMuffin, McGriddles, McNuggets, Fries, and desserts such as McFlurry and
Sundaes. To better market these cash cow products, McDonald’s needs to focus on increasing
quality and making the right pricing decisions.

Stars for McDonald’s include the investments done for the McCafe offerings.
McDonald’s needs to invest heavily in this market to effectively compete with businesses such as
Starbucks, Scooter’s, and Dunkin Donuts. With the right marketing strategy and sufficient
investment McDonald’s can gain a strong foothold in the coffee market segment.

McDonald’s is always testing new products and thus can have several products in the
question mark stage. Products in this stage include McCafe smoothie offerings, and the Create
Your Taste campaign announces by McDonald’s. Crate Your Taste is targeted towards younger
consumer who want to be able to customize their food. It is not certain if the campaign will be
successful, but McDonald’s needs to invest heavily in the platform without the ability to ensure

22
success. New Smoothie offerings such as the Blueberry Pomegranate flavor need to be tested in
the market before ensuring profitability.

McDonald’s has had products that have not been successful in the past. Products such as
the Arch Deluxe, the McLean Deluxe, and McPizza are example of dogs that were
discontinued.59 A newer item released by McDonald’s that is showing signs of possibly being in
the dog category is the McWrap (released 2013). Analysts are blaming part of the 4% drop in
sales for March on the McWrap.60 Compared to burgers 10 seconds to prepare, McWraps take an
average of 60 seconds, which is also contributing to the slower service experienced at the drive-
thru.61

Competitive Advantage Continuum

McDonald’s has been able to effectively penetrate the market with the effective usage
and collaboration of its different resources. The main resources that help McDonald’s generate a
greater advantage are its existing supply chain network and assets. In regards to its supply chain,
McDonald’s has been able to establish strong relationships with suppliers in each of its markets.
Whenever it can, McDonald’s is interested in developing relationships with local suppliers.
McDonald’s revenues are an important resource for the chain. McDonald’s had $35 billion in
sales for 2013 compared to other big competitors such as Wendy’s and Burger King with $8.7
billion and $8.5 billion in 2013 sales. With revenues several times larger than its competitors,
McDonald’s can invest more in new product development, quality control procedures, and
marketing campaigns.

McDonald’s has been able to develop several Core Competencies in the fast-food
industry. With the development of its efficient franchise system McDonald’s was able to
successfully expand rapidly into several markets. One of the important focuses for McDonald’s
and its franchise system, is that the owners are local owners, and can contribute to the
understanding of cultural differences. McDonald’s has also been able to build Strong Brand
Recognition with great marketing campaigns such as Ronald McDonald and I’m Lovin’ It. The
Golden Arches is also part of brand recognition, and has gained popularity as the chain continues
to expand in new markets. Being a fast-food location McDonald’s has also been able to excel at
offering a standardized product. With strict franchise operating procedures and strong supplier
relationships, McDonald’s is able to deliver reliable quality and consistent taste throughout its
franchise system.

Recognizing cultural differences has offered new opportunities for McDonald’s to expand
into new markets. For example, when McDonald’s expanded India, it changed its menu to offer a
completely vegetarian diet. Changing popular items such as the Big Mac to the Maharaja Mac in
India proved to be a successful move. Even though standardized product is important,
McDonald’s also recognizes the importance of meeting customer needs in different cultures.
Other examples of cultural adaptations is the offering of spaghettis in the Philippines, Refried
beans in Latin America, and the McArabia Chicken in the UAE. McDonald’s also offers delivery
services in several countries such as Korea, China, The Philippines, Japan, and Austria where the
service is more common.

23
 The strategic focus for McDonald’s is to be a low-cost convenient provider. The value
of McDonald’s proposition is the fact that they can offer a good value, convenience, and
consistency at a low price.

Balanced Scorecard

Financial Perspective

The revenue stream for McDonald’s corporation consists of: The revenue from its corporate
locations, franchise royalties (4% of monthly sales), and rent as a percentage of monthly sales.
McDonald’s sales are divided by segments are follows:

Source:
Annual 10k
Report 2014

With diversified global sales McDonald’s is able to hedge some of the risks inherent within
the U.S. market and the increasing competition. However, the global presence of its restaurants
also exposes McDonald’s to political and economic threats mentioned beforehand such as
weakness in the European market and political instability in Russia.

In the third quarter of 2014, McDonald’s same store sales in the US fell by 3%. In
comparison, competitor Chipotle Mexican Grill soared at an increase of 20% for same store
sales. In comparison to industry ratios McDonald’s is still well above the average with Profit
Margins more than four times above the industry average (MCD: 17.34%, Industry: 4.16% for

24
2014). Even though most of its
metrics are above the industry
average, a decrease in performance
is evident over the past five years.
Profit Margin has decreased from
20.50% in 2010 to 17.34% in 2014.
For 2014 Revenue Growth was
actually a -2.40%. With less
revenue coming in consequently
the interest coverage ratio for the
company also decreased from
16.79 in 2013 to 13.95 in 2014.
Even though in store revenue per
employee actually increased by 2.3%, profit per employee decreased by 10.8%. These metrics
show the challenges McDonald’s is currently facing in controlling its cost structure and offering
attractive products to its customers.
For 2014 McDonald’s stores brought an average of $2.5M in sales, compared to the industry
average of $1.2M in sales per store.

Internal Process Perspective

One of McDonald’s main areas of focus is the quality and consistency of the products it
offers. McDonald’s does a good job at keeping consistency with its product offerings in every
restaurant. On the other hand quality perception by customers has been an ongoing problem, and
is considered to be one of the main contributors to the decrease on revenues for the chain.
McDonald’s is taking steps to improve the quality of its food and address customer concerns
regarding products raised with antibiotics. On March, 2015 McDonald’s announced they would
only source chicken raised without antibiotics that are important to human medicine.
McDonald’s also announced they would only be selling milk products from cows that are not
treated with rbST, an artificial growth hormone.

