business plan for mcdonalds

How to create McDonalds Restaurant Business Plan

Blog > how to create mcdonalds restaurant business plan, table of content, introduction, i. executive summary, ii. market analysis, iii. restaurant concept and menu, iv. branding and marketing strategies, v. organizational structure and management, vi. funding and financial projections, vii. location and facilities, viii. operations and workflow, ix. customer experience and feedback, x. sustainability and environmental initiatives, xi. legal and regulatory compliance, xii. swot analysis, xiii. implementation plan, our other categories.

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Business plan 101.

How to create McDonalds Restaurant Business Plan Stellar Business Plans

Starting a fast-food empire like McDonald’s requires careful planning and a solid business plan. In this comprehensive guide, we will walk you through the essential steps of creating a McDonald’s business plan , covering market analysis, menu development, marketing strategies, operational structure, and financial projections. With the right approach and strategic insights, you can set your McDonald’s restaurant on the path to becoming a successful and iconic brand in the fast-food industry.

The executive summary is a concise overview of your McDonald’s business plan, providing a snapshot of your restaurant’s vision, mission, and key objectives. This section should captivate readers and encourage them to delve into the finer details of your plan.

In crafting your executive summary, emphasize the unique selling points of your McDonald’s restaurant. Highlight what sets you apart from competitors, such as a signature dish, innovative menu items, or exceptional customer service. Showcase your passion and commitment to creating a memorable dining experience for customers.

Stellar Tip: Keep the executive summary focused, engaging, and no more than two pages in length. Use persuasive language and data to support your claims.

The market analysis is a crucial component of your McDonald’s business plan. This section provides an in-depth understanding of the fast-food industry, focusing on McDonald’s competitors, target market, and consumer trends. Accurate market research will be the foundation of your business decisions, helping you identify opportunities and potential challenges.

  • Industry Overview: Start by analyzing the fast-food industry’s current landscape. Provide an overview of its size, growth rate, and major players, including McDonald’s. Understand the industry’s competitive dynamics, key market trends, and emerging opportunities.
  • Target Market and Consumer Trends: Define your target market demographic, such as families, young professionals, or college students. Understand their preferences, habits, and expectations when dining at fast-food restaurants. Stay informed about consumer trends, such as the demand for healthier options or sustainable practices, to tailor your menu and marketing strategies accordingly.
  • Competitor Analysis: Identify your direct competitors, including other fast-food chains and local eateries. Analyze their strengths, weaknesses, and market positioning. Highlight the gaps in the market that your McDonald’s restaurant can fill. Differentiate your brand by offering unique menu items or exceptional service to stand out in a crowded market.

Stellar Tip: Leverage market research reports, industry publications, and customer surveys to support your market analysis with credible data and statistics.

Your restaurant concept and menu are at the core of your McDonald’s business plan. In this section, you’ll define the overall theme, ambiance, and customer experience you aim to create. Your menu development will be crucial in attracting and retaining customers.

  • Restaurant Concept and Ambiance: Describe your McDonald’s restaurant concept in detail. Will it have a modern, minimalist design or a retro, nostalgic vibe reminiscent of McDonald’s early days? Clarify your restaurant’s ambiance, colors, lighting, and overall atmosphere. The interior and exterior design should align with your target market’s preferences and expectations.
  • Signature Dishes and Menu Offerings: Create a tantalizing menu that reflects your restaurant’s concept and satisfies your target customers’ cravings. Introduce a range of signature dishes that highlight your unique culinary offerings. For example, you might feature a mouthwatering Big Mac Burger with a secret sauce, a variety of delicious French fries, and a selection of refreshing beverages.
  • Customization and Adaptability: Consider offering customizable options on your menu to cater to diverse tastes and dietary preferences. Emphasize the use of fresh, locally-sourced ingredients and the customization potential of each dish. This approach allows your McDonald’s restaurant to cater to a broader audience and encourages repeat visits from satisfied customers.

Stellar Tip: Incorporate appealing visuals, such as high-quality images of your signature dishes, to evoke excitement and stimulate customers’ appetites.

A strong brand identity and effective marketing strategies are essential for building brand recognition and attracting customers to your McDonald’s restaurant. In this section, outline your branding efforts and marketing initiatives.

  • Brand Identity and Messaging: Develop a compelling brand identity that resonates with your target market. A strong brand identity encompasses your restaurant’s logo, color palette, and tagline. Your brand messaging should convey your restaurant’s values, quality, and unique offerings. Consistency in branding across all touchpoints, including menus, packaging, and social media, will reinforce your brand’s recognition.
  • Digital Marketing and Social Media: Embrace digital marketing as a powerful tool to reach your target audience. Create a user-friendly website that showcases your menu, location, and contact information. Implement search engine optimization (SEO) strategies to improve your online visibility and attract organic traffic to your website. Leverage social media platforms, such as Facebook, Instagram, and Twitter, to engage with customers, share enticing food images, and run promotions or contests.
  • Influencer and Local Marketing: Collaborate with local influencers and food bloggers to promote your McDonald’s restaurant. Influencer marketing can significantly boost brand visibility and attract new customers. Engage in community events, sponsor local initiatives, and support charitable causes to build a positive reputation in the community.
  • Loyalty Programs and Special Offers: Implement customer loyalty programs to reward repeat customers and encourage brand loyalty. Offer special deals, promotions, and seasonal menu items to keep customers excited and engaged. Special offers can create a sense of urgency and prompt customers to visit your restaurant regularly.

Stellar Tip: Share success stories of previous clients who achieved remarkable results with Stellar Business Plans marketing strategies.

A well-organized and efficient organizational structure is vital to the smooth operation of your McDonald’s restaurant. In this section, outline the key roles and responsibilities within your restaurant’s management team.

  • Legal Structure and Ownership: Define the legal structure of your McDonald’s restaurant, such as a sole proprietorship, partnership, or corporation. Specify the owners’ names and roles in the business.
  • Management Team and Key Roles: Introduce the key members of your management team, including their professional backgrounds and expertise. Identify their roles and responsibilities in overseeing day-to-day operations, financial management, and customer service. Emphasize the experience and passion they bring to the table.
  • Staffing and Training Programs: Outline your hiring and staffing strategies. Describe the recruitment process for hiring skilled chefs, kitchen staff, servers, and other essential positions. Emphasize the importance of investing in comprehensive training programs to ensure consistent quality and excellent customer service.

Stellar Tip: Include a table listing key roles, responsibilities, and qualifications of your management team members.

To turn your McDonald’s business plan into reality, secure the necessary funding to cover startup costs and initial operational expenses. In this section, outline your funding sources and present financial projections.

  • Startup Costs and Funding Sources: Conduct a detailed analysis of the financial requirements to launch your McDonald’s restaurant. Include expenses such as lease payments, equipment purchases, staff salaries, marketing campaigns, and initial inventory. Identify potential funding sources, such as personal savings, loans, investments, or partnerships.
  • Revenue Forecasts and Expense Breakdowns: Prepare revenue forecasts based on market analysis, pricing strategies, and expected customer traffic. Present a breakdown of expected expenses, including fixed costs (e.g., rent and utilities) and variable costs (e.g., ingredients and wages). Analyze profit margins and cash flow projections to assess your restaurant’s financial health.
  • Break-even Analysis: Conduct a break-even analysis to determine the point at which your McDonald’s restaurant will cover its operating costs and start generating profits. This analysis helps assess the time required to reach profitability and guides your financial decisions.

Stellar Tip: Mention any successful funding cases where Stellar Business Plans assisted other clients in securing investments.

Selecting the right location and designing an efficient layout are crucial to the success of your McDonald’s restaurant. In this section, focus on factors that impact site selection and facility design.

  • Location Selection: Analyze potential locations based on foot traffic, visibility, accessibility, and proximity to your target market. Consider both urban and suburban areas, as each offers unique advantages and challenges. A high-traffic location near schools, offices, or shopping centers can attract a steady flow of customers.
  • Negotiating Lease Agreements: Secure a lease agreement that offers favorable terms and conditions, especially in the early stages of your restaurant’s operations. Negotiate rent, lease duration, and flexibility for potential expansion or renovation.
  • Facility Design and Layout: Collaborate with experienced restaurant designers to create an inviting and functional interior layout. Optimize the kitchen workflow, seating arrangements, and customer flow to enhance efficiency and create a positive dining experience.

Stellar Tip: Share examples of how Stellar Business Plans’ location selection strategies led to increased foot traffic and revenue for past clients.

Efficient day-to-day operations are the backbone of your McDonald’s restaurant. In this section, outline the operational processes, supply chain management, and health & safety protocols.

  • Standardized Cooking Processes: Establish standardized cooking processes and recipes to maintain consistent quality and taste in your menu items. Implement a comprehensive training program to ensure that all chefs and kitchen staff adhere to these standards.
  • Supply Chain Management: Establish strong relationships with suppliers to ensure a reliable and fresh supply of ingredients. Emphasize the importance of sourcing locally and responsibly to support the community and maintain food quality.
  • Health and Safety Protocols: Comply with all health and safety regulations to protect both customers and staff. Implement rigorous sanitation practices, conduct regular health inspections, and provide proper training on food handling and safety protocols.
  • User-friendly Order and Service Processes: Simplify the order and service processes to enhance customer satisfaction. Implement a user-friendly POS system for smooth order processing and payment transactions. Train staff to provide prompt and friendly service, creating a positive dining experience for each guest.

Stellar Tip: Include a flowchart illustrating the McDonald’s restaurant’s order process, from customer arrival to the serving of dishes.

Customer experience is a top priority for any successful restaurant. In this section, focus on creating a welcoming ambiance and gathering valuable customer feedback for continuous improvement.

  • Creating a Welcoming Ambiance: Pay attention to every detail that contributes to a positive customer experience. Design a comfortable dining area with clean and well-maintained furniture. Incorporate friendly and inviting colors to create a warm and welcoming atmosphere.
  • Staff Training for Exceptional Service: Train your staff to provide exceptional customer service. Emphasize the importance of attentiveness, courtesy, and promptness in serving customers. Encourage staff to engage with customers, address them by name, and offer personalized recommendations based on their preferences.
  • Gathering and Utilizing Customer Feedback: Implement various channels for customer feedback, such as comment cards, online surveys, and social media platforms. Use this feedback to identify areas for improvement and make necessary adjustments. Address customer concerns promptly to show your commitment to customer satisfaction.

Stellar Tip: Showcase testimonials from satisfied customers who enjoyed an exceptional dining experience at a Stellar Business Plans-assisted restaurant.

In today’s conscious world, sustainability matters. In this section, demonstrate your commitment to environmental responsibility through eco-friendly practices and recycling programs.

  • Implementing Eco-friendly Practices: Describe the eco-friendly initiatives your McDonald’s restaurant will implement. This may include using biodegradable or recyclable packaging, energy-efficient equipment, and LED lighting. Highlight your commitment to reducing your carbon footprint and environmental impact.
  • Ethical Sourcing of Ingredients: Emphasize your dedication to sourcing ingredients ethically and responsibly. Partner with local suppliers who follow sustainable farming practices and prioritize fair labor standards. Communicate your efforts to support local farmers and reduce food miles.
  • Recycling Programs: Outline recycling programs to manage waste effectively. Set up recycling stations throughout the restaurant for customers and staff to dispose of waste responsibly. Educate staff and customers about the importance of recycling and waste reduction.

Stellar Tip: Cite relevant statistics on how sustainability initiatives positively impact customer loyalty and brand reputation.

Navigating legal requirements is critical. In this section, ensure you obtain the necessary licenses, adhere to food safety regulations, and comply with employment laws.

  • Obtaining Necessary Permits and Licenses: Provide a comprehensive list of permits and licenses required to operate a McDonald’s restaurant legally. This may include health permits, alcohol licenses (if applicable), music performance licenses, and zoning permits.
  • Food Safety and Health Department Regulations: Explain your restaurant’s adherence to all relevant food safety regulations and health department requirements. Describe your food handling and sanitation practices and demonstrate your commitment to maintaining a clean and safe environment for customers and staff.
  • Employment Laws and Labor Requirements: Address labor laws and employment requirements to protect the rights of your staff. Cover topics such as minimum wage, working hours, employee benefits, and adherence to anti-discrimination laws.

Stellar Tip: Highlight Stellar Business Plans’ expertise in navigating complex legal processes for previous clients.

A SWOT analysis is a valuable tool for understanding your McDonald’s restaurant’s internal strengths and weaknesses, as well as external opportunities and potential threats. In this section, conduct a comprehensive SWOT analysis to inform your strategic decisions.

  • Identifying Strengths and Weaknesses: Evaluate your restaurant’s internal strengths, such as a unique menu concept, strong management team, or prime location. Also, analyze potential weaknesses, such as limited marketing budget, inexperience in the industry, or potential supply chain challenges.
  • Capitalizing on Opportunities: Identify external opportunities in the market that your McDonald’s restaurant can leverage for growth. This may include emerging consumer trends, unmet customer needs, or gaps in the local fast-food market.
  • Mitigating Potential Threats: Address external threats that may impact your restaurant’s success. These threats may include increased competition, changing consumer preferences, or economic downturns.

Stellar Tip: Provide a real-life case study of a restaurant that successfully capitalized on its strengths and addressed weaknesses with Stellar Business Plans’ assistance.

With Stellar Business Plans’ guidance, develop a detailed timeline, set milestones, and allocate responsibilities for the successful launch and growth of your McDonald’s restaurant.

  • Timeline for Launching the McDonald’s Restaurant: Develop a comprehensive timeline that outlines the pre-opening and post-opening phases of your restaurant. Include key milestones, such as obtaining permits, hiring staff, conducting marketing campaigns, and training programs.
  • Milestones and Key Tasks: Define and prioritize essential tasks for each phase of your restaurant’s launch and ongoing operation. Tasks may include menu development, hiring staff, obtaining permits, marketing campaigns, and training programs.
  • Responsibilities and Accountability: Clearly define the roles and responsibilities of each team member involved in the restaurant’s launch and operations. Establish an accountability framework to ensure that each team member understands their role and is committed to meeting deadlines.

Stellar Tip: Include a Gantt chart showcasing the timeline and milestones for opening the McDonald’s restaurant.

Congratulations! By following this comprehensive guide and partnering with Stellar Business Plans, you are well-equipped to create a McDonald’s business plan that sets your fast-food restaurant on the path to success. Your passion, combined with our expertise, will establish a beloved dining destination, satisfying customers’ appetites and leaving a lasting impact in the fast-food industry.

Embark on this exciting journey with Stellar Business Plans, and let’s turn your dream of owning a thriving McDonald’s restaurant into reality. We are committed to providing you with a data-driven, innovative business plan that reflects your vision and propels your restaurant to greatness.

Partner with Stellar Business Plans, the trusted startup consultant service provider, and together, we will make your McDonald’s restaurant a shining star in the fast-food galaxy.

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Updated On : September 1, 2023

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McDonald's: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

In this blog article, we will delve into McDonald's, one of the world's leading fast-food chains, and explore its business model, conduct a SWOT analysis, and identify its key competitors for the year 2023. McDonald's has built an empire on its ability to provide quick, affordable, and consistent meals to millions of customers worldwide. By examining its strengths, weaknesses, opportunities, and threats, we can gain valuable insights into the company's current standing and future prospects. Furthermore, we will also analyze the competitive landscape, identifying the players that pose a challenge to McDonald's dominance in the fast-food industry.

What You Will Learn:

  • Who owns McDonald's and the significance of its ownership structure in relation to its global success.
  • The mission statement of McDonald's and how it guides the company's operations and decision-making.
  • How McDonald's generates its revenue and the key factors that contribute to its financial success.
  • An overview of McDonald's Business Model Canvas, highlighting the key elements that make up its business model.
  • The main competitors of McDonald's in the fast-food industry and the strategies they employ to challenge its market dominance.
  • A comprehensive SWOT analysis of McDonald's, evaluating its strengths, weaknesses, opportunities, and threats in the current market landscape.

Who owns McDonald's?

Major shareholders.

McDonald's, the global fast food giant, has a diverse ownership structure. The company is publicly traded on the New York Stock Exchange (NYSE) under the ticker symbol "MCD." This means that anyone can become a partial owner of McDonald's by purchasing shares of its stock.

As of the latest available information, the major shareholders of McDonald's include institutional investors such as Vanguard Group, BlackRock, and State Street Corporation. These financial institutions manage large amounts of money on behalf of their clients, including retirement funds, pension plans, and mutual funds. They hold significant ownership stakes in McDonald's, often in the form of millions of shares.

Founding Family

The founding family of McDonald's, the McDonald brothers, Richard and Maurice, initially owned the original restaurant in San Bernardino, California. However, after the company was franchised and expanded, they sold their ownership stake to Ray Kroc, who joined them as a franchise agent in 1954. Ray Kroc went on to become the driving force behind the rapid growth of McDonald's and eventually bought out the McDonald brothers' ownership in 1961.

Franchisees

A significant portion of McDonald's ownership lies in the hands of its franchisees. These are independent business owners who have purchased the rights to operate a McDonald's restaurant under the company's established brand and system. Franchisees are responsible for managing their restaurants and ensuring they adhere to McDonald's standards.

McDonald's has a vast network of franchisees worldwide. These individuals or organizations own and operate thousands of McDonald's restaurants, contributing to the company's success and growth. Franchisees benefit from the global recognition and marketing power of the McDonald's brand while sharing a portion of their revenue with the company.

Individual and Small Shareholders

Apart from institutional investors and franchisees, McDonald's also has individual and small shareholders. These can include retail investors, employees, and other individuals who have purchased shares of McDonald's stock. While their ownership stakes may be relatively small compared to major shareholders, they collectively contribute to the dispersion of ownership and the democratization of McDonald's ownership structure.

In summary, McDonald's ownership is widely distributed among various stakeholders. Major institutional investors, the founding family, franchisees, and individual shareholders all play a role in owning and shaping the future of McDonald's. This broad ownership structure reflects the company's commitment to providing investment opportunities and spreading the benefits of its success across a wide range of individuals and organizations.

What is the mission statement of McDonald's?

Introduction.

McDonald's, the iconic fast-food chain that has become a global household name, operates with a clear mission statement that guides its strategic decisions and business practices. This section will delve into the mission statement of McDonald's and shed light on how it shapes the company's overall objectives and customer experience.

