Swot analysis of McDonald’s. McDonald’s Corporation is a US fast-food chain company. Maurice McDonald, Ray Kroc, and Richard laid the foundation of the company on May 15, 1940, in San Bernardino, California. The headquarter of the company is in Chicago, Illinois, US.
Wraps, Hamburgers, Breakfast, Chicken, Coffee, French Fries, Pancake, Soft Drinks, Desserts, Milkshakes, and Salads are some of the main products/services of McDonald’s.
According to a statistical estimate by MacroTrends, the annual revenue of McDonald’s in 2020 was 19.034 billion dollars. The annual revenue has decreased by approximately 9.79%. Out of which the net income of the company was 4.926 billion dollars, and it has reduced 16.07%.
Approximately 205,000 employees were working for the company by the end of 2019. McDonald’s had approximately 38695 chains of restaurants in more than 120 countries across the world. The brand serves food to roundabout 69 million people daily worldwide.
Burger King, Subway, Chick-Fil-A, Chipotle, KFC, Wendy’s, and Shake Shack are some of the major competitors of McDonald’s.
Today, we’ll discuss the swot analysis of McDonald’s. We’ll focus on the internal strengths/weaknesses and external opportunities/threats of the chain of the fast-food company. If you want to learn about the external factors, check out the pestle analysis of McDonald’s. Here’s the swot analysis of McDonald’s;
Strengths of McDonald’s
Whether it’s French fries, hamburgers, or some other product, McDonald’s has the reputation of providing the best unique taste at its products. It’s one of the strongest suits of the brand. That’s why it attracts the attention of millions of customers across the world.
According to the ranking of Forbes and Interbrand, McDonald’s has the position of 10th and 9th respectively of the world’s most valuable brand in 2020. The market worth of the company is approximately 40.3 billion dollars. If you compare McDonald’s market worth with the competition in the fast-food industry, the maintaining of its position is remarketing.
McDonald’s has recently launched the latest tech tool at its hotels and restaurants. Like the self-servicing kiosks, payment systems, and mobile ordering are some of its examples. The usage of technology at its restaurants provides a glimpse of the tech future what how it would look like.
Real Estate Business of McDonald’s
A few people know that McDonald’s is running a very successful multi-billion dollar real-estate business. It’s along with the sale of fast-food and the chain of the restaurant business. The brand owns thousands of prime locations across the world.
Running two businesses side-by-side has helped the company to diversify its resources. According to an estimate, McDonald’s has got 38,695 chains of fast-food location points worldwide in 2020. The statistical figures of 2018, the brand owned approximately more than 855 hotels and restaurants in 120 countries.
The franchising business model of McDonald’s works a bit differently. The company provides ingredients, recipes, and brand names to its franchisees. The brand also plays the role of a landlord by renting out the building.
McDonald’s is operating its business across the world and it has the advantage of brand awareness. According to an estimate, the brand serves food to approximately more than 69 million people daily. The company owns the prime locations and customers are familiar with the brand name and logo.
McDonald’s spends millions of dollars annually on advertisements, promotional campaigns, and other marketing campaigns on social and digital media to attract the attention of people. That’s how the company has achieved the highest level of brand awareness.
Acquiring Tech Startup
McDonald’s has recently acquired an Israeli startup company by the name of “Dynamic Yield.” It helps the brand to improve customization and personalized marketing. As a result, McDonald’s can improve the customers’ experience with more personalized service.
According to an estimate by Statista, McDonald’s provides record high quick service in the fast-food industry. The company earned the highest sales of 40.41 billion dollars in the US market in 2019 because of its QSR (quick service restaurants).
Quality Control Standards
People may have different tastes and customer experience. One thing they all agree on is that McDonald’s follows the quality standards and health protocols. The brand also makes sure that the suppliers are providing healthy ingredients.
McDonald’s has recently lowered the use of high-value human antibiotics. It was according to the standards of WHO (world health organization). Many public health organizations appreciated this policy and step of the brand.
McDonald’s has a network of 38695 fast-food hotels and restaurants in more than 120 countries across the world. The brand is operating its business in countries like Russia, Netherland, Switzerland, Korea, Poland, China, Italy, Germany, France, Australia, Canada, the UK, and the US. The global presence in developed countries is one of the reasons behind the survival of the brand.
Weaknesses of McDonald’s
Interrupted Supply Chain
McDonald’s serves fast-food to millions of customers every day. It makes the hotels and restaurants of the brand crowdie and busiest places in the fast-food industry. The company faces the issue of limited availability of ingredient supplies.
The disruption in the supply chain results in the form of increasing expenses. The increase in cost would increase the sale, and decrease the company’s revenue and profitability.
McDonald’s is following the franchising business model internationally. The company has a complicated chain of brand’s owned hotels and restaurants and other networks of franchisees. It creates issues like revenue loss, customer dissatisfaction, mismanagement, and financial deterioration.
Most importantly, McDonald’s relies on its franchises for revenue. They operate independently without any control of the parent brand on daily operations. It directly impacts the growth and profitability of the brand.
