McDonald’s Supply Chain Management

How does the world’s premier fast food restaurant do it?

Submitted to: Prof. D.N.Chakraborti

Prepared by:

Ruben Nag

Roll: LSM/14/18

Year: 2014-15

McDonald’s Supply Chain Management

How does the world’s premier fast food restaurant do it?

Submitted to: Prof. D.N.Chakraborti

Prepared by:

Ruben Nag

Roll: LSM/14/18

Year: 2014-15

May 15

2015

St. Xavier’s college (autonomous), KolkataUnder

University of Calcutta

DECLARATION

I hereby declare that the project report titled “McDonald’s Supply Chain Management.” is a bonafide record done by me during the period April-May 2015 as part of my Logistics and supply chain management PGDM program at St. Xavier’s college (autonomous), Kolkata under the University of Calcutta. This study has been undertaken in partial fulfillment of the requirement for the award of PGDM in logistics and supply chain management by St. Xavier’s college (autonomous), Kolkata under the University of Calcutta.

I also declare that this report has not been submitted in full or part thereof, to any

University or institutions for the award of any degree or diploma.

-----------------------------

Place: Kolkata Ruben Nag

Date: 15/05/2015 PGDM (LSCM) (2014-2015)

St. Xavier’s college, Kolkata

ACKNOWLEDGEMENT

“I have searched for the definition of success, in the context of leading a successful life. It turns out that there are as many definitions as there are seekers and that success lies as much in the attempt as in the achievement.” - Robert Frost

“Feeling gratitude and not expressing it is like wrapping a present and not giving it.” - William Arthur Ward

I have immense pleasure to express my sincere gratitude to my mentor guide Prof. D. N. Chakraborti senior visiting professor of St. Xavier’s college, Kolkata for his continuous guidance, advice and moral support on every stage of the project. His sincere advice and suggestions has been a source of inspiration for me in completing the project work.

I would also express my sincere gratitude to our Head of the Department of career oriented programme Prof. Ashis Mitra, St. Xavier’s college, Kolkata.

I would like to sincerely thank all those people who gave their constructive input in the completion of this project and to all those who untiringly guided me. I am indebted to all those people who have contributed time, encouragement, information and assistance or in some manner enabled me to learn, to grow in experience to develop a better understanding.

I am also gratefully acknowledge St. Xavier’s college, Kolkata and the respected faculty members.

Last but not the least I would like to thank my parents for their words of encouragement and guidance all throughout the way.

Date: 15/05/2015 ------------------------------- Place: Kolkata Ruben Nag

PGDM LSCM

St. Xavier’s college, Kolkata

CERTIFICAT FROM THE GUIDE

This is to certify that the project work titledMcDonald’s Supply Chain Management is a bonafide work

carried out by Ruben Nag Roll No LSM/14/18 a candidate for the Post graduate diploma in Logistics and Supply Chain

Management of St. Xavier’s college, Kolkata under my direction.

DATE: 15/05/2015 --------------------------------------

PLACE: KOLKATA SIGNATURE OF THE GUIDE

Prof.D.N.Chakraborti Visiting Professor St. Xavier’s College, Kolkata

TABLE OF CONTENTS

S.No. CONTENTS Page No.

1. Company Description 5

2. History of McDonald’s 8

3. Goals and Objectives 10

4. Mission statement 10

5. McDonald’s India-A Profile 11

6. Evolution of McDonald’s marketing in India 13

7. McDonald’s Strategic Marketing Mix 16

8. Importance of PLC in McDonald’s 22

9. McDonald’s SWOT Analysis 28

10. Competitors Analysis 31

11. Research Methodology 32

12. Data Analysis and Interpretation 34

13. Recommendations and Conclusion 41

14. Appendices 44

15. Bibliography 48

COMPANY DESCRIPTION:

Established in California during the 1940s by two brothers, the McDonald’s restaurant became a popular teen hangout in the first flush of post-war affluence. To feed these youthful bodies, the brothers reduced the menu to the perennial favourite – hamburgers, applied assembly line techniques to food production and expanded to four restaurants by 1953. Taking note of the brothers’ success, in 1955, Entrepreneur Ray Kroc bought the right to franchise the McDonald’s System. Renamed the McDonald’s Corporation in 1960, Kroc focused his marketing effort on the family meal and children, spending heavily on television advertising which promoted the smiling clown face of its child-friendly brand mascot, Ronald McDonald. Today, the McDonald’s franchise exceeds 30,000 restaurants globally and serves over 50 million people in more than 121 countries each day.

