McDonald Case

McDonald’s Case Note

Analysis

1. The trends in McDonald’s external environment that are likely to have the greatest impact on the company’s ability to sustain a competitive advantage is:

• the millennials eating out at fast-casual restaurants that emphasize ingredient quality and demonstrate an awareness of social issues like environmental sustainability
• the key demographic group for most fast food restaurants is young adults,18-32-year-old age group; they are called “heavy users” and visit fast food restaurant chain twice or more per week
• the millennials consider transparency very important; restaurants being open about their food sourcing and preparation give trust and thus attract young adults
• but McDonald’s has been unsuccessful in attracting these millennials
• McDonald’s public image has been seriously damaged by more than a decade of negative press
• McDonald’s use of beef tallow as flavoring when cooking French fries, use of pink slime, making burgers out of boneless lean beef trimmings mixed with ammonium hydroxide were the main reason
• Easterbrook is trying to appeal to the millennials by digitization- he hired former Google executive to improve social media presence, develop smartphone apps, and test mobile payment systems

1. How is McDonald positioned vis-à-vis its major competitors?

• Although McDonald is the largest in the industry, it is behind all of its competitors (Burger King and Wendy’s) in terms of service, food quality, and innovation.
• When compared to Burger King, Burger King is the third largest in the industry and its stock outperformed McDonald’s in 2015
• Burger King is successful because it focused on simplicity: adding sauces, cheese and etc. to its core burger line to create new menus - allowed them to innovate without slowing service
• Burger King was also successful in offering limit time offers and attractive promotions
• Wendy’s differentiates itself as a cut above its competitors by offering higher-quality food that is made fresh-to-order.
• Wendy’s is doing better on betting big on just a few hit products, such as its pretzel buns
• Wendy’s has a faster service than McDonald; its average service time is one minute less than McDonald’s service time of 189.2 second
• Unlike Burger King, Wendy’s, and Taco Bell, McDonald’s greater variety of menu options slow down the order fulfilment process, increase employee stress and customer frustrations.