McDonald’s McDonald’s Behind The Golden ArchesBehind The Golden Arches

By Rahul SenguptaBy Rahul Sengupta

The McDonald’s Story – GenesisThe McDonald’s Story – Genesis

The story of McDonald’s started in 1954, when its founder The story of McDonald’s started in 1954, when its founder Raymond Kroc saw a hamburger stand in San Bernardino, Raymond Kroc saw a hamburger stand in San Bernardino,

California and envisioned a nationwide fast food chain. Kroc California and envisioned a nationwide fast food chain. Kroc proved himself as a pioneer who revolutionized the American proved himself as a pioneer who revolutionized the American restaurant industry. Today McDonald’s is the world’s largest restaurant industry. Today McDonald’s is the world’s largest

fast food chain serving 47 million customers daily. fast food chain serving 47 million customers daily. McDonald’s is now one of the most valuable brands globally, McDonald’s is now one of the most valuable brands globally,

worth more than $25 billion. The Golden Arches and its worth more than $25 billion. The Golden Arches and its mascot Ronald McDonald have gained universal recognition. mascot Ronald McDonald have gained universal recognition. Though the company has roots in the US, McDonald’s today Though the company has roots in the US, McDonald’s today

has become an has become an accepted citizen of the worldaccepted citizen of the world..

HistoryHistory• 1955 - Ray Kroc opens his first restaurant.

McDonald’s Corporation is created

• 1957 - Quality, Service, Cleanliness and Value (QSC & V) becomes company motto

• 1963 - Ronald McDonald makes debut

• 1965 - The company goes public

• 1968 - Big Mac is introduced

• 1970 – 1600 restaurants

• 1974 – Happy Meal Launched

• 1980 - 6000 McDonald’s Restaurants

• 1996 - McDonald’s opens in India, the 95th country

History ContinuedHistory Continued

1994 - Kuwait City, Kuwait 2002 - Forty seven years after

– 30,000 locations– 2000 new restaurants – World Wide Web– McDonald’s a recognized Brand

Name

McDonald’s MissionMcDonald’s Mission

Be the best quick service restaurant experience. By providing quality, service, cleanliness and value that make every customer in every restaurant smile.

3 World wide strategies3 World wide strategies

Best employerOperational ExcellenceContinue to grow and be profitable

Business ModelBusiness Model Franchise Model – Only 15% of the total number of

restaurants are owned by the Company. The remaining 85% is operated by franchises. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers.

  Product Consistency – By developing a sophisticated supplier

networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies.

Act like a retailer and think like a brand – McDonald’s focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation.

McDonald’s in IndiaMcDonald’s in India

McDonald’s entered India in 1996. McDonald’s India has a joint venture with Connaught Plaza Restaurants and Hard Castle Restaurants. Connaught Plaza Restaurants manages operations in North India whereas Hard Castle Restaurants operates restaurants in Western India. Apart from opening outlets in the major metros, the company is now expanding to Tier 2 cities like Pune and Jaipur.

Challenges in Entering Indian MarketsChallenges in Entering Indian Markets

Regiocentricism: Re-engineering the menu - McDonald’s has continually adapted to the customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the Indian palate.

  The vegetarian customer – India has a huge population of vegetarians.

To cater to this customer segment, the company came up with a completely new line of vegetarian items like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages.

Segmentation, Targeting and PositioningSegmentation, Targeting and Positioning

McDonald’s uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family.

71%

59%52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Biscuits Burgers & Pizzas Fruit Juices

% of kids who influence what FMCG brand their family buys

Segmentation, Targeting and PositioningSegmentation, Targeting and Positioning

As shown in the bar chart , kids reign supreme in FMCG purchase related to food products. So to attract children McDonalds has : 1. Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given (the latest in this range is the toys of the movie Madagascar). 2. ‘Play Place’ special facility - where children can play arcade games, air hockey, etc. This strategy is aimed at making McDonald’s a fun place to eat. This also helps McDonald’s to attract the young urban families wanting to spend some quality time while their children have fun at the outlet. 3. To target the teenagers, McDonald’s has priced several products aggressively, keeping in mind the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to attract students to the outlets like the one at Vile Parle in Mumbai.

