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Mcdonalds 2012-2013 Essay

Dick and Mac Mcdonald were two brothers who started the McDonald’s brand in California after moving their hotdog stand to San Bernadino from Monrovia Airport. After realizing that hamburgers were their most popular product, the brothers reinvented their restaurant using their Speedee Service System in 1948. It was a concept that created a production line of hamburgers that were made before being ordered. This concept pioneered the fast food industry and was in complete contrast to most restaurants that only prepared food after the customer had placed their order.

A history was created by McDonald’s system that helped them to undercut competitors by as much as 50%. The growing volumes helped them to reduce more costs from the economies of scale. This was an advantage that is a success for McDonald’s till now. The entry of Ray Kroc into the business was a significant development in the history of McDonald’s. He brought the rights that helped McDonald’s to expand their concept outside California and Arizona. A restaurant chain was quickly built and more than 100 restaurants were in operation by 1959. Ray Kroc bought the McDonald brothers in 1961. However the negotiations did not went well and McDonald brothers lost all the royalties and rights to the brand they had started. The separation ways between Kroc and the McDonald brothers was not very pleasant.

This resulted in Kroc building and then managing the opening of a new outlet of McDonald’s near the last remaining store of McDonald brothers. The historians and biographers had perceived this move as incredibly insignificant. They compared it with kicking a man when he is already down. Any malicious behavior on the part of Kroc was denied by the McDonald’s Corporation. They preferred to strike out McDonald brothers from the corporate history.

Family members of McDonald have written about the deal between the brothers and Kroc. They appeared on talk shows for promoting their side of story. McDonald’s Corporation pioneers the training of its franchise owners in 1961 with the opening of Hamburger University. This move was aimed to maintain manager and franchisee loyalty in spite of a highly competitive market. The introduction of Ronald McDonald as a brand face and the release of the Big Mac burger were seen in the 1960s. The launch of Big Mac burger has grown turning out to become the most popular burger of McDonald’s.

http://www.slideshare.net/pridhavale/mcdonalds-marketing-strategies Mission & Values

McDonald’s brand mission is to be our customers’ favorite place and way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers’ experience.

McDonald’s Values

We place the customer experience at the core of all we do. Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service in a clean, welcoming environment, at a great value. Our goal is quality, service, cleanliness and value (QSC&V) for each and every customer, each and every time. We are committed to our people. We provide opportunity, nurture talent, develop leaders and reward achievement. We believe that a team of well-trained individuals with diverse backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to our continued success. We believe in the McDonald’s System.

McDonald’s business model, depicted by our “three-legged stool” of owner/operators, suppliers, and company employees, is our foundation, and balancing the interests of all three groups is key. We operate our business ethically. Sound ethics is good business. At McDonald’s, we hold ourselves and conduct our business to high standards of fairness, honesty, and integrity. We are individually accountable and collectively responsible. We give back to our communities. We take seriously the responsibilities that come with being a leader.

We help our customers build better communities, support Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place. We grow our business profitably. McDonald’s is a publicly traded company. As such, we work to provide sustained profitable growth for our shareholders. This requires a continuous focus on our customers and the health of our system. We strive continually to improve. We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.

Company Profile

McDonald’s is Global – and in Your Hometown

McDonald’s is the leading global foodservice retailer with more than 34,000 local restaurants serving approximately 69 million people in 119 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local men and women. Our goal is becoming customers favorite way and place to eat and drink by serving core favorites such as the world famous French Fries, Big Mac, Quarter Pounder and Chicken Mc Nuggets.

Our Strategic Direction

The strength of the alignment among the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonald’s success. This business model enables McDonald’s to deliver consistent, locally-relevant restaurant experiences to customers and be an integral part of the communities we serve. In addition, it facilitates our ability to identify, implement and scale innovative ideas that meet customers’ changing needs and preferences.

McDonald’s customer-focused Plan to Win provides a common framework for our global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of our Plan to Win – People, Products, Place, Price and Promotion – we have enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in each of the last eight years. This Plan, combined with financial discipline, has delivered strong results for our shareholders.

Reporting Segments

The business is managed as distinct geographic segments that include:
* US
* Europe
* Asia/Pacific, Middle East and Africa (APMEA)
* Other Countries & Corporate(OCC) including Canada, Latin America and Corporate Restaurant Ownership

We view ourselves primarily as a franchisor and believe franchising is important to delivering great customer experiences and driving profitability. At year end 2010, 80% of McDonald’s restaurants were franchised. Of the total McDonald’s restaurants worldwide:

* Nearly 59% are conventional franchisees

* 21% are licensed to foreign affiliates or developmental licensees

* Nearly 20% are Company-operated

The McDonald’s Franchise

McDonald’s is the best of the best when evaluating the franchise industry. The McDonald’s Franchise has over the past sixty years developed an entire market, defined American Culture, written the book on franchise growth and set the standards for branding. Not bad for a company founded by a guy who sold Dixie Cups for a living. The McDonald’s franchise has played a key part in virtually every family and child’s life in America since the mid-1950’s . The Brand, with Ronald McDonald’s help, became synonymous with a child’s favorite place to eat. With the advent of the highway system’s growth throughout the United States, the McDonald’s Franchise System grew at unparalleled speeds. Today, the McDonald’s franchise system boasts over 30,000 operating restaurants worldwide.

