ENTREPRENEURSHIP

PROJECT
PROJECT REPORT AND MARKET SURVEY OF
MCDONALDS

FAST FOOD RESTAURANT

AN INTRODUCTION
A fast

food

(QSR) within

restaurant ,
the

also

industry

known

itself,

is

as

a quick

service

specific

type

restaurant

of restaurant

characterized both by its fast food cuisine and by minimal table service .
Food served in fast food restaurants typically caters to a " meat-sweet diet "
and is offered from a limited menu; is cooked in bulk in advance and kept
hot; is finished and packaged to order; and is usually available ready to
take away, though seating may be provided.
Fast food restaurants are usually part of a restaurant chain or franchise
operation, which provisions standardized ingredients and/or partially
prepared foods and supplies to each restaurant through controlled supply
channels.
Arguably

the

first

fast

food

restaurants

originated

in

the United

States with A&W in 1916 and White Castle in 1921. Today, Americanfounded fast food chains such as McDonald's and KFC are multinational
corporations with outlets across the globe.
Variations

on

the

fast

food

restaurant

concept

include fast

casual

restaurants and catering trucks . Fast casual restaurants have higher sit-in
ratios, and customers can sit and have their orders brought to them.
Catering trucks often park just outside worksites and are popular with
factory workers.
Some trace the modern history of fast food in America to July 7, 1912, with
the opening of a fast food restaurant called the Automat in New York. The
Automat was a cafeteria with its prepared foods behind small glass
windows and coin-operated slots. Joseph Horn and Frank Hardart had
already opened the first Horn & Hardart Automat in Philadelphia in 1902,
but their Automat at Broadway and 13th Street, in New York City,
created a sensation. Numerous Automat restaurants were built around the
country to deal with the demand. Automats remained extremely popular
2

throughout the 1920s and 1930s. The company also popularized the notion
of take-out food, with their slogan Less work for Mother.
Modern commercial fast food is highly processed and prepared on a large
scale from bulk ingredients using standardized cooking and production
methods and equipment. It is usually rapidly served in cartons or bags or in
a plastic wrapping, in a fashion which reduces operating costs by allowing
rapid product identification and counting, promoting longer holding time,
avoiding transfer of bacteria, and facilitating order fulfillment. In most fast
food operations, menu items are generally made from processed ingredients
prepared at a central supply facilities and then shipped to individual outlets
where they are cooked (usually by grill, microwave, or deep-frying) or
assembled in a short amount of time either in anticipation of upcoming
orders (i.e., "to stock") or in response to actual orders (i.e., "to order").
Following

standard

operating

procedures,

pre-cooked

products

are

monitored for freshness and disposed of if holding times become excessive.

This process ensures a consistent level of product quality, and is key to
delivering the order quickly to the customer and avoiding labour and
equipment costs in the individual stores.
To make quick service possible and to ensure accuracy and security, many
fast food restaurants have incorporated hospitality point of sale systems .
This makes it possible for kitchen crew people to view orders placed at the
front counter or drive through in real time. Wireless systems allow orders
placed at drive through speakers to be taken by cashiers and cooks. Drive
through and walk through configurations will allow orders to be taken at
one register and paid at another. Modern point of sale systems can operate
on computer networks using a variety of software programs. Sales records
can be generated and remote access to computer reports can be given to
corporate

offices,

managers,

trouble-shooters,

personnel.

and

other

authorized

The aim of this project is to conduct a market study on a thriving fast

food restaurant, going deep into its formation, history and growth; then
to analyse the reason that make it so popular.

MCDONALDS AN INTRODUCTION
McDonald's

Corporation (NYSE : MCD )

is

the

world's

largest

chain

of hamburger fast food restaurants , serving around 68 million customers

daily in 119 countries.
Headquartered in the United States, the company began in 1940 as a
barbecue restaurant operated by Richard and Maurice McDonald ; in 1948
they reorganized their business as a hamburger stand using production
line principles. Businessman Ray Kroc joined the company as a franchise
agent in 1955.
Ray Kroc subsequently purchased the chain from the McDonald brothers
and oversaw its worldwide growth.
A McDonald's restaurant is operated either by a franchisee, or an affiliate ,
or the corporation itself. The corporation's revenues come from the rent,
royalties and fees paid by the franchisees, as well as sales in companyoperated restaurants.
McDonald's revenues grew 27 percent over the three years ending in 2007
to $22.8 billion, and 9 percent growth in operating income to $3.9 billion.
McDonald's primarily sells hamburgers , cheese burgers , chicken , French
fries , breakfast items, soft drinks , milkshakes and desserts . In response to
changing consumer tastes, the company has expanded its menu to
include salads , wraps , smoothies and fruits.
In July 2011, McDonald's announced that their largest restaurant in the
world will be built on the 2012 London Olympics site. The restaurant will
contain over 1,500 seats and is half the length of an American Football

field. Over 470 staff will be employed serving on average (during the 2012
Olympics) 100,000 portions of fries, 50,000 Big Macs and 30,000
Milkshakes.

