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Mc Donald¶s



McDonald¶s, the leader in the fast-food wars, faced a crossroads in the early 1990s. Domestically, sales and revenues were flattening as competitors like Burger King, Wendy¶s, and Taco Bell encountered new challenges Sonic and Rally¶s competed using a back-to-basics approach of quickly serving up burgers, just burgers, for timelessconsumers. McDonald¶s was gathering flak from environmentalists who decried all the litter and solid waste its restaurants generated each day To counter some of the criticism, McDonald¶s partnered with the Environmental Defense Fund (EDF) to explore new ways to make its operations more friendly to the environment. Together, EDF and McDonald¶s considered its impact on a wide range ofstakeholders²customers, suppliers, franchisees, and the environment. The company gave its franchisees much autonomy in finding ways to eliminate environmental blight


McDonald¶s roots go back to the early 1940s when two brothers opened a burger restaurant that relied on standardized preparation to maintain quality the Speed Service System. So impressed was Ray Kroc with the brothers¶approach that he became their national franchise agent, relying on the company¶s proven operating system to maintain quality and consistency. Over the next few decades, McDonald¶s used controlled experimentation to maintain the McDonald¶s experience, all the while expanding the menu to appeal to a broader range of consumers. For example, in June 1976, McDonald¶s introduced a breakfast menu as a wayto more fully utilize the physical plant. In 1980, the company rolled out Chicken McNuggets. ««Continued


Introduction of brown paper bags with a considerable percentage of recycled content. Solicitation of suppliers to produce corrugated boxes with more recycled content, which had the twin effect of reducing solid waste and building a market for recycled products.Abandonment of polystyrene clamshell containers to hold sandwiches in favor of new paper-based wraps that combined tissue, polyethylene, and paper to keep food warm and prevent leakage.

The secret of McDonald¶s success is its willingness to innovate, even while striving to achieve consistency in the operation of its many outlets. For example, its breakfast menu,salads, Chicken McNuggets, and the McLean Deluxe sandwich were all examples of how the company tried to appeal to a wider range of consumers. The company has also made convenience its watchword, not only through how fast it serves customers, but also in the location of its outlets. Freestanding restaurants are positioned so that you are never more than a few minutes away by foot in the city or by carin the suburbs. Plus McDonald¶s is tucking restaurants into schools, stores, and more.


The key threats to McDonald¶s domestically are the lack of growth opportunities. The market is well saturated, and it would difficult to achieve double-digit growth. Other concerns are a newfound emphasis on healthier eating. Most of McDonald¶s most popular fare probably in somesmall way contributes to the increasing incidence of cancer, heart disease, and diabetes among the population. McDonald¶s are everywhere, the dining experience is never special. And as Baby Boomers age and become more affluent, it is likely that they will leave behind their fast-food ways, if only to step up to moderately priced restaurants like Olive Garden, Bennigans, and Pizzeria Uno. Thesechains have the added advantage of serving higher-margin alcoholic drinks. McDonald¶s, meanwhile, has to continually battle Burger King and Wendy¶s, which leads to an erosion of margins for everyone. Even alliances with toy manufacturers, while popular with consumers, do little for the bottom line because the cost to run these promotions can be quite expensive.

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