Background and Business Model: McDonalds

Background

McDonald's is one of the world's largest and most recognizable fast food chains, founded in 1940 by brothers Richard and Maurice McDonald. It was Ray Kroc, however, who helped turn McDonalds into the mega-successful fast-food chain that it is today. This is thanks in part to the drive-thru service first introduced in the 1970s. Today, McDonalds operates in more than 100 countries, serving nearly 68 million customers every day. Headquartered in Chicago, Illinois, McDonald's primary offerings include burgers, chicken products, breakfast items, French fries, desserts, soft drinks, shakes, salads, wraps, and fish. It is estimated that McDonald's accounts for about 18 percent of all fast-food sales in the United States and holds the biggest market share worldwide. Additionally, it employs over 390,000 people and operates more than 38,000 outlets worldwide. McDonald's is also active in promoting its brand and products through various advertising campaigns, philanthropic activities, and sponsorships. In recent years, McDonald's has made efforts to improve its products and services in accordance with customer demand for healthier options. The company also continues to focus on innovation and technology, such as the introduction of mobile ordering, delivery services, and new menus.

Business Model

McDonald's primarily operates using a franchising business model. Under this model, the company licenses its brand and trademarks to independent operators who then operate their own McDonald's restaurant while following the company's standards and guidelines. The company also owns and operates some restaurants directly. Additionally, McDonald's engages in numerous marketing and advertising activities in order to promote its brand. Some examples of McDonald's marketing and advertising activities include TV, radio, print ad campaigns, sponsorships, social media engagement, product tie-ins and promotions, in-store advertising, and digital campaigns. The company has also established various loyalty programs in an effort to build customer loyalty and strengthen its brand.

Main Source of Revenue

Main Products or Services

McDonald's main sources of revenue and/or profits for business segments include food and beverage sales, leasing and rent payments from franchisees and other income. According to their 2021 Annual Report, the company had a total annual revenue of $23.223 billion, with food and beverage sales being the main source of revenue. Leasing and rent payments from franchisees accounted for $1.02 billion, while other income accounted for $0.01 billion.

The report also showed that McDonald's experienced a 3 percent increase in global comparable sales compared to the previous year. Operating income was $16.3 billion, a 4 percent increase year-on-year, while net income decreased slightly by 1 percent to $5.58 billion.

Different Markets

McDonald's operates in many different markets around the world,...

…in 1940 by brothers Richard and Maurice McDonald. It operates in more than 100 countries and serves nearly 68 million customers every day, with headquarter located in Chicago, Illinois. Its primary offerings include burgers, chicken products, breakfast items, French fries, desserts, soft drinks, shakes, salads, wraps, and fish. The company operates primarily using a franchising business model, and leverages technology such as automation, kiosks, and AI to increase efficiency and reduce costs. Additionally, it has made efforts to improve customer service, introducing new menu items and expanding delivery services. This has resulted in improved market share and overall financial health for the company.

McDonald's is also active in promoting its brand and products through various advertising campaigns, philanthropic activities, and sponsorships. In recent years, McDonald's has seen increased sales and improved customer satisfaction due to these changes. In 2021, the company reported a total annual revenue of more than $23 billion, with food and beverage sales being the largest source of revenue. Additionally, McDonald's has seen an increase in new store openings to nearly 40,000 stores. Overall, McDonalds brand and franchise is strong all over the world. It is one of the most recognized and iconic symbols of the Western world with its golden arches, and it remains a beloved fast-food restaurant in the US, thanks…