McDonald’s began its journey as a restaurant in 1940, a last-ditch effort of brothers Dick and Mac McDonald after they failed in the movie business. In 1948, they risked everything on their 15-cent hamburger and their drive-in strategy. As of January 2024, McDonald’s holds the position of the 52th biggest company by market cap. So, we will now go through the McDonald’s SWOT analysis and find out the secrets behind its success.
McDonald’s: Company Overview
| Company | McDonald’s |
| Industry | Fast Food Restaurant |
| Founded | 15 May 1940 |
| Founder | Richard and Maurice McDonald, Ray Kroc |
| President & CEO | Chris Kempczinski |
| Headquarter | Chicago, Illinois, U.S. |
| No. of Employees | 200,000+ |
| Annual Revenue | $23.223 billion (FY 2021) |
| Website | www.mcdonalds.com |
After opening their restaurant, Dick and Mac McDonald’s decided to convert it into a hamburger stand in 1948. It operated as a drive-in that served hamburgers for 15 cents, milkshakes for 20 cents, and French fries for 10 cents. The brothers modeled their process after the principles of production line manufacture and named it the Speedee Service System. Ray Kroc met the brothers in 1954 and used their principle to create the world’s most successful example of the Business Format Franchise Model.
Now, McDonald’s has over 36,000 restaurants globally, with global systemwide sales of $112 billion in 2021. In January 2024, the company’s market cap hit $211.21 billion, and its stock is priced at $290. The company is headed by Chairman Enrique Hernandez Jr. and CEO Chris Kempczinski, and its headquartered in Chicago, Illinois.
Product & Services of McDonald’s
Burgers and sandwiches | Chicken and fish | Beverages | Desserts and shakes | Breakfast | Salads | Coffee
McDonald’s Competitors
Burger King | KFC | Wendy’s | Subway | Starbucks | Dunkin Donuts | Chipotle | Chick-fil-A
Did You Know?
McDonald’s is the only chain restaurant franchise that also owns the land that restaurants are built on. In fact, the company makes more from leasing the land than the royalties it earns from sales. The company now owns 45% of the lots and 70% of the buildings its restaurants are housed in.
Strengths – McDonald’s SWOT Analysis
Powerful Brand Image: McDonald’s is one of the most recognizable food brands globally. The company achieved this by combining its famous golden arches with its iconic jingle. Over 44% of British adults are drawn to its sonic branding and voted it the top most recognizable brand, passing even Coca-Cola and Netflix.
Flavor And Size Consistency: McDonald’s streamlines the production of all of its food items and mechanizes much of the process. This results in a consistent flavor profile and size across most of its restaurants. Just for its fries, McDonald’s will go through 3.4 billion pounds of potatoes each year, which are fried and then frozen at the factory. The company controls chemical amounts, temperature, and storing conditions to ensure every fry across the globe tastes similar.
Fast Sales: From its inception, McDonald’s has focused on efficiency, doubling down on min-maxing its products and services. Because of the tight control the company has over its processes, McDonald’s restaurants can push out 75 burgers each second combined.
Menu Diversity: McDonald’s has a diverse menu with something for everyone. In the USA, over 11 variants of burgers, 6 variants of sandwiches, 20 types of coffee, 3 types of baked goods, 17 types of beverages, and more are sold. In other countries like the Philippines, they will alter their menu and add local favorites such as burger steak with rice. It also offers vegan, gluten-free, low-fat, and vegetarian options.
Vertical Integration: McDonald’s resources every raw ingredient from scratch, processes them in their contracted facilities, ships it using contracted logistics companies, and owns the lot the products are sold on. It has integrated itself into every part of its supply chain, which has been awarded the 2nd best supply chain of 2016. By having long-term, quantifiable goals, empowering suppliers, and prioritizing overall profit, McDonald’s has mastered the vertical integration method.
Weaknesses – McDonald’s SWOT Analysis
Lacking Service Quality Control: Over 85% of McDonald’s restaurants are owned by franchisees. This is why McDonald’s has little control over customer service quality and consistency. There have been instances of wrong orders, missing or bad ingredients, and misbehaving employees. For these reasons, the company still has the lowest customer satisfaction benchmark in 2024.
Variance In Food And Service Quality: McDonald’s has attempted to keep its staple items and service consistent across all restaurants. However, due to differences in culture, international restaurants will often provide superior service and better-tasting local variants compared to their USA restaurants. Reviewers have reported other countries to have fresher food or better service.
