Success of Mcdonalds Corporation by ryq14701

VIEWS: 149 PAGES: 82

Success of Mcdonalds Corporation document sample

More Info
									  QUICK-SERVICE INDUSTRY
         OVERVIEW




SONGKI KIM           DANA WILLIAMS
JEFF OHLMAN          JORGE DIETRICH
NADINE CHAMSEDDINE   JOSE GUZMAN
Margin Trends 2004
Burger’s Big Three

   McDonald                   % 10
   Burger King                % -10.5
   Wendy‟s                    % 3
   McKey Foods: Burgers [McDonalds sub.]
   Sun Valley: Chicken [TGWU union]
   McCain Foods GB Ltd: Chips [North York]
   Sweetheart International: Ronald McDonald
    cups and straws [Holland]
Compare 2004 Sales (Mil.)

                      McDonald
                      $ 19,065

   $ 20,000

   $ 15,000                               $Yum
                                           9,170

   $ 10,000                  W endy's,
              Burger King,    $ 3,636
                                    Sonics,
                $ 1,300               $ 536
    $ 5,000

        $-
                      Annual Sales
Market Share 2004
Burger’s Big Three


McDonald             % 59

Burger King          % 21

Wendy‟s              % 20
Porter’s Five Competitive Forces

   Entrants - Low/Moderate- Brand awareness
    and lower cost competitive advantage.
    Require time and large capital Investment
   Rivalry – High- Burger King, Wendy‟s, J.B.,
    are heavy competitors
   Power of Suppliers – Low- Most have the
    purchasing power to negotiate lower prices
Porter’s Five Competitive Forces
   Competitive Force - Threat/Power- Prices and
    product offering are the main sources of competition
   Substitutes- Low/Moderate- Trends show
    consumers prefer healthier and more exotic
    alternatives
   Buying power -Most players have a lower cost
    competitive advantage. Top players also achieve
    economies of scale via this
Rivalry among Existing Competitors

   Intense rivalry and competition market share
    among existing fast-food competitors
   Slowing growth rate of sales
   To attract customers….
    - increase advertising
    - price discount
    - offer new product
Threat of New Entrants

   Economies of scale force new entrants
    to enter at a cost disadvantage
   Require higher fixed costs to enter
    existing market
   Have strong customer loyalty
   Willing to defend new entrants with price
    discounting and advertising
Threat of Substitute Products

   There are….
    - numerous restaurants and other eating
    alternatives
    - a variety of high-quality, reasonably
    priced eating alternatives
   Customer switching costs are low
McDonalds Corporation
McDonald’s History
   In 1955 Milkshake-Machine Salesman Ray
    Kroc took out a franchise on a hamburger
    store owned by two McDonald brothers.
    Today McDonald‟s is the largest fast food
    operator in the world.
   50 Million customers every day, 12000
    Restaurants in the USA, and 30,000
    Worldwide in 119 countries
   The chain has grown by one new outlet every
    17 hours in the last decade.
Marketing Strategy
   Global Brand Awareness „Golden
    Arches”
   Marketing Alliances
   Global Sponsorship
   Alignment with country-level marketing
    activities
   Focused on its customers
Marketing Budget
   Advertising Costs:
             • [In Millions]
   2004                       $ 619.50
   2003                       $ 596.70
   2002                       $ 532.30
Subsidiaries


   Boston Market
   Chipotle Mexican Grill
   Donatos Pizzeria Business
   Note: in December 2003 McDonalds
    sold Donatos Pizzeria Business
Suppliers Europe
   Golden West Foods: Buns, Ketchup,
    Syrup, milkshake mix [McDonald‟s
    subsidiary]
SWOT Analysis
                         Strengths

   Financial Power- McDonald‟s spends more on
    advertising on a single brand than any other
    organization. In 1986 a colossal $789m, or 6.3% of
    system wide sales, went to advertising. It is one of
    the five largest television advertisers in the US, with
    children as its prime target. After Santa Claus,
    Ronald McDonald is the figure best known to US
    Children.
   Recipe for Success- McDonalds revolutionized the
    fast food Industry. They introduced a new production
    process that lowered labor costs.
SWOT Analysis
          Weaknesses/Opportunities/Threats