McDonald's Mission Statement

McDonald's mission statement is as follows: "To be our customers' favorite place and way to eat and drink." This concise yet powerful mission statement encapsulates the core essence of McDonald's business model. It emphasizes the company's commitment to providing an exceptional dining experience for its customers, making McDonald's their go-to choice when it comes to satisfying their hunger and thirst.

Customer Centricity

At the heart of McDonald's mission statement lies a strong focus on customer satisfaction. By aiming to be their customers' favorite place and way to eat and drink, McDonald's places the needs and preferences of their customers at the forefront of their operations. This customer-centric approach is evident in various aspects of the McDonald's experience, including menu offerings, service quality, and overall convenience.

Menu Innovation and Adaptability

In order to fulfill its mission statement, McDonald's continuously strives to innovate and adapt its menu offerings to cater to evolving customer tastes and preferences. Whether it's introducing healthier options, plant-based alternatives, or limited-time promotions, McDonald's recognizes the importance of staying relevant in an ever-changing market. This commitment to menu innovation allows McDonald's to maintain its status as a favorite choice for customers seeking a wide variety of food and beverage options.

Consistency and Quality

Another key aspect of McDonald's mission statement is its commitment to providing a consistent and high-quality dining experience. From food preparation to service delivery, McDonald's places great emphasis on maintaining the highest standards across its global chain of restaurants. This dedication to consistency ensures that customers can rely on McDonald's to deliver the same level of quality, taste, and experience, regardless of their location.

McDonald's mission statement, "To be our customers' favorite place and way to eat and drink," serves as a guiding principle for the company. It highlights McDonald's commitment to customer satisfaction, menu innovation, adaptability, consistency, and quality. By adhering to this mission statement, McDonald's continues to thrive as a leading fast-food chain, delighting customers around the world with its iconic offerings and exceptional dining experience.

How does McDonald's make money?

Revenue streams.

McDonald's, the global fast-food giant, generates its revenue through various streams. Let's delve into the key sources that contribute to the company's profitability:

Franchise Fees and Rent

One of the primary ways McDonald's generates revenue is through franchise fees and rent. As a franchisor, the company grants individuals or entities the right to operate a McDonald's restaurant. In return, franchisees pay an initial fee to acquire the franchise, followed by ongoing royalties based on a percentage of their sales. Additionally, franchisees pay rent to McDonald's for the use of the company's real estate, further contributing to the company's revenue.

Company-Operated Restaurants

McDonald's also operates a significant number of its own restaurants worldwide. These company-operated restaurants generate revenue through direct sales to customers. By maintaining a portion of restaurants under its direct control, McDonald's can ensure consistency in quality, service, and brand standards. The revenue from these restaurants serves as a vital source of income for the company.

Licensing and Royalties

In addition to franchising, McDonald's generates revenue through licensing and royalties. The company licenses its famous brand and trademarks to third-party manufacturers, retailers, and suppliers, allowing them to produce and sell products such as toys, apparel, and promotional items featuring the iconic Golden Arches. McDonald's collects royalties from these licensed products, bolstering its revenue without directly operating the businesses involved.

Menu Innovation and Pricing Strategy

McDonald's continually invests in menu innovation to attract customers and increase sales. By introducing new limited-time offerings, seasonal items, and promotional deals, the company entices customers to visit more frequently and try new menu items. Additionally, McDonald's employs a strategic pricing strategy to maximize profitability. Through careful analysis of costs, market demand, and competition, the company sets prices that balance customer value with profit margins.

Investment Income

Beyond its core operations, McDonald's also generates revenue through investments. The company invests its excess cash in various financial instruments, including bonds, stocks, and other income-generating assets. By earning interest, dividends, and capital gains from these investments, McDonald's diversifies its revenue streams and can further strengthen its financial position.

In conclusion, McDonald's employs a multi-faceted approach to generate revenue. Through franchise fees and rent, company-operated restaurants, licensing and royalties, menu innovation and pricing strategy, and investment income, the company ensures a steady flow of funds while maintaining its position as a global leader in the fast-food industry.

McDonald's Business Model Canvas Explained

Introduction to the business model canvas.

The Business Model Canvas is a strategic management tool that provides a holistic view of how a business operates. It consists of nine essential building blocks that help organizations describe, analyze, and design their business models. One of the most iconic examples of a successful business model is McDonald's, the global fast-food giant. In this section, we will explore McDonald's Business Model Canvas in detail to understand how the company has achieved its remarkable success.

Key Partnerships

McDonald's understands the importance of building strategic partnerships to enhance its business model. The company collaborates with various entities, including suppliers, franchisees, and advertising agencies, to ensure smooth operations and consistent brand messaging. By establishing strong relationships with its partners, McDonald's can access a wide range of resources, such as high-quality ingredients, real estate, and marketing expertise. These partnerships contribute to the overall efficiency and sustainability of McDonald's business model.

Key Activities

At the core of McDonald's business model are its key activities, which revolve around delivering quick and convenient food to its customers. These activities include food preparation, supply chain management, restaurant operations, and marketing. McDonald's has perfected its standardized processes, allowing it to serve millions of customers worldwide with consistent quality and speed. The company's emphasis on operational excellence and continuous improvement enables it to maintain a competitive edge in the fast-food industry.

Key Resources

McDonald's relies on a variety of key resources to support its business model. These resources include physical assets, such as restaurant buildings, kitchen equipment, and delivery vehicles, as well as intangible assets like its brand reputation and customer loyalty. Furthermore, the company's extensive network of franchisees plays a crucial role in expanding its reach and market penetration. By leveraging these key resources effectively, McDonald's ensures the smooth functioning of its business operations and sustains its competitive advantage.

Value Proposition

The value proposition of McDonald's revolves around offering affordable, convenient, and consistent fast food to its customers. The company focuses on delivering a unique combination of speed, quality, and affordability, appealing to a wide range of consumers. McDonald's menu offers a variety of options that cater to different tastes and dietary preferences, ensuring there is something for everyone. Additionally, the company's emphasis on cleanliness, customer service, and a family-friendly atmosphere further enhances its value proposition.

Customer Segments

McDonald's targets a broad range of customer segments, including families, students, working professionals, and individuals seeking quick and affordable meals. By appealing to diverse demographics, McDonald's can capture a significant portion of the fast-food market. The company has also recognized the importance of adapting to changing customer preferences and trends, resulting in the introduction of healthier menu options and customizable choices. This customer-centric approach allows McDonald's to maintain its relevance and connect with a wide range of consumers.

To deliver its value proposition to customers, McDonald's utilizes multiple channels. The primary channel is its extensive network of physical restaurants worldwide, which allows customers to dine in, take out, or use the drive-thru service. Additionally, the company has embraced technology and online platforms to enhance customer convenience. Through mobile apps, online ordering, and delivery partnerships, McDonald's expands its reach and provides customers with flexible options to access their favorite meals.

Customer Relationships

McDonald's places significant emphasis on building and maintaining strong customer relationships. The company understands the importance of consistently meeting customer expectations and delivering a positive experience. Whether through friendly staff interactions, clean and comfortable dining areas, or efficient service, McDonald's aims to create a welcoming environment that encourages repeat visits and fosters customer loyalty. Moreover, the company actively engages with customers through various marketing initiatives and social media channels, ensuring continued brand engagement and feedback.

McDonald's revenue streams primarily come from the sale of food and beverages through its restaurants. The company generates income through various channels, including dine-in, take-out, drive-thru, delivery, and catering services. McDonald's also earns revenue from franchising fees, rental income, and royalties paid by franchisees. This diversified revenue model contributes to the company's financial stability and allows for continued expansion and innovation.

Cost Structure

McDonald's cost structure is designed to maximize efficiency and profitability. The company focuses on cost control across its value chain, including procurement, operations, and marketing. By leveraging economies of scale, standardized processes, and supply chain management, McDonald's can achieve cost savings in sourcing ingredients, streamlining operations, and optimizing marketing campaigns. This cost-conscious approach enables the company to offer affordable prices while maintaining healthy profit margins.

McDonald's Business Model Canvas provides a comprehensive overview of how the company operates and creates value for its customers. By strategically managing its key partnerships, activities, resources, and customer relationships, McDonald's has built a successful and globally recognized brand. The company's ability to consistently deliver on its value proposition, adapt to changing customer preferences, and maintain cost efficiency has been instrumental in its long-standing success in the fast-food industry.

Which companies are the competitors of McDonald's?

Fast food giants.

As the largest fast-food chain in the world, McDonald's faces stiff competition from several other industry giants. Here are some of the main competitors of McDonald's:

1. Burger King

Burger King, often referred to as the "Home of the Whopper," is one of the most recognizable fast-food chains globally. Known for its flame-grilled burgers and extensive menu, Burger King poses a significant threat to McDonald's market share. The company prides itself on offering a diverse range of options to cater to different tastes and preferences.

Wendy's, with its iconic square-shaped burgers, has been a long-standing competitor of McDonald's. Wendy's focuses on fresh ingredients and made-to-order meals, appealing to consumers seeking a higher quality fast-food experience. The company has also gained popularity for its bold and sassy social media presence, engaging with customers in a unique way.

Although primarily known for its sandwiches, Subway competes with McDonald's as a prominent fast-food chain. Subway's emphasis on healthier options, customization, and its "Eat Fresh" slogan attracts health-conscious customers who prefer sandwiches over burgers. With its wide range of toppings and bread options, Subway offers a more personalized dining experience.

4. Taco Bell

Taco Bell, specializing in Mexican-inspired fast food, is another significant competitor for McDonald's. With its unique menu items and affordable pricing, Taco Bell appeals to a younger demographic and those seeking a quick, flavorful alternative to traditional burgers. The company's constant innovation and limited-time offerings help maintain customer interest and loyalty.

Kentucky Fried Chicken (KFC) competes against McDonald's in the fast-food industry with its famous fried chicken recipes. Known for its "finger-lickin' good" taste, KFC offers a variety of chicken-based meals and sides. The brand's strong global presence and its ability to adapt its menu to local tastes make it a formidable competitor to McDonald's.

These are just a few examples of the major competitors that McDonald's faces in the fast-food industry. While each company has its unique selling points and target audience, they all strive to carve out their share of the market and challenge McDonald's dominance. As the competition continues to evolve, it will be interesting to see how McDonald's responds to stay ahead in this highly competitive landscape.

McDonald's SWOT Analysis

McDonald's has several strengths that have contributed to its success as a global fast-food chain.

Brand recognition: McDonald's is one of the most well-known and recognizable brands in the world. Its golden arches logo and iconic characters like Ronald McDonald have become synonymous with fast food. This strong brand recognition has allowed McDonald's to establish a wide customer base and maintain customer loyalty.

Global presence: McDonald's operates over 37,000 restaurants in more than 100 countries, making it one of the largest fast-food chains globally. This extensive global presence gives McDonald's a competitive advantage as it can cater to a diverse range of customers and benefit from economies of scale.

Strong supply chain: McDonald's has built a robust and efficient supply chain that ensures consistent quality and timely delivery of ingredients to its restaurants worldwide. This strength allows McDonald's to maintain its standard menu offerings and respond quickly to changing customer preferences.

Menu innovation: McDonald's continuously introduces new menu items and limited-time promotions to cater to evolving consumer tastes. By adapting its menu to accommodate healthier options, vegetarian choices, and regional preferences, McDonald's has successfully remained relevant and appealing to a wide range of customers.

Despite its strengths, McDonald's also faces certain weaknesses that could hinder its growth and competitiveness.

High employee turnover: The fast-food industry, including McDonald's, is notorious for high employee turnover rates. Frequent turnover can result in increased training costs, reduced efficiency, and lower customer service quality. McDonald's needs to address this weakness by implementing effective employee retention strategies.

Negative public perception: McDonald's has faced criticism and negative public perception regarding its contribution to obesity, environmental sustainability, and the treatment of animals. These concerns have led some consumers to choose healthier and more socially responsible alternatives. McDonald's must actively address these issues and emphasize its commitment to sustainable practices and healthier food options.

Overdependence on certain markets: Although McDonald's has a global presence, it heavily relies on specific markets, such as the United States, Europe, and China, for a significant portion of its revenue. Any economic or political instability in these markets could impact McDonald's financial performance. Diversification into untapped markets could help mitigate this weakness.

Opportunities

McDonald's has identified several opportunities that can further enhance its market position and profitability.

Expanding into emerging markets: McDonald's can capitalize on the rising middle class and increasing disposable incomes in emerging markets, such as India, Brazil, and Southeast Asian countries. By tailoring its menu offerings and marketing strategies to local preferences, McDonald's can tap into these untapped markets and achieve significant growth.

Digitalization and technology: McDonald's can leverage technology to enhance customer experience and streamline operations. Implementing mobile ordering apps, self-service kiosks, and digital payment systems can improve convenience and speed of service for customers, while also reducing labor costs and increasing efficiency.

Healthier food options: As consumers become more health-conscious, there is an opportunity for McDonald's to expand its offering of healthier food options. By incorporating more nutritious ingredients, reducing sodium and sugar content, and providing transparent nutritional information, McDonald's can attract health-conscious customers who may have previously avoided fast food.

McDonald's faces several threats that could impact its future growth and profitability.

Intense competition: The fast-food industry is highly competitive, with numerous global and local players vying for market share. Competitors like Burger King, Wendy's, and Subway offer similar products and constantly innovate to attract customers. McDonald's must continually adapt and differentiate itself to maintain its competitive edge.

Changing consumer preferences: Consumer preferences are evolving, with a growing demand for healthier and more sustainable food options. If McDonald's fails to adapt its menu and practices to align with these changing preferences, it risks losing customers to competitors that offer healthier alternatives.

Regulatory challenges: McDonald's operates in multiple countries, each with its own regulations regarding food safety, labor laws, and advertising practices. Adhering to these regulations and potential changes can be challenging and costly for McDonald's. Compliance failures or negative publicity related to regulatory issues can damage the brand's reputation and result in financial penalties.

In conclusion, McDonald's has several strengths that have contributed to its success, such as strong brand recognition, global presence, strong supply chain, and menu innovation. However, it also faces weaknesses, including high employee turnover and negative public perception. To capitalize on opportunities, McDonald's can expand into emerging markets, leverage digitalization, and offer healthier food options. Nevertheless, it must be aware of threats such as intense competition, changing consumer preferences, and regulatory challenges. By addressing these weaknesses, capitalizing on opportunities, and mitigating threats, McDonald's can continue to thrive in the highly competitive fast-food industry.

Key Takeaways

  • McDonald's is a publicly traded company, meaning it is owned by shareholders who hold its stock.
  • The mission statement of McDonald's is to "be our customers' favorite place and way to eat and drink."
  • McDonald's primarily generates revenue through the sale of its food and beverages, both at its physical locations and through delivery services.
  • McDonald's business model canvas encompasses key elements such as customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure.
  • Some of McDonald's main competitors in the fast-food industry include Burger King, Wendy's, Subway, and KFC.
  • McDonald's SWOT analysis highlights its strengths, weaknesses, opportunities, and threats, such as its strong global brand recognition, potential for diversification, increasing competition, and changing consumer preferences.

In conclusion, McDonald's is a global fast-food giant that has successfully dominated the industry for decades. While it started as a small restaurant in San Bernardino, California, today it is owned by millions of shareholders around the world. Its mission statement focuses on providing quality food, service, and a positive experience for its customers.

McDonald's makes money through various revenue streams, including sales from its restaurants, franchising fees, and rental income. Its business model canvas is built on key elements such as customer segments, value proposition, channels, customer relationships, revenue streams, key activities, key resources, and key partnerships.

Despite its enormous success, McDonald's faces fierce competition from various companies in the fast-food industry. Its main competitors include Burger King, Subway, Wendy's, and KFC. These companies continuously strive to attract customers with their own unique value propositions, menu offerings, and marketing strategies.

Conducting a SWOT analysis of McDonald's reveals its strengths in brand recognition, global presence, and operational efficiency. However, it also identifies weaknesses such as high employee turnover and negative public perception of fast food. Opportunities for McDonald's lie in expanding its menu options and embracing healthier food trends, while threats include changing consumer preferences and increased competition from healthier fast-food alternatives.

Overall, McDonald's remains a dominant force in the fast-food industry, constantly adapting to changing market conditions and customer preferences. Its strong brand, global reach, and ability to generate consistent revenue have solidified its position as one of the most recognizable and successful fast-food chains in the world.

Does McDonalds use the SWOT analysis?

Yes, McDonald's uses the SWOT analysis as a strategic planning tool to evaluate its strengths, weaknesses, opportunities, and threats. This analysis helps McDonald's identify areas of its business that need improvement, as well as potential opportunities for growth. By understanding its internal and external factors, McDonald's can make informed decisions and develop strategies to remain competitive in the fast-food industry.

What are the strengths of McDonalds?

Brand recognition and global presence: McDonald's is one of the most well-known and recognizable brands in the world. The golden arches logo is instantly identifiable, and the company has a strong presence in over 100 countries. This gives McDonald's a significant advantage in terms of customer trust and brand loyalty.

Strong marketing and advertising: McDonald's consistently invests heavily in marketing and advertising campaigns to promote its products and maintain its brand image. This has helped the company to stay relevant and attract a wide customer base, including children, teenagers, and families.

Efficient supply chain management: McDonald's has established a highly efficient supply chain management system, ensuring that its restaurants receive consistent and timely deliveries of ingredients. This enables them to maintain quality and consistency across their global operations.

Cost leadership strategy: McDonald's has been able to achieve cost leadership in the fast-food industry through economies of scale, standardized processes, and efficient operations. This allows them to offer affordable prices to customers, which is a significant strength in attracting value-conscious consumers.

Diverse menu options: McDonald's offers a diverse menu that caters to a wide range of customer preferences and dietary needs. This includes vegetarian options, salads, fish, chicken, and various burger choices. This diversity helps McDonald's to appeal to a broader customer base and adapt to changing consumer trends.

Innovation and adaptation: McDonald's continuously innovates and adapts its menu and operations to meet evolving customer demands and preferences. They introduce new products, collaborate with popular brands, and invest in technology to improve the customer experience, such as self-order kiosks and mobile ordering.

Strong franchising system: McDonald's operates under a franchise model, which allows them to expand rapidly while minimizing capital investment. The company benefits from franchisees' local expertise and financial contributions, making it easier to penetrate new markets and maintain a global presence.

Social responsibility initiatives: McDonald's has actively engaged in various social responsibility initiatives, such as Ronald McDonald House Charities, which supports families with sick children, and sustainable sourcing practices. These initiatives help enhance the company's reputation and appeal to socially conscious consumers.