To address quality McDonald’s is also focusing on technological advancements to attract

more customers. Improvements in technology like charging stations for phones and self-order
kiosks are a few of the ideas Atif Rafiq has brought to the table to draw in more customers, and
maintain the company in the forefront of technological innovation. Regarding the allocation of
its tangible resources, McDonald’s will focus on reimaging restaurants to appeal to a more
contemporary culture. Nearly 60% of McDonald’s restaurants have been remodeled with a
modern look.62

Customer Perspective

Uniform value-priced menu and a consistent customer experience is essential for a quick-
service restaurant. Quality is also an increasing concern for customer, especially with newer
restaurant (Better Burger, Fast-Casual) that stress freshness and good quality. The prevalent

25
customer perception is that McDonald’s is low quality. Even if this was not the case, it is
important to monitor and work towards changing the customer perspective on quality issues.
McDonald’s needs to find a way to change the current mindset of their product offerings to the
customer. According to Technomic, a research firm that focuses on the fast-food industry, new
customers are focusing more on natural, unprocessed, and sustainable offerings rather than on
“low fat” and “low calorie”. Even though Chipotle’s burritos have more calories than a Big Mac,
the company is seen favorably due to the customer perception of what a healthy offering is.63

McDonald’s is also fighting to retain customers in a highly competitive market. The

challenge for the company is retaining millennials, and families with children under 12 years of
age (This group’s share in the chain’s customer pool dropped from 18.6% in 2012 to 14.6% in
2014).64 Nationally McDonald’s market share for the end of 2014 was 21.7%. Based on
Euromonitor International, the Global market for the informal eating out (IEO) segment was of
$1.2 Trillion. The IEO segment is composed of about 8 million total locations. McDonald’s
global operations account for 0.4% of the outlets and 8% of sales.65 The IEO category excludes
establishments that serve primarily alcoholic beverages and full service restaurants excluding
casual dining establishments. Compared to the entire restaurant industry of $2.3 Trillion and 16
million establishments, McDonald’s global share amounts to 0.2% of the locations and 4% of
sales.

McDonald’s is focusing on generating goodwill with the general population to increase its
brand strength. With its size and influence it is able to participate in socially responsible
activities and create a positive wave a change for the quick-service industry. For example in
2011 McDonald’s created the Global Roundtable for Sustainable Beef where it partners with
major beef suppliers to set standards and practices that lead to sustainable beef production.

Learning and Growth Perspective

McDonald’s has an actual Hamburger University where it trains restaurant managers on

all necessary aspects needed to run an efficient restaurant operation. McDonald’s shows that it is
committed to train its managers to follow its recipe for success in offering Quality, Service,
Cleanliness, and Value.

Regarding its employee workforce, McDonald’s Corporation does not control much of the
employee development as restaurant franchisees are in charge of employee development and
compensation. The fast-food industry is known for its high employee turnover which can
increase costs and decrease customer satisfaction. High turnover rates also imply that the
company spends more time training new employees and have to work harder to maintain high
quality standards. Employee turnover is also spurred by the low wages that entry level jobs pay.
On average fast-food jobs are low-skill/low-wage jobs that pay just above the federal minimum
age of $7.25. Recently fast-food employees, including those of McDonald’s, have been striking
for a wage increase to $15 dollars an hour. While this increase might not be feasible,
McDonald’s needs to focus on the needs of its employees as one of its top priorities.

26
 Organizational Structure
Organizational Chart

Board of Directors
*(See Below)

Steve Easterbrook
(President and CEO)

Jim Sappington (VP, Bridget Coffing (Chief Peter J. Bensen

Richard Floersch Atif Rafiq (Chief
Kevin Ozan (CFO) Operations and Communications (Chief Administrative
(Chief HR Officer) Digital Officer)
Tehnology Systems) Officer) Officer)

Doug Goare Mike Andres Dave Hoffman Edgardo Navarro

(President, Europe) (President, (president, AMEA (President, LATAM)
McDonalds USA)

Regional Managers

Operational
Managers Supervisors

Store Managers

First Assistant Second Assistant

Shift Manager

Floor Manager

Staff Training Crew

Crew Members

McDonald’s follows a decentralized market approach giving local and regional managers the
power to make product decisions. This structure is favorable for McDonald’s because it allows

27
the chain to execute new initiatives the match customer preferences in the local area.

Board of Directors:
 Andrew J. McKenna: Non-executive chairman of McDonald’s Corporation since April
2004, and also non-executive chairman of Schwarz Supply Source.
 Susan E. Arnold: Operating executive, Global Consumer & Retail Group of The Carlyle
Group, a global alternative asset manager since 2013.
 Stephen J. Easterbrook: President and CEO of McDonald’s Corporation since March
2015.
 Robert A. Eckert: Operating Partner of Friedman, Fleischer & Lowe, LLC, a private
equity firm, since September 2014. Non-executive Chairman of Mattel, Inc., a designer,
manufacturer and marketer of toy products, during 2012.
 Margaret H. Georgiadis: President, Americas at Google Inc., a global technology
company, since October 2011. Chief Operating Officer of Groupon, Inc., a global online
local marketplace, from March 2011 to September 2011. Vice President, Global Sales
Operations at Google from 2009 to 2011.
 Enrique Hernandez, Jr: Non-executive Chairman of Nordstrom, Inc., and Director of
Chevron Corporation and Wells Fargo & Company. Director since 1996.
 Jeanne P. Jackson: President, Product and Merchandising for NIKE, Inc., a designer,
marketer and distributor of athletic footwear, equipment and accessories, since 2013.
 Richard H. Lenny: Non-executive Chairman of Information Resources, Inc., a leading
market research firm, since 2013.
 Walter E. Massey: President of the School of the Art Institute of Chicago, since 2010.
 Cary D. McMillan: Chief Executive Officer of True Partners Consulting LLC, a
professional services firm providing tax and other financial services, since 2005.
 Sheila A. Penrose: Non-executive Chairman of Jones Lang LaSalle Incorporated, a
global real estate services and investment management firm, since 2005.
 John W. Rogers, Jr: Chairman and Chief Executive Officer of Ariel Investments, LLC,
a privately held institutional money management firm, which he founded in 1983.
 Roger W. Stone: Chairman and Chief Executive Officer of KapStone Paper and
Packaging Corporation, formerly Stone Arcade Acquisition Corporation, since 2005.
 Miles D. White: Chairman and Chief Executive Officer of Abbott Laboratories, a
pharmaceuticals and biotechnology company, since 1999.