   Weakness-It is possible that a company can become
    so large it saturates the market.
   Opportunities- Because of its financial power
    McDonalds could move into to other
    industries/products at any time.
    Threats- Competitors, Suppliers, Workers Unions,
    Attacks of health campaigns, and Environment.
       Burger King


Competitive Trend Analysis
BK Background

   Founded in 1954
   Second Largest Fast Food Chain Worldwide
   Global operations of the $11.3 billion company
   BURGER KING® restaurants serve approximately 1,072
    customers per restaurant, per day, or approximately 11.8
    million customers daily worldwide
   The BURGER KING® system employs more than 300,000
    people system wide
Fascinating BK Facts


   Today, Burger King operates the #2 hamburger chain
    (behind McDonald's) with more than 11,200
    restaurants across the US and in about 55 other
    countries
   Since its founding in 1955, BURGER KING® has
    sold well over 2.1 billion hamburgers annually
BK Brand Strategy

   Brand image
    •   Masculine oriented (Burger „King‟ – not Burger Queen)
    •   „„King‟: The larger size than the average burger
   Food
    •   Great-taste
    •   High quality
    •   Fun
    •   Value
    •   Portability

   Slogan: „Have it your way‟
    •   Customized
    •   Customer-oriented
    •   Differentiation from other fast-food competitors
BK Marketing Mix Strategy

   Product (Whopper)
   Price (Compare with McDonald, Wendy‟s,
    Yum! and Subway)
   Promotion (Stick with the jumbo size
    burger – the opposite force against the
    recent trend of Low Carb)
   Place(Distribution)
BK Marketing Mix-Product
   Whopper Sandwich
   Fire Grilled Burgers
   Chicken, Fish & Veggies
   Salads
   Breakfast
   Treats
   Sides & Beverages
   Kids Menu
BK Marketing Mix-Price
    Price Range
    - $4 - $8 for a value meal

    The value meal for breakfast
    - For example, suggested Enormous Omelet
     Sandwich retail price: $2.99, or $3.49
BK Marketing Mix-Promotion

   Advertising Slogan (2004-present) “Have it your way”

    Star Wars deal
    - The fast-food chain's first global promotion

   Burger King Offering Low Carb
    - Allow substitutions of french fries with salads and bottled
    water for soft drinks

   A Big Breakfast at Burger King
    - Debuts Enormous Omelet Sandwich
Burger King Target Audience

   Customer with the sophisticated taste but still
    need fast food service

   Middle class household with the discretionary
    income

   Family with kids
Financial Picture
   Private company – hard to obtain
    numbers
   11,200 restaurants
   2004 sales 13 billion
   2004 sales growth 18.2
Burger King Largest Franchises
   AAFES                 HMS Host
   AmeriKing             Nath
   Aramark               Quality Dining
   C&L                   Sodexho-Marriott
   Carrolls Corp #1      Sydran
    franchise             TA Operating Group
   Cimm's                Veterans Canteen
   Compass               Westwind
   Deignan-Kauffman
Exclusive Supplier
   Restaurant Services, Inc. (RSI)
   Cooperative serving BURGER KING®
    restaurant owners in the United States.
   Founded in 1991
   Purchasing agent for U. S. Burger King
    system.
                 SWOT Analysis

Strengths

   Global Brand Equity
   The second largest fast food chain (18.8% of US
    fast-food hamburger business)
   Successful items: WHOPPER® Sandwich
   More than 55 Global market operations
   Customized Fast Food service
   Real Estate investment (pursuit of the best
    location in town)
   Financial support from the parent company
    (Texas Pacific Group)
Strengths
   2nd Largest burger chain
   Brand recognition and recall
   Over 11,000 locations worldwide
   WHOPPER has highest brand recognition
   Economy of scale provides buying power
   Unique product to differentiate product (flame
    broiled).
   Customization allows customer to “have it your
    way”
Weaknesses

