🕒: Seven minutes
The success of McDonald's is the business equivalent of the American dream. While McDonald's was not the first franchise business, it has become the most prominent example of this particular business model. With roots that trace back to a single drive-in started by a pair of brothers, Dick and Mac McDonald, in Southern California, McDonald's has grown to a network of almost 40,000 locations in more than 115 countries.
So how did the chain grow from a single restaurant into the expansive corporation it is today? Three main characteristics have contributed to McDonald's overwhelming success: consistency, innovation and resilience of the brand.
Consistency
No matter where in the world you visit a McDonald's – America or Australia, Ireland or India – you're going to enjoy a similar experience. This highlights the vision Ray Kroc had for McDonald's from the very beginning. Kroc was a salesman from Illinois who ventured to San Bernardino, California in 1954 when he noticed a larger than normal order for the milkshake multi-mixers he was selling came in. When he arrived in California, he was intrigued by what he witnessed – a restaurant that was efficiently serving a large number of customers who seemed pleased with the food they were receiving.
Sensing a business opportunity, he made a proposal to the McDonald brothers to begin franchising their restaurant concept, which the brothers eventually accepted. Kroc opened the first McDonald's in 1955 in Des Plaines, Illinois. "Quality, service, cleanliness and value," became Kroc's motto, and the foundation of the McDonald's franchise model. His belief in this motto was so strong that he went on to found a training school, Hamburger University, in 1961; the curriculum was based on the four key concepts of Kroc's motto, as well as lessons he had learned from his first years in business.
Consistency is the cornerstone of any franchise system and Hamburger University has systematically taught future franchisees how to run a McDonald's restaurant the way Ray Kroc envisioned. Customers know what to expect and can take comfort in that knowledge when making a decision on where to eat. These efforts towards process repetition and efficiency not only set the basis for McDonald's success from the standpoint of customers' expectations, but also help McDonald's to stay on top in a culture where producing food at a quick pace is commonly expected. This has been a major contributing factor to McDonald's incredible growth and expansion.
Innovation
While consistency and innovation may seem to contradict one another, in actuality they work together to allow for McDonald's continued growth; remaining consistent on the core components of your business doesn't mean the products you sell, or even the way you deliver them, have to stay the same. It's a delicate balance, but innovation stemming from responsiveness to both customers and franchisees has played an important role in allowing McDonald's to fend off stagnation throughout the years.
For example, in 1975, a group of potential McDonald's customers had a problem: at that time, soldiers in a certain area weren't permitted to get out of their cars while wearing their uniforms. McDonald's came up with a simple solution to this problem – add a drive-through area where customers could order, pay for and collect their food, all while remaining in their vehicle. The first McDonald's 'drive-thru' was located near military base Fort Huachuca in Sierra Vista, Arizona to serve the soldiers. Additional drive-thru locations in Georgia and Oklahoma City soon followed.
In addition, McDonald's product offerings have evolved over the years alongside the tastes of their customers, thanks in part to some observant and innovative franchisees. A few examples of products that were introduced after being developed by McDonald's franchisees or owner/operators include Filet-O-Fish, the Big Mac, apple pie, egg McMuffins and the McFlurry. These menu innovations (along with items developed in their test kitchen) have allowed McDonald's to offer products for every meal, allowing for greater profitability. Great care is taken not to affect the consumer experience when a new item is introduced.
Resilience
Though the trajectory for McDonald's has been primarily upward throughout its existence, the company has had to face several challenges and controversies. The ability to weather these storms is perhaps the biggest reason for McDonald’s enduring success.
McDonald's has had many lawsuits directed at them for various issues, and has been the subject of a large amount of negative press. What does McDonald's do to combat this negativity From an outside perspective, it appears that at least part of their strategy entails acknowledging the concern or issue, and then dedicating resources in-house to staying on top of the issue, as the following examples illustrate.
Health concerns:
Many of the challenges McDonald's has faced over the years are related to health issues, particularly concerning children. In response to these concerns, McDonald's formed the Global Advisory Council in 2004. The GAC is an international team of independent experts assembled by McDonald's to provide professional guidance in the areas of nutrition and children's wellbeing. Several additions to their menu items have been created as a result of critics' and consumers' desire for healthier choices.
In addition, McDonald's was one of the first fast-food restaurants to provide nutrition facts on their packaging, beginning in 2006. In March 2015 they introduced new standards, announcing that they would only use chickens that are largely antibiotic free and milk from cows that have not been treated with the artificial growth hormone BST.
Environmental awareness:
When it comes to sustainable environmental practices, activists have been raising concerns over McDonald's policies for decades. In response, McDonald's formally established a Global Environmental Commitment in 1990 that outlines the steps they have taken to reduce solid waste, conserve and protect natural resources, along with encouraging others to be accountable for their actions. One of results of this commitment is that currently 82% of McDonald's consumer packaging is made from renewable materials. The brand has made a committment to ensure all packaging is from renewable, recycled or certifed sources by 2025.
Maintaining goodwill:
How can McDonald's turn these tribulations into bumps in the road instead of them have a devastating impact on business? Part of the reason McDonald's can be resilient when they are challenged is an established rapport within the community. When controversies arise, having goodwill with consumers can help any company weather the storm. Ways McDonald's cultivates goodwill with consumers include their involvement in youth sports programmes and charity programmes such as Ronald McDonald House charities.
Present-day challenges:
McDonald's is drawing upon all its experience in dealing with adversity again as the last number of years has seen a shift in the mentality towards the fast-food industry. Much of the decline has come from a dearth of millennial customers. It seems this generation is turning towards trendier – and in a number of cases healthier – options from other fast-food and casual-dining restaurants. As with other issues that have arisen, it seems that the fast-food franchise is following its practice of acknowledging the issue and then committing resources to battling the problem.
Part of McDonald's plan is to let franchisees have more autonomy in making menu decisions. Over the last few years, McDonald's menu has grown by 70%. The company is also giving customers more transparency. Its 'Our food. Your questions' campaign is designed to combat the negative stereotype associated with McDonald's and allay the fears some customers may have about McDonald's food.
Lessons to be learned:
Very few companies will ever come near the magnitude of operation McDonald's has achieved. Its prominence as a fast-food restaurant, as well as a franchise model, is astonishing. The success of McDonald's can be attributed to a multitude of factors, which can be applied to a number of businesses to ensure their success. It is clear that developing strong, efficient processes and procedures and remaining consistent has enabled brand loyalty and inspired confidence in McDonald's as a business. Having the foundation of consistent processes allow businesses the flexibility to innovate and adapt to consumers' concerns, and improve the brand with minimal disruption. Problems and controversies will arise; having an established rapport with consumers can help businesses be resilient when such difficulties emerge.