The business began in 1940, Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald in 1963. Believing that the McDonald formula was a ticket to success, Kroc suggested that they franchise their restaurants throughout the country. When they hesitated to take on this additional burden, Kroc volunteered to do it for them. He returned to his home outside of Chicago with rights to set up McDonald's restaurants throughout the country, except in a handful of territories in California and Arizona already licensed by the McDonald brothers. Kroc's first McDonald's restaurant opened in Des Plaines, Illinois, near Chicago, on April 15, 1955--the same year that Kroc incorporated his company as McDonald's Corporation. As with any new venture, Kroc encountered a number of hurdles. The first was adapting the McDonald's building design to a northern climate. A basement had to be installed to house a furnace, and adequate ventilation was difficult, as exhaust fans sucked out warm air in the winter and cool air in the summer. Most frustrating of all, however, was Kroc's initial failure to reproduce the McDonalds' delicious french fries. Once the Des Plaines restaurant was operational, Kroc sought franchisees for his McDonald's chain. The first snag came quickly. In 1956 he discovered that the McDonald brothers had licensed the franchise rights for Cook County, Illinois (home of Chicago and many of its suburbs) to the Frejlack Ice Cream Company. Kroc was incensed that the McDonalds had not informed him of this arrangement. He purchased the rights back for $25,000--five times what the Frejlacks had originally paid--and pressed forward. Kroc decided early on that it was best to first establish the restaurants and then to franchise them out, so that he could control the uniformity

of the stores. Early McDonald's restaurants were situated in the suburbs. Corner lots were usually in greater demand because gas stations and shops competed for them, but Kroc preferred lots in the middle of blocks to accommodate his U-shaped parking lots. Since these lots were cheaper, Kroc could give franchisees a price break. McDonald's grew slowly for its first three years; by 1958 there were 34 restaurants. In 1959, however, Kroc opened 67 new restaurants, bringing the total to more than 100.

Kroc had decided at the outset that McDonald's would not be a supplier to its franchisees--his background in sales warned him that such an arrangement could lead to lower quality for the sake of higher profits. He also had determined that the company should at no time own more than 30 percent of all McDonald's restaurants. He knew, however, that his success depended upon his franchisees' success, and he was determined to help them in any way that he could. In 1960 the McDonald's advertising campaign "Look for the Golden Arches" gave sales a big boost. Kroc believed that advertising was an investment that would in the end come back many times over, and advertising has always played a key role in the development of the McDonald's Corporation--indeed, McDonald's ads have been some of the most identifiable over the years. In 1962 McDonald's replaced its "Speedee" the hamburger man symbol with its now world-famous Golden Arches logo. A year later, the company sold its billionth hamburger and introduced Ronald McDonald, a red-haired clown with particular appeal to children. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955 , the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion and the company became listed on the public stock markets in 1965. Kroc was also noted for aggressive business practices, compelling the McDonald's brothers to leave the fast food industry. The McDonald's brothers and Kroc feuded over control of the business, as documented in both Kroc's autobiography and in the McDonald brothers' autobiography. The site of the McDonald brothers' original restaurant is now a monument. The menu was simple: hamburgers, cheeseburgers, French fries, shakes, soft drinks, and apple pie. The carhops were eliminated to make McDonald's a self-serve operation, and there were no tables to sit at, no jukebox, and no telephone. As a result, McDonald's attracted families rather than teenagers. Perhaps the most impressive aspect of the restaurant was the efficiency with which the McDonald's workers did their jobs. Mac and Dick McDonald had taken great care in setting up their kitchen. Each worker's steps had been carefully choreographed, like an assembly line, to ensure maximum efficiency. The savings in preparation time, and the resulting increase in volume, allowed the McDonalds to lower the price of a hamburger from 30 cents to 15 cents. With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.

