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Project Report And Market Survey of McDonald’s- Cbse class 12 Entrepreneurship Project

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Project Report And Market Survey of McDonald’s- Cbse class 12 Entrepreneurship Project

  4. 4. ACKNOWLEDGEMENT I have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organizations. I would like to extend my sincere thanks to all of them. I thank my God for providing me with everything that I required in completing this project.I am highly indebted to the Teacher in Charge Mr. James Thomas for his guidance and constant supervision as well as for providing necessaryinformation regarding the project & also for his support in completing the project.I would like to express my gratitude towards my parents for their kind co-operation and encouragement which helped me in the completion of this project. I would like to express my special gratitude and thanks to industry persons for giving me such attention and time.My thanks and appreciations also go to my classmates in developing the project and to the people who have willingly helped me out with their abilities.
  5. 5. FAST FOOD RESTAURANT An INTRODUCTIONA fast food restaurant, also known as a quick service restaurant(QSR) within the industry itself, is a specific type of restaurantcharacterized both by its fast food cuisine and by minimal tableservice.Food served in fast food restaurants typically caters to a " meat-sweet diet" and is offered from a limited me nu; is cooked in bulk inadvance and kept hot; is finished and packaged to order; and isusually available ready to take away, though seating may beprovided.Fast food restaurants are usually part of a restaurant chain orfranchise operation, which provisions standardized ingredientsand/or partially prepared foods and supplies to each restaurantthrough controlled supply channels.Arguably the first fast food restaurants originated in the UnitedStates with A&W in 1916 and White Castle in 1921. Today,American-founded fast food chains such asMcDonalds and KFC are multinational corporations with outletsacross the globe.Variations on the fast food restau rant concept include fast casualrestaurants and catering trucks. Fast casual restaurants have highersit-in ratios, and customers can sit and have their orders brought tothem. Catering trucks often park just outside worksites and arepopular with factory workers.Some trace the modern history of fast food in America to July 7,1912, with the opening of a fast food restaurant called the Automatin New York. The Automat was a cafeteria with its prepared foodsbehind small glass windows and coin -operated slots. Joseph Hornand Frank Hardart had already opened the first Horn & HardartAutomat in Philadelphia in 1902, but their “Automat” at Broadwayand 13th Street, in New York City, created a sensation. NumerousAutomat restaurants were built around the country to deal with thedemand. Automats remained extremely popular throughout the1920s and 1930s. The company also popularized the notion of“take-out” food, with their slogan “Less work for Mother”.
  6. 6. Modern commercial fast food is highly processed and prepar ed on alarge scale from bulk ingredients using standardized cooking andproduction methods and equipment. It is usually rapidly served incartons or bags or in a plastic wrapping, in a fashion which reducesoperating costs by allowing rapid product identi fication andcounting, promoting longer holding time, avoiding transfer ofbacteria, and facilitating order fulfilment. In most fast foodoperations, menu items are generally made from processedingredients prepared at a central supply facilities and then shippedto individual outlets where they are cooked (usually by grill,microwave, or deep-frying) or assembled in a short amount of timeeither in anticipation of upcoming orders (i.e., "to stock") or inresponse to actual orders (i.e., "to order"). Follow ing standardoperating procedures, pre-cooked products are monitored forfreshness and disposed of if holding times become excessive. Thisprocess ensures a consistent level of product quality, and is key todelivering the order quickly to the customer and avoiding labourand equipment costs in the individual stores.To make quick service possible and to ensure accuracy and security,many fast food restaurants have incorporated hospitality point ofsale systems. This makes it possible for kitchen crew people to vieworders placed at the front counter or drive through in real time.Wireless systems allow orders placed at drive through speakers tobe taken by cashiers and cooks. Drive through and walk throughconfigurations will allow orders to be taken at one register and paidat another. Modern point of sale systems ca n operate on computernetworks using a variety of software programs. Sales records can begenerated and remote access to computer reports can be given tocorporate offices, managers, trouble -shooters, and other authorizedpersonnel.The aim of this project is to conduct a market study on athriving fast food restaurant, going deep into its formation,history and growth; then to analyse the reason that make it sopopular.In this project we will be conducting a market study on the globalfast food giant McDonald’s.
  7. 7. MCDONALD’S AN INTRODUCTIONMcDonalds Corporation (NYSE: MCD) is the worlds largest chainof hamburger fast food restaurants, serving around 68 millioncustomers daily in 119 countries.Headquartered in the United States, the company began in 1940 as abarbecue restaurant operated by Richard and Maurice McDonald ; in1948 they reorganized their business as a hamburger stand usingproduction line principles. Businessman Ray Kroc joined thecompany as a franchise agent in 1955.Ray Kroc subsequently purchased the chain from the McDonaldbrothers and oversaw its worldwide growth.A McDonalds restaurant is operated either by a franchisee, or anaffiliate, or the corporation itself. The corporations revenues comefrom the rent, royalties and fees paid by the franchisees, as well assales in company-operated restaurants.McDonalds revenues grew 27 percent over the three years ending in2007 to $22.8 billion, and 9 percent growth in operating income to$3.9 billion.McDonalds primarily sells hamburgers, cheese burgers,chicken, French fries, breakfast items, soft drinks, milkshakesand desserts. In response to changing consumer tastes, the companyhas expanded its menu to include salads, wraps, smoothies andfruits.In July 2011, McDonalds announced that their largest restaurant inthe world will be built on the 2012 London Olympics site. Therestaurant will contain over 1,500 seat s and is half the length of anAmerican Football field. Over 470 staff will be employed servingon average (during the 2012 Olympics) 100,000 portions of fries,50,000 Big Macs and 30,000 Milkshakes. This restaurant willovershadow the current largest McDo nalds in the world in Moscow,Russia. In January 2012, the company announced revenue for 2011reached an all-time high of $27 billion, and that 2400 restaurantswould be updated and 1300 new ones opened worldwide.
