Mc Donald’s case: I. Overall success:
-Founded: 1955
- Franchising since: 1955
- History: Ray Kroc, a milkshake mixer salesman, ventured to California in 1954 to visit McDonald's hamburger stand, where he heard they were running eight mixers at once. Kroc was impressed by how rapidly customers were served and, seeing an opportunity to sell many more milkshake machines, encouraged brothers Dick and Mac McDonald to open a chain of their restaurants. Kroc became their business partner and opened the first McDonald's in Des Plaines, Illinois in 1955. McDonald's and the Golden Arches have since become an internationally-recognized symbol of quick-service hamburgers, fries, chicken, breakfast items, salads and milkshakes.
- The business
…show more content…
Why succeed: McDonald’s Franchise Model * One of the first to franchise in the industry * Model: follow business format so that they give support for the whole process:
Franchisee– Lower risks and rewards of owning and operatinga McDonald’s franchise– Earns a return on investment through operating profits | McDonald’s * Lower risks of owning or leasing land and building– Covers costs and earns a return on investmentthrough rent, royalties and initial fees |
-It's not hamburgers. It's not the commercials. It's not massive corporate contracts with Disney and Coke. It's the operating system. + The most important thing that leads to McDonald's success is managers willing to do what it takes to follow procedures and implement policies that ensure employees follow procedures, not to mention riding crew and other managers' asses in regards to training those procedures and following up with them on the procedures, all the time!
It's a heavy responsibility for a manager who wants to do the best they can everyday, because it's pretty likely most of the people around you do not wake up and set out to excel
Furthermore, McDonald’s is a true franchise success; the success of McDonald’s goes back to its roots, the start. By being consistent and providing quality service, cleanliness, and values at all times, customers have nothing to complain about and customers always know what to expect locally and internationally. With making things new and fresh, innovation is a key component to the success
Advertising money is spent more efficiently (the franchiser teams up with local franchisees to advertise only in the local area).
Almost sixty-four percent of its stock holders held are institutions. Places such as, Bank of America, Northern Trust Corp, Wellington Management Co and many others that are interested in this company’s growth. Since opening in the middle of 1960’s, McDonald’s any one can recognize its trademark golden arches. We as Americans cannot turn a street corner without seeing a different McDonalds down the road. They are located everywhere, but that just means more profit for the company and its stockholders. The company owns and leases out real estate primarily in connection with its restaurant business. It generally owns the land and buildings or secures out long-term leases for the restaurant sites.
McDonalds is known for the success of their fast food chain restaurants. As a pioneer in the fast food market, McDonalds success is founded on their innovative ideas to maximized profit and product for minimal cost and labor. Their innovation can be seen in all aspects of their business, finance, marketing, advertising, and products.
Macdonald’s offers a strict, but mutually beneficial franchising and licensing agreements that have a term of 20 years (McDonald’s, 2014). Before an individual obtains a franchise or a licensing opportunity, a careful scrutiny of the restaurant location must conform to expectation of future growth of the business. The scrutiny ensures long-term profitability of the restaurant. The process of setting up a restaurant is very thorough. The franchising and licensing agreement allows the corporation to have enough cash for further expansion. Expansion creates dominance and goes a long way to stamp authority as a
Because McDonalds is such a known-worldwide corporation, you have to wonder what kind of man was brilliant enough to come up with the idea. Ray Kroc is the man behind the yellow arches. Ray Kroc was born in 1902 and was known for having various jobs until 1954 when he visited a San Bernardino, CA restaurant and was impressed by how effective and organized the operation of the restaurant was (Ray). He admired their “limited menu… which allowed them to focus on quality and quick service” (Ray). So in 1955, Kroc presented his idea of building McDonald’s restaurants across the country and founded McDonald’s System, Inc. (Ray). Kroc was very successful even from the beginning seeing that as of 1958, the 100 millionth burger had been sold by McDonald’s (Ray). Since then McDonalds has expanded considerably and has caused Americans to affiliate their yellow arches with hamburgers and quick
McDonald’s began as a barbeque, and the brothers strictly offered burgers, fries, and pop. Ray Kroc heard about McDonald’s one day and went to visit the restaurant. Kroc was surprised by their efficiency and the quality of the food. Kroc liked the fact that the brothers could focus on the quality of food, due to the limited menu items. Subsequently Kroc realized their success could amount to much more and shared his vision. Kroc told the McDonald brothers that McDonald’s could be a national business serving people across the country. (At this point, Kroc did not even think about being international). Dick and Mac were thrilled with what they heard, so in 1955 Kroc founded the McDonald’s Corporation and opened the first McDonald’s in Des Plaines, Illinois. By 1960 Kroc had bought exclusive rights to McDonald’s. In 1961, Kroc developed Hamburger University where new employees were trained on how to run a successful McDonald's. Kroc wanted to develop the most efficient methods to store, cook, and sell food, so he had a laboratory built at Hamburger University where students' test different ways to make McDonald's more productive. Hamburger University is still in use today in the search for ways to better McDonald’s. McDonald’s had their first sit-down restaurant in 1962, and then in 1975, McDonald’s had opened their first drive-thru restaurant in Arizona. The first drive-thru restaurant was
