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McDonald's SWOT Analysis and Recommendations

I've been an online freelance writer for several years. My articles often focus on business and business management.

Read on to learn how the McDonald's brand operates.

Read on to learn how the McDonald's brand operates.

McDonald's SWOT Analysis and Recommendations

Below, you'll find a detailed SWOT analysis of the McDonald's corporation. This article will help you better understand the McDonald's brand and how it operates.

1. Strengths

  • Strong brand name, image, and reputation: McDonald’s has built up huge brand equity. It is the number one fast food company by sales, with more than 36,000 restaurants serving burgers and fries in almost 120 countries. The image of McDonald's is recognized everywhere. This brand is in the top ten of the most powerful brand names in the world, along with Coca-Cola, Nokia, and GM.
  • Large market share: McDonald's is considered the largest player in size and global reach. When Wendy’s or Burger King are losing market share in 2006, McDonald's still increased its market share. The market share of McDonald's in recent years is about 19%, while Yum!Brands is 9%, and both Wendy’s and Burger King is 2%.
  • Specialized training for managers: McDonald's is very serious about training managers. This company has its own program to train managers in a highly professional manner, which is called Hamburger University. As a result, McDonald's has many good managers who can help the company develop well.
  • Mcdonald's Plan to Win: McDonald's customer-focused Plan to Win provides a common framework for its global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of its Plan to Win—People, Products, Place, Price, and Promotion—McDonald's has enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in the past few years. This plan, combined with financial discipline, has delivered strong results for the company’s shareholders.
  • Introduction of new production: McDonald's is considered the first business to enter the fast food industry. It inspired other brands to enter the industry. As a result, when thinking about fast food, customers always think about McDonald's first. In fact, in some big countries, especially in the US, McDonald's is the first choice of a large number of customers.
  • Technology innovation: McDonald’s is keeping at the forefront of technology around the globe. For example, In Brazil, McDonald’s is currently considering installing Internet access terminals in some outlets as well as enabling customers to order online. This will create a more efficient process that will reduce the amount of lag time between a customer’s orders and the pick up of the order.
  • Good marketing strategies: No matter the continent, children and adults know the face of Ronald McDonald is synonymous with the colossus restaurant chain. This results in wonderful marketing strategies among management, which conducts a very thorough market analysis, resulting in much success around the globe.

2. Weaknesses

  • Unhealthy food image: McDonald’s has been impacted by negative press like the documentary Supersize Me by Morgan Spurlock, in which he attributed our society’s obesity to McDonald’s and other fast food chains. In fact, each McDonald's dish provides a large number of calories but not too much nutrition.
  • Customer losses due to fierce competition: McDonald's has to compete with many strong brand names in the fast food industry, such as Wendy’s, Burger King, and Yum!Brands. This fierce competition makes McDonald's lose a large number of customers who prefer the favor of other brands.
  • Problem related to health issues: McDonald's uses trans-fat and beef oil in their food. Although it is not illegal, it affects customers’ health because trans-fat causes some kind of cancer. Consequently, a number of customers who care about their health stop eating at McDonald's restaurants. It makes the revenue of the company decrease.
  • Legal action: McDonald’s has been involved in a number of lawsuits. For example, there are many cases involving trademark issues. McDonald’s forced many other restaurants, companies, or just coffee shops to change their brand name because of their use of “Mc.”
  • Unbalance meals: Although McDonald's tries to update its menu by healthy criteria, McDonald’s meals are still unbalanced. For example, there are many dishes with chicken (both grilled and fried), bacon, beef, rib, or egg. There are only a few dishes with salad or fruits and vegetables, and the amount of fruits and vegetables in these dishes is limited.
  • High employee turnover rate: Although McDonald's has many good managers as well as skillful employees, the turnover rate is still high. Every year, many of their employees are fired. Moreover, many others quit their jobs, especially part-time employees, because of low salaries and high working pressure.
  • Action related to the environmental issues: McDonald's uses HCFC – 22 to make polystyrene, which contributes to ozone depletion. The company has to address this issue if it doesn’t want to be criticized.
  • Dissatisfied franchisees: Franchisees are beginning to become very dissatisfied with the fees that McDonald’s is forcing them to pay. As the company continues to expand, they are also increasing the fees franchisees have to pay for the use of the fast-food brand. Many people are not very happy about this, and, as a result, many franchisees are selling their businesses.

