Company overview and analysis of mcdonalds

McDonald is one of the largest chains of hamburger fast food restaurant. More than 58 million customers serve daily worldwide by McDonalds. A McDonald’s restaurant runs by a franchise, an affiliate or the corporation itself. The company’s revenues come from rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. The revenues grew 27 % over the three years ending in 2007 to $ 22.8 billion, and 9% growth in operating income to $ 3.9 billion.

The main products that McDonalds sells are hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milk shakes and desserts. The company alter its menu such as salads, wraps and fruit in response of obesity trends in western nations and in the face of criticism over the healthiness of its products.Source (

3.2 History of McDonald’s

In 1940 the two brothers, Dick and Mac MacDonald opened the first McDonald’s restaurant in San Bernardino, California. Initially, they owned a hotdog stand but later on serving 25 items, which were mostly barbequed. In 1948, the brothers closed and then reopened the restaurant to sell only hamburgers, milkshakes and French fries.

Reviewing McDonald’s history, the main income came from hamburgers which were sold at a price of 15 cents. Gradually the restaurant became famous and the brothers began franchising their restaurant in 1953. The first franchise was owned by Neil Fox. The second McDonald restaurant was opened in Fresno, California. It was The first to introduce the Golden Arch design.Ray Kroc, a milkshake mixer salesman and an entrepreneur in 1954 acquired the franchise of McDonald for outside California and Arizona. He opened his first and overall ninth store in Illinois, Chicago and gave birth to McDonalds Corporation. In 1958 McDonalds sold its 100 millionth hamburger. Kroc convinced the McDonalds brothers to sell the business rights to him for a sum $2.7 million.

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McDonalds started great development in 1960s. The development in American automobile utilization contributed a lot to McDonald’s success. Ray Kroc bought out the McDonalds in 1961 from brothers for $ 2.7 million. The success of McDonalds in the 1960s was because of the firm dedicated response to the consumer demand and accurate marketing. In 1965 the Filet o Fish sandwich was introduced. Kroc initially disapprove the new sandwich but after its successful trial, he agreed to add it on the menu. The great Big Mac was introduced in 1968 and the company sold its 5 billionth hamburger in 1969.In 1968 McDonald’s opened its 1,000th restaurant and Fred Turner became the company president and chief administrative officer.

Kroc became chairman and remain CEO until 1973.During 1970 McDonald’s growth continued. Fast service was a priority to the customers. The company passed $ 1 billion in annual sales in 1972. McDonalds had served 20 billion hamburgers in 1976 and system wide sales cross $ billion mark.In the year 1973, McDonalds launched breakfast fast food by introducing Egg McMuffin,. After five years McDonalds added a full breakfast menu and in 1987 one fourth of all breakfast eaten out in America came from McDonalds.In 1974 McDonalds acted upon that philosophy in an original way by opening the first Ronald McDonald House, in Philadelphia, to provide “home away from home” families of children in nearby hospitals. After twelve years 100 similar Ronald McDonald Houses were in operation across the United States.

McDonalds opened its first drive-thru window in Oklahoma city. It gave Americans a fast convenient way to procure a quick meal. The goal was to provide service in 50 seconds or less. Drive-thru sales eventually accounted for more than half of McDonalds system wide sales. 1979, the Happy Meal, a combo meal for children featuring a toy was added in the menu. Source (

McDonald’s altered its menu in 1980s to fulfil varying buyer needs. In 1983, McDonald’s launched McNuggets. McDonald’s introduced salads menu in 1987 to attract health aware consumers. McDonald’s focus on cities and introduced new architectural designs. The main focus of the company is food quality and service.The researchers claim that there was a limit in fast food industry but growth of McDonald’s continued. Effective marketing boost sales. Creative promotion played significant role in the success of McDonald’s.

The 37 percent of overall sales in 1991 came from outside America. McDonalds had established itself in 58 countries and functional in more than 3600 stores outside the America by initial 1990s. The most important global markets were Japan, Canada, Germany, UK.McDonald’s opened a Hamburger University in 1961 to develop their managers. By 1990, more than 40,000 student got bachelor of Hamburgerology degrees from Brook, Illinios campus. It also opened Hamburger university in Tokyo in 1971, in Munich in 1975 and in London in 1982.The 10,000th store opened in April 1988. McDonalds got 20,000 restaurant mark in only eight years in 1996. At the end of 1997 total had cross 23,000.

