McDonalds, unlike its competitors such as Wendy’s and Burger King, is the dominant player in the fast food industry, both in terms of size and profitability. It has achieved this position by employing innovative techniques in managing and operating its restaurants, implementing effective marketing strategies, and adapting to changing circumstances. Although it started as a humble single restaurant back in 1948, McDonalds has flourished over the years to become a prosperous multinational conglomerate.
McDonalds originated in 1948 as a small burger snack in San Bernardino, California. It has since grown significantly. What made McDonalds stand out was their unique concept: an assembly line where a limited menu of hamburgers, cheeseburgers, French fries, and drinks could be cooked faster and cheaper, enticing more customers. This food preparation concept remains central to the fast food industry. Interestingly, McDonald’s founders, Richard and Maurice McDonald, did not begin their restaurant with this innovative idea.
In the 1940’s, the McDonald brothers started a drive-in restaurant with a small menu of around twenty-five barbecue items. They wanted to improve their business and in December of 1948, they reopened with an innovative food preparation method that is still used today. The new method led to booming burger sales, almost doubling within five years. At peak times, there would be a crowd of about one hundred and fifty customers waiting outside for burgers from this rising business. Not only did it attract customers, but also caught the attention of other businesses, resulting in McDonald’s expansion. This success inspired others to imitate them and the first McDonald’s franchise was sold in Arizona for one thousand dollars. The purchase included the right to use the McDonald’s name, an explanation of their “Speedee Service System,” and two weeks of assistance from their first cashier, Art Bender.
Ray Kroc, a businessman, had a significant impact on McDonalds. In 1954, Kroc tried to sell and supply multimixer’s to McDonalds, discovering its immense success. This led him to recognize the untapped potential across the country. As a result, Kroc signed a ninety-nine-year contract with the McDonald brothers, granting him exclusive rights to franchise McDonald’s restaurants under his newly owned and operated company, McDonalds System Inc, which later became McDonald’s Corporation in 1960. The contract allowed Kroc to open unlimited restaurants without changing the original McDonalds style without written consent. In addition, the contract specified that Kroc could charge an initial franchising fee of $950 and retain only 1.9% of the franchise sales, with 0.5% returning to the McDonalds.
Kroc’s first restaurant, considered to be the first of McDonalds Corp., opened in Des Plaines Illinois in April of 1955. More and more McDonalds began to open up rapidly. By the end of 1956, fourteen McDonalds were opened, with reported sales of 1.2 million. Within four years, there were 228 restaurants, reporting sales of 37.6 million. To sustain this growth, Kroc saw it beneficial to buy out the McDonald brothers, acquiring full control over the company. As a result, in 1961, Kroc purchased the brothers’ shares for 2.7 million, granting him absolute power in all aspects of McDonalds. With Ray Kroc now at the helm of McDonalds, it paved the way for numerous new innovative ideas.
The establishment of the “Look for the Golden Arches” advertising campaign in 1961 significantly boosted sales at existing McDonald’s locations. Additionally, in 1962, the previous symbol, “Speedee”, was replaced with the now globally recognized Golden Arches. Unexpectedly, a red-haired clown named “Ronald McDonald” was introduced to the restaurant in 1963 to attract children and this proved to be highly successful. Recent research has shown that Ronald McDonald is the second most easily recognizable figure, just behind Santa Claus. This demonstrates McDonald’s exceptional track record in advertising and its contribution to the company’s growth. Throughout its history, McDonald’s has consistently excelled in marketing and gained international renown for it.
McDonald has achieved remarkable success in advertising, something that any company would aspire to. The key to their success lies in their innovative ideas for ad campaigns. Almost every campaign or slogan, such as “ba da ba ba baa I’m Lovin It,” has instantly caught on. Two particularly successful campaigns were during the 1984 Olympic Games, where they offered a “U.S. won, you won” promotion, and in 1997 when they gave away “Teenie Beanie Babys” with happy meals.
Additionally, McDonalds’ ability to adapt to changing times has contributed to their advertising success. This is evident in the evolution of the restaurant’s design over the years. Initially, McDonalds had a sleek and groundbreaking look with two arches atop the building. However, public preferences shifted in 1967 towards a more traditional style, prompting a complete redesign of the building.
This led to a complete transformation featuring mansard style roofs made of brown bricks and red shingles. As part of this revolution, McDonald’s also introduced sit-down areas. The interior had a minimalist design, with inexpensive plastic booths and tables. In 1975, McDonald’s made another significant change in its customer service approach. As cars became even more popular, McDonald’s adapted and took advantage of this trend by introducing the drive-thru window. The traditional appearance remained unchanged until recent years when McDonald’s began to extensively renovate its locations once again.
McDonalds has returned to a sleeker look with the two arches above it, resembling the ones from before 1968. However, there are significant changes in the interior. Nowadays, most new restaurants have higher-tech features like wireless Internet service, digital ordering displays, and plasma-screen television sets. The color scheme has also changed to muted earth tones instead of bright reds and yellows, and the dining areas are divided for singles, families, and business meetings. This demonstrates how McDonalds is adapting to our increasingly technological society.
