The McDonald's Turnaround Story

The McDonald's Turnaround Story
Case Code: BSTR142
Case Length: 17 Pages
Period: 1999-2004
Pub Date: 2004
Teaching Note: Available
Price: Rs.500
Organization: McDonald's
Industry: Fast-Food
Countries: USA
Themes: Corporate Turnaround
The McDonald's Turnaround Story
Abstract Case Intro 1 Case Intro 2 Excerpts

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.

Issues

The case is structured to achieve the following teaching objectives:

  • To analyze the reasons behind the decline of the leader in the fast food industry
  • To examine the events that led to the turnaround of the company
  • To study the nature of and trends in the US fast food industry
  • To understand the challenges faced by fast food companies in the 2000s and the steps that they were taking to meet these challenges
  • To study the future of the fast food industry, considering the changing trends and preferences of the people

Contents

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

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