In September 2014, the company announced that they would be accepting Apple Pay in all of its U.S. restaurants ("McDonald 's official global corporate website," 2014). The technology, funded by McDonald 's and their franchisees, allows customers to pay by waving their iphone over a scanning device at a counter or drive-thru window. The payment is charged to the credit or debit card on file for the customer 's iTunes Store account. It is important that McDonald 's accept mobile payments to stay competitive, as many other fast-food establishments and retailers have similar technologies in place. Most competitors also offer a mobile app, which McDonald 's released earlier this year. The app allows customers to receive promotions and loyalty …show more content…
In Japan, the $5 cheeseburger would sell for about 598.80 yen with the current exchange rate. The Japanese customer pays in yen. McDonald 's is based in the U.S., so they will convert the currency into dollars and be exposed to a possible loss or gain when they convert the money. When the dollar is strong, the value of the transaction to McDonald 's will be less than $5. Conversely, if the dollar is weak, McDonald 's will see higher profits in international markets. Early in 2015, the dollar was strong and McDonald 's posted an 11% decrease in revenue for the first quarter of 2015 (Cahill, 2015). The decrease would have been only 1% in “constant currencies” (Cahill, 2015). The impact of currency rate fluctuations is particularly relevant to McDonald 's because they aggressively expanded into foreign markets over the past several years and they are a high volume business. It is also worth considering the supply chain for McDonald 's as there is also exposure to international inflation. Many ingredients are sourced at the local level and they use local produce, bakers, and meat producers. Although this saves them the exchange rate volatility of importing or exporting, it exposes them in other ways. In 2010, when China experienced high food costs, McDonald 's raised menu prices by 0.5 yuan to 1 yuan per item (Kwok, 2010). Wages and labor are another important aspect of the business. The company is impacted by both their own workforce (the
The reason this occurs is because McDonald’s gets so much service that they are able to spread out to new places. This goes along with the fact since they are paid so much for their food, they can lower the prices considerably. For instance, any size drink is one dollar at McDonald's, while a large drink at Culver’s cost $2.29. Another example is how a cheeseburger at McDonald’s also costs one dollar, while a cheeseburger at Culver’s is $2.99. In fact, every single item at McDonald’s (besides multiple chicken nugget sets) is under seven dollars. However, at Culver’s everything is twelve dollars or less, five dollars more than McDonald’s. As mentioned, they can do this because they have more service. Obviously more people choose to go to McDonald’s. The food couldn’t have always been this cheap, which proves that it was always more popular among the citizens. The last thing is that Culver’s has more expensive food for mainly dinner or lunch, but McDonald’s has cheap prices for all three meals a day, breakfast, lunch, and dinner. This way, if you want some hash browns instead of a burger, you can get it even if it’s
McDonald’s make a poor business decision when they had the consumer purchase the fries as well as the drink in order to receive the promotional price. In this particular economy, if McDonald’s was smart, they would have created a new promotion and merged into it before the competitors had realized what was going on. This would have given McDonald’s a clear advantage. With this particular move, several problems were present in utilizing game theory to predict their profits. With the onslaught of fast-food corporations, McDonald’s has endless rivals in the burger world. This being the case, just reducing prices of a product will not do anything for
When an input (machinery, components, capital, labor, etc.) is denominated in a foreign currency, the risk exists that an unfavorable exchange rate movement will increase the cost of doing business. When the products are priced and sold in a foreign currency, an adverse exchange rate movement will make the product appear more expensive to consumers, decreasing demand or forcing the company to reduce its own profit margin to maintain lower price levels. For companies with integrated international business systems, an exchange rate shock can literally force them out of business, with their operations experiencing pressures from both cost and profit centers.
For the rice burgers, a McDonalds double cheese burger is priced at $VND 55,000 or about $USD 2.5 (McDonalds). Similarly, one can find a Whopper Burger priced at $VND 55,000 at Burger King Stores. The estimate cost of a similar size rice burger is about $USD 2.0, so it can be priced at $2.2 in order to sell well. The gross profit would be $0.2 – 0.3 per burger. Thanks mainly to the low labor cost, the company would be able to make a profit at this price. The other size rice burgers are priced at the same price as similar to the competitors and still make a decent profit.