How did a burger chain grow to be a world dominating brand and franchise so quickly? 1. A Great Operating Model. McDonald’s has one of the most sound and operationally solid business platforms in the world regardless of industry. As a franchise system, the McDonald’s operating unit could be leveraged through owner operators at a speed that could not be matched by company owned growth. 2. Collaborative Relationships with Franchisees. McDonald’s has one of the most synergistic working relationships with their franchisees in the franchise industry. Through this mutually beneficial relationship, the McDonald’s franchise system has thrived. The Breakfast Menu, the Fish Sandwich and most of the successful menu items have come from franchise owner’s suggestions.

3. Brand Development. McDonald’s spends over one billion dollars per year on brand development and advertising. This brand development is what has fueled the growth of not only the franchise system, but each of the operating units themselves. McDonald’s brand is rated as one of the top five brands in the world, this has an enormous impact on the success of the restaurants. 4. Financial Management. McDonald’s owes a great deal of their success to a business strategy developed early in the company’s life. By owning the real estate that the franchisee’s operate on, the McDonald’s system became one of the largest land owners in the world in a very short time period.

It was this ingenuity that provided the organization with a substantial amount of assets, equity and investment weight which powered the company forward. 5. Vendor Relationships. Ray Kroc was famous for saying that the McDonald’s franchise was built on a “three legged stool”. One being the corporation, two the franchisees and the third being the great vendor relationships. Coca-Cola was the most prominent of the vendors, but each of the supplier partner’s played a critical role in the successful expansion of the McDonald’s Franchise.

http://www.franchisemarketingsystems.com/blog/bid/50778/McDonald-s-Franchise-Franchise-Best-Practices

McDonald’s Winning Strategy, At Home And Abroad

Of all established companies that have managed to endure the many challenges time brings to their way, one stands out: McDonald’s (NYSE:MCD). On Friday morning, the company reported another blockbuster quarter both on the bottom and top lines, with sales rising across all geographic regions. How does the company do it? Two ways: First, with a franchise business model that allows its franchisee-members, management and shareholders to share the risks and rewards from the discovery and exploitation of new business opportunities—McDonald’s model has become the norm for other franchise organizations. Second, by adaptation and innovation, coming up with fresh products and services to address the needs of a diverse consumer market—as shaped by demographic, economic and local factors around the world.

McDonald’s rode the baby-boomer trend in the 1960s, the swelling ranks of teenagers and the rising female labor force participation, supplying a fast and inexpensive menu. In the 1970s and the 1980s, the company rode the globalization trend by transferring the American way of life to many countries around the world. At the same time, it adapted to the social context of each county by franchising to local entrepreneurs. In the 1990s and early 2000s, McDonald’s made successful efforts to restore its corporate image by launching the “Fast and Convenient” campaign that involved the radical adjustment of the company’s product portfolio to emerging food industry trends—the re-furbish of McDonald’s restaurants to achieve a banded, updated, and more natural dining environment.

The “fast” and “convenient” elements of the McDonald’s concept were augmented by the “healthy” and “more natural” element, by adding salads, fruits, and carrot sticks to the menu. In recent years, McDonald’s has continued to broaden its product portfolio by offering high quality coffee and healthy drinks (either through its traditional restaurants or the Cafés), competing head to head with Starbucks (NASDAQ:SBUX) and local cafeterias—benefiting by local trends like austerity in Europe, and robust growth in China.

http://www.forbes.com/sites/panosmourdoukoutas/2012/04/20/mcdonalds-winning-strategy-at-home-and-abroad/

When people think about the franchising concept, McDonalds usually comes up first as a prime example. And though McDonalds was not the first franchise business – Isaac Singer, the inventor of the sewing machine gets credit for originating the franchise idea — the hamburger chain certainly exemplifies franchising success. The first “McDonalds” restaurant was opened by brothers Dick and Mac McDonald in 1940 on Route 66 in San Bernadino, California. The menu had about 25 offerings, and “carhops” brought the food out to patrons (usually teenagers) waiting in their cars. Today, McDonalds franchise network is the world’s leading food service retailer, with more than 30,000 franchise restaurants serving 52 million people in more than 100 countries. Of those stores, more than 70 percent are owned by independent operator franchisees.

How did the chain grow from a single store to the most popular fast food restaurant and successful franchise operation in the world?

