McDonald's: Cantalupo's Challenge

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Case Details:

Case Code : BSTA069
Case Length : 19 Pages
Period : 2003
Organization : McDonald's
Pub Date : 2003
Teaching Note :Not Available
Countries : Global
Industry : Restaurants

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The challenges facing McDonald's come super sized. Its home market is all but saturated, its sterling reputation for fast, friendly service and cleanliness is tarnished, and customers are putting a growing premium on freshness and taste, neither of which McDonald's is renowned for. It hasn't come up with a new blockbuster product since Chicken McNuggets in 1983, and its aging slogan, We Love to See You Smile, hasn't made many people happy on either side of the counter in quite a while.

- Time Magazine.¹

The basis of McDonald's success is serving low-priced value-oriented product fast and efficiently in clean and pleasant surroundings.

- Ray Kroc, Former Senior Chairman.²

Introduction

James Cantalupo (Cantalupo), McDonald's Chairman and CEO since January 2003, was under intense pressure to revive the company's future. Since 1999, McDonald's sales had not improved significantly, while the costs had spiraled. The then CEO Jack Greenberg (1998-2002) had tried to revive the company's prospects by acquiring a number of non-hamburger restaurant chains. But his effort had been futile. Between 2001 and 2003, McDonald's reported six quarters of earnings decline and for the fourth quarter of 2002, registered its first ever loss since going public in 1965.

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Excerpts >>

1] Daniel Eisenberg, "Can McDonald's Shape Up?" Time, 30th September 2002.

2] www.mcdonalds.com

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