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History
Year Events
1937 Richard & Maurice, started drive-in restaurant inCalifornia.
Mid-1950
Revenues risen to $3,50,000.
1952 First franchisee started by Neil Fox in Arizona.
1955 Kroc established McDonald system Inc.
1961 Kroc bought McDonald brothers share for $2.7
million.1965
McDonalds went Public, selling its shares OTC.
1970 Restaurants grew at an avg. of about 500 peryear.
1985
First fast food chain to provide the list of
ingredients used in its products.
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Question No. 1
McDonalds was once hailed asthe role model for fast foodindustry. In the 1980s & early
1990s, it was on of the mostsuccessful companies in thefast food industry. However, inthe late 1990s, it experienced
major problems which reflectedin poor sales. Do you thinkMcDonalds faced poor sales inthe late 1990s mainly becauseof changes in the external
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External Changes
Changing Customers preferences
Increased competition
Health issues
Economic Turmoil across Asia andEurope.
September 11, 2001, terrorist
attack. Dependent on Four Countries.
Poor consumer spending in the
restaurant industry in US.
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External Changes ( contd..)
Changing Customers preferences
- customers started to prefer eatingat home using the microwave to heat
the food.- they also started visitingcompetitors chains as they offereddiscounts.
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External Changes ( contd..)
Increased competition
- competition from supermarkets,convenience stores etc.
- Wendys, Burger King, Pizza Hut,KFC, Subway, etc.
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External Changes ( contd..)
Health issues
- customers became healthconscious.
- they started to select fresh foodover fatty, fried food & red meat.
- Obesity became major health
problem.- legal suits.
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External Changes ( contd..)
Economic Turmoil across Asia andEurope.
- currency crisis in 1990 in Asian
countries.
- Economic Turmoil in Europe.
- International Sales had fallen.
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External Changes ( contd..)
September 11, 2001, terroristattack.
- McDonalds depended heavilyon US Tourism.
- With September 11, attackthe tourism industry suffered.
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External Changes ( contd..)
Dependent on Four Countries.
- McDonalds excessive dependenceon American, Britain, Germany &
France Markets.- These markets had reachedsaturation.
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External Changes ( contd..)
Poor consumer spending in therestaurant industry in US.
- there was a negative growth rate of
(-2%) in consumer spending in the USmarkets.
- decline in per store sales in the US inthe third quarter of 2002.
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Question No. 2
Some analysts feel thatMcDonalds problem in the late1990s were due to its inability to
bring about a change in theinternal environment of theorganization. When were the
problem in the internalenvironment that resulted inMcDonalds poor performance in
the late 1990s ?
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Contd
Time lag in service
Lack of innovation
Deterioration of relationship
with franchisees
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Question No. 3
Many analyst feel thatfranchising is the best way togrow , more so, in international
markets. However, McDonaldsfranchise model which was verysuccessful in the 1980s took abeating in the late 1990s. What
according to you were theproblems with the McDonaldsfranchise model? In the light ofsuch problems, do you think it is
still best way to grow?
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Mc Donald kept changing its views so manyMc Donald kept changing its views so many
times that made its franchisees suspect abouttimes that made its franchisees suspect about
companys stance.companys stance.
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Question No. 4
Soon after taking over as theCEO of McDonalds,Cantalupo had taken various
steps to reverse thedownward slide ofMcDonalds emerge as the
Great American Meal onceits youth Vigor?
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Steps taken byCantalupo
Up or Over grading system
More focus on customersatisfaction then on the numberof outlets
Emphasis on cleanliness, serviceand staff productivity to attract &retain customers
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Steps taken byCantalupo
Simplified operations
National ad campaigns instead ofregional, so that the message is
clearly conveyed to thecustomers
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THANK YOU