     Declining market share
     Self-restricted the diversification of
      product development because of
      stickiness to strong „Burger King‟ brand
      image
     Weak product development
     Slowed revenue and income growth
Weakness
   We are in a “Burger Slump”
   BK has no other business segment
   Ameriking , 2nd largest franchise filed for Chapter 11
   “Revolving” door in corporate board room, 10 CEOs in 14 years
   High franchise rate makes BK vulnerable to multiple disparate
    policies
   Failure to introduce new brand lines
   3 of 10 largest franchises are in chapter 11
   Lackluster marketing
Opportunities
      International expansion
      Only serving 1% of the world‟s
       population (Potential growth in
       China & India with new product
       development)
      Growing dining-out market
Opportunities
   Consumers have positive perception of
    brand.
   Take advantage of healthy eating trend.
   Consider new brands and franchises.
   Reduce cost of entry for BK franchise
   Expand in Asia market
   Reduce underperforming outlets
THREATS
   Mature industry
   Fiercely competitive environment
    •   With other franchises (McDonald)
    •   With the local competitor
   Growing health-conscious consumers (Low Carb Trend)
    •   The social issue of McDonald‟s „Supersize me‟
   Changing demographics (Rapid transition into the aging
    society)
   Vulnerability to the fluctuation of foreign exchange rates from
    expanding global operations
   Unreliability of supplier for the recent cow-related disease (i.e.
    Mad Cow Disease)
BK Marketing Mix-Place
    AmeriServe Food Distribution
    - It plans an orderly transition of distribution services
    - Approximately 5,800 Burger King restaurants currently
     served
    H & H Foods
     - Supply South Texas-area Burger King ® restaurants with
     beef patties
    Restaurant Services, Inc. (RSI)
    - The exclusive purchasing agent for the vast majority of
     products and services used by BURGER KING®
     restaurant owners in the United States and is manager of
     the system's supply chain.
Bibliography
Corporate Information

http://proquest.umi.com/pqdweb?index=0&did=168203801&SrchMode=1&sid=1&Fmt=3&VInst
=PROD&VType=PQD&RQT=309&VName=PQD&TS=1126476479&clientId=30358

Franchise list http://www.prnewswire.com/cgi-
bin/stories.pl?ACCT=105&STORY=/www/story/11-12-2002/0001839842

Marketing Strategy
http://proquest.umi.com/pqdweb?index=3&did=818659331&SrchMode=1&sid=1&Fmt=4&VInst
=PROD&VType=PQD&RQT=309&VName
=PQD&TS=1126477227&clientId=30358

SWOT http://search.epnet.com/login.aspx?direct=true&db=buh&an=16823714
Corporate Info
 - http://www.bk.com/CompanyInfo/index.aspx

Sonics Annual Report (2004)
 - http://www.sonicdrivein.com/pdfs/annualReports/04_12annualReport.pdf

Financial Info
  - http://www.hoovers.com/burger-king/--ID__54531,ticker__--/free-co-fin-factsheet.xhtml
               SONIC DRIVE-IN



   Sonic, America‟s drive-in, originally Top Hat drive-
    in,started as a hamburger and root beer stand in
    1953.
   Sonic is the largest chain of drive-in restaurants in
    the United States and Mexico, with more than 1
    million customers a day
   Sonic has 3000 drive-ins coast to coast
Sonic
Marketing strategy
   Multi-layered growth strategy, targeting
    earnings per share of approximately
    20% for the year ending September
    2005.
    • Addition of drive-ins
    • Increasing media expenditure to boost brand
        awareness
    •   Accelerating franchise development and
        ascending royalty rate
Sonic
Marketing strategy
   Highly differentiated concept, through
    personalized carhop service, and a
    variety of menu choices.
   Accelerated Expansion program
    • Opening 167 new franchises in 2004
    • Opening 188 new drive-ins in 2004
    • Planning to open 185 drive-ins in 2005
Sonic
Marketing strategy
   Solid Sales Trends
    • Sales increase of 13% in 2004, and 6.5%
        same store sales
    •   Sales increase of 18% in 2005, and 6.8%
        same store sales
Sonic
Marketing strategy
   Solid Financial performance
    • Revenues rose 20% to $536 million 2004 and
        18% in the first nine months of 2005
    •   Net income per diluted share rose 19% in
        2004 and is up to 21% the first nine months of
        2005
    •   ROE has exceeded 20% for five consecutive
        years.
Sonic
Subsidiaries
   Sonic Industries
   Sonic Restaurant
Sonic
Strengths
   Carhop Service: many customers enjoy
    the personal carhop who delivers the
    order to the car with a free mint
   Overall Good Company: Listed for the
    10th consecutive year by Forbes
    magazine to be one of the “ 200 best
    small companies in America”
Sonic Strengths

