McDonald's Case Questions

McDonald’s Case Questions

1. How are customer's tastes changing in the fast-food industry? What impact do these changes have on McDonald’s sales and net income?

Customer’s tastes are changing a lot along with the growth of diversified fast food chains for several reasons. First of all, customers get tired of traditional hamburger fast food restaurants and tend to prefer non-hamburger fast-food restaurant s like Pizza Hut, KFC, and subway. Secondly, the appearance of fast-casual restaurants also affects customers’ tastes. They increase the meal’s quality by offering a nice place for people to enjoy meals quickly served. Thirdly, recently, the folks have concerned about their health, so they don’t want to be obese by fast-food meals. Finally, recent years, Americans are eating out less often because of economic crisis.

As a result, these changes have a lot of impact on Mc Donald’s. The exhibit of McDonald’s in 1997-2001 stated” net income shrunk 17 percent to $1.64 billion”. It means McDonald’s consumption market remarkable decrease by customer tastes changing. Therefore, McDonald’s planned suitable strategies to recovery the earning. Firstly, they added new meals, which fit customers’ demand and can compete with the other fast food restaurants’ meals. Secondly, McDonald’s focused on the food quality and improving its public image. Thirdly, they opened its Mc café, which is considered as their ace to the goal of double sales over the next decade.

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

These changes in customer tastes and preferences affect competitive strategies such as the change of restaurants’ design, healthier meals, pricing and advertising in fast-food industry. First of all, making changes in restaurant’s design and advertising, McDonald’s opened the McCafe which share an entrance with a traditional McDonald’s restaurant in order to compete with direct and indirect rival such as Burger king, Wendy’s, Dunkin Donuts, and so on. McCafe is considered as a new strategy which attract customers who are not there for the hamburgers. Therefore, it offers gourmet beverages, foods, and serves on china with stainless steel flatware. McDonal’s advertising also focus on 3 elements such as nutritious food, friendly and fun. Secondly, an example of the change of pricing is burger king. It has made pricing strategy changes by offering a permanent line of value-priced offerings to help improve sales. Thirdly, fast-food restaurants have added healthy choices for customers like new salads. For example, Wendy’s offered new lines of chicken sandwiches and four upscale salads called “Garden sensations” which are designed to be comparable to salads