McDonald Report Marketing Stratgy & Policy

8/3/2019 McDonald Report Marketing Stratgy & Policy

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McDonalds History

In the late 1940s, Dick and Mac McDonald were searching for a way to improve theirlittle drive-in restaurant business in San Bernardino, California. Rather than tinker with the

business, which was bringing in a very comfortable $200,0001

yearly, they invented an entirelynew concept based upon speedy service, low prices, and big volume.They did away with car-hops in favor of self-service at the counter. They ditched their 25-itembarbecue menu in favor of a limited menu of just nine items: hamburger, cheeseburger, threesoft-drink flavors, milk, coffee, potato chips, and pie, with French fries and milkshakes addedsoon after they resumed operations. They re-engineered their stainless steel kitchen for massproduction and speed with assembly-line procedures. And they slashed the price of theirhamburger from a competitive 30 cents to just 15 cents.

When the new McDonalds re-opened in December of 1948, business took a while to build. Butit soon became apparent that they had captured the spirit of post-war America. By the mid-1950s, their little hamburger factory enjoyed annual revenues of $350,000 almost double thevolume of their previous drive-in business at the same location. It was not unusual for 150customers to crowd around the tiny hamburger stand during peak periods.

Word of their success spread quickly, and a cover article on their operations in AmericanRestaurant Magazine in 1952 prompted as many as 300 inquiries a month from around thecountry. Their first franchisee was Neil Fox, and the brothers decided that his drive-in inPhoenix, Arizona would be the prototype for the chain they envisioned. The resulting red-and-white tile building with a slanting roof and the Golden Arches on the sides became the modelfor the first wave of McDonalds restaurants to hit the country, and an enduring symbol of the

industry.The McDonald brothers actually designed the assembly line kitchen twice as large as theiroriginalby drawing an exact chalk diagram on their tennis court. They were able to place theequipment most efficiently after studying their crew members as they walked through their foodpreparation steps. Occasional rain bursts washed out the chalk, prompting them to redraw andrefine their design. But the brotherssuccessful beyond their dreams in San Bernardinowerebarely tapping the franchising potential of the business concept they had pioneered.

For as little as a thousand dollars, franchisees would receive the McDonalds name, abasic description of their Speedy Service System, and the services of Art Bender, their originalcounterman at the new restaurant, for a week or two to get them started. But then, in 1954, amilkshake machine salesman named Ray Kroc saw the McDonalds operation first-hand. The

fast food industry was about to take off.
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Hello Mr. Kroc

Ray Kroc was 52 years oldan age when many people begin thinking about retirementwhen he founded the company that has become the McDonalds of today. But Kroc, whodropped out of high school at age 15 to drive a Red Cross ambulance in World War I, was aconstant dreamer...a salesman who never stopped looking for the ultimate product to sell. He

began by selling paper cups to sidewalk vendors in Chicago, took a fling at Florida real estate,and had ultimately built a good business as the exclusive distributor for Multimixer milkshakemachines.

It was the sale of Multimixers, which first drew him to the McDonald brothers

hamburger stand in San Bernardino, California. After all, if he could discover the secret of howthey sold 20,000 shakes each month, how many more milkshake machines could he sell? Butwhen Kroc showed up at McDonalds one morning in 1954 and saw the rapidly moving line ofcustomers buying bags of burgers and fries, he had but one thought: This will go anyplace.Anyplace!After the McDonald brothers explained that they didnt have the personal desire to oversee theexpansion of their concept across the nation, Ray Kroc became their exclusive franchising agentfor the entire country. A great salesman had discovered his ultimate product. Kroc formed thenew franchising company on March 2, 1955 under the name of McDonalds System, Inc.On April 15, 1955 his prototype McDonalds restaurant began business in Des Plaines, Illinois,opened with the help of Art Bender, who had served the first McDonald brothers hamburger and

the first Ray Kroc McDonalds hamburger. Bender went on to open the first of KrocsMcDonalds franchises in Fresno, California, and ultimately retired owning seven restaurants.But it was in the area of franchising where Kroc uniquely applied the lessons of his salesbackground to create a successful organization. In many ways, it was a matter of necessity.

Krocs agreement with the McDonald brothers was to limit the franchise fee to $950 perrestaurant and charge a service fee of only 1.9 percent of restaurant sales with 0.5 percent ofthat going back to the McDonald brothers. In addition, Kroc decided early on that theMcDonalds system would not be in the business of selling franchise owners their equipment,their supplies, or their food. The company did, however, purchase or lease much of the real estatethe restaurants were located on; a program that soon produced a valuable competitive asset in itsown right.