Raymond Kroc gets the credit as the driving force behind McDonald’s successful franchise growth. He did not start out as a restaurant owner, but as an equipment supplier to restaurants after mortgaging his home and investing all his savings in an exclusive distributorship for a milk shake maker called “Multimixer.” In 1954, the McDonalds restaurant caught Kroc’s attention because it was using eightMultimixers. Kroc went to visit the restaurant and was amazed at the speedy business operation that served so many people at once. The McDonald brothers had already begun tofranchise their restaurant concept and had four locations going by the time of Kroc’s visit. Kroc recognized the opportunity to sell lots of Multimixers and made a proposal to the brothers to let him franchise restaurants outside of their home base in California. (Ray Kroc was not the only one impressed by the McDonalds restaurant, which was also visited by James McLamore, founder of Burger King, and Glen Bell, founder of Taco Bell.)

In 1955, Kroc launched “McDonalds Systems, Inc.” as a legal structure to run his franchises, and by 1958 McDonalds had sold 100 million hamburgers. In 1961, the McDonald brothers agreed to sell all the business rights to Kroc for $2.7 million. The company went public in 1965, and 100 shares purchased then for about $2,250 would have grown to 74,360 shares now worth over $3 million. The first McDonalds franchise opened outside the US in British Columbia, Canada in 1967. Since then, McDonalds has spread all over the world, with its largest franchise store featuring more than 700 seats opening in Beijing, China in 1992. One essential factor that contributes to franchise success is a consistent commitment to standards.

McDonalds franchise restaurants became well-known for the inspired and defining vision created by Kroc for his restaurant business. “Quality, Service, Cleanliness and Value” was the company’s motto, and customers knew that no matter where they travelled, they could rely on those qualities at every McDonalds they visited. Kroc’s brilliant marketing insights produced many winning strategies. He launched “Hamburger University” in 1961 in Elk Grove, Illinois, to train all franchisees in every aspect of McDonald’s management. Kroc also targeted families as his best market share. This resulted in the debut of the “Ronald McDonald” clown character on television in 1963, first played by Willard Scott.

McDonald’s success thrives on adapting to consumer demands…

But the franchise chain’s success also rests on another key component, which at first glance might seem contrary to franchising principles – continual innovation and adaptation to market conditions. First started as a simple hamburger, french fries and milkshake restaurant, McDonalds franchise operation experimented and expanded its menu to cater to changing tastes and consumer demand. In 1963, McDonalds introduced the “Filet-of-Fish” sandwich in the Cincinnati area for Catholics who did not eat meat on Friday. This was the first new offering added to the standard menu and went national the following year. It is interesting to note that many of the new products added to McDonald’s menu over the decades were developed by franchisees.

For instance, the “Big Mac” introduced in 1968 was the brainchild of Jim Delligatti, one of the earliest McDonalds Systems franchisees. The “Egg McMuffin” was developed in 1973 by McDonald’s franchisee Herb Peterson. A Canadian franchisee invented The McFlurry in 1997. In 2005, another adaptation to the times and consumer demand was the provision of WiFi with Nintendo in select locations; and delivery service in Singapore, where customers can phone in their order and have it delivered 24 hours a day, seven days a week. The company has also departed from its standard free-standing units, and installed quick service kiosks in busy places, like malls and airports.

McDonalds franchise business has not only survived but thrived through boom times and recessions and has successfully reacted to consumer trends. It was one of the first franchise restaurants to post nutritional information about its menu, and now offers salads and other healthy options in recent years. If you would like to get your bite of the profitable franchise restaurant industry why not find out more about well-known and some up-and-coming fast food franchises, which have been influences by the world’s most successful franchise business – McDonald’s.

http://www.franchisedirect.com/foodfranchises/themarketinggeniusbehindmcdonaldsfranchisesuccess/14/25

McDonald’s licensed for expansion

Fast food chain identifies Yunnan as target for more of its restaurants http://www.chinadaily.com.cn/bizchina/2011-09/26/content_13789938.htm

McDonald’s Reports Unexpectedly Sharp Drop in Sales

McDonald’s, the world’s largest fast-food chain, reported a decline in an important global sales figure, the first such drop in almost a decade. Monthly sales in stores open at least 13 months fell around the world by 1.8 percent in October, reflecting “the pervasive challenges of today’s global marketplace,” according to Don Thompson, who was appointed chief executive of McDonald’s in July. The last decline was in April 2003. Same-store sales fell 2.2 percent in the United States and Europe and declined 2.4 percent in the Asia Pacific, Africa and Middle East regions. Jack Russo, a stock analyst who follows McDonald’s at the financial adviser Edward Jones, said Wall Street had been expecting a dip in sales figures from McDonald’s, but not such a sharp one. In addition to weak markets around the world, Mr. Russo blamed the calendar.

“There was one less Sunday and one less Saturday in the month, and those are big sales days,” he said. “If you make an adjustment for that, sales would have been slightly positive but still decelerating.” The chain is also facing stiffer competition from its longtime rivals Burger King and Wendy’s, which have new owners. Both chains have been adding to their menus and remodeling stores. Burger King is currently featuring a gingerbread cookie shake, while Wendy’s new Garden Sensations salads are doing well. On Thursday, Wendy’s announced that its same-store sales in North America were up 2.7 percent in the third quarter, although it reported a loss of $26.2 million, or 7 cents a share, in contrast to a loss of $3.97 million in the same quarter a year ago.

