18 Jul

Must-know: A company overview of McDonald’s

WRITTEN BY Adam Jones

McDonald’s

McDonald’s (MCD) is a fast food, limited service restaurant with more than 35,000 restaurants in over 100 countries. It employs more than four million people. McDonald’s serves 70 million customers per day, which is greater than the population of France. According to IBISWorld, in 2014, McDonald’s had the largest share in the fast food restaurant industry of 17% in the U.S. The closest competitor, Yum! Brands (or YUM), had a market share of 11%.

Must-know: A company overview of McDonald’s

Food services

McDonald’s offers a uniform menu that includes fries, the Big Mac, chicken sandwiches, chicken nuggets, hamburgers, the quarter pounder with cheese, salads, wraps, desserts, soft drinks, and other beverages. However, to ensure that it connects with the international markets, McDonald’s offers locally relevant food menus as well. For example, it serves gazpacho in Spain, the black and white burger in China, and the Veg Pizza McPuff in India. In the U.S., McDonald’s main competitors are Burger King (BKW) and Wendy’s (WEN).

Company values

Companies in the restaurant industry, which investors can access through the exchange-traded funds (or ETFs) like the PowerShares Dynamic Leisure and Entertainment (PEJ) and the PowerShares Dynamic Food & Beverage (PBJ), use various strategies to differentiate themselves from the competition. McDonald’s delivers an experience to its customer through its trademark “quality, service, cleanliness, and values (or QSC&V).” To deliver this experience it uses what it calls a “Plan to Win” strategy supported by its three-legged stool approach. Plan to Win is a strategic initiative that focuses on customer experience through the five Ps–People, Product, Place, Price, and Promotion. Three legs being the owners or operators, suppliers, and company employees. Without these three legs, the stool won’t stand firm.

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