   Multi-layered growth strategy:
     • Listed at number 50 for percentage increase in
       sales on the top 50 Growth chains list( Restaurant
       Business, July 2003)
     • Ranked number 80 on the Hot Growth Companies
       list ( Business Week, June 2003)
   Good Franchise: Listed in the top 10 on Entrepreneur
    magazine‟s “Franchise 500 list” (January 2003)
   Great Sales Records: Increase of 13% in 2004 , and
    18% in the first 9 months of 2005.
   Continuously increased revenue ( chart 1)
Sonic
Strengths
   Menu
    •   Unique menu items that include Toaster Sandwiches,
        extra- long cheese coneys, hand battered onion rings,
        and a variety of drinks and deserts
    •   Quality Burgers: named one of the top three in the
        Best Overall burger QSR category for seven
        consecutive years( Restaurants & Institutions Annual
        Choice in Chains Awards, March 2003)
    •   Cream pie shake distinguished as most appealing and
        unique beverage in its category and receives “Best in
        Class” award ( Restaurant Business, May 2001)
Sonic
Weaknesses

   International Presence: Except for 7 drive-ins in Mexico,
    Sonic Does not have a well established international
    market
   Brand awareness: although Sonic has a differentiated
    service that is the carhop, and a quality burger, it is still
    not viewed as the leader in the fast food industry.
   Cost of the international franchise: To get a Sonic
    international franchise, the investor must have $3.5 million
    in assets and $2.5 million in cash which could hinder the
    development of new franchises abroad
Sonic
Opportunities
   International market growth
   National market: more than half of the
    3000 drive-ins are located in 9 states,
    the rest are developing markets
Sonic Threats

   Obesity awareness: this will push sonic to include light
    meals
   Gas prices: the rise of gas prices will increase the
    prices of sonic
   Hurricane Katrina will have negative impact on the
    Sonic Franchises since Louisiana and Mississippi are
    two core markets for Sonic. 60 restaurants in Louisiana,
    Mississippi and Alabama were damaged by Katrina.
   Mad Cow disease: This may eventually lead to
    customers shifting to other fast foods alternatives
      Sonic
      Revenue
         Revenue for the fiscal year ended August 31,2004
         Revenue for the nine months ended May 31,2005                           Total Revenues
         Projected revenue for the year ended August 31, 2005
                                                                                  Net Income

$700,000
$600,000                                                               $589,990
                                                 $536,446
$500,000                              $446,640              $442,493
$400,000
$300,000 $280,056 $280,056 $330,638
$200,000
$100,000
                                      $52,261 $63,015 $51,341 $68,454
      $0 $32,627 $32,627 $38,956
       2000      2000     2001     2003       2004       2005 projected
                                                                    2005
       Sonic
       Drive-in Sales
            Sales for the fiscal year ended August 31,2004
            Sales for the nine months ended May 31,2005
            Projected sales for the year ended August 31, 2005
                                                                                       partner drive ins
                                                                                       franchise drive ins