““Mc Donald’s mein hai kuch baat”Mc Donald’s mein hai kuch baat”

McDonald’s as a place for the whole family to enjoy. When McDonald’s entered in India it was mainly perceived as targeting the urban upper class people. Today it positions itself as an affordable place to eat without compromising on the quality of food, service and hygiene. The outlet ambience and mild background music highlight the comfort that McDonald’s promises in slogans like “You deserve a Break Today” & “Feed your inner child”. This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that McDonald’s maintains a positive relationship with the customers.

Customer Perception and Customer Expectation Customer Perception and Customer Expectation

Customer perception is a key factor affecting a product’s success. Many potentially Customer perception is a key factor affecting a product’s success. Many potentially revolutionary products have failed simply because of their inability to build a healthy revolutionary products have failed simply because of their inability to build a healthy perception about themselves in the customers’ minds. McDonalds being an internationally perception about themselves in the customers’ minds. McDonalds being an internationally renowned brand brings with it certain expectations for the customers.renowned brand brings with it certain expectations for the customers.

Target Segment What is McDonald’s for me?

A Family with children A treat to children, a fun place to be for the

children.

Urban customer on the move Great taste, quick service without affecting the

work schedule

Teenager Hangout with friends, but keep it affordable.

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customer’s expect the brand to enhance their self-image. Customer responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect strongly with the brand. However, fulfilling some of the customer expectations like a broader product variety provide McDonald’s a great scope for improvement.

McDonalds Marketing Mix (7 P’s)McDonalds Marketing Mix (7 P’s)

After segmenting the market, finding the target segment and positioning itself, each After segmenting the market, finding the target segment and positioning itself, each company needs to come up with an offer. The 7 P’s used by McDonalds are:company needs to come up with an offer. The 7 P’s used by McDonalds are:

1. Product2. Place3. Price 4. Promotion5. People6. Process7. Physical Evidence

PRODUCTPRODUCT

How should the company design, manufacture the product so that it enhances How should the company design, manufacture the product so that it enhances the customer experience?the customer experience?

PRODUCTPRODUCT

Product is the physical product or service offered to the consumer. Product includes Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non-tangible aspects of the product and service.tangible and the non-tangible aspects of the product and service.

McDonalds has intentionally kept its McDonalds has intentionally kept its product depthproduct depth and and product width product width limited. limited. McDonalds studied the behaviour of the Indian customer and provided a totally McDonalds studied the behaviour of the Indian customer and provided a totally different menu as compared to its International offering. It dropped ham, beef and different menu as compared to its International offering. It dropped ham, beef and mutton burgers from the menu. India is the only country where McDonalds serve mutton burgers from the menu. India is the only country where McDonalds serve vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds McDonalds continuously innovates its productscontinuously innovates its products according to the changing according to the changing preferences and tastes of its customers. The recent example is the introduction of the preferences and tastes of its customers. The recent example is the introduction of the Chicken Maharaja MacChicken Maharaja Mac..

McDonalds bring with it a McDonalds bring with it a globally reputed brandglobally reputed brand, , world class food qualityworld class food quality and and excellent customer specific product features.excellent customer specific product features.

PLACEPLACE

Where should be the product be available and the role of distribution channels?Where should be the product be available and the role of distribution channels?

The place mainly consists of the distribution channels. It is important so that the The place mainly consists of the distribution channels. It is important so that the product is available to the customer at the product is available to the customer at the right placeright place, at the , at the right timeright time and in the and in the right quantity. right quantity.

Nearly 50% of U.S.A is within a 3 minute drive from a McDonald’s outlet.Nearly 50% of U.S.A is within a 3 minute drive from a McDonald’s outlet.There is a certain degree of fun and happiness that a customer feels each time he dines There is a certain degree of fun and happiness that a customer feels each time he dines at McDonalds. There are certain at McDonalds. There are certain value propositionsvalue propositions that McDonalds offer to its that McDonalds offer to its customers based on their needs. McDonalds offers customers based on their needs. McDonalds offers hygienic environment,hygienic environment, good good ambience ambience and and great servicegreat service. .