Redesign :

In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of their restaurants, the first major redesign since the 1970s. The new design will include the traditional McDonald's yellow and red colors, but the red will be muted to terra cotta, the yellow will turn golden for a more "sunny" look, and olive and sage green will be added. To warm up their look, the restaurants will have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs will hang on the walls.The exterior will have golden awnings and a "swish brow" instead of the traditional double-slanted roof. The new restaurants will feature areas:

· The "linger" zone will offer armchairs, sofas, and Wi-Fi connections.

· The "grab and go" zone will feature tall counters with bar stools for customers who eat alone; Plasma TVs will offer them news and weather reports.

· The "flexible" zone will be targeted toward families and will have booths featuring fabric cushions with colorful patterns and flexible seating.

· Different music targeted to each zone.

Business model:

McDonald's Corporation earns revenue as an investor in properties, a franchiser of restaurants, and an operator of restaurants. Approximately 15% of McDonald's

restaurants are owned and operated by McDonald's Corporation directly. The remainder are operated by others through a variety of franchise agreements and joint ventures. The McDonald's Corporation's business model is slightly different from that of most other fastfood chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald's may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties on which McDonald's franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants. The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois. In other countries, McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other, local entities or governments. As a matter of policy, McDonald's does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators. According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's.

McDonald’s History

Raymond Albert Kroc

The birth of McDonald's began with Raymond Albert KrocRay Kroc was the exclusive distributor of a milk shake maker called the Multimixer. Meanwhile, two brothers, Richard and Maurice McDonald owned and ran a hamburger restaurant in San Bernadino, California, in the 1950s. Ray Kroc heard how well the McDonald brothers were doing using his Multimixers to serve their customers. He met up with them and acquired the franchising right from them to run McDonald's restaurants. A great success story was in the making. In 1955, Ray Kroc founded the McDonald's Corporation and opened the first restaurant in Des Plaines, Illinois. In 1961, he bought out the McDonald brothers

And the rest, as they say, is history. McDonald's grew into the largest restaurant organization in the world. Today, there are more than 34,000 McDonald's restaurants serving 69 million customers each day in over 119 countries. Ray Kroc died in 1984 but his legacy is very much alive. His success story continues with McDonald's families of employees, franchisees and suppliers. His commitment, dedication and achievements continue to live on at McDonald's restaurants across the world.

1955Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is created.

1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto.

1959 The 100th McDonald's opens in Chicago.

1961 Hamburger University opens in Elk Grove, near Chicago.

1963 One billion hamburgers sold. Ronald McDonald makes his debut.

1964 Filet-O-Fish sandwich is introduced.

1965 McDonald's Corporation goes public.

1967 The first restaurants outside of the USA open in Canada and Puerto Rico.

1968 The Big Mac is introduced. The 1,000th restaurant opens in Des Plaines, Illinois.

1972 A new McDonald's restaurant opens every day. The Quarter Pounder is introduced.

1973 Egg McMuffin is introduced.

1974 The first Ronald McDonald House opens in Philadelphia. The Happy Meal is launched.

1983Chicken McNuggets is introduced.New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management worldwide.

1984

50 billionth hamburger sold. Ronald McDonald Children's Charities is founded in Ray Kroc’s memory to raise funds in support of child welfare.

1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges.

1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow.

1993 The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing between Stockholm and Helsinki.

1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents.

1996 McDonald's opens in India – the 95th country.

McDonald’s Statement

Vision StatementTo be the best and leading fast food provider around the globe.

Mission StatementMcDonald's mission is to be our customers' favorite place and way to eat with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time. We invite you to be the part of this winning team and give yourself an opportunity to grow with the family of people striving to create smiles on the faces of millions of people every day.

McDonald’s ValuesBeing a responsible corporate citizen, McDonald’s firmly believes in giving back to the communities it operates in. We love to provide support and encouragement to the people who need it the most. All our restaurants contribute to their local community and every year we help set up and support numerous educational, sporting and charity programs designed to help a wide range of people.

McDonald's has a proactive approach to charities and sponsorships. We believe these help inspire and support the people of Pakistan, especially the underprivileged ones, to live a better life. We are dedicated to delivering great experiences through our ongoing community support programs.

We place the customer experience at the core of all we do. Our customers are the reason for our existence. We demonstrate our appreciation by providing them with high quality food and superior service in a clean, welcoming environment, at a great value. Our goal is quality, service, cleanliness and value (QSC&V) for each and every customer, each and every time.

