A Deciding Product Mix at Mcdonalds A live project submitted to theAccman Institute of Management for the partial fullfilment of the


Submitted To: Prof.Amit Kumar Submitted By: Mohd.Arish


To Whom It May Concern: This is to certify that under mentioned students have carried out an original research work on the topic “Optimization” No part of this project work has already been published for award of any degree or diploma.



We like to thanks Mr Ashish the Manager of McDonalds and our Faculty Dr Rakesh Kumar for helping us in making this project.



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Cover Page Certificate Acknowledgement Contents Company Profile objective and Problem Formulation Profit Maximization and LPP Conclusion Bibliography

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Company Profile McDonald's

McDonald's McDonald's Corporation (NYSE: MCD) is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily.McDonald's primarily sells hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, milkshakes, and desserts. More recently, it has begun to offer salads, wraps and fruit. Many McDonald's restaurants have included a playground for children and advertising geared toward children, and some have been redesigned in a more 'natural' style, with a particular emphasis on comfort: introducing lounge areas and fireplaces, and eliminating hard plastic chairs and tables. In addition to its signature restaurant chain, McDonald’s Corporation held a minority interest in Pret A Manger (a UK-based sandwich retailer) until 2008, and owned the Chipotle Mexican Grill until 2006 and the restaurant chain Boston Market until 2007. The company has also expanded the McDonald's menu in recent decades to include alternative meal options, such as salads and snack wraps, in order to capitalize on growing consumer interest in health and wellness. Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The corporations' revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.


Some More Information
Type Public (NYSE: MCD) Founded May 15, 1940 in San Bernardino, California; McDonald's Corporation, 1955 in Des Plaines, Illinois Founder(s) Dick and Mac McDonald McDonald's restaurant concept; Ray Kroc, McDonald's Corporation founder. Headquarters Oak Brook, Illinois, USA Number of locations 31,000+ worldwide Area served Worldwide Key people James A. Skinner (Chairman) & (CEO) Industry Restaurants Products Fast Food (hamburgers • chicken • french fries • soft drinks • coffee • milkshakes • salads • desserts • breakfast) Market cap US$ 60.07 billion (2008) Revenue ▲ US$ 22.79 billion (2007) Operating income ▼ US$ 3.879 billion (2007) Net income ▼ US$ 2.359 billion (2007) Total assets ▲ US$ 29.391 billion (2007) Total equity ▼ US$ 15.279 billion (2007) Employees 400,000 (2008) Website www.McDonalds.com

The McDonald's concept was introduced in Southern California by Dick and Mac McDonald of Manchester, New Hampshire. It was modified and expanded by their business partner, Ray Kroc, of Oak Park, Illinois, who later bought out the business interests of the McDonald's brothers in the concept and went on to found McDonald's Corporation.

1937: Brothers Dick and Mac McDonald open a hot dog stand called the Airdrome at the airport in Monrovia, California. 1940: The brothers move the Airdrome building to San Bernardino, California, where they open the first McDonald's restaurant, on U.S. Route 66, at 14th and E St., on May 15. Its menu consists of 25 items, mostly barbecue. As was common at the time, they employed around 20 carhops. It became a popular and highly profitable teen hangout. 1948: After noting that almost all of their profits came from hamburgers, the brothers closed the restaurant for several months to implement their innovative "Speedee Service System", a streamlined assembly line for hamburgers. The carhops are fired, and when the restaurant reopens it sells only hamburgers, milkshakes, and french fries. At 15 cents, the burgers are about half as expensive as at standard diners, and they are served


immediately. The restaurant was extremely successful, and its fame spread by word of mouth. 1953: The McDonald brothers begin to franchise their restaurant, with Neil Fox the first franchisee. The second McDonald's opens in Phoenix, Arizona at N.Central Ave and Indian School Road. It was the first to feature the Golden Arches design; later that year the original restaurant was rebuilt in the same style. 1953: Third McDonald's restaurant opened in Saginaw, Michigan at the corner of State Street and N. Center Road, it was rebuilt in 2006 but has stayed at that location since opening. 1953: Fourth McDonald's restaurant opens, in Downey, California at the corner of Lakewood Blvd and Florence Avenue, and is the oldest McDonald's restaurant still in operation.

Fourth McDonald's restaurant in Downey, California, at the corner of Lakewood Blvd and Florence Ave. It is the oldest McDonald's restaurant still in operation. 1954: Entrepreneur and milkshake-mixer salesman Ray Kroc becomes fascinated by the McDonald's restaurant during a sales visit, when he learns of its extraordinary capacity and popularity. Others who had visited the restaurant and come away inspired were James McLamore, founder of Burger King, and Glen Bell, founder of Taco Bell. After seeing the restaurant in operation, Kroc approaches the McDonald brothers, who have already begun franchising, with a proposition to let him franchise McDonald's restaurants outside the company's homebase of California and Arizona, with himself as the first franchisee. Kroc works hard to sell McDonald's. He even attempts to prevail on his wartime acquaintance with Walt Disney, in the failed hope of opening a McDonald's at the soon-to-be-opened Disneyland. 1955: Ray Kroc founds "McDonald's Systems, Inc." on March 2, as a legal structure for his planned franchises. Kroc opens the ninth McDonald's restaurant in Des Plaines, Illinois, in suburban Chicago on April 15. The first day's revenues are $366.12. The company's literature usually refers to this date as the "beginning" of the company, then already 15 years old, writing the McDonald brothers out of its history in favor of "Founder" Kroc. The company still refers to this restaurant as "McDonald's #1". In July, Ray Kroc opens his second McDonald's restaurant in Fresno, California, operated by Art Bender, Kroc's first subfranchisee. The Fresno site is referred to as "first McDonald's restaurant franchised by Ray Kroc" on a plaque on the site, which has been rebuilt to resemble the 1950s-style restaurants. 7