  8. 8. HISTORY OF MCDONALD’SThe McDonalds restaurant concept was introduced in SanBernardino, California by Dick and Mac McDonald of Manchester,New Hampshire. It was modified and expanded by their businesspartner, Ray Kroc, of Oak Park, Illinois, who later bought out thebusiness interests of the McDonald brothers in the concept and wenton to found McDonalds Corporation.Early historyIn 1937, Patrick McDonald opened "The Airdrome", an octagonalfood stand, on Huntington Drive in Monrovia, California. In 1940,his two sons, Maurice and Richard ("Mac" and " Dick"), moved theentire building to 1398 North E Streets in San Bernardino,California. The restaurant was renamed "McDonalds FamousBarbeque" and served over forty barbequed items.In 1953, the McDonald brothers began to franchise their successfulrestaurant, starting in Phoenix, Arizona and Downey and California.The McDonald brothers created Speedee to symbolize the quick andefficient service system that they had devised. Downeys Speedee isone of only a few remaining an d Downey’s restaurant is the oldestoperating McDonalds in the world.Recognizing the historic and nostalgic value of the intact 1953structure, the McDonalds Corporation acquired the store in 1990and rehabilitated it to a modern but nearly original co ndition.In 1954, Ray Kroc, suggested that they franchise their restaurantsthroughout the country. He got the rights to set up McDonaldsrestaurants throughout the country, except in a handful of territoriesin California and Arizona already licensed by the McDonaldbrothers.Krocs first McDonalds restaurant opened in Des Plaines, Illinois,near Chicago, on April 15, 1955, the same day that Krocincorporated his company as McDonalds Systems, Inc. (which hewould later rename McDonalds Corporation).By 1958, there were 34 restaurants. In 1959, however, Kroc opened68 new restaurants, bringing the total to 102 locations.
  9. 9. Phenomenal growth in the 1960s and 1970sIn 1960, the McDonalds advertising campaign "Look for the GoldenArches" gave sales a big boost In 1962, McDonalds introduced itsnow world-famous Golden Arches logo. A year later, the companysold its billionth hamburger and introdu ced Ronald McDonald, ared-haired clown with particular appeal to children.In the early 1960s, McDonalds really began to take off. In 1961Kroc bought out the McDonald brothe rs for $2.7 million, aiming atmaking McDonalds the number one fast -food chain in the country.In 1965, McDonalds Corporation went public. In 1985, McDonaldsCorporation became one of the 30 companies that make up the DowJones Industrial Average.McDonalds success in the 1960s was in large part due to thecompanys skilful marketing and flexible response to customerdemand. In 1968 the now legendar y Big Mac made its debut, and in1969 McDonalds sold its five billionth hamburger. Two years later,McDonalds restaurants had reached all 50 states.In 1968, McDonalds opened its 1,000th re staurant; Kroc becamechairman and remained CEO until 1973.By the late 1960s, many of the candy -striped Golden Arches storeshad been modified with enclosed walk -up order areas and limitedindoor seating. By June 1969, " mansard roof" building designfeaturing indoor seating became the standard for McDonaldsrestaurants.The company pioneered breakfast fast food with the introduction ofthe Egg McMuffin in 1972 and five years later McDonalds added afull breakfast line to the menu.In 1975, McDonalds opened its first drive-thru window in SierraVista, Arizona. This service gave Americans a fast, convenient wayto procure a quick meal. Drive-thru sales eventually accounted formore than half of McDonalds systemwide sales.Surviving the 1980s "Burger Wars"In the late 1970s, competition from other hamburger chains suchas Burger King and Wendys began to intensify. A period ofaggressive advertising campaigns and price slashing in the early1980s became known as the "burger wars." Burger King suggestedto customers: "have it your way"; Wendys offered itself as the"fresh alternative". But McDonalds sales and market sharecontinued to grow.
  10. 10. During the 1980s, McDonalds further diversified its menu to suitchanging consumer tastes. The company introducedthe McChicken in 1980. It proved to be a sales disappointment andwas replaced with series of different chicken sandwiches a yearlater. Chicken McNuggets were invented in 1979. By the end of1983, McDonalds was the second largest retailer of chicken in theworld. In 1985, ready-to-eat salads were introduced to lure morehealth-conscious consumers. The 1980s were the fastest -paceddecade yet. Efficiency, combined with an expanded menu, continuedto draw customers. McDonalds, already entrenched in the suburbs,began to focus on urban centres and introduced new architecturalstyles.Despite experts claims that the fast -food industry was saturated,McDonalds continued to expand. The first generation raised onrestaurant food had grown up. Eating out had become a habit ratherthan a break in the routine, and McDonalds relentless marketingcontinued to improve sales.McDonalds growth in the United States was mirrored by itsstunning growth abroad. By 1991, 37 percent of system wide salescame from restaurants outside the United States. McDonaldsopened its first foreign restaurant in British Columbia, Canada, in1967. By the early 1990s the company had established itself in 58foreign countries and operated more than 3,600 restaurants outsidethe United States, through wholly owned subsidiaries, jointventures, and franchise agreements. Its strongest foreign marketswere Japan, Canada, Germany, Great Britain, Australia, and France.Braille menus were introduced in 1979, and picture menus in 1988.Experiments were conducted to find new technology and to researchnew markets to keep McDonalds in front of its competition. Newlocations such as hospitals and military bases were tapped as sitesfor new restaurants.1990s: Growing painsThe 10,000th unit was opened in April 1988.It took McDonalds 33years to open its first 10,000 restaurants. Incredibly, the companyreached the 20,000-restaurant mark in only eight more years, inmid-1996. By the end of 1997 the total had surpassed 23,000, andby that time McDonalds was opening 2,000 new restaurants eachyear, an average of one every five hours.In 1993, a new region was added to the empire when the firstMcDonalds in the Middle opened in Tel Aviv, Israel.
