McDonald’s is the world’s most reputed fast-food chain US Company. Maurice and Richard, two brothers laid the foundation of the company in 1940. The initial sale location of the company was San Bernardino, California.
Ray Kroc bought the business from the McDonald’s brothers in 1955, and he launched the first branch in Des Plaines, Illinois. Kroc was a business visionary person and started converting the business into a chain brand. However, McDonald’s has a network of 39,198 restaurants till year-end 2020, out of which 36,521 were franchised in over 119 countries across the world, and 200,000 people are working for the company.
The food menu of McDonald’s comprises vegetarian and non-vegetarian burgers, sandwiches, French fries, Chicken McNuggets, appetizers, shakes, and ice creams.
According to an estimate, the annual revenue of Mcdonald’s in 2019 was $19.21 billion dollars. Out of which, the net income of the fast-food chain brand was $5.8 billion dollars. The market capital of the fast-food chain brand in 2021 was $178.97 billion dollars.
Some of the main competitors of McDonald’s are Subway, Chick-fil-A, KFC, Shake Shack, Wendy’s, Chipotle, and Burger King.
Today, we’re going to discuss McDonald’s swot analysis. It would focus on the fast-food company’s internal strengths and weaknesses, and external opportunities and threats. Here’s McDonald’s swot analysis as follows;
Strengths of McDonald’s
World’s Most Valuable Brand
McDonald’s falls under the category of the world’s 10th most valuable brand, and it has a strong brand worth. It’s not easy to achieve this position in the cutthroat competition of the hotel and restaurant industry.
Tasty Food Menu
All the items on the menu of McDonald’s offer a unique taste. Out of all the items, French fries have earned the reputation of having the most delicious taste in the entire fast-food industry according to the survey conducted by customers.
Real Estate Business
Along with selling fast food items and French fries, McDonald’s has established a multi-billion dollars real estate business. The company owns properties at the main business crowded location points in thousands of cities across the world. According to its annual report 2020, the company franchised 36,521 restaurants out of 39,198 restaurants in more than 120 countries across the world.
The way McDonald’s conducts and operates its business; it’s completely different than other fast-food brands. The company not only offers the services, prepares the food, and owns the brand name, but it also owns the land
In order to provide the customer with a better experience, McDonald’s has taken many digital initiatives. They are like an online payment system, online ordering, and self-servicing kiosks. Such tech initiatives are presenting a better brand image of the company, and benefiting the company in various ways.
Speaking of tech initiatives, McDonald’s has bought “Dynamic Yield” in order to amplify customization and personalized marketing. It’s an Israeli tech startup that is helping the fast-food brand in terms of personalized offering and better customer experience.
Highest Brand Value
McDonald’s has earned the unique reputation of the world’s most valuable brand. According to an estimate, the brand value of McDonald’s has amplified from 126.04 to 130.37 billion dollars from 2018 to 2019. Starbucks came at the second position of having a brand worth 44 billion dollars.
Quality Control and Safety Protocols
McDonald’s always carefully follows the quality measures and health and safety protocols up to full extent from the purchase of ingredients, supply chain, and the preparation of the final product. All these small things amplify the overall customer experience.
For instance, McDonald’s has recently banned the usage of high-value human antibiotics by following the standards of WHO relevant to the HPCIA (high priority critically important antimicrobials). Many consumer and public health groups have appreciated the effort to avoid dangerous superbugs.
Quick Service Restaurant
When it comes to the quick-service chain restaurants in the US, McDonald’s topped the ranking in 2019 with the sale of 40.41 billion dollars. Starbucks came close at the 2nd position with the total sale of 21.38 billion dollars in the category of the quick-service chain restaurant.
Weaknesses of McDonald’s
Franchising Business Model
McDonald’s is successfully running its thousands of franchises all over the world. But the global web of franchising business models is very complicated. However, it exposes the company to a lot of risks like limited revenue generation, customer dissatisfaction, mismanagement, and financial deterioration. It’s because those branches operate independently, and the main brand doesn’t have control over their daily operations.
Supply Chain Interruption
McDonald’s is the world’s largest fast-food chain brand and the company needs a constant supply of raw material at various locations all over the world. The limited supply of food ingredients makes it difficult for the company to run its functions smoothly. However, the interrupted supply chain lowers the sales and profitability and higher operational expenses.
Limited Employee Satisfaction
Employee rights movements have been actively functional and working towards passing the legislation of increasing the minimum wage laws. Employees of various companies aren’t happy with their employers. However, McDonald’s employees have also conducted protests and strikes against the company to amplify their minimum wage to 15 dollars.
Not Interesting Breakfast Menu
McDonald’s has been serving breakfast on its menu for the past decade, but the company’s sale in the breakfast menu has been unstable. According to Euromonitor, it went down from 17.4% to 14.7%. The company’s CEO should take some steps in order to increase the sale, if the decline is unbearable, then they should stop it permanently.
Firing Company’s CEO
The former CEO of McDonald’s was having a consensual relationship with an employee, and it was against company employment policy. The board of directors fired the CEO in 2019 by stating that it was a poor policy of Steve.