McDonalds Company functions in a global restaurant industry, where it franchises and operates restaurants. The revenue of the company consist of fees from franchised restaurants and also from the sales generated from the company operated restaurants. Management of the company examines results on constant currency basis which excludes the effect of the foreign currency and considers average exchange rate of the prior year to calculate. Company do not record any transaction related to the sale or purchase of the franchisees business in the consolidated financial statements. The company operates on diversified geographic segment and equity method where investment 50% or less i.e. Australia, China and Japan. Company regularly checks the fair
First we could say that McDonalds is an American icon, but now it’s safe to say that it’s a well know iconic company around the world. With over 30 different names for McDonalds here are a few interesting ones, and in which part of the world these names are used. McDonald’s is also known as the Golden Arches, Mickey-D’s, Macca’s (Australia), Mackey-D’s, Placcy-D’s and McDog (Britain), McDo (France), MacDoh (Quebec), Mekkes, Mekki, McDoof [literally McStupid] and Der Schotte (Germany), MacDee (Indonesia), McDonaldos and McDonas (Mexico), McCancer (U.S).The nest few parts of the analysis we will breakdown McDonalds structure and go in detail. First we will start with the financial analysis and company’s health; second we move to external analysis and porters 5 forces, third we will discuss internal analysis, fourth we will identify what kind of strategy McDonalds implement and follow, and lastly what I think will be beneficial and how to implement certain changes.
McDonald’s. Ray Kroc proposed an idea to two self-service restaurant owner brothers, Dick and Mac MacDonald, in San Bernardino, California (Hess, 1986). He later devised “The McDonald’s System, Inc.,” (The Ray Kroc Story, n.d.) a plan to open McDonald’s restaurants across the United States celebrated for their making food that was “of consistently high quality and uniform methods of preparation” (The Ray Kroc Story, n.d.) quickly available to their customers. His train of thought was to have ordinary people and merchants buy into the business by
3. What are the advantages and disadvantages of McDonald’s using franchising to grow more quickly in China?
McDonald’s has extremely strict rules when it comes to awarding franchises. First, it is very costly to open a new location or purchase an existing location, with the median startup cost being $300,000 (Kalnins & Lafontaine, 2004, p. 750). As well, the company does an extensive background check on a variety of issues including credit history, business management experience, and the acceptance of the contractual agreement that the company provides. Because of these strict rules and the large amount of capital needed to purchase a location, “rates for franchise applicants are 1% for McDonald's” (Norton, 1988, p. 204). This is an extremely low acceptance rate and is even lower than McDonald’s chief competitor, Burger King, who accepts 1.5% percent of applicants (Norton, 1988, p. 199). These low numbers are understandable in the context of the business and risk that is involved. Though the franchise purchaser must pay a large amount of money to gain the rights to the restaurant, they truly have nothing to lose besides money because they are simply running another company’s business model as well as using their trademarks and logos. McDonald’s on the other hand, has a great amount at stake because they place the well being of an entire restaurant into the caretaking of an individual who simply purchased the rights for the store. If the store does poorly or if there are issues with customer service, it reflects
The reason McDonald’s has been succeeded in the fast food industry is the value of money of their products, and the fast clean and friendly environment. Customers are getting attracted to this chain over competitors due to the quality of service and they could get burgers and fries at one price, not like other places who sells the same products, food package can be bought for a same price. The other quality is the consistency, with this qualities, Korc noticed that they have a potential of opening new stores and expand the business into mass scale successfully, which they do currently.
McDonald has been a well-known and valuable brand for over half a century. The company’s mission and vision is striving to be the world’s best quick service restaurant and formalizing their beliefs into “People, Vision, and People Promise”. “Quality, Service, Cleanliness and Value” also became the company’s motto. The company’s first McDonald store was built “in 1940 by the original McDonald brothers, Dick and Mac. Later in 1954, Ray Kroc became the first official franchisee appointed by Dick and Mac McDonald in San Bernardino, California” (Chandiramani, Ravi). Soon after, Mr. Kroc opened his first restaurant in Des Plaines, Illinois, and the McDonald’s corporation was created. The new franchise began to grow rapidly as a result of its
The first McDonald's restaurant was opened by brothers Dick and Mac McDonald in 1940 on Route 66 in San Bernadino, California. The menu had about 25 offerings, and carhops brought the food out to patrons waiting in their cars.