  11. 11. As the company entered new markets, it showed increasingflexibility with respect to local food preferences and customs. InIsrael, for example, the first kosher McDonalds opened in aJerusalem suburb in 1995. In Arab countries, the restaurant chainused "Halal" menus.McDonalds entered India for the first time in 1996, where itoffered a Big Mac made with lamb called the Maharaja Mac.Overall, the company derived increasing percentages of its revenueand income from outside the Un ited States. In 1992 about two -thirds of systemwide sales came from U.S. McDonalds, but by 1997that figure was down to about 51 percent. Similarly, the operatingincome numbers showed a reduction from about 60 percent derivedfrom the United States in 19 92 to 42.5 percent in 1997.The company made several notable blunders in the United States inthe 1990s.A seemingly weakened McDonalds was the object of a Burger Kingoffensive when the rival fast-food maker launched the BigKing sandwich, a Big Mac clone. Meanwhile, internal taste testsrevealed that customers preferred the fare at Wendys and BurgerKing.In response to these difficulties, McDonalds drastically cut back onits U.S. expansion. Plans to open hundreds of smaller restaurantsin Wal-Mart and gasoline stations were abandoned because test sitesdid not meet targeted goals.Failed turnaround: late 1990sFollowing the difficulties of the early and mid -1990s, severalmoves in 1998 seemed to indicate a reinvigorated McDonalds.Announcements were made that McDonalds would improve thetaste of several sandwiches and introduce several new menu items.McDonalds also said that it would overhaul its food preparationsystem in every U.S. restaurant. The new just-in-time system,dubbed "Made for You," was in developmen t for a number of yearsand aimed to deliver to customers "fresher, hotter food"; enablepatrons to receive special-order sandwiches (a perk long offered byrivals Burger King and Wendys); and allow new menu items to bemore easily introduced thanks to th e systems enhanced flexibility.
  12. 12. Refurbishing and creating a healthier image: Early 2000sMcDonalds was sued in 2001 after it was revealed that forflavoring purposes a small amount of beef extract was being addedto the vegetable oil used to cook the f rench fries.McDonalds soon apologized for any "confusion" that had beencaused by its use of the beef flavouring, and in mid -2002 it reacheda settlement in the litigation, agreeing to donate $10 millionto Hindus, vegetarians, and other affected groups .McDonalds also had to increasingly battle its public image as apurveyor of fatty, unhealthy food. McDonalds responded byintroducing low-calorie menu items and switching to a morehealthful cooking oil for its French fries.McDonalds continued to curtail store openings in 2004 and toconcentrate on building business at existing restaurants.McDonalds also aimed to pay down debt by $400 million to $700million and to return approximately $1 billion to shareholdersthrough dividends and share repurchasesWith the new "Forever Young" design (adopted in 2006), the firstmajor redesign since 1969, McDonalds turned a new page for itself.Most of new and remodelled restaur ants feature dining zones withthree sections or zones. Free wifi access points were also granted.Also, harsh colours and hard plastics have been replaced withcustom earth tones and flexible padded fabric. The McDonaldsmenu has been tweaked to offer a larger variety of what thecorporation refers to as more healthy food.2010sIn July 2011, McDonalds announced that their largest restaurant inthe world will be built on the 2012 London Olympics site. Therestaurant will contain over 1,500 seats and is half the length of anAmerican Football field. Over 470 staff will be employed servingon average (during the 2012 Olympics) 100,000 portions of fries,50,000 Big Macs and 30,000 Milkshakes. This restaurant willovershadow the current largest McDonalds in the world in Moscow,Russia. In January 2012, the company announced revenue for 2011reached an all-time high of $27 billion, and that 2400 restaurantswould be updated and 1300 new ones opened worldwide.
  13. 13. LIST OF PRODUCTSBurgersAll beef patties are seasoned, consisting primarily of salt and blackpepper.Big Mac: Along with the Quarter Pounder with cheese, this is oneof the two McDonalds signature menu items, introduced in 1967 asa response to the flagship burger at Big Boy restaurants. Two 1.6-ounce ground beef patties, special Big Mac sauce, shredded iceberglettuce, cheese, two gherkin slices, and re-hydrated onions on atoasted sesame seed bun, with an additional middle bun separatingboth beef patties.Big N Tasty: The Big N Tasty consists of a seasoned quarter -pound beef patty with ketchup, mayonnaise, slivered onions, twodill pickle slices, leaf lettuce, and one tomato slice on a sesameseed bun.Quarter Pounder: Along with the Big Mac, this is one of the twoMcDonalds signature menu items. 4 -ounce of ground beef pattywith ketchup, mustard, slivered onions, two gherkin slices, and twoslices of cheese.Hamburger and cheeseburger: A 45 g ground beef patty, withketchup, mustard, a single dill pickle, re-hydrated onions, on atoasted bun. Also sold as a double or triple, adding an extra pickleslice for each beef patty addedDouble Cheeseburger: It has two 45 g ground beef patties, withketchup, mustard, two slices of dill pickle, re-hydrated onions, andtwo pieces of cheese on a toasted bun.McDouble: It similar to a Double Cheeseburger, but with just oneslice of cheese. It was reintroduced as a permanent dollar -menuitem in December 2008.Daily Double: Similar to the double cheeseburger, however thetoppings are different. The Daily Double is made with lettuce,tomato, slivered onions, and mayonnaise. It also has only one sliceof cheese, rather than the two slices that are on the doublecheeseburger.