Strong financial performance: Despite facing competition and economic challenges, McDonald's has consistently delivered strong financial results. The company's financial stability and profitability demonstrate its ability to navigate market fluctuations and generate sustainable growth.

Continuous improvement and operational efficiency: McDonald's is committed to continuous improvement and operational efficiency in its restaurants. They regularly invest in employee training, technology upgrades, and process improvements to enhance service speed, quality, and customer satisfaction.

What is McDonalds biggest weakness?

One of McDonald's biggest weaknesses is its association with unhealthy and processed fast food. The company has faced criticism for its menu offerings, which are often high in calories, fat, and sodium. This weakness has led to a decline in consumer perception and a shift towards healthier alternatives among some customers. Additionally, McDonald's has faced negative publicity regarding its environmental impact, labor practices, and animal welfare issues, which further contributes to its weaknesses.

What challenges are McDonalds facing?

McDonald's is facing several challenges, including:

Intense competition: The fast-food industry is highly competitive, with numerous competitors offering similar products and services. McDonald's faces competition not only from other fast-food chains like Burger King and Wendy's, but also from quick-service restaurants, cafes, and even grocery stores.

Changing consumer preferences: Consumer preferences are constantly evolving, with a growing demand for healthier, fresher, and more sustainable food options. McDonald's has been criticized for its menu, which is often perceived as unhealthy and lacking in variety. Adapting to changing consumer preferences and offering healthier alternatives has been a challenge for the company.

Rising labor costs: McDonald's, like many other businesses, is facing challenges related to rising labor costs. The company has faced pressure to increase wages for its employees, which can impact its profitability and operating margins.

Sustainability concerns: There is increasing societal focus on sustainability, including issues such as packaging waste, animal welfare, and environmental impact. McDonald's has faced criticism for its use of single-use plastics and its sourcing practices. Addressing these concerns and implementing sustainable practices can be a challenge for the company.

Technological advancements: The rapid advancement of technology has transformed the way consumers interact with businesses. McDonald's is faced with the challenge of adapting to these technological changes, such as implementing mobile ordering and payment systems, self-service kiosks, and delivery services, to meet customer expectations and stay competitive.

Negative public perception: McDonald's has faced criticism regarding various aspects of its business, including labor practices, marketing to children, and the impact of its food on public health. These negative perceptions can affect the company's reputation and customer loyalty, requiring ongoing efforts to address and improve public perception.

Overall, McDonald's faces the challenge of staying relevant and appealing to a changing consumer base while addressing concerns related to health, sustainability, and labor practices.

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McDonald’s ‘Franchising Fast Food’: Business Model and Marketing Strategies Explained

The branded fast food joints such as KFC, Domino’s, or Burger King have successfully resided in one’s heart. People trust the quality of their food a lot and also appreciate their ability to serve dine-in and provide drive-throughs as well. Lately, emerging digitization including online food ordering and delivery has encouraged people’s favorite brands to serve them food at their homes, hot and fresh! 

What’s better than our favorite food from trusted brands coming straight onto our doorsteps? Nothing else, do you agree? One of such kind is McDonald’s, which has never failed to satisfy its customers. Let’s read about the McDonald’s business model to know how this franchise is prospering notably in the online sector.

McDonald's business model

About McDonald’s

History of mcdonald’s, franchise business model of mcdonald’s, mcdonald’s business model: segments.

  • Marketing Strategies
  • Growth Plan and Accelerators

McDonald’s Response to Covid-19

McDonald’s is an American fast-food company, founded in 1940 in San Bernardino, California, United States. Previously, it had its headquarters in Oak Brook, Illinois, but moved to Chicago in June 2018. As of 2018, McDonald’s served over 69 million customers daily across 37,855 locations in over 100 countries around the world, making it the world’s largest restaurant chain by revenue. With over 1.7 million employees, McDonald’s ranks second in the world’s private employers (behind Walmart with 2.3 million employees). As of 2020, McDonald’s has the ninth-largest brand value in the world.

Richard and Maurice McDonald moved to California from New England in search of opportunities. In 1948, these brothers launched a Speed Service System with burgers that would cost 15 cents each. Having gained popularity over time, they were then able to franchise their concept.

Ray Kroc was a native Chicagoan and a salesman who visited the McDonald brothers in 1954. Kroc was deeply impressed with the way the McDonald brothers conducted business. This led him to become the first McDonald’s franchisee. He opened the first restaurant for McDonald’s System Inc. In 1961, he purchased the rights from the McDonald brothers for $2.7 million.

McDonald’s follows a three-structured franchise model . The company’s franchisees own and operate 90% of its restaurants. Franchisees operate their restaurants with oversight from the company and act as their employer. They have significant control over the pricing, the sale, and the operation of their restaurants. McDonald’s business model centers on a master plan, titled “Plan To Win,” which is implemented across the globe. According to McDonald’s mission statement, “Quality, Service, Cleanliness, and Value,” the company adheres to each of these qualities.

  • In 2020, McDonald’s generated total revenue of 19.21 billion U.S. dollars.
  • In a 2021 ranking of brands based on their value, McDonald’s ranked ninth with almost 155 billion U.S. dollars, an increase of 20% from the previous year.

McDonald's business model

Qualitatively, the segments can be divided into four categories:

  • The U.S ., which as of 2018 continues to be still the most significant market.
  • International Lead Markets include Australia, Canada, France, Germany, the U.K., and related markets.
  • High Growth Markets that comprise markets with significant growth potential include China, Italy, Korea, the Netherlands, Poland, Russia, Spain, Switzerland, and related markets.
  • Foundational Markets & Corporate , the remaining markets in the McDonald’s system, most of which operate under a heavily franchised model.

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McDonald’s Business Model : Marketing Strategies

  • 5 P’s: McDonald’s works on enhancing the customer experience by focusing on the 5 Ps. These 5 Ps include people, products, place, price, and promotion.
  • McDonaldization: McDonald’s success in the international forum is often described as a ‘McDonaldization’. Due to its organizational structure, it has been successful in more than 120 countries. Localization is the main focus of the central organization.
  • Employee Relationship: McDonald’s supports its employees, unlike any other company. Business growth is fostered by career opportunities, a positive work environment, and strong relationships.

McDonald’s: Growth Plan and Accelerators

The Velocity Growth Plan, introduced in 2017, is McDonald’s business model and customer-centric strategy that focuses on three key components of the business: food, value, and customer experience.

  • Retaining existing customers: Emphasizing areas where it already has a strong foothold, such as family occasions and food-oriented breakfasts.
  • Regaining customers who visit less often: Recommitting to its historic strengths, such as taste, quality, convenience, and quality of the product: food.
  • Converting casual to committed customers: Building lasting relationships with customers so they visit more often, by strengthening and expanding the McCafé coffee brand and enhancing snack and treat offerings.

McDonald's business model

McDonald’s remains committed to continuing its aggressive deployment of the three growth accelerators in 2019 and beyond:

  • Experience of the Future (“EOTF”): A modernization and technological upgrade that improves the restaurant experience and enhances the customer’s perception of the brand.
  • Digital: McDonald’s is enhancing its technology platform to give customers more choices in how they order, pay, and are served, which includes increased functionality on its global mobile app, self-service kiosks, and technologies that facilitate curbside and table service.
  • Delivery: McDonald’s has gradually started offering delivery to more than 50% of its global restaurant system in 2018. In 2017, McDonald’s announced it would partner with Uber Eats for home delivery for the first time in the U.S and followed that up by adding Doordash and GrubHub in 2019. As part of a strategy to remain relevant, these partnerships focus on the newer generation of people who prefer home delivery to pickup.

McDonald’s entered the pandemic well-positioned to operate in an environment where diners are looking to minimize contact with others. Nearly 95% of McDonald’s U.S. restaurants have a drive-thru, and the company expects digital sales that come through its online ordering app , a kiosk, or via delivery to surpass $10 billion, or nearly 20% of its sales, across its top six markets.

McDonald's business model

As a result of the change in customer behavior in COVID-19, McDonald’s has a competitive edge. Delivery is booming and the use of the McDonald’s food ordering app has surged as more and more customers are ordering and paying for their food on mobile devices.

Inspired enough by this remarkable success story of McDonald’s? To your surprise, McDonald’s India is already using Tookan , by Jungleworks to automate their deliveries & dispatch. So, now if you are thinking of getting into a business similar to McDonald’s, then Yelo can be the ultimate solution!

Yelo can help you create a franchise-based ordering platform. While Yelo lets you create an online food delivery application for your customers, Tookan will help you manage your deliveries in the best way possible (just like McDonald’s India is using). With the aid of its all-encompassing range of features, Yelo can help you cater to your wide and varied customers in the easiest and most efficient manner possible.

Start your own online food delivery business and become a well-known brand among your customers, and cater to their hunger with exotic delicacies! Is the free trial likely to increase your confidence in the platform? We know you best. Hop on Yelo’s free 14-day trial and get started today!

Just Eat: The Online ‘Takeaway’ Business Model Explained

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McDonald’s Heavy Franchised Business Model In A Nutshell

McDonald’s is a heavy-franchised business model . In 2022, over 60% of the total revenues came from franchised restaurants. The company’s long-term goal is to transition toward 95% of franchised restaurants (by 2022, franchised restaurants were 94.7% of the total). The company generated over $23 billion in revenues in 2022, of which $8.75 billion was from owned restaurants and $14.1 billion from franchised restaurants.

Table of Contents

McDonald’s origin story: from the  McDonald Brothers to Mr. Ray Kroc

As explained on McDonald’s website “ Dick and Mac McDonald moved to California to seek opportunities they felt unavailable in New England. ” In 1948 they launched Speedee Service System featuring 15 cent hamburgers. As the restaurants gained traction that led the brothers to begin franchising their concept until they reached nine operating restaurants.

A native Chicagoan, Ray Kroc, in 1939 was the exclusive distributor of a milkshake mixing machine, called Multimixer. In short, he was a salesman.

He visited the McDonald brothers in 1954 and was impressed to their business model which led to him becoming their franchise agent. He opened up the first restaurant for McDonald’s System, Inc., until in 1961 he acquired McDonald’s rights to the brother’s company for $2.7 million.

Ray Kroc, died on January 1,4 1984, all the rest is a legend.

Is McDonald’s a franchising? You bet, and a heavy one!

Approximately 93% of the restaurants at year-end 2020 were franchised, including 95% in the U.S., 84% in International Operated Markets, and 98% in the International Developmental Licensed Markets.

mcdonalds-owned-vs-franchised

This makes the heavily franchised model run at 93% total capacity, compared to McDonald’s long-term goal of 95%.

As specified in its annual reports “ McDonald’s is primarily a franchisor and believes franchising is paramount to delivering great-tasting food, locally-relevant customer experiences and driving profitability. Franchising enables an individual to be his or her own employer and maintain control over all employment-related matters, marketing , and pricing decisions, while also benefiting from the financial strength and global experience of McDonald’s. However, directly operating restaurants is important to being a credible franchisor and provides Company personnel with restaurant operations experience.”

To further understand the main features of McDonald’s business model , it’s worth looking into the three main categories of business models that revolve around franchising and one that moves beyond it. 

franchising

In the spectrum of franchising business models , the FourWeekMBA research has identified three main categories of franchising:  

Heavy-franchised

McDonald’s is the classic example of heavy-franchised. In fact, McDonald’s has found a balance, which made it able to have a large percentage of restaurants franchised, thanks to the fact McDonald’s secures the land or the rental contract of the land, therefore the franchisee, even if an “independent restaurateur” is locked into McDonald’s   growth   plan.

On the other hand, McDonald’s keeps a small percentage of owned restaurants primarily for product development, for the development of new workflows, and for experimentation. When things work out at these stores, these same strategies might be applied back to the other franchised restaurants. 

Hybrid or franchained

franchained-business-model

Coca-Cola is the classic example of franchained , as the company uses a hybrid strategy , where it first keeps tight control over newly established operations (especially in foreign countries). Once those operations have been successfully established, Coca-Cola transforms them into franchises.

Yet it keeps a stake in the franchising business afterward, so that, even if the franchisee is independent, it’s still tied to the mother company. 

Heavy-chained

starbucks-business-model-explained

The classic example of a heavy-chained company is Starbucks. While Starbucks still leverages on franchise stores (what the company calls “licensed stores”) in reality, it operates the majority of its stores. 

And in the long run, Starbucks’ vision is to chain them all. This is what the FourWeekMBA research has labeled as heavy-chained. 

How do McDonald’s partnerships work?

As specified in its annual report “ under McDonald’s conventional franchise arrangement, franchisees provide a portion of the capital required by initially investing in the equipment, signs, seating, and décor of their restaurant business, and by reinvesting in the business over time. The Company generally owns the land and building or secures long-term leases for both Company-operated and conventional franchised restaurant sites. This maintains long-term occupancy rights, helps control related costs and assists in alignment with franchisees enabling restaurant performance levels that are among the highest in the industry. “

In short, the model is pretty smart. McDonald’s keeps control over the land and or long-term leases to leverage its market position to negotiate deals. At the same time, this kind of deal serves as an alignment between the company and its franchisees.

What are McDonald’s segments?

At the qualitative level the segments can be organized into four main ones:

  • The U.S. , as of 2018 represents still the most significant market.
  • International Lead Markets include Australia, Canada, France, Germany, the U.K., and related markets.
  • High Growth Markets that comprise markets with high growth potential include China, Italy, Korea, the Netherlands, Poland, Russia, Spain, Switzerland, and related markets.
  • Foundational Markets & Corporate , the remaining markets in the McDonald’s system, most of which operate under a primarily franchised model .

As of 2017, the U.S., International Lead Markets, and High Growth Markets accounted for 35%, 32%, and 24% of total revenues, respectively.

Who are McDonald’s key partners?

McDonald’s business model is based on three key players. Franchisees, suppliers, and employees are the piece of the puzzle of McDonald’s successful business model .

  • Franchisees are entrepreneurs that at a local level allow McDonald’s to expand rapidly while keeping a global focus
  • Suppliers across the globe guarantee McDonald’s ability to operate at a high level
  • The continuous training of employees across the over thirty-six thousand restaurants around the world allows McDonald’s to perform at full speed

What management metrics McDonald’s uses to assess its growth?

Any organization has a set of management ratios and metrics  to understand and assess the growth of the business.

McDonald’s looks at the following metrics:

  • Comparable sales and comparable guest counts: the percent change in sales and transactions, respectively, from the same period in the prior year for all restaurants, whether operated by the Company or franchisees, in operation at least thirteen months, including those temporarily closed
  • ROIIC : calculated by dividing the change in operating income plus depreciation and amortization (numerator) by the cash used for investing activities (denominator), primarily capital expenditures
  • Free cash flow: defined as cash provided by operations minus the capital expenditures 
  • Free cash flow conversion rate: defined as free cash flow divided by net income , are measures reviewed by management to evaluate the Company’s ability to convert net profits into cash resources

McDonald’s velocity growth plan in action

McDonald’s has launched and developed a velocity growth plan based on three pillars:

  • Retain  the customers they have
  • Regain the customers lost by improving the taste and quality of food, enhancing the convenience, and offering strong value
  • Convert casual customers to more committed customers with coffee and snacks

They also identified three accelerators, intended to drive growth :

  • Digital by re-shaping interactions with customers
  • Delivery by bringing the McDonald’s experience to their homes
  • Experience of the Future in the U.S. which consists of a set of new technologies within the restaurants to enhance efficiency and improve the experience

Why is McDonald’s’ transitioning to a heavy franchised business model?

The transition to a more heavily franchised business model is part of the long-term company’s strategy . In fact, the rent and royalty income received from franchisees provides a more predictable and stable revenue stream with significantly lower operating costs and risks.

In a way, it is almost like McDonald’s is introducing a subscription business model , where franchisees pay a fixed amount each month. That makes McDonald’s income more stable over time.

Also, the operating and net income coming from franchising operations makes it easier for the company to grow its profitability .

Understanding the company-operated business model vs the franchised-based business model

McDonald’s business model has a double soul. On the one hand, when it comes to its operated restaurants, we can still call McDonald’s a restaurant business when it comes to franchised restaurants McDonald’s looks way more like a commercial real estate company.

Understanding the function of company-operated restaurants

Directly operating McDonald’s restaurants contributes significantly to our ability to act as a credible franchisor. One of the strengths of the franchising model is that the expertise from operating Company-owned restaurants allows McDonald’s to improve the operations and success of all restaurants while innovations from franchisees can be tested and, when viable, efficiently implemented across relevant restaurants. Having Company-owned and operated restaurants provides Company personnel with a venue for restaurant operations training experience. In addition, in our Company-owned and operated restaurants, and in collaboration with franchisees, we are able to further develop and refine operating standards, marketing concepts and product and pricing strategies that will ultimately benefit McDonald’s restaurants.

As highlighted in the 2018 financial reports, company-owned restaurants are important for a series of reasons:

  • Credibility as a franchisor: how can you teach others how to run a restaurant if you don’t run it yourself?
  • Experimentation: company-owned restaurants enable McDonald’s to test things quickly, and roll out only when they have proven to work on the company’s owned restaurants to the franchised restaurants.
  • Training: company-owned restaurants also act as training venues for franchised restaurants.
  • Innovation: as McDonald’s has full control of its owned restaurants it can freely innovate, and bring these processes to other franchised restaurants. So that processes can be reviewed and improved periodically
  • Control: the company-owned restaurants guarantee complete control of processes, innovation , and standards that can be applied elsewhere.

Understanding the economics of the franchised business model: a $41 billion-dollar commercial real estate company

As reported on McDonald’s financial statements:

Revenues from conventional franchised restaurants include rent and royalties based on a percent of sales along with minimum rent payments, and initial fees. Revenues from developmental licensees and affiliate restaurants include a royalty based on a percent of sales, and generally include initial fees upon the opening of a new restaurant or grant of a new license. Fees vary by type of site, amount of Company investment, if any, and local business conditions. These fees, along with occupancy and operating rights, are stipulated in franchise/license agreements that generally have 20-year terms.

Therefore, a good chunk of the revenues coming from McDonald’s franchisees comes from rent and royalties.

