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Creating the McUniverse: McDonald's Gradual Overtake of the Globe

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Written By: Sophie Garlick


In the early 1900’s, lunch rooms and cafes were considered “mom and pop” shops, built, with few exceptions, around the idea of dining in. These independent eateries often all shared the same floor plan with a single counter for seating, and were all decorated in the same manner—with stand-up signs and advertisement posters of soft drinks. Yet, with two brothers' introduction of McDonald’s, their ideas of fast food, combined with low costs, allowed the restaurant to be distinguished from its competitors. This attracted not only consumers but also investors, such as Ray Kroc —a businessman that would begin the expansion of McDonald’s. Soon, the distinctly American menu and branding was featured in countries around the world with cultural impacts far beyond any restaurant. McDonald's transformation, from a small drive-in restaurant to a globally renowned fast-food chain, can be attributed to a combination of strategic business practices, innovative marketing techniques, and emphasis on efficiency. Its history also serves as a reflection of the evolving economy and changing social trends, with the franchise constantly adapting to consumer demands and preferences.

A cornerstone of McDonald’s success is its franchising model. While 15% of the corporation is company owned, the other 85% is a combination of conventional franchise and joint ventures.1A conventional franchise requires a purchase price that is usually between 50%-75% of the store's past annual sales.2 13% of sales are also put towards the McDonald’s Corporation for use of the building.3 The corporation itself pays for the land and then brings in outside management to run the store. So, the conventional franchise model illustrates just how McDonald’s has become one of the largest real estate owning companies with thousands of prime locations around the world. However, another program known as the Joint Venture allows existing franchisees to expand with less capital expense, only 5,000 dollars monthly, allowing an entrepreneur to become part owners with McDonald’s corporation.4 Both business models account for the rapid growth and expansion of McDonald’s as it reduces corporate risk exposure by predominantly relying on franchises. This means a motivated franchisee will garner


1 Dan Dudley, Steve Gerdhart, and Samuel Hazen. “Franchising and the Impact of McDonald’s.” Journal of Management and Marketing Research, November 20, 2011,p. 6-10

2 Dan Dudley, Steve Gerdhart, and Samuel Hazen. “Franchising and the Impact of McDonald’s.” Journal of Management and Marketing Research, November 20, 2011,p. 6-10

3 Dan Dudley, Steve Gerdhart, and Samuel Hazen. “Franchising and the Impact of McDonald’s.” Journal of Management and Marketing Research, November 20, 2011,p. 6-10

4 Dan Dudley, Steve Gerdhart, and Samuel Hazen. “Franchising and the Impact of McDonald’s.” Journal of Management and Marketing Research, November 20, 2011,p. 6-10


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money for themselves as well as the McDonald’s corporation, a large key to why the business model is so effective.5 Also, in combination with the business models, McDonald’s supply chain management and cost control is the final key ingredient to the franchise's success. McDonald’s is able to leverage the size of its corporation with existing suppliers to reduce its own costs. In addition, individual vendor pricing models are implemented in each restaurant that clearly define the trade-offs on total cost. This reduces not the price but the total cost as McDonald’s also seeks to ensure price stability by regularly revising price models, based on category and region, with its vendors.6 The overall impact of strategic business practices on McDonald's is its integral role in ensuring the franchise's success.

Additionally, McDonald’s marketing techniques have made it widely accessible and identifiable. Initially, Ray Kroc was at the forefront of McDonald’s marketing strategies as he primarily focused on expanding the restaurant's outreach through branding.7 With the opening of multiple restaurants across the U.S, in the early 1960’s advertisement began through flyers, such as the one for the grand opening in Tallahassee, alerting potential customers to “look for the drive-in with the arches.”8 Since Kroc, the corporation has continued this legacy as now, coming into the 21 century, has national, regional, and local advertising strategies. Nationally, 2% of all stores revenue is put towards national advertising which, through a committee, is used to pay for banners, radio broadcasts, and billboards.9 Specifically utilized from broadcasts on the radio to commercials, the slogan “I’m lovin’ it”— created in 2003 —acts as brand recognition, and it shows an idea that was created and stayed consistent within the brand thus allowing it to be so well known today.10 Moreover, regionally, owners have the power to decide on marketing like sponsoring a professional team. Lastly, locally advertising through special deals or coupons is one of the most effective ways to reach a large consumer group. Similarly utilizing technology for advertisement is