  14. 14. The Big N Tasty: It was introduced in 1997 and has beef pattywith ketchup, cheese, mayonnaise with a grill flavouring, dicedonions, two pickles, leaf lettuce, kebab meat and a tomato slice, ona toasted bun. It was devised to resemble BurgerKings Whopper sandwich.McFeast: A hamburger with lettuce, tomato, and mayonnaise, theMcFeast contains a quarter pounder patty, lettuce, and modifiedmayonnaise with lemon juice, ketchup, onion and tomato.Chicken, Fish, PorkMcChicken: It is a mildly spicy chicken sandwich. Made fromground white meat chicken, mayonnaise, and shredded lettuce, on atoasted bun. It still remains one of the biggest sellers, just behindthe Big Mac.Premium chicken sandwiches : The Classic is a rebranding of theCrispy Chicken and Chicken McGrill sandwiches, with mayonnaise,leaf lettuce, and a tomato slice . All are served on a whole-grainroll, with either a grilled or crispy chicken breast.Southern Style Chicken Sandwich : A southern-style fried chickenbreast filet, on a steamed bun, dre ssed with butter and two pickles.Snack Wrap: McDonalds version of a wrap made with whitemeat chicken breast, lettuce, shredded Cheddarcheese and Monterey Jack cheese, and a sauce, wrapped in a softflour tortilla. There is also a Mac Snack Wrap which features thefixings of the Big Mac, but without the bun and wrapped in atortilla shell, and uses one half of a piece of quarter meat.Chicken Fajita: Chicken, cheese, red and green bell peppers, anddiced onions in a flour tortilla. Comes with Picante sauce packetson request, which is available in mild and spicy.Chicken McNuggets: Introduced in 1980 as a replacement for theMcChicken, these are small chicken chunks served with dippingsauces of Barbecue, Sweet n Sour, Honey, and Hot Mustard. In2011, 4 new dipping sauces were introduced and added to thelineup: Sweet Chili, Honey Mustard, Spicy Buffalo, and CreamyRanch.
  15. 15. Chicken Selects: McDonalds version of chicken strips. Theyinclude choices of spicy buffalo, creamy ranch, Honey Mustard,and Chipotle barbecue dipping sauces; sauce sele ctions in the UKare Smokey barbecue, sour cream and sweet chilli sauce.Filet-O-Fish: It is a whitefish fillet with tartar sauce and a halfslice of cheese, on a steamed bun.McRib: It is a sandwich featuring boneless pork with barbecuesauce, slivered onions, and pickles.McArabia: There are two versions of the McArabia: Grilledchicken and grilled kofta (beef with spices). Both are served withlettuce, tomatoes, onions, and garlic mayonnaise in addition to twosmall patties of grilled chicken or kofta, all wrapped in an Arabicstyle pita bread. The McArabia has been very well receivedthroughout the Middle East.Chicken McBites: They are Popcorn chicken breast with "home-style seasoning”. Dipping sauces include ranch, Sweet n Sour,Tangy BBQ, Chipotle BBQ, and Honey Mustard.Fish McBites: Similar to the Chicken McBites, these are smallpieces of flaky whitefish dipped in batter and fried until goldenbrown, and served with tartar sauce for dipping.Salads and side ordersMcDonalds first introduced salads to its menu in 1985. ThePremium Salads all are a mixture of iceberg lettuce and a speciallettuce assortment, with cherry tomatoes and different toppings todifferentiate them; additionally all salads can be topped with warmgrilled or crispy chicken. All of its salads are part of McDonaldsmove towards creating a healthier image.McDonalds sells French fries as its primary side order. They alsosell potato wedges, a type o f French fry that is thick cut and wedgeshaped, fried onion pieces and onion rings.
