Home > Business essays > MacDonald: the leading fast food restaurant

Essay: MacDonald: the leading fast food restaurant

Essay details and download:

  • Subject area(s): Business essays
  • Reading time: 13 minutes
  • Price: Free download
  • Published: 21 June 2012*
  • File format: Text
  • Words: 3,764 (approx)
  • Number of pages: 16 (approx)

Text preview of this essay:

This page of the essay has 3,764 words. Download the full version above.

MacDonald: the leading fast food restaurant

1. Executive Summary:

MacDonald’s will be the leading fast food restaurant developing consumer brand and consumer base. The signature line of the production is burger. It also sells chicken sandwiches, French fries, soft drinks breakfast items and desserts. In most recent markets, MacDonald’s offers salads and vegetarian items, wraps and other localized items.

MacDonald’s burger will reinvent the hamburger experience for individuals, families and take out customers with discretion income by selling high quality, innovating products at a reasonable price, designing tasteful, convenient locations and providing industry bench mark customer service.

2. Situation analysis

MacDonald’s is not a new business in the fast food sector. It has already created worldwide acceptance and won millions of customers. However, it is passing through a rough terrain because of the entrance of new fast food competitors and people’s growing concern about the health hazards of fast food. It is slowly losing its ground and it is the urgent need to revitalize its service with its focus on quality food, quality service people’s health and reasonable price.

2.1 Market Summary:

MacDonald’s posses good information about market and knows a great deal about the common attributes of our most valued customers. MacDonald’s will leverage this information to better understand who is served, their specific needs and how MacDonald’s can better communicate with them.

2.2.1. Market Demographics:

The profile for MacDonald’s customers consists of the following geographic, demographic and behavioral factors.

Geography: Geographic targets are the countries with fast food culture. The total targeted population is 45 million who eat at Macdonald’s daily.

Demographics: Demographic targets are those who eat out several times a week, young professionals, those people who patronize higher quality restaurants and cognizant about health

Behavior factors: The MacDonald’s customers enjoy a high quality meal without the mess of making it themselves, when ordering, health concerns in regards to foods are taken into account and the value is attributed to the appearance or presentation of food.

2.2.2 Market Needs:

MacDonald’s will provide its customers with high quality hamburgers and salads with pleasing presentation ,offers a wide selection of health conscious choices and utilizes the top shelf ingredients. MacDonald’s seeks to fulfill the following benefits that are important to their consumers.

Selection: a wide choice of hamburger and salad options.

Accessibility: the patron can gain access to the restaurants with minimal waiting time and can choose the option of time in and out.

Customer service: The patron will be informed with the level of attention that they receive.

Competitive pricing: All products/ services will be competitively priced relative to comparable high end hamburger.

2.2.3. Market Trends:

The market trend for restaurants is headed toward a more sophisticated customer. The restaurant patron today relative to yesterday is more sophisticated in a number of different ways.

Food quality: The preference of high quality ingredients is increasing as customers are learning to appreciate the qualitative differences.

Health consciousness: As people in general are more cognizant of their health, patrons are requesting more healthy alternatives when they eat out.

Selection: People are demanding a larger selection of foods, they are no longer accepting limited menu.

Presentation and appearance: As presentation of an element of the culinary becomes more pervasive, patrons are learning to appreciate this aspect of it.

2.2.4 Swot Analysis

There are considerable numbers of customers of Mc Donald’s in the market. In order to sustain its market for a long-term, it is necessary to retain the customers by it. Customers are not of the same kind. Market research identifies different types of customers as:

  • The parents with children visit MC to give the children a treat.
  • Children-visit it as it is a fun place to eat.
  • A business customer -visits it as service is quick, food is tasty and can be eaten in car even in busy schedule.

Teenagers visit MC as they are attracted by the Saver Menu that is affordable and internet access availability in restaurants. McDonald’s as a leading fast food restaurant possesses both the strengths and weaknesses as every business enterprise in the market place. In the market place, once the strengths and weaknesses of any business are determined, they are fused with the opportunity and threats known as SWOT analysis. Swot analysis of the McDonald’s can be done in these ways.