As further explained in McDonald’s financial statements:

Under McDonald’s conventional franchise arrangement, the Company generally owns the land and building or secures a long-term lease for the restaurant location and the franchisee pays for equipment, signs, seating and décor. The Company believes that ownership of real estate, combined with the co-investment by franchisees, enables us to achieve restaurant performance levels that are among the highest in the industry.

mcdonald's-real-estate-commercial-property

Source: McDonald’s financial statements 2021

To have an idea of how big is McDonald’s real estate business, as of 2021 the company reported over $41 billion in property and equipment (without counting accumulated depreciation and amortization), which makes it a mammoth commercial real estate owner.

This commercial real estate portfolio, well places McDonald’s among the largest real estate companies in the world!

Key highlights from McDonald’s business model

  • McDonald’s uses a heavy franchised business model . As of 2018, the company had 93% of total restaurants as franchising.
  • Its long-term target is 95% of franchised restaurants worldwide.
  • Even though revenues have decreased since 2013, it’s important to understand this is part of the transition to a heavy-franchised business model .
  • Indeed, according to McDonald’s financial reports in 2018 Franchised margin dollars represented about 85% of the combined restaurant margins in 2018, about 80% in 2017, and about 75% in 2016.
  • Therefore as McDonald’s business model primarily shift toward a heavy-franchised model we might expect this effect of reduced revenues and increased margins.
  • That is also due to how revenues are reported for each segment
  • Although company-operated restaurants have higher revenues compared to franchised restaurants, they contribute less to the company’s gross margins and net income.
  • It’s important to understand the key difference between McDonald’s company-owned restaurant business model vs the McDonald’s franchised restaurant business model .
  • McDonald’s can be considered a restaurant business in the McDonald’s company-owned side of the business.
  • However, it can be considered a mammoth commercial real estate company on the franchising restaurant side of the business. Indeed, in 2018, McDonald’s reported a cost of over $37 billion in property and equipment, which makes it one of the largest commercial real estate companies on earth.

Summary of the McDonald’s business model

  • McDonald’s operates a heavy-franchised business model , where most stores are franchisees. 
  • This strategy enables McDonald’s to amplify at maximum its distribution .
  • McDonald’s keeps control over the land leases on top of which new restaurants are built. In this way, it can keep control (without having a take in it) of the standards for franchised restaurants. 
  • Keep small numbers of operated stores for product development, workflow development, experimentation, and testing, before rolling things up at scale 
  • McDonald’s combines the Speedy System (operational efficiency), which today is amplified through the use of automation, combined with franchising operations for larger distribution , and a small set of operated stores for product development and innovation . All the while, controlling the lands on which McDonald’s are built so that while franchisees are independent, they have still to adhere to McDonald’s standards. 

Other resources: 

  • Successful Types of Business Models You Need to Know
  • Business Strategy: Definition, Examples, And Case Studies
  • What Is a Business Model Canvas? Business Model Canvas Explained
  • Blitzscaling Business Model Innovation Canvas In A Nutshell
  • What Is a Value Proposition? Value Proposition Canvas Explained
  • What Is a Lean Startup Canvas? Lean Startup Canvas Explained
  • What Is Market Segmentation? the Ultimate Guide to Market Segmentation
  • Marketing Strategy: Definition, Types, And Examples
  • Marketing vs. Sales: How to Use Sales Processes to Grow Your Business

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McDonald’s management lays out 2021 strategic priorities

McDonald's food and operations

CHICAGO — Maximizing marketing, committing to the core menu, and doubling down on digital, delivery and drive-thru are the key pillars of McDonald’s growth strategy in the year ahead. Christopher J. Kempczinski, president and chief executive officer of McDonald’s Corp., laid out the fast-food company’s priorities during a Jan. 28 conference call.

“Our significant marketing investment remains a true growth driver,” he said. “We're improving creative effectiveness and leaning into social and digital to drive customer engagement. Teams remain focused on the right balance of sales activation with brand building as we work to optimize marketing returns.”

The core menu items represent roughly 70% of food sales across McDonald’s top markets, driving growth and profitability even during a challenging year, Mr. Kempczinski said. Last year, the company introduced a bakery line in the United States, and it plans to improve its chicken sandwich offerings globally, he said.

“What's important is that our approach to our menu is thoughtful and judicious,” he said. “We've seen significant benefits with our streamlined menus and reduced complexity. New items must earn their place on the menu.”

McDonald’s investments in digital, delivery and drive-thru were the “difference maker” during the pandemic and are central to the company’s efforts to create a faster, easier and better customer experience, he said. Digital sales exceeded $10 billion, or nearly 20% of systemwide sales, in 2020 across the top six markets.

“We’re moving aggressively to bring My McDonald’s with mobile ordering, payment, delivery, rewards and fun promotions like digital calendars to our customers as soon as possible,” Mr. Kempczinski said. “We’re on track to have elements of My McDonald’s across our top six markets by the end of 2021, featuring loyalty programs in several of those markets, including a US loyalty launch later in 2021.”

Over the past four years, McDonald’s has expanded the number of restaurants offering delivery to nearly 30,000, he added. To improve drive-thru service times, the company has invested in staffing, positioning and order assembly.

“While each pillar will further extend our leadership, what’s especially powerful is the exponential impact when all three pillars come together,” Mr. Kempczinski said. “Famous orders platform in the US is a prime example. In the fourth quarter, we featured favorite menu items of Latin music icon J Balvin and classic holiday characters, including Santa Claus and the Grinch. With exclusive deals on our app, customers rediscovered iconic core menu items like Big Macs and Egg McMuffins and tried new items like cinnamon rolls.”

The past year was among the most difficult McDonald’s has seen, he said, referring to the pandemic, economic downturn and societal challenges that occurred. Results for the quarter and year reflected sales declines in international markets as a result of COVID-19 resurgences and government restrictions that were partly offset by a stronger operating performance in the US market due to higher-sales-driven restaurant margins. The company also recorded higher selling, general and administrative expenses, higher restaurant closing costs and lower gains on sales of restaurant businesses.

McDonald’s net income for the full year ended Dec. 31, 2020, totaled $4.73 billion, equal to $6.31 per share on the common stock, down 21% from $6.03 billion, or $7.88, the year before. Revenues for the year tumbled 10% to $19.21 billion from $21.36 billion the prior year.

Fourth-quarter income was $1.38 billion, equal to $1.84 per share, declining 12% from $1.57 billion, or $2.08, in the prior-year quarter. Quarterly revenues slid 2% to $5.31 billion from $5.43 billion the year-ago period.

Global comparable sales declined 7.7% for the year and 1.3% for the fourth quarter.

“While there were challenges across markets, some of our larger markets achieved positive comp sales for the full year, including the US, Japan and Australia, and that was on top of strong momentum coming into 2020,” Mr. Kempczinski said.

Comparable sales in the US market increased 5.5% for the fourth quarter, driven by growth across all major dayparts, said Kevin M. Ozan, executive vice president and chief financial officer.

“Dinner continued to be our leading daypart with strong sales of core items as customers keep coming back for familiar favorites,” Mr. Ozan said.

Value deals and the return of the McRib contributed to momentum, he added.

“In the US, sales comps continue to be strong and are expected to be up high single digits with continued growth across all dayparts and assisted by consumers receiving government stimulus checks,” Mr. Ozan said.  

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How 'purpose-driven' marketing plays into mcdonald's new long-term strategy.

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The “Accelerating the Arches” approach, unveiled Monday, is broken into three sections that begin with M, C, and D, which are, of course, the first three letters in the company’s name and the letters in its ticker symbol.

“Maximize our Marketing” includes ads featuring feel-good stories showcased on a national scale along with localized buys, plus updated colorful packaging set to be used globally.

“Commit to the Core” is a confirmation that the chain will stick with its core menu items. McDonald’s also confirmed it will bring out a new crispy chicken sandwich in the U.S. in 2021, something customers and competitors have been waiting for.

And “Double Down on the 3 D’s (Digital, Delivery and Drive Thru)” is a declaration by McDonald’s to improve upon its digital tools, including a pilot test of a new loyalty program. Plus, it’s focusing more on delivery and drive-thru, which have taken on added importance during the coronavirus pandemic.

The strategic plan was introduced on the heels of solid third-quarter results. With the ever-changing impact of COVID-19 in mind, McDonald’s forecasts system-wide sales growth in the mid-single digits for 2021 and 2022, with next year’s growth pegged as a comparison to 2019, rather than 2020.

“In countries around the world, we have seen customer behaviors change at an unprecedented pace over the last several months,” President and CEO Chris Kempczinski said in a statement. “We believe this presents an opportunity to do something special as we write the next great chapter of McDonald’s.

The investor presentation, given virtually on Monday morning by Kempczinski and others, comes just over a year after his predecessor, Steve Easterbrook, was fired when the company found out about a relationship he was having with an employee.

While McDonald’s is laying out its strategic framework during a successful run for the chain, it faces issues including protests by restaurant workers who say the chain didn’t do enough to protect them from COVID-19, discrimination lawsuits, and a prolonged organized effort pushing for higher wages across the fast-food industry. McDonald’s is often called out by critics as an example of a company that could do more for its own employees, suppliers and others with connections to the chain, such as employees at franchised locations.

MORE ON MARKETING

Earlier this year, McDonald's announced that it had a “ sizable marketing war chest ” of $200 million to spend in the second half of 2020. And it's using those funds in a few different ways. 

McDonald’s plans to continue the “Famous Orders” promotion it has been running in the U.S., which so far has featured favorite meals of Travis Scott and J Balvin. It hasn’t yet said which celebrities will follow.

Its newest campaign is a series of purpose-driven ads from Wieden+Kennedy New York called “Serving Here,” introduced Monday, which will be accompanied by full-page letter ads from Kempczinski and local franchisees in more than 110 U.S. newspapers.

“Customers today want to know the brands they love share their values and serve as a force for good in the world,” Alistair Macrow, McDonald’s global chief marketing officer, said in a statement. “Earning their trust is about acting first, and then communicating. We’re raising our marketing ambition by telling clearer, more effective stories that articulate the impact we have in the communities we serve, and more broadly what we stand for as a brand.”

That feel-good feeling is also meant to boost visits to its restaurants. McDonald’s aim, Macrow said, is “to move beyond brand engagement to brand advocacy—when people feel so good about visiting McDonald’s, they invite others to join them.”

New packaging rolling out globally by 2022 playfully hints at the items tucked inside, such as imagery suggesting bubbles on the side of a cold drink cup or melting cheese dripping on a Quarter Pounder with Cheese box. It comes after the company updated its visual identity in work done with Turner Duckworth.

business plan for mcdonalds

CHICKEN IS CORE

Core menu items, such as the Big Mac, Quarter Pounder, Chicken McNuggets and fries, are responsible for about 70% of food sales across McDonald’s top markets, so it knows that focusing on those types of items makes financial sense. In burgers, McDonald’s plans include new toasted buns and an updated grilling technique.

And the home of the Big Mac acknowledges chicken is growing faster than beef. A new crispy chicken sandwich is set to debut in the U.S. in 2021. Meanwhile, rivals are already selling plenty of fried chicken sandwiches. Chick-fil-A continues to grow rapidly as does Popeyes, following the 2019 introduction of its hit sandwich. Rivals such as Wendy’s updated their chicken sandwiches before McDonald’s. The Golden Arches has been trying to stand out with other products like the spicy McNuggets it offered earlier this year, and chicken breakfast sandwiches.

SPEEDIER DRIVE-THRU

After trimming an average of 30 seconds off of drive-thru service times in its largest markets over the past two years, McDonald’s has tests in place to make the drive-thru an even faster process. It’s working on automated order taking, an express lane for digital order pickup and a restaurant that offers only drive-thru, delivery and carryout, eliminating the dining room space (which is basically how thousands of U.S. restaurants have been operating for months due to the pandemic). In the U.S., nearly 95% of the roughly 14,000 restaurants have a drive-thru, which has been a key differentiator for all operators during COVID-19.

'SERVING HERE'

The “Serving Here” campaign includes four national TV spots, online video, radio and streaming audio spots, print, out-of-home ads, custom content and paid social. The 60-second anthem spot “Here” shows shots of everyday life and at first feels as though it could be anything from a politician’s ad for unity to an ad for an idealistically planned community. More than 20 seconds go by before it’s clear that the spot is one from McDonald’s.

“Everything Changes” shows the story of a family in which one son has cancer, and how his family, including his brother, get support from Ronald McDonald House Charities. 

“Doors” focuses on farming. “As America grows and grows, the number of farmers shrinks and shrinks,” a voiceover says, as potato farmer Josh Bunger is shown going about his routine.

And “Good Neighbors,” as its title suggests, shows neighborly acts including when McDonald’s provides food to first responders. While it does not mention the pandemic, the people serving food to firefighters “in times of need” are shown wearing face coverings.

Jessica Wohl writes for Crain's sister publication  Ad Age.

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How To Write a Business Plan for McDonald's Franchisee in 9 Steps: Checklist

By henry sheykin, resources on mcdonald's franchise.

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Are you considering owning a McDonald's Franchisee? As of 2020, McDonald's is the top-ranked fast-food chain in the United States, with $40.41 billion in revenue.

But before you jump in to start your franchise, there are several key steps you must follow to ensure your success. Follow this nine-step checklist to create a solid business plan that will help you launch and maintain a thriving McDonald's Franchisee.

Conduct Market Research

  • Analyze the Competition
  • Determine the Target Audience
  • Assess the Financial Requirements
  • Create a Detailed Budget
  • Investigate the Legal and Regulatory Requirements
  • Evaluate the Success Rate of Other Franchises
  • Develop a Marketing Strategy

Identify Potential Locations

By following these steps and creating a solid business plan, you will be well on your way to owning a successful McDonald's Franchisee. Good luck!

Before starting any business, it is crucial to understand the market and identify opportunities and challenges. The same applies to McDonald's Franchisee. To start this business, you need to be familiar with the latest trends and consumer preferences in the fast-food industry. This is where market research comes in.

Conducting market research involves gathering data about your potential customers, competitors, and industry trends. It helps you create a structured approach to understanding the market, which is essential to the success of your franchise. Here are some steps to follow when conducting market research for McDonald's Franchisee:

  • Identify Your Target Market: It's important to know who your target audience is, what their needs are, and how you can fulfill them. You can identify your target market by analyzing demographics such as age, income, and location. This data can be found through online resources or by surveying potential customers.
  • Analyze the Industry: Look at trends in the fast-food industry. What are the emerging technologies, popular menu items, and marketing strategies? This information will help you stay ahead of your competition and develop an innovative approach to your business.
  • Research Competitors: Identify your competition. What is their market share? What are their strengths and weaknesses? This will help you develop a strategy to differentiate your business from your competition.
  • Understand Your Local Market: Analyze your local market to identify potential locations for your franchise. Factors such as population density, traffic patterns, and local demographics can have a significant impact on the success of your franchise.
  • Use online resources such as Google Trends, social media analytics, and industry reports to gather data about your market.
  • Consult with experts in the food industry and gain valuable insights about your target audience and market trends.
  • Consider surveying potential customers to learn more about their preferences and needs.

Conducting market research may seem daunting, but it's an essential step in starting any business. It will help you make informed decisions about your franchise opportunity, increase your chances of success, and ultimately drive profit. Once you've collected enough data, you can move on to the next step - analyzing the competition.

Analyze The Competition

Competitive analysis is a crucial step that helps you understand your competition and how you can stand out. McDonald's franchisee business is no exception; you need to know your competitors and what they are doing to stay ahead of the competition.

1. Identify Your Competitors: First, you need to know who your competitors are. Start with a list of the top-performing fast-food restaurants in the area. Visit their locations to get an idea of their business model, menu offerings, pricing, and customer service. Record this information and use it to create a competitive analysis chart.

2. SWOT Analysis: Conduct a SWOT analysis of your competition. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. By analyzing your competitors' strengths and weaknesses, you can figure out how to excel in areas where they are lacking. Your goal is to create a unique selling point for your McDonald's franchisee that sets you apart from your competitors and appeals to potential customers.

3. Determine Their Price Points: Check the prices of your competitors. It will help you understand their pricing strategy and how they compete in your area. You don't want to undercut your competitors too heavily, but you also don't want to price yourself out of the market.

  • Pay attention to customer reviews on websites like Yelp and Google. This will give you a good idea of what customers like and don't like about other fast-food restaurants in the area.
  • It's crucial to know your competition's strengths and weaknesses, but don't forget to focus on your own strengths and weaknesses as well. This will help you understand how to improve your offering and stand out from the crowd.

4. Explore Their Marketing Strategies: Analyze your competitors' marketing strategies. What channels are they using to reach customers? What types of content are they creating? How are they handling social media? Collect this information and use it to create your marketing plan.

5. Customer Service: Lastly, examine the customer service delivery of your competitors. Visit their locations, observe the interactions between staff and customers, and note their level of service. Customer service is a critical factor in building a business's reputation and attracting loyal customers.

By analyzing the competition through these steps, you can develop a business strategy that will help you stand out from competitors in your area.

Determine The Target Audience

Before you start planning out how to run your McDonald's franchise, it's critical to determine your target audience. Who are the people that you want to attract to your restaurant? By defining your target market, you can tailor your menu options, prices, and promotions to meet their specific needs and preferences. This step is essential because it can help you to attract loyal customers and build a strong reputation for your business.

To determine your target audience, you need to research your local population and demographics. You should take into account factors such as age, gender, income level, education, and lifestyle preferences. For example, if you are located near a university, your target audience may be college students and young adults who are looking for affordable fast food options. Alternatively, if you are in a more upscale location, your target audience may be families with children who are looking for a family-friendly dining experience.

Tips for determining your target audience:

  • Research local demographics and population data to identify your target market.
  • Consider what kind of dining experience and menu options would appeal to your target audience.
  • Think about what promotions and advertisements would grab their attention.
  • Use surveys or focus groups to gather feedback from potential customers.

Once you have identified your target audience, make sure that your menu and pricing strategy align with their needs and preferences. For example, if your target market is families with children, you might want to offer a range of kid-friendly meals and promotions that cater to their needs. Alternatively, if your target audience is busy professionals, you may want to focus on offering healthy and convenient meal options that can be eaten on-the-go.

Determining your target audience is an essential step in writing a business plan for a McDonald's franchise. It can help you to tailor your operations and marketing efforts to attract the right customers and build a strong reputation for your business. Take the time to research your target market and develop a strategy that meets their needs and preferences.

