Burger Wars Case Highlights Essay
McDonald’s is a well-known fast-food chain restaurant found around the world. They had consistent growth for decades until recently during the 90’s and early 20’s. Although not their official founder, Ray Kroc developed and exploded this fast-food restaurant into what it is today. He insisted on clean restaurants that were family friendly and fast food preparation. Large growth in the early years of the company eventually plateaued bringing about the companies struggles in the 90’s.
Policy changes and deteriorating franchise relations created failing realities within the company. Three major issues which occurred were the market-share game in which aggressive expansion policies allowed more restaurants to open while others close by failed, declining restaurant standards with stringent policies creating tensions between corporate and franchises, and large growths of competitor restaurants. Each of these issues helps in the decline of growth in revenue and stock for the company. Knowing the problems is the fastest way in solving them.With the promotion of James Cantalupo, policy changes and a head-on approach started to bring the company back on track. After 16 months, McDonald’s with the help of Cantalupo was able to restore sales and profit.
There are many lessons that can be learned from this case. Continuing from the issues discussed before, it is wise to continue this discussion to explain why these were issues and how something good can come from them. Aggressive expansion to create a large market-share initially brought McDonald’s into the spot-light and allowed their brand to become popular.This is great until product prices become too low and franchises start competing against each other.
McDonald’s franchises’ started becoming irritated at the closeness in proximity that corporate was putting “competing” franchises. This created tension between the franchises and corporate. Eventually, the market-share strategy was slowed down. McDonald’s, originally, was created with tight standards and cleanliness. To do this, corporate had to administer authoritative inspectors to verify that each McDonald’s were rising to the standards.During the 90’s customer atisfaction hit an all-time low.
McDonald’s restaurants became unclean and a dirty place. Perhaps the monitoring they saw before had slowed and they were too focused on revenues and getting food out faster than customer retention and satisfaction. There isn’t a clear understanding as to why or how their standards fell. A speculative guess might have been based on the nature of the industry. Fast-food in general has grown to be a dirty industry. The last issue involves the growing competitor industry including Yum Brands, Burger King, and Wendy’s.
Even though the market and industry was dominated by McDonald’s, it was a very easy to get in to since products were cheap. These companies grew tremendously over the last couple decades even when McDonald’s saw declines. To continue with their dominance in the fast-food industry, McDonald’s acquired and diversified into different markets keeping these new chains similar in nature to their core, fast-food. These new restaurants included Chipotle and Donatos as well as others.Even though this was discussed briefly in the article, I think it is worth mentioning the rise in consumer demand for a healthier diet.
We all know McDonald’s is not well known for anything healthy on their menu. Yes, they have “healthier” option but that which still gives almost no nutritional value. This company seems to think this international health kick is just a fad. I believe they could have helped their sales by bringing in a different costumer group of health nuts especially since there is such a large market right now.