This

restaurant

will

overshadow

the

current

largest

McDonald's in the world in Moscow, Russia. In January 2012, the company

announced revenue for 2011 reached an all-time high of $27 billion, and
that 2400 restaurants would be updated and 1300 new ones opened
worldwide.

HISTORY OF MCDONALDS
The McDonald's restaurant concept was introduced in San Bernardino,
California by Dick and Mac McDonald of Manchester, New Hampshire . It
was modified and expanded by their business partner, Ray Kroc , of Oak
Park, Illinois , who later bought out the business interests of the McDonald
brothers in the concept and went on to found McDonald's Corporation .
EARLY HISTORY
In 1937, Patrick McDonald opened "The Airdrome", an octagonal food
stand, on Huntington Drive in Monrovia, California . In 1940, his two
sons, Maurice and Richard ("Mac" and " Dick"), moved the entire building
to 1398 North E Streets in San Bernardino, California . The restaurant was
renamed "McDonald's Famous Barbeque" and served over forty barbequed
items.
In 1953, the McDonald brothers began to franchise their successful
restaurant, starting in Phoenix, Arizona and Downey and California . The
McDonald brothers created Speedee to symbolize the quick and efficient
service system that they had devised. Downey's Speedee is one of only a
few remaining and Downeys restaurant is the oldest operating McDonald's
in the world.

Recognizing the historic and nostalgic value of the intact 1953 structure,
the McDonald's Corporation acquired the store in 1990 and rehabilitated it
to a modern but nearly original condition.
In 1954, Ray Kroc, suggested that they franchise their restaurants
throughout the country. He got the rights to set up McDonald's restaurants
throughout

the

country,

except

in

handful

of

territories

in California and Arizona already licensed by the McDonald brothers.

Kroc's

first

McDonald's

restaurant

opened

in Des

Plaines,

Illinois ,

near Chicago , on April 15, 1955, the same day that Kroc incorporated his
company as McDonald's Systems, Inc. (which he would later rename
McDonald's Corporation).
By 1958, there were 34 restaurants. In 1959, however, Kroc opened 68 new
restaurants, bringing the total to 102 locations.

PHENOMENAL GROWTH IN THE 1960S AND 1970S

In 1960, the McDonald's advertising campaign "Look for the Golden
Arches " gave sales a big boost In 1962, McDonald's introduced its now
world-famous Golden Arches logo. A year later, the company sold its
billionth hamburger and introduced Ronald McDonald , a red-haired clown
with particular appeal to children.
In the early 1960s, McDonald's really began to take off. In 1961 Kroc
bought out the McDonald brothers for $2.7 million, aiming at making
McDonald's the number one fast-food chain in the country.
In 1965, McDonald's Corporation went public. In 1985, McDonald's
Corporation became one of the 30 companies that make up the Dow Jones
Industrial Average .
McDonald's success in the 1960s was in large part due to the company's
skilful marketing and flexible response to customer demand. In 1968 the
now legendary Big Mac made its debut, and in 1969 McDonald's sold its
five billionth hamburger. Two years later, McDonald's restaurants had
reached all 50 states.

In 1968, McDonald's opened its 1,000th restaurant; Kroc became chairman

and remained CEO until 1973.
By the late 1960s, many of the candy-striped Golden Arches stores had
been modified with enclosed walk-up order areas and limited indoor
seating. By June 1969, " mansard roof " building design featuring indoor
seating became the standard for McDonald's restaurants.
The company pioneered breakfast fast food with the introduction of the Egg
McMuffin in 1972 and five years later McDonald's added a full breakfast
line to the menu.
In 1975, McDonald's opened its first drive-thru window in Sierra Vista,
Arizona . This service gave Americans a fast, convenient way to procure a
quick meal. Drive-thru sales eventually accounted for more than half of
McDonald's systemwide sales.
SURVIVING THE 1980S "BURGER WARS"
In the late 1970s, competition from other hamburger chains such as Burger
King and Wendy's began to intensify. A period of aggressive advertising
campaigns and price slashing in the early 1980s became known as the
"burger wars." Burger King suggested to customers: "have it your way";
Wendy's offered itself as the "fresh alternative". But McDonald's sales and
market share continued to grow.
During the 1980s, McDonald's further diversified its menu to suit changing
consumer tastes. The company introduced the McChicken in 1980. It
proved to be a sales disappointment and was replaced with series of
different

chicken

sandwiches

year

later. Chicken

McNuggets were

invented in 1979. By the end of 1983, McDonald's was the second largest
retailer of chicken in the world. In 1985, ready- to-eat salads were
introduced to lure more health-conscious consumers. The 1980s were the
fastest-paced decade yet. Efficiency, combined with an expanded menu,
continued to draw customers. McDonald's, already entrenched in the
suburbs, began to focus on urban centres and introduced new architectural
styles.