  16. 16. CORPORATE OVERVIEWFacts and figuresMcDonalds restaurants are found in 119 countries and territoriesaround the world and serve 58 million customers each day.McDonald’s operates over 31,000 restaurants worldwide, employingmore than 1.5 million people. The companies also operate otherrestaurant brands, such as Piles Café.Focusing on its core brand, McDonalds began divesting itself ofother chains it had acquired during the 1990s. The company owneda majority stake in Chipotle Mexican Grill until October 2006,when McDonalds fully divested from Chipotle through a stockexchange. Until December 2003, it also owned Donatos Pizza. OnAugust 27, 2007, McDonalds sold Boston Market to Sun CapitalPartners. Notably, McDonalds has increased shareholder dividendsfor 25 consecutive years, making it one of the S&P 500 DividendAristocrats.Types of restaurantsMost standalone McDonalds restaurants offer both counter serviceand drive-through service, with indoor and sometimes outdoorseating. Drive-Thru, Auto-Mac, Pay and Drive, or "McDrive" as itis known in many countries, often has separate stations for placing,paying for, and picking up orders, though the latter two steps arefrequently combined; it was first introduced in Arizona in 1975,following the lead of other fast -food chains. The first suchrestaurant in Britain opened at Fallowfield, Manchester in 1986.In some countries, "McDrive" locations near highways offer nocounter service or seating. In contrast, locations in high -density cityneighbourhoods often omit drive-through service. There are also afew locations, located mostly in downtown districts that offer Walk -Thru service in place of Drive-Thru.To accommodate the current trend for high quality coffee and thepopularity of coffee shops in general, McDonaldsintroduced McCafé, a café-style accompaniment to McDonaldsrestaurants in the style of Starbucks. McCafé is a concept createdby McDonalds Australia, starting with Melbourne in 1993. Today,most McDonalds in Australia have McCafés located within theexisting McDonalds restaurant. In Tasmania, there are McCafés inevery store, with the rest of the states quickly following suit. After
  17. 17. upgrading to the new McCafé look and feel, some Australian storeshave noticed up to a 60% increase in sales. As of the end of 2003there were over 600 McCafés worldwide.Some locations are connected to gas stations/conveniencestores, while others called McExpress have limited seating and/ormenu or may be located in a shopping mall. Other McDonalds arelocated in Wal-Mart stores. McStop is a location targeted attruckers and travellers which may have services found at truckstops.Since 1997, the only Kosher McDonalds in the world that is notin Israel is located in the "Abasto de Buenos Aires", Argentina.Global operationsMcDonalds has become emblematic of globalization, sometimesreferred to as the "McDonaldization" of society.The Economist newspaper uses the "Big Mac Index": thecomparison of a Big Macs cost in various world currencies can beused to informally judge these currencies purchasing power parity.Norway has the most expensive Big Mac in the world as of J uly2011, while the country with the least expensive Big Mac is India .Some observers have suggested that the company should be givencredit for increasing the standard of service in markets that itenters. A group of anthropologists in a study entitled Golden ArchesEast looked at the impact McDonalds had on East Asia, and HongKong in particular.When it opened in Hong Kong in 1975, McDonalds was the firstrestaurant to consistently offer clean restrooms, driving customersto demand the same of other restaurants and institutions.McDonalds has taken to partnering up with Sinopec, the secondlargest oil company in the Peoples Republic of China, as it takesadvantage of the countrys growing use of personal vehicles byopening numerous drive-thru restaurants.McDonalds has opened a McDonalds restaurant and McCa fé on theunderground premises of the French fine arts museum, the Louvre.The company stated it will open vegetarian -only restaurants in Indiaby mid-2013.Redesign
  18. 18. In 2006, McDonalds introduced its "Forever Young" brand byredesigning all of its restaurants, the first major redesign since the1970s. McDonalds has invested $1 billion to redesign nearly all ofthe 14,000 restaurants by 2015.The goal of the redesign is to be more like a coffee shop, similar toStarbucks. The design includes wooden tables, faux -leather chairs,and muted colours; the red is mut ed to terra cotta, the yellow wasturned golden for a more "sunny" look, and olive and sage greenwere also added.To warm up its look, the restaurants have less plastic and morebrick and wood, with modern hanging lights to produce a softerglow.Many restaurants now feature free Wi-Fi and flat screen TVs. Otherupgrades include double drive-thrus, flat roofs instead of the angledred roofs, and replacing fibre glass with wood. Also, instead of thefamiliar golden arches, the restaurants now feature "semi -swooshes"(half of a golden arch), similar to the Nike swoosh.Business modelMcDonalds Corporation earns revenue as an investor in properties,a franchiser of restaurants, and an operator of restaurants.Approximately 15% of McDonalds restaurants are owned andoperated by McDonalds Corporation directly. The remainder areoperated by others through a variety of franchise agreements andjoint ventures.The McDonalds Corporations business model is slightly differentfrom that of most other fast-food chains. In addition toordinary franchise fees and marketing fees, which are calculated asa percentage of sales, McDonalds may also collect rent, which mayalso be calculated on the basis of sales.As a condition of many franchise agreements, which vary bycontract, age, country, and location, the Corporation may own orlease the properties on which McDonalds franchises are located. Inmost, if not all cases, the franchisee does not own the location of itsrestaurants.The United Kingdom and Ireland business model is different thanthe U.S, in that fewer than 30% of restaurants are franchised, withthe majority under the ownership of the company. McDonalds
  19. 19. trains its franchisees and others at Hamburger University in OakBrook, Illinois.In other countries, McDonalds restaurants are operated by jointventures of McDonalds Corporation and other, local entities orgovernments.As a matter of policy, McDonalds does not make dire ct sales offood or materials to franchisees, instead organizing the supply offood and materials to restaurants through approved third partylogistics operators.According to Fast Food Nation by Eric Schlosser, nearly one ineight workers in the U.S. have at some time been employed byMcDonalds. It also states that McDonalds is the largest privateoperator of playgrounds in the U.S., as well as the single largestpurchaser of beef, pork, potatoes, and apples. The selection ofmeats McDonalds uses varies with the culture of the host country.