1955: Ray Kroc hires Harry J. Sonneborn as his Chief Financial Officer. Sonneborn remained a key influence in the McDonald's corporation till his resignation in 1967. 1955: Ray Kroc hires Fred Turner (later CEO and Chairman) as a grillman in his store in Des Plaines. 1958: McDonald's worldwide sold its 100 millionth hamburger. 1959: The 100th McDonald's restaurant opens in Fond du Lac, Wisconsin. 1959: McDonald's begins billboard advertising. 1960: Kroc's company is renamed "McDonald's Corporation". 1961: The McDonald brothers agree to sell Kroc business rights to their operation for $2.7 million, a sum that Kroc borrows from a number of investors, including Princeton University; Kroc considers the sum extreme, and it strains his relationship with the brothers. In a handshake agreement, the brothers would also receive an overriding royalty of 1% on the gross sales. At the closing table the brothers told Ray that they were giving the real estate and rights to the original unit to the founding employees. Ray closed the transaction, then refused to acknowledge the royalty portion of the agreement because it wasn't in writing. The brothers keep their original restaurant, but in an oversight they fail to retain the right to remain a McDonald's franchise. Renamed "The Big M", Kroc drives it out of business by opening a McDonald's just one block north; he attends the opening. Had the brothers maintained their original agreement, which granted them 0.5% of the chain's annual revenues, they or their heirs would have been collecting in excess of $100 million per year today. Had the brothers closed their handshake agreement with Ray, these royalties would have doubled. 1961: Hamburger University opens in the basement of the Elk Grove Village, Illinois, McDonald's restaurant Bachelor of Hamburgology degrees went to graduating class of 15. 1962: McDonald's first national magazine ad appears in Life magazine. 1962: The first McDonald's restaurant with seating opens in Denver, Colorado. 1963: One of Kroc's marketing insights is his decision to advertise McDonald's hamburgers to families and children. Washington, D.C. franchisees John Gibson and Oscar Goldstein (Gee Gee Distributing Corporation) sponsor a children's show on WRCTV called Bozo the Clown, a franchised character played by Willard Scott from 1959 until 1962. After the show was cancelled, Goldstein hires Scott to portray McDonald's new mascot, named Ronald McDonald. According to Scott, they wanted to pay him in stock, but Scott decided to take the money. Scott, looking nothing like the familiar appearance of any McDonaldland character as is known today, appeared in the first three television advertisements featuring the character. After changing the character's first name to "Ronald" and replacing Scott with a new actor, and giving him the more familiar red, white, and yellow clown features, the character eventually spreads to the rest of the country via an advertising campaign. Years later, an entire cast of "McDonaldland" characters is developed. 1963: The Filet-O-Fish is introduced in Cincinnati, Ohio, in a restaurant located in a neighborhood dominated by Roman Catholics who practiced abstinence (the avoidance of meat) on Fridays. It is the first new addition to the original menu, and goes national the following year, with fish supplied by Gorton's of Gloucester. See also Lou Groen 1963: McDonald's sells its one billionth hamburger. 1963: The 500th McDonald's restaurant opens in Toledo, Ohio. 8

1964: McDonald's issues its first annual report. 1967: The first McDonald's restaurant outside the United States opens in Richmond, British Columbia. 1967: The chain's stand-alone restaurant design which is still most common today, with mansard roof and indoor seating, is introduced. 1968: The Big Mac (similar to the Big Boy hamburger), the brainchild of Jim Delligatti, one of Ray Kroc's earliest franchisees, who by the late 1960s operated a dozen stores in Pittsburgh, Pennsylvania is first introduced in the Pittsburgh, Pennsylvania market in 1967, before going system/nationwide a year later, following its great local success. The Hot Apple Pie is also introduced this year. 1968: The 1000th McDonald's restaurant opens in Des Plaines, Illinois. 1970: McDonald's opens in Costa Rica, its third country after the United States and Canada, and its first restaurant in Latin America. 1970: Having changed hands in 1968, the original "Big M" restaurant closes. It is demolished two years later, with only part of the sign remaining; this has since been restored.

An early-1970s McDonald's sign in Austin, Minnesota, showing the number of burgers sold. From 1969, the number was displayed in billions, increasing with every 5 billion. When the total reached 100 billion in 1993, the signs of this era were changed to display 99 billion permanently, as there was only room for two digits, though some signs use the "Billions and Billions Served" tagline. 1971: The first Asian McDonald's opens in July in Japan, in Tokyo's Ginza district. 1971: On August 21, the first European McDonald's outlet opens, in Zaandam (near Amsterdam) in the Netherlands. The franchisee is Ahold. 1971: The first McDonald's in Germany (Munich) opens in December. It is the first McDonald's to sell alcohol, as it offers beer. Other European countries follow in the early 1970s. 1971: The first Australian McDonald's opens in the Sydney suburb of Yagoona in December. 1971: The first McDonald's Playland opens in Chula Vista, California. 1972: The McDonald's system generates $1 billion in sales through 2200 restaurants. 1972: The 2000th McDonald's restaurant opens in Des Plaines, Illinois. 1973: The Quarter Pounder is introduced.


