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McDonald’s Corporation is a fast-food legend whose famous golden arches can be found in 118 different countries. The company is the undisputed leader in the quick-service restaurant segment of the hospitality industry, with more than twice the system-wide revenues of Burger King.
McDonald’s built its reputation by promising and delivering three things to customers: inexpensive food with consistent taste regardless of location; quick service; and a clean, familiar environment. The company was also a pioneer in the development of convenience-oriented features such as drive-through windows and indoor playgrounds for children.
Today, thanks to memorable advertising and intensive promotion efforts, McDonald’s is one of the world’s most valuable brands: In 2012, Interbrand ranked it as the world’s number 7 brand overall (Coca-Cola is number 1). The golden arches are said to be the second-most-recognized symbol in the world, behind the Olympic rings. In the United States alone, McDonald’s typically spends about twice as much on advertising as Burger King and Wendy’s. Today, however, the company faces competitive attacks from several directions.
During the 1990s, a wide range of upscale food and beverage purveyors arrived on the scene. For example, consumers began flocking to Starbucks coffee bars, where they spend freely on lattes and other coffee-based specialty drinks. The “fast-casual” segment of the industry, which includes companies such as Panera Bread, Cosi, and Baja Fresh, is attracting customers seeking higherquality menu items in more comfortable surroundings. Meanwhile, Subway overtook McDonald’s as the restaurant chain with the most outlets in the United States. Some industry observers suggested that, in terms of both food offerings and marketing, McDonald’s was losing touch with modern American lifestyles.
Until recently, the picture appeared brighter outside the United States. Thanks to changing lifestyles around the globe, more people are embracing the Western-style fast-food culture. McDonald’s responded to the opportunity by stepping up its rate of new unit openings. McDonald’s International is organized into three geographic regions: (1) Europe; (2) Asia/Pacific, Middle East, and Africa (APMEA); and (3) Other Countries. In 2005, the offices of the country heads for Europe and Asia were moved from the U.S. headquarters to their respective regions; now, for example, the head of APMEA manages his business from Hong Kong. Commenting on the change, Ken Koziol, vice president of worldwide restaurant innovation, explained, “McDonald’s was built on a strong foundation of a core menu that we took around the world but we need to make sure we are more locally relevant. Taste profiles and desires are changing.”
Asia-Pacific The Indian market appears to hold huge potential for McDonald’s. The company opened its first restaurants in New Delhi and Bombay.
In Delhi, McDonald’s competes with Nirula’s, a QSR chain with several dozen outlets; in addition, there are hundreds of smaller regional chains throughout India. The U.S.-based Subway chain opened its first Indian location in 2001; Pizza Hut, KFC, and Domino’s Pizza have also entered the market. The Pizza Hut on Juhu Road in Bombay is housed in a three-story-tall building with large plate glass windows and central air conditioning. On most nights a long line of customers forms outside.
Indian demand for meals from the major food chains is growing at a double-digit rate; annual total sales exceed $1 billion. With those trends in mind, McDonald’s identifies strategic locations in areas with heavy pedestrian traffic, such as the shopping street in Bandra in the Bombay suburbs. Other restaurant locations include a site near a college in Vile Parle and another opposite the Andheri train station; in all, McDonald’s India operated more than 250 locations at the end of 2012. Prices are lower than in other countries; most sandwiches cost about 40 rupees (less than $1). Drinks cost 15 rupees, and a packet of French fries is 25 rupees.
A complete meal costs the equivalent of about $2. Because the Hindu religion prohibits eating beef, McDonald’s developed the Chicken Maharaja Mac specifically for India. Despite protests from several Hindu nationalist groups, the first McDonald’s attracted huge crowds to its site near the Victoria railway terminal; customers included many tourists from across India and from abroad as well as locals commuting to and from work. In short order, however, Hindu activists renewed their protests, this time accusing the company of using beef tallow in its cooking.
Management responded by posting signs reading, “No beef or beef products sold here,” but the doubts raised by the controversy kept many potential customers away. Since that time, McDonald’s has worked steadily to prove that it is sensitive to Indian tastes and traditions. As is true throughout the world, McDonald’s emphasizes that most of the food ingredients it uses—as much as 95 percent—are produced locally. In addition, to accommodate vegetarians, each restaurant has two separate food preparation areas. The “green” kitchen is devoted to vegetarian fare such as the spicy McAloo Tikka potato burger, Pizza McPuff, and Paneer Salsa McWrap.
Meat items are prepared on the red side. Even the mayonnaise is made without eggs. Some of the new menu items developed for India are now being introduced in Europe and the United States.
