BACKGROUND OF THE BUSINESS

McDonald's Corporation is an Americanfast food company, founded in1940 as arestaurant operated

byRichard and Maurice McDonald, inSanBernardino, California, United States. They rechristened their
business as ahamburger stand, and later turned the company into afranchise, withtheGolden Arches
logo being introduced in 1953 at a location inPhoenix, Arizona. In 1955,Ray Kroc, a businessman, joined
the company as a franchiseagent and proceeded to purchase the chain from the McDonald
brothers.McDonald's had its previous headquarters inOak Brook, Illinois, but moved itsglobal
headquarters toChicago in June 2018.McDonald's is the world's largestrestaurant chain by revenue,
servingover 69 million customers daily in over 100 countries[11] across 37,855 outletsas of 2018.
Although McDonald's is best known for its hamburgers,cheeseburgers andfrench fries, they feature
chickenproducts,breakfast items,soft drinks,milkshakes,wraps, anddesserts. Inresponse to changing
consumer tastes and a negative backlash because of the unhealthiness of their food, the company has
added to itsmenusalads,fish,smoothies, andfruit. The McDonald's Corporation revenuescome from the
rent, royalties, and fees paid by the franchisees, as well assales in company-operated restaurants.
According to two reports published in2018, McDonald's is the world's second-largest private employer
with1.7 million employees (behindWalmart with 2.3 million employees). As of 2020, McDonald's has the
ninth-highest globalbrand valuation.

HOW IT STARTED

The first McDonald's restaurant was started in 1948 by brothers Maurice ("Mac") and Richard McDonald
in San Bernardino, California. They bought appliances for their small hamburger restaurant from
salesman Ray Kroc, who was intrigued by their need for eight malt and shake mixers. When Kroc visited
the brothers in 1954 to see how a small shop could sell so many milk shakes, he discovered a simple,
efficient format that permitted the brothers to produce huge quantities of food at low prices. A basic
hamburger cost 15 cents, about half the price charged by competing restaurants. The self-service
counter eliminated the need for waiters and waitresses; customers received their food quickly because
hamburgers were cooked ahead of time, wrapped, and warmed under heat lamps.

Seeing great promise in their restaurant concept, Kroc offered to begin a franchise program for the
McDonald brothers. On April 15, 1955, he opened the first McDonald's franchise in Des Plaines, Illinois,
and in the same year launched the McDonald's Corporation, eventually buying out the McDonald
brothers in 1961. The number of McDonald's outlets would top 1,000 before the end of the decade.
Boosted by steady growth, the company's stock began trading publicly in 1965.

The public face of McDonald's was created in 1963 with the introduction of a clown named Ronald
McDonald, while the double-arch "m" symbol became McDonald's most enduring logo in 1962, lasting
far longer than the tall yellow arches that had once dominated the earlier restaurant rooftops. Other
products and symbols would define the McDonald's brand, including the Big Mac (1968), the Egg
McMuffin (1973), Happy Meals (1979), and Chicken McNuggets (1983).

The chain continued to expand domestically and internationally, extending to Canada in 1967, reaching
a total of 10,000 restaurants by 1988, and operating more than 35,000 outlets in more than 100
countries in the early 21st century. Growth was so swift in the 1990s that it was said a new McDonald's
opened somewhere in the world every five hours. It effectively became the most popular family
restaurant, emphasizing affordable food, fun, and flavours that appealed to children and adults alike.

TYPE OF BUSINESS: CORPORATION

CORPORATORS/OWNERS:

Chris Kempczinski President and CEO

Founders:

Richard and Maurice McDonald (1st restaurant) Ray Kroc (Founder of the McDonald's Corporation)

PRODUCTS

McDonald's sells a wide range of fast food products such as hamburgers and cheeseburgers, Big Mac,
Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, wraps and
french fries. The company also offers salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve
cones, pies, soft drinks, coffee, McCafé beverages and other beverages. With an aim to minimize obesity
trends and criticism, the company often change its menu.

COMPETITORS

McDonald's faces significant competition from other quick-service brands, such as Burger King, Wendy's
(WEN), Taco Bell, KFC, and Subway. Fast- casual restaurants are also close competitors, with names like
Chipotle Mexican Grill (CMG), and Panera Bread Company. Starbucks (SBUX) is a specialty quick-service
brand that has some offerings that overlap with McDonald's.

