Macdonald Present

History Year

Events

1937

Richard & Maurice, started drive-in restaurant in California. Revenues risen to $3,50,000.

Mid1950 1952

First franchisee started by Neil Fox in Arizona.

1955

Kroc established McDonald system Inc.

1961

Kroc bought McDonald brothers share for $2.7 million. McDonald’s went Public, selling its shares OTC.

1965 1970 1985

Restaurants grew at an avg. of about 500 per year. First fast food chain to provide the list of ingredients used in its products.

Question No. 1 • McDonald’s was once hailed as the role model for fast food industry. In the 1980s & early 1990s, it was on of the most successful companies in the fast food industry. However, in the late 1990s, it experienced major problems which reflected in poor sales. Do you think McDonald’s faced poor sales in the late 1990s mainly because of changes in the external

External Changes • • • •

Changing Customers preferences Increased competition Health issues Economic Turmoil across Asia and Europe. • September 11, 2001, terrorist attack. • Dependent on Four Countries. • Poor consumer spending in the restaurant industry in US.

External Changes ( contd..) • Changing Customers preferences - customers started to prefer eating at home using the microwave to heat the food. - they also started visiting competitor’s chains as they offered discounts.

External Changes ( contd..) • Increased competition - competition from supermarkets, convenience stores etc. - Wendy’s, Burger King, Pizza Hut, KFC, Subway, etc.

External Changes ( contd..) • Health issues - customers became health conscious. - they started to select fresh food over fatty, fried food & red meat. - Obesity became major health problem. - legal suits.

External Changes ( contd..) • Economic Turmoil across Asia and Europe. - currency crisis in 1990 in Asian countries. - Economic Turmoil in Europe. - International Sales had fallen.

External Changes ( contd..) • September 11, 2001, terrorist attack. - McDonald’s depended heavily on US Tourism. - With September 11, attack the tourism industry suffered.

External Changes ( contd..) • Dependent on Four Countries. - McDonald’s excessive dependence on American, Britain, Germany & France Markets. - These markets had reached saturation.

External Changes ( contd..) • Poor consumer spending in the restaurant industry in US. - there was a negative growth rate of (-2%) in consumer spending in the US markets. - decline in per store sales in the US in the third quarter of 2002.

Question No. 2 • Some analysts feel that McDonald’s problem in the late 1990’s were due to its inability to bring about a change in the internal environment of the organization. When were the problem in the internal environment that resulted in McDonald’s poor performance in the late 1990’s ?

Problems in internal environment • Continuous expansion of business • Adverse effect on service & quality • Grading system

Cont’d • Time lag in service • Lack of innovation • Deterioration of relationship with franchisees

Question No. 3 • Many analyst feel that franchising is the best way to grow , more so, in international markets. However, McDonalds franchise model which was very successful in the 1980s took a beating in the late 1990s. What according to you were the problems with the McDonalds franchise model? In the light of such problems, do you think it is still best way to grow?

• Mc Donald kept changing its views so many times that made its franchisees suspect about company’s stance.

Question No. 4 • Soon after taking over as the CEO of McDonald’s, Cantalupo had taken various steps to reverse the downward slide of McDonald’s emerge as the “Great American Meal” once its youth Vigor?

Steps taken by Cantalupo • Up or Over grading system • More focus on customer satisfaction then on the number of outlets • Emphasis on cleanliness, service and staff productivity to attract & retain customers

Steps taken by Cantalupo • Simplified operations • National ad campaigns instead of regional, so that the message is clearly conveyed to the customers

THANK YOU