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COMPANY PROFILE

McDonalds Corporation

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PUBLICATION DATE: 23 Aug 2014
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McDonalds Corporation
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
Business Description...........................................................................................4
History...................................................................................................................5
Key Employees.....................................................................................................8
Key Employee Biographies................................................................................10
Major Products and Services............................................................................17
Revenue Analysis...............................................................................................18
SWOT Analysis...................................................................................................19
Top Competitors.................................................................................................24
Company View.....................................................................................................25
Locations and Subsidiaries...............................................................................28

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McDonalds Corporation
Company Overview

COMPANY OVERVIEW
McDonald's Corporation (McDonald's or 'the company') is one of the world's largest foodservice
retailing chains. The company is primarily known for its burgers and fries, which it sells through
35,429 restaurants in 119 countries. McDonald's operates in the US, Europe, Asia Pacific, and the
Middle East and Africa. It is headquartered in Oak Brook, Illinois and employed about 440,000 people
as of December 31, 2013.
The company recorded revenues of $28,106 million in the financial year ended December 2013
(FY2013), an increase of 2% over FY2012. The operating profit of the company was $8,764 million
in FY2013, an increase of 1.8% over FY2012. The net profit was $5,586 million in FY2013, an
increase of 2.2% over FY2012.

KEY FACTS
Head Office

McDonalds Corporation
One McDonalds Plaza
Oak Brook
Illinois 60523
USA

Phone

1 630 623 3000

Fax
Web Address

http://www.mcdonalds.com

Revenue / turnover 28,106.0


(USD Mn)
Financial Year End

December

Employees

440,000

New York Ticker

MCD

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McDonalds Corporation
Business Description

BUSINESS DESCRIPTION
McDonald's franchises and operates McDonald's branded fast food restaurants all over the world.
The company is one of the world's largest food service retailing chains, preparing and serving a
range of food products and beverages. As of December 31, 2013, the company operated 35,429
restaurants in 119 countries, out of which 6,738 were company-operated and 28,691 were franchised
or licensed. The franchise agreements include conventional franchise arrangements as well as
developmental license agreements and foreign affiliates. Of the total franchises, 20,355 restaurants
were franchised to conventional franchisees, 4,747 were licensed to developmental licensees and
3,589 were licensed to foreign affiliates.
Under the conventional franchise arrangement, McDonald's owns or secures leases for the land
and building while franchisees provide a portion of initial capital in the form of equipment, signs,
seating, decor and maintenance. These franchisees, in turn, contribute to the company's revenue
through the payment of rent and royalties based on a percentage of sales along with minimum rent
payments and initial fees.
Under the developmental license arrangement, licensees provide capital for the entire business,
including the real estate interest. For this type of franchises, McDonald's receives an initial fees as
well as a royalty based on a percentage of sales. The company's largest developmental license
arrangement operates more than 2,100 restaurants across 19 countries in Latin America and the
Caribbean. Also, the company owns an equity investment in some of the foreign affiliated markets,
referred to as affiliates. The company receives a royalty based on a percentage of sales in these
markets. At the end of FY2013, Japan was the largest affiliates market with approximately 3,200
McDonald's restaurants.
The company reports its revenues based on four geographic segments: Europe, the US, Asia/Pacific,
Middle East and Africa (APMEA), and other countries and corporate. Other countries and corporate
includes Canada and Latin America, as well as corporate activities and certain investments.
McDonald's restaurants offer a standardized menu, although there may be geographic variations.
McDonald's key product offerings include hamburgers and cheeseburgers, chicken sandwiches,
French fries, wraps, chicken nuggets, salads, oatmeal, desserts, sundaes, soft serve cones and
pies. It also offers beverages such as shakes, soft drinks, coffee, flavored tea and others. McDonald's
restaurants in the US and many international markets also offer a breakfast menu. The company's
breakfast offerings include muffins, biscuits, hotcakes, and bagel sandwiches.
McDonald's markets its products under a wide range of brand names that include Big Mac,
Filet-O-Fish, Chicken McNuggets, McFlurry, McMuffin, McGriddles, and McCafe among others.

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McDonalds Corporation
History

HISTORY
The history of McDonald's dates back to a hamburger restaurant in California that was opened by
two brothers Dick and Mac McDonald under the name of McDonald's Bar-B-Que in 1940. However,
the restaurant was shut down for three months in early 1948 for alterations and was re-opened in
late 1948 as a self-service-drive-in restaurant. The menu was reduced to nine key items that included
hamburger, cheeseburger, soft drinks, milk, coffee, potato chips and pie. The company introduced
French fries to its menu in 1949.
Ray Kroc, a distributor of milk shake mixers, opened the first franchised McDonald's restaurant in
Des Plaines, Illinois with the permission of the McDonald brothers in 1955.The number of McDonald's
restaurants grew to 100 by 1959 and 500 by 1963. The company went public in 1965 and its shares
were listed on the New York Stock Exchange.
McDonald's established its first international restaurants in Canada and Puerto Rico in 1967. In
1968, one of the first franchisees, Jim Delligatti, introduced Big Mac, which became one of the
popular branded foods in the world. Herb Peterson, an owner operator, introduced Egg McMuffin
as a breakfast item in 1973. The company introduced Happy Meal, which includes a toy, in 1979.
In 1981, the company opened restaurants in Spain, Denmark and the Philippines marking the first
steps of the company's international growth. By 1983, the company had established presence in
over 30 countries with around 7,800 restaurants worldwide. McDonald's introduced freshly tossed
salads to its menu in 1987.
During the early 1990s, the company expanded its reach in Europe and Russia by opening a number
of restaurants.
In 2000, McDonald's bought several other businesses like The Boston Market, Chipotle Mexican
Grill, and Donatos Pizzeria, in an attempt to diversify its operation. In 2001, the company bought a
33% stake in Pret A Manger, a UK sandwich chain, which operated over 100 sandwich shops in the
UK, as well as outlets in New York City, New York.
The company launched a global revitalization plan in 2003, to reassert its operational and marketing
leadership. As part of McDonald's reorganization strategy, the company sold its Donatos Pizzeria
division back to its founders and also decided to discontinue the development of non-McDonald's
brands outside the US during the same year.
In 2005, McDonald's Ventures, a wholly-owned subsidiary of McDonald's, invested in Redbox
Automated Retail, a renter of digital video discs (DVDs) through self-service kiosks, with about 800
locations in the US, including at McDonald's restaurants and supermarkets. During the same year,
DreamWorks Animation and McDonald's entered into a two-year worldwide marketing and promotional
relationship. Also in 2005, McDonald's China introduced its first drive-thru restaurant.