At the same time, demographic shifts are favoring chains that traditionally have competed less directly with McDonald’s, like Taco Bell and Chipotle. All of the hamburger chains have been working to capitalize on lower bacon prices. Burger King has a White Cheddar Whopper sandwich with bacon, and Wendy’s is offering a Bacon Portabella Melt sandwich. McDonald’s has also been aggressively using social media platforms, like Twitter, to promote its new Cheddar Bacon Onion burger, or C.B.O. It also heavily advertised its Dollar Menu and its Monopoly promotion, but Mr. Thompson said those efforts to drive sales had fallen flat in the face of “modest consumer demand.” McDonald’s stock was down about 2 percent Thursday, while Wendy’s was up about 3 percent. Burger King was also down slightly. http://www.nytimes.com/2012/11/09/business/mcdonalds-reports-global-decline-in-sales.html?_r=0

McDonald’s Suppliers Address Global Sustainability Challenges More than 170 McDonald’s supply chain partners submitted 400 stories addressing sustainability challenges to help improve food sources, the environment, communities and employee wellness around the world. A panel of executives and external experts, including BSR, Conservation International, Food Animal Initiative (FAI) and World Wildlife Fund (WWF) had the difficult task of selecting the final 2012 Best of Sustainable Supply winners. These projects were selected based on either measurable results or innovation. Supply chain achievements spanned diverse areas including meeting zero waste-to-landfill targets, taking the plastic out of plastic bottles, teaching orphans how to raise chickens, helping employees attain further education, and more.

Collectively, they demonstrated the power of sharing responsibility by letting employees lead; sharing experience by applying global lessons locally; and sharing expertise through partnerships. “One of our core values is taking seriously the responsibilities that come with being a leader, and using our size, scope and resources to help make the world a better place. Nowhere is that commitment more evident than in our supply chain,” said Jose Armario, executive vice president, McDonald’s Global Supply Chain, Development & Franchising. “The submissions in this year’s report demonstrate that McDonald’s supply chain is world class in its ability to provide safe, sustainable, and assured supply of food and products our customers love.”

Best of Sustainable Supply Report highlights include:
Integrated Pest Management

Leading competitive North American potato suppliers (ConAgra Lamb Weston, McCain Foods, J.R. Simplot Company) collaborated to identify and measure the implementation of best practices to reduce pesticide, fertilizer and water use.

Animal Welfare Training

GenOSI Inc. (an OSI Group partner in the Philippines) trained government animal welfare officers and meat inspectors in the Philippines. Judges selected this entry as an example of leadership that extends beyond a company’s scope of responsibility to drive systemic change.

Sustainable Wheat Farming to Reduce Carbon Footprint

Fresh Start Bakeries in Europe worked with suppliers to reduce the carbon footprint resulting from the agricultural practices used to produce its main
raw material: wheat. This example reflects the highest aspirations of McDonald’s Sustainable Land Management Commitment. Reducing the Use of Fossil Fuels and Supplying Energy to the Community Grupo Melo, a Central American supplier, built and optimized hydro power turbines that produce excess power for the surrounding community during the rainy season.

“The majority of any given company’s social and environmental impacts are in its supply chain. McDonald’s recognition of its suppliers is an important means to highlighting innovative solutions that drive sustainability commitments and encourage leadership within the industry,” said Sonal Pandya-Dalal, Conservation International’s Senior Advisor, Corporate Leadership Strategies, Center for Environmental Leadership in Business.

“McDonald’s Best of Sustainable Supply recognizes the importance, and thereby encourages, the development of sustainable initiatives within the supply chain,” said Roland Bonney, director of Food Animal Initiative. McDonald’s Armario added, “Leadership throughout our supply chain is increasingly critical as we work to integrate sustainability actions across all areas of our business to help make the world a better place for everyone. We sincerely appreciate all of our suppliers’ efforts.” http://www.thecropsite.com/articles/1229/mcdonalds-suppliers-address-global-sustainability-challenges

Forbes Earnings Preview: McDonald’s

McDonald’s (MCD) reports its fourth quarter earnings on Wednesday, January 23, 2013. Analysts are projecting earnings of $1.33 per share, matching that number from a year ago. The consensus estimate remains unchanged over the past month, but it has decreased from three months ago when it was $1.38. For the fiscal year, analysts are projecting earnings of $5.32 per share. Revenue is projected to eclipse the year-earlier total of $6.82 billion by 1%, finishing at $6.89 billion for the quarter. For the year, revenue is expected to come in at $27.5 billion. A year-over-year revenue decrease in the third quarter snapped a streak of three consecutive quarters of revenue increases.