Now McDonalds have also started giving Now McDonalds have also started giving internet facilityinternet facility at their centres and they at their centres and they have been playing have been playing music through radio music through radio instead of the normal music. There are certain instead of the normal music. There are certain dedicated areas for childrendedicated areas for children where they can play while their parents can have some where they can play while their parents can have some quality time together. quality time together.

PRICEPRICE

What should be the pricing strategy?What should be the pricing strategy?

PRICEPRICE

Pricing includes the list price, the discount functions available, the financing Pricing includes the list price, the discount functions available, the financing options available etc.options available etc.

It should also take into the consideration the probable reaction from the competitor to It should also take into the consideration the probable reaction from the competitor to the pricing strategy.the pricing strategy. This is the most important part of the marketing mix as this is the only part which This is the most important part of the marketing mix as this is the only part which generates revenue.generates revenue.All the other three are expenses incurred. The price must take intoAll the other three are expenses incurred. The price must take intoconsideration the appropriate demand-supply equation.consideration the appropriate demand-supply equation.

McDonald’s came up with a very catchy punch line “McDonald’s came up with a very catchy punch line “Aap ke zamane mein ,baap ke Aap ke zamane mein ,baap ke zamane ke daamzamane ke daam”. This was to attract the middle and lower class consumers and the ”. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now. effect can clearly be seen in the consumer base McDonalds has now.

McDonalds has certain McDonalds has certain value pricing and bundling strategiesvalue pricing and bundling strategies such as such as happy mealhappy meal, , combo mealcombo meal, , family mealfamily meal etc to increase overall sales volumes. etc to increase overall sales volumes.

PROMOTIONPROMOTION

What is the suitable strategy and channels for promotion of the product?What is the suitable strategy and channels for promotion of the product?

PROMOTIONPROMOTION

The various promotion channels being used by McDonald’s to effectively communicate The various promotion channels being used by McDonald’s to effectively communicate the product information are given above. A clear understanding of the customer value the product information are given above. A clear understanding of the customer value helps decide whether the cost of promotion is worth spending. helps decide whether the cost of promotion is worth spending. There are three main objectives of advertising for McDonald’s are There are three main objectives of advertising for McDonald’s are 1.To 1.To make people aware of an itemmake people aware of an item2.2. Feel positive about it Feel positive about it 3. 3. Remember itRemember it. .

The The right messageright message has to be communicated to the has to be communicated to the right audienceright audience through the through the right right mediamedia. McDonald’s does its promotion through television, hoardings and bus shelters. . McDonald’s does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing They use print ads and the television programmes are also an important marketing medium for promotion. medium for promotion.   Some of the most famous marketing campaigns of McDonald’s are:Some of the most famous marketing campaigns of McDonald’s are:1.1.“You Deserve a break today, so get up and get away- To McDonald’s”“You Deserve a break today, so get up and get away- To McDonald’s”2.“Aap ke zamane mein ,baap ke zamane ke daam”.2.“Aap ke zamane mein ,baap ke zamane ke daam”.3.3.“Food, Folks, and Fun”“Food, Folks, and Fun”4.4.“I’m loving it”.“I’m loving it”.

PEOPLEPEOPLE

How to converge the benefits of internal and external marketing?How to converge the benefits of internal and external marketing?