  20. 20. MARKETING MIXThe marketing mix of a company consists of the various elements asfollows which form the core of a company’s marketing system andhence helps to achieve marketing objectives. The marketing mix ofMcDonald’s is as follows:-Product: - McDonald’s places considerable emphasis on developing amenu which customers want. Market research establishes exactly whatthis is. However, customers’ requirements change over time. In orderto meet these changes, McDonald’s has introduced new products andphased out old ones, and will continue to do so. Care is taken not toadversely affect the sales of one choice by introducing a new choice,which will cannibalise sales from the existing one (trade off).McDonald’s knows that items on its menu will var y in popularity.Their ability to generate profits will vary at different points in theircycle. In India McDonalds has a diversified product range focussingmore on the vegetarian products as most consumers in India areprimarily vegetarian. The happy mea l for the children is a great selleramong others.Price: - The customer’s perception of value is an importantdeterminant of the price charged. Customers draw their own mentalpicture of what a product is worth. A product is more than a physicalitem; it also has psychological connotations for the customer. Thedanger of using low price as a marketing tool is that the customer mayfeel that quality is being compromised. It is important when decidingon price to be fully aware of the brand and its integrit y.In India McDonalds classifies its products into 2 categories namelythe branded affordability (BA) and branded core value products(BCV). The BCV products mainly include the McVeggie andMcChicken burgers that cost Rs 50 -60 and the BA products includeMcAloo tikki and Chicken McGrill burgers which cost Rs20 -30. Thishas been done to satisfy consumers which different price perceptions.Promotion :- The promotions aspect of the marketing mix covers alltypes of marketing communications .One of the methods employed isadvertising, Advertising is conducted on TV, radio, in cinema, online,using poster sites and in the press for example in newspapers andmagazines. Other promotional methods include sales promotions,point of sale display, merchandising, direc t mail, loyalty schemes,door drops, etc. The skill in marketing communications is to develop a
  21. 21. campaign which uses several of these methods in a way that providesthe most effective results. For example, TV advertising makes peopleaware of a food item an d press advertising provides more detail. Thismay be supported by in -store promotions to get people to try theproduct and a collectable promotional device to encourage them tokeep on buying the item.At McDonalds the prime focus is on targeting children . In happymeals too which are targeted at children small toys are given alongwith the meal. Apart from this, various schemes for winning prices byway of lucky draws and also scratch cards are given when an order isplaced on the various mean combos.Place: - Place, as an element of the marketing mix, is not just aboutthe physical location or distribution points for products. Itencompasses the management of a range of processes involved inbringing products to the end consumer. McDonald’s outlets are v eryevenly spread throughout the cities making them very accessible.Drive in and drive through options make McDonald’s products furtherconvenient to the consumers.Other than the main four elements mentioned above there are afew other elements too in the marketing mix, which are asfollows:-People:-The employees in McDonald’s have a standard uniform andMcDonald’s specially focuses on friendly and prompt service to itscustomers from their employees.Process:-The food manufacturing process at McDonald’s iscompletely transparent i.e. the whole process is visible to thecustomers. In fact, the fast food joint allows its customers to view andjudge the hygienic standards at McDonald’s by allowing them to enterthe area where the process takes pla ce. The customers are invited tocheck the ingredients used in food.Physical evidence: - McDonalds focuses on clean and hygienicinteriors of is outlets and at the same time the interiors are attractiveand the fast food joint maintains a proper decorum at its joints.
  22. 22. SWOT ANALYSISStrengths McDonald’s holds a very strong brand name worldwide. They have large partnerships with other companies that provide them with their desired products; this increases the goodwill of the company. McDonald’s is one of the most reputed firms who are socially responsible. Loyal employees & management & customer are their biggest strength. McDonald’s makes sure that cultural & regional barriers are kept in mind while providing food to different countries. Clean environment and play areas for children where they can enjoy their time.Weakness The weakness that hits the list of employee turnover rate. Every year many of their employees are fired out of the restaurant. McDonalds mostly advertises products and food items that targets children. Health conscious people often complain that they do not provide us with the organic and healthy food. This becomes their weakness when they get in the complaints. They also face quality issue at times. This affects t he business as they are running the outlet worldwide, if one franchise gets affected others also get a bad name.
  23. 23. OpportunitiesIt can open up online services for their customers so that theycan easily order their desired meals sitting at home .Discounts given on every food item may help them gain morecustomers.They can go for a joint venture with the retailers they work with .They can introduce healthy hamburgers and healthy drinks forthe people who are health conscious.In order to be environment friendly, they can use packingmaterial which can be recycled later or material that does notcreate pollution.ThreatsEmerging competition of similar outlets is becoming a problemfor McDonalds.Health issue also becomes a problem when it comes to food.As it is a multinational food outlet, fluctuations in the currencyof other countries becomes a problem for such companies .Recession in any country would definitely affect the whole outletworldwide.People facing heart problems and obesity accuse McDonalds fornot providing them with the healthy food .They have a threat of local food outlets in different countries .McDonalds is operating in a fully fledged economy wherecompetition is increasing day by day therefore they should wor keffectively to overcome their drawbacks because of the recession.