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McDonalds Corporation
History

Disney entered into a cross promotional agreement with McDonald's in 2006. The company sold its
stake in Chipotle Mexican Grill through public stock offering during the same year.
McDonald's introduced its new packaging featuring 24 consumers selected from its first online Global
Casting Call in 2007. During the same time, McDonald's sold Boston Market Corporation, its non-core
business unit, to affiliates of Sun Capital Partners, a private investment firm specializing in leveraged
buyouts and investments.
Further in 2007, McDonald's, along with DIC Entertainment Holdings, launched a legal action to
recover amounts owed to the company by Cornerstone Overseas Investment Limited, a related
company of China Retail Management Limited, the master toy and apparel licensee for McDonald's
McKids line in Asia (excluding Japan and India).
McDonald's announced plans to set up 175 new outlets in China, in early 2009. During the same
year, the company announced plans to open 180-190 company-owned restaurants in India by 2015
with an estimated investment of up to INR5,700 million ($131.6 million). Further in 2009, McDonald's
and Twentieth Century Fox announced their global partnership. As per the multi-faceted partnership,
the company would offer Happy Meal toy collections and restaurant promotions in thousands of
restaurants worldwide.
Towards the end of 2009, McDonald's was selected as an official sponsor of the 2010 FIFA World
Cup and subsequently unveiled its online games exclusively featured on the official FIFA website.
In 2010, the company issued a voluntary recall of Shrek Forever After glassware. The product had
higher levels of cadmium as compared to the standard level set by the Consumer Product Safety
Commission (CPSC).
The company launched a new range of McSpicy products, including the hot and snappy McSpicy
Chicken Burger, McSpicy Paneer Burger, McSpicy Chicken Wrap and McSpicy Paneer Wrap in
India, in 2011. In the same year, the company introduced the McCafe Shakes in three flavors:
chocolate, vanilla and strawberry.
Further in 2011, McDonald's received approval from Office of The Trade Marks Registry on the
trademark Mc (1694379). Later, in mid-2011, the company enhanced its menu to improve the
nutritional composition of food for children and adults, offered at its restaurants across Latin America.
During the London Olympic Games 2012, McDonald's offered an expansive menu with nutritional
offerings through its four McDonald's Olympic restaurants.
In the beginning of 2012, the company expanded its sponsorship agreement to be the official
restaurant on-site at the Olympic Games through 2020.
In FY2012, McDonald's opened more than 750 new restaurants in APMEA, of which over 250 were
opened in China. During the same time, the company opened 1,404 traditional restaurants and 35
satellite restaurants (small, limited-menu restaurants for which the land and building are generally
leased), and closed 269 traditional restaurants and 200 satellite restaurants.

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McDonalds Corporation
History

The company launched new packaging designs on all carry-out bags and fountain beverage cups
with quick response (QR) codes in January 2013. This initiative was undertaken by the company to
provide consumers with nutrition information. In July 2013, McDonald's selected Henry Nguyen, a
Vietnamese businessman and the founder of Good Day Hospitality, as developmental licensee to
open its restaurants in Vietnam.
In February 2014, the company opened its first restaurant in Vietnam. This was the companys
10,000th restaurant in the APMEA region.

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McDonalds Corporation
Key Employees

KEY EMPLOYEES
Name

Job Title

Board

Donald Thompson

President and Chief Executive


Officer

Executive Board

9496664 USD

Andrew J. McKenna

Chairman of the Board

Non Executive Board

1035348 USD

Enrique Hernandez, Jr.

Director

Non Executive Board

275348 USD

Robert A. Eckert

Director

Non Executive Board

275348 USD

Jeanne P. Jackson

Director

Non Executive Board

265348 USD

Richard H. Lenny

Director

Non Executive Board

250348 USD

Walter E. Massey

Director

Non Executive Board

265348 USD

Cary D. McMillan

Director

Non Executive Board

250348 USD

John W. Rogers, Jr.

Director

Non Executive Board

250348 USD

Roger W. Stone

Director

Non Executive Board

250348 USD

Sheila A. Penrose

Director

Non Executive Board

250348 USD

Susan E. Arnold

Director

Non Executive Board

250339 USD

Miles D. White

Director

Non Executive Board

250348 USD

Timothy J. Fenton

Chief Operating Officer

Senior Management

4014401 USD

Jose Armario

Executive Vice President, Worldwide Senior Management


Supply Chain, Development and
Franchising

Richard Floersch

Executive Vice President and Chief Senior Management


Human Resources Officer

Peter J. Bensen

Senior Executive Vice President and Senior Management


Chief Financial Officer

Stephen J. Easterbrook

Senior Executive Vice President and Senior Management


Chief Brand Officer

Kenneth M. Koziol

Executive Vice President and Chief Senior Management


Restaurant Officer

Jim Johannesen

Executive Vice President and Chief Senior Management


Operations Officer, McDonald's USA

Kevin L. Newell

Executive Vice President and Chief Senior Management


Brand and Strategy Officer,
McDonald's USA

Gloria Santona

Executive Vice President, General


Counsel and Secretary

Senior Management

Atif Rafiq

Senior Vice President and Chief


Digital Officer

Senior Management

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Compensation

3599644 USD

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McDonalds Corporation
Key Employees