1973: The Egg McMuffin, invented by Herb Peterson, owner and operator of a Santa Barbara franchise is introduced to the menu. 1974: On October 12, the first McDonald's in the United Kingdom opens in Woolwich, southeast London. It is the company's 3000th restaurant. 1974: The first Ronald McDonald House opens in Philadelphia, Pennsylvania. 1975: Drive-Thru is introduced in January in Sierra Vista, Arizona in order to serve meals to soldiers from nearby Fort Huachuca who were not allowed to wear BDUs while off post except while in a vehicle. The Drive-Thru is later known as "McDrive" in some countries. 1976: McDonald's pays its first cash dividend. 1977: McDonald's adds a breakfast line to the U.S. menu. 1978: The 5000th McDonald's restaurant opens in Kanagawa, Japan. 1978: Hamburger University celebrates the graduation of its 15,000th student. 1979: The Happy Meal is introduced in the U.S. 1979: The first McDonald's in France opens, in Strasbourg. 1979: The first McDonald's in Southeast Asia opens, in Singapore. 1980: McDonald's introduces the McChicken sandwich, its first poultry item. It flops, and is removed from the menu, but is later reintroduced after Chicken McNuggets prove successful. 1980: The 6000th McDonald's restaurant opens in Munich, Germany. 1981: The first Ronald McDonald House outside the U.S. opens in Toronto, Canada.

A McDonalds in a Toronto, Ontario, Canada Wal-Mart store. Notice the maple leaf on the Golden Arches. 1982: The first McDonald's in Malaysia opens, at Jalan Bukit Bintang, Kuala Lumpur. 1983: The Chicken McNuggets are introduced to the menu and instantly become a success. 1984: Ray Kroc dies on January 14. 1984: The company is a main sponsor of the 1984 Summer Olympics. Its U.S. restaurants lose money on the game "When The US Wins, You Win" after the Soviet bloc nations boycott the Games, leading to a high number of medals won by the U.S (this is later parodied in an episode of The Simpsons, with Krusty the Klown's Krusty Burger chain suffering a similar fate). 1984: On 18 July, James Huberty committed the worst mass murder (at the time) in the US, when he opened fire at the San Ysidro branch, killing 21 people before he was gunned down by a SWAT team sniper. 10

1985: McDonald's opens its first restaurant in Italy, Bolzano. 1988: McDonald's opens its first restaurant in a communist country, in Belgrade, Yugoslavia (now Serbia). Budapest, Hungary follows in the same year. 1990: On January 31, the first Soviet McDonald's opens, in Moscow. At the time it is the largest McDonald's in the world . For political reasons, McDonald's Canada is responsible for this opening, with little input from the U.S. parent company; a wall display within the restaurant shows the Canadian and Soviet flags. To overcome Soviet supply problems, the company creates its own supply chain, including farms, within the USSR. Unlike other foreign investments, the restaurant accepts rubles, not dollars, and is extremely popular, with waiting lines of several hours common in its early days. In this year many other McDonald's restaurants opened in Eastern Europe. 1990: In October, the first McDonald's opens in mainland China, in the city and Special Economic Zone (SEZ) of Shenzhen, Guangdong province.

McDonald's in Sanya, Hainan (China). This one is a soft drink/ice cream stand. 1992: The first McDonald's opens in Africa, in Casablanca, Morocco. 1992: Stella Liebeck receives third-degree burns from coffee purchased at a McDonald's drive-through. She sued in what became known as the McDonald's coffee case. 1992: Derek Wood, an employee, and two friends rob a McDonald's in Sydney River, Nova Scotia, killing three and severely injuring another. Wood is serving a life sentence for his role in the Sydney River McDonald's Murders. 1992: On April 23, the world's largest McDonald's opens in Beijing, China (over 700 seats). Along with adjacent buildings, it is later demolished. 1992: The fried apple pie is replaced with a baked apple pie (fried pies can still be found today in some locations, see the Fried Apple Pie Locator). 1993: The company launches its first sea-going restaurant aboard the Finnish cruiseferry Silja Europa, sailing between Helsinki and Stockholm. 1994: The Catalyst Award is given to McDonald's in honour of their program to foster leadership development in women. 1995: McDonald's receives complaints from franchisees that too many franchises are being granted, leading to competition among franchisees. McDonald's starts conducting market impact studies before granting further franchises. 1995: In an effort to cultivate a more "adult" image, McDonald's launches the Arch Deluxe sandwich with a massive ad campaign. Both the campaign and sandwich fail miserably and are quickly discontinued. 1996: Following the end of apartheid, the first McDonald's in South Africa opens. 11