Despite

experts'

claims

that

the

fast-food

industry

was

saturated,

McDonald's continued to expand. The first generation raised on restaurant

food had grown up. Eating out had become a habit rather than a break in
the routine, and McDonald's relentless marketing continued to improve
sales.
McDonald's growth in the United States was mirrored by its stunning
growth abroad. By 1991, 37 percent of system wide sales came from
restaurants outside the United States. McDonald's opened its first foreign
restaurant in British Columbia , Canada, in 1967. By the early 1990s the
company had established itself in 58 foreign countries and operated more
than 3,600 restaurants outside the United States, through wholly owned
subsidiaries, joint ventures, and franchise agreements. Its strongest foreign
markets

were Japan , Canada , Germany , Great

Britain , Australia ,

and France .
Braille menus were introduced in 1979, and picture menus in 1988.
Experiments were conducted to find new technology and to research new
markets to keep McDonald's in front of its competition. New locations such
as hospitals and military bases were tapped as sites for new restaurants.
1990s: Growing pains
The 10,000th unit was opened in April 1988.It took McDonald's 33 years to
open its first 10,000 restaurants. Incredibly, the company reached the
20,000-restaurant mark in only eight more years, in mid-1996. By the end
of 1997 the total had surpassed 23,000, and by that time McDonald's was
opening 2,000 new restaurants each year, an average of one every five
hours.
In 1993, a new region was added to the empire when the first McDonald's
in the Middle opened in Tel Aviv , Israel.
As the company entered new markets, it showed increasing flexibility with
respect to local food preferences and customs. In Israel, for example, the
first kosher McDonald's opened in a Jerusalem suburb in 1995. In Arab
countries, the restaurant chain used " Halal " menus.

McDonald's entered India for the first time in 1996, where it offered a
Big Mac made w ith lamb called the Maharaja Mac.
Overall, the company derived increasing percentages of its revenue and
income from outside the United States. In 1992 about two-thirds of
systemwide sales came from U.S. McDonald's, but by 1997 that figure was
down to about 51 percent. Similarly, the operating income numbers showed
a reduction from about 60 percent derived from the United States in 1992
to 42.5 percent in 1997.
The company made several notable blunders in the United States in the
1990s.
A seemingly weakened McDonald's was the object of a Burger King
offensive when the rival fast-food maker launched the Big King sandwich,
a Big Mac clone. Meanwhile, internal taste tests revealed that customers
preferred the fare at Wendy's and Burger King.
In response to these difficulties, McDonald's drastically cut back on its
U.S. expansion. Plans to open hundreds of smaller restaurants in WalMart and gasoline stations were abandoned because test sites did not meet
targeted goals.

Failed turnaround: late 1990s

Following the difficulties of the early and mid-1990s, several moves in
1998 seemed to indicate a reinvigorated McDonald's. Announcements were
made that McDonald's would improve the taste of several sandwiches and
introduce several new menu items.
McDonald's also said that it would overhaul its food preparation system in
every U.S. restaurant. The new just-in-time system, dubbed "Made for
You," was in development for a number of years and aimed to deliver to
customers "fresher, hotter food"; enable patrons to receive special-order
sandwiches (a perk long offered by rivals Burger King and Wendy's); and

allow new menu items to be more easily introduced thanks to the system's
enhanced flexibility.

Refurbishing and creating a healthier image: Early 2000s

McDonald's was sued in 2001 after it was revealed that for flavoring
purposes a small amount of beef extract was being added to the vegetable
oil used to cook the french fries.
McDonald's soon apologized for any "confusion" that had been caused by
its use of the beef flavouring, and in mid-2002 it reached a settlement in
the litigation, agreeing to donate $10 million to Hindus, vegetarians, and
other affected groups.
McDonald's also had to increasingly battle its public image as a purveyor
of fatty, unhealthy food. McDonald's responded by introducing low-calorie
menu items and switching to a more healthful cooking oil for its French
fries.
McDonald's continued to curtail store openings in 2004 and to concentrate
on building business at existing restaurants. McDonald's also aimed to pay
down debt by $400 million to $700 million and to return approximately $1
billion to shareholders through dividends and share repurchases
With the new "Forever Young" design (adopted in 2006), the first major
redesign since 1969, McDonald's turned a new page for itself. Most of new
and remodelled restaurants feature dining zones with three sections or
zones. Free wifi access points were also granted. Also, harsh colours and
hard plastics have been replaced with custom earth tones and flexible
padded fabric. The McDonald's menu has been tweaked to offer a larger
variety of what the corporation refers to as more healthy food.

2010s
In July 2011, McDonald's announced that their largest restaurant in the
world will be built on the 2012 London Olympics site. The restaurant will

10

Contain over 1,500 seats and is half the length of an American Football
field. Over 470 staff will be employed serving on average (during the 2012
Olympics) 100,000 portions of fries, 50,000 Big Macs and 30,000
Milkshakes.

This

restaurant

will

overshadow

the

current

largest

McDonald's in the world in Moscow, Russia. In January 2012, the company

announced revenue for 2011 reached an all-time high of $27 billion, and
that 2400 restaurants would be updated and 1300 new ones opened
worldwide.

McDonalds is the largest and best known global food service retailer with more
than 30,000 restaurants in 121 countries, and best known global food service.

