Company Profile
McDonald restaurant was founded in 1940 by two brothers Richard and Maurice McDonald who originally opened McDonald as a “barbecue” restaurant but was later changed to become a fast-food service restaurant with new food item such as burgers, fries, shakes, and other creative menus added to their list of fast food to enhance services. With Ray Croc as the first franchisee of McDonald restaurant, it became one of the largest growing fast-food industries in the world with restaurants in 120 countries and one of the “largest employer of labor in the world” (All McDonald’s Statistics and Interesting Facts in 2021, n.d., pp. 1, 5). According to NYSE MCD McDonald’s Corp Statistics and Facts, there “200,00 employees worked at McDonald’s company-owned restaurants, offices and corporate wings”, while there are more than 2 million people employed by McDonald’s franchised worldwide (WallStreetZen, 2021, p. 14). Currently, it was estimated that there are over 39,000 McDonald’s franchised restaurants all over the world with the next biggest market in China reporting almost 3,800 restaurants and Japan with almost 3,000 in 2020 (Statista Research Department, 2021).
Comparative Advantage
McDonalds Restaurants used to be second only to Subway, but as of 2021, McDonald is the leading fast-food restaurant in the world among its competitors, which includes Subway, Burger King, Chick-fil-A, Wendy’s, Starbucks, and other fast-food restaurants (All McDonald’s Statistics and Interesting Facts in 2021). McDonalds worldwide are known for their excellent fast-food menus such as “Big Mac, Quarter Pounder with cheese, Chicken McNuggets, Filet-O-Fish and World-Famous Fries”, which are the favorites among the consumers. McDonald’s continuing to improve the quality and taste of their meat burgers, adding desirable menus, and keeping up with customer’s demand to satisfy and attract their customers worldwide. McDonald is committed to serving excellent tasting burgers, as well as quick service to ensure customers receives satisfaction (Dudobskiy, 2016). McDonald’s comparative advantage over its rivals is the affordability, which include inexpensive items offered on their menu from $1, $2, $3 dollar items with caloric intake alongside the items (McDonald’s Menu Prices & Calories, n.d.). In addition, McDonald’s keeps up with their marketing strategy thru worldwide advertisement with its famous “Golden Arches” that can be seen all over the world with a purpose of connecting with their customers (Dudobskiy, 2016).
Supply and Demand
The demand for McDonald’s food is huge with an estimate of “80 hamburgers” being served worldwide every minute of the day and “12 million pounds of fried items” being sold to customers throughout the 120 countries where McDonalds are operating. McDonald’s restaurants are on demand worldwide due to their fast service and their vast food items, which includes French fries, Big Mac, Happy Meals, and more (All McDonald’s Statistics and Interesting Facts in 2021. n.d.).
Gross Domestic Product
McDonald’s revenue in United States in 2019 was estimated at $21.3 billion; however, its revenue declined to $19.2 billion in 2020 when coronavirus impacted the entire world. As of 2021, McDonald’s revenue ended at a mere “$22.2 billion, which is an increased of 16.59%” from last year (McDonald's Revenue 2006-2021 | MCD, n.d.). It is estimated that McDonald's had a revenue at $10.726 billion from franchised restaurants worldwide, with the highest market coming from Asia and Europe in 2020, and a total brand value estimated at almost $130 billion (Lock, 2021).
Affects of fluctuations in GDP on the economic growth, investments, and patents of McDonald’s profitability
Fluctuations in McDonald’s gross domestic product can have a huge negative impact on its profitability since McDonalds is one of the leading fast-food industries. Anything from changes resulting from environmental factor such as “climate change, deforestation; economic factors such as inflation, labor shortages, and other factors such as the pandemic and more can impact McDonald’s business operations and profitability. In 2020, the spread of coronavirus had impacted the economic growth of all large and small businesses globally. McDonald’s sales worldwide have declined due to restrictions in “hours of operations and dining in” with most of the restaurants shutting down to prevent the spread, staff shortages due to employees suffering from the sickness. Despite these barriers, McDonald’s restaurants managed to stay afloat by opening their drive thru services, providing online ordering for McDonalds, and home delivery. Even with the pandemic and staff shortages, McDonald’s continues to thrive and survive (Annual Reports 2020 – McDonalds, 2021).
