McDonald’s: What Went Wrong and How to Fix It
1. Introduction
For decades McDonald's was the undisputed king of the fast-food industry. But in recent years its business has been sagging, as customers have increasingly abandoned its core products— burgers and fries— in favor of healthier fare. The company has responded by expanding its menu and revamping its stores, but these efforts have not been enough to stem the decline. So what went wrong? And is there anything McDonald's can do to turn things around?
2. What went wrong?
There are several factors that have contributed to McDonald's declining business. First, there has been a shift in consumer eating habits, away from fast food and towards healthier alternatives such as fresh produce and grilled chicken. This trend has been driven in part by the rise of "fast casual" restaurants such as Chipotle, which offer consumers a healthier alternative to traditional fast food.
Second, McDonald's franchisees have been complaining of low profitability for years, as the company has been slow to adapt to changing customer tastes. In response, McDonald's has been trying to boost franchisee profitability by streamlining its line of production and improving product quality. However, these efforts have not been enough to offset the decline in sales, and many franchisees are now struggling to make ends meet.
Third, McDonald's once-dominant position in the fast-food industry is no longer as secure as it once was. The company faces stiff competition from a number of new entrants, such as Shake Shack and Five Guys, which are eroding its market share. In addition, established rivals such as Burger King and Wendy's are also making a comeback, thanks to their own menu expansions and store redesigns.
4. Who is to blame?
It would be easy to lay the blame for McDonald's woes at the feet of its current CEO, Steve Easterbrook. After all, he took over in 2015, just as the company's problems were beginning to emerge. However, Easterbrook is not responsible for all of McDonald's troubles— many of them predate his tenure— and he has actually done a lot to try to turn things around.
The real culprit behind McDonald's decline is the company's longtime strategy of growth at any cost. For years, McDonald's focused on expanding its global footprint and increasing sales through new store openings and menu additions. This worked well for a while, but it eventually led to saturation in mature markets and left the company ill-prepared for changes in consumer tastes. As a result, McDonald's is now facing declining sales and profits, even as its costs continue to rise.
5. What can be done?
McDonald's needs to find a way to renew growth without resorting to its old playbook of store openings and menu expansions. One possibility would be for the company to focus on increasing same-store sales, rather than simply growing its top line. This would require a shift in focus from new store openings to existing store performance, and it would require McDonald's to invest more in marketing and product innovation.
Another possibility would be for McDonald's to focus on increasing its share of the global fast-food market, rather than simply growing its overall sales. This would require a more aggressive expansion into emerging markets, where the company has a relatively small presence. It would also require McDonald's to adapt its menu and marketing to appeal to local tastes.
Either way, McDonald's will need to make some tough choices if it wants to turn things around. The days of easy growth are over, and the company will need to find a new way to prosper in the years ahead.
1. Introduction
The problem of the case study is the decreasing business activities at McDonald's. The fast-food joint has become the last resort for most customers.
A lot of factors play into the decreasing business such as the change in customer's eating habits, McDonald's franchisees profitability, and the company's secure position in the fast-food industry. These all lead to a decrease in attention from consumers, less money for advertisement, and a negative line of production.
What can be done to change this? The company needs to find a way to grow without resorting to its old ways and needs to focus on increasing same-store sales or its share of the global fast-food market. This shift would require a change in focus from new store openings to existing store performance and would need McDonald's to invest more in marketing and product innovation or adapt its menu and marketing to appeal to local tastes. However, these are only possible solutions and realistically McDonald's will have to make some tough decisions if it wants to change its current state.
2. What went wrong?
There are several factors that have contributed to McDonald's declining business. First, there has been a shift in consumer eating habits, away from fast food and towards healthier alternatives such as fresh produce and grilled chicken. This trend has been driven in part by the rise of "fast casual" restaurants such as Chipotle, which offer consumers a healthier alternative to traditional fast food.
Second, McDonald's franchisees have been complaining of low profitability for years, as the company has been slow to adapt to changing customer tastes. In response, McDonald's has been trying to boost franchisee profitability by streamlining its line of production and improving product quality. However, these efforts have not been enough to offset the decline in sales, and many franchisees are now struggling to make ends meet.
Third, McDonald's once-dominant position in the fast-food industry is no longer as secure as it once was. The company faces stiff competition from a number of new entrants, such as Shake Shack and Five Guys, which are eroding its market share. In addition, established rivals such as Burger King and Wendy's are also making a comeback, thanks to their own menu expansions and store redesigns.
4. Who is to blame?
It would be easy to lay the blame for McDonald's woes at the feet of its current CEO, Steve Easterbrook. After all, he took over in 2015, just as the company's problems were beginning to emerge. However, Easterbrook is not responsible for all of McDonald's troubles— many of them predate his tenure— and he has actually done a lot to try to turn things around.
The real culprit behind McDonald's decline is the company's longtime strategy of growth at any cost. For years, McDonald's focused on expanding its global footprint and increasing sales through new store openings and menu additions. This worked well for a while, but it eventually led to saturation in mature markets and left the company ill-prepared for changes in consumer tastes. As a result, McDonald's is now facing declining sales and profits, even as its costs continue to rise.
5. What can be done?
McDonald's needs to find a way to renew growth without resorting to its old playbook of store openings and menu expansions. One possibility would be for the company to focus on increasing same-store sales, rather than simply growing its top line. This would require a shift in focus from new store openings to existing store performance, and it would require McDonald's to invest more in marketing and product innovation.
Another possibility would be for McDonald's to focus on increasing its share of the global fast-food market, rather than simply growing its overall sales. This would require a more aggressive expansion into emerging markets, where the company has a relatively small presence. It would also require McDonald's to adapt its menu and marketing to appeal to local
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