McDonald’s understands the value of both its employees and its customers. It McDonald’s understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy understands the fact that a happy employee can serve well and result in a happy customer. customer. McDonald continuously doesMcDonald continuously does Internal Marketing. Internal Marketing. This is important as it must This is important as it must precede external marketing. This includes hiring, training and motivating able precede external marketing. This includes hiring, training and motivating able employees. This way they serve customers well and the final result is a happy employees. This way they serve customers well and the final result is a happy customer. customer. The level of importance has changed to be in the following order (the more The level of importance has changed to be in the following order (the more important people are at the top):important people are at the top):1. 1. CustomersCustomers2. 2. Front line employeesFront line employees3. 3. Middle level managersMiddle level managers4. 4. Front line managers Front line managers

The punch line “The punch line “I’m loving itI’m loving it” is an attempt to show that the employees are loving ” is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers.their work at McDonalds and will love to serve the customers.

PROCESSPROCESS

The food manufacturing process at Mc Donalds is completely transparent i.e. the The food manufacturing process at Mc Donalds is completely transparent i.e. the whole process is visible to the customers. In fact, the fast food joint allows its whole process is visible to the customers. In fact, the fast food joint allows its customers to view and judge the hygienic standards at Mc Donalds by allowing customers to view and judge the hygienic standards at Mc Donalds by allowing them to enter the area where the process takes place. The customers are invited to them to enter the area where the process takes place. The customers are invited to check the ingredients used in food.check the ingredients used in food.

PHYSICAL EVIDENCEPHYSICAL EVIDENCE

Mc Donalds focuses on clean and hygienic interiors of is outlets and at the same time the interiors are attractive and the fast food joint maintains a proper decorum at its joints.

The McDonald’s ExperienceThe McDonald’s Experience

McDonald’s has excelled due to its ability to successfully integrate the customer’s McDonald’s has excelled due to its ability to successfully integrate the customer’s perspective in its products and operations in a comprehensive manner. The perspective in its products and operations in a comprehensive manner. The revamped menu in India is an example of McDonald’s strategy of integrating the revamped menu in India is an example of McDonald’s strategy of integrating the customer’s perspective in its products. And, the operational integration is evident customer’s perspective in its products. And, the operational integration is evident from McDonald’s emphasis on its suppliers as its customers as well as its treatment from McDonald’s emphasis on its suppliers as its customers as well as its treatment of its consumers as co-producers of services. of its consumers as co-producers of services.

Core Product

Supplementary Process

Service Delivery Process

Moments Of Truth – The Service EncounterMoments Of Truth – The Service Encounter

During the Service Delivery Process, each moment of interaction between the firm During the Service Delivery Process, each moment of interaction between the firm and the customer, called “and the customer, called “Moments of TruthMoments of Truth”, helps understand the opportunities ”, helps understand the opportunities that a firm has to win or lose the customer. For example, these “moments of truth” that a firm has to win or lose the customer. For example, these “moments of truth” are created for McDonald’s every time the guard at the McDonald’s outlet meets are created for McDonald’s every time the guard at the McDonald’s outlet meets the customer, every time an attendant takes down the order from the customer the customer, every time an attendant takes down the order from the customer waiting in the queue, every time the cashier interacts with the customer, every time waiting in the queue, every time the cashier interacts with the customer, every time the attendant helps the customer guided the customer towards the table, every time the attendant helps the customer guided the customer towards the table, every time the attendant cleans the table, etc. the attendant cleans the table, etc. CustomerCustomer     

CustomerCustomer

Service ProviderService Provider Service Delivery PointsService Delivery Points

McDonaldizing the Suppliers McDonaldizing the Suppliers

McDonald’s has changed the nature of not only the food service industry but also the McDonald’s has changed the nature of not only the food service industry but also the food processing industry as well. McDonald’s realized that the battle between fast food food processing industry as well. McDonald’s realized that the battle between fast food chains would increasingly be one of efficiency of supply, lower cost production and greater chains would increasingly be one of efficiency of supply, lower cost production and greater desire to innovate. It pioneered with innovative and sophisticated food distribution and desire to innovate. It pioneered with innovative and sophisticated food distribution and packaging systems when the traditional food processors were unwilling or unable to supply packaging systems when the traditional food processors were unwilling or unable to supply food items that McDonald’s demanded.food items that McDonald’s demanded.

