The Mcdonald’s Case: Strategies for Growth Essay Example

see $42 billion in new revenue over the next eight years compared with $13 billion for quick-service restaurants.

The rationale behind McKinsey's numbers: As they age, Americans tend to trade up from quick-service to full-service restaurants. The consulting firm said that, in 2000, Americans etween the ages of 18 and 24 ate at fast-food restaurants 79% of the time and at full-service restaurants 21% of the time. Meanwhile, Americans who were 65 and older went to quick-service restaurants only 57% of the time and to sit-down restaurants 43% of the time. Headed in their direction are the Americans in the boomer demographic--ages 50 to 64--who ate at fast-food restaurants for 65% of their meals and at full-service restaurants for 35%. Third, convenience food is a substitute threat for fast-food sector.

The packed-food industry (Kraft, Campbell, etc. ) is in head-to-head competition with ast-food industry for a bigger portion of the food market. In addition, supermarkets, convenience stores, delis, and petrol stations offer more and more carry-out meals and re-heatable packaged foods.

Siehoyono, The Mcdonald’s Case: Strategies for Growth Jurusan Manajemen Perhotelan, Fakultas Ekonomi – Universitas Kristen Petra http://puslit.petra. ac. id/journals/perhotelan/

Source: http://www. businessweek.com/1998/10/b3568001. htm

Where the United States Eats Out, 2000 Last but not least, the biggest threat appears to come from an increasing awareness among consumers of the benefits of healthy eating. Nutrition and health studies and reports have heightened public concern over the fat and sodium content of fast foods. Moreover, a Euro monitor report published in November, found that "a sandwich is viewed by the majority of consumers as an inherently healthier product than burgers, chicken, fish, and chips, or many other fast-food sub-sectors. Consequently, in 1990,

burger consumption dropped to 17 percent of all restaurant orders, from 19 percent in 1982 (Lewison, 1994).

As the results from aforementioned unfavorable trends, sales growth has slowed in the fast-food market from 7. 1 percent in the 1970s to 4. percent in the 1980s to 3. 0 percent in 1990 (Lewison, 1994). McDonald's is one of the world's premier entrepreneurial success stories in fast food industry.

However, early in 2003, McDonald has announced a re-structure plan including cutting jobs, closing many restaurants and slowing down the expansion plan.

From all phenomena mentioned above, particularly what has happened to McDonald’s, what went wrong with McDonald’s and what can other international franchises learn from these mistakes are investigated in this paper.

McDonald’s History

Golden Arches“Whatever people ate, McDonald's would be the ones to sell it” Ray Kroc's: McDonald’s Founder McDonald's Corporation is the world's largest chain of fast-food restaurants. Although McDonald's did not invent hamburgers or fast-food restaurants, their name has become nearly synonymous with both. The history of McDonald’s began in 1940 when brothers Dick and Mac McDonald opened the first restaurant in San Bernardino, California. The McDonald's restaurant gained fame after 1948, when the brothers implemented their innovative "Speedee Service System", an assembly line hamburger construction and self-serve operation.

In 1954, entrepreneur and milkshake-mixer salesman Ray Kroc became interested in the McDonald's restaurant when he learned of its extraordinary capacity. Upon seeing the restaurant in operation, he approached the McDonald brothers with a proposition to open new McDonald's restaurants, with himself as the first franchisee. Kroc worked hard to sell McDonald's. He even attempted to overcome his wartime in connection with Walt Disney, in the failed hope of opening a

McDonald's at the soon-to-be-opened Disneyland.

Eventually, he opened his first restaurant in Des Plaines, Illinois. It was an immediate success. Kroc's new company was originally named "McDonald's