The number of opened stores increased to 2010 at the end of 2015. According to a report by an article published by Tom Roston in 2011, which is related to customers served . The waiting time before ordering is 12 minutes 43 seconds and the time for completing order is 1 minute 46 seconds. In 2011, Chipotle claimed to serve about 696 customers per day on average. Moreover, the number of customers continues to increase so far. On the order hand, the menu prices of McDonald’s are cheaper than the menu prices of Chipotle. According to fastfoodmenuprices.com the prices are below $8/each. The company closed about 350 stores in the beginning of 2015 in Japan, the United States, and China. Every day, McDonald’s restaurants serve 1,916 customers on average which is shown on McDonald's website in 2015. From figures which are mentioned above, we see some similarities between two companies. However, McDonald’s encountered more difficulties in 2015. To conclude, both Chipotle and McDonald’s offered the most reasonable menu prices for each type of food because both desire to attract a steady number of consumers to the
Though McDonald’s have spread its portfolio across the globe which reduces the risk factor but it might face complications if the government regulations and exchange rates fluctuates. McDonald’s have been facing persisting disapproval by a small group of people who have been publicizing its negative picture, the company has to stay cautious in order to avoid any law suit against them. (Leonard, 2015)
footage had grown an average of 7% per year over the past five years, representing one to two new
McDonald is a fast food franchise based in the United States and has various food outlets in other countries like India, United Kingdom, China, Japan, Canada and Australia. McDonald has been termed as the ‘World`s Local Restaurant’ because of its affordable take-out and sit down meals. The economic recession in the US in 2010 greatly affected businesses especially fast food restaurants whereby most small restaurants had to temporarily close their businesses. However, McDonalds remained afloat amidst tough economic times in the American market because of specific strategies which will be discussed.
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
In this economy it is very important for people to spend their hard working money on food with reasonable prices. McDonalds is one of the most reasonable priced fast food restaurants in the nation. It is quite affordable and has many different food items to choose from. The food that is sold for the price of a dollar on their famous dollar menu is amazing. In the Article “Hard Times, Randy Baldwin explains that “McDonalds is a life saver when it comes to prices on their menus”(7).Burger King However has larger prices for many of the same items so no wonder people prefer McDonald’s more. The burgers on their menus are very expensive and the average meal ranges from $5 and up while McDonald ranges from $3 and up. In the Article “Expenses, Michelle Gillis explains that “She will no longer purchase from Burger King because their prices are too high”(2).Different people from all walks of life has different types of price ranges so it depends on someone’s assets
McDonalds obtained an additional customer base and this had a positive impact on sales. Also McDonalds have sponsored past Olympics and this increased the demand of a product especially the Big Mac, they also gained free publicity and this also increases the customer base. This avoids customers to switch to competitors and this means that they will obtain a healthy and stable profit for the future. In the past year if a customer bought a meal from McDonalds the customer would receive a cup as part of their purchase. This increased the amount of customers they get and it also made McDonalds stand out from its competitors. A unique selling point of products differentiates McDonalds from its competitors because they will be more customers visiting the restaurant and this will result to increase of sales.
McDonald's is the world’s leading food service retailer with more than 30,000 local restaurants in 121 countries serving 45 million customers each day.
McDonalds focuses of four major pricing strategies: product line, promotional, penetration, and value pricing. Product line pricing is a unique pricing strategy that falls solely on their many product lines (McDonald’s Pricing Strategies). Economic conditions may change rapidly, thus warranting change in the product or the product line. During the Asian currency crisis, McDonald’s replaced french-fries with rice in its Indonesian restaurants due to the cost considerations. With the collapse of the local rupiah, potatoes, the only ingredient McDonald’s imports to Indonesia, quintupled in price. In addition, a new rice and egg dish was introduced to maintain as many customers as possible the economic hardship (International Marketing. 9th edition pg.335). In order to appeal to the local demographic, international marketers must make sure products do not contain ingredients that might be in violation of legal requirements or religious or social customs. Since Indonesia is in a Muslim country, McDonalds “Maharaja Mac” is made with non-beef products (International Marketing. 9th edition pg. 336).
line with the existent nature of McDonald's premises and business model. Thus, it is recommendable to
Since McDonald’s is the most well know fast food chain in the world with a market cap of 69.35 billion, brand recognition is their biggest strength. The secret of McDonald’s success is its willingness to innovate and maintain consistency in the operation of its many outlets. In recent years McDonald’s has introduced Premium Salads, Snack Wraps, fresh Apple Dippers in the United States, and Corn Cups in China. Also, McDonald 's products are priced so low that economic conditions are almost insignificant.