Pestle analysis of McDonald’s. McDonald’s Corporation is an American fast-food chain multinational company. Richard, Ray Kroc, and Maurice McDonald were the founders of the company. They established McDonald’s at San Bernardino, California, on May 15, 1940. The company’s headquarter is situated in Chicago, Illinois, USA.
Some of the major products/services of McDonald’s are salads, milkshakes, desserts, soft drinks, pancakes, French fries, coffee, chicken, breakfast, hamburgers, and wraps.
According to an estimate by MacroTrends, McDonald’s annual revenue was 19.034 billion dollars by the end of 2020, and it has reduced by 9.79%. Out of which the net profit of the brand was 4.926 billion dollars and it has decreased by 16.07%.
Some of the prominent competitors of McDonald’s are Shake Shack, Wendy’s, KFC, Chipotle, Chick-Fil-A, Subways, and Burger King.
According to an estimate, the company serves roundabout more than 69 million people daily across the world. McDonald’s has employed 205,000 people to manage various operations of its daily operations worldwide. The brand has a network of 38695 location points in more than 120 countries globally.
Today, we’ll study the pestle analysis of McDonald’s. How macro-environmental factors like political, economical, social, technological, legal, and environmental issues are impacting the fast-food restaurant business. If you want to learn about the internal environment, check out the swot analysis of McDonald’s. Here’s the pestle analysis of McDonald’s;
Political factors Impacting McDonald’s
Health & Hygiene Regulations
Government regulations and political laws of different countries influence the policies of McDonald’s. For instance, the brand and its employees have to follow the health and hygiene standards of different countries. If the company doesn’t follow the standard, the health & safety department would shut down McDonald’s franchises.
The fast-food items comprise a high level of sugar and salt. They both cause hypertension, diabetes, high blood pressure, and heart disease. If you eat fast food consistently, it would result in the form of heart attack, stroke, and obesity. That’s why the government is putting pressure on fast-food hotels and restaurants to follow healthy diet standards.
Now McDonald’s offers diet control food items to the customers. It gives customers a choice to add extra sugar, salt, and protein to the food. It’s a very good step for McDonald’s by following the health protocol.
Issues with the UK
The British government has very strict health regulations, and it caused McDonald’s a great loss of money in fines. For instance, the British government put a fine of 200,000 pounds on the company for violating the health standards in 2018.
An employee of McDonald’s was directing the traffic in the parking area in West Thurrock, a car hit him and fractured his knee. The court found the restaurant guilty of not providing sufficient training to the employees. Such government regulations and their lawsuits are costing the brand a lot.
Economical factors affecting McDonald’s
As we know that McDonald’s is a multinational brand and it has more than 38695 chains of hotels and restaurants across the world. The import and export tariff plays a major role because the company has to move raw material from one country to another.
The management should take a smart decision about whether to buy the ingredient and raw materials locally or from other countries. The import and export taxes would increase the basic cost that would impact the sale.
The pandemic of covid-19 has plunged the global economy into an economic recession. The lockdown and shutdown of business went on for months. It’s the beginning of 2021 and the shutdown of businesses continues.
The franchisee’s hotels and restaurants are the major sources of earning for McDonald’s. The governments of different countries shut down all the physical gathering location points for months. Resultantly, the annual revenue and net income of the company have decreased by 9.79% and 16.07% respectively in 2020. It was a major setback to the company due to the pandemic.
Higher Turnover Rate
According to an estimate, the turnover rate of McDonald’s is very high. People often laugh around with the phrase “McDonald’s is always hiring.” The employees don’t join the brand permanently because of the lower wages and long working hours. They leave the company as soon as they get another opportunity.
McDonald’s couldn’t provide quality service because of the inconsistent workforce. The poor service quality results in the form of loss of business to the company.
Social factors affecting McDonald’s
Health Conscious Customers
The customers are becoming health conscious. They care about whatever they put inside their bodies because it impacts their health later on. That’s why the trend of low calories, less sugar, salt food is growing among the public. They’re saying “no” to the fast-food by calling it “junk-food.”
They want a healthy diet and food that doesn’t jeopardize their health. The food menu of McDonald’s doesn’t follow the standard protocol of diet. Such trends aren’t good for the business of the brand.
McDonald’s has recently started offering high protein food with fewer calories to health-conscious customers. It’s a great step for the company to address this issue. The company also provides customers the option to add sugar depending upon their diet control.
The western burgers and French fries are good occasionally for the international market. They won’t always choose the same product. McDonald’s should offer a local food menu to the different geographically located audience.
For instance, Corn Pie for Thai customers, McVegan for Sweden and Finland, Panzerotti for the Italian market, Ebi Burger for Hong Kong, and McSpicy Paneer for the Indian Customers. These are some of the popular dishes in different regions. The company should offer a different localized menu to the different geographically located customers.
Healthy Brand image
McDonald’s should remove the label of “junk-food” and rebuild its healthy food brand image. The fast-food and healthy diet food market has become very competitive in recent years. It won’t be easy for the company.
Technological factors Impacting McDonald’s
Use of Technology
McDonald’s is one of the first hotels in the food industry to adapt to the latest technology. It includes a digital payment system, mobile ordering, and self-servicing kiosks. The use latest would help the brand to perform two important functions. First, it would improve the customers’ experience, and secondly, it would save time by offering them quick service. It’s because starving customers don’t like waiting in lines.
Risky Tech Investment
Many financial critics say that such a high investment in the food industry could become a risk. It’s because the customers aren’t ready to accept the technology at the hotels and restaurants. On the other hand, McDonald’s point is also valid if the competitors aren’t taking tech opportunities. It doesn’t mean that the brand shouldn’t just like them. The customers are accustomed to technology in their homes and workplaces.
The young generation is very much active on digital and social media platforms like Facebook, Google, Twitter, and Instagram. McDonald’s should exploit the current trends and launch marketing and promotional campaigns to increase customers’ engagements. Many businesses have increased their sales and growth by using social media platforms.
The lockdown and shutdown of businesses during the pandemic of covid-19 have promoted the trend of e-commerce and online shopping. McDonald’s has made partnerships with UberEats and Door Dash. It has allowed the brand to receive online orders and provide home food delivery. That’s the brand has been able to minimize the losses to a great extent.
Legal factors affecting McDonald’s
Many employees of McDonald’s protested against the company to raise their minimum wage to 15 dollars. They demanded better working conditions and higher wages. That’s why the turnover rate of the company is very high. People quit their jobs at McDonald’s often. Such protests and strikes are bringing a negative reputation to the company.
Following the Laws
McDonald’s is a multinational brand and operating its business in different countries. Therefore, the brand must follow the health and safety standards of different countries. The management should also follow the labor laws and improve the working conditions for its employees.
Environmental factors Impacting McDonald’s
McDonald’s has installed approximately more than 1000 recycling units at different location points in the UK. It’s a great step for the company to address environmental issues. The recycling units would allow customers to separate plastic cups for recycling.
According to an estimate, approximately more than 69 million customers visit different hotels and restaurants of McDonald’s across the world. Plastic packaging creates an astronomical amount of waste daily.
That’s why many environmental activists protested against the company to avoid using plastic straws and plastic packaging. The recycling units and paper packaging are great steps towards the protection of the environment.
After an in-depth study of the pestle analysis of McDonald’s, we have realized that McDonald’s has a great market position. The global economic recession, employee turnover, and environmental pollution issues pose serious threats to the company. McDonald’s should utilize digital marketing and the latest technology to avoid these threats.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.