Transcript McDonalds Corporation

QUICK-SERVICE INDUSTRY
OVERVIEW
SONGKI KIM
DANA WILLIAMS
JEFF OHLMAN
JORGE DIETRICH
NADINE CHAMSEDDINE
JOSE GUZMAN
Margin Trends 2004
Burger’s Big Three
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McDonald
% 10
Burger King
% -10.5
Wendy’s
% 3
McKey Foods: Burgers [McDonalds sub.]
Sun Valley: Chicken [TGWU union]
McCain Foods GB Ltd: Chips [North York]
Sweetheart International: Ronald McDonald
cups and straws [Holland]
Compare 2004 Sales (Mil.)
McDonald
$ 19,065
$ 20,000
$Yum
9,170
$ 15,000
$ 10,000
$ 5,000
$-
Burger King,
$ 1,300
W endy's,
$ 3,636
Sonics,
$ 536
Annual Sales
Market Share 2004
Burger’s Big Three
McDonald
% 59
Burger King
% 21
Wendy’s
% 20
Porter’s Five Competitive Forces
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Entrants - Low/Moderate- Brand awareness
and lower cost competitive advantage.
Require time and large capital Investment
Rivalry – High- Burger King, Wendy’s, J.B.,
are heavy competitors
Power of Suppliers – Low- Most have the
purchasing power to negotiate lower prices
Porter’s Five Competitive Forces
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Competitive Force - Threat/Power- Prices and
product offering are the main sources of competition
Substitutes- Low/Moderate- Trends show
consumers prefer healthier and more exotic
alternatives
Buying power -Most players have a lower cost
competitive advantage. Top players also achieve
economies of scale via this
Rivalry among Existing Competitors
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Intense rivalry and competition market share
among existing fast-food competitors
Slowing growth rate of sales
To attract customers….
- increase advertising
- price discount
- offer new product
Threat of New Entrants
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Economies of scale force new entrants
to enter at a cost disadvantage
Require higher fixed costs to enter
existing market
Have strong customer loyalty
Willing to defend new entrants with price
discounting and advertising
Threat of Substitute Products
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There are….
- numerous restaurants and other eating
alternatives
- a variety of high-quality, reasonably
priced eating alternatives
Customer switching costs are low
McDonalds Corporation
McDonald’s History
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In 1955 Milkshake-Machine Salesman Ray
Kroc took out a franchise on a hamburger
store owned by two McDonald brothers.
Today McDonald’s is the largest fast food
operator in the world.
50 Million customers every day, 12000
Restaurants in the USA, and 30,000
Worldwide in 119 countries
The chain has grown by one new outlet every
17 hours in the last decade.
Marketing Strategy
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Global Brand Awareness ‘Golden
Arches”
Marketing Alliances
Global Sponsorship
Alignment with country-level marketing
activities
Focused on its customers
Marketing Budget
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Advertising Costs:
• [In Millions]
2004
2003
2002
$ 619.50
$ 596.70
$ 532.30
Subsidiaries
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Boston Market
Chipotle Mexican Grill
Donatos Pizzeria Business
Note: in December 2003 McDonalds
sold Donatos Pizzeria Business
Suppliers Europe
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Golden West Foods: Buns, Ketchup,
Syrup, milkshake mix [McDonald’s
subsidiary]
SWOT Analysis
Strengths
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Financial Power- McDonald’s spends more on
advertising on a single brand than any other
organization. In 1986 a colossal $789m, or 6.3% of
system wide sales, went to advertising. It is one of
the five largest television advertisers in the US, with
children as its prime target. After Santa Claus,
Ronald McDonald is the figure best known to US
Children.
Recipe for Success- McDonalds revolutionized the
fast food Industry. They introduced a new production
process that lowered labor costs.
SWOT Analysis
Weaknesses/Opportunities/Threats
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Weakness-It is possible that a company can become
so large it saturates the market.
Opportunities- Because of its financial power
McDonalds could move into to other
industries/products at any time.
Threats- Competitors, Suppliers, Workers Unions,
Attacks of health campaigns, and Environment.