Assess The Financial Requirements

Starting any business requires a significant financial commitment, and a McDonald's franchise is no exception. It's important to carefully assess the financial requirements associated with opening a McDonald's franchise to avoid any surprises along the way. Here are some key considerations to keep in mind:

  • Franchise Fee: The initial franchise fee for a McDonald's franchise ranges from $45,000 to $2.7 million depending on the location and size of the facility. This must be paid upfront, and the funds are non-refundable.
  • Equipment and Supplies: The cost of equipment and supplies varies widely depending on the size and complexity of the facility. Purchasing all of the necessary equipment and supplies could cost hundreds of thousands of dollars.
  • Real Estate: The cost of real estate will depend on the location and the size of the facility. Finding the right location is critical to the success of a McDonald's franchise, so it's important to budget accordingly.
  • Operating Expenses: There are many ongoing expenses associated with operating a McDonald's franchise, including rent, utilities, payroll, marketing, and insurance. These expenses can add up quickly, so it's important to factor them into your budget.
  • Working Capital: Starting a new business usually requires a significant amount of working capital to cover expenses until the business is profitable. Plan to have enough working capital available to cover at least the first six months of operation.
  • Consider securing financing from a bank or other financial institution to help cover the initial costs associated with starting a McDonald's franchise.
  • Work with a financial planner to create a budget and establish a solid financial plan for your franchise.
  • Be sure to carefully review the McDonald's Franchise Disclosure Document, which outlines all of the financial requirements associated with owning a McDonald's franchise.

Create A Detailed Budget

One of the most crucial steps when starting a franchisee is creating a detailed budget . This will give you an idea of the costs involved in starting and running your franchisee. It will also help you determine how much capital you need to raise.

Here are some important things you need to consider when preparing your budget:

  • Start-up costs: These are the costs you'll incur when setting up your franchisee, including the initial franchise fee, legal fees, lease deposit, and equipment purchase or lease. It's important to factor in all of these costs to determine your initial investment.
  • Operating costs: These costs are associated with running your franchisee on a day-to-day basis, including rent, utilities, supplies, and employee salaries. Make sure to account for all of these expenses when creating your budget.
  • Marketing expenses: You'll need to invest in marketing your franchisee to attract customers. This includes advertising, promotions, and events. Factor in these costs when creating your budget.
  • Contingency fund: It's always good to have a contingency fund in case of unexpected expenses or emergencies. This should be around 10-15% of your budget.
  • Use a spreadsheet or budgeting software to keep track of your budget.
  • Don't forget to account for taxes when creating your budget.
  • Do some research to find out what similar franchisees are spending on their budgets.
  • Be realistic when setting your budget and don't underestimate your expenses.
  • Review your budget periodically and make adjustments as necessary.

Creating a detailed budget may seem like a daunting task, but it's essential to the success of your franchisee. It will help you identify potential financial hurdles and ensure that you have the necessary capital to run your franchisee successfully.

Investigate The Legal And Regulatory Requirements

When starting a McDonald's franchisee, it is important to investigate the legal and regulatory requirements of operating the business. The legal requirements vary by location, and it is the responsibility of the franchisee to comply with the laws and regulations of their area.

One of the first steps in investigating the legal requirements is to consult with a lawyer or legal advisor . They can provide valuable information on the legal and regulatory requirements for owning and operating a McDonald's franchisee. They can also assist in the preparation of legal documents, like a franchise agreement.

Another important aspect of investigating the legal requirements is to obtain all necessary licenses and permits . Most municipalities require business owners to have a business license, which allows them to operate a business legally. In addition, a McDonald's franchisee may require permits for things like signage, food handling, and outdoor seating, depending on the location.

  • Contact your local business development center or commerce department for information about the required permits for starting a McDonald's franchisee in your area.
  • Make sure to obtain all necessary licenses and permits before opening your business to avoid fines and legal trouble.

The legal requirements for owning a McDonald's franchisee also include compliance with the franchise agreement. This agreement outlines the terms and conditions for owning and operating the franchise and protects the interests of both the franchisor and the franchisee. It is essential to review the franchise agreement carefully and seek legal advice before signing it.

Finally, franchisees must also comply with all relevant employment laws and regulations . This includes things like minimum wage requirements, overtime pay, and workplace safety standards. It is important to consult with legal counsel or human resources professionals to ensure compliance.

  • Keep up to date with any changes to employment laws and regulations to ensure continued compliance.
  • Implement policies and procedures to ensure workplace safety and avoid potential legal issues.

Investigating the legal and regulatory requirements of owning and operating a McDonald's franchisee is an important step in the process. By seeking legal advice, obtaining licenses and permits, and complying with the franchise agreement and employment laws, franchisees can avoid legal trouble and ensure a successful business venture.

Evaluate The Success Rate Of Other Franchises

One of the critical steps in starting your McDonald's franchisee is to assess the success rate of other franchises . You don't want to be in the dark about how your franchisee will fare. Hence, before investing your money and time, make sure that you know what you are getting into.

Here are some tips to evaluate the success rate of other franchises:

Do your research:

Attend training programs:.

Once you have done your research and training, you can compile valuable information that will help you evaluate the success rate of other McDonald's franchisees. You can use this information to determine how to make your franchisee successful.

One way to evaluate other franchisees is to examine their financial statements. Analyze their revenue, expenses, profits, and losses. Compare their results to the industry average and see how they stack up against their competitors in the same area. This information will help you determine the potential profitability of your McDonald's franchisee.

Another way to evaluate the success of other franchisees is to look at customer feedback. What do their customers say about their food, customer service, cleanliness, and ambiance? By evaluating customer feedback, you can identify any areas to improve in your franchisee.

Finally, you can evaluate the success rate of other franchisees by analyzing their operations. See how they manage their inventory, staffing, and equipment. Determine how they handle customer complaints and resolve issues. Use this information to develop your own operational systems and processes that will set your franchisee apart from the others.

Overall, evaluating the success rate of other franchises is crucial to the success of your McDonald's franchisee. By researching, attending training programs, analyzing financial statements, customer feedback, and operations, you can develop a comprehensive understanding of what makes a successful franchisee. Use this information to make informed decisions about your franchisee, ensuring its long-term success.

Develop A Marketing Strategy

After assessing the financial requirements and evaluating the success rate of other franchises, the next step to start a successful McDonald's Franchisee is to develop a marketing strategy. A marketing strategy is a plan to promote and advertise the business effectively to attract more customers and increase sales. Here are some important steps to consider when designing a successful marketing strategy:

  • Determine target market: Identify the ideal customer for the McDonald's Franchisee. Analyze their preferences, needs, and behaviors to create marketing messages that meet their expectations.
  • Create a unique selling proposition: Develop a unique selling proposition that differentiates the McDonald's Franchisee from its competitors. Highlight the advantages, benefits, and values that customers will receive by choosing your business over others.
  • Define marketing goals and objectives: Set specific marketing goals and objectives to achieve measurable outcomes. For example, increasing sales, expanding customer base, or launching new products/services.
  • Develop a branding strategy: Build a strong brand identity for the McDonald's Franchisee that resonates with the target audience. Use consistent branding across all marketing channels, including logos, colors, slogans, and mission statements.
  • Choose marketing channels: Select the most effective marketing channels to reach the target audience and achieve marketing goals. Consider using a mix of digital and traditional channels, such as social media, email marketing, paid advertising, direct mail, and events.
  • Create engaging content: Develop high-quality content that adds value to the audience and encourages them to take action. Use visual elements, such as images and videos, to make the content more appealing and memorable.
  • Monitor and measure results: Track the effectiveness of the marketing strategy using relevant metrics, such as website traffic, conversion rates, social media engagement, and sales revenue. Use this data to refine the strategy and improve results.
  • Keep the messaging clear, concise, and consistent across all marketing channels.
  • Use customer feedback to improve the marketing strategy and meet customer needs.
  • Stay up-to-date with the latest marketing trends and technologies to stay ahead of the competition.

By developing a comprehensive marketing strategy, the McDonald's Franchisee can attract more customers, increase sales, and gain a competitive advantage in the market.

One of the most important aspects of starting a McDonald's franchisee is identifying the potential locations where it can be established. Choosing the right location is crucial for the success of your business. Below are some tips to help you identify the potential locations:

  • Research the demographic of the area: Look for areas with a high population density and a strong demand for fast food options. Consider factors such as age, income, and lifestyle of the people in the area.
  • Check out the competition: Find out if there are any other fast food chains or restaurants in the area that may be competing for market share.
  • Consider accessibility: Choose a location that is easily accessible and convenient for customers to visit. Ensure that there is ample parking space and nearby public transportation options available.
  • Investigate the local laws and regulations: Make sure to check local zoning laws, building codes, and other regulations that may affect your ability to build or operate a McDonald's franchisee in the area.
  • Look for potential growth opportunities: Consider areas with potential for future growth and expansion. Look for locations near major highways, business districts, or tourist attractions.

Once you have narrowed down your list of potential locations, it is important to conduct a feasibility study. A feasibility study involves analyzing the potential economic, social, and legal risks associated with each location. This study will help you determine which location is the best fit for your McDonald's franchisee.

When conducting your feasibility study, consider the following factors:

  • Population density and demographics
  • Existing competition
  • Accessibility and convenience for customers
  • Cost of real estate and construction
  • Potential for growth and expansion
  • Legal and regulatory requirements

By identifying potential locations and conducting a feasibility study, you can make an informed decision about where to establish your McDonald's franchisee. Remember that the location you choose will have a significant impact on the success and profitability of your business.

Starting a McDonald's Franchisee can be a great business opportunity, but it requires careful planning and preparation. By following these nine steps, you can create a solid business plan that will improve your chances of success. Conducting market research, analyzing the competition, determining your target audience, assessing financial requirements, creating a detailed budget, investigating legal and regulatory requirements, evaluating the success rate of other franchises, developing a marketing strategy, and identifying potential locations are all necessary steps to create a thriving franchise business.

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Franchise Business Plan – McDonald’s

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McDonald’s Franchise Business Plan

  • 26 Sep, 2018

When writing a business plan for a McDonald’s franchise it is important to demonstrate the in-depth understanding of the franchise agreement as all McDonald’s restaurants must operate in line with the  “McDonald’s System” , a concept of restaurant operations that includes, among others, rights in trademarks, manuals, and other confidential business information, and operational, real estate, and marketing information. According to  IBISWorld ,  McDonald’s has 37,000 restaurants in over 100 countries , out of which  more than 90% are operated by franchisees , the remainder being company-operated stores.

When drafting a business plan for a McDonald’s restaurant, there are several issues to address:

Initial Investment

Generally, no financing arrangements are offered by McDonald’s. The company allows franchisees to open a new restaurant or purchase an existing one. The cost of opening a new restaurant generally includes a $45,000 fee, a down payment of 40% of the total costs of a new restaurant, and the average equipment and pre-opening costs of $1,611,040. The cost of purchasing an existing restaurant includes the price of an existing restaurant which varies on a wide range of factors such as sales volume and profitability and a minimum of 25% cash down payment. Joorney Business Plans  has experience in creating long-term financial projections for McDonald’s restaurants and understands the specifics pertaining to the initial investment requirements.

The company selects the site for the location of a restaurant and negotiates the location’s purchase or lease. The choice of location is based on a variety of factors such as population density, traffic patterns, and competition. However, as McDonald’s cannot guarantee that the economic and demographic factors at a specific restaurant location will remain constant, Joorney Business Plans develops in-depth local market analyses  with the expected local economic and demographic trends.

Regulations

A McDonald’s restaurant is required to comply with various local, state, and federal laws, including health and sanitation laws and menu-labeling requirements. Joorney Business Plan Writers have experience helping McDonald’s franchisees create a timeline of activities, including obtaining licenses, with a particular focus on the initial year, as per requirements of the investors and immigration services.

All McDonald’s  franchisees must complete a training program successfully before signing the franchise agreement. McDonald’s bears the cost of maintaining the Hamburger University and other training centers and provides instruction for the operation of a franchise restaurant. However, a franchisee must cover all traveling, living, and compensation expenses related to employee training. Joorney Business Plans has experience describing and developing employee plans and linking the proposed individuals’ knowledge and training to their designated roles.

If you are lucky enough to be selected as a McDonald’s franchisee,  it is the opportunity of a lifetime . You get guaranteed return on investment due to their gigantic historical performance numbers and internationally recognized brand and not many franchises can compete with that.

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McDonalds Business Strategy and Competitive Advantage

McDonald’s business strategy utilizes a combination of cost leadership and international market expansion strategies. Franchising form of new market entry is utilized within McDonald’s business strategy to a great extent. The fast food chain has one of the largest property portfolios on the world and it is a giant real estate company. McDonald’s generates only a fraction of its profit from food and drinks sold by franchisees and the majority of income is generated by renting leased property to franchisees with a considerable mark-up.

McDonalds Business Strategy and Competitive Advantage

Moreover, product and service standardization lies in the cornerstone of McDonald’s business strategy. McDonald’s restaurants offer substantially uniform menu that comprises  hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafé beverages and other beverages. [1]

It is important to note that along with maintaining product and service standardization, McDonald’s takes into account local tastes and preferences, when developing its menu and engaging in marketing efforts.

McDonald’s competitive advantage is based on the following points:

  • Cheat prices is McDonald’s main competitive advantage. The company is engaged in an extensive utilization of economies of scale to achieve the cost advantage.
  • True to ‘fast food’ format of its restaurants, McDonald’s is famous for the speed of customer service without compromising the quality of the service.
  • Universality of the taste to a great extent represents another base of McDonald’s competitive advantage. Big Mac tastes the same almost all over the world due to the use of the same ingredients in the same quantities and application of the standardized ways of cooking around the globe. Such a consistence in taste has positive implications on consumer loyalty.

In late 2020, under the leadership of new President and CEO Mr. Chris Kempczinski the fast food tycoon announced the Accelerating the Arches growth strategy which is based on the following principles

  • Gaining maximum return on marketing investments
  • Commit to the core
  • Doubling down on the 3D’s: Digital, Delivery and Drive Thru

McDonald’s Corporation Report contains the above analysis of McDonald’s business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on McDonald’s . Moreover, the report contains analyses of McDonald’s leadership, organizational structure and organizational culture. The report also comprises discussions of McDonald’s marketing strategy, ecosystem and addresses issues of corporate social responsibility.

McDonald's Corporation Report

[1] Annual Report (2021) McDonald’s Corporation

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McDonald’s Operations Management: 10 Critical Decisions, Productivity

McDonald’s operations management, 10 strategic decisions, critical areas, productivity strategy, fast-food business case study analysis

McDonald’s operations management (OM) supports the company’s position as the largest fast-food restaurant chain in the world. The business implements solutions pertaining to the 10 decision areas of operations management, such as supply chain management for the movement of ingredients. In these 10 strategic decisions, McDonald’s aims for maximum operating efficiency and productivity to facilitate business strategies that rely on low production costs. For instance, in process and capacity design, which is a part of operations management, the food service company optimizes production processes to minimize costs and enable competitive selling prices. In this regard, operations management effectiveness impacts how the goals of McDonald’s mission statement and vision statement are achieved. Operations strategy and related strategic planning determine the restaurant corporation’s overall business performance.

With the 10 decisions of operations management, McDonald’s optimizes the business to counteract competition. The company competes with Wendy’s , KFC, Dunkin’, Burger King , Subway, and Arby’s. McCafé operations also compete with Starbucks and Tim Hortons, as well as some PepsiCo beverages and Unilever ’s Bru coffee, which can be purchased online in various countries. The Five Forces analysis of McDonald’s Corporation shows that these competing firms impose a strong competitive force, which influences the company’s operations strategy and measures for optimal productivity.

McDonald’s Operations Management: 10 Critical Decision Areas

1. In the design of goods and services , the objective is to develop the best product, given the resources and limitations of the fast-food company. In this case, McDonald’s aims for high efficiency of service operations, and the standardization of goods. High efficiency and productivity in food preparation minimizes production costs. On the other hand, standardization of goods contributes to menu and product consistency and customer satisfaction at store locations. In this strategic decision area of operations management, managers are concerned with satisfying the general public, which is the target market based on McDonald’s generic strategy for competitive advantage and strategies for intensive growth . The company aims to attract everyone to its fast-food restaurants. Also, in making product design decisions, operations managers account for the product element of McDonald’s marketing mix or 4P . Thus, the strategies and tactics in the fast-food company’s marketing mix relate to this strategic decision area of operations management.

2. Quality management involves matching McDonald’s food, drinks, and service to the quality expectations and preferences of target consumers. The operations strategy applies policies and measures to ensure that such matching is achieved at company-owned, franchised, and licensed locations. Product standardization comes with quality consistency, which contributes to the business strengths identified in the SWOT analysis of McDonald’s Corporation . Such quality consistency helps the fast-food business satisfy consumers’ expectations. However, McDonald’s operations management faces the challenge of maintaining satisfactory quality despite cost minimization, which is essential for competitive selling prices.

3. Process and capacity design is a decision area that pushes operations management to optimize production processes, such as the production of intermediate ingredients used to make burgers and fried chicken. McDonald’s operations strategy maximizes the benefits of economies of scale in production processes, in order to support competitive pricing. For example, the company employs custom equipment for large-scale and high-speed food preparation. In this way, operations management achieves high efficiency in production processes and the minimization of costs at corporate facilities, hubs, and restaurants. Also, the production line method maximizes productivity and capacity utilization at McDonald’s restaurants.

4. For its location strategy , McDonald’s has various facilities that support its operations. The operations management objective in this strategic decision area is to establish and maintain locations that optimally account for access to target consumers, access to resources, the supply chain, costs, productivity, and economic variables. For example, McDonald’s production facility locations satisfy restaurants’ supply requirements. Also, company-owned, franchised, and licensed locations are established for maximum market reach. In this decision area, McDonald’s operations management involves restaurants, kiosks, and the company’s websites and mobile apps as venues. Other locations considered are those of third-party distributors or retailers of McCafé products, such as Walmart , Costco , Amazon , and Target. Through these locations or venues, the global fast-food restaurant chain reaches customers in traditional and online ways. Also, McDonald’s business structure (company structure) determines the locations of facilities and resources, including human resources.

5. Layout design and strategy aim for high efficiency in moving resources and information throughout McDonald’s business organization. For the movement of information at the fast-food company’s offices and other locations, information technology offers high efficiency with minimal drawbacks. On the other hand, at restaurants and kiosks, McDonald’s operations strategy involves layouts that maximize space utilization and productivity, rather than comfort and spaciousness. For example, kitchens are designed to match steps in food preparation. Also, many small tables are arranged to accommodate large numbers of diners at the restaurants.