Strengths:

  • McDonald’s has established the prominent position in the mind of customers i.e. branding.
  • It has undergone detailed market research to create the right marketing mix.
  • The product offer of Mc is to fit the local cultures of customers.

Weakness:

  • Mc has been around for a long time so, important to keep innovating.
  • It could not take in consideration health problem of the customer as it faced a lawsuit in USA claiming that the company was liable for the obesity and heart problem of two teenagers who had eaten its food.

Opportunities:

  • Increasing no. of customers is looking for food that is served in a quick and friendly manner.
  • It maintained an extensive advertising campaign for decades as television, radio and newspaper.
  • It sponsors sporting events from ranging little league to the Olympic Games.
  • It operates more playgrounds to attract children in U.S., trying to reduce its negative impact on the environment by altering company policies.

Threats:

  • Mc is facing the pressure is a sign of the maturity of market for eating outside the house
  • It is facing the threat by new entrants into the restaurant market as Subway and Benjys (sandwich bar) coffee shops like Starbucks and Costa Coffee and brand varieties of fast foods.
  • It is also facing the threats as the customer life style and food habit is changing daily.

3. Marketing objectives:

      
              Over the next two years, MacDonald’s will

  • Establish its services in different locations in south Asian countries.
  • Generate 500,000,000 dollars sales
  • Increase the existing customers by 25%
  • Introduce four new products to be sold in the restaurants.

4. Market strategy:

Market Research carried out reveals that MacDonald’s has to reconsider its price to defend itself from the competitors who have entered the market with their products and it should also take into consideration the health implications it has upon its customers. Meanwhile, it should also extend its services to the parts of globe where it has never been, developing the product to suit the interest of the people.

The 4ps

Product

Macdonald’s places considerable emphasis on developing a menu that customers want market research establishes exactly what it is. However customer’s requirements change over time, what is attractive and fashionable today may not be tomorrow.

In order to meet these changes MacDonald’s has introduce new products and phases out old ones over time and will continue to do so. MacDonald’s knows that sales of products on its menu vary at different depending on the stage a product has reached. MacDonald’s will introduce the local variety of the product in different global markets. It will use the fresh ingredients, top self meat, fresh vegetables and cheese. It will introduce new products to bring the change in the variety of fast food it offers. The company will have the portfolio of products, each in a different stage of its lifecycle. Some of the MacDonald’s option s is growing in popularity while the Big Mac is at maturity stage.

Price

The customer’s perception of value is an important determinant of the price charged. The price of a good has direct relation to its quality in the customer’s mind. The low price of good may give impact to the customer that there is compromise in the quality of good. It is important to be fully aware of the brand and integrity when deciding the price. The price charged is an important factor of customers’ perception of value of the product.

MacDonald’s will charge a considerable price to its products.

Promotion

It is another important aspect of the marketing mix that covers all types of marketing communications. One of the methods is advertising which is conducted on TV, radio, cinema, online, newspaper, magazines. Other promotional methods include sales, promotional offers, telemarketing, direct mail seminars etc. TV advertising makes people aware of the food item, press advertise gives more detail; it may be supported by in store promotions to get people to try the product and a combined promotional device to encourage them to keep on buying the item.

The purpose of most marketing communications is to move the target audience to some type of action which may be to buy the product, visit a restaurant, and recommends the choice to a friend or to increase purchases of the menu item.

Key objectives of ad are to make people aware of an item, feel positive about it and remember it. The more Mc Donald’s knows about the people, the more it is able to communicate messages which appeal to them.

Messages should gain customer’s attention and keep their interest. The next stage is to get them to want what is offered. The right messages must be targeted at the right audience, using the right media.

Place

It is not just the physical location or distribution points for the products.

Mc Donald’s has well arranged restaurants in different location i.e. place to meet the customers demand.