McDonalds serves less than one percent of the worlds population.

The first McDonald's restaurant was opened in 1954.

It was operated by two brothers Dick and Mac McDonald.

McDonalds outstanding brand recognition, experienced management, high quality

food, advanced operational systems and unique global infrastructure ensure a
position that enables them to capitalize on global opportunities

11

MCDONALDS BUSINESS MODEL

Franchise Model

Only 15% of the total number of restaurants is owned by the Company.

The remaining 85% is operated by franchises.

The company follows a comprehensive

framework of training and monitoring of its franchises to ensure that they adhere to
the Quality, Service, Cleanliness and Value propositions offered by the company to
its customers. and quality across geographies .

MCDONALDS BUSINESS MODEL

PRODUCT CONSISTENCY
By developing a sophisticated supplier networked operation and distribution
system, the company has been able to achieve consistent product taste and quality across
geographies.
ACT LIKE A RETAILER AND THINK LIKE A BRAND
McDonalds focuses not only on delivering sales for the immediate present, but also
protecting its long term brand reputation. McDonalds Business Model.
CUSTOMER PERCEPTION AND CUSTOMER EXPECTATION

Customer perception is a key factor affecting a products success.

McDonalds being an internationally renowned brand brings with it certain

expectations for the customers.

12

Customer Perception and Customer Expectation

Target Segment

What is McDonalds for

A Family with children

A treat to children, a fun place to be for the children

Urban customeron the move

Great taste, quick service without affecting the work

schedule
IMPORTANCE OF PLC IN MCDONALDS
IMPORTANCE OF PLC IN MCDONALDS

To counter these changes McDonalds has continuously introduced

new products and has phased out the old ones which were at the decline stage of their
PLC.

The introduction is timed such that the new product does not cannibalize the product
already in the maturity or growth stage. Thus the secret lies in getting profits with different
products in the different stages of the PLC.

LIST OF PRODUCTS
BURGERS
All beef patties are seasoned, consisting primarily of salt and black pepper.
Big Mac : Along with the Quarter Pounder with cheese, this is one of the
two McDonald's signature menu items, introduced in 1967 as a response to
the

flagship

burger

at Big

Boy

restaurants.

Two

1.6-ounce

ground

beef patties, special Big Mac sauce, shredded iceberg lettuce, cheese, two
gherkin slices, and re-hydrated onions on a toasted sesame seed bun, with
an additional middle bun separating both beef patties.

13

Big N' Tasty : The Big N' Tasty consists of a seasoned quarter-pound beef
patty with ketchup, mayonnaise, slivered onions, two dill pickle slices, leaf
lettuce, and one tomato slice on a sesame seed bun.
Quarter Pounder : Along with the Big Mac, this is one of the two
McDonald's signature menu items. 4-ounce of ground beef patty with
ketchup, mustard, slivered onions, two gherkin slices, and two slices of
cheese.
Hamburger and cheeseburger : A 45 g ground beef patty, with ketchup ,
mustard, a single dill pickle , re-hydrated onions , on a toasted bun. Also
sold as a double or triple, adding an extra pickle slice for each beef patty
added
Double Cheeseburger: It has two 45 g ground beef patties, with ketchup ,
mustard, two slices of dill pickle , re-hydrated onions , and two pieces of
cheese on a toasted bun.
McDouble: It similar to a Double Cheeseburger, but with just one slice of
cheese. It was reintroduced as a permanent dollar-menu item in December
2008.
Daily Double: Similar to the double cheeseburger, however the toppings
are different. The Daily Double is made with lettuce, tomato, slivered
onions, and mayonnaise. It also has only one slice of cheese, rather than
the two slices that are on the double cheeseburger.
The Big N' Tasty : It was introduced in 1997 and has beef patty with
ketchup, cheese, mayonnaise with a grill flavouring, diced onions, two
pickles, leaf lettuce, kebab meat and a tomato slice, on a toasted bun. It
was devised to resemble Burger King 's Whopper sandwich.

14

McFeast: A hamburger with lettuce, tomato, and mayonnaise, the McFeast

contains a quarter pounder patty, lettuce, and modified mayonnaise with
lemon juice, ketchup, onion and tomato.
CHICKEN, FISH, PORK
McChicken : It is a mildly spicy chicken sandwich. Made from ground
white meat chicken, mayonnaise, and shredded lettuce, on a toasted bun. It
still remains one of the biggest sellers, just behind the Big Mac.
Premium chicken sandwiches : The Classic is a rebranding of the Crispy
Chicken and Chicken McGrill sandwiches, with mayonnaise, leaf lettuce,
and a tomato slice. All are served on a whole-grain roll, with either a
grilled or crispy chicken breast.
Southern Style Chicken Sandwich : A southern-style fried chicken breast
filet, on a steamed bun, dressed with butter and two pickles.
Snack Wrap : McDonald's version of a wrap made with white meat chicken
breast , lettuce , shredded Cheddar cheese and Monterey Jack cheese , and a
sauce, wrapped in a soft flour tortilla . There is also a Mac Snack Wrap
which features the fixings of the Big Mac, but without the bun and wrapped
in a tortilla shell, and uses one half of a piece of quarter meat.
Chicken Fajita : Chicken, cheese, red and green bell peppers , and diced
onions in a flour tortilla. Comes with Picante sauce packets on request,
which is available in mild and spicy.
Chicken McNuggets : Introduced in 1980 as a replacement for the
McChicken, these are small chicken chunks served with dipping sauces
of Barbecue , Sweet n' Sour , Honey , and Hot Mustard . In 2011, 4 new
dipping sauces were introduced and added to the lineup: Sweet Chili,
Honey Mustard, Spicy Buffalo, and Creamy Ranch.

