McDonalds Case Study

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

(Kowitt, 2011).

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