At the end of 1956, McDonalds 14 restaurants reported sales of $1.2 million and had servedsome 50 million hamburgers. In just four years, there were 228 restaurants reporting $37.6million in sales, and the company had sold its 400 millionth hamburger mid-way through 1960.But to enjoy further growth, Kroc knew he had to buy out the McDonald brothers in order toloosen the restrictive agreement, which he had been operating under. For all the restaurantssuccess, Krocs company had netted a meager $77,000 profit in 1960 and was carrying $5.7million in long-term debt.
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Kroc managed to obtain a loan in 1961based on the companys real estate values and thoughit ultimately cost him $14 million to repay it, he bought the ability to control his growing system.

That same year, he opened Hamburger University in the basement of a restaurant in ElkGrove Village, Illinois, a training facility for new franchisees and store managers which hasgrown to be a worldwide institution utilizing sophisticated training techniques and high-level

management courses.

McDonalds Growth in the United States

McDonalds growth in the United States soon became a series of milestones in sales,numbers of restaurants, numbers of hamburgers served, and in establishing standards of quality,service, cleanliness and value (QSC&V) previously unknown in the growing fast food restaurantindustry. By 1963, we were selling one million hamburgers a day , and Ray Kroc servedhamburger number one billion to Art Link letter on Link letters national television show.The first national meeting of McDonalds franchise owners was held in Hollywood, Florida in1965, celebrating the chains 10th anniversary with the theme, The Skys the Limit. It was also

in 1965 that McDonalds became a public company, selling its shares over the counter for $22.50eacha price that sky-rocketed to $49 within a few weeks.On July 5, 1966, McDonalds was listed on the New York Stock Exchange, quite anaccomplishment then for a chain of hamburger restaurants. In 1967, the price of a McDonaldshamburger rose from 15 to 18 cents the first increase since the McDonald brothers introducedthe 15-cent price two decades earlier. And in the following year, restaurant number 1,000 openedin Des Plaines, Illinois, not far from Krocs original restaurant.

By 1970, McDonalds reported $587 million in sales from almost 1,600 restaurants in all50 states of the U.S. and four other countries. In the same year, a restaurant in Bloomington,Minnesota became the first to reach $1 million in annual sales and another in Waikiki, Hawaiiwas the first to serve breakfast. The following year, the first McDonalds Play land opened inChula Vista, California.McDonalds broke the billion dollar sales mark in 1972 and the stock split for the fifth time,making 100 shares of the original 1965 stock equal to 1,836 shares.In 1975, the first drive-thru operation was established in Sierra Vista, Arizona an innovationthat today accounts for about half of all McDonalds restaurant sales in the U.S. and Canada. Thecompany enjoyed sales of $2.5 billion that year, with 3,076 restaurants in 20 countries. Thefollowing year, hamburger number 20 billion was sold.In 1977, Ray Kroc was named Senior Chairman of McDonalds, and Fred Turner, who was thegrill man at Krocs first restaurant, was named Chairman of the Board. That year, more than1,000 restaurants exceeded $1 million in sales, and 11 topped $2 million.By our silver anniversary in 1980, the 6,263 restaurants in 27 countries rang up sales of $6.2billion and passed the 35 billion hamburger milestone. On January 14, 1984, Ray Kroc died having accomplished his dreams for McDonalds...and then some. That same year, his littlecompany broke the $10 billion sales barrier, served its 50 billionth hamburger, and operated8,300 restaurants in 36 countries. A new McDonalds restaurant opened somewhere in the worldevery 17 hours, and the average restaurant enjoyed an annual sales volume of $1,264,000.

By 1990, our sales had grown to $18.7 billion, passing the milestone of 80 billionhamburgers sold. McDonalds 11,800 restaurants were in 54 countries. And top leadershipchanged for just the third time in our history in 1990with Fred Turner becoming senior


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chairman and passing the baton to Mike Quinlan, who had begun working for McDonalds in1963 as a part-time mail clerk. In 1999, Jack M. Greenberg took over the top job, which waspassed to Jim Cantaloupe, former Vice Chairman and President, when Greenberg retired inDecember of 2002.Ray Krocs dreams for McDonalds growth throughout the United States had been more than

satisfied...but thats only the beginning of the story. McDonalds took the world by storm aswell.

International Expansion

While McDonalds was astounding the experts with the rapid growth of its hamburgerchain in the United States, our company had another big surprise brewing internationalexpansion.