15

Chicken Selects : McDonald's version of chicken strips . They include

choices

of spicy

buffalo , creamy

ranch , Honey

Mustard ,

and Chipotle barbecue dipping sauces; sauce selections in the UK are

Smokey barbecue , sour cream and sweet chilli sauce .
Filet-O-Fish : It is a whitefish fillet with tartar sauce and a half slice of
cheese, on a steamed bun.
McRib : It is a sandwich featuring boneless pork with barbecue sauce,
slivered onions, and pickles.
McArabia : There are two versions of the McArabia: Grilled chicken and
grilled kofta (beef with spices). Both are served with lettuce, tomatoes,
onions, and garlic mayonnaise in addition to two small patties of grilled
chicken or kofta , all wrapped in an Arabic style pita bread. The McArabia
has been very well received throughout the Middle East.
Chicken McBites : They are Popcorn chicken breast with "home-style
seasoning. Dipping sauces include ranch, Sweet n' Sour, Tangy BBQ,
Chipotle BBQ, and Honey Mustard.

Fish McBites: Similar to the Chicken McBites, these are small pieces of
flaky whitefish dipped in batter and fried until golden brown, and served
with tartar sauce for dipping.
Salads and side orders
McDonald's first introduced salads to its menu in 1985. The Premium
Salads all are a mixture of iceberg lettuce and a special lettuce assortment,
with cherry

tomatoes and

different

toppings

to

differentiate

them;

additionally all salads can be topped with warm grilled or crispy chicken.
All of its salads are part of McDonald's move towards creating a healthier
image.
16

McDonald's sells French fries as its primary side order. They also sell
potato wedges, a type of French fry that is thick cut and wedge shaped,
fried onion pieces and onion rings .

CORPORATE OVERVIEW
FACTS AND FIGURES
McDonald's restaurants are found in 119 countries and territories around
the world and serve 58 million customers each day. McDonalds operates
over 31,000 restaurants worldwide, employing more than 1.5 million
people. The companies also operate other restaurant brands , such as Piles
Caf.
Focusing on its core brand, McDonald's began divesting itself of other
chains it had acquired during the 1990s. The company owned a majority
stake in Chipotle Mexican Grill until October 2006, when McDonald's fully

divested from Chipotle through a stock exchange. Until December 2003, it

also owned Donatos Pizza . On August 27, 2007, McDonald's sold Boston
Market to Sun

Capital

Partners .

Notably,

McDonald's

has

increased

shareholder dividends for 25 consecutive years, making it one of the S&P

500 Dividend Aristocrats.

TYPES OF RESTAURANTS
Most

standalone

McDonald's

restaurants

offer

both counter

service

and drive-through service, with indoor and sometimes outdoor seating.

Drive-Thru, Auto-Mac, Pay and Drive, or "McDrive" as it is known in
many countries, often has separate stations for placing, paying for, and
picking up orders, though the latter two steps are frequently combined; it
was first introduced in Arizona in 1975, following the lead of other fast-

17

food chains. The first such restaurant in Britain opened at Fallow

field , Manchester in 1986.
In some countries, "McDrive" locations near highways offer no counter
service

or

seating.

In

contrast,

locations

in

high-density

city

neighbourhoods often omit drive-through service. There are also a few

locations, located mostly in downtown districts that offer Walk-Thru
service in place of Drive-Thru.
To accommodate the current trend for high quality coffee and the
popularity of coffee shops in general, McDonald's introduced McCaf ,
a caf -style

accompaniment

to

McDonald's

restaurants

in

the

style

of Starbucks . McCaf is a concept created by McDonald's Australia,

starting with Melbourne in 1993. Today, most McDonald's in Australia have
McCafs located within the existing McDonald's restaurant. In Tasmania ,
there are McCafs in every store, with the rest of the states quickly
following suit. After upgrading to the new McCaf look and feel, some
Australian stores have noticed up to a 60% increase in sales. As of the end
of 2003 there were over 600 McCafs worldwide.
Some locations are connected to gas stations /convenience stores , while
others called McExpress have limited seating and/or menu or may be
located in a shopping mall . Other McDonald's are located in Wal-Mart
stores. McStop is a location targeted at truckers and travellers which may
have services found at truck stops .
Since 1997, the only Kosher McDonald's in the world that is not in Israel is
located in the " Abasto de Buenos Aires ", Argentina .

