Summary- McDonald's profitablilty

My essential research question at the beginning of this passion project was to understand what affects the profitability of McDonald's.  I was interested in this topic because a friend of mine's dad recently lost his job after working with the company for over 10 years. When he talked about it he said "McDonald's really isn't doing well right now" which was surprising because they are everywhere.

www.chicagotribune.com

        Throughout my research process I have uncovered the the relationship between McDonald's and their customers. 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.

         Through thousands of letters and complaints McDonald's finally answered the demands in bringing breakfast to the all-day lunch/dinner menu. Deemed a "no brainer" , McDonald's had been holding out for the extreme makeover for years because it seemed that costs would out way the benefits. Through just one week of the menu change has resulted in a 4.5 percent increase in daily revenue. This new move comes after the chain hit its lowest quarterly growth in the past 3 years.

           For years McDonald's has been at the helm of fast food industry due to their inexpensive, quality food. However, the luxury of getting a burger on the run is a fad that has seen its end in an age where subway and Chipotle control the fast food market. McDonald's has began a transition to an intensive approach that includes table service and a thicker patty. In the article "McDonald's Beefs Up Its Range with a Meatier Mac" author, Saabira Chaudhuri, discusses the businesses new approach to fast food. 

      McDonalds has implemented many changes in the past year in an attempt to re attract the customers whom have supported them for years. 

McDonald's response to flight$15

http://www.thefederalistpapers.org/us

        For years workers have pleaded for a an increase in the federal minimum wage. Their argument is that a higher minimum wage will bring millions out of poverty and provide a wage that they can live off of. Theoretically this sounds like a good plan, however the businesses that employ minimum wage workers are typically running on tight margins and in order to answer to the increase they must lower prices or let people go. Businesses are getting extremely clever to answer to the minimum wage increase and make payroll. Recently, McDonald's introduced a  computerized kiosk with a brand new menu and experienced extremely successful results. 

       For the fast food industry, who makes profits though the narrow margins of their transactions, the spike would bring many unintended consequences. After the $15 minimum wage was pioneered by Seattle, the city is now experiencing the consequences to the change. According to "Seattle sees fallout from $15 minimum wage, as other cities follow suit" the author Dan Springer argues "many minimum wage workers are eligible for basic welfare programs and with the increase workers are now asking for fewer hours". The whole point to increase the minimum wage was to take away the peoples dependence on the government, but many workers have found that they can stay just under the poverty line and continue to receive subsidies. The minimum wage increase will increase prices and unemployment while the individuals dependence on the government stays constant. 

      McDonald's took their own stance on the proposed federal minimum wage increase by introducing computerized kiosks'. If a computer can do a job more efficiently for less resources then McDonald's will take the business minded approach and computerize the industry. The unskilled minimum wage protesters are now going to be making zero and will be replaced with skilled workers who will program and fix the machines.

libertynews.com

Back to basics: McDonald's presenting a fundamental approach to fast food

http://www.thesilverink.com

             For years McDonald's has been at the helm of fast food industry due to their inexpensive, quality food. However, the luxury of getting a burger on the run is a fad that has seen its end in an age where subway and Chipotle control the fast food market. McDonald's has began a transition to an intensive approach that includes table service and a thicker patty. In the article "McDonald's Beefs Up Its Range with a Meatier Mac" author, Saabira Chaudhuri, discusses the businesses new approach to fast food. 

            McDonald's has began testing in the UK with a sirloin burger, a new menu item most notably different for its bigger bun and thicker patty. The food giant aims to answer to growing concerns over competitors whom have experienced great success in Europe for its larger quantity meals. The new sirloin burger is 30 percent thicker than that of a traditional patty, yet costs more and takes more time to prepare. To understand the motive behind this sweeping change, one must understand what is going on within the McDonald's corporation. In March of 2015 McDonald's hit the lowest profit margin its seen in the past 5 years. compared to March of the previous year, McDonald's had seen a 4.36 percent drop in margin to a staggering 13.62 percent. Leaving shareholders worried, McDonald's corporate had to make a change to their system. Following the all-day breakfast campaign, McDonald's saw a 2.9 percent revenue increase and opened 82 stores in the US alone. The change in the thickness of the patty is a logical approach to a renovated business structure. The change comes in a series of changes likely to be rolled out in the next 3 years with the focus on improving quality and the customer experience. 

