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.