1996: First McDonald's opens in Belarus, marking the chain's 100th country (by its own calculation; however, this total included many non-sovereign territories). At the opening ceremony, the Belarusian militia are accused of brutality toward members of the public hoping to enter the restaurant in Minsk. 1996: The first Indian McDonald's opens. 1997: McDonald's wins the "McLibel" case, in what many consider to be a Pyrrhic victory in terms of the company's image. Only about half of the counts are in McDonald's favour despite enormous legal resources deployed against self-representing defendants. 1997: The McFlurry is invented by a Canadian franchisee. 1998: Jack M. Greenberg succeeds Michael R. Quinlan as CEO. 1999: First McDonald's Restaurant opens in Tbilisi, Georgia. Jack Greenberg is elevated to Chairman and CEO. 1999: French leftist activist José Bové and others gain worldwide attention when they destroy a half-built McDonald's franchise in Millau (Aveyron). The incident follows a European Union ban on American meat imports, on the grounds that they use hormone treatments; in response the U.S. had increased import duties on French Roquefort cheese and other European Union products. Bové was sentenced to three months in prison for his role in the incident. 2000: Eric Schlosser publishes Fast Food Nation, a book critical of fast food in general and McDonald's in particular. 2000: The company opens its 1000th British store, inside the Millennium Dome. 2001: The FBI reports that employees of Simon Worldwide, a company hired by McDonald's to provide promotion marketing services for Happy Meals and the 'Millionaire'/'Monopoly' contest, stole winning game pieces worth more than $20 million. 2002: A survey in Restaurants and Institutions magazine ranks McDonald's 15th in food quality among hamburger chains, highlighting the company's failure to enforce standards across its franchise network. 2002: McDonald's posts its first quarterly loss ($344m), for the last quarter. It responds to the stiff competition from other fast-food restaurants, offering higher quality burgers and more variety, by attempting to move more upmarket by expanding its menu and refitting restaurants. It announces it is withdrawing from three countries (including Bolivia) and closing 175 underperforming restaurants. 2002: In October of this year, McDonald's opens the first of 2 corporate stores in Lincoln, Nebraska to test concept restaurant called "3N1". the concept incorporated a "Sandwich & Platter" casual dining area, a "bakery and ice cream" area featuring gourmet coffees, and a traditional McDonald's into one building. The second store is launched approximately six months later. The concept is spearheaded by Tom Ryan, who was Executive Vice President and Chief Concept Officer at the time. The concept is abandoned in less than a year, and Ryan leaves McDonald's to join Quiznos Sub. 2003: James Richard Cantalupo is elected Chairman and Chief Operating Officer, succeeding Jack M. Greenberg. Just prior to assuming his post Cantalupo shuts down Project Innovate, a global consulting project that had already spent $170 million of a projected 5-year budget of $1.2 billion. 2003: McDonald's starts a global marketing campaign which promotes a new healthier and higher-quality image. The campaign was labeled "i'm lovin' it" and begins simultaneously in more than 100 countries around the world. 12

2003: According to Technomic, a market research firm, McDonald's share of the U.S. market had fallen three percentage points in five years and was at 15.2%. 2003: The firm reports a $126M USD loss for the fourth quarter . 2003: McDonald's introduces their premium salads, the McGriddles and the chicken selects. 2004: Morgan Spurlock directs and stars in Super Size Me documentary film in which he eats nothing but McDonald's food for 30 days to the great detriment of his health. 2004: After the release of Super Size Me, McDonald's does away with their Supersize options. 2004: Chairman and CEO Jim Cantalupo dies suddenly at the age of 60 in his hotel room of an apparent heart attack while attending the annual franchisee convention in Las Vegas, Nevada on April 19th. A 30-year veteran of the organization, Cantalupo had previously served as President and CEO of McDonald's International. He is credited with introducing the premium salad line and reformulating Chicken McNuggets to include leaner, all-white meat.[6][5] Andrew J. McKenna, Sr., a prominent Chicago businessman and a McDonald's director, is elected Nonexecutive Chairman and Charlie Bell of Sydney, Australia is elected President and CEO of McDonald's Corporation. A month later Bell is diagnosed with colorectal cancer during a physical exam required for his new post and passes away in January of the next year. Like retired chairman and former CEO Fred L. Turner, Bell began his McDonald's career as a crew member. He was promoted frequently, serving as the corporation's Chief Operating Officer and as President of both McDonald's Europe and of the Asia/Pacific, Middle East and Africa Group. 2005: Jim Skinner is elected President and CEO. Skinner began his McDonald's career as a trainee restaurant manager at a McDonald's in Carpentersville, Illinois in 1971 after serving nearly ten years with the US Navy.

First McDonald's restaurant in Zamboanga City, Philippines opened February 28, 2005 2005: McDonald's experiments with call centers for drive-through orders. The center, located in Fargo, North Dakota takes orders from more than a dozen stores in Oregon and Washington. The experiment is in part motivated by labor costs, since the minimum wage in North Dakota is over 40% lower than that in Oregon or Washington. 2005: Owing in part to competitive pressure, McDonald's Australia adopts "Made for you" cooking platform in which the food is prepared from pre-cooked meat after the customer orders (as opposed to the firm's normal procedure since 1948, in which the food is cooked then sold as needed). It should become standard practice in all Australian restaurants by 2007. Some restaurants in New Zealand also follow suit. The practice had earlier been tested, and abandoned, in the U.S. 13

