Princess Sullivan
Econ 230 Macroeconomics
Dr. Jeff Bajah
Regent University
Rivals & Comparative Advantage
"McDonald’s is undoubtedly the world’s leading quick service restaurant with over 39 thousand locations in over 119 markets. Not only is the chain wide-spread it was by far the most valuable fast-food brand in the world in 2020, with an estimated brand value of approximately 129.32 billion U.S. dollars. The only foodservice company that came close was coffeehouse chain Starbucks, its brand value amounting to the much smaller sum of approximately 47.75 billion U.S. dollars." (Lock, S., 2022).
Rivals and close contenders range from Kentucky Fried Chicken (KFC), Burger King, and more. Though KFC's focus is on fried chicken, it makes it no less of a threat in the fast-food world. With a whopping $2.49 billion dollars in revenue annually, KFC is ranked the 2nd "largest fast-food chain" and growing; with a reported 24,104 restaurants in 120+ countries in 2019 alone. (Mcdonaldsfaq.com). Next comes Burger King, another strong competitor in the fast-food industry. Like McDonald's, it is well known to serve burgers, fries, drinks and more. Burger King shows no signs of slowing down in the future either. With a reported revenue in 2018 of $1.78 billion in 2019, and 17,796 restaurants in 100+ countries. (Mcdonaldsfaq.com, 2022)
Comparative advantage
Though innovative, McDonald's could never be quite duplicated. McDonald's has a comparative advantage, and many people still prefer the McDonald's franchise 'model' and the way they do business - even to this day. With its speed, efficiency, forward-thinking and tech-savvy ways, McDonald's was and always will be ahead of its time. In the past, “The introduction of indoor playgrounds and kids' meals that came with small toys (often related to a contemporary film or television show), later imitated by other fast-food companies, strengthened the business's hold on families with small children." (Mcdonald's corporation, 2015). Now, McDonald's is looking forward to the future and the continuation of generational appeal. McDonald's has set such a high standard it has become a household name, appealing to all generations. With McDonald's it's more than burgers…it's a way of life!
Supply & Demand
Technological advancements, global crisis, and trends can and will affect supply and demand. With the recent Covid-19 pandemic around the world, it forced people to create different ways of doing business. With limited access to people and places as well as the use of masks and social distancing, changed everything and impacted everyone. Some businesses did not make it. Therefore, innovation is essential. Shifting with the times and knowing that what worked then may not work now is pivotal to staying in the game in any business. McDonald's recognizes the times, which will also be key to their success in the future. They are not slaves to the past, remain flexible, and stay abreast of new trends. According to Lucas (2020), McDonald's CEO Chris Kempczinski said “In terms of enduring behavior, I think whether it’s the use of kiosks, the use of mobile, the use of delivery, the use of drive-thru, certainly one of the things is that customers are looking for more of a contactless type of experience,” Kempczinski said. “They’re looking for more of a digital type of experience, one that they can navigate on their own.” Lucas, A. (2020).
Trends & Generational Influences
Not only is technology important today; but so is generational appeal. More and more celebrities can be seen on television influencing the spending habits of people - largely the younger generation. McDonalds is no exception to this. Celebrity endorsements help to sway a crowd, and largely the youth. More and more youth may have increased purchasing power and influence on spending behaviors than ever, and companies are taking notice. "According to calculations based on the 2010 China census data and the data released by the National Bureau of Statistics last year, in 2020, China's population is about 1.4005 billion, and the population of Generation Y is 328,315,484 accounting for 23.43% of the total population and Generation Z is 74,908,462 accounting for 5.35%. These two generational cohorts account for 28.78% of China's total population and are currently the main force of consumption." (Zhang, Bowen, Mulhern, Frank, Wu, Xu, and Wang,andGao, 2021). With such large numbers of consumption from China alone, it is wise to stay on top of the needs of the people no matter what generation they are in.
GDP
McDonald's continues to create jobs, stimulate the economy, and add to the GDP both foreign and domestic. "Global foodservice retailer McDonald’s operated and franchised a total of 39,198 restaurants worldwide in 2020. This figure has seen a year-on-year increase for the last 16 years." (Lock, S., Feb 25, 2022). Though U.S. citizens loves the Golden Arch, the largest revenue accounted for in 2020 came internationally equating to $9.46 billion U.S.D. and only about $7.66 billion U.S.D. domestically. (Lock, S., 2022 Revenue of McDonalds Corporation 2020 by region).
With increasing popularity in China and Japan, these are some of the largest key markets for McDonald's. "In 2020, China had the number of McDonald’s restaurants throughout the Asia Pacific and Middle East with approximately 3.79 thousand stores, followed by Japan with about 2.9 thousand stores and Australia with 1007 stores. Worldwide, there were around 39.2 thousand McDonald’s restaurants in that year." (Statista Research Department, 2021). The GDP of McDonald's home country (U.S.A.) and key market countries are China and Japan.
References
Cowen, T., & Tabarrock, A. (2021). Modern Principles of Economics,5th Ed. New York: Worth Publishers.
Lock, S. (2022, February 25). Number of McDonald's restaurants worldwide from 2005 to 2020. Statista. https://www.statista.com
Lock, S. (Feb 25, 2022). Revenue of McDonald's Corporation 2020, by region. Statista. https://www.statista.com
Lucas, A. (2020, July 28). CNBC.com. Retrieved McDonald's says some pandemic consumer trends could endure (cnbc.com)
Mcdonald’s.com. (2019). Investors. Retrieved March 26, 2022, from https://corporate.mcdonalds.com/corpmcd/investors.html
Mcdonald's Corporation. (2015). In T. Riggs (Ed.), The Gale encyclopedia of U.S. economic history (2nd ed.). Gale. Credo Reference: http://eres.regent.edu/login?url=https://search.credoreference.com/content/entry/galegue/mcdonald_s_corporation/0?institutionId=2468
McDonald’s FAQS. (2022). Top 10 McDonald’s Competitors. Retrieved from https://mcdonaldsfaq.com/mcdonalds-competitors/
O'Neill, A. (2022). Total population in Japan 2016-2026. Statista. Retrieved from https://www.statista.com/statistics/263746/total-population-in-japan
Statista. (2002). Gross domestic product (GDP) at current prices in China from 1985 to 2020 with forecasts until 2026 (in billion U.S. dollars). Retrieved from • China: GDP 2012-2024
Statista. (2022). Gross domestic product (GDP) of the United States from 1990 to 2021 (in billion current U.S. dollars). Retrieved from • U.S. GDP 1990-2019 | Statista
Statista. (2002). Japan: Gross domestic product (GDP) in current prices from 1986 to 2026 Retrieved from • Japan GDP 1986-2026 | Statista
Statista Research Department. (2021, Apr 6). Number of McDonald's restaurants APMEA 2020, by country. Retrieved by • APMEA: number of McDonald's: restaurants by country 2020 | Statista
Yahoo! Finance (2022). McDonald's Corporation (MCD): Income Statement. Retrieved from https://finance.yahoo.com/quote/mcd/financials?p=mcd
Miss Sullivan
This is an excellent start to the milestone, and I agree with you that McDonald's has established a market where it's hard to bring any compensation. Although all fast-food service has taken on the assemble style of making a product by setting up a station that impacts how fast the development is relayed to the customers. I found it interesting that China and Japan were some of the largest key markets for Mcdonald since it is an American-based business with cultural differences between the two countries. All and all, great work and great work
God Speed
JB