Week 2 Assignment
Running Head: MCDONALD’S SITUATIONAL ANALYSIS 1
McDonald’s Situational Analysis
Samuel A. Sample
BUS 330 Principles of Marketing
Professor Sadeghinejad
February 16, 2016
MCDONALD’S SITUATIONAL ANALYSIS 2
McDonald’s Marketing Plan: Frieday with RedBox
Brand or Company Description (minimum 25 words)
McDonald’s is the world’s largest fast food chain with over $25B in annual sales and more than
35,000 retail locations in more than 100 countries (McDonald’s Corporation, 2015).
Core Products or Services (minimum 25 words)
Beyond the burgers, french fries and milkshakes that they’ve been selling since its founding,
McDonald’s sells a variety of wraps, salads, sandwiches and beverages – more than 200 items in all (The
Economist, 2015). McDonald’s locations are typically open for breakfast, lunch, dinner and late night
dining and many feature drivethru service.
A Brief History (minimum 50 words)
The first McDonald’s restaurant was opened in 1948 by Richard and Maurice McDonald. It
brought production line techniques to the burger business and challenged the dominant carhop drivein
business model. Ray Kroc was one of the earliest franchisees and the key figure in the rapid expansion of
the business after he bought out the McDonald brothers 1961. McDonald’s became a public company in
1965 and opened its first international location in 1967. Sales and locations have continued to grow every
year since.
Key current competitors (minimum 50 words)
Historically, McDonald’s primary competitors were identified to be the large fast food burger
chains like Burger King and Wendy’s. But given McDonald’s size and the expansion of their menu, the
competitive set must be viewed more broadly to include sandwich shops like Subway, other fast food
concepts like ChikfilA, more upscale fast casual restaurants like Panera and Chipotle, as well as coffee
shop chains like Starbucks and Dunkin’ Donuts.
MCDONALD’S SITUATIONAL ANALYSIS 3
SWOT Analysis (minimum 500 words)
SWOT Analysis: Strengths (Describe a minimum of 3 positive controllable factors)
1. Anytime, anywhere convenience
With over 14,000 locations in the U.S. alone, there’s a McDonald’s within a short drive of almost
everyone and most are open from 6am to 11pm. The number of locations also means that McDonald’s can
purchase media nationally which is more cost efficient than buying locally.
2. Brand equity
As a results of its many locations, consistent brand experiences and hundreds of millions of
dollars spent on marketing each year McDonald’s has developed a very strong brand. For example, they
ranked 5th on BrandZ’s 2014 most valuable global brand list (Rooney, 2014).
3. The Best French Fries
McDonald’s french fries are universally loved even by people who don’t otherwise like
McDonald’s food. McDonald’s fries were voted #1 in a 2015 YouGov study (Peterson, 2015).
4. Kid appeal
McDonald’s is a popular destination amongst younger kids. Many locations have indoor
playgrounds and there are menu items such as Happy Meals which combine several kid friendly food
offerings in a fun box that includes a toy. The brand does a lot of advertising on kid targeted programs
and Ronald McDonald is a highly recognizable spokesperson.
5. Inexpensive
With it’s well known dollar menu, McDonald’s is perceived by most consumers as an
inexpensive place to go for breakfast, lunch or dinner or a between meal snack.
SWOT Analysis: Weaknesses (Describe a minimum of 3 negative controllable factors)
1. Menu bloat
MCDONALD’S SITUATIONAL ANALYSIS 4
In their attempt to compete with a wide range of competitors, McDonald’s menu has swollen to
more than 200 items. This is driving down operational efficiency as it takes longer for consumers to order
and longer for the food to be prepared (Walton, 2015). Franchisees also have to invest in additional
kitchen equipment and training.
2. Dining environment appeal
Many McDonald’s locations are outdated relative to chains like Starbucks or Panera which offer
comfortable seating, amenities like fireplaces and greater cleanliness (Walton, 2015).
3. Low customer satisfaction
In a 2014 ACSI survey, McDonald’s ranked last with a rating of 71%, some 7 points below competitors
like Wendy’s and Subway (Comoletti, 2014). The rating reflects factors such as order accuracy, food
quality, staff courtesy and menu variety.
