McDonald’s : Behind The Golden Arches

The McDonald’s Story – Genesis

The story of McDonald’s started in 1954, when its founder Raymond Kroc saw a hamburger stand in San Bernardino, California and envisioned a nationwide fast food chain. Kroc proved himself as a pioneer who revolutionized the American restaurant industry. Today McDonald’s is theCalifornia world’s largest fast food chain serving 47 million customers daily. McDonald’s is now one of the most valuable brands globally, worth more than $25 billion. The Golden Arches and its mascot Ronald McDonald have gained universal recognition. Though the company has roots in the US, McDonald’s today has become an accepted citizen of the world.

Year	Events
1955	Ray Kroc opens his first restaurant. McDonald’s Corporation is created
1957	Quality, Service, Cleanliness and Value (QSC & V) becomes company motto
1963	Ronald McDonald makes debut
1965	The company goes public
1968	Big Mac is introduced`
1974	Happy Meal is launched
1996	McDonald’s opens in India, the 95th country

Business Model

• Franchise Model – Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchises. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers.

• Product Consistency – By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies.

• Act like a retailer and think like a brand – McDonald’s focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation.

McDonald’s in India

McDonald’s entered India in 1996. McDonald’s India has a joint venture with Connaught Plaza Restaurants and Hard Castle Restaurants. Connaught Plaza Restaurants manages operations in North India whereas Hard Castle Restaurants operates restaurants in Western India. Apart from opening outlets in the major metros, the company is now expanding to Tier 2 cities like Pune and Jaipur.

Challenges in Entering Indian Markets

• Regiocentricism: Re-engineering the menu – McDonald’s has continually adapted to the customer’s tastes, value systems, lifestyle, language and perception. Globally McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonald’s came up with chicken, lamb and fish burgers to suite the Indian palate.

• The vegetarian customer – India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages.

Segmentation, Targeting and Positioning

McDonald’s uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family.

As shown above, kids reign supreme in FMCG purchase related to food products. So to  attract children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given (the latest in this range is the toys of the movie Madagascar). For this, they have a tie-up with Walt Disney. At several outlets, it also provides special facilities like ‘Play Place’ where children can play arcade games, air hockey, etc. This strategy is aimed at making McDonald’s a fun place to eat. This also helps McDonald’s to attract the young urban families wanting to spend some quality time while their children have fun at the outlet. To target the teenagers, McDonald’s has priced several products aggressively, keeping in mind the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to attract students to the outlets like the one at Vile Parle in Mumbai.

“Mc Donald’s mein hai kuch baat”

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