The Turnaround Plan of McDonald's: A Long Way to Go
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Case Code: BSTR487 Case Length: 16 Pages Period: 2010-2016 Pub Date: 2016 Teaching Note: Not Available |
Price: Rs.500 Organization: McDonald's Corporation Industry: Restaurants Countries: USA, Global Themes: Turnaround |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Trouble on the Menu
For several decades, McDonald's had been synonymous with fast food, but after 2010, customers started looking at it differently. People started showing an interest in outlets serving food which they perceived to be wholesome and made of healthy ingredients, while McDonald's become synonymous with cheap and greasy food made of unhealthy ingredients. According to Mike Donahue, former chief communications officer at McDonald's US, “McDonald's) has become the symbolic scapegoat for anyone wanting to use a generic word to describe obesity or health problems. Anyone that wants to be a critic for food or health issues, their mind SpellCheck inserts McDonald's, and that’s a major problem if you want to bring in more customers...
International Markets
In several international markets where McDonald's had a presence, it was slowing down too. In the third quarter of 2014, the global same store sales dropped by 3.3%. International operations were affected by challenges in several markets in Europe, Latin America and Asia. In China, where the company was known for its high quality products, its' fortunes took a dip, after a television investigation showed a vendor supplying expired meat to McDonald's. An undercover investigation showed that one of the meat suppliers of McDonald's was relabeling expired meat and supplying it to the company. This had an adverse impact on McDonald's, which relied on cleanliness and high quality in its quest to expand in the market. The company found it extremely difficult to convince customers ‘that it maintained high quality....
The Turnaround Plan
On May 04, 2015, as McDonald's was about to celebrate its 60 years in the business, Easterbrook announced a growth lead turnaround plan for the company to reset the business. Easterbrook’s operational growth led turnaround, aimed at making McDonald's a modern and progressive burger company through a three-fold framework...
What Next?
The heavily franchised business model put forth by Easterbrook was expected to generate more stable revenue and cash flow streams. The structural changes and ownership were expected to result in savings in the bottom line and spur future growth. McDonald's planned to deliver US$ 300 million in savings in general and administrative expenses through restructuring, refranchising, and focus on spending...
Exhibits
Exhibit I: McDonald's - Quarterly sales
Exhibit II: McDonald's Revenues – Region Wise
Exhibit III: McDonald's -Comparable Sales and Guest Counts
Exhibit IV: McDonald's - Consolidated Statement of Income
Exhibit V: McDonald's Turnaround Framework
Exhibit VI: McDonald's – Reporting Segments
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