$2,500,000                                                                $2,369,647
                                                      $2,219,340
$2,000,000                        $1,874,562$1,988,842          $1,777,235
$1,500,000    $1,533,948$1,704,014
$1,000,000
 $500,000                                       $449,585 $374,663 $499,551
           $224,880 $267,463 $330,707 $371,518
       $0
        2000      2001     2002     2003     2004      2005 projected
                                                                2005
Sonic
Porter’s Analysis
   High rivalry among competitors
    • Little product differentiation
    • Low customer loyalty which leads customers
        to shift easily to another fast food chain.
    •   High number of fast food restaurants.
Sonic
Porter’s Analysis
   Low threat of new entrants
    • Economies of scale. Sonic alone has 3000
        drive ins which makes the cost of
        manufacturing low, and thus giving it a
        competitive advantage
    •   High Capital requirement ( equipment and
        training)
    •   Service differentiation through carhops
Sonic
Porter’s Analysis
   Low bargaining power of supplier
    • Cost of shifting suppliers is low
    • Substitute products are not an option because
      beef is part of the burger
Sonic
Porter’s Analysis
   Threat of substitutes
    • People can shift to a different fast food

   Low bargaining power of buyer
    • No buyer concentration
Sonic References
   http://www.fastfoodfacts.info/blog/
   http://www.entrepreneur.com/franzone/d
    etails/0,5885,12-12---282811-,00.html
   www.Sonicdrivein.com
JACK & THE BOX
COMPETITIVE ANALYSIS
IMPORTANT DATES
   Born in San Diego California 1.951 as a Pioneers in
    the “Drive-Thru” serving system
   Major expansion to 1000 restaurants in the Western
    and Southwestern markets
   They become a private owned company in 1988
   1.992 went public with 17.2 million shares
   1995 Great advertising campaign with expansion to
    Southeastern markets until 2001
   With a long-term goal of becoming a national
    restaurant company, Jack in the Box entered the
    fast-casual restaurant category in 2003
STRATEGY
   Jack in the Box Inc., founded in 1951, is a
    restaurant company that operates and
    franchises Jack in the Box® restaurants and,
    through a wholly owned subsidiary, Qdoba
    Mexican Grill®.
   The company also operates approximately 40
    proprietary convenience stores called Quick
    Stuff, which is a major-branded fuel station and
    is usually developed adjacent to a full-size
    Jack in the Box restaurant.
COMPANY STRATEGY…
   Jack in the Box is among the nation's leading fast-food
    hamburger chains, with more than 2,000 quick-serve
    restaurants in 17 states. As the first major hamburger
    chain to develop and expand the concept of drive-thru
    dining.
   Jack in the Box has always emphasized on-the-go
    convenience, with approximately 85 percent of the half-
    billion guests served annually buying food at the drive-
    thru or for take-out. In addition to drive-thru windows,
    most restaurants have indoor dining areas and are open
    18-24 hours a day.
COMPANY STRATEGY…
   Jack in the Box offers a broad selection of distinctive,
    innovative products targeted at the adult fast-food
    consumer, including hamburgers, specialty sandwiches,
    salads and ice cream shakes. Hamburgers represent the
    core of the menu, including the signature Jumbo Jack,
    Sourdough Jack and Ultimate Cheeseburger. And,
    because value is important to fast-food customers, the
    company also offers value-priced products on "Jack's
    Value Menu," including tacos, a chicken sandwich and
    Breakfast Jack.
                   SUBSIDIARIES



   Qdoba Mexican Grill, which was acquired by Jack in
    the Box Inc. in January 2003, is an emerging leader
    in fast-casual dining
   Operates more than 230 restaurants in 35 states.
   Qdoba is renowned for offering nouveau Mexican
    cuisine
       SWOT ANALYSIS
Strengths

   The revenues of the company for the last four
    years are continually growing
   The company is also showing good profits
   The company is remodeling 200 stores per
    year
   Offers higher quality customer service
Weakness
   The company has to spend an a higher
    percentage of money in advertising,
    assets, and strategic planning.
   They do not have much presence in the
    Southeast region which is a profitable
    market.
OPPORTUNITIES
   Since Jack in the Box is a very well
    known company in the Southwest they
    can always use this good-will in order to
    attack other markets now that the
    company is growing .
THREATS

   The late increase in the meat and oil
    prices
   Changing consumer tastes &
    preferences
   Large investments required to stay
    competitive are eating away at profit
    margin
TRENDS
TRENDS
TRENDS
Yum! Brands, inc.