18

GLOBAL OPERATIONS
mcdonald's has become emblematic of globalization , sometimes referred to
as the "mcdonaldization " of society.
the economist newspaper uses the " big mac index ": the comparison of a big
mac 's cost in various world currencies can be used to informally judge
these currencies' purchasing power parity . norway has the most expensive
big mac in the world as of july 2011, while the country with the least
expensive big mac is india .
some observers have suggested that the company should be given credit for
increasing the standard of service in markets that it enters. a group of
anthropologists in a study entitled golden arches east looked at the impact
mcdonald's had on east asia , and hong kong in particular.
when it opened in hong kong in 1975, mcdonald's was the first restaurant to
consistently offer clean restrooms, driving customers to demand the same
of other restaurants and institutions.
mcdonald's has taken to partnering up with sinopec , the second largest oil
company in the people's republic of china, as it takes advantage of the
country's growing use of personal vehicles by opening numerous drive-thru
restaurants.
mcdonald's has opened a mcdonald's restaurant and mccaf on the
underground premises of the french fine arts museum, the louvre .
the company stated it will open vegetarian- only restaurants in
india by mid-2013.

19

REDESIGN
in 2006, mcdonald's introduced its "forever young" brand by redesigning
all of its restaurants, the first major redesign since the 1970s. mcdonald's
has invested $1 billion to redesign nearly all of the 14,000 restaurants by
2015.
the goal of the redesign is to be more like a coffee shop, similar to
starbucks . the design includes wooden tables, faux-leather chairs, and
muted colours; the red is muted to terra cotta, the yellow was turned golden
for a more "sunny" look, and olive and sage green were also added.
to warm up its look, the restaurants have less plastic and more brick and
wood, with modern hanging lights to produce a softer glow.
many restaurants now feature free wi-fi and flat screen tvs. other upgrades
include double drive-thrus, flat roofs instead of the angled red roofs, and
replacing fibre glass with wood. also, instead of the familiar golden arches,
the restaurants now feature "semi-swooshes" (half of a golden arch),
similar to the nike swoosh .

BUSINESS MODEL
mcdonald's corporation earns revenue as an investor in properties, a
franchiser of restaurants, and an operator of restaurants. approximately
15% of mcdonald's restaurants are owned and operated by mcdonald's
corporation directly. the remainder are operated by others through a variety
of franchise agreements and joint ventures.
the mcdonald's corporation's business model is slightly different from that
of most other fast-food chains. in addition to ordinary franchise fees and

20

marketing fees, which are calculated as a percentage of sales, mcdonald's

may also collect rent , which may also be calculated on the basis of sales.
as a condition of many franchise agreements, which vary by contract, age,
country, and location, the corporation may own or lease the properties on
which mcdonald's franchises are located. in most, if not all cases, the
franchisee does not own the location of its restaurants.
the united kingdom and ireland business model is different than the u.s, in
that fewer than 30% of restaurants are franchised, with the majority under
the ownership of the company. mcdonald's trains its franchisees and others
at hamburger university in oak brook , illinois .
in other countries, mcdonald's restaurants are operated by joint ventures of
mcdonald's corporation and other, local entities or governments.
as a matter of policy, mcdonald's does not make direct sales of food or
materials to franchisees, instead organizing the supply of food and
materials to restaurants through approved third party logistics operators.
according to fast food nation by eric schlosser , nearly one in eight workers
in the u.s. have at some time been employed by mcdonald's. it also states
that mcdonald's is the largest private operator of playgrounds in the u.s., as
well as the single largest purchaser of beef , pork , potatoes , and apples . the
selection of meats mcdonald's uses varies with the culture of the host
country.

MARKETING MIX
The marketing mix of a company consists of the various elements as
follows which form the core of a companys marketing system and hence
helps to achieve marketing objectives. The marketing mix of McDonalds is
as follows:-

MCDONALDS MARKETING MIX

21

1. PRODUCT
2. PLACE
3. PRICE
4. PROMOTION

PRODUCT :

McDonalds places considerable emphasis on developing a menu which

customers want. Market research establishes exactly what this is. However,
customers requirements change over time. In order to meet these changes,
McDonalds has introduced new products and phased out old ones, and will
continue to do so. Care is taken not to adversely affect the sales of one
choice by introducing a new choice, which will cannibalise sales from the
existing one (trade off). McDonalds knows that items on its menu will
vary in popularity. Their ability to generate profits will vary at different
points in their cycle. In India McDonalds has a diversified product range
focussing more on the vegetarian products as most consumers in India are
primarily vegetarian. The happy meal for the children is a great seller
among others.

PRICE : The customer s perception of value is an important determinant of the price

charged. Customers draw their own mental picture of what a product is
worth. A product is more than a physical item; it also has psychological
connotations for the customer. The danger of using low price as a
marketing tool is that the customer may feel that quality is being
compromised. It is important when deciding on price to be fully aware of
the brand and its integrity.
In India McDonalds classifies its products into 2 categories namely the
branded affordability (BA) and branded core value products (BCV). The
22

BCV products mainly include the McVeggie and McChicken burgers that
cost Rs 50-60 and the BA products include McAloo tikki and Chicken
McGrill burgers which cost Rs20-30. This has been done to satisfy
consumers which different price perceptions.

