In March 2015, Steve Easterbrook became CEO after his predecessor's turnaround strategy did not succeed. McDonald's was facing problems with the financial aspect of the corporation despite the overall market being on the rise. The company's sales rate declined and it experienced a decrease in its income as well. The company is looking into developing a better strategic identity. How should McDonald's Corporation respond to the recent decrease in sales and current consumer trends?
Marne L. Arthaud-Day; Frank T. Rothaermel
Harvard Business Review (MH0037-PDF-ENG)
January 14, 2016
Case questions answered:
What should McDonald’s response be to the recent decrease in sales and current consumer trends?
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Case answers for McDonald's Corporation
McDonald’s Corporation, known as the American success story, has been a world leader in the fast-food industry since its inception. Founded in 1940, McDonald’s catered to bringing simplistic meals to American households at rapid speed. With a focus on convenience and affordability, it was difficult to imagine a better business plan.
However, following the 2008 recession, net income decreased as much as 15% and shares kept falling although the market itself recovered in the following years. Some executives suggested streamlining the menu and catering more directly to the overseas locations, while others suggested increasing the quality of their products to compete in the post-recession era.
In order for McDonald’s Corporation to remain the leader of accessible food, they should focus their efforts to minimize their menu to key products and reduce workers employed at restaurants with a shifted focus to technology adoption and allocate those savings to develop a more inviting, unique fast food experience.
McDonald’s has over 121 menu items in each of their restaurants across the world (Exhibit 10) however, according to the case about 30% of McDonald’s sales come from their 5 main products: Big Macs, Hamburgers, Cheeseburgers, Fries and McNuggets.
The CEO during the rollout of “All-Day Breakfast” made it a point to only include the best selling items in its breakfast menu offerings so the same thought process should be adapted to the rest of McDonald’s menu.
McDonald’s Corporation should limit the menu to the essential items in order to cut costs. This would also increase operational effectiveness regarding the speed of service and reduce customer confusion. Due to the vast majority of locations, there is little reason for each restaurant in the US to have the same simplified menu. While the global market has specific needs per region, McDonald’s should…