Name

Job Title

Board

Bridget Coffing

Senior Vice President and Chief


Communications Officer

Senior Management

Adam M. Kriger

Senior Vice President, Corporate


Strategy

Senior Management

Jim Sappington

Senior Vice President and Global


Chief Information Officer

Senior Management

J.C. Gonzalez-Mendez

Senior Vice President, Global CSR, Senior Management


Sustainability and Philanthropy

Erik Hess

Senior Vice President, Consumer


and Brand Strategy

Deborah Wahl

Senior Vice President and Chief


Senior Management
Marketing Officer, McDonald's USA

Douglas M. Goare

President, McDonald's Europe

Senior Management

3919408 USD

David L. Hoffmann

President, McDonald's APMEA

Senior Management

3238956 USD

Jeffrey P. Stratton

President, McDonald's USA

Senior Management

Edgardo Navarro

President, McDonald's Latin


America

Senior Management

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Compensation

Senior Management

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McDonalds Corporation
Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES


Donald Thompson
Board: Executive Board
Job Title: President and Chief Executive Officer
Since: 2012
Age: 51
Mr. Thompson has been the President and Chief Executive Officer at McDonald's since 2012. He
has also been a Director at the company since 2011. Prior to his current role, he served as the
President and Chief Operating Officer at McDonald's from 2010 to 2012. Mr. Thompson has been
with the company for 23 years and has held various management positions during that time. He
served as the President, McDonald's USA from 2006 to 2010, and as an Executive Vice President
and the Chief Operations Officer, McDonald's USA from 2005 to 2006.

Andrew J. McKenna
Board: Non Executive Board
Job Title: Chairman of the Board
Since: 2004
Age: 84
Mr. McKenna has been the Chairman of the Board at McDonald's since 2004. He was appointed a
Director at the company in 1991. Currently, Mr. McKenna also serves as the Chairman at Schwarz
Supply Source. He also serves as a Director at Skyline Corporation and Ryan Specialty Group. Mr.
McKenna has served on many civic, community and philanthropic boards over the years and currently
serves as a Trustee at Ronald McDonald House Charities, Museum of Science and Industry (Chairman
Emeritus) and the University of Notre Dame (Chairman Emeritus). He serves as a Director at the
Big Shoulders Fund of the Archdiocese of Chicago, Ann and Robert H. Lurie Childrens Hospital of
Chicago, Ireland Economic Advisory Board, Lyric Opera of Chicago and United Way of Metropolitan
Chicago among others. Mr. McKenna is also the Founding Chairman of Metropolis Strategies.

Enrique Hernandez, Jr.


Board: Non Executive Board
Job Title: Director
Since: 1996
Age: 58

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Key Employee Biographies

Mr. Hernandez has been a Director at McDonald's since 1996. He is the President and Chief Executive
Officer at Inter-Con Security Systems. Mr. Hernandez also serves as the Chairman at Nordstrom
and as a Director at Chevron Corporation and Wells Fargo & Company.

Robert A. Eckert
Board: Non Executive Board
Job Title: Director
Since: 2003
Age: 59
Mr. Eckert has been a Director at McDonald's since 2003. He served as the Chairman at Mattel in
2012. Mr. Eckert also served as the Chief Executive Officer and Chairman of the Board at Mattel
from 2000 to 2011. Currently, he is also a Director at Amgen and Levi Strauss & Co.

Jeanne P. Jackson
Board: Non Executive Board
Job Title: Director
Since: 1999
Age: 62
Ms. Jackson has been a Director at McDonald's since 1999. She has been the President of Product
and Merchandising at NIKE since 2013. Ms. Jackson served as the President of Direct to Consumer
at NIKE from 2009 to 2013. She was the Chief Executive Officer at MSP Capital from 2002 to 2009.
Currently, Ms. Jackson is also a Director at Kraft Foods Group.

Richard H. Lenny
Board: Non Executive Board
Job Title: Director
Since: 2005
Age: 62
Mr. Lenny has been a Director at McDonald's since 2005. He has been the Operating Partner of
Friedman, Fleischer & Lowe since 2011. Mr. Lenny served as the Chairman, President and Chief
Executive Officer at The Hershey Company from 2001 until his retirement in 2007. He is also a
Director at ConAgra Foods and Discover Financial Services.

Walter E. Massey
Board: Non Executive Board
Job Title: Director

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Key Employee Biographies

Since: 1998
Age: 76
Dr. Massey has been a Director at McDonald's since 1998. He has been the President of the School
of the Art Institute of Chicago since 2010. Dr. Massey is the President Emeritus of Morehouse College
having served as its President from 1995 to 2007.

Cary D. McMillan
Board: Non Executive Board
Job Title: Director
Since: 2003
Age: 56
Mr. McMillan has been a Director at McDonald's since 2003. He has been the Chief Executive Officer
at True Partners Consulting since 2005. From 2001 to 2004, Mr. McMillan was the Chief Executive
Officer at Sara Lee Branded Apparel, and from 2000 to 2004, he served as an Executive Vice
President at Sara Lee Corporation. Currently, he also serves as a Director at American Eagle
Outfitters and Hyatt Hotels.

John W. Rogers, Jr.