28
Departmentalization and Decision Making

McDonald’s global presence advocates for the division of the business into 4 different
geographic regions. Although McDonald’s enforces uniform standards and policies throughout
its restaurants, food offerings may differ depending on geographic regions to suit the taste of the
local customers.

McDonalds
Corporation

Middle East &

Africa-Asia Europe North America Latin America
Pacific (AMEA)

The geographic division of McDonald’s allow for a more decentralized decision-

making approach. Overall long-term strategy is always decided by top management, but
different regions are given freedom to make decisions. This allows McDonald’s to assimilate
different cultural aspects which would not be possible if al decision making was centralized.

Organizational Culture

McDonald’s has a culture that encourages creativity, fun, and innovation. McDonald’s
business model is based on the “three-legged-stool” approach; balancing the needs of its owners,
suppliers, and company employees. McDonald’s states that balancing the needs of these three
groups is essential to the company’s success.66 McDonald’s also offers mentoring opportunities
for its employees and special training for its managers to create successful individuals.

Recommendations
McDonald’s has had a journey full of success, from the opening of its first restaurant in 1948
to more than 36,000 restaurants worldwide today. The values that drive McDonald’s are a
constant vigilance to its QSC&V values which place the customer experience as the number one
driving factor for success. QSC&V stand for quality, service, cleanliness and value. Success can
also be attributed to the franchise model early on. McDonald’s is free from having to manage
and provide cover infrastructure costs which has allowed the company to rapidly expand
worldwide. The attractiveness of McDonald’s low-cost strategy and consistent quality has also
boosted the company to be the number one food-chain in terms of revenues and brand value.
Today McDonald’s has chosen to change its strategy and focus on reimaging its restaurants to
portray a modern allure with its McCafe offerings. Being a mature company McDonald’s has
also chosen to invest in the quality of its products and devote marketing expenses to improve its
brand image.

29
 To ensure successful and profitable operations McDonald’s needs to face several challenges
in its local U.S. industry and across its global operations. The most prevalent threats McDonald’s
is facing today are:

 Negative market exposure of its product offerings which influences customer

perception and threatens market share. Negative perceptions are also related to
customer service issues.
 Environmental scandals which bring into questions the quality of McDonald’s food
and suppliers.
 Increasing competition in the U.S. market, with growing chains in two main
categories: Better Burger, and Fast-Casual. This threat is also related to changing
customer tastes, and the increasing importance of product sustainability, freshness,
and quality.

The challenges McDonald’s is facing today has caused a constant decrease in sales for nine
consecutive months, and a reported -2.4% revenue growth for the year ended 2014. To combat
the threats mentioned beforehand McDonald’s needs to change customer perspectives on their
views related to the price and quality perception of their product offerings. To focus on quality
and value McDonald’s should implement the following recommendations: Emphasis on
employee development to create a positive restaurant environment, focus menu offerings to
improve quality.

1. Emphasis on Employee Development

McDonald’s has stated that focusing in employee well-being is key to ensure the success
of the company. McDonald’s currently offers training programs for managers/owners in their
hamburger university establishments. However, McDonald’s needs to focus on increasing the
knowledge and competency of its entire workforce through increased standards of living, and
new training opportunities. A positive increase in customer service can also mean positive gains
in customer satisfaction which can materialize in revenue gains and customer retention.
McDonald’s needs to focus on providing employees with opportunities for advancement, and
develop training programs to improve the customer service in the drive-thru and inside the
restaurant.

1a. Provide a career development program for company employees. Although wage increase
certainly help, they are not the only way to increase employee commitment to company values.
McDonald’s should consider implementing a Career Development program that allows its
employees to pursue training programs or college degrees with support from the company.
Managers should also make sure to cross-train employees to provide job enrichment and increase
employee motivation.67

Career Development

 During the course of 2015-2016 McDonald’s should develop and prepare a plan that will
allow company employees to participate in career development initiatives. Initially the

30
 plan will be rolled out as a test in company owned restaurants which will not affect
franchisees. Although franchises would also be encouraged to follow the company
developed program.
 Company employees will be reimbursed either the total amount or a significant
percentage of the costs of tuition (ex: 80% company covered) for attending college and
working towards a degree.

Cross-Train

 New policies need to be developed by management to require all managers in corporate

and franchise owned restaurants to cross-train their employees in different
responsibilities. Cross-training will enhance employee experience, knowledge, and
competence. Cross-training will also allow management to rotate its employees to
enhance working conditions and increase employee motivation.