5 Dan Dudley, Steve Gerdhart, and Samuel Hazen. “Franchising and the Impact of McDonald’s.” Journal of Management and Marketing Research, November 20, 2011,p. 6-10

6 Adam Shrum. “An Outline of McDonald’s Supply Chain Management.” Dynamic Inventory, January 3, 2019. https://www.dynamicinventory.net/mcdonalds-best-supply-chain-management/.

7 Ray Kroc and Robert Anderson. Grinding it out: The making of McDonald’s. Chicago, Illinois: St. Martin’s Griffin, 2016: p. 216-222

8 Advertisement for the Grand Opening of McDonald’s in Tallahassee. Photograph. Tallahassee , April 13, 1961. Print Collections.

9 Jing Han. “The Business Strategy of McDonald’s.” International Journal of Business and Management 3, no. 11 (2009). https://doi.org/10.5539/ijbm.v3n11p72.

10 The. 2022. “McDonalds - I’m Lovin’ It (Official Music Video) Ft. Ronald McDonald.” YouTube. https://www.youtube.com/watch?v=TSSPDoXIPEU.


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successfully seen in 2022 when Szechuan sauce, a popular condiment, became available only on the app and as a result, “[t]he social-led campaign became the brand's most cost-efficient app download campaign, reaching 420 million people.”11 The marketing techniques used by McDonald’s have shown innovation dating back from its initial creation all the way to present day. In all, the advertising ensures that customers maintain their interest in McDonald’s and that those Golden Arches continue to be recognizable around the globe.

Efficiency is also key in ensuring McDonald’s remains a top tier fast food restaurant. Before standardization and drive-thrus there was the Speedee Service System created in 1948; a system invented by the Mcdonald brothers that standardized the food making process to ensure a fast delivery to customers.12 It was the first of its competitors to implement the drive thru in the 1970s and now continues to make improvements in wait time, further building upon the brothers’ idea: streamlining operations ensures both quality and efficiency among all McDonald’s food. The food process, like the beef patties made on an assembly line in McDonald’s Canada for example, shows the added efficiency in using technology.13 Similarly, electronics “…placed near the front of restaurants in 2015, allow customers to place their orders using a touchscreen machine. McDonald's said it would add the technology at 1,000 locations every quarter for eight to nine quarters as of mid-2018.”14 This use of technology also cuts down on wait time and allows more customers to order at one time. These efficient ideas implemented by the chain are explained best by the former CEO who discusses McDonald’s business tactics because while there can't be a standardized menu as target consumers across geographies maintain different tasting preferences, McDonald’s 600-page training manual also includes descriptions of the production process for every franchisee.15 Without efficiency, the concept of “fast food” would not be McDonald’s trademark and the appeal of quickly grabbing a meal would be completely lost on consumers.


11 Rebecca Stewert. “How 2 Marketing Dynamos Reinvigorated McDonald’s for Gen Z.” Adweek, April 10, 2023.https://www.adweek.com/brand-marketing/golden-arch-itects-how-2-marketing-dynamos-reinvigorat ed-mcdonalds-for-gen-z/.

12 Gennaro Cuofano. “McDonald’s Speedee System.” FourWeekMBA, February 26, 2023. https://fourweekmba.com/mcdonalds-speedee-system/.

13 Beef Patties in McDonald’s. Photograph. Canada, n.d. Huffington Post.

14 Stephanie Storm. “McDonald’s Introduces Screen Ordering and Table Service.” The New York Times, November 18, 2016.

https://www.nytimes.com/2016/11/18/business/mcdonalds-introduces-screen-ordering-and-table-service.h tml.

15 Easterbrook, Steve . 2012. Review of The Exit Interview Interview by Bob Langer. CNBC. http://video.cnbc.com/gallery/?video=3000098271.


