Are quality and taste important to you when selecting a restaurant? Explain.
The McDonald brothers’ first restaurant was founded in 1937 just east of Pasadena, California. It didn’t serve hamburgers, had no playground, and offered no Happy Meals. The most popular menu item was the hot dog. From that humble beginning, Ray Kroc built McDonald’s into a mammoth business that earns over $23.5 billion in annual revenue and employs more than 450,000 people in approximately 32,000 restaurants in 118 countries. For decades, McDonald’s growth and profit margins were the envy of the world. McDonald’s was considered an effective business with tremendous potential for growth domestically and internationally. Consumer tastes constantly change, and adults began to get bored with the McDonald’s menu in the 1960s. Responding to environmental pressure such as changes in consumer tastes, McDonald’s introduced a new sandwich called the Big Mac. As consumers grew weary of beef, McDonald’s introduced chicken McNuggets and chicken sandwiches in the early 1980s and within four years was the nation’s second-largest poultry seller. In 2000, McDonald’s started to accept credit cards to pay for meals. In 2009, the company added new premium items such as the Angus burger and McCafé coffees (lattes, cappuccinos, etc.) to help boost sales during the recession. This last move seems to be helping stabilize sales in the United States and increasing profits overseas. Within-stores sales of U.S. restaurants remained flat (not negative) in 2009, whereas overseas sales grew as much as 4.3 percent in Europe, Asia/Pacific, the Middle East, and Africa. McDonald’s changed as the environment demanded. It became the most recognized brand name and built thousands of Golden Arches restaurants. McDonald’s wanted to provide consumers with a quality meal, served quickly, at a fair price. In the past, however, McDonald’s attempts at pizza, fajitas, pasta, fried chicken, and low-fat sandwiches have all been failures. For a company that enjoyed significant growth for five decades based on its ability to read environmental trends, the failures have been shocking. McDonald’s has been unable to capitalize on its brand name or move beyond hamburgers and French fries. During a period when Americans are eating out more, McDonald’s has failed to capture a growing portion of the market. Still, every single day McDonald’s serves a meal to 1 of every 14 Americans. McDonald’s has expanded into markets in more than 120 countries serving about 5 million customers each day. McDonald’s continues to enter new markets each year. The worldwide expansion has created a problem with quality control: McDonald’s is faced with the quality control problem of building an increasing number of stores without carefully checking the quality of the product they serve. In a survey for Restaurants & Institutions magazine in which 2,800 consumers graded chains based on the taste of their food, McDonald’s ranked 87 out of 91. Consumers around the world want taste and quality when selecting a restaurant. McDonald’s, like other fast-food chains, is attempting to address claims that their menu is filled with foods that contribute to obesity. Providing more nutritious menu items is still a challenge for a business that primarily is associated with hamburgers and French fries. The organizational effectiveness of McDonald’s remains a serious concern among franchisers, executives, and stockholders. How or whether McDonald’s can make the necessary changes to again be the growth-oriented organization it once was is questionable.