Mcdonalds Case Study Essay

3354 Words Oct 24th, 2014 14 Pages
McDonald’s Corporation in the New Millennium
J. Paul Peter and Ashish Gokhale University of Wisconsin—Madison

Jack Greenberg, CEO of McDonald’s Corporation, stared into the clear September skies thinking about the “Big Mac Attack.” At one time, the term was an advertising slogan referring to a craving for a McDonald’s Big Mac burger. However; “Big Mac Attack” now referred to McDonald’s earnings declines in the late 1990s and early 2000s. Dynamic market expansion, new products, and special promotional strategies had made McDonald’s Corporation a leader of the fast-food industry. However, sales growth in the United States had slowed to below the industry average in recent years. Jack Greenberg was trying to decide on a set of appropriate
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“People are willing to pay a couple dollars more for a better dining experience, yet don’t want to sacrifice the convenience of quick service. Fast-casual combines all the elements for what the on-the-go consumer—which seems to be almost everyone these days—is looking for,” said one analyst.1

Americans are eating out less often compared to previous years and eating habits are changing.2 Though the recession is a major reason why folks aren’t eating out as much at upscale restaurants, it’s another story at fast-food restaurants. Many younger consumers are getting tired of fast food and are thinking about their health. There seems to be a growing dissatisfaction with the quality aspect of the McDonald’s and Burger Kings of the world. It’s not just young adults who are turning away from fast food. Baby boomers are also looking for “better” alternatives and fast food is not as appealing to this large group who frequently eat out.

McDonald’s Corporation
McDonald’s system wide sales for 2001 were over 540 billion, but net income shrunk 17 percent to $1.64 billion, as shown in the exhibit. McDonald’s U.S. market share remained above that of competitors, but grew more slowly. Its share was up 2.2 percent in 2000 compared to 2.7 percent growth for Burger King Corp. and 2.5 percent for Wendy’s International.3

Looking for hits to reverse earnings declines, McDonald’s

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