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Taking the economy into account since McDonald’s creation as well as its adaptation to consumer demands and preferences illustrates further causes of success. Menu innovation began with the launch of the breakfast menu and the introduction of the Big Mac as a signature sandwich in the late 1900’s. Even now, “[t]he brand spends time going on what Hassan described as food safaris around different markets to get a feel for trends and what customers want and create new classics.”16Also obtaining a large part of its power from its size, McDonald’s has entered international markets also taking into account consumer preferences in other countries. In comparison to competitors such as Burger King, McDonald’s utilizes relationships with distributors, supply chain management, and scale economics and drives down commodity prices seen in 2012 when worldwide company expenses totaled 82% of revenue while for Burger King totaled 89%.17 Also, through adding a permanent value menu, McDonalds reflects economic needs of consumers' price cutting in 2002 with, “69 [cents] hamburgers, 79 [cents] cheeseburgers, and 89 [cents] sausage biscuits.”18 But, McDonald’s is not only able to keep prices down, it’s able to keep consumer needs met. Differing menu items depending on the location of the franchise ensures both standardization and preference are taken into account. The McChicken, as it is known in the U.S, is also known as the, “[b]ubu Ayam McD (Malaysia), McAloo Tikki (India), McArabia (Egypt), McMollete (Mexico), McPollo (Chile), McKroket (Netherlands), McTurco (Turkey), and McLaks [in] (Norway).”19 The interior and exterior of McDonald’s also seek to meet consumer wants from country to country. In Yangzhou, China, McDonald’s exterior seeks to match that of other local housing and eateries while still maintaining the Golden Arched logo.20 While each McDonald’s still functionally operates the same within each building, the stylistic differences, as seen in China, show different


16 Rebecca Steven. “Would You like a Side of Culture with That? When It Comes to Marketing, McDonald’s Doesn’t Just Want to Sell Burgers--It Also Wants to Shape Popular Culture.” The Free Library, May 7, 2022.

https://www.thefreelibrary.com/Would+You+Like+a+Side+of+Culture+With+That%3f+When+it+comes+to.. .-a0747098980.

17 David Leihborn. “Beyond Entry: Examining McDonald’s Expansion in International Markets.” Semantics Scholar, 2004.

https://www.researchgate.net/publication/266276716_Beyond_Entry_Examining_McDonald’s_Expansion _in_International_Markets.

18 Pauline Meyer. “McDonald’s Mission Statement & Vision Statement (an Analysis).” Panmore Institute, July 17, 2022. https://panmore.com/mcdonalds-vision-statement-mission-statement-analysis.

19 Natley Kelly. “McDonald’s’ Local Strategy, from El McPollo to Le McWrap Chèvre.” Harvard Business Review, August 7, 2014. https://hbr.org/2012/10/mcdonalds-local-strategy-from.

20“Mcdonalds China Photos and Premium High Res Pictures - Getty Images.” n.d. Www.gettyimages.com. Accessed June 9, 2023. https://www.gettyimages.com/photos/mcdonalds-china.


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countries’ effects on the brand. Also, the consumer want for a family friendly space was met in 1971 with McDonald’s PlayPlace —an idea born from the corporation's “think tank”, created by McDonald’s former President F.L. Turner wanted a space that would encourage creativity as well as a “family” atmosphere.21 Also taking social shifts into account, the company understands that what is ultimately associated, by consumers, with the image of fast food is unhealthy food. In response to this in the 21 century, McDonald’s offers healthier alternatives at a low cost, as a reflection of customer wants, “…healthful menu items such as low-fat soft-serve frozen yogurt and low-fat milk shakes, whole grain brand-name cereals, nonfat apple bran muffins, 100% vegetables oil for cooking fries, and the McLean Deluxe.”22 As shown, the evolving customer preferences and the economy is made to work in favor of the corporation as McDonald’s uses its worldwide influence to keep millions of customers satisfied.