In 1990s lot of growth of McDonalds has came outside of USA, with global units increasing from 3600 in 1991 to more than 11,000 by 1998. McDonalds modified its menus to local food taste and values. McDonalds used Halal menus in Arab countries. In 1992 about two-thirds of overall revenue came out of America. In 1997 the sales was down about 51 percent. There were some mistakes done by McDonald’s in 1990s.

McDonald’s expelled, Leo Burnett its major advertisement agency in the year 1997 having a 15 year association because of its advertisement policy failures. The research on taste said that consumers preferred the cost at Burger King and Wendy. McDonald’s limit its US expansion plans due to the problems. In 1997 McDonald’s opened only 400 new restaurant compare to 1130 new stores opened in 1995.

In February 1998 McDonalds bought a minority interest in another fast food company. The company also enhances the taste of its sandwiches and launches many new items like McFlurry desserts in summer of 1998. In the same month, the company announced that it would examine its food preparation process in all of its US stores. McDonald’s bought Aroma Cafe in 1999, a UK chain of coffee and sandwiches shops. In the year 1999, McDonald’s 25000 store opened and Jim Cantalupo became company president.

In 2000 McDonald’s bought Boston market chain for $ 173.5 million in cash and debt which became bankrupt. that was McDonalds largest acquisition yet.The company continues its expansion plans in 2001 by purchasing 33 % share in Pret A Manger which experts in sandwiches. There were more than 110 Pret shops in the United Kingdom at that time.The new promotion line “I’m lovin’ it” was launched in September 2003 to back up the new products. This was the first global advertisement camping of McDonald’s which was launched in more than 100 nations and was truly the most successful of all. Revenue gone up helped also by improvements in service. The same store sales rose to 7.3 percent in December 2003. It has increased to 2.4 percent for the whole year after declining 2.1 percent in 2002. In December 2003 McDonalds announced that it would focus only on hamburgers business by limiting its others menus. In 2004 around $1.5 billion was allocated to refurnish the existing restaurants. The Company’s president Cantalupo set some goals like maintaining yearly sales and to boost productivity rate from 3 to 5 percent.

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The SWOT analysis of McDonalds is shown below :

SWOT analysis of McDonald’s:





The brand and detailed market research

To create the right marketing mix.

Innovation is vital to attract consumers since McDonald’s is out for a long time





Increasing numbers of consumers want food that is served in a quick and friendly way.

New competitors.

Changing consumer lifestyles.


3.3 Competitive advantage of McDonalds

Nowadays fast food industry is very competitive due to the presence of many competitors offering different sorts of menus. Despite of the hurdles McDonald’s came out as one of the leading fast food chain around the world.

The great success of McDonalds for many years was depended on a simple formula that is give consumer value for money, fast efficient service and quality in a clean atmosphere and they will come back again and again. In order to deliver the value for money and continuous high quality the company standardized the methods of taking orders, preparing food and service.

Standardization increased the output of employees and ensures that consumers had the same experience in all the stores of McDonalds. The company has developed good business relationships with the suppliers which able to decline its supply chain cost. McDonald’s purchasing power enabled it to realize economies of scale as it get larger in buying and to pass on cost savings to consumers in the form of low priced deals which enhanced forward demand. Wherever the consumers went there was already one of their restaurants.

These continuous experiences and low prices have created brand loyalty among the consumer of McDonalds. This strategy worked really well until late 1990s and early 2000s.After that the company was under criticism for accelerating obesity by its high fat foods.

McDonald’s image has been ruined by the book Fast Food Nation and by the documentary Super Size Me. Due to these circumstances the sales were down and profits were declining in the year 2002. At that critical time, it seemed that McDonalds had lost its position.This situation was resolved by a classic corporate makeover which enabled McDonalds to regain its competitive advantage. First of all higher management was replaced and the considerations were shifted. The company replaced its super size menu by introducing healthier choices like salad menu and apple slices. The company has conducted a research to identify what consumer ate and concluded that people were eating more chicken than beef. Therefore McDonalds emphasized on chicken meals, adding grilled chicken sandwiches, wraps with chicken , southern style chicken sandwiches. The company also make sure to sell many low cost menu including cheeseburger and fries. In the recession period of 2008-2009 sales of low price meals has increased. It has been found that chicken sales doubled from 2002 to 2008. McDonalds buys more chicken than beef.