  24. 24. COMPANY’S FINANCIAL INFORMATION Company Name: McDonalds Corporation Ticker Symbol: MCD Web Address: CEO: Mr. Donald Thompson No. of Employees: 420,000 Common Issue Type: CS Business Description: McDonalds Corporation franchises and operates McDonalds restaurants in the food service industry. The Company and its franchisees purchase food, packaging, equipment and other goods from numerous independent suppliers. Industry Information: LEISURE - RestaurantsPrice Day Change Bid Ask Open High Low Volume87.18 -0.02 - - 87.43 87.43 86.76 3658828Market Cap (mil) Shares Outstanding (mil) Beta EPS DPS P/E Yield 52-Wks-Range87,526.7 1,004.0 0.39 5.27 2.53 16.4 3.5 102.22 - 83.31 KEY FIGURES (Latest Twelve Months - Balance Sheet (at a glance) in Millions LTM) Yesterdays Close 87.06 $ PE Ratio - LTM 16.4 Market Capitalisation 87,526.7 mil Latest Shares Outstanding 1,004.0 mil Earnings pS (EPS) 5.27 $ Dividend pS (DPS) 2.53 ¢ Dividend Yield 3.5 % Dividend Payout Ratio 48 % DIVIDEND INFO Dividend Declared Date 09/20/2012 Revenue per Employee 64,300 $ Dividend Ex-Date 11/28/2012 Effective Tax Rate 31.3 % Dividend Record Date 12/02/2012 Float 1,015.3 mil Dividend Pay Date 12/16/2012 Dividend Amount 770 Float as % of Shares Outstanding 99.9 % Type of Payment Cash Payment Foreign Sales 18,478 mil Dividend Rate 3.08 Domestic Sales 8,528 mil Current Dividend Yield 3.5 5-Y Average Dividend Yield 3.1 Selling, General & Adm/tive (SG&A) as % of Revenue 9.10 % Payout Ratio 48.0 Research & Devlopment (R&D) as % of 5-Y Average Payout Ratio 53.0 Revenue 0.00 % Share price performance previous 3 years Gross Profit Margin 44.7 % EBITDA Margin 35.6 % Pre-Tax Profit Margin 29.1 % Assets Turnover 0.8 %
  25. 25. Return on Assets (ROA) 16.1 %Return on Equity (ROE) 39.2 %Return on Capital Invested (ROCI) 20.4 %Current Ratio 1.0Leverage Ratio (Assets/Equity) 2.4Interest Cover 16.6Total Debt/Equity (Gearing Ratio) 0.96LT Debt/Total Capital 48.0 %Working Capital pS 0.06 $Cash pS 2.17 $ Share price performance intradayBook-Value pS 13.83 $Tangible Book-Value pS 11.10 $Cash Flow pS 6.89 $Free Cash Flow pS 1.25 $KEY FIGURES (LTM): Price infoPrice/Book Ratio 6.30Price/Tangible Book Ratio 7.85Price/Cash Flow 12.6Price/Free Cash Flow 69.9P/E as % of Industry Group 42.0 %P/E as % of Sector Segment 77.0 %PRICE/VOLUME High Low Close % Price Chg % Price Chg vs. Mkt. Avg. Daily Vol Total Vol1 Week - - - 0.0 101 54,041 66,2174 Weeks 87.43 83.31 84.74 2.7 101 57,129 856,92913 Weeks 94.16 83.31 91.02 -4.4 98 61,288 3,554,70026 Weeks 94.16 83.31 87.75 -0.8 93 59,419 7,189,75852 Weeks 102.22 83.31 98.03 -11.2 79 59,272 14,521,666YTD 102.22 83.31 - -13.2 77 59,774 13,807,695Moving Average 5-Days 10-Days 10-Weeks 30-Weeks 200-Days Beta (60-Mnth) Beta (36-Mnth) 86.61 86.31 88.25 89.31 91.74 0.39 0.31 5-Year 3-Year YTD vs. Curr Qtr vs. Annual vs.GROWTH RATES R² of 5-Year Growth CHANGES Growh Growth Last YTD Qtr 1-Yr ago Last AnnualRevenue 3.81 77.6 Revenue % 6.66 2.1 -0.2 12.2Income 20.17 81.1 Earnings % 9.78 -1.4 -3.5 11.3Dividend 15.36 94.7 10.16% EPS 1.0 -1.4 15.1Capital Spending 6.97 NA 10.52$ EPS 0.04 -0.02 0.69R&D 0.00 NA 0.00Normalized Inc. 11.58 NA 9.79SOLVENCY RATIOSSHORT-TERM SOLVENCY RATIOS
  26. 26. (LIQUIDITY)Net Working Capital Ratio 2.71Current Ratio 1.3Quick Ratio (Acid Test) 1.0Liquidity Ratio (Cash) 0.67Receivables Turnover 21.5Average Collection Period 17Working Capital/Equity 6.2Working Capital pS 0.88Cash-Flow pS 6.77Free Cash-Flow pS 2.09FINANCIAL STRUCTURE RATIOSAltmans Z-Score Ratio 4.85Financial Leverage Ratio (Assets/Equity) 2.3Debt Ratio 56.4Total Debt/Equity (Gearing Ratio) 0.87LT Debt/Equity 0.84LT Debt/Capital Invested 56.9LT Debt/Total Liabilities 65.2Interest Cover 17.3Interest/Capital Invested 1.67
  27. 27. Attn: Replace this page with the 30 th page (as displayedon the pdf reader and pg no.27 as displayed in the doc) ofthe Consolidated Balance Sheet of McDonald’s, which youcan find on the link below.