Overreliance On Fast-food: The fast-food industry has become more and more trend prone and oversaturated with competitors. For McDonald’s, keeping up with rapidly changing customer opinions and viral trends can be catastrophic. McDonald’s has tried to make viral or trendy food items like the Mighty Wings in 2013, which were considered unpalatable and expensive. Even successful attempts like the McRib are marketing stunts and aren’t sustainable.
High Employee Turnover: McDonald’s has an annual turnover rate of over 130%. The company’s fast service comes at the cost of low employee wages, brutal work hours, and atrocious working conditions. In 2022, McDonald’s has an eNPS score of -14, and 47% of employees have stated they’d never recommend working at the company.
Opportunities – McDonald’s SWOT Analysis
Expanding Into Emerging Markets: McDonald’s has already entered Asian and Latin American markets such as India, Pakistan, Philippines, Columbia, Brazil, and Bolivia. However, McDonald’s has yet to expand into smaller countries such as Bhutan or Bangladesh. The company can open restaurants in urban areas with value-for-money-focused fast food.
Expanding The USA Menu: McDonald’s can expand its USA restaurants’ menu with international items that it already serves outside the nation. This would allow McDonald’s to diversify its menu without figuring out how to streamline the process.
Exploiting Social Media Marketing: While McDonald’s is one the most powerful brands, thanks to its marketing, it has yet to exploit social media. McDonald’s is active on social media platforms, but it fails to interact and respond to users in a way that draws positive attention. It can reduce marketing costs by simply hiring social media managers to engage users and create content for cheaper leads.
Threats – McDonald’s SWOT Analysis
High Competition: McDonald’s is currently far ahead of many of its competitors. But as time passes, chains such as Chipotle, Starbucks, Wendy’s, Jack in the Box, and Cracker Barrel have begun to win over certain demographics. Starbucks, for example, offers a more comfortable atmosphere with friendlier customer service. In 2022, Starbucks has a market cap of over $113.83 billion.
Local Businesses: McDonald’s is known for offering cheap but filling food. However, many local vendors can outpace the company by offering cheaper food items that are tastier, healthier, and made with fresher ingredients. Joe’s Pizza on Carmine Street sells a slice of classic cheese pie for only $3, and most locals prefer local shops like this over chains.
Negative Press Against Fast-food: Fast food has been receiving negative press for years, but it has gotten worse over time. McDonald’s has already been sued for using beef tallow in its fries and criticized heavily for popular items like the Sausage McGriddle. With people becoming more and more health conscious, McDonald’s is at risk of losing customers.
[Bonus Infographic] SWOT Analysis of McDonald’s
Recommendations for McDonald’s
To continue its dominance over the food industry, McDonald’s should mostly focus on modernizing and min-maxing its marketing and communications and improve upon working conditions. The company can consider the following suggestions.
- McDonald’s should hire competent social media managers who specialize in word of mouth or WOM and communication marketing. The company can generate more leads and appeal to a larger customer base by spending less and appearing more engaging.
- It can add vegan items from countries like India, Pakistan, Brazil, the Philippines, and others countries to provide more interesting and healthy options for vegans. Also, Asian countries focus on cost-friendly vegan street food options. McDonald’s can reproduce these items for culture-friendly marketing and larger profit margins.
- McDonald’s should crowdsource ideas for changing customer service. Its overly controlling philosophy has helped in most cases, but it has damaged its employee-to-customer interactions. Understanding what the consumers are unhappy about will allow the company to make meaningful changes that will improve its brand image.
- McDonald’s should create a more engaging workplace atmosphere and monitor its employee communications. Employees should have a protective and fair method to complain against their superiors or coworkers. The company should also have independent investigators looks into restaurants to identify any issues or dissent.
Frequently Asked Questions (FAQs)
How many customers does McDonald’s serve per day?
McDonald’s serves up to 69 million customers per day.
Why is McDonald’s so successful?
McDonald’s has employed franchising and vertical integration with a profit for all mindset from the beginning. Underneath its fast-food business, it generates up to 40% of its revenue from leasing the lots the restaurants are built on.
Final Words on McDonald’s SWOT Analysis
McDonald’s is the uncontested market leader in the food industry, and it has achieved its position by mastering its supply chain. However, if it sticks to traditional marketing, and fast-food items, and doesn’t improve its customer and employee relations, it is bound to face losses soon. Only by improving upon its weaknesses and exploiting new marketing avenues can it sustain its reign.
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