McDonald’s also started with tiny suppliers and grew with them displaying great loyalty. McDonald’s also started with tiny suppliers and grew with them displaying great loyalty. Some of McDonald’s classic food items like Filet-o-Fish, French Fries, Chicken Nuggets etc. Some of McDonald’s classic food items like Filet-o-Fish, French Fries, Chicken Nuggets etc. are results of supplier innovation. Interestingly, it took KFC more than three years before in are results of supplier innovation. Interestingly, it took KFC more than three years before in finally introduced its own version of chicken nuggets. Thus supplier technological expertise finally introduced its own version of chicken nuggets. Thus supplier technological expertise had given McDonald’s a product which was not a mere marketing innovation but a technical had given McDonald’s a product which was not a mere marketing innovation but a technical one.one.

McDonald’s attempted to squeeze labour out of the stores by moving more preparation back McDonald’s attempted to squeeze labour out of the stores by moving more preparation back into the processing plant, creating the opportunity to develop unique products based on into the processing plant, creating the opportunity to develop unique products based on suppliers’ processing skills. suppliers’ processing skills. For the first time, McDonald’s suppliers became the focal For the first time, McDonald’s suppliers became the focal point of new product development.point of new product development. This converted the fast-food industry’s most This converted the fast-food industry’s most fragmented distributed system into more efficient one which helped McDonald’s reduce its fragmented distributed system into more efficient one which helped McDonald’s reduce its inventory and manage costs effectively.inventory and manage costs effectively.

Importance of PLC in McDonaldsImportance of PLC in McDonalds

The requirements of customers change over time and thus the product offering has to be The requirements of customers change over time and thus the product offering has to be changed accordingly. What is the fashion today may be out of market within few weeks. changed accordingly. What is the fashion today may be out of market within few weeks. Thus continuous innovation is required. Thus continuous innovation is required.

To counter these changes McDonalds has continuously introduced new products and has To counter these changes McDonalds has continuously introduced new products and has phased out the old ones which were at the decline stage of their PLC. The introduction is phased out the old ones which were at the decline stage of their PLC. The introduction is timed such that the new product does not cannibalize the product already in the maturity or timed such that the new product does not cannibalize the product already in the maturity or growth stage. Thus the secret lies in getting profits with different products in the different growth stage. Thus the secret lies in getting profits with different products in the different stages of the PLC. stages of the PLC.

A perfect example of revitalising a product in decline phaseA perfect example of revitalising a product in decline phase

The French Fries have been an important part of the McDonalds menu worldwide. But now it was in the stage of decline and was actually not generating proper return. In an attempt to revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served with chatpata spice mix which has resulted in increase in the sales of French Fries and has elevated it from to the decline stage. This is used to delay the decline of a well established product which has the potential of generating further revenue.

Competitors AnalysisCompetitors AnalysisMcDonald’s has been a leading fast-foods outlet in Vile Parle. But the outlet understudy has McDonald’s has been a leading fast-foods outlet in Vile Parle. But the outlet understudy has other competitors eating away into its market share. In addition to its traditional rivals—other competitors eating away into its market share. In addition to its traditional rivals—KFC, Dominos, Pizza Hut—the firm encounters new challenges. Jumbo King competes KFC, Dominos, Pizza Hut—the firm encounters new challenges. Jumbo King competes using a back-to-basics approach of quickly serving up burgers for time-pressed consumers. using a back-to-basics approach of quickly serving up burgers for time-pressed consumers. On the higher end, the KFC has become potent competitor in the quick service field, taking On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonald’s. Perhaps in the new environment, fast, convenient service away customers from McDonald’s. Perhaps in the new environment, fast, convenient service is no longer enough to distinguish the firm. is no longer enough to distinguish the firm. At this time, a new critical success factor may be emerging: the need to create a rich, At this time, a new critical success factor may be emerging: the need to create a rich, satisfying experience for consumers. This brings us to satisfying experience for consumers. This brings us to service and experience based service and experience based competitioncompetition which McDonald’s can use for competitive advantage against Jumbo King. which McDonald’s can use for competitive advantage against Jumbo King. Keeping in mind the demographics of the area, McDonald’s has Wi-Fi enabled the outlet to Keeping in mind the demographics of the area, McDonald’s has Wi-Fi enabled the outlet to cater to the student community. It is for this overall “Food, Fun & Folks” experience that cater to the student community. It is for this overall “Food, Fun & Folks” experience that customers pay a premium over the other competitors.customers pay a premium over the other competitors.Competition also reduces product lifecycle; inducing firms to revise their products Competition also reduces product lifecycle; inducing firms to revise their products portfoliosportfolios and to revisit their product market to understand changing needs, expectations and and to revisit their product market to understand changing needs, expectations and perception of different market segments. The new McBreakfast would be introduced perception of different market segments. The new McBreakfast would be introduced between 6 to 11 am as a pilot project. This would open up a whole new revenue stream for between 6 to 11 am as a pilot project. This would open up a whole new revenue stream for McDonald’s by tapping into the student and working population by providing a healthy and McDonald’s by tapping into the student and working population by providing a healthy and wholesome breakfast. This shows how demographic shift can affect the demand for products wholesome breakfast. This shows how demographic shift can affect the demand for products and services. McDonald’s has anticipated these changes to maintain its competitive edge.and services. McDonald’s has anticipated these changes to maintain its competitive edge.