We opened our first restaurant outside the U.S. in Canada on June 1, 1967 in RichmondB.C., and the race was on. Canada today has more than 1,300 restaurants.Some of McDonalds international openings have been so dramatic that they have becomeheadline news in the media around the world. On January 31, 1990, for example, more than

30,000 people lined up on a cold winter day in Moscow to visit the new, 23,680-square footMcDonalds the most people ever served by a single restaurant to that date. That restaurantopening culminated years of negotiations which had begun during the Montreal Olympics in1976.Other former Iron Curtain countries where McDonalds has proven tremendously popularinclude the Czech Republic, East Germany, Hungary, and Slovenia.We also broke ground in another new part of the world when we entered the Middle East with anew restaurant, which opened in Tel Aviv, Israel in October of 1993. New restaurants wereadded in Saudi Arabia, Oman, Kuwait, Egypt, Bahrain, United Arab Emirates, and Qatar,reflecting our extensive and long-term commitment to the region.


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McDonald's in PakistanAiming to be the world's best quick service restaurant, McDonald's Pakistan opened its doors inSeptember 1998 at Lahore and presently operating in six major cities with a network of 20restaurants. With a strong belief in the Ray Krock phrase when you are green you are growing,McDonald's Pakistan has an aggressive plan to expand in all other cities of Pakistan and israpidly growing with the focus to provide friendly and quick service restaurant experience to ourcustomers.

McDonald's MissionMcDonald's mission is to be our customers' favorite place and way to eat with inspired peoplewho delight each customer with unmatched quality, service, cleanliness and value every time ...

we invite you to be the part of this winning team and give yourself an opportunity to grow withthe family of people striving to create smiles on the faces of millions of people everyday.

McDonalds People Philosophy

Respect and Recognition: Every employee is consistently treated with dignity and respect.All employees are valued and recognized for their contribution to the organization.

Values and Leadership Behaviors: Every employee is a leader who listens andcommunicates openly and honestly and every employee acts in the interest of all other peoplewho contribute to the success of the business, including customers, owner, and suppliers.

Total Compensation: To recognize our people part in our business success, our Pay andRewards program follows a Pay-for-Performance philosophy, the better results produced byemployees, the greater pay opportunities.

Learning, Development and Personal Growth: Employees has the opportunity to advance inskill, contribution and career level through high-quality training, coaching and feedback.

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VISION

To be the world's best quick service restaurant experience, being the best means providing

outstanding quality, service, cleanliness, and value, so that they make every customer in every

restaurant smile.

MISSION STATEMENT

To deliver operational excellence to our customers in each of our restaurants and to be the best

employer for people in each community around the world and to achieve enduring profitable

growth by expanding the brand and leveraging the strengths of the McDonald's system through

innovation and technology.


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McDonald's History and Products

Raymond Albert Kroc - 1954

Ray Kroc mortgaged his home and invested his entire life savings tobecome the exclusive distributor of a five-spindled milk shake makercalled the Multimixer. Hearing about the McDonald's hamburger

stand in California running eight Multimixers at a time, he packed uphis car and headed West. It was 1954. He was 52 years old.

Dick and Mac McDonald's Restaurant, San Bernardino, CaliforniaRay Kroc had never seen so many people served so quickly when hepulled up to take a look. Seizing the day, he pitched the idea ofopening up several restaurants to the brothers Dick and MacMcDonald, convinced that he could sell eight of his Multimixers toeach and every one.

Where it all began, Des Plaines, IllinoisRay Kroc opened the Des Plaines restaurant in 1955. First day's

revenues-$366.12! No longer a functioning restaurant, the DesPlaines building is now a museum containing McDonald'smemorabilia and artifacts, including the Multimixer.

Ray Kroc At Work"If you've got time to lean, you've got time to clean," Ray Krocpreached to his troops. Heeding his own words, here the Chairman ofthe Board cleans the parking lot of the first McDonald's franchise inDes Plaines, Illinois.

Ronald McDonald, In Any Language He Means "Fun!"

"The smile known around the world," In his first TV appearance in1963 the happy clown was portrayed by none other than WillardScott.

Fred Turner And Ray Kroc, Architects Of A DreamRay Kroc (right) and Fred Turner study the design which wouldreplace the red and white tile buildings that had become landmarksthroughout the U.S. Called Kroc's first "grill man extraordinaire,"Turner is today Senior Chairman of the Board.

McDonald's Comes To Wall Street

In 1965 McDonald's went public with the company's first offering onthe stock exchange. A hundred shares of stock costing $2,250 dollarsthat day would have multiplied into 74,360 shares today, worthapproximately $3.3 million on December 31, 2006.

