McDonald’s SWOT Analysis (2023) (2024)

By S. K. Gupta | Last updated: Mar 31, 2023

Company: McDonald’s Corp.
CEO:Chris Kempczinski
Founders: Richard and Maurice McDonald’s
Year founded: 1940
Headquarter:Chicago, Illinois
Number of Employees (FY 2022):150,000
Type: Public
Ticker Symbol: MCD
Annual Revenue (FY 2022): $23.18 Billion
Profit |Net income ( FY 2022): $6.17 Billion

Products & Services:Fast food and Beverages
Competitors: Burger King | Chipotle | Wendy’s | Shake Shack | KFC | Chick-Fil-A | Subway | Dunkin Donut | Panera Bread | Starbucks

Did you know

McDonald’s is the largest supplier of toys in the world, remember the toys that you get with every happy meal!

Introduction

McDonald’s is one of the most celebrated fast food chains worldwide. This American food restaurant was founded seventy-five years ago, in 1940, by two brothers Richard and Maurice.

The first McDonald’s stall was a BBQ joint, which was opened in San Bernardino, California.

After eight years, it was turned into a fast-food restaurant, which was later purchased by Multimixer salesman Ray Kroc. In 1955, he started his first franchise in Des Plaines, Illinois, transforming it into a proper corporation gradually.

Today, McDonald’s Corp. is one of the top ten international brands running thousands of franchise in almost all over the world, including Australia, Canada, France, Germany, the United Kingdom, China, Italy, Korea, Poland, Russia, Spain, Switzerland, the Netherlands and many other countries in the world.

Let’s explore the latest dynamics of SWOT analysis of McDonald’s . It reveals how the most thriving food chain business of all time uses its competitive advantages to continue ruling the fast-food industry.

McDonald’s Strengths

The following factors are McDonald’s most potent aspects which have ensured the company’s profitability, development and universal brand image.

1. Most Valuable Brands

McDonald’s is the 9thmost valuable brand in the world. With an incredible brand value, the company rules the restaurant industry regardless of the fierce competition.

2. Tasty Food

McDonald’s fries are considered the best tasting fries in the fast food industry. McDonald’s fries are best-tasting fries says customer survey.

3. McDonald’s – A Real Estate Company

Very few people know that apart from selling burger and fries, McDonald’s has a multi-billion real estate empire. Imagine having thousands of premium locations around the globe.

In 2022, there were 38,260franchised restaurantsand 2,015 company operated restaurants making it a total of 40,275restaurants spread across 119 countries.

McDonald’s franchise works slightly differently. McDonald’s not only provides their brand name, recipes, ingredients, processes to franchisees but also owns the land and operates as a landlord and makes revenue through rent payments.

4. Technology Initiatives

McDonald’s is taking revolutionary technology initiatives to make their ‘Experience of the Future’ dream come true. Initiatives like implementing self-service with kiosks, mobile order and payment systems are benefiting McDonald’s image as the ‘restaurant of the future.’

5. Technology Acquisitions

The company’s latest acquisition of ‘Dynamic Yield‘ is another step towards enhanced personalized marketing and customizations. Dynamic Yield is an Israeli startup that assists brands like McDonald’s to boost their customer experience with brands personalize offerings.

6. Highest Brand Value in Fast Food Brands

McDonald’s enjoys the privilege of being the most valuable fast food brand in the world. According to Interbrand, in 2022, McDonald’s brand value increased to $48.6 billion(about 6% increase from 2021). No other fast-food brand was even close to McDonald’s worth in terms of the brand value. Next close competitor is Starbucks with a brand value of $14 billion.

7. Improved Quality Control and Health Protocols

You can debate about the taste and overall customer experience, but McDonald’s’ quality standard has always been its strong point. The Company enforces complete food safety and quality protocols before buying the ingredients from third-party intermediaries.

Recently McDonald’s has begun restricting the use of the high-value human antibiotics. It was established by the World Health Organization (WHO) as “highest priority critically important antimicrobials” (HPCIA) to human medicine, in its global chicken supply since 2018.

The policy is also appreciated by many public health and consumer group as it is a great effort to prevent dangerous superbugs.

8. Leading quick-service restaurant

In 2022, McDonald’s was the leading quick-service restaurant (QSR) chain with revenue of $23.18 billion.

About 37% ($8.74 billion) of the sales revenue is generated by company-operated restaurants and 61% ($14.1 billion) by franchised restaurants in the form of fees from franchisees and development licenses. Rest 2% ($ 329 million) of the revenue is attributed to other categories (technology fees, brand licensing arrangements).

9.McDonald’s offer discount to front line workers

The fast food giant announced that it will be continuing its 20% discount for National Health Services (NHS) workers for the entirety of 2022 across the entire UK. Workers can use the discount on McDonald’s entire online menu. The discount was meant as an initiative for NHS workers to save money on their favorite items on the menu for this year.

However, the primary reason why the fast food giant offered this amazing discount deal was to show its appreciation to the frontline workers, appreciating their hard work amidst the deadly outbreak.

McDonald’s Weaknesses

Here are some of the shortcomings of McDonald’s’ strategy and structured composition, which affects its overall growth.

