McDonalds

Critical Analysis 1

        McDonald’s has become the most successful fast food chain in the world over the past few decades, however the majority of owners throughout the franchise aren’t confident in McDonald’s longer term financial success and they also do not believe that McDonalds’ comeback plans are effective. McDonald’s comeback plan was based largely around the release of all day breakfast throughout every store. During the fourth quarter when they announced all day breakfast they had a 5.7 percent increase posted for U.S same-store sales growth, its best performance in almost four years. (Patton). Their comeback plan also included a new deal for a $2.50 meal, and on the day of its announcement McDonald’s stock rose 8.1%, which is their biggest increase in seven years. (Patton). This success however was short lived, McDonald’s growth dropped from 5.4 percent in the first quarter of this year down to 1.8 percent at the end of the second quarter. (Megan).

        The biggest threat currently facing McDonald’s is the fact that people have such a large option of food establishments to pick from for relatively the same cost. A full meal from McDonald’s can range anywhere from approximately six to ten dollars. For that same price you can go into almost any diner and get a larger and healthier meal for the same price. If McDonalds wishes to compete they have two options, option A try to drop prices throughout the value chain in order to sell products at a lower cost, or they could start to shift into the new trend of whole foods like most places seem to be doing, this however would raise the cost for each of their products to the point that more and more people will start taking the option of a diner or home cooked meal. The majority of people also are not going to McDonald’s to have a healthy meal, they just want something that tastes good, is quick to acquire, and cheap. For that reasoning I believe their best option to go with is cutting costs wherever they can in order to bring the price of their products down.

        McDonald’s already has a dominating lead on the market share for fast food restaurants throughout the world, taking up 19% of the global market. (McDonald’s Corporation). McDonald’s is currently in no place to make any drastic changes to their plans considering their continued success over the past few decades. However that does not mean that McDonald’s cannot tweak a few things throughout their value chain. For McDonald’s outbound and inbound logistics it may be possible for them to find a cheaper way to ship and store their raw materials as well as finished goods. They also could try to find a cheaper supplier of beef and chicken, they may have to suffer a slight quality loss, but as I said before people going to McDonald’s do not care about the quality of their food as long as they get it quickly and it has a decent taste. Another step to help them increase growth would be being able to get the finished product into the hands of the customer as quickly and efficiently as possible. People come to McDonald’s because it is “fast food” meaning you should have it ready to eat extremely quickly. If McDonald’s trained its employees to more efficiently fill customer’s orders it would increase their satisfaction and raise the chance of that specific customer returning to McDonald’s when they want a quick meal.