PROMOTION :

The promotions aspect of the marketing mix covers all types of marketing
communications .One of the methods employed is advertising,
Advertising is conducted on TV, radio, in cinema, online, using poster sites
and in the press for example in newspapers and magazines. Other
promotional methods include sales promotions, point of sale display,
merchandising, direct mail, loyalty schemes, door drops, etc. The skill in
marketing communications is to develop a campaign which uses several of
these methods in a way that provides the most effective results. For
example, TV advertising makes people aware of a food item and press
advertising provides more detail. This may be supported by in-store
promotions to get people to try the product and a collectable promotional
device to encourage them to keep on buying the item.
At McDonalds the prime focus is on targeting children. In happy meals too
which are targeted at children small toys are given along with the meal.
Apart from this, various schemes for winning prices by way of lucky draws
and also scratch cards are given when an order is placed on the various
mean combos.

PLACE :

Place, as an element of the marketing mix, is not just about the physical
location

or

distribution

points

for
23

products.

It

encompasses

the

management of a range of processes involved in bringing products to the

end consumer. McDonalds outlets are very evenly spread throughout the
cities making them very accessible. Drive in and drive through options
make McDonalds products further convenient to the consumers.
Other than the main four elements mentioned above there are a few
other elements too in the marketing mix, which are as follows:People:-The employees in McDonalds have a standard uniform and
McDonalds specially focuses on friendly and prompt service to its
customers from their employees.
Process:-The food manufacturing process at McDonalds is completely
transparent i.e. the whole process is visible to the customers. In fact, the
fast food joint allows its customers to view and judge the hygienic
standards at McDonalds by allowing them to enter the area where the
process takes place. The customers are invited to check the ingredients
used in food.
Physical evidence : - McDonalds focuses on clean and hygienic interiors of
is outlets and at the same time the interiors are attractive and the fast food
joint maintains a proper decorum at its joints.

INTRODUCTION OF MARKETING STRATEGY

Marketing strategy is very much important for developing any of the business. Without it,
the effort of the business to attract customer is random and very inefficient. The main
24

focus of your strategy must make sure that your product should fulfill the demands of the
consumers and as well as it maintains the long-term relationship with those consumers.
To achieve this, you will have to initiate flexible strategy that responds to change in
customer demand and perception. It may also give brand name to your product which will
help you to run your business in new markets smooth and efficient manner. First of all the
main purpose of you marketing strategy should be to identify the weather the target
customer sare satisfied with your product and services of your business. Once you have
created and implemented your strategy, try to identify the feed from you customer and if
any changes or improvement is required apply it for the maximum satisfaction of
customers This helps you to identify that, where your strategy needs to be improved and
how it can be developed, so that it can be implemented for effective action. Before
applying any strategy in the business proper planning programs must be organized within
the members of the organization. WHAT IS MARKETING?
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society at large." Marketing

MEANING OF MARKETING STRATEGYA

Marketing strategy defines and describes the objectives or planning through which you are
going to satisfy your consumer needs in the selected target market. It does not involve
written work but, it includes communication
between different departments of the business enterprise for example: sales department,
managers, executives etc. In fact it is a set of strategies that implied by the organization in
order to increase the growth and development of the business. Normally strategy deals
with the manner in which your organization plan to achieve the consumer satisfaction and
maximize the profit.

DEFINITION OF MARKETING STRATEGY

Marketing Strategy is a set of specific ideas and actions that outline and guide decisions
on the best or chosen way to create, distribute, promote, and price a product or service
(manage the marketing mix variables)
25

A marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable
competitive advantage.
Marketing strategy is a process that can allow an organization to concentrate its limited
resources on the greatest opportunities to increase sales and achieve a sustainable
competitive advantage. A marketing strategy should be centered on the key concept that
customer satisfactions the main goal. Business Advantages identifies needs and wants of
consumers

determines demand for product aids in design of products that fulfill

consumers needs outlines measures for generating the cash for daily operation, to repay
debts and to turn a profit identifies competitors and analyzes your products or firms
competitive advantage identifies new product areasy identifies new and/or potential
customers allows for test to see if strategies are giving the desired results Business
Disadvantages identifies weaknesses in your business skills leads to faulty marketing
decisions based on improperly analyzed datay identifies weaknesses in your overall
business plan.

SWOT ANALYSIS

26

STRENGTHS

McDonalds holds a very strong brand name worldwide.

They have large partnerships with other companies that provide them with
their desired products; this increases the goodwill of the company.

McDonalds is one of the most reputed firms who are socially responsible.
Loyal employees & management & customer are their biggest strength.
McDonalds makes sure that cultural & regional barriers are kept in mind
while providing food to different countries.

Clean environment and play areas for children where they can enjoy their
time.

27

WEAKNESS

The weakness that hits the list of employee turnover rate. Every year many
of their employees are fired out of the restaurant.