McDonald’s has been on the winning streak of the sale breakfast menu for nearly a decade in the US market. The CEO of the company admitted the fact in May 2018 that the consumption and sale of breakfast haven’t remained the same as it used to be.
The brand must do something to regain its market share. The fast-food market has become very competitive and it won’t be easy for the company.
The employees worldwide have been protesting for better working conditions and increased wages. They aren’t satisfied with their employers. Many employees of McDonald’s have gone protesting and striking against the company for increasing the minimum wage up to 15 dollars. The backlash, protests, and strikes have jeopardized the reputation of the brand.
CEO got fired
McDonald’s has fired its CEO, Steve Easterbrook for having a consensual affair with an employee of the company. It was against the company’s policy. The board decided to let Steve go because he had shown poor judgment of character.
Relying on the Western Market
McDonald’s has a network of hotels and restaurants across the world. The majority of the company’s revenue comes from western markets like Canada, France, Germany, the US, and the UK. The brand also has a network in countries like India, Singapore, China, and Malaysia. But they aren’t developed as the western markets are.
Opportunities available to McDonald’s
McDonald’s has dominated the US market by putting more focus on it. But the company has always had difficulties in the international market. The expansion in the global market has great growth potential and it would pay off well. It’s time that the brand should start focusing on the global market rather than just the US market.
McDonald’s shouldn’t become monotonous with its routine menu. The brand should add new items and innovative products to its menu. It would maintain the customers’ excitement and increase the company’s sales.
For instance, McDonald’s launched an exclusive service drink by the name of “MIX by Sprite Tropic Berry” in New York in 2018. It became so successful that the brand started serving it in the other states as well. The thing the company should keep in mind is relevant to the culture and geography, the menu would maintain the charm.
McDonald’s introduced an economic price menu of 1 dollar, 2 dollars, 3 dollar menu, and 5 dollar Mix and match deal. It attracted the attention of the price-conscious customer market. Such a menu increases the sale of the company.
Online Ordering & Delivery
The pandemic of covid-19, lockdown, the shutdown of businesses, and social distancing has limited people to their houses. Such an environment has promoted the culture of online shopping and e-commerce.
McDonald’s has recently partnered up with Door Dash and UberEats for the delivery of food in the US. The online ordering, mobile application, and home delivery service are great steps of the company. They would help the fast-food brand to reach more customers and increase the market share.
Many health critics have labeled the fast-food as junk food. McDonald’s should play it smartly by introducing healthy and customized food offer to the customers. Such initiatives have shown positive outcomes with more sales and profitability. Now McDonald’s should rebuild its image of being a healthy brand.
We are living in a world of digital and social media. McDonald’s is already using social media platforms like Google, Facebook, YouTube, and Instagram for marketing purposes. The brand should put more focus on digital marketing. It would help the company to increase customers’ engagement, find out their choices, and launch the product accordingly.
Threats McDonald’s has to face
Local Cultural Conflict
McDonald’s is operating its business in more than 100 countries across the world. The company has had some conflicts with local cultures in different regions. Such conflicts are threatening the brand image. For instance, the brand had issues in the Muslim countries over “halaal” meat as an ingredient.
The cultural conflicts make it difficult for the company to maintain its brand image worldwide and operate the business effectively.
Chick-fil-A, KFC, Chipotle, and Burger King are some of the main competitors of McDonald’s. Their increasing sale and growth rate is a great threat to the company.
Risky Tech Investment
McDonald’s has recently made a huge investment in acquiring the tech startup company and other tech tools. But they could turn out to be very risky if they don’t deliver the required results. It’s because the public isn’t yet ready to accept and adapt to technological changes at the hotels and restaurants. Only time would tell whether they’re successful or not.
McDonald’s is also facing great pressure from environmentalists and eco-friendly customers to reduce waste. They demand that the company should take eco-friendly steps and set an example for other brands.
For instance, the environmental activists protested and demanded that the brand shouldn’t use plastic straws at its location points across the world. Plastic straws are polluting the environment.
New Trends of Fast-food
The young generation considers the menu of McDonald’s to be the taste of the old school and conventional. Wendy’s and Shake Shack are offering experimented recopies and a variety of menus up to the taste of the young demographic.
For instance, the “Signature-Crafted Burgers” of Wendy’s has won the market share and McDonald’s couldn’t compete against it. The brand had no choice but to return to conventional Quarter Pounders to save the market share whatever was left behind.
The pandemic of covid-19 has shut down all the hotels and restaurants worldwide for months. McDonald’s heavily relies on its franchises for revenue. The lockdown of businesses has decreased the annual revenue and net income of McDonald’s by approximately 9.79% and 16.07% in 2020.
After a careful study of the swot analysis of McDonald’s, we have concluded that McDonald’s is indeed a market leader in the fast-food hotels and restaurant business. The brand should launch a new product menu, avoid cultural issues, and use digital marketing tools to compete in the market.