Board: Non Executive Board
Job Title: Director
Since: 2003
Age: 56
Mr. Rogers has been a Director at McDonald's since 2003. He has been the Chairman and Chief
Executive Officer at Ariel Investments, which he founded, since 1983. Presently, Mr. Rogers serves
as a Director at Exelon Corporation and as a Trustee of Ariel Investment Trust.

Roger W. Stone
Board: Non Executive Board
Job Title: Director
Since: 1989
Age: 79
Mr. Stone has been a Director at McDonald's since 1989. He has been the Chairman and Chief
Executive Officer at KapStone Paper and Packaging Corporation, formerly Stone Arcade Acquisition
Corporation, since 2005. He was the Manager at Stone Kaplan Investments from 2004 to 2008. Mr.
Stone serves as the Chairman at Stone Tan China Holding Corporation and Stone Tan China
Acquisition (Hong Kong) Company.

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Key Employee Biographies

Sheila A. Penrose
Board: Non Executive Board
Job Title: Director
Since: 2006
Age: 68
Ms. Penrose has been a Director at McDonald's since 2006. She has been the Non Executive
Chairman at Jones Lang LaSalle since 2005. From 2000 to 2007, Ms. Penrose was the President
at Penrose Group. She was an Executive Advisor at Boston Consulting Group during 200108.

Susan E. Arnold
Board: Non Executive Board
Job Title: Director
Since: 2008
Age: 60
Ms. Arnold has been a Director at McDonald's since 2008. She previously served as the President,
Global Business Units at The Procter & Gamble Company (P&G) from 2007 until 2009. Prior to that,
Ms. Arnold was the Vice Chairperson at P&G Beauty and Health from 2006 to 2007 and the Vice
Chairperson of P&G Beauty from 2004 to 2006. Ms. Arnold currently serves as a Director at The
Walt Disney Company, and has been the Operating Executive, Global Consumer and Retail Group
at The Carlyle Group since 2013.

Miles D. White
Board: Non Executive Board
Job Title: Director
Since: 2009
Age: 59
Mr. White has been a Director at McDonald's since 2009. He has been the Chairman and Chief
Executive Officer at Abbott Laboratories since 1999. Mr. White also serves as a Director at Caterpillar.

Timothy J. Fenton
Board: Senior Management
Job Title: Chief Operating Officer
Since: 2012
Age: 56

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McDonalds Corporation
Key Employee Biographies

Mr. Fenton has been the Chief Operating Officer at McDonald's since 2012. Previously, from 2005
to 2012, he served as the President of McDonald's APMEA. Mr. Fenton also served as the President,
East Division for McDonalds USA from 2003 to 2005. He was the Senior Vice President of Southeast
Asia, the Middle East and Africa. Prior to that, Mr. Fenton was the Vice President and Managing
Director at the Middle East Development Company. Mr. Fenton began his career with McDonald's
in 1973. In 1990, he was appointed the Director for Asia Pacific and, from 1992 to 1995 he served
as the Managing Director for McDonald's Poland and Vice President of McDonald's Central Europe
North.

Jose Armario
Board: Senior Management
Job Title: Executive Vice President, Worldwide Supply Chain, Development and Franchising
Since: 2011
Age: 54
Mr. Armario has been the Executive Vice President of Worldwide Supply Chain, Development and
Franchising at McDonald's since 2011. Prior to that, he served as the Group President of McDonald's
Canada and Latin America from 2008 to 2011, and as the President, McDonalds Latin America from
2003 to 2008. Mr. Armario was previously Senior Vice President and International Relationship
Partner for the Latin America region. He joined McDonald's in 1996 and was involved in managing
the company's restaurants in Chile.

Richard Floersch
Board: Senior Management
Job Title: Executive Vice President and Chief Human Resources Officer
Age: 56
Mr. Floersch is an Executive Vice President and the Chief Human Resources Officer at McDonald's.
He joined McDonald's from Kraft Foods International, where he served as the Senior Vice President
of Human Resources from 1998 to 2003. Prior to that, Mr. Floersch was the Vice President of
Corporate Compensation at Philip Morris. Before Philip Morris, he was the Vice President of
Compensation for Kraft Foods North America.

Peter J. Bensen
Board: Senior Management
Job Title: Senior Executive Vice President and Chief Financial Officer
Since: 2008
Age: 51
Mr. Benson has been a Senior Executive Vice President and the Chief Financial Officer at McDonald's
since 2008. He joined McDonald's in 1996 as the Director of Financial Accounting and Reporting

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McDonalds Corporation
Key Employee Biographies

and subsequently held positions of increasing responsibility. Mr. Benson served as Vice President
and Assistant Controller from 2002 to 2007. In 2007, he was appointed Senior Vice President and
Corporate Controller. Prior to joining McDonald's, Mr. Benson was a Senior Manager for Ernst &
Young in Chicago. He also had assignments in the mergers and acquisitions practice and Midwest
region accounting and auditing group.

Stephen J. Easterbrook
Board: Senior Management
Job Title: Senior Executive Vice President and Chief Brand Officer
Since: 2013
Age: 46
Mr. Easterbrook has been a Senior Executive Vice President and the Chief Brand Officer at
McDonald's since 2013. Previously, he served as the Chief Executive Officer at PizzaExpress and
at Wagamama Limited. Mr. Easterbrook began with McDonalds in 1993 as a Financial Reporting
Manager in London. From 1993 until 2011, he held several positions at McDonalds, including
President, McDonalds Europe; Corporate Executive Vice President and Chief Brand Officer; Senior
Vice President and Division President, Northern Europe; Chief Executive Officer, McDonalds UK;
Deputy Managing Director, McDonalds UK; and Regional Vice President for the UKs Southern
region.

