A Look Into McDonald’s Global Supply Chain
“….here at McDonald’s, our values are relative to the inclusivity of our entire system. So our franchisees are a very diverse group who give us tremendous ideas about how to get deeper and broader into the marketplace and satisfy our customers’ needs. Our supply chain is very diverse. And what that helps us with are a number of things from just innovation around creativity and products all the way through to new ideas about how we could be more efficient and pass those savings on to the customers and thereby enhance our shareholders’ value….” -Don Thompson, President and CEO of The McDonald’s Corporation Introduction
McDonald’s is the largest and leading fast food restaurant chain in the world. (Exhibit 1) More than 34,000 local restaurants are serving approximately 69 million people in 119 countries each day (The McDonald’s Corporation website). McDonald’s mission is to be “their customer’s favorite place and way to eat.” This is achieved by serving a variety of menu items like chicken products, breakfast items, classic hamburgers and signature sandwiches, milkshakes, soft drinks and premium coffee beverages. The fast food chain took serious considerations in designing and offering menu items that are sensitive to their customers’ culture, religious dietary restrictions, and awareness in healthy eating. By adding these options, the corporation found new ways to establish a footing in that particular community or society, as well as increase overall sales for the organization. The U.S. corporation started in 1940 by Maurice and Richard MacDonald. These two brothers originally established their business much like most diners in their area, with a drive-in serviced by carhops and an extensive menu for customers. The brothers noticed that they spent more time concerned with replacing carhops and cooks and not focusing on what could make their business unique. In an attempt to differentiate their restaurant from their competitors, the brothers decided to make dramatic by eliminating their drive-in service model along with carhops, restructured their menu, and introduced the Speedee Service System into their restaurant. The system used lots of unskilled workers, each of whom did one small, specific step in the food-preparation process. The process depended heavily upon on an assembly line style of food preparation. The system gave them an advantage by having fresh food and cold beverages ready before customers ordered the products. In 1953, the MacDonald Brothers began franchising their restaurant to independent entrepreneurs. In 1955, Ray Kroc arranged with the brothers to open the McDonalds Systems, Inc. To enhance the performance of the restaurant, Kroc created the company’s first advertisement in 1959, by using billboards. The company’s name was renamed to McDonalds Corporation in 1960. And with the success of quick service, fresh food, and their new marketing campaign, McDonalds was able to sell its 100 billionth hamburger, while opening their 500th U.S. franchise in 1963. The expansion of the company continued in the 1990s and the 2000s, opening franchises in different regions of the world including Asia, Africa, Central America, South America, Europe, and Australia (Exhibit 2). A Snapshot of the Global Fast Food Industry
The Global Fast Food Restaurants industry is only one component of the wider food service sub-sector, including cafes, cafeterias, full-service restaurants, casual dining, coffee shops, street stalls and takeout stands, with an estimated total revenue of about $1.86 trillion (in US dollars) in 2012. This innovative business sector is estimated to account for revenue of $706.7 billion in 2012, or about 38.0% of the global economy. It’s estimated that the industry’s revenue will grow to 3.2% in 2012, and annually by 2.1% in 5 years. Established and more industrialized nations will account for about 83.0% of the industry’s total global revenue in 2012 with...
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