A Big Idea Called "Big Mac"
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"Introduced systemwide in 1968, the Big Mac was the brainchild ofJim Delligatti, one of Ray Kroc's earliest franchisees, who by thelate 1960s operated a dozen stores in Pittsburgh."

The Egg McMuffinIntroduced in 1973, the Egg McMuffin was developed by owneroperator Herb Peterson.

The First Ronald McDonald House in Philadelphia, PAIn 1974 Fred Hill of the Philadelphia Eagles teamed up withMcDonald's to create Ronald McDonald House. Here the families ofcritically ill children have a place to call home while they're away fromhome as the young patients undergo treatment for their conditions.

The Happy MealSince 1979 the Happy Meal has been making kids visits that muchmore special. Clubs the world over collect Happy Meals toys andboxes.

The Future Begins NowMcDonald's Express for a world that can't slow down!. McDonald's is

popping up in more non-traditional locations like Kawait, Amoco andChevron stations, with full menu offerings and dining room seating,ust like you'll find in a traditional McDonald's.

The McDonald's Came to Pakistan

McDonald's Pakistan opened its doors in September 1998 at Lahoreand presently operating in six major cities with a network of 20restaurants. With a strong belief in the Ray Krock phrase when youare green you are growing.McDonald's Pakistan is a part of the Lakson Group of Companies.

McDonald's On The Worldwide Web!
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Forty three years after opening our first restaurant in DesPlaines, Illinois, we are proud to come to you on the WorldWide Web. Did you know that McDonalds.com receivesmillions and millions of hits every week?

50th AnniversaryMcDonald's Corporation celebrated its 50th Anniversary with theopening of a flagship restaurant in Chicago.
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S.W.O.T. Analysis

Strengths:

Pioneer and market leader in fast food business thus have a Strong brand name, image

and reputation. Widely recognized market leader, have a high market share in fast food business e.g.,

42% of US fast-food & hamburger business.

Rapid adaptation to the cultural needs of the society.

Tasty, nutritious and quality food.

Less serving time.

Clean environment.

Good customer service.

Strong Financial Position

Consistency in the quality of food, no compromise on quality.

Prestige brand name attracts people of all classes.

Successful items: Fries, Happy Meal, Big Mac etc.

Standard food on all its franchises around the world.

Weaknesses:

o Fewer branches in Pakistan.

o Lack of employee motivation.

o No clear strategic direction in expansion of business.

o Weak Marketing Skills e.g., Less advertisement.

o Higher overall costs than rivals.o Disgruntled franchisees.

o Less space for parking.

o Weak product development.

o Long cues due to fewer counters.

o No branches in small cities.

o Too narrow product line due to which the market share is decreasing.

Opportunities:

Expand product line.

Motivate employees in order to retain them.

Provide more parking facilities.

More counters to reduce delivery time.


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Alliances or JVs to expand business.

Introduction of new technology in cooking equipment.

Vertical integration.

Focus on different segments of the society e.g., youth, children, elderly and target them

individually thus increasing customer base.

Open branches in small cities & Expanding to new geographic areas as currently they are

serving 1% of the worlds population.

Expand market through huge advertisement and other marketing techniques in order to

take market share from rivals.

Threats:

Entry of new potent competitors.

More health-conscious consumers.

Security issues.

Political instability.Increasing inflation.

New Costly government regulations slowing market growth.

Demographic changes.

Changing demographics.

Fluctuation of foreign exchange rates; Economies.

Loss of sales to substitute.

Adverse shifts in exchange rates & trade policies.

P.E.S.T. Analysis

Political Issues:

Sense of Insecurity.

Lack of Investment opportunities due to political instability.

Economic Issues:

o Increase in the sales tax rate.

o Since McDonalds is an international food chain so it brings in lot of investment in the

country thus contributing to the society.


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o McDonalds also provides employment opportunities to the youth of the society thus

decreasing the unemployment rate in the country.

o Increase in the interest rate creates a huge hurdle in the expansion of the business.

o Increase in Per capita income is shifting the individuals of the society towards high

standard of living thus creating more potential consumers for McDonalds.

Social Issues:

Pakistans societal needs are very different from other nations of the world and

McDonalds raise to success in creating a demand for fast food.

There is always a huge demand of food industry in Pakistan especially in Lahore so it

became easy for McDonalds to start their business in such an active environment.

A large number of Pakistani society is composed of youth, since young blood love to

explore new ideas thus McDonalds provide them a new experience every time.

Ever increasing population also creates more demand of McDonalds Products.