5. Competitors Analysis:

People food habit has been changing worldwide rapidly with large number of people eating out daily. A large number of fast food chains are expanding at present. Brands like Subway, Krispy, Kreme, Camille’s Sidewalk Cafe, Cose Ink, Papa Murphy’s, Bob’s Big Boy etc are on the expansion trail. Meanwhile a number of incumbent chain and their franchises are struggling to return positive results on existing operations. For e.g. .Burger King where one high profile multiunit franchisee went bankrupt and improved sales and profits are vital in turning other franchisees and the franchisor operations. MacDonald will distinguish itself from all other competitors by introducing a range of products, a new store quality and a wi-fi access in all the restaurants.

6. Break Even Analysis:

For the expansion and the improvement of MacDonald’s, a total of 500, 0000 dollars capitals will be required for the first fiscal year. The initial cost will be sourced from its own internal sources which is the income generated from its existing restaurants, and which will be the 50% of the total cost and the rest of the investment will be the loan taken from the bank for the restaurant has already talked to the managers of four internationally renowned banks. An overdraft has also been agreed to be the most suitable arrangement for the first year as financial requirements will vary substantially from month to month and there will be no profits with which to pay the capital. After the first year, trading levels will be more predictable and finance arrangements will be reviewed.

The initial capital requirements will cover the following costs.

a) Exploratory costs:                                                                   150,000 dollars

b) Initials costs:                                                                            550,000 dollars

c) Capital costs:                                                                            650,000 dollars

d) Possible direct costs for the first year                                         2,800,000 dollars

e) Possible overhead expenses for the first year                              9,50,000 dollars

Total first year overheads (950,000) + exploratory and initial costs (700,000) =1,650,000

The projected overheads for the business in the first year will be 1,65,0000.To break even the business would have to achieve sales of which 37% pays the overheads and 63% pays the possible direct costs. If sales X37% =1,650,000 then the sales required to reach the break even would be 4459459.5 dollars.

Therefore, the breakeven point of sales in the first year will be 4459459.5 dollars. This will not be achieved in the first year. However, in the second year the profit margin will cover the overheads and produce certain profit amount.

6. Implementation, Evaluation and Control

Once the marketing strategy is made ready, various responsibilities are provided to the different individuals so that the plan can be implemented. Systems are put in place to gain market feedback that measures success against short term targets. Proper evaluation, how activities are carried out to achieve the objectives, is required. Mc Donald’s has to ensure that it is done within the boundary of a tightly controlled, finite marketing budget.

7. The Environmental and Market forces that have challenged McDonald’s

One of the marketing forces that have been challenging MacDonald’s is supposed to have brought by the growing trend of franchising in the fast food industry. It is found that there is high rate of franchising in fast food industry, so this sector is supposed to be one of the most challenging sectors to operate in. As a fast food industry competing and defending market share market has always been a challenging task for MacDonald’s. Many fast food brands like Burger King, Yum, Subway, Krispy, Kreme, Camille’s Sidewalk Cafe, Cose Ink, Papa Murphy’s; Bob’s Big Boy etc are franchising and expanding. A number of chains have responded to the current environment by attempting to differentiate themselves from competitors. McDonald’s sought to distinguish itself by introducing a range of products and a new focus on a store quality and the new “I’m loving it” Mc Donald’s new health focus involves new ‘Go Active Happy Meals’ for adults that includes salad, bottled water, pedometer and advice to walk more. MacDonald’s has also worked hard changing and testing a new image before rolling it out throughout the group. According to a recent press release, Burger King reportedly has a pipeline of 30 new products now being explored. Mc Donald’s and a range of other chains like Starbucks and Schlolzky’s have also sought to differentiate themselves by rolling out Wifi access (Wireless Internet Service) in many restaurants.