1b. Conduct in house training sessions for company employees that emphasize customer
service. A perfect example of excellent customer service is Chick-Fil-A. Being in the same
industry Chick-Fil-A demonstrates completely different characteristics when it comes to
customer service. McDonald’s should model a new employee training program that incorporates
some if not all of Chick-Fil-A’s customer service ideals. The success of Chick-Fil-A can is
evident with the highest revenue per restaurant in the fast-food industry at $2.8 million per store.
Chick-Fil-A’s service practices have also gained them in the top five businesses for excellence in
customer satisfaction. McDonald’s should train its employees to practice employee courtesy, and
emphasize cleanliness of its facilities.

Train on Employee Courtesy

 Quality of food goes hand in hand with excellent service. McDonald’s needs to develop a
training plan where employees are taught how to properly treat customers.
 Benchmarking with the best restaurant in the business brings to mind certain practices
that can enhance the customer experience. Practices such as being polite, smiling, and
servicing tables can enhance the customer experience and create a positive experience for
the customer.
 Part of emphasizing customer service means that McDonald’s should also make sure that
it has the highest standards of cleanliness in its facilities. McDonald’s should implement
rigorous practices to ensure the best quality of its facilities.

2. Focus the Menu Offerings

Focus the Menu. One of the strengths that McDonald’s has is the ability to innovate and
introduce new products, but has the chain done too much and forgone quality standards by
expanding its menu too fast? In the past decade McDonald’s has added more than 100 new items
to its menu and is now up to 145 offerings.68 McDonald’s has stretched itself to thin trying to
meet all market needs. In turn instead of improving quality, the chain has affected quality and

31
customers have not changed the view they have of McDonald’s. Too many items to prepare have
also decreased accuracy and efficiency at the drive-thru (189.5 second average time). For
Example McWraps average time to prepare is 60 seconds, compared to the average burger time
of 10 seconds. Instead of tackling quality with “healthy” offerings, McDonald’s should trim its
menu offerings and focus on improving the quality of its core business of burgers. It is amazing
to see that in a test of 21 burger chains, McDonald’s burger was rated last for quality and taste.

Current CEO Steven Easterbrook has rolled out a new create your taste platform that will
allow customers to custom make their own burgers. While this new technology feature is good
and presents new opportunities it does not address the negative quality perception of its menu
offerings. To trim down its menu and address quality issues McDonald’s should do the
following.

McDonald’s should analyze its different products based on profit potential and needed
investment for growth and cut the least profitable items. This will help create a leaner menu, and
allow McDonald’s to focus on high growth items, as well as allow the company to work on the
quality of its burger offerings.

Emphasis on healthy offerings, and customizability is becoming increasingly popular. Instead

of adding new items McDonald’s should concentrate on improving the quality of its burgers.

 McDonald’s should consider adding bun options for its burgers. Upon ordering a burger,
the customer would be able to decide on different bread options depending on what
he/she is looking for. McDonald’s could offer its traditional bun, a whole wheat bun, and
a potato bun for example. To accomplish this, McDonald’s will have to contact its bread
suppliers and conduct a cost analysis on the addition of the new buns.
 Conduct a feasibility study of sourcing beef from sustainable suppliers (Antibiotic Free).
Customers today are looking for better quality and freshness. They are also concerned
with sustainable sourcing of food products. Restaurants like Chipotle and Shake Shack
have demonstrated that it is possible to source antibiotic-free beef, but with a slight cost
increase. Chipotle reported an increase of 25 to 50 cents per burrito after it adopted its
antibiotic-free practice.69 Shake Shack reported that antibiotic-free meat can cost 15-20%
more than regular beef, but customers seem to be willing to pay higher prices for better
quality.70

32
 Bibliography

Aleem, Zeeshan. “McDonald's Bizarre New Strategy Proves Its Critics Have Been Right All
Along.” Policy Mic. Accessed March 30, 2015. http://mic.com/articles/107824/mc-
donald-s-bizarre-new-strategy-proves-its-critics-have-been-right-all-along.

Azila J. “Factor Affecting Customer’s Experience in Local Fast-Food Restaurant.” Academia.

Accessed April 6, 2015.
https://www.academia.edu/8094231/Factors_Affecting_Customers_Experience_in_Loc
al_Fast_Food_Restaurant.

Baertlein, Lisa. McDonald’s vows ‘modern’ makeover amid US sales struggles. Reuters.
Accessed March 15, 2015. http://www.reuters.com/article/2015/03/09/us-mcdonalds-
sales-idUSKBN0M512E20150309.

Barrett, Mike. “The 19 Ingredients in McDonald’s Fries – Including a Form of Silicone Found in
Silly Putt Along with a petrol-based chemical”. Natural Society. Accessed April 7,
2015. http://naturalsociety.com/19-ingredients-mcdonalds-fries-including-form-
silicone-found-silly-putty/.

Burger King. “Nutritional Information.” Accessed April 10, 2015.

http://www.bk.com/pdfs/nutrition.pdf.

Caldwell, Carla. “Report: Chick-Fil-A Slowest Drive-Thru, but Most Accurate.” Accessed April
6, 2015. http://www.bizjournals.com/atlanta/morning_call/2013/10/report-chick-fil-a-
slowest.html.

Chipotle Mexican Grill 10k Report 2014.

Chipotle Mexican Grill. “It’s What’s Inside That Counts.” Accessed April 7, 2015.
http://www.chipotle.com/en-US/menu/ingredients/ingredients.aspx.

Choi, Candice. “McDonald’s CEO Steps Down as Sales Decline.” Yahoo Finance. Accessed
March 28, 2015. http://finance.yahoo.com/news/mcdonalds-names-executive-
easterbrook-ceo-225851828--finance.html.

Client Heartbeat. “How Chick-Fil-A Created a Memorable Experience (And Grows Revenue by
13% Annually).” Accessed April 6, 2015. http://blog.clientheartbeat.com/chick-fil-a-
customer-experience/.