Revenue fell 0.2% in the third quarter and rose 0.2%in the second quarter, 7.1% in the first quarter and 9.8% in the fourth quarter of the last fiscal year. Net income has decreased in each of the last two quarters. In the most recent quarter, profit dipped 3.5% year-over-year, and the figure dropped 4.5% in the second quarter. The majority of analysts (56%) rate McDonald’s as a buy. This compares favorably to the analyst ratings of its nearest six competitors, which average 48.1% buys. McDonald’s’ average analyst rating hasn’t changed over the past three months.

McDonald’s debuts new packaging featuring QR codes

QR codes on McDonald’s new packaging convey nutritional information. The interactive codes on carryout bags and cups convey nutritional information Jan. 18, 2013 McDonald’s Corp. will replace all carryout bags and fountain drink cups with new packaging featuring quick-response, or QR, codes, to convey nutritional information for its food. The launch began this week at McDonald’s more than 14,000 U.S. restaurants, and will extend to the chain’s international markets throughout 2013, the Oak Brook, Ill.-based company said. Text of the caloric and nutritional disclosures will be translated into 18 languages. “Our new packaging is designed to engage with customers in relevant ways and celebrate our brand,” said Kevin Newell, McDonald’s chief brand officer. “Customers tell us they want to know more about the food they are eating and we want to make that as easy as possible by putting this information right at their fingertips.”

QR codes broaden access to McDonald’s nutritional information by pulling up specific online content on a smart phone Web browser once the user snaps a photo of the code with the phone’s camera. Illustrations and other text will also adorn the to-go packaging, McDonald’s said. The brand already has rolled out new menu boards to all domestic restaurants to display caloric information for its menu items. The system wide launch of calorie counts occurred on Sept. 17, 2012, and officials at the time said the new menu boards would remain in place permanently, even if a Mitt Romney victory in the presidential election were to put the viability of health care reform, and its nationwide menu-labeling requirement, in doubt.

The chain of more than 34,000 quick-service restaurants worldwide was among the first restaurant brands to introduce nutrition information on packaging, during its sponsorship of the 2006 Winter Olympics in Torino, Italy. For several years, even before government-mandated menu labeling, McDonald’s published caloric and nutritional information on brochures, tray liners and on its website. McDonald’s operates or franchises restaurants in 119 countries. http://nrn.com/latest-headlines/mcdonald-s-debuts-new-packaging-featuring-qr-codes

McDonald’s expands chicken wing test to Chicago

Move signals possible national rollout of Mighty Wings, says analyst Jan. 7, 2013 McDonald’s USA’s decision to extend its testing of Mighty Wings in the Chicago market this week could signal an eventual national rollout for the chicken wing product, according to a research note from securities analyst Lynne Collier of Sterne Agee. The Oak Brook, Ill.-based chain with more than 14,000 quick-service restaurants in the United States tested its Mighty Wings item for a limited time last summer in Atlanta.

“Given that we believe that the Atlanta test proved successful,” Collier wrote, “we believe that it is likely that we will continue to see additional McDonald’s markets featuring wings and would not rule out a national launch in the future.” Collier’s channel checks among McDonald’s operators revealed that the wings would be sold in orders of three, five and 10 pieces. A starting price likely would be about $3, Collier estimated. McDonald’s biggest quick-service competitors also have focused on chicken in the new year or have developed chicken-wing-like products before. In new menu additions revealed on Jan. 2, Burger King included upgraded chicken nuggets with “all white meat” and a “crispy tempura-style batter.” Wendy’s last chicken limited-time offer was a Mozzarella Chicken Supreme sandwich during the holidays, but the chain also sold Boneless Wings for a limited time starting in June 2009.

And one of the flavors for Taco Bell’s 99-cent Loaded Grillers is a Spicy Buffalo Chicken Griller that simulates a Buffalo wing wrapped and grilled in a tortilla. Collier also noted that a chain the size of McDonald’s wading into the market for chicken wings could affect fast-casual or casual-dining chains specializing in wings. “We believe that wings could be a successful new product launch for McDonald’s,” she wrote. “However, we note that a national launch by McDonald’s could create cost pressure on wings as it relates to supply. Potentially, this could result in sustained high pricing for companies selling wings, such as Buffalo Wild Wings.” That dynamic in the commodity market for chicken wings already had a major effect for much of 2012. For its most recent quarter, which ended Sept. 23, 2012, Minneapolis-based Buffalo Wild Wings reported a 5-percent decrease in net income despite having more stores open compared with a year earlier and same-store sales increases in the mid-single digits.