Burger King
Competitive Trend Analysis
BK Background
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Founded in 1954
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Second Largest Fast Food Chain Worldwide
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Global operations of the $11.3 billion company
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BURGER KING® restaurants serve approximately 1,072
customers per restaurant, per day, or approximately 11.8
million customers daily worldwide
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The BURGER KING® system employs more than 300,000
people system wide
Fascinating BK Facts
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Today, Burger King operates the #2 hamburger chain
(behind McDonald's) with more than 11,200
restaurants across the US and in about 55 other
countries
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Since its founding in 1955, BURGER KING® has
sold well over 2.1 billion hamburgers annually
BK Brand Strategy
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Brand image
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Food
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Masculine oriented (Burger ‘King’ – not Burger Queen)
‘‘King’: The larger size than the average burger
Great-taste
High quality
Fun
Value
Portability
Slogan: ‘Have it your way’
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Customized
Customer-oriented
Differentiation from other fast-food competitors
BK Marketing Mix Strategy
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Product (Whopper)
Price (Compare with McDonald, Wendy’s,
Yum! and Subway)
Promotion (Stick with the jumbo size
burger – the opposite force against the
recent trend of Low Carb)
Place(Distribution)
BK Marketing Mix-Product
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Whopper Sandwich
Fire Grilled Burgers
Chicken, Fish & Veggies
Salads
Breakfast
Treats
Sides & Beverages
Kids Menu
BK Marketing Mix-Price
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Price Range
- $4 - $8 for a value meal
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The value meal for breakfast
- For example, suggested Enormous Omelet
Sandwich retail price: $2.99, or $3.49
BK Marketing Mix-Promotion
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Advertising Slogan (2004-present) “Have it your way”
Star Wars deal
- The fast-food chain's first global promotion
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Burger King Offering Low Carb
- Allow substitutions of french fries with salads and bottled
water for soft drinks
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A Big Breakfast at Burger King
- Debuts Enormous Omelet Sandwich
Burger King Target Audience
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Customer with the sophisticated taste but still
need fast food service
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Middle class household with the discretionary
income
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Family with kids
Financial Picture
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Private company – hard to obtain
numbers
11,200 restaurants
2004 sales 13 billion
2004 sales growth 18.2
Burger King Largest Franchises
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AAFES
AmeriKing
Aramark
C&L
Carrolls Corp #1
franchise
Cimm's
Compass
Deignan-Kauffman
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HMS Host
Nath
Quality Dining
Sodexho-Marriott
Sydran
TA Operating Group
Veterans Canteen
Westwind
Exclusive Supplier
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Restaurant Services, Inc. (RSI)
Cooperative serving BURGER KING®
restaurant owners in the United States.
Founded in 1991
Purchasing agent for U. S. Burger King
system.
SWOT Analysis
Strengths
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Global Brand Equity
The second largest fast food chain (18.8% of US
fast-food hamburger business)
Successful items: WHOPPER® Sandwich
More than 55 Global market operations
Customized Fast Food service
Real Estate investment (pursuit of the best
location in town)
Financial support from the parent company
(Texas Pacific Group)
Strengths
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2nd Largest burger chain
Brand recognition and recall
Over 11,000 locations worldwide
WHOPPER has highest brand recognition
Economy of scale provides buying power
Unique product to differentiate product (flame
broiled).
Customization allows customer to “have it your
way”
Weaknesses
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Declining market share
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Self-restricted the diversification of
product development because of
stickiness to strong ‘Burger King’ brand
image
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Weak product development
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Slowed revenue and income growth
Weakness
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We are in a “Burger Slump”
BK has no other business segment
Ameriking , 2nd largest franchise filed for Chapter 11
“Revolving” door in corporate board room, 10 CEOs in 14 years
High franchise rate makes BK vulnerable to multiple disparate
policies
Failure to introduce new brand lines
3 of 10 largest franchises are in chapter 11
Lackluster marketing
Opportunities
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International expansion
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Only serving 1% of the world’s
population (Potential growth in
China & India with new product
development)
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Growing dining-out market
Opportunities
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Consumers have positive perception of
brand.
Take advantage of healthy eating trend.
Consider new brands and franchises.
Reduce cost of entry for BK franchise
Expand in Asia market
Reduce underperforming outlets
THREATS
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Mature industry
Fiercely competitive environment
•
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With other franchises (McDonald)
With the local competitor
Growing health-conscious consumers (Low Carb Trend)
•
The social issue of McDonald’s ‘Supersize me’
Changing demographics (Rapid transition into the aging
society)
Vulnerability to the fluctuation of foreign exchange rates from
expanding global operations
Unreliability of supplier for the recent cow-related disease (i.e.
Mad Cow Disease)
BK Marketing Mix-Place
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AmeriServe Food Distribution
- It plans an orderly transition of distribution services
- Approximately 5,800 Burger King restaurants currently
served
H & H Foods
- Supply South Texas-area Burger King ® restaurants with
beef patties
Restaurant Services, Inc. (RSI)
- The exclusive purchasing agent for the vast majority of
products and services used by BURGER KING®
restaurant owners in the United States and is manager of
the system's supply chain.