We are committed to our people. We provide opportunity, nurture talent, develop leaders and reward achievement. We believe that a team of well-trained individuals with diverse backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to our continued success.

We believe in the McDonald’s System. McDonald’s business model, depicted by our “three-legged stool” of owner/operators, suppliers, and company employees, is our foundation, and balancing the interests of all three groups is a key.

We operate our business ethically. Sound ethics is good business. At McDonald’s, we hold ourselves and conduct our business to high standards of fairness, honesty, and integrity. We are individually accountable and collectively responsible.

We give back to our communities. We take seriously the responsibilities that come with being a leader. We help our customers build better communities, support Ronald McDonald House Charities, and leverage our size, scope and resources to help make the world a better place.

We grow our business profitably. McDonald’s is a publicly traded company. As such, we work to provide sustained profitable growth for our shareholders. This requires a continuous focus on our customers and the health of our system.

We strive continually to improve. We are a learning organization that aims to anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.

McDonald’s Products

McDonald’s Target MarketMcDonald’s wants to attract as many customers as it can. But the main targets of the efforts by McDonald’s are following groups:

Parent visit McDonald’s to give the children a treat. Children want to visit McDonald’s as it is a fun place to eat. A business customer visits McDonald’s during the day as service is quick, the food tastes great and can be

eaten in the car without affecting a busy work schedule. Teenagers are attracted by the Saver Menu which is affordable, and the internet access.

McDonald’s Logistics & Supply chain management

Supply Chain Management in Fast Food Sector There are two key components to the fast food industry supply chain;

1. Raw materials are essential to the ultimate product - value added component.2. Quick, convenient, and quality food.

The most important aspect of the industry supply chain is that it is driven by the consumer. The consumer has what seems to be an endless amount of fast food chains to choose from every day. McDonalds' main goal of their marketing is to make the consumer drive that extra two blocks past the

competitor to eat at their chain.

McDonald’s Supply Chain Management Supply chain is extensive and complex. Efficient, safe and quality food at an affordable price. Large number of direct suppliers – companies that make or deliver final products to their restaurants. Large number of indirect suppliers – companies and farms that grow or process the ingredients that are

eventually delivered to their direct suppliers.

McDonald’s E-Procurement In the process of procuring a product, a typical McDonald’s franchise restaurant places an order through

E-MAC digital website. The order is sent to the suppliers. Suppliers order is processed and managed by the logistics. The logistics sends the order of the products to the franchise restaurants. It is the responsibility of the E-

MAC and logistics that the products are sent to the restaurant. All the above, steps are handled and executed by the E-MAC digital.

McDonalds’ Suppliers

Following are the McDonald’s suppliers of food;

Gaviña Gourmet Coffee:Our 25-year relationship with Gaviña has delivered countless cups of delicious coffee.

Lopez Foods : McDonald’s 100% pure beef patties are produced to the highest quality standards.

Keystone Foods : Innovation and Chicken McNuggets

100 Circle Farms: The potatoes for our World Famous Fries are grown with efficiency, precision and heart.

Jiangsu Dingneng Foods Co. Ltd:Dehydrated onions 

Following are the McDonald’s suppliers of equipment and other items;

Zhengzhou Kerry Machinery Equipment Co., Ltd.

Guanxing (Shanghai) Import & Export Co., Ltd.

Guanxing (Shanghai) Import & Export Co., Ltd.

Guangzhou Maibao Package Co., Ltd.

Zhengzhou Shuliy Machinery Co., Ltd.

Shantou Eastoys Factory

Shantou Kai Dongfan Plastic Toy Factory

Wenzhou Xiangou Foreign Trade Corporation

Shanghai Tianwan Food & Beverage Equipment Co., Ltd.

Shanghai Xinrui Catering Equipment Co., Ltd.

Wuhan Xinhengyue Industry And Trade Co., Ltd.