Technology Factors:

Technology is the main competitive advantage of McDonalds, as McDonalds is the

only fast food chain in Pakistan with customized & specialized cooking equipment thus

insuring quality at each and every McDonalds outlet.

McDonalds have a complete MIS Department which enables them to have a complete

control over their inventory system, this MIS Department acts as a life blood for the

organization.

Due to the rapid technological advancements McDonalds needs to keep itself update in

order to sustain their competitive advantage.

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According to the Management of McDonald in Pakistan:-

The McDonald is a Cash Cow for us now because it has a large Market share of food chain of

Pakistan and it is a Market Leader at the moment. But the growth rate of McDonald has

decreased a lot as compared to 3 to 4 years back. Its headquarter is in Lahore and it is also

BCG Matrix

DogsIV

Cash CowsIII

Question MarksI

StarsII

Relative Market Share PositionHigh1.0

Medium.50

Low0.0

Industr

S

alesGrowthRate

High+20

Low-20

Medium

0


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opening its Restaurants in other cities which were not captured at the start but the Growth has

been down a lot as compared to its aggressive strategy. A lot of other new competitors are

entering the food market by introducing the local culture which is one of the threads McDonald

is facing right now. But still McDonald is in Growing stage but the speed of this growth has cut

down. So Cash Cow is the right location of McDonald (According to Miss Shumaila (manager

in Fortress Branch).

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Grand Strategy Matrix

Food Chain Business is one of the Fastest Growing Business of Paki9stan and when we fit

McDonald in the Grand Strategy Matrix, the position of McDonald is Quadrant1 because the

Market growth of Food Industry in Pakistan is quite high and McDonald is a Strong Competitor

in the Food Chain Business. Its Focus is to build a McDonald Restaurant at every corner ofPakistan (1 km distance). McDonald takes risk when necessary. Per Capital income is increasing

in Pakistan and people are moving towards standard Goods. And McDonald will become the first

choice of the people of Pakistan if it will continue its standard and quality because people will go

for standard and quality when they will become health conscious and it is a trend which is

moving vastly in the people of Pakistan to become health conscious.

Quadrant IV

Concentricdiversification

Horizontal

diversification Conglomerate

diversification

Joint ventures

Quadrant III

Retrenchment Concentric

diversification

Horizontaldiversification Conglomerate

diversification

Quadrant I

Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric

Quadrant II

Market development

Market penetration Product development Horizontal integration Divestiture Liquidation

RAPID MARKET GROWTH

WEAKCOMPETITIVE

POSITION

STRONGCOMPETITIVE

POSITION

SLOW MARKET GROWTH


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Porters 5 Forces Model

The basic point in the Porters 5forces model is Rivalry among Competing Firms. And to some

extent, McDonald has done it successfully. There was no concept of Restaurants like McDonald

in 90s. And McDonald not only took risk to enter the food industry of Pakistan but also succeed

to some extent. There were some local Restaurants in the beginning which were famous for

cultural food and they were the biggest competitors of McDonald in the beginning. And

afterwards the Restaurants like KFC, Sub-Way, Pizza Hut, and some local Restaurants like

Fri-Chicks, AFC, and some others are the big competitors of McDonald. And McDonald has an

edge on all over them due to its Management and quality.

No other Restaurant has HR department except McDonald and also McDonald is focusing on

Backward Integration for their chicken, Potatoes and other Raw Material. So, Rivalry

amongst the competitors is very tuff. They all are offering same type of Burgers, Pizzas, and

Potential developmentof substitute roducts

Rivalry amongcompeting firms

Bargaining power

of su liers

Potential entry of newcom etitors

Bargaining power

of consumers


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other stuff but the thing which differ them from each other is the Quality of Management and

Product. There is still huge Market which is enraptured and McDonald and other Restaurants are

trying to apply First Move Strategy to capture the Market which is not captured yet and so the

Customers and theBargaining Power of Customers will be increased. Entry of new

Competitors is not so easy because a bigger part is under McDonald, KFC and other big

Restaurants so new entry will be so difficult to survive. But if new entry will focus on some

differentiate product or with a product which have a cultural touch then the company can

not only survive but can also capture a lot of Market share.

Results of Force Field Analysis:Our Driving Forces are more than Restraining so that there is a possibility of a little bit of change

in McDonald policies and strategies.

Outcomes of Different Strategies

To get maximum profit.

Satisfied Customers.

Quality and tasty food.

Better services.

Value to customers and employees.

To increase the market share by increasing customer base.

Relaxed environment.

Go for expansion of the business by opening new branches in different parts of the country.

Value employees and provide them nice and relaxing environment to work in.


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To become a good social member of the society by giving back to the society.

