History

Year Events

1937 Richard & Maurice, started drive-in restaurant in

California.
Mid- Revenues risen to $3,50,000.
1950
1952 First franchisee started by Neil Fox in Arizona.

1955 Kroc established McDonald system Inc.

1961 Kroc bought McDonald brothers share for $2.7

million.
1965 McDonald’s went Public, selling its shares OTC.

1970 Restaurants grew at an avg. of about 500 per

year.
1985 First fast food chain to provide the list of
ingredients used in its products.
 Question No. 1
• McDonald’s was once hailed as
the role model for fast food
industry. In the 1980s & early
1990s, it was on of the most
successful companies in the
fast food industry. However, in
the late 1990s, it experienced
major problems which reflected
in poor sales. Do you think
McDonald’s faced poor sales in
the late 1990s mainly because
of changes in the external
 External Changes
• Changing Customers preferences
• Increased competition
• Health issues
• Economic Turmoil across Asia and
Europe.
• September 11, 2001, terrorist
attack.
• Dependent on Four Countries.
• Poor consumer spending in the
restaurant industry in US.
External Changes ( contd..)

• Changing Customers preferences

- customers started to prefer eating
at home using the microwave to heat
the food.
- they also started visiting
competitor’s chains as they offered
discounts.
 External Changes ( contd..)
• Increased competition
- competition from supermarkets,
convenience stores etc.
- Wendy’s, Burger King, Pizza Hut,
KFC, Subway, etc.
External Changes ( contd..)
• Health issues
- customers became health
conscious.
- they started to select fresh food
over fatty, fried food & red meat.
- Obesity became major health
problem.
- legal suits.
 External Changes ( contd..)
• Economic Turmoil across Asia and
Europe.
- currency crisis in 1990 in Asian
countries.
- Economic Turmoil in Europe.
- International Sales had fallen.
External Changes ( contd..)
• September 11, 2001, terrorist
attack.
- McDonald’s depended heavily
on US Tourism.
- With September 11, attack
the tourism industry suffered.
External Changes ( contd..)
• Dependent on Four Countries.
- McDonald’s excessive dependence
on American, Britain, Germany &
France Markets.
- These markets had reached
saturation.
External Changes ( contd..)
• Poor consumer spending in the
restaurant industry in US.
- there was a negative growth rate of
(-2%) in consumer spending in the US
markets.
- decline in per store sales in the US in
the third quarter of 2002.
 Question No. 2
• Some analysts feel that
McDonald’s problem in the late
1990’s were due to its inability to
bring about a change in the
internal environment of the
organization. When were the
problem in the internal
environment that resulted in
McDonald’s poor performance in
the late 1990’s ?
 Problems in internal
environment
• Continuous expansion of
business

• Adverse effect on service &

quality

• Grading system
 Cont’d
• Time lag in service

• Lack of innovation

• Deterioration of relationship
with franchisees
 Question No. 3
• Many analyst feel that
franchising is the best way to
grow , more so, in international
markets. However, McDonalds
franchise model which was very
successful in the 1980s took a
beating in the late 1990s. What
according to you were the
problems with the McDonalds
franchise model? In the light of
such problems, do you think it is
still best way to grow?
• Mc Donald kept changing its views so many

times that made its franchisees suspect about

company’s stance.
 Question No. 4
• Soon after taking over as the
CEO of McDonald’s,
Cantalupo had taken various
steps to reverse the
downward slide of
McDonald’s emerge as the
“Great American Meal” once
its youth Vigor?
 Steps taken by
Cantalupo
• Up or Over grading system

• More focus on customer

satisfaction then on the number
of outlets

• Emphasis on cleanliness, service

and staff productivity to attract &
retain customers
 Steps taken by
Cantalupo

• Simplified operations

• National ad campaigns instead of

regional, so that the message is
clearly conveyed to the
customers
THANK YOU