Suppliers of McDonalds India

SUPPLIER’S OPERATION THROUGH E-MAC DIGITAL

McDonald’s LogisticsMcDonalds Logistics Standards

Distributor Quality Management Process

Operations and Customer Relations

Quality Control (HACCP/QIP)

Cold Chain Standards

Hygiene Regulations

Product Handling Standards

Emergency and contigency plan

Logistics is the management of flow of resources between their point of origin and their point of destination so as to meet some requirements McDonald’s - the largest fast food chain in the world selected Venus Pakistan as its logistic partner after careful and thorough evaluation. We are responsible for the procurement, imports, clearing, warehousing and distribution of all products to all McDonald’s restaurants in Pakistan.

In McDonalds logistic involves 3 phases

Inbound logistic Operations Outbound logistic

Inbound logisticIt is the movement of materials from suppliers and vendors in to production processes and storage facilities. Every McDonald’s burger has nine different ingredients, which are sourced, from suppliers across the country before it reaches the consumer. McDonald's has a global package design for there to-go bags and fountain drink cups. All the inputs are imported from different countries like Saudi Arabia, South Africa, UAE and Malaysia; only the buns used in burgers are procured locally from Dawn Bread. Based on the demand forecast by the Restaurant Manager, the First Assistant orders the Venus Distributors on daily basis. Venus Distributors (supplier of McDonalds) is independent to acquire the raw material from wherever it desires but it remains limited only by the strict specifications of materials by McDonald's.Venus Distributors stores all the raw materials, in its own cold stores and delivers only one-day material to the restaurant. Venus group companies providing different facilities to McDonalds like:

Providing McDonalds Pakistan the most comprehensive range of Specialized & Customized Services Warehousing, Storage/Cold Storage, and Sole Distribution Services starting right from Pick-up at Sea Port to Delivery at all McDonalds Restaurants in Pakistan –

everything is handled with maximum efficiency.

Central Inventory Management of Venus Pakistan dedicated to handling every aspect of McDonalds inventory.

Quality Inspection Process (QIP) Units at Venus Pakistan especially operates to look after McDonalds Logistics Operations.

With a proven track record of having served the Logistics needs of McDonalds, Venus Pakistan established its dedicated McDonalds Logistics Operations in 1997. It also received the DQMP (Distribution, Quality, and Management Process) Certification from McDonalds USA Audit Team after they visited and inspected our facilities and certified us as such (which makes us the only one to receive any such Certification from McDonalds USA). Main Boulevard Branch has its own cold storage facility, which is used to store the daily-procured raw material, so that the raw materials remain fresh and nutritious up till they are delivered in the form of finished goods (burgers, French fries, ice cream, etc.) to the customers. There are only two products buns and Cokes, which are sent directly to the restaurants. Buns have a limited shelf life, hence they are sent directly to the outlets, while Coca Cola is also sent directly to ensure quick dispatch of its products.The buns are packed in plastic crates to ensure their quality.These crates have to go back to the bakery, that’s when return logistics takes place. Venus Pakistan has full-fledged facilities to pack locally manufactured products in sachets such as sugar, tomato ketchup, toothpicks, etc., and supply these to Institutions (Restaurants, Cafes, Hotels, 5-Star Hotels, Hospitals, etc.), through its own Distribution Network and Logistics support.Being responsible for McDonald’s supply chain, the company had to import lettuce from Europe.

The logistics involved in handling the product at the airports late night forced the directors to think of alternate ways to manage this business. The company with the assistance of advisors from the agricultural university and experts from china set up a pilot farm in Lahore. After experimenting for one year the group decided to setup an agriculture division. Today lettuce is farmed in Lahore on 100 acres during the winters and on 3 parcels of 25 acres each in Abbotabad and man sera. Production/yield is approximately 5000 kg (5 tons) per week. The farm is experimenting with romaine. The farm management has plans to grow exotic vegetables in the future and tap/develop the export market in Dubai.

The transportation of McDonald’s has been completely outsourced and since 80 percent is in refrigerated truck movement.The products are transported in a dedicated fleet of refrigerated trucks to the company’s Distribution Centres. Multi-temperature and single temperature trucks then transport the fast food swiftly to the McDonald’s restaurants across the country.