3. Opportunities

  • Growth of the fast food industry: The fast food industry is now developing significantly. Changes in lifestyle have led to a change in people's eating habits. In the past, only workers, drivers, or those who had to work a lot and didn’t have enough time for a home meal would choose fast food; nowadays, almost everyone eats fast food, and a majority of them like fast food very much.
  • Conservation: McDonald's should research green energy and green packaging solutions and incorporate these findings as a part of its marketing strategies and advertisements.
  • Globalization and expansion in other countries: McDonald's has more than 36,000 restaurants in almost 120 countries. Of the 36,000 restaurants, at least 14,000 are in the US. However, now, because McDonald's incorporates cultural identities in each country it enters, McDonald's can open more restaurants in new areas such as China or India—the countries whose culture influences people's lifestyles deeply. The expansion of these areas is a big opportunity for McDonald's.
  • A low-cost menu is preferred by a large number of customers: With a low-cost menu, McDonald's can attract customers who have low incomes. This segment makes up a fairly remarkable part, especially in recent times when the global economy has been struggling. It is not difficult for McDonald's to apply low-cost menus to all restaurants.
  • The appearance of freebies and discounts: Discounts given on every food item may help them gain more customers. Moreover, more and more customers are enjoying freebies and discounts, even when they don’t need them or don’t use these freebies after.
  • Diverse tastes and needs of customers: Customers’ tastes have now become more diverse. As a result, they require a new format of service in order to satisfy them. McDonald's, with a new format of business such as McCafe, can attract a new segment of customers; for instance, civil service customers who prefer coffee and want to use Wi-Fi to work when drinking coffee.
  • Growing health trends among the customers: Although people are concerned about how McDonald's can have a negative influence on their health, it is also a chance for McDonald's. This company can develop new products, such as fresh burgers or healthy desserts.

4. Threats

  • Intensity competitors: Along with the development of the fast food industry, there are many new fast food brands that have entered the market. So far, there are no strong brands that can compete with McDonald's. However, there are some up-and-comers, and they are getting stronger gradually; for example, Yum!Brands, Wendy’s, and Burger King. Although the market share of these brands are lower than McDonald's, they do their best to gain more customers from McDonald's. Moreover, more casual dining restaurants increase their burger offering and decrease their prices. If we are not really in a hurry, we may choose this kind of restaurant instead of fast food restaurants.
  • Public health crisis: With a growing number of obesity cases among Americans, fast food chains like McDonald's will continue to be overshadowed by their previous product offerings, for example, the Supersized Meal, no fruit or yogurt, and slim salad selection. Besides, people nowadays are facing more serious heart problems. As a result, they require nutritious and healthy food as well as a healthier lifestyle.
  • Serious environmental issue: The environment is one of the hottest topics all over the world. Any action that influences the earth and human life is criticized strongly. Consequently, if McDonald's keeps using HCFC -22, it may lose customers, especially who really care about the earth.

Recommendations

I have several recommendations for this company. Besides looking at the grand matrix and SWOT matrix, there is something McDonald's should do with its strategies:

International Expansion

Although saturated in the United States, McDonald's has great expansion capabilities abroad. According to the grand matrix, market development is one strategy that McDonald's should implement. The company should prepare an international strategy that focuses on big cities along with highly populated areas, especially in Asia. There are not many McDonald's restaurants in this potential market. Japan is the only Asian country that has a lot of McDonald’s fast food restaurants.