In the Philippines, the primary competitor of McDonald's is the Jollibee Corporation, a Filipino fast food
chain.

BUSINESS STRATEGY

McDonalds business strategy utilizes a combination of cost leadership and international market
expansion strategies. Franchising and licensing forms of new market entry is utilized within McDonald's
business strategy to a great extent.
Moreover, product and service standardization lies in the cornerstone of McDonalds business strategy.
McDonald's restaurants offer substantially uniform menu that comprises hamburgers and
cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches,
Chicken McNuggets, wraps, french fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve
cones, pies, soft drinks, coffee, McCafé beverages and other beverages.

It is important to note that along with maintaining product and service standardization, McDonald's
takes into account local tastes and preferences, when developing its menu and engaging in marketing
efforts.

McDonald's competitive advantage is based on the following points:

1. Cheat prices is McDonald's main competitive advantage. The company is engaged in an extensive
utilization of economies of scale to achieve the cost advantage.

2. True to 'fast food' format of its restaurants, McDonald's is famous for the speed of customer service
without compromising the quality of the service. 3. Universality of the taste to a great extent represents
another base of McDonald's competitive advantage. Big Mac tastes almost all over the world due to the
use of the same ingredients in the same quantities and application of the standardized ways of cooking
around the globe. Such a consistence in taste has positive implications on consumer loyalty.

BUSINESS STRUGGLES

• Unhealthy food image: McDonald's has been impacted by negative press like the documentary
"Supersize Me" by Morgan Spurlock in which he contributed our society's obesity to McDonald's and
other fast food chains. In fact, each McDonalds dishes provides large amount of calories but not too
much nutrition.

Customer looses due to fierce competition: McDonalds has to compete with many strong brand name in
fast food industry such as Wendy's, Burger King or Yum! Brands. This fierce competition makes
McDonalds loose a large number of customers who prefer favor of other brands.

• Problem related to health issue: McDonalds use Trans-fat and beef oil in their food. Although it is not
illegal, it affects badly on customer's health because Trans-fat is causes of some kind of cancer.
Consequently, a number of customers who care about their health stop eating at McDonalds
restaurants. It makes revenue of company decrease.
• Legal action: McDonald's has been involved in a number of lawsuits and other legal cases in the
course. For example, there are many case which involved with trademark issue. McDonald's force many
others restaurant, company of just a coffee shop to change their brand name because of keeping "Mc"
letters.

• Unbalance meals: Although McDonalds tries to update its menu by healthy criteria, McDonald's meals
are still unbalance. For example, there are many dishes with chicken (both grilled and fried), bacon,
beef, rib or egg. Besides, just several dishes are salad with vegetable and fruit. Moreover, amount of
fruit or vegetable is not much.

• High employee turnover rate: Although McDonalds has many good managers as well as skillful
employees, the turnover rate is still high. Every year many of their employees are fired out of the
restaurants. Moreover, many others quit their jobs, especially part time employees because of low
salary as well as too high working pressure.

Action related to environmental issue: McDonalds uses HCFC - 22 to make polystyrene that is
contributing to ozone depletion. The company has to repair this weakness if doesn't want to be
criticized.

• Dissatisfied Franchisees: Franchisees are beginning to become very dissatisfied with the fees that
McDonald's are forcing them to pay. As the company continues to expand, they are also increasing the
amount of fees franchisees have to pay for the use of the notorious fast-food brand. Many people are
not very happy about this and as a result many franchisees are selling their businesses.

NET PROFIT

McDonald's annual/quarterly revenue history and growth rate from 2006 to 2021.

McDonald's revenue for the quarter ending March 31, 2021 was $5.125B, a 8.7% increase year-over-
year.

• McDonald's revenue for the twelve months ending March 31, 2021 was $19.618B, a 6.82% decline
year-over-year.

McDonald's annual revenue for 2020 was $19.208B, a 10.09% decline from 2019.

McDonald's annual revenue for 2019 was $21.364B, a 0.5% increase from 2018.

McDonald's annual revenue for 2018 was $21.258B, a 6.85% decline from 2017.