Bibliography
Corporate Information
http://proquest.umi.com/pqdweb?index=0&did=168203801&SrchMode=1&sid=1&Fmt=3&VInst
=PROD&VType=PQD&RQT=309&VName=PQD&TS=1126476479&clientId=30358
Franchise list http://www.prnewswire.com/cgibin/stories.pl?ACCT=105&STORY=/www/story/11-12-2002/0001839842
Marketing Strategy
http://proquest.umi.com/pqdweb?index=3&did=818659331&SrchMode=1&sid=1&Fmt=4&VInst
=PROD&VType=PQD&RQT=309&VName
=PQD&TS=1126477227&clientId=30358
SWOT http://search.epnet.com/login.aspx?direct=true&db=buh&an=16823714
Corporate Info
- http://www.bk.com/CompanyInfo/index.aspx
Sonics Annual Report (2004)
- http://www.sonicdrivein.com/pdfs/annualReports/04_12annualReport.pdf
Financial Info
- http://www.hoovers.com/burger-king/--ID__54531,ticker__--/free-co-fin-factsheet.xhtml
SONIC DRIVE-IN
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Sonic, America’s drive-in, originally Top Hat drivein,started as a hamburger and root beer stand in
1953.
Sonic is the largest chain of drive-in restaurants in
the United States and Mexico, with more than 1
million customers a day
Sonic has 3000 drive-ins coast to coast
Sonic
Marketing strategy

Multi-layered growth strategy, targeting
earnings per share of approximately
20% for the year ending September
2005.
• Addition of drive-ins
• Increasing media expenditure to boost brand
•
awareness
Accelerating franchise development and
ascending royalty rate
Sonic
Marketing strategy
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Highly differentiated concept, through
personalized carhop service, and a
variety of menu choices.
Accelerated Expansion program
• Opening 167 new franchises in 2004
• Opening 188 new drive-ins in 2004
• Planning to open 185 drive-ins in 2005
Sonic
Marketing strategy
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Solid Sales Trends
• Sales increase of 13% in 2004, and 6.5%
•
same store sales
Sales increase of 18% in 2005, and 6.8%
same store sales
Sonic
Marketing strategy
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Solid Financial performance
• Revenues rose 20% to $536 million 2004 and
•
•
18% in the first nine months of 2005
Net income per diluted share rose 19% in
2004 and is up to 21% the first nine months of
2005
ROE has exceeded 20% for five consecutive
years.
Sonic
Subsidiaries
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Sonic Industries
Sonic Restaurant
Sonic
Strengths
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Carhop Service: many customers enjoy
the personal carhop who delivers the
order to the car with a free mint
Overall Good Company: Listed for the
10th consecutive year by Forbes
magazine to be one of the “ 200 best
small companies in America”
Sonic Strengths
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Multi-layered growth strategy:
• Listed at number 50 for percentage increase in
sales on the top 50 Growth chains list( Restaurant
Business, July 2003)
• Ranked number 80 on the Hot Growth Companies
list ( Business Week, June 2003)
Good Franchise: Listed in the top 10 on Entrepreneur
magazine’s “Franchise 500 list” (January 2003)
Great Sales Records: Increase of 13% in 2004 , and
18% in the first 9 months of 2005.
Continuously increased revenue ( chart 1)
Sonic
Strengths

Menu
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Unique menu items that include Toaster Sandwiches,
extra- long cheese coneys, hand battered onion rings,
and a variety of drinks and deserts
Quality Burgers: named one of the top three in the
Best Overall burger QSR category for seven
consecutive years( Restaurants & Institutions Annual
Choice in Chains Awards, March 2003)
Cream pie shake distinguished as most appealing and
unique beverage in its category and receives “Best in
Class” award ( Restaurant Business, May 2001)
Sonic
Weaknesses
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International Presence: Except for 7 drive-ins in Mexico,
Sonic Does not have a well established international
market
Brand awareness: although Sonic has a differentiated
service that is the carhop, and a quality burger, it is still
not viewed as the leader in the fast food industry.