In contrast, China is considered one of the biggest markets in the world because of this country’s population. Nevertheless, according to the recent figures, China is in ninth position among the countries that have McDonald’s restaurants, with about 1,000 restaurants, while this number in the US is about 14,000. If McDonald's can develop more and more in Asia, it is a huge advantage for the company to gain market share.

Name Recognition

The second is about name recognition. Everywhere, millions of people are familiar with the Golden Arches that are on top of every McDonald's restaurant. McDonald's should use this familiarity to gain more attraction from customers. It does not mean that this company should become involved in many areas of the food industry.

In fact, soft drinks and fast food bring large profits for McDonald's. However, if they keep getting involved in other areas, it would increase the potential for liability to the company because of many intense competitors. McDonald's has built the McDonald Hotel in Zurich, Switzerland. Needless to say, it is a unique hotel. A lot of customers in other countries want McDonald open the same hotel in their countries. As a result, McDonald's should care about this chance more than developing a new kind of food business, the success of which the company is not sure about. In addition, aside from exploiting the brand name, the company can exploit its sources of food and drink in McDonald’s fast-food restaurants for the hotel, as well as the service skills of employees.

Research and Development

In addition, McDonald’s strength, as I mentioned above, is the introduction to new production. The company should focus on this strength. However, the company seems not to diversify its products regularly, while competitors are stronger and have new products gradually. Because of this reason, McDonald's should spend more money on research and development to create new products and services as well as increase the efficiency of operations.

First, one thing McDonald's should focus on is the play places for kids. McDonald's has play places, but not in every restaurant. If you eat in a McDonald’s restaurant, you can be free to eat while your children play at the place for kids. Customers love that. Thus, if it is popularized in all restaurants of the company, customers will be more satisfied and, of course,e they want to come back regularly.

Moreover, toys have to be focused on much more, with many new interesting toys being added often, and safety should be focused on as well. Jolly Bee is one brand that applies this strategy very successfully. McDonald's can learn from Jolly Bee, developing this service to improve its market position.

Healthy Menu Options

Next, even if the company’s menu is still relatively inexpensive compared to that of its competitors, it is not totally enough. McDonald's focuses too much on cheese, beef, and chicken menu items rather than healthy options. McDonald's has fruit slices on the menu. However, it is only served once a week. In recent times, with the change in eating habits of many customers, McDonald's also should change. The company should bring new, healthy products to the restaurant’s menu. This would give customers an alternative while allowing McDonald's to maintain its market share globally.

Customer Service

The last one is also about customer service. Managers at McDonald's are trained professionally. As a result, they can train employees well. McDonald’s employees are evaluated highly by customers because of their behaviors as well as their attitude. However, customers are not pleased with the idea of waiting in long lines due to insufficient employees to handle the volume of customers. Sometimes the employees are rude, forcing the customers to go to a competitor’s restaurant next time.

In the markets that have a high market share and a very huge number of customers such as the US, Canada, or the United Kingdom, this issue occurs more frequently. McDonald's should find a way to solve it. For example, the company has to hire more employees and increase their salaries to keep them working for a long time. This time is just enough for them to get skills to service customers well. Besides, it is necessary to increase the number of employees at the weekend or at lunchtime. More employees means that pressures are shared and bad attitudes are avoided.

Conclusion

McDonald's has undergone several changes since its inception in San Bernardino, California. The fast food chain has conquered the US, and it is now focusing on the rest of the world. McDonald's, along with this trend, continues to strive toward customer satisfaction while still enhancing its international market position.

The company is doing very well and keeps trying to gain traction in Africa, China, and the Middle East, which will be a continued source of revenue for many coming years. If McDonald's can overcome all of its challenges, make use of its advantages, and utilizes the right strategies, it will win the market again and hold fast to the first position in the fast food industry.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Comments

Tim on September 05, 2018:

How about a vegetarian burger?