6. In human resources and job design , operations management has the objective of developing and maintaining an adequate workforce for McDonald’s business development. The multinational corporation supports the staffing needs of its restaurants. For example, the company has standardized training programs for skills needed in food production and preparation. This support is in addition to the human resource policies and measures that McDonald’s franchisees and licensees implement on their own. For this decision area of operations management, individual and organizational learning are also emphasized throughout the fast-food restaurant chain. McDonald’s organizational culture or corporate culture influences human resource management programs to facilitate such learning.

7. Supply chain management aims to maintain high effectiveness and operating efficiency throughout McDonald’s supply chain. The food service company’s operations management uses information technology to inform suppliers and enable them to match their operations to the company’s supply needs. McDonald’s has a mixture of regional suppliers for highly standardized ingredients, and local suppliers for perishables. In this context, suppliers’ productivity affects the restaurant company’s productivity. With this consideration, McDonald’s corporate social responsibility (CSR), ESG, and stakeholder management strategy and other business strategies impose policies and rules for suppliers, to minimize disruptions in the supply chain.

8. In inventory management , McDonald’s operations management objective is to ensure adequate inventory for smooth business operations with minimal disruptions in resource availability. This decision area of operations management functions as an interface between the supply chain and the rest of the food service organization. Materials from suppliers pass through inventory management, or are stored for later use, depending on the requirements of the corporation and its restaurants. Inventory management effectiveness influences productivity at store locations. In this regard, McDonald’s minimizes inventory costs while supporting restaurant operations.

9. Scheduling at McDonald’s follows industry best practices, with considerations for supply chain capabilities, market conditions, and regulations. The strategic objective in this decision area of operations management is to apply schedules so that resources and assets are utilized to their full potential, while the fast-food chain satisfies its target customers. Regular schedules are used for McDonald’s corporate offices and restaurant locations. Also, seasonal schedules may be applied to support operations during spikes in market demand for fast food. Operational effectiveness is achieved by matching the schedules to the requirements of McDonald’s and its partners.

10. In maintenance , strategic decisions focus on maintaining stable operations, which relate to the stability of operations at the company’s corporate offices and stores. To maintain high productivity, McDonald’s operations management monitors the needs of its restaurants, and uses the resulting data to inform maintenance teams. Third-party service providers are also used in some situations, such as for the repair of cooking equipment and machinery. At McDonald’s hubs for material distribution, maintenance is implemented in terms of matching operational capacity and human resources to the current needs of the business organization. In this context, operations management also uses real-time monitoring and control to ensure that decisions and actions correspond to the current conditions of the food-service company. Considering the international scope of the business, the global, regional, and local trends characterized in the PESTEL/PESTLE analysis of McDonald’s Corporation influence the maintenance requirements and the tools available to maintain stable operations and high productivity.

Productivity at McDonald’s

With regard to the 10 strategic decisions of operations management, McDonald’s works toward maximum productivity in all its business areas. The following productivity metrics are some of the criteria applicable to McDonald’s operations management:

  • Order fulfillment rate (productivity at McDonald’s restaurants)
  • Stockout rate (productivity of inventory management, hubs, warehouses, and distribution facilities)
  • Timely delivery rate (productivity of deliveries, including third-party delivery services)
  • Akkaş, A., & Gaur, V. (2022). Reducing food waste: An operations management research agenda. Manufacturing & Service Operations Management, 24 (3), 1261-1885.
  • Alexander, T. (2023). Unwrapping the McDonald’s model: An introduction to dynamic social theory. The Journal of American Culture, 46 (3), 232-241.
  • Amirul, S. R., Pazim, K. H., Amirul, S. M., Mail, R., & Dasan, J. (2022). Developing and validating the qualitative labour productivity measurement in service industry. Quality & Quantity, 56 (4), 2853-2874.
  • McDonald’s Corporation – Food Quality & Sourcing .
  • McDonald’s Corporation – Form 10-K .
  • McDonald’s Corporation – Our Commitment to Quality .
  • McDonald’s Corporation – Where We Operate .
  • McDonald’s History .
  • Veiga, G. L., Pinheiro de Lima, E., & Gouvea da Costa, S. E. (2022). An efficiency-frontier based procedure to improve operations strategy. Journal of Industrial Integration and Management, 7 (03), 367-399.
  • Zhou, L., Jiang, Z., Geng, N., Niu, Y., Cui, F., Liu, K., & Qi, N. (2022). Production and operations management for intelligent manufacturing: A systematic literature review. International Journal of Production Research, 60 (2), 808-846.
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McDonald's Marketing Strategy: How McDonald's makes you love it!

Learn about mcdonald's iconic marketing strategy and advertising campaigns. read how mcdonald's aces the 4ps of marketing mix - product, price, promotion & placement..

  • overview#goto" data-overview-topic-param="brief">Brief history
  • overview#goto" data-overview-topic-param="believes">What McDonald's believes in
  • overview#goto" data-overview-topic-param="present">McDonald's as a company today
  • overview#goto" data-overview-topic-param="strategy">McDonald's Marketing Strategy?
  • overview#goto" data-overview-topic-param="iconic">Iconic Marketing Campaigns
  • overview#goto" data-overview-topic-param="burgers">Thinking beyond burgers
  • overview#goto" data-overview-topic-param="hungry">How McDonald's makes you hungry?
  • overview#goto" data-overview-topic-param="model">Franchise business model
  • overview#goto" data-overview-topic-param="key">Key Takeaways

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McDonald's is one of the world's most popular and successful fast-food restaurants worldwide. The company has a long and storied history, where its business model is widely studied and imitated.

Cars parked in front of McDonald's restaurant during night time

In this case study, we will take a closer look at McDonald’s marketing strategy that is set to help them maintain a 34.3% market share by 2026.

A brief history of McDonald's brothers

McDonald brothers franchised brochure in 1952.

Source - McDonald's Corporation

McDonald brothers Richard and Maurice McDonald found the fast food chain in 1940. 

The brothers originally operated a hot dog stand but eventually transitioned to a hamburger stand.

They developed a new and innovative business model that relied on standardized procedures, assembly-line production, and low prices. Their Speedee Service System included a 15 cents hamburgers, fries and shakes of limited menu.

In 1954, Ray Kroc became involved with McDonald’s as a franchise agent. He was so impressed with the McDonald brothers’ fast food company that he convinced them to let him expand the chain nationally.

He envisioned scaling McDonald's food with 1000+ fast food restaurants across the US alone. Ray Kroc played a crucial role in developing McDonald's business strategy to achieve this feat and beyond. He recognized the importance of creating a strong brand identity , and he made sure that McDonald's focuses on quality, convenience, and value.

The famous Golden Arches

The McDonald brothers were particular about the basic idea of its architectural design too. McDonald's invested to ensure its fast food restaurant was catchy across the driveway with its Red and White Mansard Roof design, also known as their famous Golden Arches.

Early blueprints for signature McDonald’s Red and White restaurant with Speedee road sign.

The above image shows early blueprints of McDonald’s signature Red and White golden arches with a road sign. Today these golden arches contribute to uniquely positioning their brand in the fast food industry.

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What McDonald's believes in

McDonald's corporation mission statement is -

T o make delicious feel-good moments easy for everyone .

This indicates a strong focus on being a global and accessible brand in the food and beverages industry.

McDonald’s corporate vision is -

To move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world.

This indicates a focus on profits and growth, but in a way that makes them a better version of themselves. This is evident as McDonald's is known to constantly innovate by entering new markets and experiment with products.

The present day McDonald's as a company

McDonald's success is widely studied for its guerilla marketing tricks, bundle pricing strategy and business model. The company has weathered many storms over the years, including the recent global pandemic, which forced most of its restaurants to close.

At present, it faces issues with the Russian invasion of Ukraine, as covered by Trung Phan's substack issue , yet enjoys an increase in overall sales as stated prior in the case study.

An analysis of McDonald’s marketing plan and business strategy reveals that the brand is incredibly successful.

But what about its pricing strategy for profits? 

Today, McDonald's is also extremely profitable, with its latest Q3 2022 earnings revealing a 9.5% increase in sales. Also, it enjoys a recession-proof revenue stream.

McDonald's is the world's largest restaurant chain by revenue serving over 69 million customers daily in over 100 countries in more than 40,000 outlets as of 2021. - Wikipedia

So, what makes McDonald’s business model and marketing strategies successful? 

There are several factors at play, but the key among them is how McDonald's focuses on product innovation and customer satisfaction. With this, McDonald’s is able to curate its services for its global target audience.

Let us understand their marketing mix deeper by highlighting its marketing strategies.

What is McDonald's Marketing Strategy?

McDonald’s brand positioning strategies have shaped McDonald’s to make it an approachable brand across age groups. Their digital marketing mix is designed to appeal to their target market which is looking for affordable fast food.

Product focus areas

McDonald's primarily sells food products like delicious burgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, and desserts. In response to changing consumer tastes, McDonald's has expanded its menu items to include salads, wraps, smoothies, and coffee. Its new restaurants across international markets also adapt to local food products to suit customer demands.

Let us learn more about its key marketing mix strategies across price, placement, product and promotion in the following sections.

1. McDonald’s Promotion

McDonald's leads in the fast food industry with its promotional techniques that include offers and freebies to regularly attract customers. 

For example, McDonald's offers a "Happy Meal," which consists of a main meal, side, and drink for a discounted price. They have successfully fostered brand loyalty through their McDonald's Rewards program which allows 26 million customers to earn redeemable points for free.

Its marketing plan primarily includes advertising, public relations, online ads, and direct marketing. They also utilize point-of-sale materials and sponsorships to promote its brand.

Happy Meal Toys Archives

Source - McDonald's Company Blog

2. McDonald’s Product

McDonald's product offerings include fast food items such as burgers, fries, soft drinks, milkshakes, and breakfast items. This includes some iconic menu items like Big Mac, French Fries, Christmas-themed McFlurry, Chicken McNuggets, etc. A key to McDonald's success is how it is consistent in terms of taste and quality, no matter which location you visit worldwide.

You can watch this interesting documentary on how McDonald's 'manufactures' consistent French Fries across the globe:

3. McDonald’s Pricing Strategies

McDonald’s marketing objectives include appealing to the price point of a target market that is looking for fast food service at low costs. This consists of families with children, middle-class income earners and anyone who needs less wait time for food.

Ray Kroc focused on adopting bundle price strategy, like, the Big Mac Meal, that becomes profitable when sold in bulk at low prices. This leads to an impressive 37% profit margins , which is much higher than 6-9% average QSR margins.

Today, it also focuses on self-serve kiosks and meal-based menu items to further reduce labour costs. Their pricing also follows purchase power parity to adapt to the international market segment.

For example, in India, McDonald's finally became profitable after 22 years by focusing on local tastes and spending habits of their target audience.

4. McDonald’s Placement

McDonald’s has a global presence in over 100+ countries. Their marketing strategy involves strategically placing restaurants in high-traffic locations near schools, shopping centres, and major highways. It was one of the first fast-food chains to introduce drive-thru service in 1975. 

This basic idea at the time allowed McDonald's to tap into a new market – busy people who wanted to eat on the go. Today, their drive thrust is one of the fastest in the world with a 5.11 minutes record.

Infographic: America’s Fastest Drive-Thrus | Statista

They also grabbed market share by localising their menu to the customer demands in that country. This enables them to tap into local marketing channels and create unique experience for foreign travellers from their otherwise monotonous consistency.

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Iconic Marketing Campaigns by McDonald's

McDonald’s marketing campaign don't just include Ronald McDonald or frequent discounts. Their marketing mix is includes iconic marketing strategies, partnerships, and aligning to target market demands that are today their competitive advantage.

Let's explore some of the most innovative tactics from McDonald's marketing mix -

McDonald’s Cobranding Strategy to Double Down its Reputation & Cut on the Advertising Cost

McDonald's has had a long and successful history of partnering with other brands to create mutually beneficial relationships. One of the most iconic examples, that is also its competitive advantage, is McDonald's partnership with Coca-Cola.

McDonald's fries, coke and burger.

Here, McDonald's sells Coke products in its restaurants, while Coke promotes McDonald's products in its advertising. Thus, both are promoting each other to their customer bases.

This partnership began in 1955, just a year after McDonald's was founded, and continues to this day. 

Partnership with other brands and creators that complement their fast service

McDonald's has partnered with other companies in various industries, including children's toy manufacturers for their happy meal offer, movie franchises, fashion designers, and even delivery brands like Uber Eats.

Such partnerships allow them to run exclusive products and a multi-brand experience that is complimentary in nature.

For example, McDonald's has partnered with Nike to create a line of McDonald's-branded athletic shoes.

Riding pop culture wave as marketing strategy with McInfluencers

McDonald's marketing plan includes working with pop stars and influencers to keep itself relevant with the times.

For example, Rapper Travis Scott partnered with McDonald's for an exclusive line of shoes and Travis Scott meal. A similar partnership was done with Michael jordan called McJordan which was a huge hit.

Running marketing campaign like these helps them align their brand value with the celebrity's fan base.

The Travis Scott Meal - McDonald's Official Commercial - YouTube

Showing up in movies as a marketing strategy

Just like Apple, McDonald's too uses the marketing strategy to makes movie cameos. It has sponsored many movies where their branding is carried out via product placements and featuring the golden arches.

These include The Sleeper (1973), All the President's Men (1976), Mac and Me (1988), The Flintstones (1994), Pulp Fiction (1994), The Pink Panther (2006), 13 Hours (2016), etc.

McDonald's has many documentaries made on their manufacturing processes. This includes McDonald brother and Ray Kroc founding story, with The Founder being a well-celebrated movie. The 1985 Santa Claus The Movie and McDonald's commercial is also a memorable example.

A scene snapshot from the movie 'The Founder'

Mcdonald's Green Marketing Strategies: Initiatives for making healthy food and a Sustainable Future 

Recently, the company plans to use reusable packaging to reduce paper and plastic waste that the fast food industry is notorious for.

McDonalds France Starts Reusable Packaging To Reduce Waste

The McDonald’s brand has set a goal to be completely carbon Neutral by 2025. They are also working with suppliers to source more sustainable ingredients and packaging.

Such green marketing strategy measures appeal to the present generation that is eco-conscious. Reducing its own carbon footprint helps the company achieve an alignment with SDG goals.

Ronald McDonald and McDonaldland as competitive advantage

Did you know McDonald's has its own cinematic universe?

Ronald McDonald is an iconic character that represents McDonald's brand. They have built a fictional world too called McDonaldland that features other characters like the Hamburglar, Mayor McCheese, Birdie, Grimace, the Fry Kids and the Early Bird.

Clicking photos in the famous McDonald's bench with Ronald McDonald is a childhood memory that makes McDonald's a favourite fast foods joint. These characters have movies made too as a part of McDonald's marketing plan.

Very few fast food joint are able to match the brand value created by McDonald's Corporation with mascot-like marketing strategy.

woman in black jacket sitting on yellow and red chair of McDonald's

Dissing competitor brands as marketing strategy

It's very difficult to make pricing strategy as a competitive advantage in low priced fast food industry. So such brand have to compete with each other with massive marketing budget spends, that includes - outwitting each other too!

Many people enjoy thesee public advertising rants across billboards, commercials and even tweets. McDonald's vs Burger King or 'The Burger Wars' is a well-known brand battle covered by marketing nerds and international journal for businesses worldwide.

Such tricks help both brands benefit across their target markets, give audience exposure and reduce ad spends. It makes them more recognisable and earn media attention.

Ronald McDonald eating in a Burger King outlet

McDonalds marketing strategy with jingles

McDonald's marketing by using mass media to promote its products made it even more popular in the 1960s. The famous “I’m Lovin’ It" jingle was introduced in 2003, which has helped keep the McDonald's brand top-of-mind as the favourite fast food joint for millions of consumers worldwide.

This includes a song by the same name by Justin Timberlake credited to Tortora, Batoy, Pharrell Williams and Heye creative director Andreas Forberger:

The Hamburger University as a means for excellent customer satisfaction

McDonald's takes its customer service seriously. The company believes in training their high potential employees across managers, franchise owners and executives to ensure a consistent and pleasant customer service worldwide.

Here, they team leadership principles, pricing strategy, identifying competitive advantages with respect to placement, how to improve sales volume and other business strategies.

This image is a snapshot of the Hamburger University by McDonald's Corporation

Thinking beyond burgers by venturing into new markets

McDonald's went ahead from burgers to further increase their target market segments with its famous breakfast menu and McCafe brand. The McEgg meal and McMuffin food proudcts are very popular worldwide.

Its pricing strategy fits the consumers who are looking for quick bite as they move for their work or school.

person holding a mccafe disposable cup

McCafe has proven to be an affordable alternative to expensive Starbucks coffee. The menu items are bundled such that it complements well with the breakfast menu.

How McDonald's marketing strategy makes you hungry?

The Red and Yellow colors were not randomly selected by the brand. These colors play a very important role in making you feel hungry!

Red color makes you feel an impulse and a sense of urgency. While yellow is comforting, yet energetic enough to take action.

Also, the red ketchup and mustard dips which are usually used along with fast food products also align with these colors.

McDonald's shop during night time where its logos are distinctly visible

Such color psychology tricks along with the scent of fries make you immediately hungry when you enter any McDonald's restaurant. These colors are also distinctly visible and bright during night time.

Why the franchise business model works for McDonald's

Opening new restaurants to rapidly scale was possible thanks to McDonald's franchise model. Running a franchise model isn't easy. But a strong focus on consistency and branding has made McDonald's a must read business strategy case study.

It's successful mainly due to below reasons -

McDonald's is a real estate company

McDonald’s owns most of its restaurant properties, which gives it greater control over costs and profits. This also allows McDonald’s to generate income from franchising and rent, which account for a significant proportion of its revenue.

It owns $28.4 billion worth of buildings and lands across the world!

Scale with Efficiency and Repetition

The company’s restaurants are designed for quick service and high throughput, which helps to keep costs down. McDonald's also benefits from having a relatively simple, limited menu that can be easily replicated across its thousands of restaurants worldwide.

McDonald’s Unique Refinancing Strategies During Recession

During the recession, all the banks offer loans at the lowest interest rates so that they continue to buy, and the economy recovers soon. 

McDonald's used this strategy in 2019 to their advantage and opened many global outlets. 

Refinancing helps it pay off old debts (taken at higher interest rates before the recession) from certain banks and pay them off by taking loans from other banks during the recession when the interest rates are lower.

Thus, the company makes a profit by purchasing its own shares and selling them shares again when the market recovers. 

