McDonalds was first opened approximately 75 years ago by two brothers, Dick and Mac McDonald. It was originally opened as a carhop with items ranging from tamales to peanut-butter-and-jelly sandwiches. McDonald’s Bar-B-Q, as it was first called, was ran out of San Bernardino, California. Carhops were the rage during that time in Southern California and McDonald’s was an instant hit. The parking lot was consistently full until late at night. However, the McDonald’s brothers had frustration with the customers because of how many plates and glasses they broke. Furthermore, it took a large staff to serve all of the customers. In 1948, the brothers decided to shut down the restaurant in order to reengineer the business. They were no longer a carhop, customers waited in line to be served, and the food came in a wrapper instead of on plates. Currently, McDonald’s is now the world’s largest restaurant chain and one of the biggest private employers (Fox, 2015).
Today, McDonald’s corporation has faced difficulties when it comes to maintaining their status around the world. “Sales at existing locations have dropped in five of the past six quarters, with a rate of decline accelerating to 2.3 percent in the first quarter of 2015” (Fox, 2015). Furthermore, revenue has also declined for McDonald’s as well. There are several reasons for the decline in revenues for the organization. The main reasons the organization has started to struggle is due to the size or the organization, the size of the menu, and the size of the working underclass and the rate of obesity throughout the country (2015).
The first current problem McDonalds has is the size of the corporation. This makes it difficult for the organization to fix their current problems. Back in the day, the McDonald’s brothers were able to shut down the restaurant in order to analyze their current issues, fix them, and reopen to make the restaurant stronger and more profitable. Today, McDonald’s has become too large or an organization to close down for a couple of months. The size also makes it more difficult to make changes. The corporation cannot simply snap their fingers and say they are going to start to do things differently. The huge size of the organization makes immediate change somewhat impossible. Change is something that needs to be closely monitored in order to insure proper change implementation. McDonalds needs to figure out a way to fix their current problems without completely shutting down all of their locations (Fox, 2015).
Another problem that is present for McDonalds is the size of their menu. Recently, a man visited a McDonalds in California. He realized there were only 12 cars in the parking lot and none in the drive-through. Once he walked inside, he counted only five customers inside the restaurant. He was overwhelmed by the oversized menu. He did not know what to order since there were so many options to choose from. He ended up choosing something that stood out on the menu because the letters were bigger. He ordered an iced coffee and went on his way (Fox, 2015).
After the customer was done in McDonalds, he went across the street to In-N-Out Burger. In-N-Out was founded around the same time as McDonalds, however, only has 300 locations compared to the 36,000 locations McDonald’s has. The customer counted 62 cars in the parking lot, 10 in the drive through, and every table on the inside was taken. The menu was also different. There were only four items on the menu compared to McDonald’s completely oversized menu. The last thing the customer noticed was about the taste of the food; it wasn’t nearly as good as McDonalds (Fox, 2015).
The last current problem has been a problem for McDonalds over the past decade. These problems include “the consolidation and industrialization of the agricultural sector, the growth of a working underclass, and the global burgeoning of waistlines” (Fox, 2015). Obviously, McDonalds cannot fix these global issues. In the past, they have taken steps to remedy some of these problems. They have stated that they are willing to raise workers’ wages and try to get antibiotics out of the chicken it buys (2015). However, it is hard for one corporation to take on these huge national issues. Stating they will make these changes, however, does increase consumer trust in an organization. Which is important when it comes to loyalty and retaining their customers.
The first recommendation is currently already in play for McDonalds. About a decade ago, the current CEO Jim Skinner fixed the size problem by stopping the current growth of the organization. Instead of adding more chains to the size of the corporation, Skinner improved the existing restaurants that were already up and running. The new CEO, Steve Easterbrook, is trying to fix these current problems by closing hundreds of underperforming restaurants around the country. This could cause more problems for the organization. While it will make it easier to analyze business performance and figure out the best way increase revenue with less chains, it will only make things more difficult in the future. First, reopening those chains would be a huge expense. What McDonald’s needs to do is implement change one chain at a time. They can also use the underperformed chains to their advantage. For example, they could use one of these locations to see whether or not creating a smaller menu would be beneficial to the organization.
The second recommendation for McDonalds is to decrease the size of its menu. Having a large menu can be troublesome for some people. It can overwhelm the customer such as the customer above. It can also make it difficult for the customer to choose what they want to eat. Sometimes too many options can make it difficult for a customer to pick what they want to eat. As mentioned above, In-N-Out Burger only has four options on their menu. These options are simple: a hamburger, a cheeseburger, fries, and the Double-Double (consists of two patties and two slices of cheese) (Fox, 2015). This is very simple for customers; they either want cheese or they do not. It decreases the time the customer has to spend deciding on what they would like to eat that day. As a result, customers are less confused, they order faster, and are able to return to their daily activities faster.
The last recommendation has to do with the consolidation and industrialization of the agricultural sector. While McDonalds has made promises to push to get antibiotics out of the chicken it buys, that does not mean it will stop the manufacture from putting the antibiotics into the chicken. One recommendation would be for McDonalds to buy chicken from a manufacture that does not use antibiotics in their chicken. This could be helpful to McDonalds, however, it could also be harmful. While it may increase their cliental with individuals who do not want antibiotics in their chicken, it could lose some of their cliental as well. Buying chicken from a different manufacture could mean there may be a different taste in the chicken. This could cause McDonalds to lose current customers who specifically crave that taste.
Even with the obstacles McDonald’s is currently having, it is still the biggest food chain in the world. Overall, it still dwarfs its rivals. However, McDonald’s current issues do need to be dealt with in order to McDonald’s to maintain its rank in the industry. The size of the organization does create problems for the organization, as well as its menu and current industrial and economic issues. However, if McDonald’s revamps using proper methods than the corporation should have no problem staying on top of the industry.
Fox, J. (2015, April 30). Is It Too Late for McDonald's to Save Itself? Bloomberg Businessweek.
Lazare, L. (2015, July 17). McDonad's desperation mounts as burger behemoth reports lousy Februrary U.S. sales. Chicago Business Journal.