Kenneth M. Koziol
Board: Senior Management
Job Title: Executive Vice President and Chief Restaurant Officer
Since: 2013
Age: 54
Mr. Koziol has been an Executive Vice President and the Chief Restaurant Officer at McDonalds
since 2013. He previously served as the Corporate Senior Vice President of Innovation and Design
at the company. Prior to that, Mr. Koziol served as the Corporate Vice President, Worldwide Quality
Assurance. He also served on the Supply Leadership Board and was the leader of the Quality
Assurance Board. Mr. Koziol joined McDonalds in 1988 as Manager in US Purchasing. Since then,
he has held various management positions in the Supply Chain department, including Senior Director
for US Food and Packaging Supply Chain Management. Prior to joining McDonalds, Mr. Koziol
worked at Perseco for six years and was the Director of Purchasing. He also worked at Hyatt Hotels
for six years where he held a variety of restaurant management and purchasing positions.

Jim Johannesen
Board: Senior Management
Job Title: Executive Vice President and Chief Operations Officer, McDonald's USA

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McDonalds Corporation
Key Employee Biographies

Mr. Johannesen is an Executive Vice President and the Chief Operations Officer at McDonald's
USA. Previously, he was the President of McDonald's USA's Central Division. Prior to that role, Mr.
Johannesen served as a Senior Vice President and the Chief Support Officer at McDonald's USA.

Kevin L. Newell
Board: Senior Management
Job Title: Executive Vice President and Chief Brand and Strategy Officer, McDonald's USA
Since: 2013
Mr. Newell has been an Executive Vice President and the Chief Brand and Strategy Officer at
McDonald's since 2013. Prior to his current role, he served as an Executive Vice President and the
Global Chief Brand Officer at the company. Mr. Newell also served as the US Senior Vice President
and Restaurant Support Officer for the West Division from 2009 to 2011. Prior to that, Mr. Newell
served as the US Vice President and General Manager of the Greater Southern Region from 2006
to 2009. Mr. Newell has been with the company for 23 years.

Gloria Santona
Board: Senior Management
Job Title: Executive Vice President, General Counsel and Secretary
Since: 2003
Age: 63
Ms. Santona has been Executive Vice President, General Counsel and Secretary at McDonald's
since 2003. She became the companys Corporate Secretary in 1996 and has served as General
Counsel since 2001. Ms. Santona has been with the company for 36 years.

Atif Rafiq
Board: Senior Management
Job Title: Senior Vice President and Chief Digital Officer
Age: 40
Mr. Rafiq is a Senior Vice President and the Chief Digital Officer at McDonald's. Most recently, he
served as the General Manager of Kindle Direct Publishing at Amazon.com. Before Amazon, Mr.
Rafiq served in a number of leadership capacities for Yahoo!, including Head of Global Product
Marketing/Strategy for Yahoo! News and General Manager for Yahoo! Local. He began his career
on the web in 1996 as a founding member of the Business Development and Corporate Strategy
team at AOL. Prior to that, Mr. Rafiq worked at Goldman Sachs.

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McDonalds Corporation
Major Products and Services

MAJOR PRODUCTS AND SERVICES


McDonald's is one of the world's largest foodservice retailing chains. The company's key products
include the following:
Products:
Hamburgers
Cheeseburgers
Chicken sandwiches
Chicken nuggets
French fries
Salads
Oatmeal
Milk shakes
Desserts and sundaes
Soft serve cones
Pies
Soft drinks
Coffee
Beverages
Biscuits
Hotcakes
Bagel sandwiches
Muffins
Brands:
Big Mac
Filet-O-Fish
Chicken McNuggets
McFlurry
McMuffin
McGriddles
McCafe

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McDonalds Corporation
Revenue Analysis

REVENUE ANALYSIS
Overview
The company recorded revenues of $28,106 million in FY2013, an increase of 2% over FY2012.
McDonald's generates revenues through four business segments, which are defined based on
geographical presence: Europe (40.2% of the total revenues in FY2013), the US (31.5%), APMEA
(23%) and other countries and corporate (5.3%).
Revenues by segment
In FY2013, the Europe segment recorded revenues of $11,300 million, an increase of 4.4% over
FY2012.
The US segment recorded revenues of $8,851 million in FY2013, an increase of 0.4% over FY2012.
The APMEA segment recorded revenues of $6,477 million in FY2013, an increase of 1.3% over
FY2012.
Other countries and corporate* segment recorded revenues of $1,478 million in FY2013, a decrease
of 3.7% compared to FY2012.
*Other countries and corporate includes operations in Canada and Latin America, as well as corporate
activities.

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McDonalds Corporation
SWOT Analysis

SWOT ANALYSIS
McDonald's is one of the world's largest foodservice retailing chains. The company enjoys strong
brand value, which is helping it to maintain a leadership position in its market. However, intense
competition in the retail food industry could erode the companys market share and affect its
profitability.
Strengths

Weaknesses

Strong brand value and market leadership


Focus on value offerings
Strong cash flows driven by the franchise
business model

High spending in the uncertain European


markets

Opportunities

Threats

Growing foodservice market


Growing hot drinks market, another
favorable trend to drive topline
Growing presence in key Asian markets

Intense competition in retail food industry


Food safety and other regulations
Increasing labor wages

Strengths

Strong brand value and market leadership


McDonald's is one of the well-established global brands. It is the worlds largest quick-service
restaurant brand. The companys 35,429 restaurants in 119 countries have reinforced the brand
identity of McDonalds. Many of its products like Big Mac, McGriddle and McMuffin are reputed fast
food brands with strong customer loyalty. McDonald's products are most recognized as affordable
fast food products that offer good quality. The companys brand equity can be gauged by the fact
that on an average McDonald's serves nearly 70 million customers every day. Also, McDonald's
consistently ranks among the top most brands in several brand surveys. In 2014, the company was
ranked among top 25 brands in the worlds top 500 brands list by an industry source specializing in
brand valuation. In 2013, the McDonald's was ranked among the top 10 brands in the top 100 global
brands list by an industry source specializing in brand services and activities. In addition, the company
was featured in the list of worlds most valuable brands 2013 released by a business magazine.
The strong brand portfolio has enabled the company to sustain its leadership in the fast food chain
industry. The company has increased its global market share, both in developed and emerging
markets, primarily driven by the McDonalds brand equity. The revenues have also grown consistently
and the companys global comparable sales also witnessed a growth. Strong brand recognition