Two Dimensional Perceptual MappingTwo Dimensional Perceptual Mapping

SWOT AnalysisSWOT Analysis

The Road AheadThe Road Ahead

Entry to Tier 2 and Tier 3 cities – The main target customer for McDonald’s is the new urban Indian family. With the customer demographics constantly changing and tectonic social and cultural shifts being observed in Tier 2 and Tier 3 cities due to globalization, the company is now expanding to Tier 2 cities like Pune and Jaipur.

Rolling out McBreakfast across all outlets – In India, the company has recently launched its entry into the breakfast food category. This is now launched on a pilot basis on select stores. In Mumbai, it available at the Vile Parle outlet. The company views this category as a key growth driver in future.

ExhibitsExhibitsVegetarian Non Vegetarian

McVeggie Chicken Maharaja Mac

McAlooTikki McChicken Burger

Paneer Salsa Wrap Shahi Chicken McCurry

Crispy Chinese Wrap Chicken Mexican

McCurry Pan Fillet-O-Fish

Pizza McPuff

Vegetarian MenuVegetarian Menu Non-Vegetarian MenuNon-Vegetarian Menu

Survey ResultsSurvey ResultsQ. Which is your favourite product at McDonald’s?

Favourite Product

6%

18%

12%

34%

12%

8%

10%

MAHARAJ MAC

MC CHICKENBURGER

MC VEGGIEBURGER

FRENCH FRIES

MC CURRY PAN

FILETO FISH

OTHERS

Q. Is the product line in McDonald’s adequate?

Is the product line adequate?

28%

34%

38%YES

NO

AVERAGE

Survey ResultsSurvey ResultsQ. What is the main problem you faced at McDonald’s?

Q. Which area do you think needs the most improvement?

Problems Faced in McDonald's

24%

4%

16%

16%

40%

Long Queues

Rude Behavior ofEmployees

Congestion

Other

No Problem

Improvement Required

10%

6%

30%

24%

20%

10%

Delivery Time

Capaciousness

Product Variety

Prices

Offers anddiscounts

Others

Survey ResultsSurvey ResultsQ. What is the first thing that strikes your mind about McDonald’s?

First Thing About McDonald's That Strikes Customer's mind

30%

26%

18%

4%

22%

Burger

Golden Arches

Service

Value for Money

Fun

THE FREE TOYS PROVIDED WITH HAPPY THE FREE TOYS PROVIDED WITH HAPPY MEALS (WALT DISNEY’S MADAGASCARMEALS (WALT DISNEY’S MADAGASCAR))

KIDS PLAYING AT PLAY PLACE- KIDS PLAYING AT PLAY PLACE- MCDONALD’S VILE PARLE (MUMBAI)MCDONALD’S VILE PARLE (MUMBAI)

THE NEW BREAKFAST MENU STARTED AT THE NEW BREAKFAST MENU STARTED AT SELECT STORES IN MUMBAI.SELECT STORES IN MUMBAI.