Cold Chain logistics

A cold chain is a temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used help extend and ensure the shelf life of products such as fresh agricultural produce, processed food. McDonalds’ entire network supply-chain consists of movement of goods through a cold chain.Suppliers are also a part of this cold chain. McDonalds have the largest refrigerated movement of products. An interesting and innovative feature of this cold chain is that the same truck can carry products at different temperatures ranging from:

Frozen products at -18C to -25C, Chilled products from 1C-4C

Dry products at ambient temperatures

Outbound logistic

Outbound logistics is the process related to the storage and movement of products from the end of the production line to the users end. When customers enter the restaurant, they go to the counter, give their order, which they are served within a single minute. Now customers take away the tray in which the order is served, and take their seats themselves, in the big hall with a sitting capacity of 200 persons.

McDonald’s Operation

The cooking procedure and recipe is documented so that the products become standardized and customers get the similar taste, quantity and quality to whichever restaurant they go. It is the policy of McDonald's to throw away any burger if they remain on heated grill for 15 minutes. All the utensils and equipment used in cooking are washed at the closing of restaurant every night, with anti-microbial fluid. Kitchen, floor, washrooms and all other restaurant areas are cleaned after every half an hour.

McDonald’s Transportation

The distributors receive items from different parts of the country. The items are stored in rooms with different temperature zones and are finally dispatched to the

McDonalds restaurants on the basis of their requirements. The company has both cold and dry storage facilities with capability to store products up to -22º C as well

as delivery trucks to transport products at temperatures ranging from room temperature to frozen state. The specially designed trucks maintained the temperature in the storage chamber throughout the journey. Matching supplier production with deliveries to meet schedules and restaurant needs. Centralized distribution centers. Emphasis on economies of scale – High storage volumes. QIP (Quality Inspection Program). HACCP (Hazard Analysis Critical Control Point) – Food safety standards emphasizing prevention of

faults rather than detection through inspection. No Knife in restaurants.

McDonalds Distribution systems

McDonald uses three types of Distribution strategy

Franchising Licensing Joint venture

4 TYPES OF RESTAURANTS:-

*Mc Drive*Special theme restaurants*Mc Café*Mc Express

McDonald’s has a successful franchise business model wherein all restaurants are operated either by the company or by franchisees, including conventional franchisees under franchise arrangements and developmental licensees and foreign affiliated markets under license agreements. The company’s operations are designed to assure consistency and high quality at every restaurant. When granting franchises or licenses, the company is selective and generally does not franchise to passive investors.

McDonald’s has franchised about 80% of its restaurants, while the remainder is owned and operated by the company. Each of the company’s franchisees usually has a standard 20-year franchise license. A franchise license is an authorization granted by either a company or a government body to an individual or a group that enables them to perform specific commercial activities. For McDonald’s, the franchise model has led to years of profitability, growth, and risk mitigation.

ORDER PROCESSING SYSTEM

*Cash & cashless payments

*Online Orders:-

Online menu

Delivery fees

Redeeming discounts

Cancellations

*McDonald’s Delivery

MCDONALDS INFORMATION SYSTEMS

TRANSACTION PROCESSING SYSTEM (TPS)

“POINT OF SALE” SYSTEM

DECISION SUPPORT SYSTEM (DSS)

“MADE FOR YOU” SYSTEM

McDonalds Forecasting system

McDonald’s is a well-known worldwide franchise and has been around since the 1950s. Serving customers for over 50 years successfully entails a strong inventory and operations management system. “McDonald's is the world's #1 fast-food company by sales, with more than 33,500 restaurants serving burgers and fries in 119 countries”.

To maintain and continue a successful franchise operation, quality food items, and highly successful sales continue to increase its efforts to “raise the bar” and offer items that cater to all types of consumers. Whether it is McDonald’s famous hamburger, chicken nuggets or salad and a latte, McDonald’s has it. Striving to continue to be the #1 franchise, McDonald’s obtains its forecasting data from consumers, employees, and the industry itself. Combining both expert judgment and market research, McDonald’s continues to rely on putting the customer first when it comes to the future and success of McDonald’s.

Qualitative Forecasting

Expert Opinion and Market Research McDonald’s uses qualitative forecasting methods to help aide in predicting the future growth of the organization. Developing a strong customer focus, McDonald’s relies heavily upon gathering information from customers, employees, and other experts in the field to assist in the decision-making process. Within the qualitative approach, McDonald’s focuses attention on utilizing expert judgment. Expert judgment is important because it provides significant insight into different aspects of the organization. When seeking expert’s opinions, a technique known as Delphi is used to ensure quality opinions are formed. The Delphi technique allows McDonald’s to gather expert’s opinions on predictions of future behavior.