Consumer Reports. “McDonald’s Burgers Named Worst in America in Consumer Reports’ New
Fast-Food Survey.” Accessed April 3, 2015.
http://pressroom.consumerreports.org/pressroom/2014/07/my-entry-1.html.

33
Consumer Reports. “Cleanest Fast-Food Restaurants in America.” Accessed April 3, 2015.
http://www.consumerreports.org/cro/magazine/2014/08/cleanest-fast-food-restaurants-
in-america/index.htm

Consumer Reports. “Best and Worst Fast-Food Restaurants in America.” Accessed March 16,
2015. http://www.consumerreports.org/cro/magazine/2014/08/best-and-worst-fast-
food-restaurants-in-america/index.htm.

Derose, Chris. “How McDonald’s Can Finally Fix its Abysmal Customer Service.” Business
Insider. Accessed March 17, 2015. http://www.businessinsider.com/how-mcdonalds-
can-fix-customer-service-2013-5.

Esri. “Mnority Population Growth: The New Boom.” ESRI. Accessed April 5, 2015.
http://www.esri.com/library/brochures/pdfs/minority-population-growth.pdf.

Fast Company. “Chick-Fil-A’s Recipe for Customer Service.” Fast Company. Accessed April 5,
2015. http://www.fastcompany.com/resources/customer/chickfila.html.

Fast Company. “Apps, Video Games, And Wearables: A Vision For The Future Of
McDonald's.” Fast Company. Accessed April 6, 2015.
http://www.fastcodesign.com/3043717/sxsw/apps-video-games-and-wearables-a-
vision-for-the-future-of-mcdonalds.

Fast Food Industry Profile: the United States. Fast Food Industry Profile: United States (January
2012): 1-32. Publisher Provided Full Text Searching File, EBSCOhost (accessed March
22, 2015).

FAO. “Global and regional food consumption patterns and trends.” Food and Agriculture
Organization. Accessed March 29, 2015.
http://www.fao.org/docrep/005/ac911e/ac911e05.htm.

Food and Drug Administration. “Disclosure of Nutrient Content Information for Standard Menu
Items Offered for Sale at Chain Restaurants or Similar Retail Food Establishments and
for Articles of Food Sold From Vending Machines.” FDA: FR Doc No: 2010-16303.
http://www.gpo.gov/fdsys/pkg/FR-2010-07-07/html/2010-16303.htm.

Fortune Online. “McDonald’s Posts a Global Sales Decline as Troubles Linger.” Fortune.
Accessed March 7, 2015. http://fortune.com/2015/02/09/mcdonalds-worldwide-sales-
fell-more-than-expected-in-january/.

Frater, Jamie. “Top 10 Failed McDonald’s Products.” Accessed April 6, 2015.

http://listverse.com/2009/05/30/top-10-failed-mcdonalds-products/.

Freedman, David H. "How junk food can end obesity." The Atlantic, 2013., 68, Literature
Resource Center, EBSCOhost (Accessed March 21, 2015).

34
Gogolak, E.C. City Council Hears Plea From Fast-Food Workers. NY Times. Accessed March
12, 2015. http://www.nytimes.com/2013/06/28/nyregion/city-council-hears-plea-from-
fast-food-workers.html?ref=nyregion&_r=0.

Goh, Brenda. “The McDonald’s Meat Supplier Scandal in China Keeps Escalating.” Business
Insider. Accessed March 10, 2015. http://www.businessinsider.com/mcdonalds-china-
food-supplier-scandal-2014-7.

Grantham, Russell. “Chick-fil-A Model Helps it Lead.” Accessed April 7, 2015.

http://www.ajc.com/news/business/chick-fil-a-model-helps-it-lead/nQPpn/.

Gucciardi, Anthony. “Mcdonald’s Sales Rapidly Decline as Americans Reject Fake Food.”
Infowars. Accessed April 5, 2015. http://www.infowars.com/mcdonalds-sales-rapidly-
decline-as-americans-reject-fake-food/.

Gucciardi, Anthony. “Watch: Factory Farm Whistleblower Unveils Disturbing Video

'Sustainable' farm conditions revealed”. Natural Society. Accessed April 7, 2015.
http://naturalsociety.com/perdue-farm-whistleblower-unveils-disturbing-video/.

Guru Focus. “McDonald’s Corp.” Guru Focus. Accessed April 8, 2015.

http://www.gurufocus.com/stock/MCD.

Hottovy, R.J. “McDonald’s Turnaround Plan Sensible but Will Take Time Amid Structural
Industry and Consumer Changes.” Morningstar. Accessed March 12, 2015.
http://analysisreport.morningstar.com/stock/research?t=MCD&region=USA&culture=e
n-US&productcode=MLE.

Horovitz, Bruce. “Thousands of Fast-Food Workers Strike; Arrests Made.” USA Today.
Accessed April 4, 2015.
http://www.usatoday.com/story/money/business/2014/09/04/fast-food-restaurants-
strike-mcdonalds-wendys-burger-king-taco-bell/15058943/

Interbrand. “Best Global Brands Rankings.” Interbrand. Accessed April 8, 2015.

http://www.bestglobalbrands.com/2014/ranking/#?listFormat=sq.

Jaffe, Sarah. “McJobs Should Pay, Too: Inside Fast-Food Workers' Historic Protest For Living
Wages.“. The Atlantic. Accessed March 29, 2015.
http://www.theatlantic.com/business/archive/2012/11/mcjobs-should-pay-too-inside-
fast-food-workers-historic-protest-for-living-wages/265714/.

Kharas, Homi. “The Emerging Middle Class in Developing Countries.” Brookings Institution.
Accessed April 1, 2015.
http://siteresources.worldbank.org/EXTABCDE/Resources/7455676-
1292528456380/7626791-1303141641402/7878676-1306699356046/Parallel-Sesssion-
6-Homi-Kharas.pdf.