2005: McDonald's in Singapore began their McDelivery service: customers place their food orders over the phone, and it is delivered to wherever they are. The service is available 24 hours a day, 7 days a week. 2005: McDonald's opens a Wi-Fi service in selected restaurants with Nintendo for Nintendo DS. 2005: A fired employee, who was terminated for hitting a female customer, murdered his former manager at a McDonald's outlet in West Sussex, England. Shane Freer stabbed Jackie Marshall (57) to death during a children's party at the fast food restaurant she was supervising. Freer was convicted and sentenced to life in prison by Lewes Crown Court. 2005: Ronald McDonald gets a leaner, sportier look. 2006: McDonald's announces that it will include nutritional information on the packaging for all products beginning in March and that its upcoming menu changes will emphasize chicken, salads, and other "fresh foods" rather than hamburgers. 2006: McDonald's and Disney end their 10 year promotional partnership. Split allegedly mutual although the generally accepted reasons were that McDonald's no longer sees benefit from sticking with one studio; due to the increased competition from other studios, as well as having to promote flop films, and Disney no longer wants to be associated with a company so strongly tied to childhood obesity. 2006: McDonald's begins their "forever young" branding by redesigning their restaurants. 2006: Anna Svidersky was murdered by David Sullivan while working in an Anderson Road McDonald's in Vancouver, Washington. 2007: McDonald's reintroduces its 42-ounce super-size soda under the name Hugo. 2008: Mcdonald's introduces the Mcskillet burrito. This larger button constants of scramble eggs, red & green bell peppers, onions potatoes and Red Rojo Salsa and sausage all wrapped in a warm folor tortilla. Later in the year, Chicken was added. 2008: McDonald's introduces the Chicken Biscuit and the Southern Style Chicken Sandwich. 2008: In November, McDonald's starts phasing in new designs for their containers. They also introduced a new menu board design that featured warmer, darker colors, more realistic photos with the food on plates and drinks in glasses. The design should hit nation wide come 2009. 2009: McDonald's now serves cappuccinos, mochas, & lattes.

Corporate overview
Facts and figures McDonald's restaurants are found in 119 countries and territories around the world and serve nearly 47 million customers each day. McDonald's operates over 31,000 restaurants worldwide, employing more than 1.5 million people. The company also operates other restaurant brands, such as Piles Café, and has a minority stake in Pret a Manger. The company owned a majority stake in Chipotle Mexican Grill until completing its divestment in October 2006. Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.


Types of restaurants Most standalone McDonald's restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or McDrive as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined; it was first introduced in Arizona in 1975, following the lead of other fastfood chains. In some countries "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts, that offer Walk-Thru service in place of Drive-Thru. Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-roll themed restaurant. In Victoria, British Columbia, there is also a McDonald's with a 24 carat (100%) gold chandelier and similar light fixtures. To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald's introduced McCafés. The McCafé concept is a café-style accompaniment to McDonald's restaurants in the style of Starbucks. McCafé is a concept of McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in Australia have McCafés located within the existing McDonald's restaurant. In Tasmania there are McCafés in every store, with the rest of the states quickly following suit. After upgrading to the new McCafe look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafés worldwide. Some locations are connected to gas stations/convenience stores, while others called McDonald's Express have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in Wal-Mart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops.

Playgrounds Some McDonald's in suburban areas and certain cities feature large indoor or outdoor playgrounds, called "McDonald's PlayPlace" (if indoors) or "Playland" (outdoors). The first PlayPlace with the familiar crawl-tube design with ball pits and slides was introduced in 1987 in the USA, with many more being constructed soon after. Some PlayPlace playgrounds have been renovated into "R Gym" areas. "R Gyms" are in-restaurant play area that features interactive game zones designed for children aged 4 to 11. Equipped with stationary bicycles attached to video games, dance pads, basketball hoops, monkey bars, an obstacle course, and other games which emphasize physical activity.


The "R Gym" features the Toddler Zone, an active play environment with age appropriate games that develop physical coordination and social skills; the Active Zone, designed for children aged four-to-eight that promotes physical fitness through fun play; the Sports Zone which features a series of sport oriented activities to promote aerobic exercise for children aged 9-to-11; the Parent Zone which features seating and provides a monitoring area for their children; and the Dining Area which allows families to eat.

Redesign In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of their restaurants, the first major redesign since the 1970s. The new design will include the traditional McDonald's yellow and red colors, but the red will be muted to terra cotta, the yellow will turn golden for a more "sunny" look, and olive and sage green will be added. To warm up their look, the restaurants will have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs will hang on the walls. The exterior will have golden awnings and a "swish brow" instead of the traditional double-slanted mansard roof. The new restaurants will feature areas: The "linger" zone will offer armchairs, sofas, and Wi-Fi connections. sssThe "grab and go" zone will feature tall counters with bar stools for customers who eat alone; Plasma TVs will offer them news and weather reports. The "flexible" zone will be targeted toward families and will have booths featuring fabric cushions with colorful patterns and flexible seating. Different music targeted to each zone. Business model McDonald's Corporation earns revenue as an investor in properties, a franchiser of restaurants, and an operator of restaurants. Approximately 15% of McDonald's restaurants are owned and operated by McDonald's Corporation directly. The remainder are operated by others through a variety of franchise agreements and joint ventures. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald's may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties


on which McDonald's franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants. The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois. In other countries, McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other, local entities or governments. As a matter of policy, McDonald's does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators. According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. (According to a news piece on Fox News this figure is one in ten). The book also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies with the culture of the host country.

