Reference no: EM133390082

Case Study - MCDONALD' S PLAN TO WIN

After 50 years of operation, McDonald' s is revitalizing its products, and pushing innovation through a variety of initiatives. This foodservice giant with more than 30,000 restaurants in 100 countries provides food to nearly 50 million customers each day, but decades of expansion, sales growth, and profits made the burger giant complacent. By focusing on getting bigger, not better, the company stumbled in 2002, recording its first losing quarter. By 2003, U.S. sales had flattened, as many consumers were turning to healthier options and restaurants with more upscale menu items, a segment sometimes referred to as "fast - casual" . Morgan Spurlock' s film Super-Size Me, released in 2004, also seriously diminished the public image of the quick - service chain, as moviegoers watched Spurlock become ill and gain 25 pounds after eating only McDonald' s food for one month.

With pressure to get back on track, it was time for McDonald' s to rethink the business. The chain devised a recovery strategy that included new menu items, redesigned restaurants, and a focus on the consumer experience. Through a program titled "Plan to Win, " McDonald ' s focused on making a deeper connection with customers through the five business drivers of people, products, place, price, and promotion. Using its own five P' s, the company is developing and refining new strategies to deliver value, offering product variety, developing updated and contemporary stores, balancing the delivery of value pricing with more expensive items, and marketing through bold and innovative promotions.

Execution of this strategy has included mystery shoppers and customer surveys, along with grading restaurants to help the company deliver on its people goals. New menu items like the Fruit &Walnut Salad in the United States and deli sandwiches in Australia are part of the commitment to serve high - quality products to satisfy customer demand for choice and variety. Restaurants are staying open longer, accepting credit and debit cards, enabling wireless Internet access, and even providing delivery service in parts of Asia. As part of the program, franchisees and suppliers are asked to provide their opinions and ideas on facility design, while the company benchmarks retail leaders, such as Crate &Barrel, to help produce cleaner and smarter restaurants. The company is testing small handheld devices to use on what it calls "travel paths," a process for checking operational failures such as the temperature inside the refrigerators. Experiments with a new grilling concept from Sweden, which grills burgers vertically instead of horizontally, offers space - saving possibilities for the chain. Product offerings like the McCafé, a concept developed in the Australian market that provides gourmet coffee inside 500 existing restaurants, are proving to be successful. The trouble experienced in the early part of the millennium has abated, and executives at McDonald' s have declared success after several years of progress under the Plan to Win.

Company revenues are up, and the fi rm plans to remain focused on its core business. One indication of its commitment to fast food was the divestiture of its seven - year ownership stake in Chipotle Mexican Grill, a highly successful fast - casual burrito chain. With the sale of around 5 million shares of Chipotle stock, the burger maker is now refocusing on Brand McDonald' s.

Attracting more customers to McDonald ' s remains its goal for growth. In the U.S. market, the strategy is to leverage menu innovation; in Europe, upgrading the customer experience and enhancing local relevance have driven management efforts; and the Asia/Pacific, Middle East, and Africa markets have focused on building sales through extended hours. The question remains whether focusing on the core business will yield maximum return. At McDonald ' s, the executives are betting on the core brand and hoping that this strategy will pay off.

1. Will the decision to focus on Brand McDonald' s yield the best returns?

2. Why divest shares in the popular fast - casual Chipotle Mexican Grill concept just as it begins to take off?

3. Can the premium coffee McCafé concept expect to compete seriously with Starbucks? Or will McDonald' s, like the market leaders in many other industries in the past, struggle?

4. How many times can McDonald' s reinvent itself and continue to grow?