McDonald’s Case Study

Prepared By : ISHA AGGARWAL

SECTION: PGDM 1
 SCPS
SECTOR COMPANY PRODUCTS SERVICES
• Quick Service • McDonalds • Beverages • Core value service-
Restaurants(QSR) • Breakfasts Giving the food fast to
• Real Estate • Burgers its customers at a
reasonable price with
good quality.

Why QSR is growing? • Head quarters: • Chicken and Sandwiches • Free wifi
• Urbanization Chicago, United States • Desserts and Snacks • Discount on Birthday
• Rapid expansion • Revenue:2107.6 crore • Combo meals Celebrations
• Increasing number of USD(2019)
working professionals

• Snacks and rolls

Estimated growth at a • Number of locations • Fries
CAGR of over 18% 38695
during 2021-2025 restaurants(2019)
BUSINESS MODEL
FRANCHISE MODEL ADOPTED BY MCDONALDS AS
A JOINT VENTURE WITH VIKRAM BAKSHI AND
AMIT JATIA

CPRL HRPL
 The first cracks in the venture appeared in 2008, when
McDonald’s tried to buy out Bakshi’s share for $7 million.
Bakshi said this was far less than it was worth.
Reportedly, consulting firm Grant Thornton valued
CPRL at $331 million in 2009.
 McDonald’s ousted Bakshi as MD of CPRL, citing
financial discrepancies. The allegations included
mismanagement of funds, lack of attention to the JV, and
conflict of interest. McDonald’s said Bakshi had pledged
51,300 of his CPRL shares without the company’s
approval to raise a loan of ₹200 million to fund his real
estate business

 McDonald’s accused the franchisee of failing to pay

royalties over two years. CPRL was required to pay 5
per cent of overall sales as royalty to McDonald’s.
 In response, Bakshi claimed that the royalty money
was being used to repay bank loans and that both the
McDonald’s nominee directors on the CPRL board
were aware of it.
RIVALS
 McDonald’s franchise in India
had helped its competitors in
many ways. Rivals such as
Domino’s, Subway, and KFC
quickly gained market share
by offering exciting meal
offers. According to market
research firm Kantar IMRB,
since the closure of the  The dispute also impacted the market share of
McDonald’s outlets in Delhi, McDonald’s in India. The fast food chain’s overall
Subway and KFC had gained market share dropped from 9 per cent in June 2017 to
5 per cent and 2 per cent 3 per cent in July 2017. Expansion was hit as
market share respectively.
McDonald’s opened just one outlet in 2017 compared
to 27 outlets in 2012
Problem Faced??? Challenges Faced!!!
 More Competitors
 Legal Issues related Agreement
 Losses
 Joint Venture may occur
 Food safety and Quality
 Franchise problem
 Perceptions may changed about
McDonald’s
 Losses of 3.05 Billion and increasing
market share of competitors
 Employees were affected almost 6500
 Franchisee license were expired more
than 40 outlet
 Shortage of supplies and shut down of
84 outlets.
Data Interpretation

 While McDonald’s was facing

problems with CRPL, Westlife
Development, which owned the
master franchise rights through its
subsidiary HRPL, was performing
well. It reported a 25 per cent
increase in revenue between 2014
and 2017. While CPRL had added
just 13 outlets and ₹1.13 billion in
revenue during the period, HRPL
had added 74 outlets and
generated ₹1.92 billion in revenue
Various operations like contacts with
different vendors should be handled by
McDonald’s.
Competitive pricing and segmentation of
consumers and related activities must be
performed.
They should redesigned there marketing
strategy and keep a check on rivals.
There should be third party platform also
where both CPRL and McDonald may
contact at one platform.
The agreements signed must be read
thoroughly and levy there after.
Both parties should be transparent ,
integrated during the course of action
K E Y TA K E AWAY S

• 1 • EVALUAT E • 4 • BRAND
• Always evaluate the risk before taking a big • Its not about image and product others factors
step which involves huge amount of are considering while building a BRAND
investment
• 2 • IMPACT • 5 • LEGAL ASPECTS

• Small things have big impact • Legal aspects should also be taken into
consideration before entering a new market.

• 3 • JOINT VENTURE • 6 • FRANCHISEE AND

FRANCHISER
• Venture need proper planning and • Mutual trust should exist between
execution phase them both.

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