McDonald's Case Analysis

Customers taste in the fast food industry are changing many ways.  First, would be that customers are looking for a nonhamburger options which is where companies such as KFC, Taco Bell, and Pizza Hut play a role.   Then you also have the customer who wants a nonhamburger sandwich which is where Subway is dominating the market with a variety of sandwich options with different meats, vegetables, and condiments.  A substitute or competitor in this market as well would be the prepared meals and sandwiches found in local supermarkets, gas stations, and convenience stores.  As well as microwave meals available to customers.  Another change is the prevalence of heavy users of fast food restaurants.  These people spend a lot of time and money on fast food.  Another major change in the fast food industry would be the increase in the fast casual segment.     The fast casual segment is the implementation of deli sandwiches and meals that are more upscale than traditional fast food in a relaxed, comfortable, and nice setting.  The price point is little higher than fast food establishments so companies such as Boston Market Panera Bread Company, and Atlanta Bread Company fall into this category.  These impacts are affecting McDonald’s net income, market share, and product offerings.  In 2001 sales were over $40 billion, but net income shrunk 17 percent to $1. 64 billion.  In regards market share McDonald’s remained above that of competitors, but grew more slowly.  The changes in customer taste has also made McDonald’s result to changes in the menu launching new products which are alternatives for hamburger and also putting some of those product offerings at the forefront of the company to try and separate from the cheap and greasy image so the Big Mac Attack is no longer a viable option.    

The change in customer taste and preferences are causing the fast food industry to make modifications to continue be successful businesses.  Within the fast food industry in hamburger segment, all the dominant players in the segment McDonalds, Hardee’s, Wendy’s, and Burger King look to differentiate whether by price or product offerings, but still keep up with customer taste and preferences.  Burger King went about adding a salad line and a permanent array of value priced offerings.  Burger King also went about debuting 10 new or improved products, included the chicken whopper which was a major success.  The new and improved products led to Burger King having to make extensive kitchen and drive through upgrades.  Burger King is moving away from their tactical approach which was monthly changes in menu items; now Burger King is looking for a permanent marketing strategy.  Hardee’s went about introduce new products and also joining the price-promotion burger wars.  The price promotion burger war is the focus on the strategy is to have the best price while still having value and gaining a financial return.  To approach this strategy Hardee’s tried a few things; one being sandwiches bundled with regular-sized fry and a drink for $2. 99.  Other tactics were midpriced sandwich option, the famous bacon cheeseburger for $1. 59, and a new croissant sunrise breakfast sandwich for a $1. 79.  Wendy’s has demonstrated strongest same store sales gains within the major burger chains in recent years this feat is not due to any burgers on the menu instead it is, because of Wendy’s line of four upscale salads called garden sensations.  The garden sensation lineup includes the $3. 99 chicken blt, taco supremo, mandarin chicken, and $2. 99 spring mix salads.  Wendy’s product line includes four major components burgers, chicken sandwiches, value menu, and garden sensations.  Wendy’s is not focusing on their product offering to get ahead in the business, instead Wendy’s is focusing on increasing media outlays and in store operations.  Wendy’s consistently ranks ahead of competitors in quality, customer service, innovation, and unit level sales.  Wendy’s is hoping the previously mentioned focuses will contribute to sales growth for the company. McDonald’s looked to implement new tastes menu which limited time offers on products such as fried chicken sandwich of tenderloin strips under the chicken selects name, a new grilled chicken sandwich, a pork tenderloin sandwich, and a philly cheese steak sandwich.  To combat competitors such as Wendy’s and Burger King chicken sandwiches; McDonald’s put their chicken products at the forefront of its offerings.