McDonalds alter its emphasis on the drinks. For years drinks were afterthoughts at McDonalds but the researcher view the fast growth of Starbucks. In 2006 the company decided to offer better coffee including lattes. The company improve the quality of its coffee by purchasing quality beans, using high quality equipments and filtering its water.

McDonalds did not forget the need to keep the price low and service fast. The company adding coffee machines that produces cappuccinos and lattes less than a minute just by a push of a button. For many consumers a latte from the McDonald’s restaurant is fine enough.

The next major change is in the design of the stores. the previous restaurant design have been replaced by sleek new buildings with trendy furnishings and lights, wide screen TVs and Wi-Fi connections. The concept is to highlight the perception of quality and to target more consumers. (Hill, Jone, 2009 ,p 72-74)

3.4 Market share of the company

United Kingdom is found to be McDonald’s best major market last year. Consumers were attracted to its value deals to save money. The company came out with a stunning increase of 11% in sales and 7.5% increase of consumers in the year 2009. Today McDonalds Corporation aim to create 5,000 new vacancies this year. According to the company its stores get busier and open longer and decided to open 10 to 15 new restaurants. The increase in revenue is the greatest in four years in Britain. The company boosted its market shares and make sales of £485 million. The company has increased its overall employees to 80,000 by creating 6,000 new vacancies previous year, 2000 more than it had predicted. The annual net sales of McDonalds were increased by 6% reached to £2.83 billion.


The company had a profit of $6.8 billion and revenues of $ 22.7 billion in 2009 whereas overall sales combining company owned and franchised stores summed to $56.9 billion. In 2008 profits were boost up by 6.2% and revenues were decline 3.3%. The company has observed in five years its revenues increase at an annual rate of 4.9% whereas profit inclined by 14% and storewide sales increased 9%. McDonald’s revenues for the first three quarters of 2009 ending in September 2009 were $ 11.4 billion declined by 10.1% compare to first nine months of 2008. While operating income rose by 1.5% over the same period last year reached to a figure of $5 billion. The decrease in revenue were the result of huge decreases in operating cost.

source (

The following table shows the numbers of McDonalds owned stores and franchises.








Total Restaurants







Franchised Restaurants







Company-Owned Stores







% Company-Owned Stores







Table 1: source(

The chart mentioned below shows the total sales of McDonalds in various part of the world from 2007 to 2009.


Table 2: source (

Chapter 6

Conclusions and Recommendations

6.1 Conclusions

I have found following sets of conclusions by reviewing all the chapters and key findings of the research.

The introduction chapter explained the importance of consumer buyer behaviour in the modern world. It also highlighted thoughts of different authors on the role of buyer’s behaviour. The background of chapter one identifies the context in which research has been conducted. This section tries to point out the affects of consumer behaviour on McDonald’s Corporation, one of the leading global fast food chains. I have tried to explain the reasons for conducting this research in nature of the problem section of this chapter. I have also given the justification of doing this research. The most important part of this chapter is aims and objectives section. Here the researcher has explained main aims and objectives of the study. The aim of the study is the significance of consumer buyers behaviour at McDonalds and the key objectives are; 1) To review the literature of consumer buyer behaviour, 2) To identify the factors that why consumers choose McDonalds food, 3) To explore environmental and individual factors of consumer buyer behaviour and 4)to recommend McDonalds how to improve their business. The approach or organization of the research is also defined in this chapter.

This chapter mentioned literature related to consumer buyers behaviour. It defines the view point of various authors on consumer behaviour. Consumer behaviour is a purchasing behaviour of end users which are individuals and households who purchase goods and services for personal use. These buyers combine to form consumer markets. (Kotler, Armstrong, 2004, p 178).Consumer behaviour is affected by various environmental factors include culture, sub culture, social class, groups and family, situational factors and marketing efforts. The second main group of factors that influence buyer’s purchase decisions are those that are personal or individual to the customer. These factors are psychological factors, lifestyle variables, demographics variables and the economic situation. (Lancaster et al, 2007, p 74-79).Abraham Maslow a psychologist put forward a theory of motivation known as Maslow’s Hierarchy of Needs. This theory is one of the most broadly mention theories of motivation. Maslow observed man needs in the form of a hierarchy increasing from bottom to top levels. Maslow’s hierarchy of need consist of Physiological needs, security or safety needs, affiliation or acceptance needs, esteem needs and Self-actualization needs.(Koontz, Weihrich, 2006, p 290-291).This chapter explained two important models of consumer behaviour which are AIDA model and buyer decision process model. AIDA model consists of four stages which Awareness, Interest, Desire and Action. The AIDA model follows a sequential problem solving process. This model explains activities involve in buyer decision process. The buyer decision model viewed buying as a problem and describes the steps involved in the buying process. These activities are Problem recognition, information search, and evaluation of alternatives, purchase decision and post purchase behaviour. The buying decision process depends on role of purchase within the decision making unit, types of buying behaviour and the decision process. The process of purchasing involves many people who are initiator, influencer, decider, buyer and users. A consumer shows different patterns of behaviour because of risk factor. Complex buying behaviour, Dissonance-reducing behaviour, Habitual buying behaviour, Variety-seeking buying behaviour, Routine decision-making and Impulsive decision-making are various types of buying decision behaviour.

