McDonald’s knows how to do it!

Background

The base for McDonald’s was created by the McDonald brothers Richard and Maurice, when they opened their first restaurant in San Bernardino in California in 1940. After a complete rearrangement and redesign, they had a new opening of their fast-food restaurant with self-service in 1948. Five years later, the golden M (so-called “Golden Arches”) adorned a restaurant for the first time. Actually, McDonald’s creation was “on accident”. In 1954, Ray Kroc only wanted to sell some milkshake-mixers to the McDonald brothers. But then he was so fascinated by their restaurant and its concept of fast food with high quality and friendly service with low prices, that he acquired the license to open restaurants with the same principle. So he opened the first McDonald’s restaurant in 1955 in Des Plaines, Illinois. The franchise-system of McDonald’s was born!

Current Situation

Every day more than 2,7 mio. customers on average find themselves in a McDonald’s restaurant. Last year (2010) McDonald’s Germany had almost 1 Bln. customers which lead to net sales of 3.017 bln. € – meaning a 3,7% growth compared to 2009. Right now, there are almost 1400 McDonald’s restaurants in Germany consisting of small restaurant units in shopping malls or train stations, restaurants at airports and at highways. 971 of them have a McDrive. Additionally, McDonald’s creates numerous jobs and places for students and trainees. More than 62.000 workers, 2.000 trainees and 164 bachelor-students are employed. 

Analysis

In an article by Jim Laube, he describes how to turn a good restaurant into a great business. There he also refers to McDonald’s since it probably is the most successful restaurant chain in the world. Laube talks about Ray Kroc’s way of leading the McDonald’s business. What he did was to create a plan. Rather than working IN the business, he worked ON the business. He basically made a manual for operating a McDonald’s restaurant including a set of instructions for all the different areas which need to be considered for a restaurant. That way he was able to just show his franchisees exactly how to run a McDonald’s restaurant in order to have ensured success. Actually his main product weren’t burgers or fries, but the business. His primary customers were franchisees who would pay for the right to own and operate such a restaurant.
So what Laube suggests is to prepare an operating manual in order to be successful. Categories which need to be included are for example:
  • Menu & kitchen management
  • Personnel administration
  • Purchasing and inventory
  • Safety and Security
  • Marketing
  • Equipment/Facilities management
Also Fran from FranZoom refers to McDonald’s operations manual in her article. She claims that the most important point of that manual is to create consistency. No matter if you go to McDonald’s in Florida, Canada, Saudi Arabia or Germany, they’re all identical to each other. Of course, there are some adjustments according to the country’s culture, but the manual puts a huge priority on making sure that customers always get what they expect in terms of food, environment and employees.

A Bigger Plan – Possible?

In 2010 there were 25 new openings and more are planned in the upcoming years. Every business wants to expand and that’s what McDonald’s has been doing very successfully in the last decades. Also their McCafé concept will be spreading around the world. Today, there are already 737 McCafés (81 opened in 2010) and more and more McCafés will be opened in the future. As you can see on the map: No McDonald’s in most of Africa. But I guess it wouldn’t make much sense to have it there since most of the countries are developping countries so they wouldn’t be able to afford it.

Future of McDonald’s

In my opinion, McDonald’s will always be one of the most successful chains in the world. During the last years, McDonald’s raised their prices (just like all other shops, restaurants,…) and still the number of customers is growing! Even though, everyone knows/thinks that McDonald’s is “bad” for them, they go there because it tastes good and it’s still cheaper than everything else. 
So how serious can the bad thoughts about McDonald’s be?
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6 Comments

  1. Elisa S.

     /  January 24, 2012

    Hi Ly,
    thanks for that well-written and interesting post 8)
    Right now I am asking myself why we as the food group did not write or even think about the fast food giant mc donalds until now – maybe that topic was to obvious ^^
    Nevertheless, you brought up some very interesting facts and numbers – more than one billion customers in 2010? When I read this I started wondering why I feel almost ashamed about these numbers and I realized that mc donalds has somehow a negative brand image, and that although they invest millions in marketing campaigns and strategies every year. Mc Donalds has not only an unhealthy brand image (we all eat unhealthy stuff from time to time, I don’t think that is the crucial point in that context) but it is also associated with unethical behaviour. I just found an article about its meat production (http://zis-economics.posterous.com/mcdonalds-meat-production-where-does-it-come) and about farm washing – maybe you could dig deeper into this? Would be great =)

    Reply
  2. Hi Ly.

    Great post…I did not expect McDonald’s to be that big and so widely spread.
    It is great how you managed to apply the Toyota A3 Model and made an interesting and not to long out of it. For your next post you could consider talking about McDonald’s Marketing strategies, as you were talking about them having a special business model with the low prices but quality food. Especially as using social networks recently backfired on McDonald’s…just an idea 😉
    http://mashable.com/2012/01/25/mcdonalds-new-twitter-campaign/ Just for the interests sake…it is about McDonald’s twitter disaster.

    Reply
  3. Hi Ly.

    Great post. I never knew that McDonald’s was this huge and so widely spread.

    You did a great job in applying the Toyota A3 Model and your post is really well structured and formulated.

    Perhaps you could write a little about McDonald’s Marketing strategies in your next post. Especially after the social networks seem to have backfired on McDonald’s. As you can see in this blog post: http://mashable.com/2012/01/25/mcdonalds-new-twitter-campaign/ …just an idea 😉

    Reply
  4. Marius

     /  February 10, 2012

    Hi Ly,

    I can only join my colleagues in praising your blog post. I think it was well researched and very informative. I have to admit that I am really a Mc Donald’s hater. I think there are enough healthier and especially cheaper alternatives to Mc Donald’s – I think the majority of the customers doesn’t go there because they want to eat a salad. Here I found an interesting source for healthier alternatives http://www.helpguide.org/life/fast_food_nutrition.htm

    Reply
  5. Lilian

     /  February 12, 2012

    Hi Ly!
    Very nice blog post and great adaption of the Toyota A3 model! Starting to read your post I immediately had to think of the 7-Eleven case study, because when reading it and writing the reaction post to it, I fully understood the concept of franchising for the first time. It’s not very complicated, but I never grappled with it before and now having this in mind, the worldwide success of McDonalds doesn’t surprise me that much. Of course McDonalds could be criticized for their food production or ecologically damaging behavior, but it is clear that they just did a great job with their business strategy.
    Maybe the following link interests you – here I found a review of McDonald’s franchising system and which advantages and disadvantages there are for potential franchisees: http://franchises.about.com/od/fastfoo1/fr/mcdonalds.htm

    Reply
  6. Nico

     /  February 12, 2012

    Hi Ly,

    nicely written and well structured post. Recently I read an article which stated that Jamie Oliver uncovered the unethical meat production of McDonalds in America. McDonalds basically uses low quality beef which is found in dog food and prepares it with ammonium hydroxide. This chemical makes the meat enjoyable for humans again.
    Jamie Oliver calls it pink slime.
    I can imagine a pink slime creating more value to the low quality beef.
    Ammonium hydorxide is legal on the american food market.
    The pink slime is supposed to neutralize acids and split up protein. According to the USDA, ammonium hydroxide is the perfect bacterial killer. Anyways, there have been numerous cases of salmonella infections and illnesses caused by ‘e.coli’ bacteria.
    McDonalds is not the only case. Also Burger King or Taco Bell used ammonium hydroxide.
    By now, McDonalds has changed it’s way of production and claims not to use ammonium hydroxid anymore.
    We can be happy that our beef comes from healthy, green grass browsing cows which are stationed in the Alps.

    Reply

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