Cost of the international franchise: To get a Sonic
international franchise, the investor must have $3.5 million
in assets and $2.5 million in cash which could hinder the
development of new franchises abroad
Sonic
Opportunities
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International market growth
National market: more than half of the
3000 drive-ins are located in 9 states,
the rest are developing markets
Sonic Threats
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Obesity awareness: this will push sonic to include light
meals
Gas prices: the rise of gas prices will increase the
prices of sonic
Hurricane Katrina will have negative impact on the
Sonic Franchises since Louisiana and Mississippi are
two core markets for Sonic. 60 restaurants in Louisiana,
Mississippi and Alabama were damaged by Katrina.
Mad Cow disease: This may eventually lead to
customers shifting to other fast foods alternatives
Sonic
Revenue
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Revenue for the fiscal year ended August 31,2004
Revenue for the nine months ended May 31,2005
Projected revenue for the year ended August 31, 2005
$700,000
$600,000
$589,990
$536,446
$500,000
$446,640
$442,493
$400,000
$300,000 $280,056 $280,056 $330,638
$200,000
$100,000
$52,261 $63,015 $51,341 $68,454
$0 $32,627 $32,627 $38,956
2000
2000
2001
2003
2004
2005 projected
2005
Total Revenues
Net Income
Sonic
Drive-in Sales
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Sales for the fiscal year ended August 31,2004
Sales for the nine months ended May 31,2005
Projected sales for the year ended August 31, 2005
partner drive ins
franchise drive ins
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$2,369,647
$2,219,340
$1,874,562$1,988,842
$1,777,235
$1,533,948$1,704,014
$500,000
$449,585 $374,663 $499,551
$224,880 $267,463 $330,707 $371,518
$0
2000
2001
2002
2003
2004
2005 projected
2005
Sonic
Porter’s Analysis
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High rivalry among competitors
• Little product differentiation
• Low customer loyalty which leads customers
•
to shift easily to another fast food chain.
High number of fast food restaurants.
Sonic
Porter’s Analysis
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Low threat of new entrants
• Economies of scale. Sonic alone has 3000
•
•
drive ins which makes the cost of
manufacturing low, and thus giving it a
competitive advantage
High Capital requirement ( equipment and
training)
Service differentiation through carhops
Sonic
Porter’s Analysis
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Low bargaining power of supplier
• Cost of shifting suppliers is low
• Substitute products are not an option because
beef is part of the burger
Sonic
Porter’s Analysis
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Threat of substitutes
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Low bargaining power of buyer
• People can shift to a different fast food
• No buyer concentration
Sonic References
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
http://www.fastfoodfacts.info/blog/
http://www.entrepreneur.com/franzone/d
etails/0,5885,12-12---282811-,00.html
www.Sonicdrivein.com
JACK & THE BOX
COMPETITIVE ANALYSIS
IMPORTANT DATES
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Born in San Diego California 1.951 as a Pioneers in
the “Drive-Thru” serving system
Major expansion to 1000 restaurants in the Western
and Southwestern markets
They become a private owned company in 1988
1.992 went public with 17.2 million shares
1995 Great advertising campaign with expansion to
Southeastern markets until 2001
With a long-term goal of becoming a national
restaurant company, Jack in the Box entered the
fast-casual restaurant category in 2003
STRATEGY
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Jack in the Box Inc., founded in 1951, is a
restaurant company that operates and
franchises Jack in the Box® restaurants and,
through a wholly owned subsidiary, Qdoba
Mexican Grill®.
The company also operates approximately 40
proprietary convenience stores called Quick
Stuff, which is a major-branded fuel station and
is usually developed adjacent to a full-size
Jack in the Box restaurant.
COMPANY STRATEGY…
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Jack in the Box is among the nation's leading fast-food
hamburger chains, with more than 2,000 quick-serve
restaurants in 17 states. As the first major hamburger
chain to develop and expand the concept of drive-thru
dining.
Jack in the Box has always emphasized on-the-go
convenience, with approximately 85 percent of the halfbillion guests served annually buying food at the drivethru or for take-out. In addition to drive-thru windows,
most restaurants have indoor dining areas and are open
18-24 hours a day.
COMPANY STRATEGY…
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Jack in the Box offers a broad selection of distinctive,
innovative products targeted at the adult fast-food
consumer, including hamburgers, specialty sandwiches,
salads and ice cream shakes. Hamburgers represent the
core of the menu, including the signature Jumbo Jack,
Sourdough Jack and Ultimate Cheeseburger. And,
because value is important to fast-food customers, the
company also offers value-priced products on "Jack's
Value Menu," including tacos, a chicken sandwich and
Breakfast Jack.
SUBSIDIARIES
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Qdoba Mexican Grill, which was acquired by Jack in
the Box Inc. in January 2003, is an emerging leader
in fast-casual dining
Operates more than 230 restaurants in 35 states.