MacDonald’s has often been the target of criticism. In 1990, a small of group of activists is reported to have distributed Leaflets entitled what’s wrong with Macdonald’s criticizing its environmental, health, and labor record. The corporation wrote to the group demanding them to apologize, but the two of the activists refused to back down. MacDonald’s sued them for libel. In 1999, French anti-globalization activist Jose Bove pulled down a half built McDonald’s to protest against the introduction of fast food in the region. In 2001, Eric Schlosser’s book Fast Food Nation included criticism of the business practices of McDonald’s where he mentions that McDonald’s uses its political influence to increase its profits at the cost of people’s health and the social conditions of its workers. The book also questioned McDonald’s advertisement techniques for being targeting the children. In 2002, Hindu vegetarian groups sued McDonald’s for misrepresenting their French fries as vegetarian. Morgan Spurlock’s documentary film Super Size Me in 2004 said that McDonald’s food was contributing to the epidemic of obesity in society. It mentioned that the company was failing to provide nutritional information about its food for its customers. Six weeks after the film released, McDonald’s announced that it was eliminating the super size option, and was creating the adult happy meal. It introduced a huge range of salads, wraps and other low fat options to the people. In response to public pressure, McDonald’s sought to include more healthy choices in its menu. James Meikle, the health correspondent of Guardian mentions the public health minister Melaine Johnson accusing the fast food industry of selling the products that increases the obesity level on 21 January 2005. He also mentioned that the than government had already put the food industry on notice that manufacturers would be banned from advertising products that are high in fat, sugar and salt unless they put their own house in order. This was definitely directed to Macdonald’s as well. On May 22, 2008 McDonald’s announced that, in the U.S. and Canada, it will be introducing cooking oil for its French fries that contain no fats. The company will use canola-based oil with corn and Soya oils by year’s end for its baked items, pies and cook it.

In April 2008, McDonald’s announced that 11 of its Sheffield restaurants have been using a biomass trial that had cut its waste and carbon footprint by half in the area. In that trial, waste from the restaurants were collected by Viola Environmental Services and used to produce energy at a power plant. McDonald’s seems to have a plan to expand this project, although the lack of bio mass power plants in the U.S. will prevent this plan from becoming a national standard, anytime soon. In addition, in Europe, McDonald’s has been recycling vegetable grease by converting it to fuel for their diesel trucks. Furthermore, McDonald’s has been using a corn-based bio-plastic to produce containers for some of their products.

The U.S. Environmental Protection Agency has recognized McDonald’s continuous effort to reduce solid waste by designing more efficient packaging and promoting the use of recycled-content materials. McDonald’s reports that they are committed towards environmental leadership by effectively managing electric energy, by conserving natural resources through recycling and reusing materials, and by addressing water management issues within the restaurant. In an effort to reduce energy usage by 25% in its restaurants, McDonald’s opened a prototype restaurant in Chicago in 2009 with the intention of using the model in its other restaurants throughout the world. Building on past efforts, specifically a restaurant it opened in Sweden in 2000 that was the first to intentionally incorporate green ideas, McDonald’s designed the Chicago site to save energy by incorporating old and new ideas such as managing storm water, using skylights for more natural lighting and installing some partitions and tabletops made from recycled goods.

When MacDonald’s received criticism for its environmental policies in the 1970s, it began to make substantial progress towards source reductions efforts. On August 1 1990,the MacDonald’s Corporation and Environmental Defense joined forces in a unique collaborative project which worked together to find the ways to reduce Mc Donald’s solid waste through source reduction, reuse, recycling, and compositing. Since1996, Mc Donald’s has been systematically recording and analyzing its environment data using its Eco-balance instrument. Eco-balance is an important basis for Mc Donald’s environment controlling. It enables Mc to set ecological priorities and measure the development of McDonald’s environmental performance. It helps Mc Donald’s make right decisions to implement environmental measures efficiently.

Facing the environmental challenges, Mc Donald’s is doing 14 things in its words as follows. Mc Donald’s believes it has a special responsibility to help protect and preserve the environment for future .Here are some deeds Mc Donald’s has done.

Setting targets

MC D. had made a commitment to reduce the volume of solid waste by 50% by 1995 through three R’s i.e. Reduce, Recycle and Reuse.

Bulk is better

McDonald’s moved to a bulk delivery system for Coca Cola and a bag in box system for other soft drink concentrates during 1993 which means no packaging and no waste.

Recycled same materials

MacDonald’s uses recycled content in corrugated cardboard boxes and asks that its suppliers do the same. All its food boxes and cartoons are made from recycled materials.