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Food Quality at McDonalds (For UK and USA):

McDonalds BEEF: 100% pure USDA INSPECTED BEEFNo fillers, no additives.

McDonalds FISH: Only whitefish from the Pacific Ocean, Bering, Baltic and North Seas for

Filet-o-Fishsandwich

McDonalds PRODUCE: Our green lettuce produce is farm-fresh. Just in time delivery system

ensures it is delivered fresh to our restaurants on a consistent basis. McDonalds global

restaurants have served nearly 432 million pounds of vegetables and 181 million pounds of

fruit to their customers.

In 2005, McDonald's served:

304 million pounds of mixed greens

102 million pounds of tomatoes

9 million pounds of carrots

51 million pounds of fruit (apples, strawberries, oranges & more)

16 million gallons of fruit juice

Numbers Tell the Quality & Choice Story (In One Year):

McDonalds restaurants in the United Kingdom served enough fresh grapes and apples from

its fruit bags to provide more than one serving of fruit to every man, woman and child who

live in New York City.

The number of salads sold by McDonalds U.K., if placed side by side, would reach from

London to Prague.


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The amount oflettuce served in McDonalds restaurants in Japan would equal the weight of

30 Boeing 747s.

In the U.S., McDonald's served 130 million pounds of mixed greens, 52 million pounds of

tomatoes and 88 million pounds of fruit and/or fruit juice thanks to items like Premium

Salads, Fruit n Yogurt Parfaits, and fruit juice.

McDonalds is the #1 buyer of apples in the U.S. restaurant industry. McDonalds purchased

34 million pounds of fresh cut apples last year and expects to purchase 52 million pounds in

2006 for Apple Dippers and Fruit n Walnut Salad.

McDonalds Nutrition Information:

McDonalds offers a range of portion sizes and comprehensive information about their food.

McDonalds introduced product packaging which displays nutrition information using a new

easy-to understand icon and bar chart format.

Additional Happy Meal choices around the world for the needs of each and every child.

Nutrition information is available on over 1.5 billion tray liners since 2004 as well as

restaurant brochures, posters, and wallet cards.

Food Safety at McDonalds

According to Dr. Michael P. Doyle, Regents Professor and Director, Center for Food Safety,

University of Georgia For more than two decades, McDonalds has quietly been at the forefront

in helping the industry address food safety issues. From promoting the implementation of food

safety interventions in the slaughterhouse to developing automated grills for cooking hamburgers

to educating thousands of employees annually in safe food handling practices, McDonalds has

had far- reaching influence in providing greater public health protection through safer foods.

McDonalds Quality Checks:

McDonalds and their suppliers conduct thousands of food safety and quality checks before

products ever get to the restaurant. There is a strict daily protocol governing safety and quality.

Food Safety and Quality in Each Restaurant

2,160 safety checks and procedures monthly.

25,920 safety checks and procedures annually.


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McDonalds requires 72 safety protocols to be conducted every single day in McDonalds

restaurantsdetailed daily monitoring routine for restaurant managers.

Testing conducted every two hours at beef supplier facilities. Patties are cooked using the same

grills found in McDonalds restaurants and scored to ensure consistent taste and texture.

Chicken: A typical McDonalds chicken supplier conducts nearly 2,000 safety and quality

checks everyday.

Potatoes: 95 separate quality and safety checks each day by their potato suppliers.

Industry-Setting State-of-the-Art Beef Testing

Beef: McDonalds beef suppliers conduct more than 2,000 safety and quality checks daily at

every beef patty plant.

McDonalds was the first in the quick-service restaurant industry to require multiple stages of

E. coli tests for its hamburgersboth before and after grinding.

Every incoming shipment of beef is tested and then held until tests return. All testing results

are shared with USDA.

Independent audits have been performed on supplier facilities, laboratories and farms to

maintain the highest standards.

From 2002-2005, McDonald's suppliers for meat globally conducted 2,099 animal welfare

audits.

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Marketing Techniques:

McDonalds main customers are children of young age and McDonald cares a lot about its young

customers and has developed different characters for attracting them like:

1-Ronald McDonald

2- Hamburglar

3- Grimace &

4- Birdie

Communicating to Children:

McDonalds understand the importance of responsible marketing practices and for this they

communicate with kids and families seriously
http://en.wikipedia.org/wiki/Image:McDonalds1.svg


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McDonalds provide appropriate portion size meals according to the age of the kid.

McDonalds provides nutrition information so parents can make informed choices about the

food of their kids.

Happy Meals are a good source of at least 8 nutrients, including protein, fiber, vitamins

and minerals.