Chad Voci on July 13, 2018:

McDonald's needs to start using crushed ice to eliminate all the condensation buildup on their glasses/ cups

Cindy on June 10, 2018:

Sorry, but I found this article to be very hard to follow, as there were so many grammatical errors. Perhaps, before publishing another article, you might want to have someone else read it over first or run it through Microsoft Word's Spelling and Grammar functions. The reader will most likely take the content of the article more serious if it is free of grammar errors and spelling mistakes. Just my two cents ;)

Tom Hughes on May 21, 2018:

One result of your changes is to fry the quarter pound "Fresh Beef" burger at the time of order. That sounds good but it has upset me because if the time delays to place an order and get the order full filled. I waited a long time to see if this was an occasional issue, but it is not. I have visited McDonalds in Huntley, IL (2), Woodstock, Lake Geneva, Wis, Ekkhorn Wis, Whitewater Wis and others in Crystal Lake IL - 2 cars in from of me when I place an order for a Diet Coke, bag of French Frys - most of the time it take 10 min to getr my order- other time like in Lake Geneva, ElkHorn and Crystal Lake I had to wait 15 min to get a Double Cheese Burger and a Diet Coke. You new strategy is causing me to not want to eat at McDonalds Anymore. I have shared my feeling with your window people but I know and you know they can't do anything about it. I was taken to one of the first 50 McDonald Franchised back in 1955 in Kenosha Wis. The idea then was premake hambers and frys and shakes and pull them from a hopper in to bags and get the customer though the order and take process. Was less than a min once you ordered. NOW you order and you wait in line - I also have gone to some of your sites and read the comments - I am not the only one who feels your service time are way too long. I hope someone in Mgt reads these notes. I called 2 times today to talk to someone at Corporate Office in Oak Brook but got answered by a robot phone system and then was instructed to wait for the next agent, only to be put on hold for over 15 mins each time. You have a bad process now and you wait my time to get your food items. I plan on now going to other places to get a burger- I didn't have this problem at the Sonic Resturant in Algonquin IL. It was less costly, tasted great and the time I waited was like 3 min. Many of your employees agree with me - they hear the complaints from your customers. I know I consumed 10s if thousands of Qt Lber, double cheese burgers, fish sandwiches and 10 tons of french fries in my lifetime (1947 - 1955) not consumption but from 1055 to 2018 I have been a loyal McDonalds Customer - no more you are not really interested in my wait time and the only items that are going for you is your french fries-others items just as bad as all of the rest of your industry.

Sakuna on April 03, 2018:

Thank you it's really help me to do my individual project

Theha on December 20, 2017:

Thankyou. This is really helpful.

meme on December 15, 2016:

ur thing just saved my grade

Ritesh Bangre on November 10, 2016:

thanx... its very helpful in completing in my projects

Jack on December 21, 2015:

Ayo is the best customer facing team member I have ever encountered, and Chris does not support his development due to how snakey he is. Also I would like to to recommend ayo for team supervisor and if ayo is punished for these actions, I would like Chris to be demoted for his negative attitude towards ayo's development #snakeychris

Linda on May 30, 2014:

Do you have one of these analysis for Burker King! Really good

PDXBuys from Oregon on May 09, 2014:

Although many people are trying to eat healthier meals, people are also broke. Fast food offers a quick and inexpensive alternative. I used to be a regular at the McDonald's in Venice Beach California. The most common customers were lovely young women fresh off the beach -- and scraggly old homeless men. The problem with the homeless in that location was so bad that the restaurant had to hire a full-time security guard to keep order.

Ronald on March 03, 2014:

Wow....indeed very helpful in completing my project...........thanxxz

http//DailyHealthTips247.com on December 30, 2013:

McDonald's has been able to weather the storm over the years,however the upcoming healthier options might become big threats in the nearest future as the world is clamoring for more healthier meals.

eshita on June 26, 2013:

thnx a lot...it really helped me in my project work...:)