McDonalds Corporation

McDonald's Corporation

McDonald's is the global market leader in the fast food industry. Two brothers in San Bernardino, California started the first McDonald's fast food restaurant in 1948; they tailored their drive-in restaurant, as an example of convenience for other restaurants to soon follow. At the beginning, there were only a few items on the menu, which has now substantially evolved to many more options, catering to the appetite of each region's interest of food and health standards. With the modest beginnings of only a few items to choose from on their menu, the McDonald's brothers focused on customer service and hamburgers at a price anyone can afford. Their prices are still reasonably priced for any budget. In 1961, Ray Kroc bought McDonald's with a franchising vision for it to expand, in which he opened a restaurant in Illinois. Ray purchased McDonald's from the two brothers for $2.7 million dollars, and contributed to the popularity and success McDonald's has today. Kroc's key concern was always preserving McDonald's image by setting high standards with himself and his company.

In the 1960's, under Kroc's leadership, McDonald's used strategic advertising and marketing campaigns; Kroc used capital in order to attain the goals and vision he had with McDonalds. One of the catchiest parts of the advertisements that McDonald's marketing plan came up with was the golden arch as their trademark. Children became attracted to McDonald's even more with Ronald McDonald joining this advertising. In 1967, Canada and Puerto Rico became the to open McDonald's, outside the US. In 2003, McDonald's restaurants grew to 14,000 locations, and in the international market have grown to 14,177, which is a 32 percent increase. The international profitability has been substantial, with great success worldwide.

The extraordinary growth of McDonald's has greatly to do with their franchising system. More than half of McDonald's restaurants are franchises, in which the company is very discerning on who they chose to become a part of their team. Before anyone joins the franchise, extensive training is mandatory, which includes 2 years of training and 2000 uncompensated hours in a McDonald's restaurant. There are high standards set for those that choose to franchise, which includes a 20-year term and a minimum of 175,000.00 of non-borrowed money. There are several factors that come with the purchasing price of the restaurant, that include if it is an existing or new restaurant. There are some instances in which a Business Facilities Lease is granted for that may not have enough capital, but all other requirements are met.

McDonald's deems it responsible for each franchise to supply their own food, supplies, and overall equipment for their facility. Each franchise is responsible for all occupancy costs that include property taxes, maintenance, etc. Franchises are also to pay rent and other service fees, which all depends on the sales performance, which can range from 4 to 8.5 percent. These requirements are established during the extensive training that prospective franchise owners have to consider before joining.

Employees at McDonald's tend to be those who have never had a job, teenagers and students that do not have experience in the work environment. With this in mind, employees at McDonalds are generally paid allot less than employees at other restaurants. There are standardized procedures that employees must adhere to, with meticulous steps that should be followed. The uniform is an example of this homogenous work environment; there is little variation throughout the globe. In some countries, there are different colors used in their uniform, because to religion. Although uniform is standard in most restaurant chains, there are certain aspects of McDonald's that need to be revisited. Some experts have concluded that the steps are so rigid that the work environment is not meant for a young crowd, who are as robots working in an age that thrives on technological advances. This of course, has led to a 130 to 135 percent turn over rate.

There should be some considerations in change regarding their turn over rate. In order to have a successful business, change needs to be considered, and knowing the competition and their success should also be priority. Restaurants such as Chic-Fil-A have tapped into a strategy that is beneficial for the future of the employees that work with Chic-Fil-A, as well as giving young employees that desire to stay at a fast food chain while in school, reducing turn over rate substantially compared to McDonalds. Chick-fil-A, Inc. founder S. Truett Cathy established the Team Member Scholarship program in 1973 to encourage Chick-fil-A restaurant employees to further