Over time, both the restaurant itself and its menu have undergone changes. Under Ray Kroc’s ownership of McDonalds, various menu additions were made that have now become well-known staples in their menu. These include the “Fillet o Fish” in 1963 and the introduction of the Big Mac in 1968. Other famous additions include the McFlurry, Quarter Pounder, Chicken McNuggets, and Happy Meal.
McDonald’s introduced breakfast items to their menu in 1973 as a means of addressing sales limitations. This strategic decision allowed them to tap into a previously untapped market and extend operating hours, ultimately leading to an increase in revenue. It is worth mentioning that McDonald’s faced competition from various hamburger restaurants, including Wendy’s and Burger King.
During the late 1970s and early 1980s, competition between fast food companies intensified. Experts in the industry believed that the fast food market had reached its maximum potential, requiring existing companies to compete for a larger market share rather than expanding further. Burger King responded by launching its “Have it your way” campaign, while Wendy’s introduced their “Fresh Alternative” campaign. However, despite their efforts, McDonald’s continued to see growth in sales and market share. This indicates that consumers were more receptive to McDonald’s advertising strategies, highlighting the effectiveness of their marketing tactics. One way to gauge McDonald’s success is through its rapid growth in the United States. In 1965, when McDonald’s became a publicly traded company and sold shares at $22.25 each, the company experienced significant growth with share prices more than doubling to $49 each within a few weeks.
To further observe McDonald’s achievements, let’s consider the following statistics. In 1967, McDonald’s opened its 1,000th restaurant. By 1970, they had reached their 1,600th restaurant and had expanded to all 50 states in the United States. During this time, their annual sales amounted to $587 million. Moving forward to 1990, McDonald’s had an impressive total of 11,800 restaurants worldwide and reported sales of $18 million. Notably, they had sold a staggering total of 80 billion burgers by then.
Given its success within the United States market, it was only a matter of time before McDonald’s ventured beyond national borders and embarked on global expansion. This journey began with the opening of their first non-U.S. branch in Richmond B.C., Canada in 1968. This event marked the beginning of an ongoing wave of international growth for McDonald’s.
Nowadays, you can find McDonald’s restaurants in as many as 119 different countries across the globe. Their pioneering approach led them to open branches where other American companies hadn’t even attempted to do so initially. Undoubtedly, their success has been remarkable throughout this expansive journey.
A notable instance of this occurred in 1990, in Moscow, when McDonalds inaugurated a restaurant in Soviet Russia. On the initial day, over thirty thousand individuals stood in line to become the first customers at the newly opened McDonalds in Moscow. Another illustration transpired in 1992, as McDonalds established its first restaurant in Beijing and managed to attract a crowd of forty thousand people on its inaugural day. At present, there are thirty-one thousand McDonalds restaurants worldwide. However, it should be noted that McDonalds faced limitations to its expansion. Bearing this in mind, the motto of “better, not just bigger,” came into effect. It is now increasingly common to find twenty four hour McDonalds establishments.
The idea of McDonald’s boosting its financial performance by maximizing its existing restaurants instead of constructing new ones was introduced. In simpler terms, the emphasis is on generating more revenue from current McDonald’s locations rather than expanding further. One method to achieve this is by extending the operating hours. This tactic has been used before when the breakfast line was introduced, allowing for longer business hours and potential profit growth. Despite McDonald’s achievements, there are still areas that require enhancement.
McDonalds has faced several challenges, primarily related to legal issues and the link between their food and health problems such as obesity. One notable trial, referred to as the “McLibel” case, occurred in 1997. During this trial, McDonalds took legal action against two environmentalists who distributed a leaflet containing various alarming allegations about the company. Although McDonalds ultimately won the case, their reputation suffered considerable damage, rendering their victory somewhat hollow. The judge found them guilty of mistreating animals, paying low wages, and exploiting children through their advertisements – a significant blow to McDonald’s image. Another detrimental setback came from a documentary called “Supersize Me,” created by Morgan Spurlock.
For years, McDonalds has received criticism for its unhealthy food. However, the documentary “Supersize Me” brought about significant changes. In response to the movie, McDonalds took various actions. They discontinued the option to supersize fries and soda, introduced bottled water and yogurt as alternatives, launched a salad line, and began printing nutritional facts on their product wrappers. These measures were implemented as a direct response to the film.
McDonalds serves as an excellent example of a successful company. It grew from a single burger shack into a multinational conglomerate with over thirty one thousand restaurants worldwide. This exemplifies how an innovative concept, such as the assembly line style restaurant, can lead to immense value in the future. The expansion of McDonalds is a testament to the effectiveness of creative marketing strategies. Additionally, it highlights how one individual, Ray Kroc, built upon a single idea to create a globally recognized business.