Use and use again

Three quarters of all restaurants currently save clean, dry and undamaged cardboard cases used for delivery of its French Fries to sell back into industry for the use of a second and sometimes even a third time.

Delivering the goods

Delivery vehicles that can carry fresh, frozen and chilled food have resulted in fewer deliveries enabling it to reduce the diesel costs and fuel emissions.

Energy saving

Everyone at Mc Donald’s is encouraged to save energy where possible. A utility committee was established to rationalize and control resources which was successfully managed to increase efficiency and find cost savings. The design and development of buildings and equipment result in initiatives as special lighting system that reduce electricity use by adapting the brightness to the daylight outside and reacting to the busiest times in the restaurant.

No more CFCs.

Since 1998, MacDonald’s has only used CFC free materials in its packaging. All refrigeration and air conditioning systems are carefully maintained by approved contractors following industry guidelines for the use and disposal of CFCs.

Rainforests

Nowhere in the world, has McDonald’s use of beef threatened tropical rainforests.In the UK, McDonald’s only uses EC produced beef, mainly from UK and Irish suppliers with minority from France.

Bring on Smog hogs

McDonald’s introduced ‘Smog Hogs’ electrostatic precipitators in 1983 which clean up the local environment by removing the cooking smells before they leave the restaurants.

Local action

Mc Donald’s restaurant managers and franchisee developed environmental projects with local schools and community groups. A competition is run each year, the President’s Environmental Award, to encourage restaurant staff to participate actively in the improvement of their local environment.

Supporting national initiatives

In 1993.Mc Donald’s restaurants all over the UK provided the collecting centres for the Aluminum Can Recycling Association’s Summer Campaign for the Children’s Tropical Rainforest project. Over 5400 tones of aluminum were collected.

Beating the litterbugs

Mc Donald’s was the first restaurant company to introduce “Litter Patrols” to the UK. Everyday, McDonald’s collect all rubbish dropped in the vicinity of the restaurants regularly. Its packaging also holds Tidy Man Symbol to encourage customers to dispose waste properly.

Bin it

Each summer’s road show, McDonald’s teams up with the Tidy Britain Group to take the litter education ‘Bin It for Britain’ to towns and cities across the UK, its main focus is to encourage young people to be responsible for their litter.

Restaurants

Each Mc D. restaurant is carefully designed individually to fit into its local environment. It means listening to local scenery and landscaping dive through restaurant.

References:

Environmental Defense Fund and McDonald’s Corporation. Waste Reduction Task Force Final Report. Oak Brook, IL: McDonald’s, 1991. p. 22

Floyd, C. (2004). The Great Fast Food Challenge. Article. [ online] at

http://www. Franchise- chat.com/ resources/ fast_ food_challenge.htm. Assessed on 10-10-2009.

McDonald’s. [online] at http:/en. Wikipedia. Org/Wiki/ McDonalds. Assessed on 10-10-2009.

McDonald’s corporate website, http://www.mcdonalds.com.au/ Assessed on 10-10-2009.

Mc Donald’s Leaflet Environment-facing the challenges ~ 14 things McDonald’s is doing. [Online] at http://www.mcspotlight.org/company/publications/environment_challenge.html. Assessed on 16-10-2009.

Mestro, R. (2008) McDonald’s Swot. [Online] at

http://www. scribd.com/doc/3972375/MC-DONALDS- SWOT. Assessed on 15-10-2009.

Svoboda, S. (1995) Case A: McDonald’s Environmental Strategy, Pollution Prevention in Corporate Strategy. [Online] at

http://www.umich.edu/ nppcpub/ resources/ compendia/ …/CORPcase A. pdf. (Assessed on 15-10-2009).

...(download the rest of the essay above)

About this essay:

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, MacDonald: the leading fast food restaurant. Available from:<https://www.essaysauce.com/business-essays/macdonald-the-leading-fast-food-restaurant/> [Accessed 29-03-24].

These Business essays have been submitted to us by students in order to help you with your studies.

* This essay may have been previously published on Essay.uk.com at an earlier date.