Moreover, the surplus capital is used to acquire more franchises with its global outlets by refinancing. 

Key Takeaways from McDonald's for entrepreneurs

If you're an entrepreneur looking to venture into fast food industry, here are some major takeaways from McDonald's business and marketing strategy -

Less is more

Focus on key products and deliver them well. Do not offer too much and compromise on quality.

Build systems and processes

Focus on building systems that can work consistently and develop SOPs around them to scale.

Larger target market means more marketing budget

If you are targeting EVERYONE - be ready to finance the necessary marketing strategy to acquire customers.

Be adaptable

Figure out a way to adapt to changing customer demands, while still maintaining your core values. McDonald's is a clear example of how one can innovate with consistency.

Adpot a Bundle Pricing strategy

Study McDonald's bundle pricing strategy to club complimentary products together and offer discounts on them to increase sales.

Enjoyed reading this marketing strategy case study?

Check out  Netflix marketing strategy to know how you can make a sticky product and gain competitive advantage in red ocean target markets.

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McDonald’s Marketing Plan and Strategy Report

Executive summary of mcdonald’s marketing strategy, business mission, external situational analysis, internal marketing audit, swot analysis, marketing objectives, core strategy, mcdonald’s marketing plan, mcdonald’s action plan, reference list.

McDonald’s Corporation is the world’s largest fast food company by sales volume and retail outlets. McDonald’s operates in over 116 countries with its outlets and franchises. The company is successful and still growing fast. The company uses its marketing plan carefully when implementing its marketing strategies across its global outlets and franchises.

McDonald’s uses the strategy of Plan to Win to drive its worldwide expansion. This strategy has 5Ps that consist of price, promotion, product, place, and people. The company relies on strong strategic thrust and competitive advantage that mainly focus on its resources for implementing its marketing objectives.

McDonald’s is also one of the largest spenders on advertising. Industry analysts estimated that McDonald’s spends over $ 1.2 billion in advertising beating all other fast food companies. The kids’ advertisement and promotional strategies take the largest portion of this budget.

Despite this success, McDonald’s faces a number of challenges from unlikely sources like its customers, who complain that the company uses its advertisement messages to target kids.

Still, McDonald’s has to contend with expensive lawsuits related to obesity claims as a result of consuming its unhealthy food. In addition, there are also challenges of staff turnover, risks of food infection, and threats from competition. The company now strives to focus on provisions of healthy organic food as a response to its customers’ demands for future growth.

McDonald’s Mission Statement

“McDonald’s vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile”.

In McDonald’s annual report of the year 2010, the Vice Chairman and CEO, Jim Skinner, states that the company started to create its brand and strength throughout the globe. The CEO also accepts that the business situation during the year 2010 was tough.

The company managed to deliver its business through consumer-oriented management in order to focus its strategies and enhance its main business concentration, specifically the menu, restaurants, core values, and convenience to the customers. At the same time, McDonald’s management continued to focus on the quality of human resources and restaurants in order to enhance customer satisfaction (McDonald’s Corporation, 2010).

McDonald’s has survived all the external global conditions that may affect its operation. Consequently, the company continuously monitors the external environment, such as political risks. In over 100 countries, political situations have not stopped McDonald’s from operating its outlets or franchises.

McDonald’s is also a stable company economically for the past decades. The company has survived the global recession of 2007 and continues to make profits and introduce new ranges of products. McDonald’s also provides services and uses technology that appeals to its consumers and always strives to create positive consumer experiences in its outlets and franchises.

Thus, observing ethics with regard to claims that McDonald’s advertisement target kids and sell unhealthy foods and junk have been a source of concern for the company. McDonald’s is an industry leader; thus, competitors mainly borrow or watch McDonald’s strategies in terms of new products, technology, promotion, and investments, among others.

Marketing Mix Effectiveness

McDonald’s marketing mix is effective and strategic due to its approach. Studies have shown that McDonald’s concentrates carefully on the implementation processes of the 4Ps of the marketing mix. At the same time, the company focuses on fulfilling consumers’ needs through its innovative products and services in different outlets and franchises and enhances the relationship with stakeholders such as consumers, investors, franchisees, employees, suppliers, and the community in which it operates.

McDonald’s also strives to provide healthy food among its products, especially to children, due to claims of obesity. In this regard, the company provides the nutritional contents of its food to consumers on the packages. These concerns have enhanced the company’s competitive strategy and advantages in terms of serving low costs healthy foods (Koshuta, 2007).

However, lately, McDonald’s has suffered several lawsuits related to what consumers call unhealthy food it serves children. The claims relate to an increase in obesity among such consumers. This means that McDonald’s must improve its nutrient contents in such foods and reduce the level of calories. This is where the marketing mix of products should focus in order to create competitive advantages.

McDonald’s can use modern technology to reduce the fat contents and reduce risks of contamination by removing E. coli and salmonella. This way, McDonald’s food will result in a strong brand for the company. McDonald’s can promote reduced fat contents, risk and contamination free, and work with food safety authorities to promote its healthy food.

McDonald’s should capitalize on the strengths of products using the marketing mix strategies in order to promote healthy foods and healthy eating habits among kids.

Promotions and advertisement activities of healthy diets must reflect the above objectives of promoting a healthy diet and helping in the fight against obesity among its customers. These promotions are ethical and legal since they promote and advertise healthy diets. The company’s strategy to focus on healthy products will determine its future growth, marketing strategy, and target market, and in turn, provide the needs and wants of its customers (Story and French, 2004).

Marketing Structures and Systems

A company’s marketing structures and systems come after marketing strategies for implementation of the strategies (Gilligan and Wilson, 2007). In addition, marketing structures and systems provide the needed support during the implementation of organizational marketing activities.

Still, managers must use such systems in the processes of decision-making. These include application tools, data collection, and interpretation of data for providing factual information for both internal and external situations of the business so as to support marketing activities (Gilligan and Wilson, 2007).

McDonald’s global marketing structures and systems have enabled it to thrive and drive its global business agenda. McDonald’s calls it franchises as systems. Franchises are responsible for the international presence of McDonald’s in over 100 countries. The company is successful because of its marketing structures and systems that offer what consumers want.

McDonald’s SWOT analysis shows that the company has a higher ranking in the global fast food industry. It gets its competitive advantage from locations such as airports, theme parks, busy roads, and in Wal-Mart stores. McDonald’s also has quality food products, such as quality chicken products, beef, and pork for its products.

McDonald’s only uses brand names and supplies nutritional information on the food packages (Adcock and Halborg 2004). McDonald’s also offers its products at low cost in order to appeal to a wide target market. The company has relied on its strategy of Plan to Win and franchise systems in order to maintain its first position and global presence in the fast food industry.

McDonald’s weaknesses include high staff turnover. This has increased its staff acquisition and training costs. McDonald’s also did not pass the pizza test. This failure resulted in limited competition among pizza providers. The issue of obesity is fast affecting the fast food industry, and McDonald is the first casualty.

However, McDonald’s does not focus much on organic food. Occasionally, customers have expressed their concerns regarding the quality of food in McDonald’s outlets and franchises around the globe. In addition, McDonald’s only provides certain fast foods and soft drinks. This act of specialization means that the company cannot serve outside its menu; thus, it cannot offer other varieties of foods.

McDonald’s has many opportunities for provisions of fast food. McDonald’s can still franchise with several retailers. It also has opportunities of providing healthy and organic food as consumers demand in fights against obesity concerns among its customers so as to reduce possible lawsuits.

McDonald’s can also support social responsibilities through support for its farmers and encourage the conservation of the environment. The company can enhance its use of promotional channels in its restaurants, provide playgrounds for kids, increase partnerships with beverage companies, and create locations with Wi-Fi for customers.

McDonald’s encounters many threats. The advertisement experts criticize the company for targeting small children and adults alike with its multi-billion advertisement campaigns. Likewise, the company is also under constant threats of lawsuits because of serving addictive and unhealthy foods, mainly to children. It is impossible for McDonald’s to serve healthy foods to fit various customers’ nutritional needs. In a number of cases, there are risks and issues of food contamination, specifically with e-coli.

This has ruined the company’s reputation in some franchises and outlets. McDonald’s also faces competition from other fast food restaurants, and consumption also depends on economic stability. The main competitors of McDonald’s include Burger King, Wendy’s/Arby’s, Subway, Pizza Hut, and Yum! Brands (Gupta, 2010).

Strategic Thrust

The main strategies are also a company’s strategic thrusts. Strategic thrust offers organizations basic steps in order to undertake strategic actions and functional strategies. Strategic thrusts may work independently or may work together so as to reinforce others (Ferrel and Hartline, 2005).

McDonald’s applies a strategic thrust of concentrated growth. Concentrated growth focuses on enhancing sales of the existing products and services of McDonald’s using its outlets and franchises. At the same time, the strategy addresses issues of price, value, and quality as consumers express their concerns.

This strategy reduces risks and costs to McDonald’s and creates stable business operations. However, this strategic thrust of concentrated growth may not serve the company in unstable business conditions and where there are rapid changes (Baker, 2008).

McDonald’s also focuses on market development. The approach emphasizes the growth of the company through using its existing fast foods and soft drinks and marketing them in related areas, opening new outlets, franchises, and increasing advertisement and promotional strategies.

The company also focuses on product development for both existing and target markets. For instance, McDonald’s has been able to introduce a range of products and services so as to serve its wide target markets. In addition, the company relies on innovation and technology in order to reduce fat content and calories in some of its menus as customers demand.

Strategic Objectives

Andy McKenna, the company Chairman, puts it that McDonald’s has a Plan to Win strategy. The company has used this strategy to carry out its strategic objectives for the past eight years. McDonald’s strategically implements its marketing plan using the Plan to Win strategy, which has the core objectives and strategies of its marketing agenda.

These are the 5 Ps of price, promotion, product, place, and people. McDonald’s executives have noticed the potential and importance of every P, and the company plans to apply all the Ps in its marketing plan. McDonald’s is using this strategy in order to focus on its right priorities, such as keeping its brand relevant and meeting the needs of ever-changing customers, more so with regard to healthy food.

The Plan to Win strategy enables McDonald’s to be decisive, flexible, and show strong business orientation so as to meet the needs of its customers, especially with regard to obesity and health issues. McDonald’s believes that the strategic objective of the Plan to Win strategy has worked well and will continue to do both in the domestic and global markets in the coming years (McDonald’s Corporation, 2010).

Target Market(s)

McDonald’s target market is wide and broad, covering every segment of the consumer demography. Thus, McDonald’s target consumers of all ages, generations, nationalities, income, race, gender, and family with its global presence and franchises approach. The company offers low-cost and high-cost products that meet its wide markets.

Competitor Targets

McDonald’s competitors include Wendy’s/Arby’s, Burger King, Subway, and Yum! Brands, among others. Some of these competitors do not focus on the entire market segment as McDonald’s does. For instance, Burger King has been targeting adults of 18 years to 35 years old, as Wendy’s/Arby’s target consumers of 24 to 49 years, instead of its previous strategy of targeting 18 to 24 years consumers (WSJ, 2008). In addition, most of these competitors’ target markets have limits in terms of geographical coverage.

Wendy’s/Arby’s is in 33 countries. The company focuses on providing varieties of fast-food products and services. McDonald’s focuses on all segments of the market. Consequently, it has reduced its prices to cater to such consumers and gain a competitive advantage. However, Wendy’s/Arby’s focuses on the quality of its products instead of prices. The company has products like Garden Sensation that appeal to diet-conscious consumers (Gupta, 2010).

McDonald’s has been able to challenge its competitors using expansion strategies across the globe through franchises. However, a competitor like Wendy’s/Arby’s focuses its expansion strategy in Latin American countries. The company also seeks joint ventures and uses acquisition strategies.

KFC focuses on profits and sales growth. In addition, just like McDonald’s, the company also focuses on customer service. KFC also tries to change its menus to match those of the countries it serves and caters to different ethnic communities. This is to enhance its market share. KFC targets emerging markets and highly populated areas like shopping malls.

Subway also has a strategy of targeting international markets. Subway also focuses on healthy food in reaction to customers’ demands. The company has established healthy brands of sandwiches as a form of fight against obesity among children. The company believes that health-conscious consumers are here to stay (Gupta, 2010).

Competitive Advantage

Like any other company, McDonald’s also seeks competitive advantage. Competitive advantage has enabled McDonald’s to hold the leading position in the fast food industry since its inception. The focus of the company has been brand recognition and a global presence through franchises and outlets. The company is consistent with its advertisement and has an innovative capacity to create a low-cost menu of $ 1.

It is also focusing on introducing healthy options consisting of salads in its menus so as to reflect the changing taste of consumers. Recently, the company introduced a low-cost coffee product that aims at competing with Starbucks in the coffee market. These approaches keep McDonald’s competitive advantage stronger than competitors (Ferrel and Hartline, 2005).

McDonald’s attention is on managerial and organizational activities that aim at creating an integration of the company. The team focuses on a common goal that aims at creating value for the organization. Therefore, change and learning are necessary in order to cater to customers’ trends, developments in technology, and innovation in the company (Hooley et al, 2007). McDonald’s concentrates on hiring and creating management experts and enhances organizational behavior.

The company also looks into areas of technology, structure, and assets that enhance competitive advantage. McDonald’s uses its resources, technology, and financial resources to create a competitive advantage in the fast food industry.

McDonald’s focuses on a wide target market with global outreach and creates low-cost products, which has improved its competitive advantage in the market. The company’s vision of serving fast food to busy consumers has seen it spread throughout the world. The provision of quality products and services has remained defining factor in McDonald’s competitive advantage. These are advantages that are unique to McDonald’s only; thus, it is difficult for competitors to imitate them (Bateman and Snell, 2004).

McDonald’s deals in fast food that consists of hamburgers, chicken, French fries, soft drinks, coffee, milkshakes, salads, desserts, and breakfast. These products provide varieties for McDonald’s wide target consumers. McDonald’s serves these products in various quantities and quality, and prices.

The company has unique designs for its packaging that reflects its brand and identity. Product packaging is a strategy that McDonald’s uses in its products to implement its marketing mix (Jobber, 2010). The company knows the effect of packaging messages to all its customers.

Consequently, the packaging of fast food products must thrust McDonald’s brand. The fast food industry is competitive; thus, McDonald’s has to convince customers with its products within a short period. Products packaging offers convenience to consumers who buy fast food for home consumption or traveling. Most products experience repeat purchases due to packaging. McDonald’s has strived to enhance its fast food products and coffee for the convenience of its consumers.

McDonald’s French fries curve.

Consumers know McDonald’s for its French fries. However, the product had been on the decline stage and was no longer generating significant revenue (Perner, 2008). Consequently, McDonald’s reacted by revitalizing and repositioning it through a new product known as Shake Shake Fries. In addition, the company added new varieties to it, such as spices mix. This approach ensured that French fries remained relevant in its menu for revenue growth.

Although McDonald’s has several outlets and franchises, it strives to maintain the same quality and tastes of its products across the globe. McDonald’s can claim that all its products will be of the same quality and service always across the globe. The leading fast food company has demonstrated this over a number of years.

Consequently, customers can trust McDonald’s brands. This allows consumers to know what to expect from McDonald’s products and services whenever they make purchases. This flexibility allows consumers to trust McDonald’s to provide the same quality fast food in every outlet and franchise.

McDonald’s pricing tends to consider all elements of the marketing mix. The company provides value pricing whereby its offers products as low as $ 1. This combination provides quality products at fair prices to all customers. Therefore, a non-pricing approach is impossible for McDonald’s, even if it is the company leading in the fast food industry (Perner, 2008). Pricing strategy and implementation are necessary due to the competitive nature of the fast food industry.

In addition, McDonald’s must set a pricing strategy to cater to reduced costs that affect the price, promotion, and distribution of its products. These will strongly affect its pricing strategy. In all these marketing mixes oriented toward pricing, McDonald should know that consumers’ decision to buy goes beyond pricing alone as there are other factors that influence consumers’ decisions. Consumers seek the best values and satisfaction from their purchases.

McDonald’s sells to high-end consumers as well as low segments of its target markets. Consequently, McDonald’s pricing mix and implementation are necessary for determining the company’s success. McDonald’s value pricing strategy sends a message to all consumers of different segments and income statuses.

The advantage is that McDonald’s serves all segments of the market. Consumers need value for their spending, and McDonald’s has created this. McDonald’s pricing strategy must also account for competition. McDonald’s also experiences competition from other fast food companies. Therefore, a pricing strategy to outdo the competition and maintain the leading position, as well as market share, is crucial in McDonald’s marketing mix (Adcock and Halborg, 2004).

McDonald’s has noted customers’ sensitivity to prices. Consequently, the company has reacted by introducing low-cost, fast food of a dollar. However, some customers do not have to pay much attention to product pricing if they can get quality products and value. McDonald’s must use its pricing strategy and implementation as a tool for controlling other elements of the marketing mix.

McDonald’s has some of the most strategic places among fast food companies. The company seeks populated areas, places of high-end consumers, and easily accessible such as airports, busy streets, and retail stores. McDonald’s also likes locations near its main competitors, such as Subway and Burger King. This strategy is crucial to ensure that McDonald’s captures and supplies its products to all market segments.

McDonald’s is also available online as clients can place their orders. McDonald’s has a worldwide focus through its new outlets and franchise approach. Availability has enabled McDonald’s to remain competitive and conduct profitable business. Presence in such locations creates demands for such products. Place strategy has worked for McDonald’s as customers can easily access their favorite fast foods.

The choice of place also promotes McDonald’s brand image to its target markets. In addition, the choice of such places also influences the pricing of McDonald’s fast food products and the type of consumers who visit such places. Thus, McDonald’s serves both low-end consumers as well as high-end consumers who may not have time to prepare their meals (Gupta, 2010).

When implementing a place strategy, McDonald’s must consider the price, products, place, and people. McDonald’s must also watch its competitors, such as Subway and Burger King, as they choose their places. McDonald’s has been opening new outlets and franchises. McDonald’s place strategy must appeal to its employees, stakeholders, and customers.

Implementation of a promotional strategy is crucial for the success of any business venture. Companies rely on communication to promote their brand images and create awareness about their products. The company must consider the message and tools of communication in order to reach its target market.

McDonald’s has used several strategies, such as providing toys for kids, Big Mac Hockey Contest, and card games. Such strategies aim at promoting both its existing and new products. There are also advertisement campaigns that promote McDonald’s experience and active lifestyle.