4. Low employee wages
McDonald’s does not pay its restaurant workers what most would consider to be a “living wage”. As a
result, McDonald’s does not always attract the highest quality employees and turnover can be high,
resulting in a constant need for rehiring and retraining.
SWOT Analysis: Threats (Describe a minimum of 3 negative uncontrollable factors)
1. Healthier eating trends
While McDonald’s menu does feature some healthier items like salads and wraps, they are still
primarily associated with burgers, french fries, mass production and processed food. As such, healthier
eating trends represent a threat to McDonald’s business.
2. Aging of the population
The percent of population in the United States over the age of 65 is growing. From 10% in 1970
to a projected 20% by 2030 (Ortman, Velkoff, & Hogan, 2014). The aging of the population is a threat for
a business whose core consumer franchise has historically been families with younger children.
MCDONALD’S SITUATIONAL ANALYSIS 5
3. Rising social consciousness
While McDonald’s business or environmental practices have likely improved over time, the level
of scrutiny surrounding the triplebottom line and associated negative publicity has increased in recent
years. Popular documentaries like Super Size Me and Fast Food Nation have not portrayed McDonald’s
food or its business practices in a positive light.
SWOT Analysis: Opportunities (Describe a min. of 3 positive uncontrollable factors)
1. Positive childhood associations
Regardless of people’s current perceptions or level of satisfaction, most McDonald’s consumers
have fond childhood memories associated with the brand that can be potentially activated with the right
messaging or product offerings. This creates an opportunity with the next generation of parents.
2. The prolonged U.S. economic recession
The more people’s budgets are pinched, the more they are apt to “trade down” to less expensive
options like fast food. With its wellknown dollar menu, McDonald’s has the opportunity to benefit from
a prolonged economic downturn.
3. Growth in speciality coffee
The percentage of Americans drinking speciality coffee in the US has more than doubled since
2009 (Ward, 2004) and teenagers are a particularly high growth segment. McDonald’s McCafe specialty
coffee product line should continue to benefit from this trend.
Marketing Plan Focus (What you’re marketing and why, minimum 100 words)
Based on my SWOT analysis, I believe there is an opportunity to significantly grow the
afterdinner snacking business (i.e., french fries and McCafe beverages) amongst teenagers and young
adults. This is also a way to showcase updated facilities and amenities like Wifi to customers who may
not have visited McDonald’s recently. I think it’s important to reestablish brand liking with this age
group prior to them having kids of their own. This will be the focus of my marketing plan.
MCDONALD’S SITUATIONAL ANALYSIS 6
References
Bacic Media Group, LLC. (n.d.). McDonald's prices fast food menu prices. Retrieved February
1, 2016, from http://www.fastfoodmenuprices.com/mcdonaldsprices/
Comoletti, J. (2014, June 19). America's favorite fast food chains. Retrieved from
http://www.businessinsider.com/mcdonaldslastincustomersatisfaction20146
The Economist. (2015, January 10). When the chips are down. Retrieved from
http://tinyurl.com/mg8nmqh
McDonald's Corporation. (2015). 2014 Annual Report (Rep.). Retrieved from
http://tinyurl.com/haq4fkp
Ortman, J. M., Velkoff, V. A., & Hogan, H. (2014). An aging nation: the older population in the
United States. Washington, DC: US Census Bureau, 251140.
Peterson, H. (2015, July 13). The best fast food french fries in America. Retrieved from
http://www.businessinsider.com/thebestfrenchfriesinamerica20157
Redbox Automated Retail, LLC. (n.d.). Redbox corporate information. Retrieved February 7, 2016, from
http://www.redbox.com/facts
Rooney, J. (2014, May 20). Google beats Apple As BrandZ most valuable global brand.
Retrieved from http://tinyurl.com/hsg5zu3
Ward, H. (2014, December 10). Specialty coffee consumption: A look at the numbers. Retrieved
from http://tinyurl.com/jmk5ok7