This chapter gives a brief overview of McDonalds Corporation is given. The chapter starts with an introduction. A brief history of McDonalds was mentioned. SWOT analysis of McDonalds has been done in this chapter which defines strength, weaknesses, Opportunities and threats to the company.

I have mentioned the research methodology in order to conduct the research on buyer behaviour. this chapter started with an introduction followed by the review of data collection methods. In data collection section various data collection methods have been discussed including Questionnaire, Interview and observations etc. The view of various authors has been mentioned on different methods of data collection. After that I have mentioned that what methods of data collection I have used and why. I have used Questionnaire and Surveys methods in order to conduct my research.

I have conducted my research based on surveys. I have conducted a total of 63 surveys. I have done these surveys in McDonalds, KFC, Pizza Hut, and Burger king and subway restaurants of Central London area. I have prepared a questionnaire which consists of seven major questions. This questionnaire can be found in the Appendix section.

I went to the different restaurants I have mentioned above. With the permission of the management I would able to communicate with the consumers and able to take answers of the questions I required.

For this purpose I have chosen a sample size, in this case 123 customers. This questionnaire has been responded by 123 customers.

In the last I have mentioned possible limitation to the study. There is a possibility of some error during data collection process during the research. Time limitation is one of the barriers. Conducting surveys are not easy always. I have to go to different restaurants in order to collect the data. It might a possible that some of the respondents of the questionnaire are bias or could not able to reply the questions accurately.

In Data Analysis and Findings chapter, the data points or parameters on which questions are asked during the surveys are mentioned. I have conducted data analysis on seven data points which are age group, gender, education, timings of visits to McDonalds, factors for choosing McDonalds stores, customer retention at McDonalds and reasons for leaving McDonalds food by consumers.

The key findings obtain from the analysis are enlisted below:

1 Age group

Around 45% of customers visited McDonalds having ages from 18 to 25 years. 33 % of respondents visited McDonalds having ages from 26 to 35 years. 16 % of consumers visited McDonalds having ages from 36 to 40 years. Only 6 % of respondents visited McDonalds were more than 40 years.

2 Genders

McDonald’s food is equally famous among men and women. 48 % of customers visited McDonalds stores were males whereas 52 % of customers are females.

3 Education

Around 49% of customers visited McDonald’s stores have secondary education. 28% of customers visited McDonald’s stores have university education. 23% of customers visited McDonald’s stores have primary education.

4 Timings of visits to McDonalds

Around 57% of consumers visited McDonald’s restaurants from 12:00 pm to 6:00 pm. 31% of customers visited McDonald’s stores from 6:00 pm to 12:00 am. Only 12% of customers visited McDonald’s restaurants from 6:00 am to 12:00 pm.

5 Factors for Choosing McDonalds

36% of customers visited McDonald’s restaurant because of its value. 31% of customers visited McDonald’s restaurants because of its high service standards. 13% of respondents visited McDonald’s stores because of its cleaned environment. 11% of consumers visited McDonald’s stores due to brand consciousness and only 9% of respondents visited McDonalds because of their high quality standards.

6 Factors of Customer Retention at McDonalds

35% of customers visited McDonald’s stores due to good value of money. 26% of customers visited McDonald’s restaurants because of implementing high levels of Customer Service and Satisfaction.13% of customers visited McDonald’s stores due to brand loyalty.11% of consumers visited McDonald’s stores due to pleasant and friendly atmosphere.10% of customers visited McDonald’s due to its high quality standards. Only 5% consumer visited McDonalds due to introduction of new products, offers and discounts

7 Reasons for leaving McDonalds foods

42% of customers avoided McDonald’s foods due to high levels of fats and calories. 36% of respondents left McDonald’s food because it can cause obesity. 22% of consumers avoided McDonald’s food because its market competitors offer more variety and taste.