During that time period, the average price of chicken wings rose 70 percent to $1.97 per pound, compared with $1.16 per pound in the chain’s year-earlier third quarter, Buffalo Wild Wings said. McDonald’s is maintaining a robust menu innovation pipeline in the United States in order to turn around some recently soft domestic same-store sales. Its popular McRib sandwich is available nationwide as a limited-time offer, including as a $1 add-on to the purchase of any Extra Value Meal. The chain also recently added the Grilled Onion Cheddar Burger to the Dollar Menu. McDonald’s operates or franchises more than 34,000 restaurants worldwide.

http://smallbusiness.chron.com/product-development-strategy-mcdonalds-12207.html

PRODUCT MODIFICATION

Say (Cottage) Cheese

McDonald’s paneer burger for the Indian palate June 12, 2011 Why McDonald’s now loves paneerEvery April McDonald’s India executives hold an offsite meeting to chart the brand’s future growth plans and consider modifications to its menu. At the 2009 meeting, the team felt that while McDonald’s India had an excellent array of vegetarian products, there was no ‘premium’ – priced above Rs 50 – offering on this platter. It decided there should be one. Abhijit Upadhye, menu management and supply chain head, was given the responsibility of creating it.

That was the starting point of a two-year-long saga that culminated in the launch of ‘McSpicy Paneer’ in end-March this year, which has proved so popular that most McDonald’s Indian outlets keep running out of stock every day. India is the fast food chain’s global vegetarian hub. It is also the only country where McDonald’s does not serve its iconic Big Mac, since the burger patty contains beef. Until recently it was also the only country where McDonald’s served vegetarian burgers, though lately, the United Arab Emirates has been picking up McDonald’s vegetarian products too, primarily to cater to the expatriate Indian population.

Upadhye, who earlier played a key role in adapting McDonald’s French fries for the Indian market and launched the breakfast menu in India, began from scratch. Early on, he and his team decided – on the basis of focus group studies – that the premium burger would be paneer based. The problem? No one had ever made a paneer burger before. McDonald’s had introduced paneer in its menu earlier – it used to have McCurry Pan, which comprised crumbled paneer nuggets – but the paneer burger was a different ball game. Consumer feedback showed they wanted a large slice of paneer filling – and easy as it sounds, that presented a host of problems. As Sudha Shankarnaryanan, General Manager, Product Development and Quality Assurance, points out, there is very little written material on paneer.

“Even Indian cookbooks have barely a page on paneer processing,” she says. In a company like McDonald’s which is devoted to processes, it meant Shankarnaryanan would have to delineate and standardise the process herself. The first task she embarked upon, along with McDonald’s India’s largest food processor Vista, was to figure out a way to massproduce a spicy paneer ‘fillet’, that would comprise the filling of the paneer burger. “We ruled out crumbled filling inside the burger,” says Upadhye. “Even after that, there were many options. We considered a product with two thin slices of paneer with a chutney in between. There was also the option of infusing spices into the paneer at the processing stage. But finally we figured that a spicy, breaded paneer fillet gave the right ‘bite’ and taste.” Shankarnaryanan and a team from Vista visited the Singapore regional headquarters of Kerry Systems, the global coating-systems supplier of McDonald’s, to work out the coating for the paneer fillet. They carried the paneer with them. A coating was devised all right, but a new challenge arose.

“Meats absorb flavours and any coating sticks to them very easily. Paneer is not so amenable,” says Shankarnaryanan. How to coat the paneer without compromising its softness? To get the right equipment, Shankarnaryanan along with representatives of Vista and Kerry visited the Netherlands-based CFS, a renowned food processing equipment company, to acquire the exact equipment they needed. They found it. At first, McDonald’s could find no paneer supplier in India capable of delivering the 120-odd tonne required by the fast food chain every month. But Vista Managing Director Bhupinder Singh had a friend – Rajan Malik, Chairman of the Thane-based dairy-processor Good Day Foods, which had already established itself as one of the largest suppliers of curd to Mother Dairy in western India.

Malik, a graduate from the National Dairy Research Institute at Karnal in Haryana, was flabbergasted by the sheer quanity of paneer Upadhye’s team wanted. “Paneer looks easy to make at home. But mass-producing it to exact standards is tough,” says Malik. He and Shankarnaryanan tried several hundred formulations together for making paneer using different kinds of milk and creating different levels of moisture in the finished cheese. “We needed a paneer that was neither so soft that it crumbled easily during processing nor so firm that it became rubbery on frying.

We had to walk a fine line,” says Shankarnaryanan. Malik decided to use buffalo milk from the Kolhapur belt, whose quality, he says, is among the best in the country. Quite a compliment from a Punjabi who studied in Haryana. Milk from northern India was rejected for several reasons, including major production problems during the summer months. “We needed assured supplies and quality,” says Malik, highlighting the fact that he travels to the dairy villages once a month. The McDonald’s name helped too, as the fast food giant is known to clear dues with vendors quickly.

“We work on a 10-day cycle, and everything is computerised. Farmers get paid for their milk two days after the cycle closes,” says Malik. “Indian companies have a horrible reputation when it comes to paying their vendors. We did not want that.” Mailk has devised another way of keeping his farmers on board. “We hold back 25 paise a litre from their income, and every Diwali double that sum and give it to them as bonus,” he says. Back to the preparation table. Now that the paneer was ready, the team switched its attention to the sauce.