As a prominent example of the rapid globalization of American fast food industry, McDonald's is often the target of criticism for its menu, its expansion, and its business practices. The McLibel Trial, also known as McDonald's Restaurants v Morris & Steel, is an example of this criticism. In 1990, activists from a small group known as London Greenpeace (no connection to the international pressure group Greenpeace) distributed leaflets entitled What's wrong with McDonald's?, criticizing its environmental, health, and labor record. The corporation wrote to the group demanding they desist and apologize, and, when two of the activists refused to back down, sued them for libel in one of the longest cases in British civil law. A documentary film of the McLibel Trial has been shown in several countries. In 1999, French anti-globalisation activist José Bové vandalized a half-built McDonald's to protest against the introduction of fast food in the region. In 2001, Eric Schlosser's book Fast Food Nation included criticism of the business practices of McDonald's. Among the critiques were allegations that McDonald's (along with other companies within the fast food industry) uses its political influence to increase its profits at the expense of people's health and the social conditions of its workers. The book also brought into question McDonald's advertisement techniques in which it targets


children. While the book did mention other fast-food chains, it focused primarily on McDonald's. In 2002, vegetarian groups, largely Hindu, successfully sued McDonald's for misrepresenting their French fries as vegetarian. Morgan Spurlock's 2004 documentary film Super Size Me said that McDonald's food was contributing to the epidemic of obesity in society, and that the company was failing to provide nutritional information about its food for its customers. Six weeks after the film premiered, McDonald's announced that it was eliminating the super size option, and was creating the adult happy meal. Anthony Bourdain on his show, No Reservations, has criticized McDonald's among other fast-food restaurants for its culinary blandness. The soya that is fed to McDonald’s chickens is supplied by agricultural giant Cargill and comes directly from Brazil. Greenpeace alleges that not only is soya destroying the Amazon rain forest in Brazil, but soya farmers are guilty of further crimes including slavery and the invasion of indigenous peoples’ lands. The allegation is that McDonald's, as a client of Cargill's, is complicit in these activities.

Arguments in defense of McDonald's
In response to public pressure, McDonald's has sought to include more healthy choices in its menu and has introduced a new slogan to its recruitment posters: "Not bad for a McJob". (The word McJob, first attested in the mid-1980s and later popularized by Canadian novelist Douglas Coupland in his book Generation X, has become a buzz word for low-paid, unskilled work with few prospects or benefits and little security.) McDonald's disputes the idea that its restaurant jobs have no prospects, noting that its CEO, Jim Skinner, started working at the company as a regular restaurant employee, and that 20 of its top 50 managers began work as regular crew members. In 2007, the company launched an advertising campaign with the slogan "Would you like a career with that?" on Irish television, outlining that their jobs have many prospects. In a bid to tap into growing consumer interest in the provenance of food, the fast-food chain recently switched its supplier of both coffee beans and milk. UK chief executive Steve Easterbrook said: "British consumers are increasingly interested in the quality, sourcing and ethics of the food and drink they buy". McDonald's coffee is now brewed from beans taken from stocks that have been certified by the Rainforest Alliance, a conservation group. Similarly, milk supplies used for its hot drinks and milkshakes have been switched to organic sources which could account for 5% of the UK's organic milk output. McDonald's announced on May 22, 2008 that, in the U.S. and Canada, it will be introducing cooking oil for its french fries that contains no trans fats. The company will


use canola-based oil with corn and soy oils by year's end for its baked items, pies and cookies.

Environmental record

Discarded McDonalds packaging contributes to the urban litter problem in cities worldwide. In April 2008, McDonald's announced that 11 of its Sheffield restaurants have been using a biomass trial that had cut its waste and carbon footprint by half in the area. In this trial, waste from the restaurants were collected by Veolia Environmental Services and used to produce energy at a power plant. McDonald's plans to expand this project, although the lack of biomass power plants in the U.S. will prevent this plan from becoming a national standard anytime soon. In addition, in Europe, McDonald's has been recycling vegetable grease by converting it to fuel for their diesel trucks. Furthermore, McDonald's has been using a corn-based bioplastic to produce containers for some of their products. Although industries who use this product claim a carbon savings of 30% to 80%, a Guardian study shows otherwise. The results show that this type of plastic does not break down in landfills as efficiently as other conventional plastics. The extra energy it takes to recycle this plastic results in a higher output of greenhouse gases. Also, the plastics can contaminate waste streams, causing other recycled plastics to become unsaleable. The U.S. Environmental Protection Agency has recognized McDonald's continuous effort to reduce solid waste by designing more efficient packaging and by promoting the use of recycled-content materials. McDonald's reports that they are committed towards environmental leadership by effectively managing electric energy, by conserving natural resources through recycling and reusing materials, and by addressing water management issues within the restaurant. When McDonald’s received criticism for its environmental policies in the 1970s, it began to make substantial progress towards source reductions efforts. For instance, an “average meal” in the 1970s—a Big Mac, fries, and a drink—required 46 grams of packaging; today, it requires only 25 grams, allowing a 46 percent reduction. In addition, McDonald’s eliminated the need for intermediate containers for cola by having a delivery 19

system that pumps syrup directly from the delivery truck into storage containers, saving two million pounds of packaging annually. Overall, weight reductions in packaging and products, as well as the increased usage of bulk packaging ultimately decreased packaging by 24 million pounds annually.