    Yum! Brands inc. is the largest restaurant
     company with more than 34,000 company,
     franchise, license, and joint ventures, in
     more than 100 counties.
 .
Yum! Brands, inc.
   Oct 1997 Pepsi co. owner of KFC, pizza
    hut, and Taco bell formed a publicly
    owned and independent company:
    Tricon Global restaurants inc.( Yum!
    Brands former name)
    May 2002 the company acquired
    Yorkshire Global restaurants, Inc. and
    changed the name to Yum! Brands, inc.
Yum! Brands, inc.
Growth Strategies
   Build dominant China brands
    • China is the number one market for new
        company development
    •   China division operating profits were more
        than $200 million in 2004
   Run great restaurants
    • 100% CHAMPS culture restaurants
        (Cleanliness, hospitality, Accuracy,
        Maintenance, Product Quality and Speed)
Yum! Brands, inc.
Growth Dtrategies
   Multi-brand great brands
    • Yum! Is the world leader in multi-branding,
        offering consumers more choice by combining
        two brands under one roof
    •   Yum! Owns 2900 multi-brand restaurants
        Worldwide.
Yum! Brands, inc.
Growth strategies
   Drive profitable international growth
    • Yum! Restaurants International (YRI) owns
        more than 11,000 restaurants outside the US
    •   YRI opened 700 restaurants every year for
        the past 5 years. And in 2004 YRI opened 3
        new restaurants each day of the year.
    •   In 2004 YRI revenues totaled $2.1 billion, and
        operating profit reached $337 million
Yum! Brands, inc.
A & W Restaurants, inc.
   Is based in Louisville, KY
   Founded in 1919, serving all American
    pure beef hamburger and hot dogs.
   Owns 600 food outlets in 13 countries
    and territories around the world and 600
    points of distribution at Yum!
    Multibramds restaurants.
Yum! Brands, inc.
KFC Corporation
   Is the most popular chicken restaurants chain
   Is based in Louisville, KY
   Was founded in 1953 and specializing in
    Original recipe, Extra Crispy, and Colonel‟s
    Crispy Strips with home style sides, BBQ
    Wings, and Chicken sandwiches.
   Owns 13000 outlets in more than 80 countries
Yum! Brands, inc.
Long John Silver’s, inc.
   Is the world‟s largest quick-service seafood
    chain.
   Is based in Louisville, KY
   Was founded in 1969and specializing in
    batter-dipped fish, chicken, shrimp, and
    hush-puppies.
   Owns 1200 restaurants worldwide, and 200
    additional points of distribution in multi-brand
    restaurants
Yum! Brands, inc
Pizza Hut Inc.
   Is the World‟s largest pizza restaurant
    company
   Is based in Dallas, TX
   Specializes in pan pizza, thin n crispy pizza,
    hand tossed style pizza, and stuffed crust
    pizza
   Owns 7500 restaurants in the USA, and more
    than 4500 restaurants in over 80 countries
Yum! Brands, inc
Taco Bell Corp.
   Is the nation‟s leading Mexican-style
    quick service restaurant
   Specializes in Tacos, burritos,
    quesadillas, border bowls, and nachos
   Owns 6000 restaurants in the USA and
    serves 35 million people.
Yum! Brands, inc.
Corporate Responsibility
   Community involvement
    • Yum! Brands foundation corporate sponsor of
        dare to care program to end hunger
    •   YUMeals program to end hunger in the USA
    •   Pizza Hut book it program to help develop
        reading interest for children
    •   KFC colonel kids charity to provide nationwide
        access to childcare
    •   Taco bell teen programs
Yum! Brands, inc.
Corporate Responsibility
   Diversity
    • For the past two years, Yum! Has been
        recognized in Fortune magazine‟s top 50 “
        Best Companies for Minorities”
    •   Yum! Has been recognized in Black
        Enterprise magazine as one of the 30 best
        companies in diversity

								
To top