Opportunity Analysisfor
Quick-Service Restaurant Industry - McDonalds
1.0 Introduction and Company Background
1.1 Introduction
Quick service restaurants are also known as fast food restaurants. Unlike any other traditional restaurants, the food is served quickly in these type of restaurants and has minimal table service. Fast food restaurants are typically part of a restaurant chain or franchise operation. The quick service restaurants first started in the United States in 1912 with A&W. In the recent time these kind of restaurants gained more popularity due to lack of time to prepare food at home and these restaurants are visible at every centre of the suburbs, cities, airports, malls, food courts and off road. Young age people are more attracted towards these restaurants. We can see tremendous changes in the industry now a day. This evolution represents the change in the consumer taste and entrepreneur’s profit opportunities.
The popular fast food chains in today’s world are McDonalds, KFC, Subway, Dominos, Pizza hut etc. quick service food generates revenue of $570 billion globally.
1.2 Company Background
McDonalds is the world’s leading company in the Quick service food industry. It expanded to 119 countries with 36,525 restaurants around the world. McDonalds have clear policies which lead them to success they are food quality, fast & friendly service, maintain clean and customer satisfaction. The company was first started by two brothers Mac and Dick McDonalds in 1948, then later it was brought by franchising agent, Ray Kroc, in 1961 and opened the first McDonalds in Illinois.
The company has 420,000 employees at present. The company follows three legged business model, where the three legs are owners or operators, suppliers and company employees. This company develops and operates franchise and provides service across the world. It has a limited menu, prepared quickly and priced moderately. Company sells products predominantly breakfast, sandwiches, burgers, soft drinks and hot drinks. McDonalds serves daily 70billion people around the world and it has the largest share in the quick serve restaurant industry of 17% in the U.S. The nearest competitor is Yum brand (KFC) had a market share of 11%. About 81% of the McDonalds restaurants are franchised, only 19% is company owned.
2.0 Situation Analysis
2.1 Market Analysis
• McDonalds maintains its brand name as top seller in the quick service food restaurant industry. It has a global market share of 12.7%.
• McDonalds has global comparable sales growth of 0.2% and has 4% earnings per share growth.
• Company divides revenue into franchised and company operated. It earns 67% of revenues from company owned sites and only 33% revenues from franchise.
• US market is the McDonalds home and oldest market with 14,278 locations. It competes with Yum Brands, Wendy and other chain supplies. We can see the decrease in the growth and sales by 1% in 2014.
• McDonald has 7,602 stores in Europe. Europe has largest market mainly consisting of company-owned restaurants and second comes to franchises.
• In Asia/Pacific, middle east and Africa altogether McDonalds has 9,918 stores. McDonald carefully customised its offerings in these countries according to the varied tastes, because of which the sales increased by 2.4% in 2014.
• In the rest of the world McDonalds has 3631 stores and it suffers from some risks due to widespread global operations.
• As mentioned above the biggest competitors of McDonald are KFC, Subway, Pizza hut, Dominos.
• New entrants in the quick service food industry is increasing globally, but this is less likely to affect the McDonald’s because of its strategies and popularity.
2.2Macro Environment Analysis
PESTEL Analysis shows the external factors which determines opportunities and threats to business.
Political Analysis
McDonald has a lots of opportunities to enhance its trading internationally, and to improve supply chains globally. It also has a chance to change its methods and plans to reduce taxation impact without going against the law. However, increase in public health policy may cause threat to the business. In the political analysis we can see opportunities outweigh threats.
The main political issues of company would be:
• The increase in International trade agreements.
• Pending tax reform.
• Evolving public health policies.
Economic Analysis
McDonald industry is influenced by the change in the global economy. The most economic factors are:
• Slow but stable growth in the economy of US.
• Stable but risky European economy.
• Slowdown in the Chinese economy.
McDonald has an opportunity to grow steadily in its biggest market in the United States. European economy is a bit threatening and the economy slowdown in china threatens the economy in Asia.
Social Analysis
Social impacts limits or supports the business. The main factors are:
• Trend in healthy lifestyle.
• Increasing cultural diversity.
• Wealth gap widening.
Technological Analysis
One can say that, one of the reason for the McDonalds success is through technological applications. Things to possibly consider:
• Research & development in the industry is moderate.
• Increase in business automation.
• Increase in sales through mobile devices.
McDonalds has an opportunity to improve its Research & Development and business automation.
Environmental Analysis
• Rising interest for corporate environmental program
• Increasing emphasis on sustainable business strategies
• Climate change
Climate change has a threat to the industry and need to be addressed.
Legal Analysis
• Minimum wage law in United states.
• Health regulations.
• Animal welfare laws.
All the legal issues are threats to the business.
2.3 Micro Environment Analysis
2.3.1 Company Analysis.
The 3 positives of the company are:
• McDonald has solid brand value.
• Even though it has many competitors still it remains as the top seller in the quick service food industry.
• Friendly and quick service.
The negatives are:
• Trend in public towards healthy food.
• Undergone legal obligations like under pay to employees.
2.3.2 Competitor Analysis
• McDonalds has direct competitors and indirect competitors, national and international competitors. Direct competitors are the other organizations in the same industry. Its rival companies are Yum Brands(KFC), Wendy’s, Subway, Burger king in US, Hungry Jacks in Australia, Pizza hut, Dominos. Its faces highest competition from KFC in US.
• The level of Competition is growing intense. Other companies marketing strategies are increasing and they are updating to the technologies, new trends and focusing on healthy menu options. Each company has different marketing strategies.
• According to the statistics McDonalds has the brand value of 88,654 million dollars, whereas subway has 21.567 million, KFC 12,386 million, Pizza hut 8,309 million, Domino’s 4,869 million and burger king has 3,685 million dollars.
• McDonalds has the highest sales compared to the other companies. According to company filings, the sales margin of McDonalds is 17.5% whereas Yum Brands or KFC has margin of 15%.
2.3.3 Consumer Analysis
Main Customers of McDonalds are young age people, due to the lack of time in the busy world people are more attracted towards quick service restaurants. McDonalds provide customer satisfaction and value for money. It has a strong marketing strategies and solid brand value. It constantly updates to the new trends in taste and provides healthy food.
2.3.4 SWOT Analysis
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STRENGTHS
- Strong brand image
- Moderate market diversification
- Standardized process
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WEAKNESSES
- Limited process flexibility
- Low product diversification
- Vulnerability to Western market decline
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OPPORTUNITIES
- Expansion in developing countries
- Market development in the Middle East
- Product diversification
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THREATS
- Expansion in developing countries
- Market development in the Middle East
- Product diversification
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3.0 Objectives
MarketingObjectives
Increasing the opportunities, thereby improving the business.
Continuous technology update.
To make mobile options more easy.
Concentrate on healthy menu option.
Recommendation
This SWOT investigation demonstrates that McDonald`s can enhance its business suitability through proceeded with worldwide extension, particularly in high-development markets. Likewise, the organization can decrease dangers by growing new items or entering new businesses identified with the fast food eatery industry. These are the most pertinent moves McDonald`s can make taking into account its SWOT examination