Legal cases
McDonald's has been involved in a number of lawsuits and other legal cases, most of which involved trademark disputes. The company has threatened many food businesses with legal action unless they drop the Mc or Mac from their trading name. In one noteworthy case, McDonald's sued a Scottish café owner called McDonald, even though the business in question dated back over a century (Sheriff Court Glasgow and Strathkelvin, November 21, 1952). It has also filed numerous defamation suits. For example, in the McLibel case, McDonald's sued two activists for distributing pamphlets attacking its environmental, labor and health records. After the longest trial in UK legal history, McDonald's won a technical victory for showing that some allegations were untrue. But it was a massive public relations disaster, since the judge also found that more than half of what was on the pamphlet was truthful, or were simply the opinions of the activists and therefore nonprosecutable. McDonald's has defended itself in several cases involving workers' rights. In 2001 the company was fined £12,400 by British magistrates for illegally employing and overworking child labor in one of its London restaurants. This is thought to be one of the largest fines imposed on a company for breaking laws relating to child working conditions (R v [2002] EWCA Crim 1094). In April 2007 in Perth, Western Australia, McDonald's pleaded guilty to five charges relating to the employment of children under 15 in one of its outlets and was fined AU$8,000. Possibly the most infamous legal case involving McDonald's was the 1994 decision in The McDonald's Coffee Case. In a McDonald's American Idol figurine promotion, the figurine that represents "New Wave Nigel" wears something that closely resembles Devo’s Energy Dome, which was featured on the band's album cover, Freedom of Choice. In addition to the figurine's image, it also plays a tune that appears to be an altered version of Devo's song "Doctor Detroit." Devo copyrighted and trademarked the Energy Dome and is taking legal action against McDonald's.


McChicken, Filet-O-Fish, Chicken McNuggets, French fries and fried chicken sold by McDonald's in Bangkok. McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. Portugal is the only country with McDonald's restaurants serving soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia).

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.



The Rock N Roll McDonald's in Chicago, Illinois where the company celebrated its 50th anniversary.

A McDonald's store front in Times Square.


The interior of a McCafé concept located in Dublin, Ireland.

The site of the first McDonald's to be franchised by Ray Kroc is now a museum in Des Plaines, Illinois. The building is a replica of the original, which was the ninth McDonald's restaurant.

McDonald's in Riga, Latvia. 23

McDonald's in Bratislava, Slovakia.

A McDonald's in Meknes, Morocco

A McDonald's delivery vehicle in Seoul, South Korea. 24

A McDonald's in Shenango Township, Pennsylvania just outside of New Castle was rebuilt in 2007 with the new "Forever Young" look.

A refurbished stand-alone McDonalds in Portsmouth, England. Unlike international McDonald's, British McDonald's are simply being refurbished rather than rebuilt.

Not-so-traditional storefront of the McDonald's in Times Square.


McDonalds in Corfu, Greece

A McDonald's restaurant with a Playplace in Moncton, Canada


Global operations

Countries with McDonald's stores McDonald's has become emblematic of globalization, sometimes referred as the "McDonaldization" of society. The Economist magazine uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. Scandinavian countries lead the Big Mac Index with four of the five most expensive Big Mac's. Norway has the most expensive Big Mac in the world as of July 2008, whilst the cheapest country is Malaysia. The brand is known informally as "Mickey D's" (in the US and Canada), "Macky D's" (in the UK and Ireland), "Mäkkäri" (in Finland), "McDo" (in France, Quebec, the Philippines and the Kansai region of Japan), "Maccer's" (in Ireland), "Macarrannis" (in Mexico), "Maccas" (in New Zealand and Australia), "McD's" (in New Zealand), "Donken" (in Sweden), "de Mac" (in the Netherlands), Mäkkes (in Germany), "Mac" (in Brazil), "Makku" (in most of Japan; "Makudo" in the Kansai region); "Mek" (in Serbia), "Mekáč" (in the Czech republic), "Mak-Dak" (in the Russia), Mac (in Portugal) and "MacDon's' (in Canada). McDonald's has also acquired derogatory nicknames, such as "McVomit's" (in parts of America). Thomas Friedman once said that no country with a McDonald's had gone to war with another. However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Careful historians point to the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia War as exceptions.


Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East (Stanford University Press, 1998, edited by James L. Watson) looked at the impact McDonald's had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. In East Asia in particular, McDonald's have become a symbol for the desire to embrace Western cultural norms. McDonald's have recently taken to partnering up with Sinopec, China's second largest oil company, in the People's Republic of China, as it begins to take advantage of China's growing use of personal vehicles by opening numerous drive-thru restaurants. The only countries in Europe not to have McDonald's stores are Albania, Armenia, Bosnia and Herzegovina and the Vatican City.

Global locations
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Argentina Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Belarus Belgium Botswana Brazil Bulgaria Canada Chile People's Republic of China Hong Kong Macau Republic of China Colombia Costa Rica Croatia Cuba (Guantanamo Bay Naval Base) Cyprus Czech Republic

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Ecuador Egypt El Salvador Estonia Fiji Finland France Georgia Germany Greece Guatemala Guyana Honduras Hungary Iceland Italy India Indonesia Ireland Israel Japan Jordan Kuwait Latvia Lebanon Lithuania

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Luxembourg Macedonia Malaysia Malta Mauritius Mexico Moldova Morocco Netherlands Aruba New Zealand Nicaragua Norway Oman Pakistan Panama Peru Paraguay Philippines Poland Portugal Qatar Romania Russia Samoa Saint Lucia Saudi Arabia Serbia Singapore

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Slovakia Slovenia South Africa South Korea Spain Sri Lanka Sweden Switzerlan d Syria Thailand Turkey Ukraine United Arab Emirates United Kingdom Cayman Islands Gibraltar United States American Samoa Guam Puerto Rico United States Virgin 28

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Denmark Dominica Dominican Republic

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Islands Uruguay Venezuela Yemen Zimbabwe


Objective and Problem Formulation
Linear Programming Problem Introduction • Linear Programming was developed by George B Dantzing in 1947 for solving military logistic operations. • Linear Programming (LP) is a mathematical modeling technique useful for the allocation of limited resources, such as labour, material, machine, time, warehouse space, capital, energy etc. to several competing activities, such as products, services, jobs, new projects etc. Also, the general LPP calls for optimizing a linear function of variables called the objective function subject to a set of linear equations and /or inequalities called the constraints or restrictions.