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McDonalds Corporation
SWOT Analysis

enables the company to consolidate its market share both through new restaurant openings as well
as product extensions.
Focus on value offerings
McDonalds restaurants offer a broad menu at various price points providing value to its customers
in more than 100 countries around the world. In its company-operated restaurants, the company
manages menu board prices to ensure value at all price points, increase profitability and to mitigate
inflation. To achieve these, McDonalds uses a strategic pricing tool that balances price and product
mix. Franchisees also have access to this strategic pricing tool. The company aims to optimize its
product mix by utilizing a menu with entry-point value, core, premium and promotional offerings.
The company continued to evolve its value platform across geographies during FY2013. In the US,
the company introduced its Dollar Menu as Dollar Menu & More, which is intended to offer value
and variety to its customers at various price points. In Europe, the company enhanced its value
offerings in certain markets with multiple pricing tiers across its menu to appeal to a broad range of
customers. For instance, in France, the company launched the Casse-Croute, a two-item meal for
E4.50 (approximately $5.98). In addition, McDonalds continued to evolve its everyday value platform
by including more affordable menu options and promotional offers across dayparts and price points.
Previously, in FY2012, the company launched the Loose Change Menu, a branded affordability
menu in Australia, while China focused on breakfast, lunch, and dinner value platforms. The company
balanced its value initiatives with mid-tier offers, such as Bubble Tea in China, and premium
limited-time offers, such as the Serious Lamb Burger and Wrap in Australia. The value-based meal
offerings ensure a constant and in some cases, more footfall, and therefore increased sales. In the
long term, the companys popular value offerings will be its core strength in achieving a unique brand
value.
Strong cash flows driven by the franchise business model
McDonalds pioneering franchising model enables the company to keep its costs low. At the same
time, rent and royalty income from various franchise owners ensures a stable revenue stream to the
company. The companys successful franchise model is also helping it achieve strong cash flows.
In FY2013, the companys cash from operations reached $7.1 billion. The substantial cash flow
along with McDonalds strong credit rating and continued access to credit provide the company with
flexibility to fund capital expenditures and debt repayments. McDonalds locally-owned and operated
restaurants through its franchise model are maximizing the brand performance. Furthermore, the
franchise business model, which is less capital intensive than the company-owned model is allowing
the company to be a locally-relevant one.

Weaknesses

High spending in the uncertain European markets

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McDonalds Corporation
SWOT Analysis

For McDonalds, Europe is a major market, with the largest share of revenues coming from the
region. In FY2013, Europe accounted for 40.2% of the total revenues. The European economy has
been in the midst of a prolonged economic slowdown. According to the latest estimates by an
international financial organization, the economy in euro area contracted 0.7% in 2012 and 0.4% in
2013. The GDP growth rate for the euro area is forecast to be 1% for 2014 and 1.4% for 2015.
Although recovery is expected in the economy, it is expected to be very slow with the domestic
demand continuing to witness a decline. Despite sluggish economic activity in the European markets,
the company has plans to increase its market share with the right mix of guest counts, strategic
restaurant reimaging and expansion. The company plans to open more than 300 new restaurants
and reimage nearly 400 restaurants in FY2014 in Europe. However, despite all the initiatives,
McDonalds has little pricing power in Europe due to the slowdown in consumer spending on informal
eating out occasions. Therefore, further spending in these markets might not result in any of the
expected gains to the company.

Opportunities

Growing foodservice market


The foodservice industry is expected to continue its steady growth in the future. According to industry
estimates, the global foodservice market is expected to grow at a compound annual growth rate
(CAGR) of approximately 5.8% in terms of revenue and approximately 5.6% in terms of volume
during 201318. This growth is mainly attributable to growing commercial foodservice segment. In
addition, the rapid growth in the sub-segments of the commercial foodservice segment such as
restaurant and cafes is expected to further drive the growth of the global foodservice market.
Furthermore, the restaurant industry has witnessed consistent growth in sales in the past few years.
According to industry sources, the total foodservice industry sales are estimated to surpass $680
billion in 2014, registering an increase of 3.6% over 2013. This growth is attributed to stronger
economic growth in the US and the increase in demand from consumers during the year.
McDonalds is one of the largest global foodservice retailers serving nearly 70 million people per
day. The growth in the foodservice market augurs well for the company, as the increased consumer
demand will lead to better revenues for the company.
Growing hot drinks market, another favorable trend to drive topline
The global hot drinks market is expected to grow at a steady rate in the future. As per the MarketLine
estimates, the global hot drinks market generated total revenues of $94 billion in 2012, representing
a CAGR of 4.4% for the period spanning 200812. Over the same period, market consumption
volumes grew at a CAGR of 2.6% to reach 7.2 billion kilogram (kg) in 2012. Among the hot drinks,
coffee sales are the most lucrative for the global hot drinks market. In 2012, coffee sales generated
total revenues of $54.2 billion, equivalent to 57.7% of the market's overall value. The performance
of the market is expected to accelerate, with an anticipated CAGR of 4.6% for the five-year period
201217, which is expected to lead the market to a value of $117.7 billion by the end of 2017.