McDonald’s Competitors Subway

Kentucky Fried Chicken (KFC)

Mr. Burger

Burger King

McDonald’s Market Share

McDonald’s SWOT Analysis

McDonalds is a growing and striving business. It has successfully managed to turn out huge amounts of profits every year therefore it has ample number of investors. These investors contribute in monetary form and allow McDonalds to maintain its competitive advantage. McDonalds is a well and high financed company that has the ability to charge excessively low on its products and turn out a high profit. Other firms that are limited on funds cannot charge low, as they have to meet their costs.

Strengths Praised and ranked high in many food magazines for quality of service and food. Therefore, McDonalds

has a reputed name amongst various companies. The McDonalds logo according to many experts has been termed to be the most recognizes logo in

various countries, amongst children. McDonalds has established its branches in all important locations including; airports, railways and bus

stops. McDonald takes cleanliness and food hygiene very seriously; therefore it has one the most awards. McDonalds was one of the first few restaurants which started to show all nutritional values on their

menus. McDonalds has the ability to easily adapt to various cultures, hence it has been successful in most of the

countries. McDonald is engaged in many corporate social activities during the year. They have an assembly line system which ensures that the cost of production is always kept low. Provides professional training for all employees, to ensure high and consistent quality to all the customers.

Weakness

McDonalds over the years has attracted negative press due to selling junk food at very low prices. Many organizations and companies have sued McDonalds on various issues.

McDonalds lacks the ability to create innovative advertisements to attract children. McDonald’s service is no longer the same in all locations due to the ample franchising contracts. McDonalds has a high set up cost. McDonalds’ tends to lose out on sales when the economy fluctuates because people use their disposable

income to purchase fast food. When their disposable income is changed their spending also changes, hence McDonalds loses out on sales.

McDonalds only offers processed and inorganic food line. McDonalds’ has a high employee turnover. McDonalds has an extensive training program which often lowers the total revenue.

Opportunities McDonalds’ can expand or enter into the organic food industry because now people are becoming very

health conscious. McDonalds’ could provide more services such as free delivery in various countries, to capture more

market share. McDonalds’ could expand its menu to cater to all the individuals. McDonalds’ could attract attention by keeping or sponsoring various events for adults and children. McDonalds’ could add more services, such as free internet to attract and retain its customers. McDonalds’ could engage in various promotions and season discounts to beat the competitors. Expand more intensively into other countries or launch in new locations to cover the untapped areas.

Threats In many countries, McDonalds has been known to advertise and incite children in to consuming their

products with toys other events. Many companies and agencies are observing and are considering taking actions.

McDonalds’ sales and revenue are very dependent on the economic conditions of a country. Therefore, countries that do not perform well tend to also have a negative impact on McDonalds sales and revenue.

McDonalds’ is facing immense competition from the fast food places and organic restaurants. The negative press could have a significant impact on McDonald if corrective actions are not taken. The increase in health awareness can also have an impact on McDonalds as people would not want to

consume junk food, once they know its side effects.

McDonald’s Quality Assurance

The Homely Touch of the Highest Quality Standards at McDonald’s

At McDonald’s it’s always like coming home. We make sure that the warmth of our homely touch reaches your highest expectations. Be it food, service or the ambiance, we keep elevating our quality standards to new levels. McDonald’s has implemented rigorous food safety standards called “from farm to restaurants”. Here food is not just meant for thought. Food means quality by all means. That is why McDonald’s is served to you and your loved ones with all our heart and soul.

Meat With 100% Purity

100% purity is the reason why all our beef sandwiches taste so delicious. They are made from 100% halal beef cuts with no additives or preservatives. Chicken that we serve is carefully deboned breast meat only, with seasoned batter and a choice of sauce portions, while our Spicy McCrispy Chicken Deluxe uses only muscle cuts. All relevant authorities monitor our high quality standards of 100% halal chicken.

High Quality Baked Buns

We source our buns from suppliers who use only high quality wheat. All the buns are subject to strict quality and safety controls all through the production process.