How did McDonald's corporation won the Indian market.
McDonald’s Corporation is a fast-food legend whose famous golden arches can be found in 118 different countries. The company is the undisputed leader in the quick-service restaurant segment of the hospitality industry, with more than twice the system-wide revenues of Burger King.
McDonald’s built its reputation by promising and delivering three things to customers: inexpensive food with consistent taste regardless of location; quick service; and a clean, familiar environment. The company was also a pioneer in the development of convenience-oriented features such as drive-through windows and indoor playgrounds for children.
Today, thanks to memorable advertising and intensive promotion efforts, McDonald’s is one of the world’s most valuable brands: In 2012, Interbrand ranked it as the world’s number 7 brand overall (Coca-Cola is number 1). The golden arches are said to be the second-most-recognized symbol in the world, behind the Olympic rings. In the United States alone, McDonald’s typically spends about twice as much on advertising as Burger King and Wendy’s. Today, however, the company faces competitive attacks from several directions.
During the 1990s, a wide range of upscale food and beverage purveyors arrived on the scene. For example, consumers began flocking to Starbucks coffee bars, where they spend freely on lattes and other coffee-based specialty drinks. The “fast-casual” segment of the industry, which includes companies such as Panera Bread, Cosi, and Baja Fresh, is attracting customers seeking higherquality menu items in more comfortable surroundings. Meanwhile, Subway overtook McDonald’s as the restaurant chain with the most outlets in the United States. Some industry observers suggested that, in terms of both food offerings and marketing, McDonald’s was losing touch with modern American lifestyles.
Until recently, the picture appeared brighter outside the United States. Thanks to changing lifestyles around the globe, more people are embracing the Western-style fast-food culture. McDonald’s responded to the opportunity by stepping up its rate of new unit openings. McDonald’s International is organized into three geographic regions: (1) Europe; (2) Asia/Pacific, Middle East, and Africa (APMEA); and (3) Other Countries. In 2005, the offices of the country heads for Europe and Asia were moved from the U.S. headquarters to their respective regions; now, for example, the head of APMEA manages his business from Hong Kong. Commenting on the change, Ken Koziol, vice president of worldwide restaurant innovation, explained, “McDonald’s was built on a strong foundation of a core menu that we took around the world but we need to make sure we are more locally relevant. Taste profiles and desires are changing.”
Asia-Pacific The Indian market appears to hold huge potential for McDonald’s. The company opened its first restaurants in New Delhi and Bombay.
In Delhi, McDonald’s competes with Nirula’s, a QSR chain with several dozen outlets; in addition, there are hundreds of smaller regional chains throughout India. The U.S.-based Subway chain opened its first Indian location in 2001; Pizza Hut, KFC, and Domino’s Pizza have also entered the market. The Pizza Hut on Juhu Road in Bombay is housed in a three-story-tall building with large plate glass windows and central air conditioning. On most nights a long line of customers forms outside.
Indian demand for meals from the major food chains is growing at a double-digit rate; annual total sales exceed $1 billion. With those trends in mind, McDonald’s identifies strategic locations in areas with heavy pedestrian traffic, such as the shopping street in Bandra in the Bombay suburbs. Other restaurant locations include a site near a college in Vile Parle and another opposite the Andheri train station; in all, McDonald’s India operated more than 250 locations at the end of 2012. Prices are lower than in other countries; most sandwiches cost about 40 rupees (less than $1). Drinks cost 15 rupees, and a packet of French fries is 25 rupees.
A complete meal costs the equivalent of about $2. Because the Hindu religion prohibits eating beef, McDonald’s developed the Chicken Maharaja Mac specifically for India. Despite protests from several Hindu nationalist groups, the first McDonald’s attracted huge crowds to its site near the Victoria railway terminal; customers included many tourists from across India and from abroad as well as locals commuting to and from work. In short order, however, Hindu activists renewed their protests, this time accusing the company of using beef tallow in its cooking.
Management responded by posting signs reading, “No beef or beef products sold here,” but the doubts raised by the controversy kept many potential customers away. Since that time, McDonald’s has worked steadily to prove that it is sensitive to Indian tastes and traditions. As is true throughout the world, McDonald’s emphasizes that most of the food ingredients it uses—as much as 95 percent—are produced locally. In addition, to accommodate vegetarians, each restaurant has two separate food preparation areas. The “green” kitchen is devoted to vegetarian fare such as the spicy McAloo Tikka potato burger, Pizza McPuff, and Paneer Salsa McWrap.
Meat items are prepared on the red side. Even the mayonnaise is made without eggs. Some of the new menu items developed for India are now being introduced in Europe and the United States.
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