Established in the year 1940, with over 36,900 restaurants globally in 120+ countries, McDonald’s has grown from being just a normal fast food restaurant serving hot dogs and milkshakes to being the world’s second largest restaurant chain by revenue, serving over 69 million customers daily.
SWOT Analysis of McDonald’s discusses the strengths, weaknesses, threats, and opportunities that led the brand to achieve this height of fame and growth.
SWOT Analysis of McDonald’s
Strengths describe the factors that which the organization is good at and what separates it from its competitors.
—Strong global presence: With a presence in over 120+ countries and with 36,000+ stores, McDonald’s has an impressive global presence and is second largest fast food restaurant in the world serving around 69 million + customers daily. It’s this strength of McDonald’s that allow it to cater to a wider audience base.
—Loyal Customer Base: Over 80+ years of serving customers with its popular hamburgers, McDonald’s has managed to build its own strong loyal customer base.
—Store Location: An early mover in the fast-food space, McDonald’s stores occupy prime sites around the world and is one of the main strengths of McDonald’s
—Market power over suppliers and competitors. Due to its size, McDonald’s can exercise its market power over suppliers by requiring lower prices from them. The company clearly demonstrates this with The Coca-Cola Company.
Because of McDonald’s and The Coca-Cola Company’s agreement, no other restaurant chain can sell Coca-Cola drinks for lower prices than McDonald’s, even if it means losing the business to PepsiCo.
—Variety in Menu: One of the major strengths of McDonald’s is the variety of food that it offers to its customers. McDonald’s tweak’s its menu and food offerings, basis the region in which it operates.
Weaknesses stop an organization from performing at its optimum level. They are areas where the business needs to improve to remain competitive:
— Archaic McDonald’s stores: In this changing digital world, McDonald’s still run stores with old design and functionality. McDonald’s need to redesign its stores to make it more technologically advanced with self-ordering digital kiosks where consumers can order and then have food delivered to their table.
— High dependency on US market: Since its inception, McDonald’s has been a true American fast food restaurant and for this reason, it has maintained huge dependency on the US market. But over the years U.S. restaurant sales and traffic have struggled to grow and it has started to have a huge impact on McDonalds’s balance sheet.
—Managing Franchisees: Franchisee management is one of the critical issues in the success of the fast food chains and due to conflicting operational issues between McDonald’s and its franchisees many of its outlets got closed since its inception. Early this year, McDonald’s closed around 160+ stores in India and Check out the franchise issue McDonald’s is facing in America
—Negative publicity: McDonald’s has faced a lot of flak for its food being unhealthy, loaded with fat, carbs, salt, and sugar. It’s not just food, there are a lot of issues regarding the corporate culture that gained McDonald’s a lot of negative publicity.
Learn more about the Positioning of McDonald’s
Threats refer to factors that have the potential to harm an organization in the future. Given the fact, threats give a brand a far-sighted view about the problems that the brand is likely to face in the future, it is one of the most important factors in the SWOT Analysis of McDonald’s.
— Changing consumer food trends and preferences: Due to the emergence of Millennials, the food trends and preferences are changing. Consumers demand for fresh and natural food options are increasing.
This changing food preferences of the consumers are putting additional pressure on the fast food giants like McDonald’s to tweak their menu to cater to the changing food needs.
—Increased labor cost and Increased cost of employee training: Increasing labor cost and cost of employee training is affecting the profit margins of the company.
— Food quality challenges: Food quality is an important challenge before McDonald’s. McDonald’s has faced a lot of criticism for its food being unhealthy, loaded with fat, carbs, salt, sugar. Also, the laws related to food quality has become quite stringent in different countries and is becoming a major challenge for fast food chains.
—Competition from global and local players: McDonald’s faces stiff competition from not just global players but also local players as well. Competitors are introducing new food items to their menu to cater to local consumer needs and capture higher market share. For example: Lately, McDonald’s has to close their stores in Greece as they faced extreme competition from a local player “Goodys”.
Goodys replicated McDonalds’ franchise concept of efficiency and convenience – but localized the menu and service—offering an array of Mediterranean products rather than burgers and fries. The rest is history. McDonald’s has been closing stores in several locations, having 19 stores in the country with 11 of those in Athens.
Read the complete story here
Check out the marketing mix of McDonald’s
Opportunities refer to the factors which the organization can use to its favor to grow its market share, sales, brand recognition etc. It’s the second most important factor in SWOT Analysis of McDonald’s as it will shape the future of the company’s strategy.
—Expanding to new Geographies: McDonald’s need to lay more emphasis on expanding to new geographies. Emerging economies, changing lifestyle of consumers and their increasing buying propensity is allowing fast food giants to explore new geographies to increase their market share and revenue.
—Exploring new food items in Menu: Catering to the changing food demands and needs of the millennials, McDonald’s has a big opportunity to introduce healthy and natural food options in their menu that are low in fats and calories.
—Localizing the Menu: Expanding to new geographies require McDonald’s to localize their food menu. McDonald’s has a huge opportunity to add new local food options in their menu catering to the local needs of the geographies that they are expanding to.
—Delivery Sales: With the changing industry backdrop, Delivery sales is seen as a key growth strategy for McDonald’s. The fast-food giant has expanded the number of locations where it offers UberEats delivery, which has posted solid growth and attracted repeat customers. Delivery sales are seen as a major opportunity for the brand to grow.
—Store Redesign: Dubbed as “Experience of the Future store”, McDonald’s is planning to redesign its stores which will include features such as self-ordering digital kiosks where consumers can order and then have food delivered to their table.
Conclusion
There are a number of challenges that McDonald’s faces but still it’s the strong brand equity, current market position, and the opportunities that pose a strong growth in the future for the brand.
This concludes the SWOT analysis of McDonald’s.
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