The McDonald’s Corporation: How did they become the most popular fast-food company in the world?
1. Introduction
How did McDonald’s become the most popular fast-food company in the world?
The answer to this question is not very simple and it would take a lot of time to describe all the steps that led to this result.
What we can do is try to analyze the current situation of the company and the fast food industry in general to understand how McDonald’s Corporation became so successful.
2. The fast food industry in the United States
The United States is the country with the highest consumption of fast food in the world.
According to a study by the Food and Agriculture Organization of the United Nations, “the average American spends about $1150 on eating out annually” (FAO, 2005).
This number is almost three times higher than what Europeans spend on average and six times higher than what people from developing countries spend.
The FAO study also showed that “US$110 billion are spent on fast food every year” in the United States (FAO, 2005).
This means that the US fast food industry is worth more than the GDP of most countries in the world.
There are many reasons why Americans love fast food so much.
First of all, it is very convenient.
In a country where people are always in a hurry, it is much easier to stop at a McDonald’s and get a burger than to cook at home.
Besides, fast food is usually much cheaper than normal restaurants.
And finally, it has become part of American culture.
For many people, going to McDonald’s is like going to a movie: it is something they do on a regular basis.
3. McDonald Corporation as a player of this industry
McDonald’s Corporation is by far the largest player in the US fast food industry.
It has more than 14000 restaurants only in the United States and more than 36000 restaurants all over the world (McDonald’s, 2016).
This means that McDonald’s has almost three times as many restaurants as its closest competitor, Burger King (BK, 2016).
Besides being the largest company in terms of number of restaurants, McDonald’s is also the most profitable one.
Its annual revenue is more than US$24 billion (McDonald’s, 2016), while Burger King’s revenue is less than US$4 billion (BK, 2016).
In other words, McDonald’s makes six times more money than Burger King.
There are several reasons why McDonald’s is so successful.
First of all, it has a very efficient business model.
All McDonald’s restaurants are owned by franchisees who have to pay royalties to the company for using its brand name and following its standards.
This means that McDonald’s doesn’t have to invest much money in opening new restaurants: it only has to collect royalties from its franchisees.
Secondly, McDonald’s has been very good at expanding its business globally.
It started opening restaurants outside the United States already in 1967 (McDonald’s, 2016) and now it has almost 37000 restaurants in 119 countries (McDonald’s, 2016).This has helped the company to continue growing even when the US market became saturated.
And finally, McDonald’s has been very good at innovating its product offering.
It was one of the first companies to introduce salads and McNuggets to its menu and it has continued introducing new products on a regular basis.
4. Global fast food industry
The global fast food industry is worth more than US$570 billion (QSR, 2016).
This means that it is almost twice as big as the US fast food industry.
However, the growth of the global fast food industry has been slowing down in recent years.
According to Euromonitor, “the global fast food industry is expected to grow by only 2% in 2016” (Euromonitor, 2016).
This is much slower than the 7% annual growth that the industry was experiencing only a few years ago (Euromonitor, 2016).
The slowdown of the global fast food industry is due to several factors.
First of all, many countries are becoming increasingly health-conscious and are therefore eating less fast food.
This is especially true in developed countries where people are already quite wealthy and don’t need to save time by eating fast food.
Secondly, the economic slowdown in China and other emerging markets is also having an impact on the fast food industry.
As people become less wealthy, they tend to eat out less often and spend less money on high-quality food.
And finally, the terrorist attacks in Paris and Belgium have also led to a decrease in tourist spending, which has impacted the fast food industry as well.
Despite these challenges, the global fast food industry is still expected to grow in the future.
This is because there are still many countries where fast food consumption is relatively low but is growing quickly.
India, for example, is expected to be one of the fastest-growing markets for fast food in the next few years.
According to Euromonitor, “fast food sales in India are expected to grow by 19% in 2019” (Euromonitor, 2016).
This is because India has a large population of young people who are becoming more urbanized and have more disposable income.
5. Conclusion
The US fast food industry is worth more than $110 billion per year and McDonald’s Corporation is by far the largest player in this industry.
McDonald’s has been very successful in expanding its business globally and has more than 37000 restaurants in 119 countries.
Despite some challenges, the global fast food industry is still expected to grow in the future due to the increasing urbanization of developing countries.