Ronald McDonald encourages fitness and actively plays its role at community events &

charity fundraisers.

McDonalds also attracts its little customers by giving toys with every happy meal, these toys are

exclusively made for McDonalds by McDonalds own safety approved suppliers. Theyre not

off-the-shelf toys or toys made by anyone else. Testing these toys for the safety of children is

not new as these toys are rigorously tested and retesting time and time again. Theyre backed by

a proactive safety program that starts with the design of the toy and continues throughout the

entire process, long before a Happy Meal toy makes it to the production line.

When it comes to toy safety, McDonalds take nothing for granted. They remain ever vigilant and

continue to watch every step of the process. McDonalds suppliers do not use lead-based paint on

Happy Meal toys. This safety step has been a McDonalds mandate for more than 20 years.

Productivity:

According to McDonalds Productivity is The revenue which McDonalds is going to generate

from each of their outlets which in turn Increases Shareholder Value through the Growth ofProfits and Market Share in the Fast Food Industry.

Sales

Services

Quality Food

Changes: (Kaizan- Think Small)

McDonald's is currently operating in more than 120 countries of the world and due to this they

are exposed to different societies and cultures in different parts of the world catering to which is

a very big challenge for McDonalds, so McDonalds have to adapt itself according to the needs of

the society thus become one of the most active models for implementing changes.

McDonalds Goes Green:

A dark green or black facade replaces the trademark bright red and yellow, armchairs, low-hung

trendy lights, quirky designs and different types of seating areas are all an attempt to attract a


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more discerning customer. The most effective way to attract customers is to show your concern

with the society and instead of being held up as an example of corporate evil and greed.

The fast food chain especially McDonalds has been hitting out at critics with a series of

environmental and social initiatives designed to prove that it cares by carrying out green

marketing campaign:

Introducing energy and water conservation awareness programs.

Using recyclable packaging material.

Recycling used cooking oil for bio-diesel.

Featuring more vegetarian items on the menu.

Placing solar panels on the restaurant's roof, enhancing the insulation, recycling of waste heat.

Not only concerning with that, the company should also go through a full makeover, redesigning

some of its restaurants and introducing a special and specific theme for their each and every

restaurant in a way which will revitalize the site and attract more customers.

Introduce Touch Screen Ordering System in restaurant:

business is notoriously competitive and the restaurant will only have a good chance of success if

they make sure the basics are covered. Its an interesting concept; the guests will probably find

the touch screens engaging and different.

Takeaways:

Fast food restaurants like McDonalds are famous for takeaways and drive thrus which are more

fast and easy way to get food while we drive towards our destination. Mostly the drive-thrus are

packed with cars and ordering food become difficult and take more time then going in restaurant,

for this we suggest that McDonalds should:

o Introduce Touch screen in drive-thrus for more speedy and efficient service.

o Introduce wireless watch systems for customers so that the customer knows that his order

is being prepared and will be delivered in a specific amount of time.

Fast food and social Values:

Todays most efficient restaurant concepts

incorporate touch-screen ordering, and even

online reservations system. Since restaurant


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Fast foods are convenience foods that can be prepared and served very quickly but mostly fast

food comes with a price as mostly the menus in fast food outlets tend to be stacked with items

high in salty French fries, beef burgers, fried chicken, a with a thick cheese covering. These

appeal to the palate by being fatty, low in fibers and nutrients, but high in salt (One beef burger

can contain more than 1000 milligrams of sodium). To make matters worse, they are often

served with sugar-laden soft drinks or creamy milkshakes full of empty calories or fat.

What McDonald can do

o Introduce food which has low calories.

o More vegetarian items in their menu

o Use ingredients which contains more fibers properties and introduce diet plan for diabetic

people.

Other Changes which McDonald should incorporate:

1. McDonalds should use 4-R method which allows for the following efficient use of

resources;

Re-use

Re-cycle

Re-duce Re-move

2. Build and remodel McDonalds restaurants with energy efficiency in mind, which should be

designed in such a way to reduce air conditioning needs, with solar panels so that cheep

energy is generated. Our restaurants use an average of about 1,650 gallons of water per day,

mostly for personal sanitation, cleaning and, in some cases, landscape maintenance.

McDonalds Global Water Team has established global standards for restaurant water

quality and is working on other priorities, including conservation.

3. New more energy efficient equipment for our restaurants.

4. Que-Matrix system should be introduced during the rush seasons like Eid, Basant etc. in

order to reduce the rush on counters.

5. Installation of more LCD T.V.s in the restaurants and Menu should be displayed on these

LCDs also so that the customers can easy make a decision by sitting on their seats.