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McDonalds Corporation
SWOT Analysis

McDonald's offers hot and cold coffee drinks in a variety of flavors. Therefore, the company can
increase its market share in the growing hot dinks market through its product offering.
Growing presence in key Asian markets
McDonalds has been aggressively expanding its presence in Asia, particularly in China. The
increasing middle class income group and their increasing disposable income have contributed to
the increase in demand for various consumer goods in the country. More than 160 cities in China
have population greater than one million. Furthermore, by 2030, the middle class population in China
is expected to account for 70% of the countrys total population. These factors are expected to lend
support to the growing demand for food products and beverages offered by McDonalds. In order to
tap this growing market, the company has already embarked on aggressive expansion plans in the
country.
In FY2013, the company opened 731 new restaurants in APMEA, of which 275 were opened in
China. McDonalds announced plans to open around 800 restaurants in FY2014, with about 300
expected in China. By leveraging its strong brand name, McDonalds can expand the companys
presence in fast growing Asian markets and lend stability to its topline growth.

Threats

Intense competition in retail food industry


McDonald's operates in a highly competitive retail food industry. The retail food industry is highly
competitive with respect to price and quality of food products, new product development, advertising
levels and promotional initiatives, customer service, reputation, restaurant location, and attractiveness
and maintenance of properties. The company competes with international, national, regional and
local retailers of food products. The competitors of McDonalds include Starbucks, Yum! Brands,
Burger King Worldwide, The Wendys Company, Jack in the Box, and Dunkin Brands. For instance,
The Wendys Company evolved itself into a hybrid chain between fast food and the newer fast-casual
restaurants by rebranding itself with a new logo, uniforms, menu items and restaurant renovations.
In recent times, McDonald's is also facing stiff competition from Starbucks, Taco Bell and Burger
King Worldwide in the breakfast segment as these competitors are launching breakfast items and
offers. Moreover, since coffee is an important breakfast item, Starbucks could leverage its brand
strength in coffee to attract morning customers. Intense competition could therefore erode the
companys market share and affect its profitability.
Food safety and other regulations
The recent concerns among the public regarding food safety have led to increased regulations. In
July 2009, a new legislation was passed requiring more frequent inspections of processing plants
and giving the government authority to order the recall of tainted foods. According to several
organizations, the present food safety regulations are inadequate and these organizations have

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McDonalds Corporation
SWOT Analysis

recommended stricter regulations. For instance, in October 2009, the American Public Health
Association recommended legislative changes to establish a new authority to strengthen the food
safety system. In April 2013, the US Food and Drug Administration (FDA) requested a budget of
$4.7 billion for fiscal 2014 (October 1, 2013 through September 30, 2014). Of this, $295.8 million
would be spent on food safety regulations.
The company is subject to several food safety and other laws and regulations regarding the
manufacturing, marketing, and distribution of food products in the US and overseas.These regulations
govern matters such as ingredients, advertising, taxation, health and safety matters, and environmental
concerns. The company's failure or inability to comply with such requirements could subject it to civil
remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions,
which may impact the business of the company. Such regulations may increase the burden of specific
compliances for McDonalds and increase the related expenditure for the company.
Increasing labor wages
Labor wages have been increasing in the US and Europe. In recent times, tight labor markets,
increased overtime, government mandated increases in minimum wages and a higher proportion
of full-time employees are resulting in an increase in labor costs. The federal minimum wage rate
in the US, which remained at $5.15 per hour since 1998, increased to $5.85 per hour in 2008. It
further increased to $6.55 per hour in 2009 and to $7.25 per hour in 2010. Moreover, many states
and municipalities in the country have minimum wage rates even higher than $7.25 per hour due to
higher cost of living. The minimum wage rate has increased in the states of Arizona (from $7.8 in
2013 to $7.9 in 2014), Colorado (from $7.78 in 2013 to $8 in 2014), Florida (from $7.79 in 2013 to
$7.93 in 2014), Ohio (from $7.85 in 2013 to $7.95 in 2014), Oregon (from $8.95 in 2013 to $9.1 in
2014) and Washington (from $9.19 in 2013 to $9.32 in 2014) in the recent past. Similarly, the minimum
wages in Europe have been rising steadily. According to Eurostat, the hourly labor costs in the euro
area and EU28 zone increased by 1.4% and 1.2%, respectively, in the fourth quarter of 2013.
The company's cost structure will be negatively impacted by the rising labor wages. It could impact
the margin expansion adversely and affect the companys profitability.

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McDonalds Corporation
Top Competitors

TOP COMPETITORS

The following companies are the major competitors of McDonalds Corporation

Starbucks Corporation
Yum! Brands, Inc
Burger King Worldwide, Inc.
The Wendys Company
Dunkin Brands Group, Inc.
Jack in the Box Inc.
Taco Bell Corp.

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McDonalds Corporation
Company View

