McDonalds Case Study
CASE STUDY of mcdonald's
Part One: Executive Summary
Introduction and Challenge
McDonald's is an ever-growing corporation that has penetrated markets throughout the world,
while consistently producing profits for shareholders. The birth of McDonald's occurred in 1941,
when Dick and Mac McDonald opened a restaurant with drive-in service (Upton, 2005). One
distinguishing factor that these founders incorporated was the "Speedee Service System," an
operational strategy that emphasized detailed attention to equipment, processes, and uniformity. This
birthmark of consistency still penetrates the company and has been lauded as a primary reason for
overall success. As of 1991, the operations manual surpassed 750 pages of intensely meticulous
directions for making the branded McDonald items customers enjoyed. As McDonald's tries to
maintain its supremacy as the fast-food industry leader in the twenty-first century, they are faced with
the following dilemma: how should McDonald's adapt its operations strategy to respond to the
increasing demand for flexibility and product variation.
The Business and Industry
Initially, McDonald's approached several of the central food processing suppliers in order to
satisfy the high demand for various ingredients. These companies declined the offer, not wanting to
adhere to their intense specifications. However, small suppliers gambled on the new upstart and in
return McDonald's created a whole new set of institutional vendors. Attention to detail has made
McDonald's one of the most successful corporations in the world. While the small McDonald's menu
has slowly evolved over time, the operational focus of consistency has been maintained. Two major
menu modifications that provided significant advantage are: (a) the introduction of the breakfast menu
in 1976, and (b) the McCafe? line in 2009. In the 1980s, the breakfast line provided 15% of overall
restaurant sales and the McCafe? line currently adds well over $100,000 for individual store sales
McDonald's competes in the quick-service restaurant industry and key rivals include Burger
King, Subway, Taco Bell, as well as larger establishments such as Chili's and The Olive Garden.
Success among rivals has been achieved by adherence to "limited menu, low prices, and fast service"
(Upton, 2005). McDonald's is now attempting to rebrand itself as socially responsible and health
conscious. Even though the McLean failed in earlier years, the salads and grilled chicken items remain
as staples, and environmentalism plays a growing role in company policy.
McDonald's embraces an operations strategy of extreme uniformity across all locations. The
four main areas that make up much of the operations strategy are product enhancement, maintaining
supplier relationships, tailored equipment, and training. In addition, franchising is a major factor and
by 1992 McDonald's made 39% of revenues from 3,500 domestic franchisees.
Conclusion and Outlook
Uniformity, training, differentiation, and franchising are integral to the future success of this
company as they strive to maintain their dominance in the industry. For McDonald's to continue its
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