Reference
All McDonald’s Statistics and Interesting Facts in 2021. (n.d.). National Tech Center. https://www.nationaltechcenter.org/mcdonalds-statistics-and-interesting-facts/center/
Annual Reports 2020 – McDonalds. (2021, February 23). https://corporate.mcdonalds.com/content/dam/gwscorp/assets/investors/2020%20Annual%20Report.pdf#:~:text=Annual%20Letter%20to%20Shareholders%20Dear%20Shareholders%2C%20the%20Global,people%20we%20strive%20to%20put%20first%20every%20day
Dudobskiy, J. (2016, February 8). Business Strategy and Competitive Advantage. Business Research Methodology. https://research-methodology.net/mcdonalds-business-strategy/
Lock, S. (August 31, 2021) McDonald’s - statistics & facts. https://www.statista.com/topics/1444/mcdonalds/
McDonald’s Menu Prices & Calories. Fast Food, (n.d.). https://www.fastfoodprice.com/menu/mcdonalds-prices/
McDonald's Revenue 2006-2021 | MCD. Macrotrends. https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/revenue
Statista Research Department (2021, April 6). Number of McDonald’s restaurants APMEA 2020, by country. https://www.statista.com/statistics/256049/mcdonalds-restaurants-in-the-emea-region/
WallStreetZen. (June 20, 2021) NYSE MCD McDonald’s Corp Statistics and Facts: https://www.wallstreetzen.com/stocks/us/nyse/mcd/statistics
Mcdonald's has been a fascinating company to learn about. Mcdonald's took a risky approach back in the early days of the company deciding to franchise their company. In 2022, they reached 94.8% Franchised (ForWeekMBA), which has allowed them to grow at a higher rate due to the franchisees taking most of the upfront cost of around 1.3-2 million (Investpida). Mcdonald's is one of the biggest fast food franchises in the US and the world, with 38k stores open worldwide, with Subway being second at 36.6k stores worldwide. Mcdonald's is the most extensive franchised business in the world, and that's been the case for decades now (americasbestfranchises). Refrences https://fourweekmba.com/mcdonalds-revenue-by-country/ https://www.investopedia.com/articles/insights/072516/cost-buying-mcdonalds-franchise-mcd.asp#:~:text=McDonald's%20franchisee%20applicants%20must%20have,cost%20upwards%20of%20%241%20million. https://americasbestfranchises.com/blog/the-biggest-franchises-in-the-world-in-2023/#:~:text=McDonald's,in%20more%20than%20100%20countries.
Usually, the core principle and the biggest ingredient to thriving in the market is having a specific goal when entering a particular market. Macdonald's company was very specific about its purpose and position in the market, enabling it to achieve tremendous growth despite the presence of other businesses that offer almost identical goods. Moreover, it embraces the strategy of differentiation and diversification, thus remaining unique while offering a wide array of products to cushion itself from the shocks of demand ebbs. In parallel, the business has expanded to other economies in Europe and Asia, enabling it to access a larger market while offsetting the threats of a market crash. Diversification is essential in market risk mitigation (Leković, 2018). Despite the effectiveness of diversification, some happenings stretch beyond the competitive advantage of diversification. A good example is the receding COVID pandemic which reduced working hours, thus sizably reducing the demand volume.
Leković, M. (2018). Investment diversification as a strategy for reducing investment risk. Ekonomski horizonti, 20(2), 173-187. https://scindeks.ceon.rs/article.aspx?artid=1450-863X1802173L
Evelyn Lara-Mason
Wk 2 Milestone Response 2
Good evening,
McDonald’s has competition:
In the search of learning about McDonald’s (MCD), the one aspect I take note of is how the Market can compare a newcomer to the block verse a long-time company like McDonald’s. Chick Fil A (CFA) is quickly hitting the ground floor with room to make up for time. Their net sales were $1.24 million (U.S. only) while McDonald’s made an astounding $112 billion globally (Corporate McDonalds, 2022). First in comparison, McDonald’s is public, and CFA is private (Leadem, 2019). With numbers we must be careful to remember that numbers can fool us when there is no base to compare. Looking at whether a company is improving (increasing) or whether numbers look big but actually in a decline (Macrotrends, 2022). Chic Fil A has been increasing each year (graph 1) and with the amount of stores verse McDonalds global setting, it is cause for McDonald’s to take a look at one of their competitors that seems to be paving the highway with polite values, ranking them the 3rd largest chain (graph 2) (Taylor and Yuan, 2019). While McDonalds is number one in ranking, indeed Chic Fil A is here to stay.
Graph 1
Graph 2 Comparison ranking of chains
The future look great for Chic fil a but will McDonalds be able to keep first place in the restaurant chain business. Time may tell a different story.
References:
Leadem, R. (2019, May 14) 25 Interesting Facts You Should Know About Chick-fil-A. Entrepreneur. https://www.entrepreneur.com/article/311452#:~:text=The%20company%20will%20never%20go,always%20remain%20a%20private%20company.
McDonald's Net Income 2010-2022 | MCD (2022), Revenue and Profit. Macrotrends. https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/net-income
Taylor, K., & Yuan, Y. (2019, Sep 03). How Chick-fil-A took over America, explained in charts. Business Insider https://ezproxy.regent.edu/login
Total revenue of Chick-fil-A from 2017 to 2021(in billion U.S. dollars) (2022) Statistica
https://www.statista.com/statistics/1071209/total-revenue-chick-fil-a/
Greetings maripl1,
I have done research about McDonalds in previous economics courses, and it never gets old. This is one of the most interesting companies to research because the growth has exceeded what it originally was sought out to all those years ago. One of the interesting facts is that "nearly 75 percent of the population across the company's top markets lives within three miles of a McDonalds and this advantage allows the Company to meet customers' evolving needs for speed and convenience" (Corporation, 2022).
Works Cited
Corporation, M., 2022. McDonald's Announces New Growth Strategy. [online] Prnewswire.com. Available at: <https://www.prnewswire.com/news-releases/mcdonalds-announces-new-growth-strategy-301168170.html> [Accessed 5 July 2022].
I have always been told that McDonalds biggest investment was actually real-estate. Speaking from experience, depending on where you go throughout the world the menu drastically changes.
Hello,
Which country would you say is the biggest market for McDonald's outside the US and what is its GDP? Also how does fluctuations in the currency exchange market affect McDonald's profitability? I would encourage elaborating on this when submitting your milestone.
Thanks
Jeff Bajah