1. The Franchise business model

McDonald’s is the best example of international franchising models. However, having this complicated web of franchised and company-operated restaurants expose the brand to certain risks.

The risks of financial deterioration, mismanagement, customer dissatisfaction, and low revenue generation. The company heavily depends on the franchises which works independently and hence they have no control over their day to day performance, but it affects the brand directly.

2. Supply chain interruptions

McDonald’s being one of the busiest food chains often faces issues due to disruption in the supply chain. Also, it limits the availability of products, which are critical to the operations.

Therefore, when a franchise experiences such interruptions, the operational expense increases, which there by results in reduce revenue and lower profitability.

3. Lack of Employee Satisfaction

Due to recent employee right revolutions worldwide and increased wage limits, many organizations have faced critical dissatisfaction from employees.

Recently McDonald’s has faced extreme backlash from their workforce. The workers went to several protests and strikes with a demand to increase their minimum wage to $15 an hour, causing the company reputational harm.

4. McDonald’s Breakfast Menu Has Lost Its Charm

For nearly a decade, McDonald’s breakfast sales remained unbeatable especially in the US. However, in May 2018, the company’s CFO accepted that they have been observing a downfall in McDonald’s breakfast menu consumption and they must do something to fix it.

But with such fierce competition around, it won’t probably be easy to regain the popularity for breakfast meals.

5. CEO was fired due to violation of company policy

In Nov 2019, McDonald’s CEO, Steve Easterbrook, was fired after having a consensual relationship with an employee. It violated company policy. Also, the company’s board stated that Steve had “demonstrated poor judgment.”

6. Poor Employee Safety

In May 2020, five employees sued McDonald’s for failing to adopt government safety guidance. The lawsuit argues that McDonald endangered the lives of its employees and their families by failing to provide hand sanitizer, gloves, and masks during the recent health crisis.

7. Sexual Harassment

Companies are required to nurture a safe working environment for all employees regardless of gender. In a lawsuit filed by over 100 female employees in April 2020, McDonald’s is accused of creating a hostile work environment and subjecting them to sexual harassment. The lawsuit erodes trust and taints its reputation further.

8. Negative Publicity

In June 2020, McDonald’s was accused of firing an employee for suing the company over its failure to protect employees during the recent health crisis. The termination is unethical because it seeks to discourage other employees from exercising their right to legal redress against their employer.

9.McDonald’s Japan Faces Fry Shortage

McDonald’s in Japan are suffering from a shortage of its famous fries. The Japanese stores are forced to cut their fries in shorter slices to fulfill demand. Customers will have to face the shortage, which has largely been impacted by global supply complications and food shortages.

However, the fast food giant announced that it will resolve the issue shortly. McDonald’s also stated that it has been facing supply issues at the port of Vancouver due to flood damages, which has also been an integral cause of the delays.

McDonald’s Opportunities

The following opportunity section for McDonald’s emphasizes the emerging chances of growth. It can help the company to improve its business performance, management structure, and strategic growth and other aspects.

1. Value Meals

In 2018, McDonald’s launched its “$1, $2, $3” menu and “2 for $5 Mix and match deal” proposed toward its value-conscious consumers. The menu was a successful addition, resulting in increased sales.

2. Innovative Products

McDonald’s must put efforts to introduce new, innovative items on their menu to make customers choose them instead of the new fast food outlets.

In 2018, the company started to serve an exclusive beverage – MIX by Sprite Tropic Berry in their New York outlets. It became an instant hit and is likely to be served in all of the US.

Launching more items like this according to the geographical conditions and culture can help McDonald’s maintain their charm for a longer period of time.

3. Global Expansion

McDonald’s rules over the US, but it is often that it struggles in the international market. However, the company has high potential to continue its global expansion by focusing more on international markets rather than different states of America.

4. Rebuilding the Brand Image

While fast-food restaurants are struggling to fight the image of ‘junk producing centers’, McDonald’s can play it smartly by continuing its aggressive initiatives towards, healthy and customized offerings.

These developments have begun to show progress, with positive comparable sales leading to a growth in profits. The re- franchising mission have surely pushed the sales back, but in the long run, the healthy image of McDonald’s can continue to make bigger differences.

5. Mobile order and McDelivery

McDonalds has initiated a partnership with UberEats and Door dash for US food delivery. These mobile order and delivery initiatives help McDonald’s to reach and fulfil customer’s ever-changing needs.

6. Offer Healthier Options

More consumers are seeking healthier options. Even though McDonald’s offers healthy options like salads and 1% Low Fat Milk Jug, the options are very limited. The company can increase the number of healthy options to attract more health-conscious consumers and grow.

7. Expand Drive-Ins, Pick-Ups, and Self-Order Kiosks

McDonald’s prioritization of creating the best in-premise dining experience became a major weakness during the recent health crisis. This strategy contributed to a 17% decline in earnings as more consumers opted for pick-ups and deliveries to be consumed at home. McDonald’s can increase deliveries, curb-side pick-ups, self-order kiosks, and drive-thru options to attract more customers during this trying time.