35
Kowitt, Beth. "Fallen arches." Fortune, 2014., 106, General OneFile, EBSCOhost (accessed
March 12, 2015).

Karnani, Aneel, Brent McFerran, and Anirban Mukhopadhyay. "Leanwashing: A HIDDEN

FACTOR IN THE OBESITY CRISIS." California Management Review 56, no. 4
(Summer2014 2014): 5. Publisher Provided Full Text Searching File, EBSCOhost.

Learmonth, Michael. McDonald's Looks To Wireless Charging, Tech Conveniences To Spur

Turnaround. Ibtimes. Accessed March 18, 2015. http://www.ibtimes.com/sxsw-2015-
mcdonalds-looks-wireless-charging-tech-conveniences-spur-turnaround-1847350.

Liebelson, Dana. “Will McDonald’s Stop Serving Big Mac With a Side of Antibiotics?” Mother
Jones. Accessed April 12, 2015.
http://www.motherjones.com/politics/2014/02/mcdonalds-antibiotics-beef.

Lutz, Ashley. Millennials are telling a big lie about McDonald’s. Business Insider. Accessed
March 16, 2015. http://www.businessinsider.com/millennials-go-to-mcdonalds-the-
most-2015-3

Lutz, Ashley. McDonald’s is Plotting to Copy Amazon’s Strategy. Business Insisder. Accessed
March 17, 2015. http://www.businessinsider.com/mcdonalds-reveals-what-it-will-be-
like-to-eat-there-in-the-future-2015-3.

Lutz, Ashley. “How the McWrap is Killing McDonald’s Business.” Business Insider. Accesssed
April 5, 2015. http://www.businessinsider.com/how-the-mcwrap-is-killing-mcdonalds-
2015-3.

McArdle, Megan. “Unions are Loving McDonald’s Labor Ruling.” Bloomberg. Accessed March
30, 2015. http://www.bloombergview.com/articles/2014-08-01/unions-are-lovin-
mcdonald-s-labor-ruling.

McDonald’s Corporation. McDonald's USA Announces New Antibiotics Policy and Menu
Sourcing Initiatives. McDonald’s Corporation. Accessed March 18, 2015.
http://news.mcdonalds.com/press-releases/mcdonald-s-usa-announces-new-antibiotics-
policy-and-menu-sourcing-initiatives-nyse-mcd-1179405

McDonald’s Corporation. McDonald’s Global Consumer Conference March 2015.

http://cc.talkpoint.com/ubsx001/030415a_ae/?entity=6_43LPJFE

McDonald’s 10k Report 2014.

McDonald’s. “What We Do.” McDonald’s Corp. Accessed March 10, 2015.

http://www.aboutmcdonalds.com/mcd/our_company/mcdonalds_system/what_we_do.h
tml.

36
McDonald’s Corporation. 2013 Annual Report. Accessed March 11, 2015.
http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/Investors/McDs2013
AnnualReport.pdf.

McDonald’s Corporation. “Mission & Values.” Accessed March 6, 2015.

http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html

McDonald’s Corporation. “McDonald’s Announces 3-Year Total Cash Return Target.”

McDonald’s Corporation. http://news.mcdonalds.com/Corporate/Press-
Releases/Financial-Release?xmlreleaseid=123050

McDonald's Corporation SWOT Analysis. Mcdonald's Corporation SWOT Analysis (August

2014): 1-8. Business Source Complete, EBSCOhost (accessed March 22, 2015).

McDonald’s Corporation. “Getting to Know Us.” McDonald’s Corporation. Accessed March 6,

2015. http://www.aboutmcdonalds.com/mcd/our_company.html.

McIntyre Douglas A., Alexander Kent, Alexander E.M. Hess, Thomas C. Frohlich, Ashley C.
Allen. “The 2014 Customer Service Hall of Fame.” USA Today. Accessed April 4,
2015. http://www.usatoday.com/story/money/business/2014/07/19/customer-service-
hall-of-fame/12690983/.

NAICS. “722513 Limited Service Restaurants.” NAICS Association.

http://www.naics.com/naics-code-description/?code=722513.

NASDAQ. “Crude Oil: WTI (NYMEX).” NASDAQ. Accessed March 16, 2015.
http://www.nasdaq.com/markets/crude-oil.aspx?timeframe=1y.

NPD Group. “Restaurant Burgers Had a Banner Year in 2014.” NPD Group. Accessed March
10, 2015. https://www.npd.com/wps/portal/npd/us/news/press-releases/2015/restaurant-
burgers-had-a-banner-year-in-2014/.

Oches, Sam. “The Drive-Thru Performance Study.” QSR. Accessed March 20, 2015.
http://www.qsrmagazine.com/reports/drive-thru-performance-study.

Ortman, Jennifer M., Victoria A. Velkoff, Howard Hogan. “An Aging Nation: The Older
Population in the United States.” U.S. Census Bureau. Accessed March 30, 2015.
http://www.census.gov/prod/2014pubs/p25-1140.pdf.

Peterson, Hayley. “McDonald’s Posts Worst Sales Decline in 10 Years.” Business Insider.
Accessed March 20, 2015. http://www.businessinsider.com/mcdonalds-august-sales-
worst-decline-in-10-years-2014-9.

Patton, Leslie. “Have we Reached Peak Burger.” Bloomberg. Accessed March 23, 2015.
http://www.bloomberg.com/bw/articles/2014-09-04/fast-food-chains-growth-in-u-dot-
s-dot-may-have-peaked.

37
Patton, Leslie. “McDonald’s Seen Overhauling U.S. Menu From 145 Choices.” Bloomberg.
Accessed April 9, 2015. http://www.bloomberg.com/news/articles/2013-05-
17/mcdonald-s-seen-overhauling-u-s-menu-from-145-choices.

