Case Study 1: McDonalds

Case Study 1: McDonalds

Erin Barraclough
 Case Study 1: McDonalds

1. How are customer taste’s changing in the fast-food industry? What impact do these
changes have on McDonald’s?

The stigma of fast-food is changing due to a health conscious generation of consumers.

This new generation of consumers are reading the ingredients and counting the calories of the

foods they are ingesting. Consumers are trending toward fresh, healthy alternatives rather than

the traditional burger and fry institutions. In order for McDonalds to retain its competitive

presences in this ever changing market, they have to find ways to remain appealing to

consumers. They’ve accomplished this by adding lower calorie items to their menu such as

salads and grilled chicken wrap. They have also added calorie content to the menu which makes

consumers feel as though they are able to make informed decisions on their items of choice.

Another angle McDonalds has taken is to offer items at a reduced cost on their “value menu”.

With reduced priced burgers and fries, consumers can make a choice for a slightly healthier 5$

foot long sub or a 1$ burger.

2. How well are these changes in customer tastes and preferences being reflected in
competitive strategies in the industry?

The changes in customer tastes and preferences are highly reflected industry wide. They

can be seen through the layout of restaurants, décor, menu, pricing and how these industries are

marketing their products. Not only have traditional burger and fry fast food industries changed

what they are offering such as McDonalds with healthier oatmeal or fruit cup for breakfast or

Wendy’s salads and grilled chicken sandwiches. Other fast food chains that are traditionally

thought to be a healthier choice, such as Subway, have started to offer breakfast options to

compete with the thought-to-be unhealthy McDonalds breakfast choices. McDonalds and other

fast-food places have also improved upon its store quality. Rather than slick plastic lunchroom
seats there are cloth cushions to enjoy one’s McCafé and free internet. This is so they can

compete against the ever popular Starbucks.

3. What are McDonald’s strengths and weaknesses and what conclusions do you draw
about its future?

a. McDonald’s strengths include:

i. Comfort in reliability, name, image, character and product recognition creates
customer loyalty
ii. McDonald’s is the leader in their market with 3 times the sales as the next highest
industry competitor.
iii. Location stronghold. Key location and real estate nation wide
iv. Multiple industry links ie, Disney movie toys, movie release promotions
b. McDonald’s weaknesses include:
i. Decline in sales
ii. Shares grow slower than competitors
iii. Debit increases
iv. Increase with the dissatisfaction in food products going viral ie, “Pink slime of
McNuggets ”

From these strengths and weaknesses, McDonalds appears to be changing with the

consumers tastes. As long as McDonalds continues to be attentive to the wants of its

consumers, they should be successful at keeping a foothold in the restaurant industry.

4. Should McDonalds’s develop a separate strategy for the heavy user segment of the fast
food industry?

In the recent years there have been several media displays of the truth behind the

health of fast food. From the documentary “Super Size Me” to the exposé on how

McNuggets are made McDonalds is being criticized for the lack of nutrition in their food.

In recent years there is even criticism coming from the White House on obese children with

fingers pointed at the fast food industry. While the heavy users still do not seem to have

changed their loyalties and use of McDonald’s products. McDonalds has done a good job
 with changing to meet the needs of the health conscious consumer but still offer deals for

the traditional burger and fry heavy user segment through the value menus. In summation,

McDonalds current strategy appears to be their best course of action.

5. What should Jack Greenberg do to grow sales, profits and market share at
McDonalds?

In order to grow profit and sales, McDonalds should take the lead from Pizza Hut which

now offers both the traditional pizza place, fast-food atmosphere or alternate locations which are

Pizza Hut Bistro sit down restaurant options. McDonalds should introduce upscale Café

locations to compete with the likes of Starbucks or Panara Bread. These locations would have

plush lounge areas and offer the line of McCafe as well as other meal options that focus on the

more nutritious minded consumer. While other locations should continue to offer the current

menu combination of fast-food burgers as well as the limited Café items to appeal to the fast-

food clientele.