Poor Employee Safety
Five McDonald’s employees claimed that the company hasn’t been following the government safety regulations and filed a lawsuit against it in 2020. The focus of the lawsuit was on the point that the company is using the safety protocols of sanitizers, masks, gloves, and other things during the pandemic crisis.
Sexual Harassment Lawsuit
Approximately more than 100 female employees of McDonald’s have filed a sexual harassment lawsuit against the company that it has failed to create a safe working environment for women. It’s the responsibility of every organization to develop a gender-biased free workplace environment in order to sexual harassment. Such lawsuits are jeopardizing the reputation of the fast-food brand.
McDonald’s fired an employee that spoke against the poor safety regulation of the brand during the pandemic crisis in 2020. It’s not ethical on many levels because the company sent a signal to other employees that if they speak up about their rights, then they have to find another employer.
Opportunities for McDonald’s
McDonald’s started a special 1 dollar, 2 dollar, and 3 dollar menu offer to the customers, and a big deal for 5 dollars to its highly valued customers. It was a great low-price deal and it increased the sale of the company to a great extent.
McDonald’s should work on upgrading its menu by introducing new items to it and offering customers a variety to choose from different types of fast foods. The company launched a special beverage offer “MIX by Sprite Tropic Berry” at some New York branches in 2018. Customers loved it and the company should keep on experimenting with new offers in different markets relevant to their cultures.
McDonald’s has established a strong influence in the US market, but the fast-food brand hasn’t made a similar impact in the international market. Therefore, the fast-food brand should put more emphasis on the international market and expand into emerging markets.
Rebuilding Brand Image
We’re living in a health-conscious world and it has created the trend of considering fast food a junk food. McDonald’s has to play smart and fight against this mind by offering customized healthy food items and promoting them on various social media channels.
The marketing of a healthy and organic food menu would make a bigger impact and attract the attention of the larger diet-conscious customer market. It means that McDonald’s has to rebuild its healthy food brand image, mission statement, and goals and objectives from all over again.
Home Delivery Service
McDonald’s has developed a partnership with Door Dash and UberEats in order to offer home delivery services in the US market. Online ordering and home delivery services have changed the landscape of running and operating businesses. McDonald’s should exploit this opportunity by investing more resources in the development of the online platform.
As I said earlier that the customer market has become healthier diet conscious. The existing healthy diet offers of McDonald’s like low-fat milk and salad are very low. Therefore, the restaurant brand should amplify its healthier food menu by offering more items.
Self Order Kiosks
Social distancing during the pandemic crisis has presented the challenge of seat setting at its location points in the best possible manner. In order to deal with the challenge, McDonald’s should consider other options like drive-thru shopping, self-ordering kiosks, curbside pickups, home delivery service, and buy online and pick at store option. They would help the company to increase its sale.
Threats to McDonald’s
McDonald’s has invested a lot of resources in the development of innovative technology, but the investment in technology could be highly risky. It’s because you don’t know the reaction of the customer market whether they would accept the innovative tech initiatives or not. It’s probable that they won’t like the new tech initiatives.
The fast-food and restaurant industry is highly competitive, and McDonald’s has to compete against the world’s leading brands like Burger King. Some of the other competitors are Chick-fill-A, Starbucks, and others.
Cultural Food Threat
As we know that McDonald’s is a global multinational brand and the company is offering fast food in different countries. Cultural differences pose the biggest threat to the company. For instance, halal food and halal food ingredient are the biggest threats that the company is facing in Muslim countries. They would greatly jeopardize the company’s reputation by offering culturally and religiously unacceptable food to the customers, even if it has one element in it.
New Food Trends
New generations like Gen-Z and millennials have completely different food tastes, and they like different types of food items. Some brands like Wendy’s and Shake Shack have adopted the new recipe that the customers liked and admired. Their market presence makes it difficult for McDonald’s to maintain its market position.
McDonald’s and other brands are facing environmental challenges like waste management, scarcity of resources, and food preparation method. For instance, plastic packaging and the usage of plastic straws are causing environmental pollution. The company has taken a good initiative of abandoning the usage of plastic straws in more than 37,000 branches worldwide to fight against environmental challenges.
The pandemic crisis and worldwide lockdown have decreased the company’s profit to a great extent by approximately 4%. The economic uncertainty is impacting all businesses and companies.
Healthy diet trends like switching from fast food to healthy organic food are one of the major threats to the existence of McDonald’s. It’s because health-conscious customers purchase food items from other competitive brands. In the long term, it would badly impact the profitability of the company.
The introduction of new health and safety regulations and changes in the lifestyle of customers is the biggest challenge to the company. Some countries have banned the usage of some specific food ingredients that are the main elements of McDonald’s menu.
After an in-depth study of McDonald’s swot analysis; we’ve realized that McDonald’s is the world’s leading fast-food chain brand. The company should focus on its strengths in order to exploit opportunities and work on its weaknesses to avoid threats.