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Economics 3400 - Essay Example

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In 119 nations McDonalds attends to approximately 68 million customers on a daily basis (McDonalds). The headquarters of the fast food chain are in America. The firm begun in 1940 as a…
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Economics 3400
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Economics 24th September History and introduction. In this world the largest group of hamburger fast food restaurants is McDonalds Corporation. In 119 nations McDonalds attends to approximately 68 million customers on a daily basis (McDonalds). The headquarters of the fast food chain are in America. The firm begun in 1940 as a barbecue eatery ran by the McDonald brothers Richard and Maurice McDonald. In 1948, the brothers restructured their eatery as a hamburger booth by utilizing production line concept. In 1955, a capitalist named Ray Kroc became the firm’s franchise agent. He then bought the franchise from the McDonald brothers and managed its global growth. Currently McDonalds manages more than 31,000 outlets across the world while providing employment to greater than 1.5 million people. Approximately, one in eight people from the US labor force have worked as employees of McDonalds.
How McDonalds generates revenues?
Any McDonalds restaurant is managed by a McDonalds itself, an affiliate, or the franchisees. The companys sales are generated through the royalties, rental of property, and charges submitted by the franchisees, and sales generated from firm-operated outlets.
What does McDonalds sell?
McDonalds sells various burgers and sandwiches such as Big Mac, Quarter Pounder, McArabia and McChicken. Other than burgers it also sells breakfast items like oatmeal and hotcakes. To make sure that the firm is not criticized for promoting unhealthy eating habits fresh salads, low fat milk, smoothies and fruit are also sold.
Categories of restaurants
Most outlets of McDonalds provide both counter and drive-through services. The services can be both indoor and occasionally outdoor seating. In 1975, after observing other fast food companies Drive-Thru was started in Arizona.
To adapt to the recent preference for premium coffee and the overall reputation of coffee shops, McDonalds launched McCafé, similar to Starbucks. After making changes to the interior dining areas and facilities certain Australian stores of McDonalds have observed a 60% rise in sales. By the end of 2003 there were more than 600 McCafés located across the world.
A few McDonalds located in out-of-town residential areas and specific cities have enormous indoor or outdoor playgrounds. In 1987 the first “PlayPlace” with the well-known crawl-tube shape with ball craters and slides was introduced in America. Various “PlayPlaces” were constructed afterwards. Some PlayPlace areas have been redesigned and converted into "R Gym" areas.
In 2006, McDonalds redesigned all of its restaurants. This was the first major change in interior since the 1970s. The aim of this modification is to become similar to a coffee shop like Starbucks. The changes made include wooden tables, leather cushioned chairs, and lighter shades of various colors such as red, green and yellow. The restaurants have fewer plastic-made materials and greater display of bricks and timber. Sophisticated hanging lights create a light glow as evening arrives. Majority of the eateries now offer free Wi-Fi high-speed internet and LCD TVs. Above all, the well-known golden arches have been altered; the outlets now show halves of golden arches.
Business model
The Ireland and United Kingdom business model of McDonalds are different than the U.S. Less than thirty percent of eateries are franchised. Most of the eateries are owned by the company. McDonalds provides world-class training to its own franchisees and others at Hamburger University located in Oak Brook, Illinois.
In many other countries, McDonalds outlets are run by joint ventures between McDonalds Corporation and local authorities. McDonalds has the policy of not becoming a supplier of meat, dressings, oil or other supplies to its franchisees. Instead of supplying on its own McDonalds organizes the provision of food and other things to eateries via tested specialized logistics experts.
However, the kind of meats McDonalds utilizes depends on the culture and religion of the host country. For instance, McDonalds franchise was purchased by Shiza Foods in Pakistan and today it used Halal meat (Pakistan’s majority population comprises of Muslims who eat meat which has been obtained from animals slaughtered by a Muslim butcher in the Islamic way) which comes from Middle eastern countries. The palm Oil used for frying comes from Malaysia while the employees are from local population.
As a result of importing palm oil and meat the cost of production rises. Furthermore, the Pakistani currency is much more devalued compared to the US dollar hence this further increases cost of production. As a result, the burgers made are expensive for even the middle class Pakistani consumer and the name McDonalds is associated with premium quality at an expensive price.
McDonalds has been raising shareholder dividends since the last 25 years hence turning itself into one of the “S&P 500 Dividend Aristocrats”.
McDonalds. McDonalds. n.d. 23 September 2012 . Read More
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