Businessmodel of McDonald’s

Customer Segments

McDonald’s is a family friendly fast food restaurant chain. It caters its products and restaurants to a broad range of consumer demographics. As a fast food provider, the Company caters to consumers seeking convenience and expediency.

McDonald’s restaurants, however, are also a popular meeting place for various consumers, reportedly retaining particular popularity among millennials. The values of younger consumers, notably millennials, has made quality, choice and nutrition increasingly important to the Company, leading it to add more health-conscious items to its menu.

McDonald’s is a global brand, serving an extensive base of customers across the world. While the Company’s key market remains its native US, the Company also serves substantial customers bases across markets across Latin America, Europe, Asia Pacific, the Middle East, and Africa, including in South Korea, the UK, China, and Russia.

Value Propositions

McDonald’s provides value to its customers in the following ways:

• Its brand strength and standing, with the Company one of the most popular and recognisable brands in the world across all business sectors, controlling substantial financial reserves and market share in its core operating jurisdictions;
• Its accessibility and convenience, with the Company operating an extensive global network of outlets located in consumer hubs, and serving customers quickly and efficiently, offering drive through outlets and delivery in certain markets;
• Its products, with the Company offering a range of food items, including items that are exclusive to certain geographic markets, and evolving its menu to suit consumer demands;
• Its global reach, with the Company having a direct operational presence across the Americas, Europe, Asia Pacific, Europe, Middle East, and Africa; and
• Its supply chain and quality assurance systems, with the Company purchase food, packaging, equipment and other goods from numerous independent suppliers, and operating a network of quality centres around the world to ensure that its products and ingredients meet high quality standards and product specifications. ### Channels

McDonald’s operates a website at www.mcdonalds.com, through which it provides information on its menu, deals, operating locations, and food standards. In some markets the Company operates a McDelivery service, which allows customers to place orders and make payments online. The Company also offers a mobile app for iOS and Android devices, through which customers can access deals and discounts.

McDonald’s principally serves its customers through its extensive network of fast food restaurants. The Company has a total more than 35,000 restaurants across its operating markets, comprising 6,444 company-operated outlets and 30,081 franchised restaurants, which are operated by independent franchise partners. These outlets serve customers directly over the counter through in-restaurant sales personnel, as well as, at some restaurants, through drive through counters and home delivery services.

McDonald’s operates an extensive supply chain and distribution network, including a network of distribution centres. This infrastructure is supported by independently owned and operated distribution centres that are approved by the Company, and distribute products and supplies to McDonald’s restaurants.

Customer Relationships

In some markets McDonald’s offers its products to customers on a self-service basis through its online McDelivery services. This allows customers to place orders, make payments, and arrange deliveries online without interacting with sales personnel. The Company also offers a mobile app, through which customers can independently access deals and discounts.

McDonald’s principally serves its customers directly through its numerous restaurant outlets. Customers are able to speak with sales personnel in person in order receive more information on the Company’s menu or to lodge complaints. The Company seeks to provide excellent customer service, with a view to securing repeat business.

McDonald’s additionally maintains customer relationships through its various social media accounts – including with Facebook, Twitter, YouTube, Instagram, and Tumblr – through which the Company can interact directly with consumers. The Company also keeps customers updated with events through an email newsletter.

Key Activities

McDonald’s operates and franchises McDonald’s-branded restaurants around the world. The Company’s restaurants serve a locally-relevant menu of food and drinks sold at various price points more than 100 countries across the Americas, Europe, Asia Pacific, the Middle East, and Africa. The Company’s organises its operations into four business segments divided by geographic markets: US, International Lead Markets, High Growth Markets, and Foundational Markets and Corporate.

The Company has a network of more than 35,000 restaurants, more than 30,000 of which are franchised. These franchised restaurants are owned and operated under various structures, including conventional franchise, developmental license or affiliate, and are owned and operated by independent franchisees.

Key Partners

McDonald’s cultivates an extensive partner network, which supports the Company’s operations around the world. These partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, comprising suppliers of ingredients and products that are utilised in the Company’s various menu items, as well as suppliers of equipment and services that are utilised more broadly across the enterprise;
• Distribution and Logistics Partners, comprising various third parties that assist the Company in operating its distribution network, including independently owned and operated distribution centres that distribute products and supplies to McDonald’s restaurants;
• Franchise Partners, notably the Company’s network of independent franchisees, which comprises various third parties who own and operate the bulk of McDonald’s restaurants around the world;
• Strategic and Alliance Partners, comprising various market leading companies and organisations with which the Company collaborate on joint marketing, branding, sponsorship, and other projects; and
• Community and Social Partners, comprising non-profits and charitable organisations with which the Company works on social and community projects around the world. McDonald’s has numerous partnerships in place. It has recently launched several partnerships including a partnership with Uber as part of the UberEats delivery service, a sponsorship partnership with Pokémon GO, and a distribution partnership with West Jet.

Key Resources

The key resources of McDonald’s are its brand and intellectual properties, its unique menu items, its ingredients and supply chain, its network of company-operated and franchised restaurants, its IT and communications infrastructure, its distribution and delivery infrastructure, its partnerships, and its personnel.

McDonald’s owns or is licensed to use various intellectual properties including trademarks, service marks, patents, copyrights, trade secrets and other proprietary information. This notably includes the trademarks “McDonald’s” and “The Golden Arches Logo”. Searches of records published by the US Patent and Trademark Office identified a number of patent applications in which the Company is named as assignee, including applications entitled ‘Automated grill’, ‘Food safety administration system’ and ‘Automated beverage system’.

McDonald’s additionally owns and or leases a portfolio of real estate properties around the world, notably its network of more than 35,000 company-operated and franchised restaurants.

Cost Structure

McDonald’s incurs costs in relation to the development of its products and intellectual properties, the procurement of supplies and services, the operation and management of its network of restaurants, the maintenance of its IT and communications infrastructure, the implementation of marketing and advertising campaigns, the operation of its distribution infrastructure, the management of its partnerships, and the retention of its personnel.

In 2015 McDonald’s recorded total operating costs and expenses in the amount of $18.27 billion. This included company-operated restaurant expenses – comprising food and paper costs, payroll and employee benefit costs, and occupancy and other costs – totalling $13.98 billion, franchised restaurants occupancy expenses totalling $1.65 billion, and selling, general, and administrative expenses totalling $2.43 billion.

Revenue Streams

McDonald’s generates revenue through the sale of food and beverage items across its network of company-operated and franchised restaurants around the world. The Company’s revenue is derived in the form of over-the-counter sales fees.

In 2015 McDonald’s generated total revenue in the amount of $25.41 billion, down slightly on the $27.44 billion recorded by the Company in 2014. The Company generates the majority of its revenue in the form of company-operated sales, which totalled $16.49 billion for the year. The Company’s remaining revenue was derived through its franchised revenue, which totalled $8.93 billion.