McDonald’s Business Strategy

A key element of McDonald’s strategy since the beginning has been the policy of the company to own all property on which a McDonald’s outlet was built, regardless of whether that location was franchised or company-owned. Rental income varies from property to property, but it has been estimated that McDonald’s generates more money from its rent than from its franchise fees. McDonald’s real estate holdings and rent generated from these holdings are an important component of the company’s value and income. McDonald’s is unique in the fast-food industry in that it owns much of its real estate. In most cases, McDonald’s restaurants are located on prime high-traffic real estate that is highly visible and easily accessible. McDonald’s conditions for a franchise location include a corner lot with at least 35,000 square feet of land whose entrance and exit were facilitated by a traffic light. McDonald’s also earns money by marketing excess land. The company was also testing new methods for raising revenue, such as selling retail merchandise in certain stores.

In 2002 Jim Cantalupo came out of retirement to lead McDonald’s turnaround back to profitability and restore the image of one the world’s best known brands. The new strategy was called the McDonald’s Plan to Win and focused on what the company identified as its five key drivers of success: people, products, place, price, and promotion. The first driver of exceptional customer experiences would focus on people, the employees who dealt with the customers on a daily basis. In response to a customer service ranking that rated McDonald’s dead last in the fast-food industry, even lower than the IRS. McDonald’s vowed to do a better job of staffing its restaurants at busy times and rewarding employees for delivering outstanding customer service. An interactive e-learning program to cost-effectively train employees in customer service attitudes and skills would be instituted. By reducing the menu and using more visual menus, service could be speeded up. McDonald’s would measure success in this area through a reduction in complaints related to service and increases in friendliness scores and speed of service.

The second driver of exceptional customer experiences at McDonald’s was to focus on was its products. The company planned to be more responsive to the growing interest in wholesome food choices and premium products. The McGriddle sandwiches, McChicken Premiere, and Premium Salads were some items in the premium product category. They also offered the new white-meat chicken nuggets and expanded Happy Meal menus by offering fruit slices instead of fries and fruit drinks and milk instead of soft drinks to allow a healthier alternative for customers. McDonalds’s planned to judge its success in this area through improvements in its hot and fresh scores.

The third driver was place, by making McDonald’s cleaner, and more modern. They also wanted to make McDonald’s a place where you could feel comfortable hanging out with friends or family. By installing wireless technology in some locations along