8.McDonalds Launches the McPlant in Ireland and UK

Vegans in Ireland can now rejoice as McDonalds launches its first-ever plant-based burger called the ‘McPlant’. The vegan burger will be offered to both Irish and British patrons. The fast food giant partnered with Beyond Meat (a rising vegan organization), to bring the restaurant’s vegan burgers to the UK and Ireland. The vegan patty was made via a collaboration between both McDonalds and Beyond Meat – and the burger was tested by Beyond Meat at over 200 restaurants in 2021.

McDonald’s Threats

The threat factor is connected with the phenomenon which stops the company from taking full advantages of the benefits that can be derived from the available strengths. Therefore these are the few threat that McDonald’s faces.

1. Risky Investments on Technology Initiatives

Although the innovative changes done by McDonald’s have a positive outlook, the investment in technology is still risky.

The public pace of adapting new technologies may slow down the return on investment, and the results of enhancing customer experience may not generate the expected returns.

2. Fierce Competition from Competitors like Chick-Fil-A

We might think that burger giants like ‘Burger King’ are McDonald’s only competitors, but the table is beginning to turn.

Recently, Restaurant Business revealed that Chick-fil-A is now McDonald’s biggest competitor in the wildly competitive Quick Serve Restaurant (QSR) area.

3. Cultural Threat While operating in Various Countries

Being a global fast-food chain, McDonald’s has often faced multiple cultural threats in different parts of the world, causing harm to the image of the brand.

Also, it gets challenging to adapt and operate differently as per the location of the franchise. For example, a few years ago, McDonald’s faced quite a big scandal for using ingredients which were not ‘halaal’ in Muslims countries.

Such controversies make it difficult for McDonald’s to meet customer expectations with inherited risks in the international operating environment, deteriorating the brand image.

4. New Age Fast Food Trends

McDonald’s often for millennial is considered an old school with its traditional menu and taste. In this situation, food chains like shake shack and Wendy’s take full advantage with their often experimented menu and recipes to include variety.

For example, McDonald’s failed to compete with Wendy’s “Signature-Crafted Burgers.” and hence had to stick with its conventional Quarter Pounders to save face.

5.McDonald’s Social Advertisem*nts are Impacting Global Youth Health

According to a new study, it was revealed that popular fast food brands such as McDonald’s is targeting their social ad campaigns on underprivileged or low income communities across the world.

McDonald’s is using popular, mainstream social media networks such as , Instagram, Snapchat, Twitter and Facebook to propel their marketing, reaching millions of youth throughout the world. However, the report has also mentioned that its marketing is beginning to have a bad impact on consumer health, leading to dangerous repercussion later in life.

6. Economic Uncertainty

In the 2022, McDonald’s missed profitsfor the full year due to economic uncertainty. This led to a 18% drop in its net income and can drop even more if economic uncertainties persist for longer.

7. The Rise in Health-Consciousness

More consumers are adopting healthy lifestyles and switching to healthier alternatives like salads and organic shakes. Unfortunately, most of the items on McDonald’s menu are unhealthy and it can lose health-conscious customers to competitors with healthier options.

8. Tighter Regulations

The rise in lifestyle diseases is burdening for many countries. Some countries have enacted laws to limit the use of specific ingredients that are unhealthy or banned fast-food companies. Nine countries have banned McDonald’s like Iceland, Macedonia, Montenegro, Bermuda, and Bolivia.

9. Constant Environmental Concerns

Like every other food giant, McDonald’s face immense pressure to improve its practices to minimize the waste, which causes environmental pollution.

The growing ecological concerns demand McDonald’s to take initiatives in this regard and set an example for other food outlets but it is not that simple.

In March 2018, environmental activists proposed the board of directors of McDonald’s to abandon the use of plastic straws in its over 40,000 restaurants worldwide due to explosion of plastic pollution.

Conclusion

McDonald’s is one of the most powerful food brands of all time, deriving incredible globalization and customer loyalty. But despite the company’s continuous legacy, it needs to keep in check the aspects which can cause trouble.

In this SWOT analysis for the company, we highlighted each of the strength, weakness, opportunity and threat which McDonald’s faces in the market.

References & more information

1. Hals, T. (2020, May 19). U.S. workers hit McDonald’s with class action over COVID-19 safety. Reuters
2. Pierson, B. (2020, April 13). McDonald’s faces new class action over ‘pervasive sexual harassment’. Reuters
3. Eidelson, J. (2020, June 19). McDonald’s Accused f Firing Worker Who Sued Over Covid-19 Claims. Bloomberg
4. Malacoff, J. (2020, January 17). The Healthiest Things You Can Order from the McDonald’s Menu, According to Nutritionists. Shape
5. Lucas, A. (2020, April 30). McDonald’s earnings fall 17% as coronavirus leads to restaurant closures, plunging sales. CNBC
6. Balu, N. (2020, April 30). McDonald’s profit misses estimates, shares drop 4%. Reuters
7. Lucas, A. (2020, June 16). McDonald’s to bring back some menu items cut during the pandemic. CNBC
8. Jones, M. (2020, Jan. 03). 9 Countries That Have Banned McDonald’s. Readers’ Digest

Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.