Pezzini, Mario. “An emerging middle class.” OECD. Accessed March 30, 2015.
http://www.oecdobserver.org/news/fullstory.php/aid/3681/An_emerging_middle_class.
html.

PR Newswire. “McDonald's Reports Global Comparable Sales For February.” PR Newswire.

Accessed March 17, 2015. http://www.prnewswire.com/news-releases/mcdonalds-
reports-global-comparable-sales-for-february-300046950.html.

QSR Magazine. “The QSR 50.” Accessed March 30, 2015.

http://www.qsrmagazine.com/reports/qsr50-2014-top-50-chart.

QSR Magazine. “Escaping the Burn-and-Churn Employee Treadmill.” Accessed March 25,
2015. http://www.qsrmagazine.com/outside-insights/escaping-burn-and-churn-
employee-treadmill.

QSR Magazine. “Local Heroes Top Golden Arches.” QSR Magazine. Accessed April 5, 2015.
http://www2.qsrmagazine.com/articles/exclusives/0810/customer-1.phtml

Rathi, Ghanshyam. “Global Strategy of McDonald’s and How it Reached all Corners of the
World.” Academia.
https://www.academia.edu/6465022/Global_Strategy_of_McDonald_and_How_It_Rea
ched_All_corners_of_World.

Rohde, David. “The Swelling Middle.” Reuters. Accessed March 30, 2015.
http://www.reuters.com/middle-class-infographic.

Ronald McDonald House Charities. “Mission & Values.” http://www.rmhc.org/mission-and-

vision.

Rosenberg, Martha. “7 things McDonald’s really wants you to forget.” Salon. Accessed March
30, 2015.
http://www.salon.com/2014/10/24/7_things_mcdonalds_really_wants_you_to_forget_p
artner/.

The Conference board. “Global Economic Oulook 2015 - Charts & Tables.” Accessed March 30,
2015. https://www.conference-board.org/data/globaloutlook/index.cfm?id=27451.

The Guardian. “McDonald's will let customers build their own burgers for the first time.” The
Guardian. Accessed March 30, 2015.
http://www.theguardian.com/business/2014/dec/08/mcdonalds-build-own-burgers-
customers.

38
Tuder, Stefanie. “McDonald’s Hamburger University is No Joke.” ABC. Accessed March 21,
2015. http://abcnews.go.com/blogs/lifestyle/2014/04/mcdonalds-hamburger-university-
is-no-joke.

SAS. “A Lesson in Customer Service from Chick-Fil-A President Dan Cathy.” SAS. Accessed
March 15, 2015. http://www.sas.com/en_us/insights/articles/marketing/a-lesson-in-
customer-service-from-chick-fil-a.html.

Schoreder, Eric. “Brand value of fast-food companies tracks higher.”

http://www.foodbusinessnews.net/articles/news_home/Food-Service-
Retail/2013/05/Brand_value_of_fast-food_compa.aspx?ID=%7B0C813C7E-1DE8-
4B00-8F92-73EC4CE9B19A%7D&cck=1.

Sheridan, Marcus. “8 Reasons Why Chick-Fil-A has the best Business Model in America.” The
Sales Lion. Accessed April 3, 2015. http://www.thesaleslion.com/8-reasons-why-
chick-fil-a-has-the-best-business-model-in-america/.

Sowinski, Lara L. "The future of food logistics: by air, land and sea, transportation innovations
and developments are creating new opportunities for the global food supply
chain." Food Logistics, 2014. 20, General OneFile, EBSCOhost (Accessed March 20,
2015).

Statista. “Brand value of the 10 most valuable fast food brands worldwide in 2014 (in million
U.S. dollars).” Statista. Accessed April 10, 2015.
http://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-
worldwide/.

Statista. “Statistics and Facts of McDonald’s.” http://www.statista.com/topics/1444/mcdonalds/.

Statista. “Market share of leading brands in the United States fast food industry in 2013.”
Statista. Accessed April 10, 2015. http://www.statista.com/statistics/196611/market-
share-of-fast-food-restaurant-corporations-in-the-us/.

Strasser. Annie-Rose. “McDonalds Tells Workers To Budget By Getting A Second Job And
Turning Off Their Heat.” Think Progress. Accessed April 7, 2015.
http://thinkprogress.org/economy/2013/07/15/2300321/mcdonalds-buget-low-wage/.

UNITED STATES: FOOD & DRINK REPORT. United States Food & Drink Report no. 4
(October 2014): 1-153. Business Source Elite, EBSCOhost (Accessed March 21, 2015).

Vitasek, Kate. “Trust and Collaboration: McDonald’s Supply Chain Strategy.” GSC Council.
Accessed April 4, 2015. Global Sourcing Council. http://gscouncil.org/trust-and-
collaboration-mcdonalds-supply-chain-strategy/.

39
Vrontis, D. and Pavlou, P. “The external environment and its effect on strategic marketing
planning: a case study for McDonald’s.” Journal for International Business and
Entrepreneurship Development, Vol. 3, Nos 3/4, pp.289–30 (Accessed March 30,
2015).

Yang, Nathan. "Burger King and McDonald's: Where's the Spillover?." International Journal Of
The Economics Of Business 19, no. 2 (July 2012): 255-281. EconLit with Full Text,
EBSCOhost.

