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Read the case study provided below on the topic - McDonald's and Burger King: The Evolution of Franchising and Benefits of the Burger Wars . And answer the question given below .

Question - Summarize the reasons for the diversification of the fast-food giants and state the new products they added and the benefits of the decision.

The main aim is to complete the question provided in a very detailed manner and explain the question correctly.

Case - McDonald's and Burger King: The Evolution of Franchising and Benefits of the Burger Wars

\f\fMcDonald's Begins In 1940 the McDonald brothers, Dick and Mac, ran a restaurant in California which offered a menu that included fifteen cent hamburgers, shakes, and fries. The restaurant also introduced a Speedee Service System which could quickly produce food using industrial assembly line techniques and allowed diners to serve themselves. With this system, the brothers streamlined their menu, offering only a handful of popular items, including hamburgers, cheeseburgers, soft drinks, fries, and milkshakes. The change in focus from a full menu to a more focused burger menu also reduced production costs, thus developing a new business model. Moving away from serving customers in their cars, their restaurant featured both a drive-in and an in-store model of customer self-service. This development introduced the term "fast food" to popular culture. Ray Kroc, a milkshake machine salesman, took note of the McDonald brothers' business and its success and tried to convince them to take him on as a partner. The brothers hesitated. In 1954, they finally agreed. Kroc would use his sales skills to sell franchises for the brothers and collect royalties of 1.9% of gross sales, cutting the brothers in on 0.5% of the payment. With this agreement, in 1955 Kroc built a store in Illinois that featured the golden arches that have remained part of McDonald's branding ever since. Although the McDonald brothers preferred a slower business approach, Kroc had plans for growth and Innovation. In 1961, he bought the brothers out of the business and set up McDonald's Franchise Realty Corporation. This company would buy land and develop stores for lease to franchisees, charging variable rent that depended on a store's gross sales. This gave McDonald's a profitable cash stream. More than 700 franchises opened across the United States in the following decade. As Herman (2019) notes: Kroc obtained the exclusive license to market the McDonald's name and methods, and founded McDonald's Corporation. Kroc also opened a drive-in location in Des Plaines, Illinois, to demonstrate the business format's profitability. He then purchased the land to Page 4 of 9 McDonald's and Burger King: The Evolution of Franchising and Benefits of the Burger Wars SSAGE businesscases SAGE SAGE Business Cases B Sabithulla Khan 2021 build franchise locations, and then rented the real estate to franchisees on long-term leases. This action Increased access to capital funds. In 1957, there were 37 McDonald's locations, by 1959 there were 100 locations, and by 1961, there were 228 locations. McDonald's meteoric rise continued. In 1977, Kroc assumed the title of Senior Chairman. From that point, McDonald's continued to grow, assuming new leadership and reaching more than 36,000 ocations around the world by 2018\f\fThe Power of the Franchise William moved on to research how the fast food franchise giants chose to grow in the new millennium. He noted an important development in the first investor conference of Jim Cantaloupo, McDonald's CEO during the early 2000s. Cantaloupo pointed out the company's vision of having "clean restrooms and hot food" at every restaurant. This clear vision supported McDonald's continuing profits and success (Cunneen, 2010). His successor, Steve Easterbrook, who took over in 2015, followed the same logic and vision: to offer a great experience beyond just the core product. Having a clear vision and goal made McDonald's a leader in its space. As per the agreements of franchising, some of the more recent franchisees have landed in trouble with Burger King and McDonald's, following violations in health code or sanitary conditions. Despite those troubles, Burger King and McDonald's franchising has continued and Mcdonald's franchising around the world has outpaced that in the United States (Michaels, 2015). In the post-2008 economy, Burger King and McDonald's were both challenged. Wendy's surpassed Burger King in 2009 as the number 2 burger company (Business Wars 6, 2019). There were fears that McDonald's franchisees would not do well and the mood was somber through 2015, but it seems to have improved slightly since that period (Michaels, 2015). However, recent reporting from the Wall Street Journal confirms fears that some of the franchisees are still concerned that their investments are not paying off and that the remodeling costs they are being asked to bear may not have the required rate of retum (Jargon, 2018). As the article points out, there has not been a big shift in sales since the tumaround efforts: "U.S. same-store sales growth of 2.6% in the second quarter fell short of forecasts for 3% growth. McDonald's this summer made layoffs and other changes to its field operations to become nimbler" (Jargon, 2018). The competition from Burger King and others has caused some of the shift in revenues and has posed a challenge to the company's bottom Page 6 of 9 McDonald's and Burger King: The Evolution of Franchising and Benefits of the Burger Wars SSAGE businesscases SAGE SAGE Business Cases O Sabithulla Khan 2021 line. As Entrepreneur magazine points out: Easterbrook also began strengthening the company's franchise network, selling thousands of corporate- owned stores to independent owners. "You've seen chains like Burger King, Wendy's, and Buffalo Wild Wings do this, too," says Mark Siebert, franchise consultant and CEO of the iFranchise Group. This points to the growth of franchisees, which constituted 81 percent of total McDonald's outlets, with them occupying over 95 percent of the share and 90 percent worldwide." (Entrepreneur, 2019) William found that what both firms seem to have done well is to have put in place a solid management system that includes marketing, branding, and operations management, which franchisees get access to as soon as they sign on (Obringer, 2019). William knew that most businesses fail due to lack of management expertise and good systems in place. With this worry out of the way, franchisees can focus on superior customer service and great delivery, which can make success all the more guaranteed. William would argue that this is one of the biggest draws of franchising.\fSource: Wikimedia Commons, http:://commons.wikimedia.org/wiki! File:Veg Maharaja Mac, McDonald%27s India (32248201441).jpg McDonald's has made substantial changes in its model, including how it presents itself to customers. Under CEO Steve Easterbrook, there have been big changes, including all-day breakfasts, alterations in how food is ordered, and food with fewer hormones (CNBC, 2019). McDonald's is also reinventing itself through faster and better delivery of food. As Clint Carter of Entrepreneur (2019) points out, "Through a partnership with Uber Eats, the order-however-the-hell-you-want-to company now offers home delivery from roughly 9,000 U.S. stores." In November 2019, Easterbrook was fired for having a consensual relationship with an employee, and replaced with Chris Kempczinski, formerly president of McDonald's U.S. division (Yaffe- Bellany, 2019). Burger King has also undergone changes. The company is experimenting and adapting new technologies and offerings, including "meatless meat." Given the meat consumption patterns of Millennials, this may well be the Page 8 of 9 McDonald's and Burger King: The Evolution of Franchising and Benefits of the Burger Wars SSAGE businesscases SAGE SAGE Business Cases D Sabithulla Khan 2021 next big marketing trend that shapes how customers consume food. The trend capitalizes on environmental and health concerns expressed by a growing base of customers. Drawing on the healthier attitude, Burger King wrote an open letter to McDonald's to observe a Peace Day and serve a "McWhopper" as a compromise, for just one day: September 21, 2015. But this call for peace was not accepted by McDonald's. The companies continue to battle it out, spending hundreds of milions in advertising and promotions, aiming to gamer attention from the average consumer (Business Wars 6, 2019). As McDonald's and Burger King move into the future, William wonders how they will draw on the lessons of their business model to continue to innovate and succeed in the shifting fast food industry. Will they return to aggressive marketing techniques to attract customers? Will they create and market healthier offerings