McDonald’s Corporation (MCD)

History and Background

McDonald's Corporation was founded in 1940 by Richard and Maurice McDonald in San Bernardino, California. Initially a barbecue restaurant, it was later reorganized as a hamburger stand. In 1954, Ray Kroc partnered with the McDonald brothers, and eventually bought the company, expanding it globally. Key milestones include the standardization of operations, the introduction of the Speedee Service System, and aggressive franchising.

Core Business Areas

• Franchising: McDonald's primarily operates through franchising, where independent entrepreneurs own and operate McDonald's restaurants. The company generates revenue from franchise royalties and initial fees.
• Company-Operated Restaurants: McDonald's also operates a smaller number of company-owned restaurants, which provide direct revenue and serve as testbeds for new menu items and operational strategies.
• International Operations: McDonald's has operations around the globe. McDonald's Corporation licenses and franchises restaurant operations under its brand name in countries and territories worldwide. In addition, McDonald's Corporation's international business includes the operation of restaurants under affiliate agreements in certain markets.

Leadership and Structure

McDonald's is led by CEO Chris Kempczinski. The organizational structure includes corporate officers overseeing various functions such as operations, marketing, finance, and development. Regional management teams oversee specific geographic areas.

Key Offerings

• Big Mac: The Big Mac is a signature burger consisting of two beef patties, special sauce, lettuce, cheese, pickles, and onions on a sesame seed bun. McDonald's doesn't publicly break out market share for specific menu items. Competitors include other fast-food chains with similar offerings (Burger King's Whopper, Wendy's Dave's Single).
• French Fries: McDonald's French Fries are a popular side dish. Similar to Big Mac, market share of this particular product is not broken out. Competitors include the French Fries offerings of all fast food brands.
• McNuggets: Chicken McNuggets are a popular appetizer item, consisting of small pieces of battered and fried chicken. Market share of McNuggets is unavailable. Competitors include chicken nuggets at KFC, Burger King, Wendy's, and Chick-Fil-A.

Industry Overview

The fast-food industry is highly competitive, characterized by changing consumer preferences, health concerns, and increasing competition from fast-casual restaurants and delivery services.

Positioning

McDonald's is positioned as a leading global fast-food chain, known for its affordability, convenience, and consistency. Competitive advantages include brand recognition, extensive franchise network, and efficient supply chain.

Total Addressable Market (TAM)

The global fast-food market is estimated to be $931.70 billion in 2024 and is expected to reach $1.39 trillion by 2032. McDonaldu2019s is positioned to capture a significant portion of this market through its global brand recognition and franchise network.

Key Competitors

• YUM (YUM)
• QSR (QSR)
• WEN (WEN)

Competitive Landscape

McDonald's advantages include its global brand recognition and extensive franchise network. Disadvantages include negative perceptions of food quality compared to fast-casual restaurants.

Dynamic Yield

• Year: 2019
• Acquisition Price (USD millions): 300
• Strategic Rationale: Acquisition of personalization platform to enhance customer experience through personalized menus and offers.

Historical Growth: McDonald's has experienced steady growth over the past decade, driven by global expansion and menu innovation.

Future Projections: Analysts project continued growth in revenue and earnings, driven by international expansion and digital initiatives. Expected revenue growth rate is around 3-5% per year.

Recent Initiatives: Recent strategic initiatives include the introduction of new menu items, investments in technology (e.g., mobile ordering, kiosks), and a focus on sustainability.

McDonald's is a strong, globally recognized brand with a robust franchise system and consistent profitability. Its strengths lie in its extensive reach and efficient operations. However, the company needs to continually address concerns about food quality and adapt to changing consumer preferences while navigating increasing competition in the fast-food industry. Continued focus on innovation and international expansion is vital.

Data Sources:

• Company SEC Filings
• Analyst Reports
• Industry Research Reports
• Company Investor Relations

Disclaimers:

The data provided is for informational purposes only and should not be considered financial advice. Market conditions and company performance can change rapidly, and past performance is not indicative of future results.