40
Endnotes
1
McDonald’s. “What We Do.” McDonald’s Corp.
2
McDonald’s Corporation. “Mission & Values.” Accessed March 6, 2015.
3
Ibid.
4
McDonald’s 10k Report 2014.
5
Ghanshyam Rathi. “Global Strategy of McDonald’s and How it Reached all Corners of the
World.”
6
Ibid.
7
Ibid.
8
Kate Vitasek. “Trust and Collaboration: McDonald’s Supply Chain Strategy.” GSC Council.
9
The Guardian. “McDonald's will let customers build their own burgers for the first time.”
10
McDonald’s Corporation. “McDonald’s Announces 3-Year Total Cash Return Target.”
McDonald’s Corporation.
11
Mario Pezzini. “An emerging middle class.”
12
David Rohde. “The Swelling Middle.”
13
Jennifer M. Ortman, Victoria A. Velkoff, Howard Hogan. “An Aging Nation: The Older
Population in the United States.” U.S. Census Bureau.
14
Esri. “Mnority Population Growth: The New Boom.”
15
NASDAQ. “Crude Oil: WTI (NYMEX).”
16
United States: Food & drink report. United States Food & Drink Report no. 4 (October 2014):
1-153.
17
FAO. “Global and regional food consumption patterns and trends.”
18
Food and Drug Administration FR Doc No: 2010-16303.
19
Lara L. Sowinski. “The future of food logistics: by air, land and sea, transportation innovations
and developments are creating new opportunities for the global food supply chain."

41
20
Fast Company. “Apps, Video Games, And Wearables: A Vision For The Future Of
McDonald's.”
21
McDonald’s 10k Report 2014.
22
McDonald’s Corporation. “Getting to Know Us.” McDonald’s Corporation.
23
Ronald McDonald House Charities. “Mission & Values.” http://www.rmhc.org/mission-and-
vision
24
NAICS. “722513 Limited Service Restaurants.” NAICS Association.
25
"Fast Food Industry Profile: the United States."
26
Ibid.
27
Ibid.
28
Ibid.
29
Ibid.
30
Statista. “Brand value of the 10 most valuable fast food brands worldwide in 2014 (in million
U.S. dollars).”
31
Patton, Leslie. “McDonald’s Seen Overhauling U.S. Menu From 145 Choices.”
32
Burger King. “Nutritional Information.”
33
Chipotle Mexican Grill. “It’s What’s Inside That Counts.”
34
Statista. “Market share of leading brands in the United States fast food industry in 2013.”
35
QSR Magazine. “The QSR 50.” http://www.qsrmagazine.com/reports/qsr50-2014-top-50-chart
36
Douglas A. McIntyre. “The 2014 Customer Service Hall of Fame.” USA Today.
37
QSR Magazine. “The QSR 50.”
38
SAS. “A Lesson in Customer Service from Chick-Fil-A President Dan Cathy.”
39
Azila J. “Factor Affecting Customer’s Experience in Local Fast-Food Restaurant.”
40
Douglas A. McIntyre. “The 2014 Customer Service Hall of Fame.” USA Today.
41
Fast Company. “Chick-Fil-A’s Recipe for Customer Service.”
42
 42
Douglas A. McIntyre. “The 2014 Customer Service Hall of Fame.” USA Today.
43
Client Heartbeat. “How Chick-Fil-A Created a Memorable Experience (And Grows Revenue
by 13% Annually).”
44
Caldwell, Carla. “Report: Chick-Fil-A Slowest Drive-Thru, but Most Accurate.”
45
Consumer Reports. “Cleanest Fast-Food Restaurants in America.”
46
Statista. “Statistics and Facts of McDonald’s.”
47
Vitasek, Kate. “Trust and Collaboration: McDonald’s Supply Chain Strategy.” Global
Sourcing Council
48
Lisa Baertlein. McDonald’s vows ‘modern’ makeover amid US sales struggles. Reuters.
49
Patton Leslie. “Have we Reached Peak Burger.”
50
Choi Candice. “McDonald’s CEO Steps Down as Sales Decline.”
51
Beth Kowitt. "Fallen arches." Fortune, 2014., 106, General OneFile, EBSCOhost
52
Patton Leslie. “Have we Reached Peak Burger.”
53
Mike Barrett. “The 19 Ingredients in McDonald’s Fries
54
Aneel Karnani, Brent McFerran, and Anirban Mukhopadhyay. "Leanwashing: A HIDDEN
FACTOR IN THE OBESITY CRISIS." California Management Review 56, no. 4
(Summer2014 2014):
55
Consumer Reports. “Best and Worst Fast-Food Restaurants in America.”
56
Bruce Horovitz. “Thousands of Fast-Food Workers Strike; Arrests Made.” USA Today.
57
Goh Brenda. “The McDonald’s Meat Supplier Scandal in China Keeps Escalating.”
58
R.J. Hottovy. “McDonald’s Turnaround Plan Sensible but Will Take Time Amid Structural
Industry and Consumer Changes.” Morningstar.
59
Jamie Frater. “Top 10 Failed McDonald’s Products.” http://listverse.com/2009/05/30/top-10-
failed-mcdonalds-products/
60
Ashley Lutz. “How the McWrap is Killing McDonald’s Business.”
http://www.businessinsider.com/how-the-mcwrap-is-killing-mcdonalds-2015-3

43
61
Ibid.
62
McDonald’s Corporation. 2013 Annual Report.
63
Beth, Kowitt. "Fallen arches." Fortune, 2014., 106, General OneFile, EBSCOhost.
64
Ibid.
65
Ibid.
66
McDonald’s Corporation. 2013 Annual Report.
67
Chris Derose. “How McDonald’s Can Finally Fix its Abysmal Customer Service.”
http://www.businessinsider.com/how-mcdonalds-can-fix-customer-service-2013-5
68
Candice Choi. “McDonald’s CEO Steps Down as Sales Decline.”
69
Dana Liebelson. “Will McDonald’s Stop Serving Big Mac With a Side of Antibiotics?”
http://www.motherjones.com/politics/2014/02/mcdonalds-antibiotics-beef
70
Ibid.

44