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Throughout the article "McDonald's Profit down 30% on Sales Slump" posted on Forbes Lauren Gensler, senior economic adviser for Forbes discusses what is causing the dramatic loss in profit by the most popular fast food restaurant in the world.
In the article the author gives many examples as to why McDonald's profits dropped 30% in just one quarter. McDonald's is the most popular fast food restaurant in the World. With over a billion stores and counting, minor changes to the business model results in changes of thousands of dollars. There are many factors that determine how the franchise will stand in the constantly changing business world. Since 2005 McDonald's has seen an increase in nearly 10 million dollars annually. Part of this growth is accredited to the healthier menu options. In a survey by the Washington post a simple survey showed people would rather pay more for healthier food than less for cheap food. As of 2010 McDonald's began recording all nutritional facts on food items sold. After the implemented the nutritional code the corporation saw their largest jump in annual revenue since 1996. In an article by the Market Realist McDonald' "business model is built around growing comparable sales to realize margin leverage". McDonald's credits itself with comparing their model with other fast food chains and making changes accordingly. In conclusion, there are many factors in the operations of McDonald's and by minimizing costs they are able to maximize on profitability.
I cannot remember the last time I ate at McDonald's, Even when I'm eating out on a tight budget I never consider McDonald's because the food oozes with grease and fat and the environment within the restaurant is unattractive. I would rather pay a few dollars more to eat better, healthier food. With all the new information about what saturated fat does to your body I think the many people feel the same was as me in that they would pay more for healthier food. The author discusses how many millennial young adults are much more aware to what they eat than 10 years ago. With the loss of a huge market it is hard for McDonald's to keep up with restaurants like Chipotle.
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