CASE 06MARKETING MANAGEMENT

GROUP 06

FAST FOOD RESTAURANT

CONTENTINTRODUCTIONSUBWAY : SUCCESS FACTOR OF SUBWAYMCDONALD’S HISTORY COMPETITOR 7P OF MCDONALD’S NOWADAYS ISSUE RE-BRANDING : THE MCDONALD’S

STRATEGY

INTRODUCTIONFast food is the term given to food that can

be prepared and served very quickly.Fast food outlets are take-away or take-out

providers, often with a "drive-through" service which allows customers to order and pick up food from their cars; but most also have a seating area in which customers can eat the food on the premises.

VARIANT OF FAST FOODFast food often brings to mind traditional

American fast food such as hamburgers and fries.

The other variant of fast food : Japan : Sushi, BentoUnited States : PizzaMiddle East Asia : KebabUnited Kingdom : Fish and Chips

WHY FAST FOOD RESTAURANT GROWS FASTLY?With today’s hectic lifestyles, time-saving

products are increasingly in demand. One of the most obvious examples is fast food.

The fast food industry focuses heavily on rapid consumer turnover, speed of service, take-out sales, and less expensive price compare to table service restaurant meals.

SUBWAYSubway is a fast food franchise that

primarily sells submarine sandwiches, salads and personal pizzas. It is owned and operated by Doctor's Associates, Inc. (DAI).

Subway is one of the fastest growing franchises in the world with approximately 31,835 restaurants in 91 countries as of September 2009.It is the largest single-brand restaurant chain globally and is the second largest restaurant operator globally after Yum! Brands (35,000 locations).

SUCCESS FACTOR OF SUBWAYMenu reflects demand for fresh, healthy

and fast. Partnering with the American Heart

Association. Worldwide brand recognition. Customizable menu offerings. Low franchisee start up costsSize and number stores and channels

McDonald’sMcDonald’s Corporation, known as McD, started it

business from 1940.McD primarily sells hamburgers, cheese burgers,

chicken products, and french fries. More recently, it has begun to offer salads, wraps, and fruit.

McD is the world's largest chain of fast-food restaurants with more than 31,000 local restaurants serving more than 58 million people in 118 countries each day.

Low price, speed, service and cleanliness became the critical success factor of the bussiness.

McDonald’sMcD is looking for homogeneous

consumer groups and replicating the same format in foreign countries, making only minor changes to suit the local or national preferences but recognizably maintaining the original concept.

India Thailand Dubai Indonesia

McDonald’sDespite the diverse environments, most outlets

were operated using the same reward systems, the same hierarchical management structure, and the same routine for serving food.

McD centralized the design of its service concept, restaurant layout, the selection of franchisees and other personnel, and the design and content of training of restaurant managers and staff.

Such strategy, structure, and uniformity have made McDonald’s the brand name that defined American fast food.

COMPETITORYum!

the world's largest fast food restaurant company in terms of system units

Fortune 500 coorparations, that operates or licenses Taco Bell, KFC, Pizza Hut, and A&W restuarant

Subway The third largest fast food operator

globally after Yum! Brands and McDonalds

How McD become a global brandBy franchising, McD are able to expand

rapidly across countries.Establish Hamburger University that only aim

to train franchisees and corporate decision-makers.

McD MISSION

“McD mission is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurants smile.”

7P OF McDMcDonald’s overall strategic

plan is called Plan to Win: created better McDonald’s experiences through the execution of multiple initiatives surrounding the five factors of exceptional customer experiences – product, price, place, promotion, people, physical evidence, process.

PRODUCTHamburgersVarious types of chicken sandwichesFrench friesSoft drinksBreakfast itemsDessertSaladsVegetarian itemsWraps

PRICE McDonald’s has a unique pricing strategy

that falls solely on their many product lines.The most notable and recent example of

this is McDonald’s “Dollar Menu”.

PLACENumber of locations more than 31,000

worldwide.Type of restaurant :counter servicedrive-through servicegas stationsconvenience storesshopping mallMcStop

PROMOTIONHappy meals

McDonald’s used to give children a choice between toys, milk, fruit, or vegetables as part of their Happy Meals.

Slogan “I’m Lovin’ it”

PEOPLEStars as their performanceGives employee larger role in decisionPhilosophy of quality, service, cleanliness,

and value is the guiding force behind its service

Fast friendly service

PHYSICAL EVIDENCECleanessSpeedQualityTransparency

PROCESSFood manufacturing transparent to the

customersTraining to the licensesInvented the most efficient cooking

equipmentNew method of food packaging and

distribution

FALLEN OF McDIn 2002, McDonald’s posted its first loss.

Earnings were $893.5 million, down 45 per cent from $1.64 billion in 2001. McDonald's share of fast-food sales in the U.S. has slipped almost two percentage points, to 16.2%.

The drop has come even as the company has increased its number of restaurants by 50%, and the Total revenue from 2001 to 2002 just increased for 3.6%.