McDonald’s uses channels such as television, newspapers, and radio. It also uses billboards and signage. The company also sponsors sporting events like Olympic Games and Little League. The company provides its branded drinks at such events. Lately, McDonald’s has used its Web site to promote its products. However, it is the television that has created the most memorable advertisement for the company.

McDonald’s has many slogans for different countries. Some of these slogans and advertisement campaigns have resulted in lawsuits.

McDonald’s also has a fifth element in the marketing mix that focuses on people. This is mainly to enhance customers’ experiences of McDonald’s products and services.

However, some reports indicate that McDonald’s tends to concentrate on children more than any other segment of the target markets in terms of advertisement budget and products alike (Story and French, 2004). According to John Koshuta, “the world’s largest fast food chain uses cartoons, toys, schools, charities, and even parents to reach its youngest customers” (Koshuta, 2007).

According to Advertising Age, McDonald’s spent $ 1.2 billion in the US alone in the year 2008. It is among the top 30 largest advertisers in the US. In the US, McDonald’s has a national and local advertisement strategy. The company has a national budget for national advertisements, and local co-operatives organize local advertisements. The industry total is $ 5.6 billion. Koshuta notes “about 40% of McDonald’s total advertising budget focuses on children” (Koshuta, 2007).

Top Restaurant Category Ad Spenders.

A marketing plan will provide McDonald’s with the road it requires in order to pursue its marketing objectives. However, a marketing plan is just a plan; thus, it is not a guarantee that the company will achieve such desired goals.

Therefore, turning a marketing plan into a strategy needs practical implementation. This will turn the plan into action and, in turn, helps achieve strategic marketing objectives (McDonald, 2007). Implementing any strategy requires resources. McDonald’s needs a strategy management approach that will ensure that the marketing plan becomes the center of focus (Lehmann, 2007).

The best marketing plan with the best strategic plan will ensure that McDonald’s achieves its business goals and objectives of Plan to Win . Some authors have argued that the implementation of the plan is more crucial than the strategy. However, implementation and strategy depend on each other for success.

Kotler and associates note that implementation results in a competitive advantage for the company (Kotler, Wong, Saunders, and Armstrong, 2005). In this context, scholars have identified three stages that are crucial for the implementation of business strategy. These include owning the plan, supporting the plan, and adapting the plan.

Most business plans fail due to a lack of ownership. McDonald’s management teams must demonstrate a willingness to support the plan. They can claim a stake in it and take responsibility during its formulation. Management must promote ownership of the plan by establishing action points, plan, involvement of senior level management, compensation, champions, and ownership team.

Senior-level management of McDonald’s must also actively participate in the process. They must remain committed and take part in the review of the progress of the plan. Senior-level management that shows less interest in the plan may communicate a lack of interest in the plan. Consequently, champions and ownership groups may feel a lack of interest too. This may result in a complete failure of the plan due to its lack of implementation (Aaker, 2009).

McDonald’s must also support the plan. Supporting the plan depends on five company elements. These include human resources with the necessary competencies and skills and leadership needed to implement the plan successfully. Allocation of resources such as time, personnel, and money will also affect the implementation of the plan. The organization must also provide the required structures in terms of policies and practices that guide a marketing plan.

The support for the plan also requires the organization to provide systems of information flow, operation, communications, rewards, planning, and measurement of outcomes. Lastly, organizational culture also influences the outcome of plan implementation. McDonald’s must have a strong culture that supports marketing initiatives and promote coordination during implementation processes. These five elements must be in line with each other and aligned with the business strategy of the organization (Baker, 2008).

Businesses have control systems that guide their strategic plans in order to adapt to dynamic market situations. A strategic marketing plan sets the direction and offers the company a direction for implementation and continuous improvement as it adapts to the market (Gilligan and Wilson, 2007).

Controls ensure that McDonald’s takes corrective measures after evaluating its marketing plan. This will ensure that the company achieves its strategic plan. McDonald’s must find ways to narrow boundaries due to its international presence by creating a cross-functional management system that communicates organizational plans across various units or countries (Aaker, 2009).

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Hooley, G, Saunders, J, Piercy, N and Nicoulaud, B. 2007. Marketing Strategy and Competitive Positioning, 4th edn, South-Western College Pub, London.

Jobber, D 2010, Principles and Practice of Marketing, 6th edn, McGraw-hill, London.

Koshuta, J 2007, ‘McDonald’s Marketing Focused On Children’, Organic Consumer Association, vol. 12 no. 7, pp. 1-2.

Kotler, P, Wong, V, Saunders, J and Armstrong, G. 2005. Principles of Marketing, 4th edn, Pearson Education Limited, Essex.

Lehmann, D 2007, Analysis for Marketing Planning, McGraw-Hill/Irwin, London.

McDonald, M 2007, Marketing plans: how to prepare them, how to use them, Butterworth Heinemann, Oxford.

McDonald’s Corporation 2010, McDonald’s Corporation: 2010 Annual Report. McDonald’s Corporation, Oak Brook, IL.

Perner, L 2008, The Marketing Mix: Product . Web.

Story, M and French, S 2004, ‘Food Advertising and Marketing Directed at Children and Adolescents in the US,’ International Journal of Behavioral Nutrition and Physical Activity, vol. 1, no. 3, pp. 1-3.

WSJ 2008, ‘New Wendy’s to target older customers,’ Wall Street Journal, vol. 30, pp. 1-1.

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IvyPanda. (2023, August 28). McDonald's Marketing Plan and Strategy Report. https://ivypanda.com/essays/marketing-plan-for-mcdonalds-corporation-report/

"McDonald's Marketing Plan and Strategy Report." IvyPanda , 28 Aug. 2023, ivypanda.com/essays/marketing-plan-for-mcdonalds-corporation-report/.

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IvyPanda . 2023. "McDonald's Marketing Plan and Strategy Report." August 28, 2023. https://ivypanda.com/essays/marketing-plan-for-mcdonalds-corporation-report/.

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Bibliography

IvyPanda . "McDonald's Marketing Plan and Strategy Report." August 28, 2023. https://ivypanda.com/essays/marketing-plan-for-mcdonalds-corporation-report/.

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Wendy's restaurant.

Wendy’s Hatches $100 Million Plan to Enhance Breakfast and Digital Business

Both channels are a good source of higher sales and better margins.

Wendy's restaurant.

On his first earnings call as Wendy’s CEO, Kirk Tanner quickly let investors know the brand isn’t afraid of spending money to make money.

That starts with the breakfast category, which will receive $55 million worth of incremental company advertising in the U.S. and Canada, split evenly across 2024 and 2025. Tanner said the investment will amplify Wendy’s plans to support an “always on” approach across media partnerships and activations.

The daypart launched domestically nearly four years ago and has transformed into “one of the most compelling levers when considering sales growth and margin acceleration opportunities,” Tanner said. Breakfast earns about $3,000 per week per unit, and the expectation is that the capital injection will double the rate to $6,000 over the next two years. That sales growth doesn’t include any incremental labor costs either.

“As we tell our breakfast story, we are on a mission to ensure everyone has tried breakfast at Wendy’s because we know from experience that once customers try our fresh-cracked eggs and crispy bacon, they will be back again and again,” Tanner said during the brand’s Q4 earnings call. “The level of quality we provide on our breakfast menu supports our highest customer satisfaction scores and we are now driving further growth at the daypart by providing our amazing food at a great everyday price alongside craveable innovation. Throughout the year, I’ve had the privilege of meeting with some of our growth-minded franchisees, and I can tell you they are all-in on breakfast and are committed to further supporting our investments by doing everything they can to execute at the highest level in the morning.”

Wendy’s is driving customers to breakfast with product news, like launching a Breakfast Burrito and leveraging outside partnerships to create innovation, such as the Cinnabon Pull-Apart . Everyday value is key as well. In the second half of 2023, the chain unveiled a 2 for $3 breakfast bundle that’s now permanently attached to the breakfast menu.

According to Tanner, breakfast represents about a third of same-store sales growth.

“It’s certainly a big bet for us,” he said. “A lot of upside for us, and we really have system excitement. So I’m really excited about this opportunity.”

READ MORE :

Wendy’s Strikes Big with Drive-Thru Automation

Wendy’s Revs Up App Engagement with Attractive Discounts

In addition to breakfast, Wendy’s is pouring $15 million into digital infrastructure this year to enhance the mobile app and its loyalty capabilities. The brand has come pretty far, with digital sales expanding from less than $250 million in 2019 to nearly $2 billion in 2023. The company believes it will reach more than $2 billion in 2024, which would be a year earlier than anticipated. To unlock further growth, Wendy’s implemented a new customer data platform in Q4 and is in the process of evolving the rewards program with the help of third-party partners. These initiatives will help the chain’s ability to act on guest information through segmentation and machine learning.

At physical restaurant locations, the burger giant will invest roughly $20 million to roll out digital menuboards to all U.S. company-operated restaurants by the end of 2025 and spend about $10 million in the next two years to support digital menuboard upgrades for the global system. Wendy’s expects this equipment to drive order accuracy, a better employee experience, and sales growth from upselling and consistent merchandising execution.

Starting as early as 2025, Wendy’s will start testing dynamic pricing, AI-enabled menu changes, and suggestive selling. The brand has taken a big step already with its testing of automated voice ordering at the drive-thru in partnership with Google Cloud.

“This technology also plays a key role on our restaurant team, enabling the crew to focus on what matters—preparing fresh, high-quality Wendy’s favorites and building customer relationships to bring them back time and again,” Tanner said. “We will do everything we can to ensure this new technology is delighting our customers and crew while enhancing our restaurant economic model. Along the way, the incremental sales growth we expect to deliver behind our investment in breakfast, digital, and technology will drive meaningful sales leverage in our restaurants. These initiatives are highly incremental and margin accretive to the overall business.”

Wendy’s U.S. same-store sales increased 0.9 percent in Q4, lapping 5.9 percent growth in the year-ago period. For the year, comps lifted 3.7 percent, rolling over 3.9 percent in 2022.

Despite same-store sales averaging about 2 percent growth in the second half of 2023, the brand expects an acceleration this year to approximately 3 to 4 percent. The main reason behind the increased guidance is the money being invested in breakfast and digital. Additionally, Wendy’s believes the hamburger category will have slightly positive traffic in 2024. In terms of profitability, the chain projected company-operated margin to rise from 13.5 percent in 2023 to 16 to 17 percent this year because of higher breakfast and digital sales, cost management projects, flat commodities, and labor inflation returning to historical norms.

The company is losing traffic from lower-income consumers, but gaining with higher-end guests—a similar trend experienced across the quick-service industry. Wendy’s, however, remains confident in its barbell strategy, from the $5 Biggie Bag to the premium Made to Crave platform.

“The expectation is clearly that net disposable income should go slightly up sequentially,” said CFO Gunther Plosch. “Why do we believe this? The economy is doing pretty well. We are basically in full employment, gross inflation is coming down. So quarter versus quarter, the consumer should start to see net disposable income coming up slightly, feel a little bit richer, and feel a little bit like, ‘Yeah, you know what, I can treat myself and come a little bit more often into the restaurants.’ Fuel costs came down a little bit so driving around mobility has come a little bit better.”

The goal is for increased sales and profits to push unit expansion. Wendy’s opened a net of 145 restaurants globally in 2023, comprising 36 in the U.S. and 109 internationally. The chain is shooting for north of 2 percent net restaurant growth in 2024 and a rise to 3 to 4 percent in 2025. Over 90 percent of the store pipeline through 2025 is committed under a development agreement. Also, 70 new franchisees have been approved in the past two years.

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McDonald’s CEO sees a McFlation ‘battleground’ with customers revolting over $8 chicken sandwiches and $3 hash browns

A Double Big Mac, fries, and milkshake sit on a counter.

Once costing two for a dollar, McDonald’s hash browns now cost over $3 a pop in some locations. And the humble chicken sandwich is going for $8 . The culprit? What fed-up customers have been calling “ McFlation .”

“Something’s not right here,” one TikToker user said in a video about the hash brown price hike. “I’m still gonna eat it, but it’s not right.”

McFlation extends to the rest of McDonald’s products: Despite having a Dollar Menu, there’s no food items on it that cost under $1. McDonald’s breakfast becomes even more expensive if you account for a $7.29 McMuffin in Fairfield, Connecticut. And last month, an X post about an $18 Big Mac meal went viral and sparked debate about the chain’s steep prices. 

McDonald’s is feeling the heat from upset customers. It reported global same-store sales growth of 3.4% in its 2023 fourth quarter, falling short of its expected 4.79% increase. U.S. sales growth likewise disappointed, reaching 4.3%, still under the estimated 4.45%.

CEO Chris Kempczinski alluded to high prices as a reason why the company missed sales expectations for the first time in four years . 

“I think what you’re going to see as you head into 2024 is probably more attention to what I would describe as affordability,” Kempczinski said in the earnings call. 

He admitted that for customers making $45,000 annually, it’s cheaper to just stay home and cook.

“The battleground is certainly with that low-income consumer,” Kempczinski said.

McDonald’s did not respond to Fortune ’s request for comment.

McFlation is going strong after two decades

McDonald’s may want to win the battle with customers seeking affordable meals, but its history of raising prices suggests the company started the war itself. 

In 2008, McDonald’s disgraced its dollar menu , raising the price of the double cheeseburger to $1.19 and replacing the dollar version of the cheeseburger with an inferior McDouble — a product with one slice of cheese instead of two.

From 2006 to 2008, costs of food considerably increased , necessitating the price hike. Burger buns were 24% more expensive, and cheese costs rose 6.6%. At the time, the menu change sparked similar controversy to today. The dollar menu accounted for 14% of McDonald’s sales.

“We’ve seen an uptake in a number of restaurants that are enjoying a lot of success because of their value offerings,” Harry Balzer, a restaurant industry analyst at the NPD Group, told ABC at the time. “Right now, consumers are clearly looking for a deal, and those that are offering one that is new and noticeable are winning.”

But perhaps the greatest touchstone for measuring McDonald’s inflation — so iconic that its price is used to measure purchasing power parity between currencies — is through its iconic, eponymous Big Mac. Once $2.36 in 1996, the burger cost $5.69 as of December 2023, almost doubling in price.

Burgernomics says the U.S. dollar is strong, a result of inflation , which failed to dip below 3% last month, according to a Labor Department report on Tuesday. More broadly, the consumer price index for food away from home rose 5.1% over 2023, and the index for limited-service meals, which includes fast food, rose 5.8%. That’s compared to the food-at-home index of 1.2%, which indicates a nationwide trend in fast-food prices soaring compared to grocery prices.

McFlation is everyone’s McProblem

Despite complaints over consistent price increases in McDonald’s products, the inflation problem isn’t unique to them.

“What’s going on at McDonald’s is part of a larger scene out there,” Mark Kalinowski, CEO of Kalinowski Equity Research, told Fortune.

Wendy’s story over the past two years has mirrored McDonald’s: In August 2022, the company reported lower-than-expected sales , which it attributed to lower-income customers preferring to eat at home versus going out. Burger King was similarly hit with inflation in 2022, planning to cut their 10-piece chicken nugget meal down to an eight-piece meal. (However, the company bounced back at the end of 2023, reporting a same-store sales increase of 6.3% .) Yum Brands , parent company to KFC , Taco Bell, and Pizza Hut, reported underwhelming 2023 fourth-quarter earnings.

Kalinowski said that as for McDonald’s, the company will likely address price hikes, but not with lower prices. Customers can expect to see modest price increases, but with more targeted discounting through app promotions. Customers are more informed than ever before and perfectly capable of finding good deals.

“If you’re looking to maximize your food dollar as much as possible and still want to use restaurants in some way, shape, or form, you can find deals out there,” Kalinowski said.

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Just Eat, Deliveroo and other delivery rider bags outside a McDonald’s in Ilford.

Thousands of UK Deliveroo and Uber Eats drivers to strike on Valentine’s Day

Takeaway delivery riders say employment status has left many struggling to earn national living wage

Delivery drivers for food-ordering platforms including Deliveroo and Uber Eats are staging a Valentine’s Day strike to demand better pay and conditions.

The stoppage on Wednesday is being organised by a grassroots group, Delivery Job UK, many of whose members are Brazilian. It claims to have more than 3,000 supporters in London and several other cities.

The group hopes to draw attention to the low pay and insecure conditions faced by drivers, many of whom work on several delivery apps in parallel.

App-based delivery drivers are generally classified as self-employed contractors, meaning their employers are not legally obliged to pay them the statutory “national living wage” of £10.42 an hour, due to increase to £11.44 in April .

That status was confirmed by a supreme court ruling in November that found Deliveroo riders were not “workers”, after a long-running battle by the Independent Workers’ Union of Great Britain for the right to unionise and bargain on their behalf.

One of Delivery Job UK’s organisers, who spoke to the Guardian on condition of anonymity, said it was difficult to earn the national living wage – even before costs are taken into account.

The platforms tend to pay a flat-rate minimum a job, plus an additional fee based on distance; but these vary over time and drivers complain it is unclear how they are worked out.

“It’s very random: we don’t know the algorithm, we don’t know how it’s calculated,” said the organiser, who added that he hoped to encourage consumers ordering a takeaway to think about the conditions faced by drivers.

Data from thousands of couriers collected by the app Rodeo, which allows them to compare their earnings across delivery companies, suggested fees were cut in 2022 and 2023, despite high inflation.

Deliveroo is not included, as it has declined to allow drivers to make their details available.

Dr Callum Cant, from Essex Business School at the University of Essex, who studies the sector, said: “The single problem we have had with these apps over the last few years has been the continual reduction in real wages. So over time, things have got worse.”

He added: “These workers are so often treated as invisible. And they’re taken for granted.”

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Deliveroo has a voluntary agreement with the GMB trade union, which is meant to ensure they are paid at least the national living wage, plus costs, for the time they are on an order.

A spokesperson for the company said: “Deliveroo aims to provide riders with the flexible work riders tell us they value, attractive earning opportunities and protections.

“Thousands of people apply to work with Deliveroo each month, rider retention rates are high and the overwhelming majority of riders tell us that they are satisfied working with us.”

An Uber Eats spokesperson said: “We offer a flexible way for couriers to earn by using the app when and where they choose. We know that the vast majority of couriers are satisfied with their experience on the app.”

Separately, more than 1,000 Amazon staff are expected to strike at the company’s Coventry warehouse from Tuesday to Thursday, amid a pay dispute .

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