Qdoba is renowned for offering nouveau Mexican
cuisine
SWOT ANALYSIS
Strengths
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The revenues of the company for the last four
years are continually growing
The company is also showing good profits
The company is remodeling 200 stores per
year
Offers higher quality customer service
Weakness
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The company has to spend an a higher
percentage of money in advertising,
assets, and strategic planning.
They do not have much presence in the
Southeast region which is a profitable
market.
OPPORTUNITIES
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Since Jack in the Box is a very well
known company in the Southwest they
can always use this good-will in order to
attack other markets now that the
company is growing .
THREATS
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The late increase in the meat and oil
prices
Changing consumer tastes &
preferences
Large investments required to stay
competitive are eating away at profit
margin
TRENDS
TRENDS
TRENDS
Yum! Brands, inc.
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.
Yum! Brands inc. is the largest restaurant
company with more than 34,000 company,
franchise, license, and joint ventures, in
more than 100 counties.
Yum! Brands, inc.
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Oct 1997 Pepsi co. owner of KFC, pizza
hut, and Taco bell formed a publicly
owned and independent company:
Tricon Global restaurants inc.( Yum!
Brands former name)
May 2002 the company acquired
Yorkshire Global restaurants, Inc. and
changed the name to Yum! Brands, inc.
Yum! Brands, inc.
Growth Strategies
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Build dominant China brands
• China is the number one market for new
•
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company development
China division operating profits were more
than $200 million in 2004
Run great restaurants
• 100% CHAMPS culture restaurants
(Cleanliness, hospitality, Accuracy,
Maintenance, Product Quality and Speed)
Yum! Brands, inc.
Growth Dtrategies
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Multi-brand great brands
• Yum! Is the world leader in multi-branding,
•
offering consumers more choice by combining
two brands under one roof
Yum! Owns 2900 multi-brand restaurants
Worldwide.
Yum! Brands, inc.
Growth strategies
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Drive profitable international growth
• Yum! Restaurants International (YRI) owns
•
•
more than 11,000 restaurants outside the US
YRI opened 700 restaurants every year for
the past 5 years. And in 2004 YRI opened 3
new restaurants each day of the year.
In 2004 YRI revenues totaled $2.1 billion, and
operating profit reached $337 million
Yum! Brands, inc.
A & W Restaurants, inc.
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Is based in Louisville, KY
Founded in 1919, serving all American
pure beef hamburger and hot dogs.
Owns 600 food outlets in 13 countries
and territories around the world and 600
points of distribution at Yum!
Multibramds restaurants.
Yum! Brands, inc.
KFC Corporation
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Is the most popular chicken restaurants chain
Is based in Louisville, KY
Was founded in 1953 and specializing in
Original recipe, Extra Crispy, and Colonel’s
Crispy Strips with home style sides, BBQ
Wings, and Chicken sandwiches.
Owns 13000 outlets in more than 80 countries
Yum! Brands, inc.
Long John Silver’s, inc.
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Is the world’s largest quick-service seafood
chain.
Is based in Louisville, KY
Was founded in 1969and specializing in
batter-dipped fish, chicken, shrimp, and
hush-puppies.
Owns 1200 restaurants worldwide, and 200
additional points of distribution in multi-brand
restaurants
Yum! Brands, inc
Pizza Hut Inc.
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Is the World’s largest pizza restaurant
company
Is based in Dallas, TX
Specializes in pan pizza, thin n crispy pizza,
hand tossed style pizza, and stuffed crust
pizza
Owns 7500 restaurants in the USA, and more
than 4500 restaurants in over 80 countries
Yum! Brands, inc
Taco Bell Corp.
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Is the nation’s leading Mexican-style
quick service restaurant
Specializes in Tacos, burritos,
quesadillas, border bowls, and nachos
Owns 6000 restaurants in the USA and
serves 35 million people.
Yum! Brands, inc.
Corporate Responsibility

Community involvement
• Yum! Brands foundation corporate sponsor of
•
•
•
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dare to care program to end hunger
YUMeals program to end hunger in the USA
Pizza Hut book it program to help develop
reading interest for children
KFC colonel kids charity to provide nationwide
access to childcare
Taco bell teen programs
Yum! Brands, inc.
Corporate Responsibility

Diversity
• For the past two years, Yum! Has been
•
recognized in Fortune magazine’s top 50 “
Best Companies for Minorities”
Yum! Has been recognized in Black
Enterprise magazine as one of the 30 best
companies in diversity