“The sauce is vital for paneer,” Upadhye explains. He spent a few days with sauce technicians from Mrs Bector’s, a food specialities firm at Phillaur in Punjab. At one such meeting, a technician recalled a particular tandoori sauce he had once made. One taste of it, and Upadhye knew he had found what he was looking for. Early in March 2011, the McSpicy Paneer line fired up at Vista’s processing unit at Taloja, Navi Mumbai. The first few days were crazy: several hundred paneer fillets were thrown away as trials were held to calibrate the machine. Rough edges were smoothened out and Upadhye was able to meet his announced launch date of March 28. http://businesstoday.intoday.in

Product innovation

http://www.restaurantmagazine.com/tag/mcdonalds-restaurants/ http://www.marketingmagazine.co.uk/News/MostRead/1165796/McDonalds-begins-2013-Chicken-McBites-drive/ http://www.quickservicecpa.com/dollars-and-sense/entry/new-product-development-for-atlanta-based-mcdonalds-restaurants http://producenews.com/index.php/news-dep-menu/test-featured/8782-mcdonald-s-eyes-expanding-produce-offerings-in-2013-menu-to-boost-healthy-offerings http://www.quickservicecpa.com/dollars-and-sense/entry/mcdonalds-focuses-on-global-trends-in-2013

McDonald’s reveals upcoming menu and promotion strategies

A look at what McDonald’s is doing to retain market share and meet tough monthly same-store sales comparisons Sep. 20, 2012  McDonald’s dual strategies of emphasizing its value platforms and rearranging limited-time offerings throughout the fourth quarter and beginning of 2013 should help the Golden Arches differentiate and defend its position in a tough market, industry watchers said. In the United States, where same-store sales have risen 4.8 percent through August, but face daunting comparisons from 2011 in the coming months, McDonald’s will put more advertising emphasis back on its Dollar Menu and will shift the nationwide limited release of its popular McRib to December, according to separate reports released this week.

In a research note published this week by Barclays Capital, analyst Jeffrey Bernstein noted that McDonald’s chief executive Don Thompson and others acknowledged a lack of marketing focus on the chain’s value platforms contributing to underperforming sales in the first part of 2012. Meanwhile, a memo from the McDonald’s Operators National Advertising Fund leaked to Advertising Age disclosed McDonald’s decision to move the national McRib promotion back to mid-December, from an earlier scheduled window of mid-October to mid-November. Sources in the Ad Age report noted that McDonald’s faces a same-store sales comparison from December 2011 of a 9.8-percent increase in the United States, which benefited from last year’s unseasonably warm weather. Moving the McRib promotion from November, where it had been on the marketing calendar the past two years, to December feasibly could smooth out the spike in sales from a year earlier.

“It might be a positive move for them, and it’s worth testing,” said Darren Tristano, executive vice president of Chicago-based market research firm Technomic Inc. “Results will dictate how [McDonald’s does] it in the future, but it’s not a surprise they’re shaking things up. They have a new CEO, and maybe this is a way for him to put his own signature on what they’re doing.” The reports also found that McDonald’s plans to launch a premium burger, the Cheddar Bacon Onion Angus Third Pounder, in McRib’s former autumn slot, in addition to a similar Cheddar Bacon Onion chicken sandwich.

The Operators Fund’s leaked memo also said Fish McBites, which had been test-marketed last February, would roll out nationally next February for Lenten season. Ash Wednesday is Feb. 13, 2013. Those planned release dates also coincide with big same-store sales months from a year earlier. In November 2011, a national McRib promotion, as well as peppermint McCafe beverages and a 0.75-percent price, hike drove an increase of 6.5 percent in McDonald’s domestic same-store sales. The brand’s February 2012 same-store sales soared 11.1 percent, benefiting from mild weather, a favorable calendar shift, and sales of the Filet-O-Fish and the nationwide limited-time offer of Chicken McBites.

Building on international success

Every restaurant company needs to balance its marketing with long-term value and periodic new-product news, as McDonald’s and its quick-service peers already do, but McDonald’s has a greater imperative to differentiate itself further because of Burger King’s recent menu moves, Tristano said. “Burger King has taken a ‘me-too’ strategy and added items typically found at McDonald’s,” he said, “and as a result, McDonald’s is less differentiated if you can get a snack wrap and a smoothie at Burger King too. McDonald’s has to strengthen its difference to maintain its market share by creating more innovative LTOs that create craveability and a reason to go specifically to McDonald’s.” The way for McDonald’s to maintain market share in a manner that Burger King, Wendy’s or other rivals can’t is to import successful items and flavors from its many international markets, Tristano added. The Cheddar Bacon Onion sandwiches have done well over the past few years in several European markets, particularly the Chicken Bacon Onion sandwich. Chicken McBites, which have been a premier limited-time offer for McDonald’s this year and laid the groundwork for next year’s Fish McBites, originally were developed in Australia.