General Structure of LPP • Decision Variables • • The Objective Function The Constraints

General Structure of LPP • Decision Variables: The activities that are competing one another for sharing the resources available. These variables are usually interrelated in terms of utilization of resources and need simultaneous solutions. All these variables are considered as continuous, controllable and non-negative. • The Objective Function: A LPP must have an objective which should be clearly identifiable and measurable in quantitative terms. It could be of maximization of profit (sales), minimization of cost etc. The relationship among variables representing objective must be linear. The Constraints: There are always certain limitations or restrictions or constraints on the use of resources, such as labour, space, raw material, money etc. that limit the degree to which an objective can be achieved. Such constraints must be expressed as linear inequalities or equations in terms of decision variables.

Assumptions of LP Model • Certainty • Additivity 30

• •

Linearity (Proportionality) Divisibility (continuity)

Assumptions of LP Model • Certainty: In all LLP’s, it is assumed that all the parameters; such as availability of resources, profit contribution of a unit or cost contribution of a unit of decision variable and computation of resources by a unit decision variable must be known and fixed. Or we can say that, all the coefficients in this objective function as well as in the constraints are completely known with certainty and do not change during the period of study. Thus, the profit per unit of the product, requirements of material and labour per unit, availability of material etc. are given and known in the problem. The LP is obviously deterministic in nature. • Additivity: The value of the obj. function for the given values of decision variables and the total sum of resources used, must be equal to the sum of the contributions (profit or loss) earned from each decision variable and the sum of the resources used by each decision variable respectively. For example, the total profit earned by the sale of two products A & B must be equal to the sum of the profits earned separately from A & B. Similarly, the amount of a resource consumed by A & B must be equal to the sum of resources used for A & B individually. Linearity or Proportionality: This assumption requires the contribution of each decision variable in both the obj function and the constraints to be directly proportional to the value of the decision variable. Or we can say that, the amount of each resource used ( or supplied) and its contribution to the profit (or cost) in obj. fun must be proportional to the value of each decision variable. For eg., if production of a one unit of a product uses 5 hrs of a particular resource, then making 3 units of that product uses 3*5=15 hrs of that resource. Divisibility or Continuity: This implies that solution values of the decision variables and resources can take on any non-negative values, including fractional values of the decision variables. For eg., it is possible to produce 8.35 quintals of wheat or 7.453 thousand gallons of a solvent or 43.45 thousand kiloliters of milk. Such variables are not divisible and hence are to be assigned integer values. When it is necessary to have integer variables, the integer programming problem is considered to attain the desired values. Applications Agriculture Applications Military Operations 31

• •

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Production Management Financial Management Marketing Management Personnel Management Steps for formulating the LPP Identify the Decision Variables Identify the Problem data Formulate the constraints Formulate the Objective Function


Let X1 is the quantity produced of McAloo Tikki Burger X2 is the quantity produced of Veg. Pizza Mcpuff X3 is the quantity produced of Veg. Surprise X4 is the quantity produced of Chicken Mcgrill X5 is the quantity produced of Mcveggie Burger X6 is the quantity produced of McChicken Burger X7 is the quantity produced of Filet-O-Fish X8 is the quantity produced of Wrap Chicken Mexican Objective function :Zmax = 450X1 + 45X2 + 35X3 +55X4 + 45X5 + 25X6 +20X7 +10X8 Subject to constraints :450X1 + 30X2+ 60X4 +70X5 +30X6 ≤ 800 (Bread) 40X1 + 10X2 + 5X3 +5X5 ≤ 80 (Potato) 20X1 + 5X2 + 2X3+X4+2X5+3X6+2X7+3X8≤50 (Butter) 3X4 + 2X6 + X8≤10 (Chicken) X7 ≤ 5 (Fish) 2X1 +3X2 +X3 ≤ 7 (Men use in preparing veg. items) X4 + 2X6 + X7+X8≤6 (Men use in preparing non veg. items) 25X1+15X4+4X5+3X6+2X7 ≤45 (Onions) X1≥0, X2≥0, X3≥0, X4≥0, X5≥0, X6≥0, X7≥0, X8≥0 X1≥0 , X2≥0 , X3≥0.



Our project on “The different product mix of Mc. Donalds” outlet, at Ansal Plaza, Greater Noida was aimed at maximization of the profit margin by decreasing the costs input. After careful LPP model formulation, and thereby solving and analyzing the same we reached a conclusion that the product mix maximization (Zmax)is at 905.00 and Iteration of the simplex table came out to be at 7. This information maybe helpful for formulating future policies and practices of operation at the above mentioned branch of Mc. Donalds for maximum profit gain.


www.mcdonalds.com www.wikipedia.com


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