U4O1 – McDonalds

 
WHEN the first McDonald’s restaurant opened in 1940 in San Bernardino, California, there were only nine items on the
original menu.

A hamburger would have set you back just 15 cents and a carton of “Refreshing Cold Milk” — yes, that was a thing —
cost 12 cents.

Now there are more than 100 items on the menu and the Australian branch of the fast-food behemoth pulls in around
$5 billion in sales annually.

But as the booming “wellness” industry rides on the billion-dollar coat tails of the global movement towards healthier
eating, McDonald’s has had to make a decision — get on board or watch profits decline.

“We want to be a part of people’s everyday lives and choices and to do that you need to offer more than just
hamburgers and fries,” McDonald’s Australia’s chief operating officer Shaun Ruming told news.com.au.

“If you’re not modern and progressive and keeping up with what the trends are, then our customers are going to go to
other places. There’s a lot of choice out there so we have to make sure McDonald’s is one of those choices.”

This week McDonald’s launched two major changes: table service in “75-85 per cent” of its restaurants and a
partnership with food delivery service UberEats.

McDonald’s has been running its own delivery service for three years, in limited stores, but receiving mounting pressure
from customers to partner with an existing app.

“We kept on getting messages from customers saying ‘Why aren’t you guys on Uber and why can’t I order it? When are
you going to do that?’” Mr Ruming said.

“The delivery market in Australia is a multi-billion-dollar industry. We think that’s an important thing for us to be
involved in.”

“In some of the food courts you can’t do [table service], but most of our restaurants will be offering table delivery,” Mr
Ruming said.

“It’s particularly popular with mums and people who don’t want to stand at the counter. They want to sit down and wait
while someone brings out their food.”

Other changes implemented over the past 12 months include a new gourmet burger range, novelty items such as the
Chicken Big Mac and Loaded Fries, store revamps and a partnership with Snapchat allowing job applicants to submit
their resumes via the popular app.

“We kept getting told ‘We want to buy hamburgers and we want them to be top quality, made from ingredients sources
in Australia and we want to understand the ingredients and where they come from’, so we did that,” Mr Ruming said.

“And now when you go into our restaurants, they look very different from what they used to.”

McDonald’s, according to Mr Ruming, has no limits on what it will serve to its increasingly fussy customers.

“[Changing consumer trends] don’t scare me. It challenges us to be on the front foot of what those trends are. We just
continue to ask people, ‘What do you like? What do you enjoy?’ and try to provide that.
Questions
 
1. Outline the two main changes that McDonald's is proposing to introduce to it stores. Explain why McDonalds is
implementing these changes. (4 MARKS)

2. Describe three Key Performance Indicators that are mentioned in the article. Explain how each of these KPI's
would be used to evaluate the performance of McDonald's. (6 MARKS)

3. Explain three Driving Forces for Change that support the need for McDonald's to make the relevant changes. (6
MARKS)

4. Describe and justify three Restraining Forces for Change that McDonald's may encounter when making the
changes to its stores. (6 MARKS)

5. Explain which of Porter's Generic Strategies that McDonald's uses to create a competitive advantage - Lower
Cost or Differentiation. (2 MARKS)