  28. 28. QUESTIONNAIRE (Attn: Attach minimum 5 copies)Name: ____________________ age: ________Gender: _________ occupation: _______________Please spare a few minutes of your valuable time to answer thissimple Questionnaire.1. How often do you visit fast food restaurants? Everyday Alternate days Weekends Once in a month Once every three months2. Which of the following fast food chain do you visit the most? Subway McDonald’s KFC Pizza Hut Burger King3. Are you satisfied with the services provided by them Yes Sometimes Not at all satisfied4. How often do you eat at McDonald’s? Everyday Alternate days Weekends Once in a month Once every three months5. Which among the following is your favourite product at McDonald’s? Big Mac Burger Mac Veggie Big Mac Chicken Burger Maharaj Mac Mac Fileto Fish6. Is the product line of McDonald’s adequate? Yes No Haven’t Thought About That7. What time of the day do you prefer to eat at McDonald’s? Morning Noon Evening Night8. What is the main problem you faced at McDonald’s? Long queues Wrong orders Hygienic problems Other problems No problems9. What are the unique selling prepositions of McDonald’s? Product variety Hygiene Ambience Quick service Location Other10. Do you think McDonald’s will be triumphant over all its competitors? Yes Maybe Haven’t Thought About That Never Thank You!!
  29. 29. SURVEY RESPONSE ANALYSIS Frequency of visits made to fast food centers Everyday Alternate days Weekends Once in a month Fast food chain visited the most Subway MacDonalds KFC Pizza Hut Burger King Favourite product at Macdonald’s Big Mac Burger Mac Veggie Big Mac Chicken Burger Maharaj Mac Mac Fileto Fish
  30. 30. Time of the day prefered to eat at Macdonald’s Morning Noon Evening NightMain problem faced at McDonald’s Long queues Wrong orders Hygienic problems Other problems No problemsThe unique selling prepositions of MacDonald’s Product variety Hygiene Ambience Quick service Location Other
  31. 31. THE TOP FIVE REASONS WHY MCDONALD’S IS SO POPULAR1. The System This is the first thing that makes McDonalds so successful, byhaving an effective and efficient system in place, which exploits theminimum wage labour available, in the form of young teenagers whoare just looking to make some cash or pick up fundamental job skills.2. ConvenienceThe second reason why McDonalds is so popular is because itseverywhere. There a McDonalds at every corner of the map, at everymajor shopping centre, district, highway, freeway, every place whichattracts even, remotely more than 10 people, will have a McDonaldsrestaurant not too far from them. McDonalds is having the best RealEstate locations around the world which makes it so popular aroundthe globe.3. Likability and FamiliarityThe Golden Arches, the Big M. Ronald McDonald, happiness and fun;all these are the associations with McDonald’s which makes it sofamiliar by being so familiar to all age groups and to everybody.4. The MenuMcDonalds has one of the most diverse menus, targeting all agesfrom little kids to old pensioners, and everyone else in between.Theres Big Macs for the big kids and junior burgers for the little. Themenus versatility is accentuated when they introduced the "healthytick" concept, which target those people who wants to watchwhat they eat (even though it doesnt make sense to go to a fast foodrestaurant to eat healthy).5. ConsistencyThe last reason is, McDonalds is so successful because of itsconsistency. The expectations that we have about everythingsurrounding the store are fulfilled in almost every store nationwide,worldwide. So everybody knows what theyre getting into before theycome to McDonalds, and by being so consistent, it has a solidreputation to uphold.
  32. 32. CONCLUSIONWhat started as a simple food stand on Huntington drive, Californiain 1937, through the ages have become a billion Dollar corporationand the world’s second largest fast -food chain. When analysed, onewould understand that McDonald’s had a stable growth in the pastyears.The credits of building it into one of world’s la rgest fast foodoperation can be given to Ray Kroc who took over McDonald’sfrom its establishers, modernised and expanded it to suit thecontemporary trend. Today McDonald’s has a net worth of $15.15billion.Through this project report and market survey we saw the howMcDonald’s was formed, its history and the present position. Wealso its list of various products offered and the corporate profile.Through the marketing mix, we saw how they make use of theirproduct, price, place, promotion mixes. SWOT a nalysis showed usthe strengths and weakness of McDonald’s as well as theopportunities and threats they have got.The consolidated financial statement showed us the financialposition of the corporation as of 2011. The questionnaire surveyprovided us with a clear picture of the needs, want and expectationsof the consumers of the fast food market in general and McDonald’sin particular. The respondents also rated the services provided bythe corporation. At last we also saw the top five reasons that makeMcDonald’s so popular.I gladly hope that this project has met its aim.Let me conclude by quoting this quote by Ray Kroc"Perfection is very difficult to achieve, and perfection was what Iwanted in McDonalds. Everything else was secondary for me." Thank You!!
  33. 33. ~~~~~~~~~~~~ Attn: Pictures on the next page!!
  34. 34. Pictures to be attachedAttn: Attach these pictures on the backside of the pagewhich is adjacent to the relevant page.
  35. 35. Logo of McDonald’sMcDonalds world headquarters, Oakbrook, United States Ray Kroc- The franchiser of McDonalds
  36. 36. The first McDonald’s restaurant opened by Patrick McDonald, in 1937 McDonald’s Speedee mascotDowney’s restaurant; the oldest operating McDonalds in the world.
  37. 37. World-famous Golden Arches logo The legendary Big Mac
  38. 38. The Chicken McNuggets
  39. 39. The Maharaja Mac which is offered in India
  40. 40. An exterior view of the worlds largest McDonalds restaurant built on 2012 London Olympics site
  41. 41. The Big MacThe Big n Tasty
  42. 42. The premium chicken sandwich The McDonalds Chicken Fajita
  43. 43. McArabiaMcDonald’s Salads McDonald’s French fries
  44. 44. A map showing every continent with at least one McDonalds restaurant
  45. 45. A modern McDonald’s restaurant in London