McDonalds in the United Kingdom
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Case Code: BSTR339 Case Length: 32 Pages Period: 1974-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.500 Organization: McDonald's Corporation Industry: Fast food Countries: UK Themes: Entry, Expansion, Localization, Operational Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
"It is important to note that our business in the U.K. remains strong. Even in spite of declining consumer confidence in the U.K., our sales, our guest counts, and our margins continued to grow in the second quarter and were a strong contributor to our overall results."
-Ralph Alvarez, President and Chief Operating Officer of McDonald's Corporation, in 2008.
"Everyone will make their own decision on what suits them and their family and their lifestyle. But it's good-quality food at affordable prices and if that works for families then they'll keep on coming back. On average, our customers come three times a month. So out of 90 meals a month, three will be at McDonald's. I'm perfectly comfortable with that fitting in to anyone's diet."
-Steve Easterbrook , CEO of McDonald's Corporation, UK, in 2009.
Overcoming Challenges, Gaining Momentum
For the first quarter ended March 31, 2009, US-based fast food chain McDonald's Corporation (McDonald's) delivered strong sales growth in the UK despite the global economic recession. During the period, McDonald's business in Europe registered a 3.2% rise in sales and its global profits increased by 4% to US$ 979.5 million. It was reported that McDonald's growth in the UK was above the European average in terms of sales as well as customer count.
In the UK, cost-conscious customers flocked to McDonald's restaurants as they offered different menu choices at affordable prices. Commenting on its business in the UK, Steve Easterbrook (Easterbrook), CEO of McDonald's UK, said, "This marks our twelfth consecutive quarter of growth and has been achieved at a time when the informal eating out market in the UK was flat."
The UK was one of the key markets for McDonald's. The fast food giant entered the country in 1974, at a time when American-style fast food was not too popular in the country. The British considered McDonald's entry a part of the American cultural invasion and so McDonald's faced some start-up problems in the country. During its first year in the UK, McDonald's reported losses as it failed to attract English customers.
In order to enhance its brand reputation in the UK and to improve sales, McDonald's focused on four core areas - food, employees, the environment, and communities. It introduced several new items on the menu, revamped restaurants, launched community programs, and introduced accredited qualifications and apprenticeships for its employees in the UK...
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