Crunchy Farm-Fresh Vegetables

We select the best of the best vegetables that are continually monitored for freshness, high nutrients and safety, to maintain top quality standards. We use regional/local suppliers to ensure that the freshness and high quality are delivered to you in all our products.

No Compromise

At McDonald’s we give high importance to the smallest of the detail, from meat to spices, and everything is standardized. That is because we follow our global set quality standards with no compromise, right from the farm to the restaurant till the time it is served to you.

Conclusion

McDonald’s effectiveness and profitability is obviously well supported by their strong competitive position and market share in their primary product market. Its’ international

success is achieved by the company’s strategy and tactics, which complement each other and work in harmony, providing the optimum return bounded by efficiency. The company is thriving as it is both effective (doing things right) and efficient (doing the right thing).McDonald’s portfolio of products is well managed and ensures the best fit between the company’s strengths and weaknesses and for offsetting the threats found in its competitive environment. In considering the strong competitive position of the firm in a highly attractive market.McDonald’s business depends entirely upon the timely delivery of fresh and quality products. The entire model being outsourced they lack control over the process. We suggest that some control points need to be setup in the supply chain model to monitor the smooth functioning of the entire process.Hygiene facilities in the Kitchen should be improved Number of employees involved in the supply chain process need to be increased so that they can properly handle any contingency arising in the SCM model.

Recommendation for McDonalds

Diversification

Currently McDonald is importing Potatoes from abroad, this makes the product cost so high, so it becomes very difficult for it to capture the middle-income people. By diversification it is being suggested that McDonald should go for backward integration . Similarly McDonald’s should go for its own cattle farm so it will reduce its input cost and it will lead to lower market price of its products as compared to its competitors. In this way the sales of McDonald can be increased by at least 50% of current sales volume By doing this backward integration McDonald’s can avoid the problems like Govt. heavy duties on inputs imported from other countries and similarly it can avoid the problems of continuous devaluation and exchange rate.

Product Development

McDonald’s, it should introduce all the time new products that make it differentiated and it must sustain it so that no other competitor can copy their products and there should be lesser chances of product imitation. For this it may altogether change the whole product and can bring a new product or sometimes any major modification in the existing products. So we recommend that McDonald should apply the Product Development at all times whenever the need arises.

Improvements in

Customer Service-Focus on team, not individuals-Reward the behavior that you want

Training/Compensation-Training in customer service, speed and accuracy

Increase pay to attract more qualified applicants-Technology

Improvement of order verification system -Continued Growth of International Market

APPENDIX-I

No of McDonald’s restaurants across the Globe

APPENDIX-II

McDonald’s Global Locations

 Argentina

 Aruba

 Australia

 Austria

 Azerbaijan

 Bahamas

 Bahrain

 Bangladesh

 Barbados

 Belgium

 Bermuda

 Botswana

 Brazil

 Bulgaria

 Canada

 Cayman Islands

 Chile

 People's Republic of China

 Hong Kong

 Macau

 Colombia

 Costa Rica

 Croatia

 Cyprus

 Czech Republic

 Denmark

 Dominica

 Dominican Republic

 Ecuador

 Egypt

 El Salvador

 Estonia

 Fiji

 Finland

 France

 Georgia

 Germany

 Greece

 Grenada

Guatemala

 Guyana

 Honduras

 Hungary

 Iceland

 Italy

 India

 Indonesia

 Ireland

 Israel

 Jamaica

 Japan

 Jordan

 Kuwait

 Latvia

 Lebanon

 Lithuania

 Malaysia

 Malta

 Mauritius

 Mexico

 Moldova

 Morocco

 Netherlands

 New Zealand

 Nicaragua

 Oman

 Pakistan

 Panama

 Peru

 Paraguay

Philippines

 Poland

 Portugal

 Qatar

 Romania

 Russia

 Saint Lucia

 Saudi Arabia

 Serbia

 Singapore

 Slovakia

 Slovenia

 South Africa

 South Korea

 Spain

 Sri Lanka

 Sweden

 Switzerland

 Syria

 Taiwan

 Thailand

 Trinidad and Tobago

 Turkey

 Ukraine

 United Arab Emirates

 United Kingdom

 United States

 Guam

 Puerto Rico

 United States Virgin Islands

 Uruguay

 Venezuela

 Yemen