McDonalds

What is their situation? A behemoth slowing.

• Highly Competitive Market;

Subway; 35,000-37,000 locations internationally and looking to move into higher quality stores like a Mcdonalds would be in with drive through windows.

KFC; 25,000 locations internationally and has been net positive in store number increases for the last 17 years.

• Cost leadership;

Mcdonalds builds competitive advantage through cost minimization with a standardized processes designed to maximize efficiency, minimize costs, and ensure profitability despite the use of competitive selling prices.

The large size of the business organization (38k-40k locations) allows for economies of scale, which translate to cost reduction in purchasing materials and producing ingredients used at the company’s restaurants.

Despite leading the industry in debt as of 2021 (39 billion) the company only has an above average debt to equity ratio of .68, not much higher than the industry average of .56.

What would I do about it?

• All in digitalization (Contactless ordering, double drive throughs, etc.) of the standardized process; Mcdonalds revenue grew in 2022 through price increases
• Leave the price increases in place, use some of that 3.3 billion in cash to enhance the online ordering process and delivery process.
• Mcdonalds already has partnered with Uber, DoorDash, Deliveroo, Justtakeaway.com, the infrastructure is already there to grow this part of the business.
• Keep the menu simple and make ordering/getting food as easy as possible for everyone to penetrate the market deeper, utilize economies of scale, continue cost leadership.

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Biggest Challenge? Finding Data.