The chain’s most recent premium food event in the United States, large McWraps, got its start in Europe as well. “If you look at some of their biggest successes, McCafe started outside the U.S., and I believe the salads were popularized in France,” he explained. “McDonald’s is in more than 100 countries, and you’re going to learn something in every country. If you have the advantage of 130 countries doing research and development for you, you’ll find some very clear winners that have a very broad application back here in the U.S.” One exception to that trend may be the English Pub Burger, which was tested in the United States in the summer of 2011 and was a variant of the Angus Third Pounders with hickory-smoked bacon, grilled onions, steak sauce and Dijon mustard.

Bernstein wrote in his research note that McDonald’s decided not to roll out the Pub Burger as a national limited-time offer after disappointing feedback in test, even after Thompson pointed to the sandwich in previous earnings calls as a possible winner. Culver’s recently introduced its own such limited-time offer, the Colby Jack Pub Burger. But McDonald’s officials told Bernstein during his recent meeting with them that they are confident they could withstand competition from Culver’s or larger rivals who have been growing their sales this year as well.

“The largest of those peers would need to generate an incremental 4 percentage points of comparable-sales gains to negatively impact McDonald’s by 1 percentage point, all else equal,” Bernstein wrote. Oak Brook, Ill.-based McDonald’s operates or franchises more than 33,500 restaurants worldwide, including more than 14,000 in the United States. http://nrn.com

McDonald’s to give away books with Happy Meals Wed, 9 Jan 2013 McDonald’s is launching Happy Readers, a two-year campaign to giveaway books and encourage children to read as part of its Happy Meals marketing strategy.

McDonald’s to give away 15 million children’s books.

Happy Readers kicks off today (9 January) with a five week partnership with publisher DK to give away a series of non-fiction books with Happy Meals. An animal themed TV ad aimed at children will be supported by press activity targeting mums in consumer magazines. McDonald’s will work with a number of publishers to give away different book series over the course of the two-year campaign launched in partnership with the National Literacy Trust. It hopes to address the “startling” statistics revealed by NLT that one in three children don’t own a book and half of children don’t enjoy reading. More than 15 million children’s books will be given away over the next two years as part of Happy Readers. In the UK 60 million children’s books are sold every year which McDonald’s says demonstrates the scale of the campaign. The Happy Readers branding will appear on every Happy Meals box from this week alongside a voucher to buy another book for £1 at WH Smiths.

The initiative follows a pilot last year that saw the restaurant chain give away HarperCollins Mudpuddle Farm books as part of a Happy Meals promotion. McDonald’s internal resesrch found that nine in 10 parents wanted the brand to repeat the promotion. Speaking to Marketing Week ahead of the launch Alistair Macrow, McDonald’s ‘vice president of UK marketing said: “With eight in 10 families in the UK visiting our restaurants in the course of the year we’ve got an opportunity like no one else to give that experience to so much of the UK population. The stats are startling. Our restaurants are fun enjoyable places families come to together and relax so there’s an opportunity for us to inject some fun into the reading experience.”

The brand often attracts criticism for marketing to children and the pilot was criticised by the Children’s Food Campaign and called an “inappropriate marketing strategy at a time when there is an epidemic of childhood obesity”. Macrow batted away potential criticism for the Happy Readers scheme, saying: “It goes back to NLT research that shows a really clear link between book ownership and children’s future success in life. We’re a brand that has a relationship with more children and families than most other brands so I think it’s a really positive thing for us to take that relationship and do something that’s going to help the development of children. I can only see a positive to using our relationship with families in that way. I think that’s really powerful.” http://www.marketingweek.co.uk

McDonald’s rolls out digital play zones Fri, 7 Dec 2012
McDonald’s is rolling out digital interactive Happy Meals play zones in 150 UK restaurants in a bid to encourage kids to be more active.

Gesture controlled play zones will launch in 150 McDonald’s McDonald’s is rolling out digital interactive Happy Meals play zones in 150 UK restaurants in a bid to encourage kids to be more active. The fast food chain says it is introducing the gesture controlled play zones to “enhance the Happy Meal experience”. Children are encouraged to interact with Happy Meals characters and games through images projected onto the floor. It uses overhead tracking cameras with infra-red technology to respond to children’s movement and create an “immersive experience”. Each movement-activated game will be themed alongside Happy Meals promotions. Campaigns can be managed by marketing teams remotely.

A spokesperson for McDonald’s says: “The restaurant re-imaging programme, and the testing of new design and technology innovations, is all about creating an eating-out experience that is fun, entertaining and a treat for every member of the family.” McDonald’s has launched a number of Happy Meals initiatives this year including adding healthier eating options such as fizzy fruit drink Fruitizz and giving away books in a bid to help literacy. The chain faces a constant battle with lobbying organisations over the way it markets to children. A US court ruled McDonald’s could continue to include toys in Happy Meals after a case claimed its tactics to attract children are “predatory”, earlier this year. http://www.marketingweek.co.uk


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