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Quality Control Cycle (QCC):

This is a specific approach that aims to develop a quality culture throughout the Organization. In

McDonalds Quality Chains are formed and then these chains are connected to form a QCC. In

this each person or team treats the receiver of their own work as if they are an external customer.

Just in time production (JIT):

Just in time is a pull system of production, so actual orders provide a signal for when a product

should be manufactured. This means that stock levels of raw materials, components, work in

progress and finished goods can be kept to a minimum. This requires a carefully planned

scheduling and flow of resources through the production process.

Demand-pull enables McDonalds to produce only what is required, in the correct quantity and at

the correct time.

McDonalds also using sophisticated production scheduling software to plan production for each

period of time, which includes ordering the correct stock.

Advantages of JIT:

Lower stock holding means a reduction in storage space which saves rent and insurance costs.

As stock is only obtained when it is needed, less working capital is tied up in stock.

There is less likelihood of stock perishing, becoming obsolete or out of date.

Avoids the build-up of unsold finished product that can occur with sudden changes in demand.

Less time is spent on checking and re-working the product of others as the emphasis is on

getting the work right first time.

Disadvantages of JIT:

There is little room for mistakes as minimal stock is kept for re-working faulty product.

Production is very reliant on suppliers and if stock is not delivered on time, the whole

production schedule can be delayed.

There is no spare finished product available to meet unexpected orders, because all products

are made to meet actual ordershowever, JIT is a very responsive method.

---------------------------------------------------------------------------------


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Problems:-

The downfall of the economy of Pakistan (External factor).

Not focusing the cultural products of Pakistan like making Burgers in the stuff likeParatha.

The increase in the Rivalry.

No Branches in small but develop cities.

The service is not up to mark as compared to other competitive Restaurants.

The cost of Products is too much high and it should be cut down by contracting to localsuppliers.

The Restaurant is mainly focusing high class rather than middle or lower class.

Recommendations:

There is a need to introduce an online ordering system.They need to open more branches in small but developed cities.

More Seating arrangement and spacious restaurants are required.Improvement in the service.


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Privacy concern especially in Muslim countries:There is a huge segment of population who want to go to a fast food restaurant but they do not go

as they claim that it is not comfortable because of parda issue especially in Muslim country like

Pakistan.

McDonald should:

When ever McDonald goes in Muslim country they should understand the suitability factor in

every segment of the target population. Suitability factors like values norms traditions and

religion most importantly because it is nearly impossible to change the spiritual quotation of

people of particular region. So when ever McDonald thinks to expand in other region they must

have to understand the religion need of people. And sets their plan accordingly

o They can open a McDonald which could be only for ladies and children.

o They could introduce separate or upper flour for ladies and children only.

Local supplier:

As we know that prices are increasing on a huge scale so it will be possible for McDonald to

think beyond and try local supplier so they can reduce the extra burden of high prices. If the

price in Pakistan tend to rise it will decrease the buying power of customer.

So to reduce the price of McDonald need to reduce their cost first

o Find local supplier

o Puzzle games rather toys for children or cost effective toys

o Reduce the extra layer of employees in branch

o Give low light environment

Queue matrix Machine:

Now a day queue matrix technique is very use full to reduce the long queue on counters they can

use a token system in rush hours like we can see in banks so their will be no queues.

More glass windows:

It very uses full methods now days to reduce the electricity bill and proper use of use of sun

light. And in night timing it attract more and more people.

Dust bins:

Should have a prominent color like rend pink yellow and it should be in easy accessible rang not

in a far corner where no body will bother to go and use it.


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Advertisement:

McDonald can play advertisement on their plasma screen which the use near about in every

branch for entertainment purpose on which they mostly plays game shows they plays

advertisement of Sports car watch mobiles and lots of things .

Mobile charging facility:

As we know every body is busy and people some time dont find a place where they can eat in

hurry and charge their hand devices like mobile and laptops.

Others:

o Some help has been taken from HRM project which we done in the HRM course.o www.mcdonalds.comwas also a source of information.o McDonald did not provide us the income statement and Ratios so we download it

from Internet.

o http://www.hoovers.com/mcdonald'so Mam Mahroo ( Faculty of Management PCBA) also helpful for us to gather some

information.

o Snaps have been taken from Google.
http://www.mcdonalds.com/http://www.mcdonalds.com/http://www.hoovers.com/mcdonald'shttp://www.hoovers.com/mcdonald'shttp://www.hoovers.com/mcdonald'shttp://www.mcdonalds.com/

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