Since the establishment of McDonald's fast-food chain in Chicago, Illinois back in 1940 by Maurice and Richard McDonald, the company has grown to become a franchise of global repute. McDonald's is ranked amongst the top ten most valuable brands in the world.
McDonald's outlets are available in more than 120 countries. There are more than 37,000 registered franchisees spread across the entire world.
This brand is known for many fast food treats, but none is as popular as their french fries and hamburgers. McDonald's offers eat-in or takeaway customers a variety of foods and drinks, including appetizers, desserts, seafood, smoothies, and soft drinks.
As of 2021, McDonald's had a staff strength of about 200,000, proving how valuable this company is to the global economy. In this McDonald's SWOT analysis, you will get to know the strengths of this fast-food franchise.
We will also expose some of their weaknesses, including threats to their business. You can also expect to see some possible opportunities that they could explore to enhance their overall business profile.
Some of the key strengths as contained in this SWOT McDonald's analysis are as follows;
- A very valuable global brand: Interbrand and Forbes are two reliable sources of information about the true value of a brand. According to these two sources, McDonald's is regarded as the fast-food chain brand with the most value in the whole world. McDonald's is estimated to be worth about USD$150 billion.
- McDonald's offers a wide range of food options: McDonald's hamburgers and french fries are without a doubt the two most popular food items on their menu. However, McDonald's offers much more than these. They offer different types of salads like Greek salad and Garden salad. They also provide a variety of meals and poultry goods. In addition to this, McDonald's has an assortment of drinks, including smoothies, coffee, and soft drinks.
- Strategic acquisitions: McDonald's has maintained a leading position in the global fast-food business because it has adapted to modern trends. It has done this by acquiring strategic companies like Dynamic Yield. Acquiring this firm has helped McDonald's improve its customized service offering to customers.
McDonald's also uses Internet access terminals that help to speed up the time between when a customer places an order and when the order is ready for pick up. The strategic acquisitions of McDonald's have enabled them to offer truly impressive personalized service to customers.
Some of the weaknesses revealed in this SWOT McDonald's report include;
- The cons of a franchise-based business model: One of the major disadvantages of the franchise-based business model in the fast-food chain industry is a lack of control. McDonald's has no control over the daily performance of every franchisee. Franchisees may engage in poor business operations that could bring the McDonald's brand to disrepute and create distrust from otherwise loyal customers.
- Reduced menu list: Due to the fact that McDonald's outlets are the busiest around the world. The brand concluded that it would be best to limit the number of food items available to customers to enhance its efficiency. The problem with this policy is that McDonald's loses out on many prospective customers because they do not offer the variety of preferred food items in demand.
- McDonald's has a very high worker turnover rate: Even though McDonald's has over 200,000 workers, its employee turnover rate is pretty high. Many employees simply quit working for McDonald's because of their low wage structure. Others stop working because they cannot cope with the intense work environment and on-the-job demands. Workers not being satisfied with work conditions and wages is not good for the company's image.
McDonald's has a few opportunities they can capitalize on, such as;
- Delivery of food items to homes: COVID-19 was an ice-breaker for most companies, including McDonald's. The trend during the peak of the pandemic was people preferred to order goods including food items to be delivered to their homes rather than them going out to eat.
McDonald's entered into a partnership agreement with Ubereats to deliver McDonald's food items to people's homes to fulfill orders placed online. McDonald's can fully explore and maximize the potential of this type of service delivery.
- Introducing more Geographic and cultural-specific food items: McDonald's can lead the way in the global fast-food industry by providing food items that meet the needs of the locals in the countries where the business operates. The fast-food industry is growing at a very rapid rate and McDonald's can take full advantage of this by providing a more eclectic offering depending on the location of its business.
- Providing low-cost food items: McDonald's can improve traffic into its outlets with low-cost food items. In some countries, occasional outings to a McDonald's outlet are seen as a treat. McDonald's can turn occasional customers into regular daily customers with new food items available at low prices.
- Providing more health-conscious meals: McDonald's is widely seen as the epitome of unhealthy meals by health and fitness fanatics. A new market for more healthy foods has emerged and the image of McDonald's to the group of consumers is not a good one. McDonald's can flip this trend by rebranding to include healthy meals and attract this new customer segment to their outlets with a health-conscious menu.
Some key external threats to McDonald's as seen in this report include;
- Competition from other reputable fast-food chains: The likes of Chipotle, Subway, Starbucks, Burger King, KFC, and Wendy's are direct rivals to McDonald's. They have to maintain their market share with improved food items and service delivery. Exploring new consumer markets like localized dishes and healthy meals is also a good way to beat the competition.
- The threat of a damaged reputation: With less healthy meals available to a new type of customer segment, McDonald's will receive a lot of stick, particularly online from individuals and groups that prioritize healthy living. McDonald's has been used as a scapegoat for fast food chains not having a genuine offering of Health-conscious food items. This can be really damaging to the image of the brand.
- The threat of low sales due to cultural differences: McDonald's outlets operating in other countries need to be aware of the culture and traditions of the people of those countries. For example, the Hindi tradition forbids the eating of beef since cows are seen as sacred animals in India. So it would be unwise for a McDonald's fast-food chain in India to offer beef hamburgers for sale.
Many people around the world have never heard of McDonald's. This fast-food chain has a global presence raking more than ISD$23 billion in sales revenue (as of 2021) with a net income of around USD$7.5 billion (in 2021).
This McDonald's SWOT analysis reveals the strengths of this franchise and possible opportunities. The SWOT McDonald's report in this post also provides information about the brand's weaknesses, including those external factors that can threaten to damage their business.
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