6.2 Recommendations to McDonalds

I have suggested following set of recommendations to McDonalds by analyzing the conclusion and the key findings:

Age group: I have found during the surveys that 78% of customers who visited McDonald’s restaurants in central London area were adults having ages from 18 to 35 years. This particular age group is quite vital because of the highest numbers of their visits and also the major source of business. It revealed that McDonald’s food is very famous among young people of ages from 18 to 25 years and among the adults of ages from 26 to 35 years.

Therefore it is recommended to the company to develop their overall operation strategies including promotions and advertisements in such a way which target and retain this very important age group of customers who has generated the highest revenues for these McDonalds stores which is 78 %.

Gender: I have found that eating McDonald’s food is uniformly popular among males and females. The study revealed that gender is not distinction in this case. 48% of males and 52% of female customers have visited McDonald’s central London stores.

So the company has to target equally male and female consumer by efficient and effective marketing strategies which may include merchandising, promotion and advertisements etc.

Education : The Company has to maintain and improve its high standards of customer service and satisfaction regardless of educational level of consumers. Every single customer who visited McDonald’s stores plays a major role in increasing the business.

Timings of visits to McDonalds: I have found in the research that 88% of customers visited McDonald’s stores from mid day to mid night that is from 12:00 pm to 12:00 am.

My point of view in this concern is that McDonalds stores has to maximize its sales to optimum level during this very crucial business time period which makes 88 % of the total sales. This target can be achieved by implementing and enhancing higher quality standards, fast and efficient service, cleanliness and great value to all consumers at all times in every store.

Factors for Choosing McDonalds: I have found during the research that 67 % of the respondents visited McDonald’s stores because of their high value and service standards and 31 % of the customer visited the stores due to cleanliness, brand and quality factors.

All of these factors are important in order to retain the consumers.

During the survey it has been found that 36% of all consumers visited McDonald’s stores of central London because of the value they offer that is good value of money, value of food and value of customers.

In my point of view McDonald’s corporation has to ensure the implementation and monitoring of highest value and service standards offer to all customers at all times they visit McDonald’s restaurants. Also speedy and efficient service must be ensured and viewed in order to convenience the customers. Secondly McDonald’s stores will have to maintain and improve their cleanliness, branding and quality standards

Factors of Customer Retention at McDonalds: It has been observed by the researcher that 61% of all respondents were loyal to McDonalds because of good value of money and high standards of customer service and satisfaction. Around 13% of customers go to McDonalds due to branding element and 21% of consumers visited because of friendly environment and high quality.

In my opinion McDonalds has to introduce more variety of menus that offers customers good value of money. The company has to take more precise measures for the maintenance and improvement of customer care and service standards. The company has to ensure that all of its restaurants represent nice and soothing atmosphere for the customers. The company should check and monitor the quality standards of the stores. The company should take effective measures for the advertisements and promotions of its products. The company should make sure that its offers and discount vouchers are accessible to masses in order to increase the business. Proper advertising campaigns, promotions and merchandising should be carried out regularly and monitor in order to boost brand loyalty among the customers.

Reasons for leaving McDonalds foods : In my point of view McDonalds Corporation should have to take measures in order to cut the level of fats in its meals which can make customers obese. McDonalds Corporation should have to conduct a research on variety and taste required by its customers in order to improve the food quality.

6.3 Suggestions for future research

This research could be helpful in any future research on the topic of consumer buyer behaviour. This study might have some limitations which I have already mentioned earlier. Conclusion and findings can be used in future research on consumer behaviour. It focused on buying behaviour of consumer while choosing McDonalds food. However in future the research can be widen by exploring the affects of branding and marketing mix on consumer buying behaviour. Future research can thereby focus on the marketing strategies adopted by fast food companies to maintain and improve their businesses.

One of the drawbacks which is revealed during my research that fast foods are excessive in fats which in long run not good for health. In the future the companies may do more research on healthier food options in order to avoid their consumer to get obese. It might be possible in the future that fast food companies diversify variety of food and improve taste in order to attract consumer attention. By adding more variety and taste fast food chains will able to retain the customers and hence boost the business.

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