  

          As I have discussed in my previous posts, McDonald's is struggling to provide a healthy, cheap option that is enticing to the customer. An increase in quality means an increase in price, which will lead to less prevalence among the lower class; bringing the opposite output McDonald's intended. McDonald's has been working to improve the burger chain's food quality, customer experience, employee benefits and brand image in the U.S, where McDonald's has struggled. Their efforts seem to be paying off, for McDonald's reported last month its first quarterly increase in two years in sales at U.S. restaurants open at least 13 months. It will be interesting to see how the public responds to the new approach. 

In my next post I will summarize the how the workers affect the output of the corporation and the effects government regulations has had on success abroad. 

All day breakfast savior to McDonald's revenue dropoff

https://fortunedotcom.files.wordpress.com

       In 2013 Mcdonald's was at the top of the fast food industry by a substance margin, leading subway by nearly 10 billion in annual revenue. Surprisingly, Subway is now leading Mcdonald's in global locations suggesting no signs of slowing down. In the subordinate seat, Mcdonalds has been taking necessary risks to stimulate economic growth. As of October 6, 2015 the fast food chain began offering all day breakfast at all locations which brought a much anticipated return. In an article, "McDonald's hails successful all-day breakfast launch" published by Fortune author Daniel Bentley writes about where the all-day breakfast menu came about and how it will lead to success for the corporation.

     Through thousands of letters and complaints McDonald's finally answered the demands in bringing breakfast to the all-day lunch/dinner menu. Deemed a "no brainer" by Bentley, McDonald's had been holding out for the extreme makeover for years because it seemed that costs would out way the benefits. Through just one week of the menu change has resulted in a 4.5 percent increase in daily revenue. This new move comes after the chain hit its lowest quarterly growth in the past 3 years. McDonald's not anticipates to subsidize all day breakfast in an attempt to bring in new customers and maximize profit. President of McDonald's said Tuesday, "The successful launch of All Day Breakfast proves that when we listen to and respond to our customers and align around a great execution plan, we will grow our business and take share." McDonald's assumes all responsibility for recent business tactic and will continue to experience growth.

    For years all day breakfast was unattainable to the business because of their techniques in the kitchen, but by limiting the menu to a handful of breakfast items McDonald's is now able to appease the consumer. If new menu items can attract new customers the business will inevitably bring in more profit.  The business can keep prices low and beat their competitor by offering a meal with good value at a fair price, so when the supplier can provide a product that more people want, like they have with the breakfast menu, they can make more money. The author makes a good point in saying that McDonald's has a bigger issue in mainstream society that disapproves fast food. Bentley argues that the all day breakfast may get people through the door, but in order to truly fix their problem they need to reevaluate the public's perception and provide a fresher outlook on fast food.




      

      

McDonald's lost relevancy to the millenials

Factors affecting MacDonald's profitability



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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. 

McDonalds Profitability

Source: http://www.skinnytwinkie.com/

• Briefly explain why you are interested in studying your topic:  

Mcdonald's is the second most popular restaurant in the world (behind only subway) I want to explore how much gross income Mcdonald's has annually and what are the greatest factors behind their profit.

• The overall question I plan on answering by the end of the project:

What affects the profitability of Mcdonalds menu choices?

• Sub questions I will need to answer in order to answer the overall question:

How will all-day breakfast benefit the revenue of mcdonalds?

What have been the greatest factors in mcdonald's success?

Which menu items create the most revenue?

how has management changed the face of Mcdonald’s to increase profit?

what promotions bring in the most revenue each year?

How has the dollar menu affected Mcdonald's?

• My plan of research (what specific Library Databases, specific websites, names of authors, people, etc. will I pursue to find the answers to the questions above):

1. The database ‘Teen Health and Wellness’ would be a good database that I can research to understand how the health craze in the United States has affected the choices the public makes on fast food and Mcdonalds
2. I will also use the ‘Teen Health and Wellness’ to look deeper into how putting the nutritional label onto all food items has affected profitability.
3. i'm going to use the ‘Global Issues in Context’ to research how the profitability of fast food changes when money gets tight and compare yearly revenue with economic prosperity.
4. I will use the ‘Student research center’ to look further into recent articles about all day breakfast, saturated fat, and the “dollar menu”.
5. I'm going to use ‘Proquest: research library’ to look into the business of Mcdonald's and who is behind operations at each location.

http://marketrealist.com/2014/01/key-threats-can-cause-mcdonalds-profitability-fall-cliff/

Key threats that can cause McDonald’s profitability to fall off a cliff

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. 

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