Chicago based McDonald’s is arguably the most recognizable fast food chain in the entire world. Operating across 120 markets in over 37000 locations, this familiar fast-food joint is a particular favorite of kids worldwide. The red and yellow motif, together with the characteristic arched M, has become a banner of happiness and quick meals the world over.
With an estimated brand value of about 126 billion USD, McDonald’s also holds the recognition of being the most valuable fast food chain in the world. In this PESTLE analysis of McDonald’s Corporation we are going to take a look at the various macro environment factors that affect the performance of this global restaurant chain.
Here we will perform pestle analysis of McDonald’s.
McDonald’s Political Factors
Political factors play a crucial role in the performance of McDonald’s. Being a food chain, it is always subject to the multiple health and hygiene regulations that are put forward by the countries in which it operates. Further, as it primarily serves fast food which is associated with a number of health risks such as obesity and heart attack, McDonald’s must also keep the health concerns of its customers in mind. Taxes imposed by governments on the sale of fast food can negatively affect the profitability of the restaurant chain.
As McDonald’s operates across countries and continents, the international relations between nations and trade agreements also play a crucial role in the success of McDonald’s. Cross-border tension and animosity among the countries it operates in can have a negative impact on the restaurant. However, in emerging markets such as India, McDonald’s has scope for expansion.
McDonald’s Economic Factors
Economic factors play a major role in the success of any business, and the same is true for McDonald’s. But in the case of this global giant the situation becomes overtly complex as it not only has to take into account the local economy of the USA but also the economy and unemployment status of all the regions it operates in.
Poor employment rates and economic instability can lead to a fall in the fortunes of this company. Unless people have enough disposable incomes, they are not going to spend on ‘junk food’. However, the current trend of a young workforce which prefers meals-on-the-go is certainly a booster for this business.
McDonald’s Social Factors
A night out at McDonald’s used to be a weekly ritual for many families. This is no longer the case. As concerns about health rise across the planet, people are increasingly turning away from ‘junk food’ and towards low-calorie and low-salt diets. As the world becomes more health conscious, McDonald’s too needs to reshape its menu to cater to the needs of a global clientele.
McDonald’s Technological Factors
Technology can provide a huge differentiating factor for McDonald’s success. Using advanced tools such as digital marketing and social media, McDonald’s can create a loyal fan following that is sure to translate into more customers. Further, using digital technologies will allow the restaurant chain to open up new modes of ordering and payments that can increase customer convenience and boost sales.
Data science can be utilized to gauze market behaviors and customer trends to customize their menu accordingly. Advances in food technology should be utilized to improve the product offerings and attract customers who may feel distanced by the ‘junk food’ tag attributed to McDonald’s foodstuff.
McDonald’s Legal Factors
Legal regulations can often become the stuff of headache for major brands. For McDonald’s food safety standards and hygiene regulations are of utmost importance. Further, as it operates across the globe, it has to contend with the rules and laws of multiple nations. Often, developing countries have relaxed regulations which can make it attractive for McDonald’s to expand into these markets. However, increased regulations and red tape can prove to be major hurdles in the path to expansion.
McDonald’s Environmental Factors
As the world grows more environment-conscious, McDonald’s has opportunity to position itself as a brand that duly fulfills its corporate social responsibility. By making their supply chain, logistics and operations more ecologically sustainable the brand can gain a large customer base that is sure to identify with its sustainable practices.
Conclusion: Pestle Analysis of McDonald’s
In conclusion, we can say with confidence that notwithstanding the trends away from fast food and global political turmoil, a strong economy and technological advancements can fuel McDonald’s journey to retain the number one position in the fast food space.
As per market reports, McDonald’s is going strong and has reported considerable growth in 2019. With the right strategy, one can hope this trend to continue in the future near and far.
Image by Jan Vašek