TrainingTraining

Surpasses even the U.S. ArmyProvides career opportunitiesService Enhancement ProcessConsistent through CD-ROMs

Surpasses even the U.S. Army

Provides career opportunities

Service Enhancement Process

Consistent through CD-ROMs

ReHIREmentReHIREment

Program established for mature workersEase of transition of older workers

returning to the workforce.Flexible scheduling so as not to jeopardize

their Social Security benefits.More than 40,000 older workers serve

McDonald’s customers on any given day

McJobsMcJobs

Assistance to employees with mental and physical disabilities.

More than 9,000 workers went through the program.

Given formal graduation ceremony

Management Management Development ProgramsDevelopment Programs

Crew DevelopmentRestaurant ManagementMid-ManagementExecutive Development

Hamburger UniversityHamburger University

Management Training Center

Worldwide Education Program

Technology 200 per class 65,000 managers

graduated to date

Women and MinoritiesWomen and Minorities

Soars above stereotype of average fast-food joint

Compose more than 50 percent of McDonald’s current workforce

Featured as the “The Best Companies for Minorities”

TechnologyTechnology

McDonald’s in Sweden– World’s First Snowmobile Drive-Thru

McDonald’s & ExxonMobil???– Speed pass invades McDonald’s

Financial AgendaFinancial Agenda

• System Wide Sales

• McDonald’s Corporation Revenues

• Cash Flow

• Financial Ratios

• Stock Performance

System Wide Sales System Wide Sales In The Year 2000In The Year 2000$40.181 Billion$40.181 Billion

Company operated

Resturants26%

Franchised61%

Affiliated13%

McDonald’s CorporationMcDonald’s Corporation Sales By Segment Sales By Segment

U.S.37%

Europe33%

Asia/Pacific14%

Latin America7%

Other9%

IncomeIncome(in millions)(in millions)

NetRevenues

NetIncome

Earnings / Share

$12,421

$14,243

$13,259

'98 '99 '00

$1,550

$1,947 $1,977

'98 '99 '00

$1.14

$1.44 $1.49

'98 '99 '00

Cash Flow StatementCash Flow StatementIn (millions)In (millions)

2000 1999

Net Income

Net Cash Provided By Operating Activities

Net Cash Provided By Investing Activities

Net Cash Provided By Financing Activities

$1,977.3

$2,751.5

(2,212.6)

(536.7)

$1,947.9

3,008.9

(2,261.8)

(626.8)

Cash and equivalents increase(decrease)

Cash and equivalents at beginning of year

Cash and Equivalents at end of year

$2.2

$419.5

$421.7

$120.3

$299.2

$419.5

Financial RatiosFinancial RatiosAnalysis McDonald Industry

P/E Ratio 21.42 25.49

Price to Sales 2.36 1.97

Price to Book 3.52 3.95

Quick Ratio 0.76 0.63

Inventory Turnover 109.28 32.44

Total Debt to Equity 0.89 0.64

Net Profit Margin 11.01 7.62

Return on Assets 7.54 8.67

Return on Investment 8.30 10.54

Return on Equity 17.62 17.65

Revenue/Employee 40,852 77,289

Stock PerformanceStock Performance Mkt Cap 52-wk Range Last Trade 35.877B 24.75 - 31.00 Mar. 8 27.91

                                                                            

Social CommitmentsSocial Commitments

“9-11” Relief EffortEnvironmental ConcernsEducational InvolvementQuality & Safety ProceduresRonald McDonald House

Charities (RHMC)

Making A DifferenceMaking A Difference

We have an obligation to give We have an obligation to give back to the communities that back to the communities that give us so much." give us so much." - Founder Ray Kroc, 1955- Founder Ray Kroc, 1955

THANK YOUTHANK YOU