The McDonald’s today is far from the firm of 70 years ago, transforming from a uniquely American to an international presence. Its core values of low priced and efficient food assimilated well into a variety of different cultural settings, yet its success cannot be attributed to just one idea. The idea of a large business structure allows it to leverage its scale to enter new markets. To accompany this, the unique branding and differentiation in market from country to country allows McDonald’s to stay locally relevant while maintaining the overarching ethos each customer is ensured of when they enter a store. Today, its significance is seen through the 68 million customers that are served in 119 countries. The arrival of the Golden Arches is a sign a country has achieved a certain level of development with levels of disposable income large enough to support a Western firm.


Bibliography


Beef Patties in McDonald’s. Photograph. Canada, n.d. Huffington Post.

Chase , Dennis. 2011. Review of You Deserve a Break Today - on the Employee Water Bed. International Management 24 (December).

21 Dennis Chase. 2011. Review of You Deserve a Break Today - on the Employee Water Bed. International Management 24 (December).

22 Pauline Meyer. “McDonald’s Mission Statement & Vision Statement (an Analysis).” Panmore Institute, July 17, 2022. https://panmore.com/mcdonalds-vision-statement-mission-statement-analysis.

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Cuofano, Gennero. “McDonald’s Speedee System.” FourWeekMBA, February 26, 2023. https://fourweekmba.com/mcdonalds-speedee-system/.

Dudley, Dan, Steve Gerdhart, and Samuel Hazen. “Franchising and the Impact of McDonald’s.” Journal of Management and Marketing Research, November 20, 2011, p.1–10.

Easterbrook, Steve . 2012. Review of The Exit Interview Interview by Bob Langer. CNBC. http://video.cnbc.com/gallery/?video=3000098271..

Han, Jing. “The Business Strategy of McDonald’s.” International Journal of Business and Management 3, no. 11 (2009). https://doi.org/10.5539/ijbm.v3n11p72.

Kelly, Natley. “McDonald’s’ Local Strategy, from El McPollo to Le McWrap Chèvre.” Harvard Business Review, August 7, 2014. https://hbr.org/2012/10/mcdonalds-local-strategy-from.

Kroc, Ray, and Robert Anderson. Grinding it out: The making of McDonald’s. Chicago, Illinois: St. Martin’s Griffin, 2016.

Leihborn, David. “Beyond Entry: Examining McDonald’s Expansion in International Markets.” Semantics Scholar, 2004.

https://www.researchgate.net/publication/266276716_Beyond_Entry_Examining_McDonald’s_Expansion_in_Intern ational_Markets.

“Mcdonalds China Photos and Premium High Res Pictures - Getty Images.” n.d. Www.gettyimages.com. Accessed June 9, 2023. https://www.gettyimages.com/photos/mcdonalds-china.

Meyer, Pauline. “McDonald’s Mission Statement & Vision Statement (an Analysis).” Panmore Institute, July 17, 2022. https://panmore.com/mcdonalds-vision-statement-mission-statement-analysis.

Shrum, Adam. “An Outline of McDonald’s Supply Chain Management.” Dynamic Inventory, January 3, 2019. https://www.dynamicinventory.net/mcdonalds-best-supply-chain-management/.

Strom, Stephanie. “McDonald’s Introduces Screen Ordering and Table Service.” The New York Times, November 18, 2016.

https://www.nytimes.com/2016/11/18/business/mcdonalds-introduces-screen-ordering-and-table-service.html.

Steven, Rebecca. “Would You like a Side of Culture with That? When It Comes to Marketing, McDonald’s Doesn’t Just Want to Sell Burgers--It Also Wants to Shape Popular Culture.” The Free Library, May 7, 2022. https://www.thefreelibrary.com/Would+You+Like+a+Side+of+Culture+With+That%3f+When+it+comes+to...-a074 7098980.

Stewart, Rebecca. “How 2 Marketing Dynamos Reinvigorated McDonald’s for Gen Z.” Adweek, April 10, 2023. https://www.adweek.com/brand-marketing/golden-arch-itects-how-2-marketing-dynamos-reinvigorated-mcdonalds-f or-gen-z/.

The. 2022. “McDonalds - I’m Lovin’ It (Official Music Video) Ft. Ronald McDonald.” YouTube. https://www.youtube.com/watch?v=TSSPDoXIPEU.


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