Abstract

The case gives a comprehensive account of the decline of McDonald's in the 1990s, and the events that led to the company's eventual turnaround in the early 2000s. McDonald's is the leading fast food chain in the world. Set up as a small drive-in joint in 1937, the company developed a highly successful system of franchising in the 1950s to expand across the US and later, around the world. The USP of McDonald's was cheap fast food, and the company's signature product, the Big Mac hamburger was considered an American icon. However, in the late 1980s and 1990s, the company's growth began to taper off. Analysts attributed this to a growing interest in a healthier lifestyle among people, which made them shun fat-laden fast food, and also increasing competition. By the late 1990s and the first two years of the early 2000s, the company's profits had decreased drastically. In January 2003, McDonald's posted its first quarterly loss since it went public in 1965. In 2003, under the leadership of Jim Cantalupo, the company announced a turnaround plan aimed to restore the company's tarnished image and crumbling operations. By mid-2004, it was generally acknowledged that McDonald's had turned around.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The reasons behind the decline of the leader in the fast food industry
• The events that led to the turnaround of the company
• Trends in the US fast food industry.

Keywords

McDonald's, Turnaround, Jack Greenberg, Jim Cantalupo, 'Great American Meal', Wendy's, Burger King, 'Mystery Shoppers', Advertising Campaigns, "I'm lovin' it" Campaign, Fast Food Industry, Yum Brands, Chipotle, Fazoli's and Donatos Pizzeria