COMPANY VIEW
A statement by Donald Thompson, the President and Chief Executive Officer at McDonald's, is given
below. The statement has been taken from the companys Annual Report for FY2013.
To Our Valued Shareholders:
Its a privilege to serve great-tasting, high-quality food and beverages with the speed and convenience
expected by almost 70 million daily customers in 119 countries and we dont take it for granted.
Our unique business model comprised of the best franchisees, excellent suppliers and talented
employees is the reason McDonalds is the worlds largest quick-service restaurant brand. Its
also the reason we continued to grow in 2013. Global comparable sales increased 0.2%, and
Systemwide sales were up 3%*. We increased operating income 3%* and diluted earnings per share
4%*. And, we invested approximately $2.8 billion in new and existing restaurants.
We also remain committed to returning all free cash flow to shareholders. In 2013, we returned $4.9
billion to shareholders through dividends and share repurchases.
Though McDonalds continued to grow, our performance fell short of our high expectations this past
year. Challenging conditions including a flat or contracting informal eating out category in most
of our major markets, increased competitive activity and consumer price sensitivity impacted our
results. In addition, some of our customer-facing initiatives didnt generate the comparable sales lift
and incremental guest visits needed to overcome external pressures in todays highly fragmented
marketplace.
Were addressing near-term performance by optimizing current initiatives for broader reach and
better execution, while appropriately investing to meet future demand. As we look forward, I remain
confident in the underlying strength of our System and business model. Yes, for us, this is about our
scale. Its also about our sizeable marketing presence, our industry-leading cash flow and the
efficiencies were able to capture as a result.
Building on our strengths to generate enduring, profitable growth
Our desire to ensure the McDonalds experience consistently delivers on our trademark QSC&V
Quality, Service, Cleanliness & Value remains a top priority. Were also building on the
competitive advantages inherent in our business model and focusing on the drivers within our control.
Around the world were:
Balancing core classics and new menu choices. Were focusing on timeless favorites such as the
Big Mac, Egg McMuffin and our World Famous Fries while broadening our appeal with new menu
options in the categories where we believe the most growth opportunity exists: beef, chicken,
beverages and breakfast.

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McDonalds Corporation
Company View

Focused on improving customer service. We often say that the interaction between our customers
and our crew at the front counter or drive-thru is the moment of truth. Emphasizing important
elements of the service experience like the staffing, scheduling and positioning of our crew
enables us to deliver at that all-important moment, and also improves the restaurants overall capacity
for change.
Ensuring we provide affordable options across our menu. We are strengthening our value platforms
as we maintain an emphasis on this foundational element of our brand promise and a key driver of
the customer experience.
Keeping our restaurants contemporary. With more than 1,500 re-images in 2013, nearly 60% of
McDonalds restaurants now have more modern interiors and exteriors.
Growing to the real market opportunity. We opened more than 1,400 restaurants in both established
and emerging markets last year.
As our customers evolve, so must we. Were drawing on deeper consumer insights to better
understand their changing preferences. And, were applying these learnings across all our actions
from restaurant execution and operations innovation to marketing and menu.
Giving customers more reasons to choose McDonalds, more often
Were placing greater emphasis on strengthening our relationship with our customers. Were focused
on what motivates them and closely aligning our global growth priorities with the reasons they
choose McDonalds. That means serving great-tasting food and beverages, creating memorable
experiences within and beyond our restaurants, and offering unparalleled convenience from a brand
they respect and trust.
While our growth priorities are a global framework, markets have different areas of focus based on
their customers needs. Our decentralized approach is truly an enviable local market structure that
provides grass-roots knowledge to help us better execute local initiatives and programs that resonate
with our customers.
For example, the U.S. is focusing on breakfast by building on the advances we made in 2013 with
the introduction of the delicious Egg White Delight McMuffin while also enhancing customer
service. Europe continues to strategically grow the McCaf brand, emphasize affordability through
mid-priced bundles like Frances two-item Le Casse Croute, and build on investments in technology
to advance digital efforts within the context of our newly formed global digital strategy. And, in
Asia/Pacific, Middle East and Africa, were concentrating on getting the right value platforms in place
and growing brand extensions such as delivery and McCaf. Our ability to learn, share and scale
best thinking across geographies is truly a testament to our unique business model.
Making an impact, growing our business

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McDonalds Corporation
Company View

Our brand and our business are inextricably linked. We are excited about the more focused and
ambitious way were leveraging our brand as we accelerate our growth.
The work were doing across the broad spectrum of social responsibility and sustainability underpins
our belief that holistic and outcome-based actions can deliver the most meaningful impact for our
customers and the business. Im especially proud of the advances we made last year. We partnered
with the Alliance for a Healthier Generation, founded by the American Heart Association and the
Clinton Foundation, and committed to increase customers access to fruit and vegetables in 20 of
our top markets. Working together with organizations, including the World Wildlife Fund, we advanced
our commitment to sustainable sourcing, including the eventual purchase of sustainable beef. And,
as founding members of the Global Roundtable for Sustainable Beef, were helping to develop
globally accepted principles and criteria.
Of course, we never forget that its our people who make the difference to us as a company, and
to our approximately 70 million daily customers. Whether were providing a teenager with a first job
or equipping a new manager with skills to run one of our 35,000 restaurants, were honored to provide
resources that open the doors of opportunity for learning, training and advancement to the estimated
1.8 million employees in our company-owned and franchised restaurants worldwide.
Leading in new ways
In todays rapidly shifting marketplace, great brands like McDonalds must lead in new ways. While
change is our biggest challenge, its also our greatest opportunity. Change is our chance to get
better. Stronger. Even more relevant and memorable to the customers we serve. Thats our
commitment, because our customers are the heart and soul of who we are, as one System.
On behalf of the entire McDonalds System, thank you for your support and confidence in our ongoing
effort to deliver strong shareholder value. Were grateful for your partnership and investment in our
enduring brand and were committed to satisfying each customer who chooses McDonalds.

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McDonalds Corporation
Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES


Head Office
McDonalds Corporation
One McDonalds Plaza
Oak Brook
Illinois 60523
USA
P:1 630 623 3000
http://www.mcdonalds.com

Other Locations and Subsidiaries


McDonald's Restaurants of Canada Limited
CAN

HanGook McDonald's Co. Ltd.


KOR

McDonald's Real Estate LLP


GBR

Restaurantes McDonald's, S.A.


ESP

McDonald's Central Europe GmbH


AUT

McDonald's GmbH
DEU

McD APMEA Holdings Pte. Ltd.


SGP

McDonald's Restaurants of Ireland Limited


IRL

McDonald's Polska Sp. z o.o


POL

Golden Arches Restaurants Sdn. Bhd.


MYS

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