McDonalds mostly advertises products and food items that targets children.

Health conscious people often complain that they do not provide us with
the organic and healthy food. This becomes their weakness when they get
in the complaints.

They also face quality issue at times. This affects the business as they are
running the outlet worldwide, if one franchise gets affected others also get
a bad name.

OPPORTUNITIES
It can open up online services for their customers so that they can easily
order their desired meals sitting at home.

Discounts given on every food item may help them gain more customers.

They can go for a joint venture with the retailers they work with.

They can introduce healthy hamburgers and healthy drinks for the people
who are health conscious.

In order to be environment friendly, they can use packing material which

can be recycled later or material that does not create pollution.

THREATS
Emerging competition of similar outlets is becoming a problem for
McDonalds.

Health issue also becomes a problem when it comes to food.

As it is a multinational food outlet, fluctuations in the currency of other

countries becomes a problem for such companies.

28

Recession in any country would definitely affect the whole outlet

worldwide.

People facing heart problems and obesity accuse McDonalds for not
providing them with the healthy food.

They have a threat of local food outlets in different countries.

McDonalds is operating in a fully fledged economy where competition is

increasing day by day therefore they should work effectively to overcome
their drawbacks because of the recession.

COMPANYS FINANCIAL INFORMATION

Company Name:
Ticker Symbol:
Web Address:
CEO:
No. of Employees:
Common Issue Type:
Business Description:

McDonald's Corporation
MCD
www.mcdonalds.com
Mr. Donald Thompson
420,000
CS
McDonald's Corporation franchises and operates McDonald's
restaurants in the food service industry. The Company and its
franchisees purchase food, packaging, equipment and other
goods from numerous independent suppliers.

Industry Information:

LEISURE - Restaurants
29

SURVEY RESPONSE ANALYSIS

30

31

THE TOP FIVE REASONS WHY MCDONALDS IS SO

POPULAR
1. THE SYSTEM
This is the first thing that makes McDonald's so successful, by having an
effective and efficient system in place, which exploits the minimum wage
labour available, in the form of young teenagers who are just looking to
make some cash or pick up fundamental job skills.

2. CONVENIENCE
The second reason why McDonald's is so popular is because it's
everywhere. There a McDonald's at every corner of the map, at every major
shopping centre, district, highway, freeway, every place which attracts
even, remotely more than 10 people, will have a McDonald's restaurant not
too far from them. McDonald's is having the best Real
Estate locations around the world which makes it so popular around the
globe.

3. LIKABILITY AND FAMILIARITY

The

Golden Arches, the Big M. Ronald McDonald, happiness and fun; all these
are the associations with McDonalds which makes it so familiar by being
so familiar to all age groups and to everybody.
4. THE MENU
McDonald's has one of the most diverse menus, targeting all ages from
little kids to old pensioners, and everyone else in between. There's Big
Macs for the big kids and junior burgers for the little. The menu's
versatility is accentuated when they introduced the "healthy tick" concept,
which target those people who wants to watch what they eat (even though it
doesn't make sense to go to a fast food restaurant to eat healthy).

32

5. CONSISTENCY
The last reason is, McDonald's is so successful because of its consistency.
The expectations that we have about everything surrounding the store are
fulfilled in almost every store nationwide, worldwide. So everybody knows
what they're getting into before they come to McDonald's, and by being so
consistent, it has a solid reputation to uphold.

CONCLUSION
What started as a simple food stand on Huntington drive, California in
1937, through the ages have become a billion Dollar corporation and the
worlds second

largest

fast-food

chain.

When

analysed,

one

would

understand that McDonalds had a stable growth in the past years.

The credits of building it into one of worlds largest fast food operation
can be given to Ray Kroc who took over McDonalds from its establishers,
modernised and expanded it to suit the contemporary trend. Today
McDonalds has a net worth of $15.15 billion.
Through this project report and market survey we saw the how McDonalds
was formed, its history and the present position. We also its list of various
products offered and the corporate profile.

33

Through the marketing mix, we saw how they make use of their product,
price, place, promotion mixes. SWOT analysis showed us the strengths and
weakness of McDonalds as well as the opportunities and threats they have
got.
The consolidated financial statement showed us the financial position of
the corporation as of 2011. The questionnaire survey provided us with a
clear picture of the needs, want and expectations of the consumers of the
fast food market in general and McDonalds in particular. The respondents
also rated the services provided by the corporation. At last we also saw the
top five reasons that make McDonalds so popular.
I gladly hope that this project has met its aim.
Let me conclude by quoting this quote by Ray Kroc
"Perfection is very difficult to achieve, and perfection was what I wanted
in McDonald's. Everything else was secondary for me."
Thank You!!

BIBLIOGRAPHY

www.google.com

www.wikipedia.org

www.macdonalds.com

www.slideshare.net

www.scribd.com

www.marketing91.com

www.infobarrel.com

www.aboutmacdonalds.com

answers.yahoo.com

talkfinanceonline.com
34

The Maharaja Mac which is offered in India

35