HAPPY MEAL AT

MCDONALD’S
 WHAT IS A HAPPY MEAL?!

• Happy Meal is a kids' meal sold at the fast food restaurant

chain McDonald's since June 1979
• They account for 10% of its annual sales or $3 billion
• The Happy Meal contains a main item (a hamburger, cheeseburger, or small
serving of Chicken McNuggets), a side item (French fries, apple slices, a Go-
Gurt tube, or a salad in some areas),a drink (milk, juice, or a soft drink) and a toy
 OBESITY IN AMERICA AND ITS
IMPACT ON McD
• In 2010, the Centers for Disease Control and Prevention (CDC) reported higher
numbers once more, counting 65.7% of American adults as overweight, and 17% of
American children, and according to the CDC, 63% of teenage girls become
overweight by age 11
• This major health concern caused the food advocates to harp on McDonald’s, to the
extent of demanding a ban on Happy Meals
• In July 2011 McDonald’s included healthier options in the Happy Meal like low-fat
milk, apple juice, apple slices and a smaller portion of fries
• While McDonald’s was trying to give healthier options, critics still felt this was just
good publicity to keep hold of their loyal customers
 IMPACT OF RECESSION
• In 2009, at the lowest point of recession, sales at full-service restaurants fell more
than 6% but stayed same at fast-food outlets
• Many competitors such as Burger King, Jack in the Box saw the sales fall, but
McDonald’s sales remained fairly unaffected by the recession
• McDonald’s achieved this by spending aggressively on advertising by increasing the
spend by almost 7% and also increased its market share
 NORMAL GOODS AND
INFERIOR GOODS
• Inferior good’s demand declines when income rises or vice versa. In other
words, demand of inferior goods is inversely related to the income of the
consumer
• Even during recession, sales of McDonald’s stayed same. Hence, the fast
food by McDonald’s is an inferior good
 NORMAL GOODS AND
INFERIOR GOODS
• A normal good is a good that experiences an increase in its demand due to
a rise in consumers' income or vice versa.
• During recession, sales of full-service restaurants fell by more than 6%. Hence,
food served at these restaurants is an example of normal good
 SUBSTITUTION EFFECTS AND
INCOME EFFECTS
• The substitution effect is the decrease in sales for a product that can be attributed
to consumers switching to cheaper alternatives when its price rises
• This can be observed with the sales of full service restaurants going down and that
fast foods remained the same as customers switched to cheaper alternatives with
many fast food outlets offering 1$ menus.
• The income effect is the change in demand for a good or service caused by a
change in a consumer's purchasing power resulting
• Income effect can be seen in fast food outlets where despite lowered rates, the
sales remained the same hence the quantity purchased/demand increases.
 ALTERNATIVES FOR A HEALTHY
MEAL
• Offering healthy meals at a lower price compared to the happy meal
• Offering more variety of healthy options
• Offering discounts to customers who stick to healthy meals
• Fat tax on junk food as implemented in Kerala
• Promoting healthy meals through advertisements
• Giving more incentives to children who buy health meals

• People have become more conscious about health

• Healthy meals would balance health with taste
 REASONS FOR MCDONALD’S
SUCCESS
• Consistency (similar experience everywhere)
• Quality of food and service
• Customisation of food menu according to demographic location
• Innovation (always something new to offer)
• Cross selling (Would you like to make it a meal instead?)