Table : McDonald’s Revenue (dollars in millions)

2000 2001 2002

Total Revenue 14,243 14,870 15,406

Operating Income

3,330 2,697 2,113

Net Income 1,977 1,637 893

Source: McDonald’s financial report 2004

Net Income (2001-2002)= (893-1,637)/1,637= 45.5%Total Revenue (2001 -2002) = (15,406-14,870)/14,870 = 3.6%

What went wrong?The most fundamental problem the is the quality of its food. While the company focused on building more stores, consumers have decided they want better food and more variety.

HEALTH ISSUEObesity• According to the Massachusetts Medical Society

Committee on Nutrition, fast food is especially high in fat content, and studies have found associations between fast food intake and increased body mass index (BMI) and weight gain.

Food poisoning• Manure gets mixed with meat, contaminating it with

salmonella and Escherichia coli 0157:H7. E. coli 0157:H7 is one of the worst forms of food poisoning. Usually spread through undercooked hamburgers .

ENVIRONMENTAL ISSUEThe biggest environmental nightmare for

McDonald’s :WastePackagingGlobal warming

Obesity and Well being issueThere is increasing concern about obesity

rates and related risks to well-being, and a holistic approach by McDonald

High-Quality Choices - Continue to develop high quality menu offerings that provide customers with a range of choices that meet their needs and preferences and that fit in a balanced diet.

Consumer-Friendly Nutrition Information - Enable consumers to make the right decisions - continuing to provide even easier access to nutrition information

Communicate Responsibly - Continue to refine marketing and communication practices, particularly to children 

High-Quality Choices

Examples of nutrition information on the packaging.

Communicate Responsibly particularly to the children

NUTRITION INFO

Enviromental issueMcD efforts on minimizing environmental

impact of restaurants business

Energy efficiency – Find further ways to increase energy efficiency in restaurants to save money and reduce our environmental impact.

In 2007 and 2008, McDonald’s was ranked second among food service companies by Climate Counts, designating the company in the organization’s “Starting” category, as a “better choice for the climate conscious consumer.”

McDonald’s restaurant managers are equipped with a variety of energy management tools, including restaurant energy surveys and audits, and in selected restaurants, Energy Management Systems (EMS).

In 2007, McDonald’s USA was named an Energy Star Partner of the Year by the U.S. Environmental Protection Agency.

Sustainable Packaging & Waste Management – Continue exploring ways to reduce environmental impacts of consumer packaging and waste in restaurant operations.

Green Restaurant Design – Enhance our current strict building standards to incorporate further opportunities for efficiency and innovation in the design and construction of our restaurants.

McDonald’s FranceBeaugrenelle restaurantin Paris with an array ofsustainability enhancementsand environmentallythemeddecor.

Re-branding: the McDonald’s strategy

McDonald’s ValueWe place the customer experience at the

core of all we doWe are committed to our peopleWe believe in the McDonald’s SystemWe operate our business ethicallyWe give back to our communitiesWe grow our business profitablyWe strive continually to improve

We place the customer experience at the core of all we doAllowing franchisees to launch extensive

experiments in food and décor, launching “I’m lovin’ it” marketing theme

Providing the customers with high quality food and superior service, in a clean, welcoming environment, at a great value.

We are committed to our peopleTalented people, with diverse backgrounds

and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to continued success.

McD Employee Benefits are organized into 4 categories:Health and ProtectionPay and RewardsInvesting Employee futureHelping Balancing Employee work and life

People Priority: McDonald’s Approach is to address all employees' interests

Respect - Create a diverse and inclusive culture where everyone feels valued and respected.Commitment Enhancement - Continue to enhance our employment value proposition to drive high levels of employee commitment.Talent Management - Attract, develop and retain the most talented people at all levels.

We believe in the McDonald’s SystemThe balance of interests among the three

groups : owner/operators, suppliers, and company employees.

We operate our business ethicallyMcDonald’s conducts its business to high

standards of fairness, honesty, and integrity. And the people are individually accountable and collectively responsible.

We give back to our communities

• Support Ronald McDonald House Charities• Support World Children’s Day •“ Ronald McDonald Reading Corner “, to utilize Ronal McDonald to promote early literacy.•Increase financial and volunteer support to RMHC•Partnerships and sponsorships•Owner/Operator Involvement•Disaster Relief

McDonald’s serves as the Official Restaurant of the Olympic Games

McDonald’s ChampionKids programs

More than 930 restaurants, McDonald’s China will support the kind blood donors with a free orange juice and hamburger to replenish their nutrients, upon their presentation of a blood donation certificate (Sichuan region earthquake relief efforts)

We grow our business profitably

Provide sustained profitable growth for our shareholders.

Requires a continuing focus on customers and the health of the company.

We strive continually to improve

Anticipate and respond to changing customer, employee and system needs through constant evolution and innovation.

CONCLUSIONNowadays fast food are recognized as

an unhealthy foodHowever: their income keep on growing,

because: they offer: speed, cleanliness, and delicious food.

McDonalds do their repositioning from unhealthy to healthy fast food.

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