Explore McDonald's Strengths: A Deep Dive SWOT Analysis

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Company Details

Founder:	Ray Kroc
Founded:	April 15, 1955, San Bernardino, California, United States
CEO:	Chris Kempczinski (Nov 4, 2019–)
Headquarters:	Chicago, Illinois, United States
Revenue:	21.08 billion USD (2019)
Subsidiaries:	McCafé, McDonald’s Restaurants,…

When it comes to truly global fast food industry brands in the world, McDonald’s has hardly any competitors. The American fast-food chain was introduced in 1940 as a BBQ stall. Later, it was acquired and turned into a corporation.

Today, it is one of the most recognizable brands with locations all around the globe, from Vancouver to Beijing. With hegemony in its market segment, loyal customer base, and truly international character, McDonald’s is truly loving all of it.

Despite the high rise in market value, McDonald’s main business model is far from perfect. For now, the advantages are canceling out the effects of disadvantages, but we need to take a deeper and more robust look at its short and long-term survival and sustainability.

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SWOT Analysis of McDonald’s

A SWOT Analysis can reveal what are the internal and external strategic factors of a business. In the case of McDonald’s, SWOT Analysis can reveal what the business is enjoying and can enjoy in terms of strengths and opportunities. For the red flags, weaknesses and threats are considered.

Through broad categories, internal factors are summed into internal aspects while external factors are all discussed under two main categories: opportunities and weaknesses.

McDonald’s Internal Factors

Internal factors include both strengths and weaknesses. Since they are in control of the company, McDonald’s can further augment the former while taking of the latter.

Strengths

Strengths are simply competitive advantages that McDonald’s is enjoying over its competitors. Here is a detailed look at some of the most influential ones.

Lucrative Brand Value

Even in the presence of fierce competition and other adversities, McDonald’s is still ruling the fast-food market. It has become one of the 9th most valuable brands in the world. This is a great feat in itself.

Tasty Food Hegemony

Through multiple surveys, it has now firmly been established that McDonald’s fast food restaurants’ offerings, especially fries, are considered the best in class. This is another feather in the cap of the company that knows how to exploit it for its gains.

Real Estate Ventures

It is hard to imagine that McDonald’s, the most valuable fast food brand, is not just a fast-food chain. The company has amassed billions through owning land and then franchising it to third parties. McDonald’s shares its brand name, recipes, ingredients, etc., as well as collects rent payments from those locations.

Technological Application

McDonald’s Corporation understands that old business operations are not working anymore. Now, it has successfully implemented digital options and assistance points through kiosks. Customers can order and customize their orders in a hassle-free manner.

Acquisitions

McDonald’s is on the run to acquire start-ups and technologies that can help the fast-food giant is making its customer experience better. In a recent take, McDonald’s acquired “Dynamic Yield” – an Israeli start-up. This is in line with becoming the best in the fast food restaurant market.

Top Fast Food Brand Globally

In the food sphere, McDonald’s fast food restaurants reign supreme. In 2020, the brand worth of the company was estimated at around $46 billion. This is higher by light years when compared to the competition.

Excellent Health & Safety Protocols

McDonald’s brand has a long tradition of accepting and implementing global health initiatives in their workplaces and food-making practices. In the last couple of years, the company has successfully adopted programs led by WHO and other regional and international organizations to reduce the risks of creating superbugs through human antibiotics.

Rapid Services

McDonald’s is famous in the fast food industry for its quick and no-nonsense services. In the year 2020 during the pandemic, the company vowed to its customers and industry pundits by maintaining rapid service time delivery without affecting food and services quality.

Social Initiatives & Campaigns

During the COVID-19 pandemic, McDonald’s UK offered front-line workers a 20% flat discount throughout. It was a tribute to the professionals and workers who were fighting the pandemic on multiple fronts. The discount is still valid for the year 2022 for all NHS employees. This is a great boost in brand image.

Weaknesses

Despite its leading market value and advantages, McDonald’s faces weaknesses that can threaten its long-term growth and expansion.

Franchise Business Model

McDonald’s rakes in heavy revenue through licensing fees and rent payments from franchisees. Still, it faces a lot of a hard time in controlling the quality of food, customer experience, and overall brand image. By employing a rather central growth plan, McDonald’s can increase control along with revenue for its quick service restaurant.

Supply Chain Issues

Being a thriving food chain business in the market has its costs. In the case of McDonald’s, the company faces several supply chain issues during its operations in the fast food industry. This can affect long-term trust of customers and the overall quality of food and services. The global chicken supply chain, in the case of McDonald’s, is the key to becoming a leading quick service restaurant.

Dwindling Employee Satisfaction

McDonald’s fast food faced backlash in many countries due to the rising of worker unions and rights groups. Protests led the to termination of operations in the UK until the company agreed to give raise in wages while maintaining safe workplaces for the workers.

Flop Menu Items

McDonald’s vehemently introduced and kept its McDonald’s breakfast menu around. In the US, it was unbeatable in terms of popularity and sales. In 2018, the breakfast meal has been losing its charm.

It is hard to gain valuable customers back once they have been enticed by better options by competitors.

Controversies

From sexual harassment to employee safety and the firing of the CEO over intimate indiscretion, McDonald’s brand image had faced a cocktail of controversies. This has further made it hard for the brand to reach out to the families and average Americans to come and eat at a safe place.

Poor Publicity

McDonald’s fired an employee because that person went to court due the to company’s poor handling of COVID-19 pandemic prevention at its location. This further brought bad publicity to the brand.

McDonald’s External Factors

The external factors determine the things that are not in direct control of the brand but it can achieve better profits and growth through them or even endanger its existence.

Opportunities

Opportunities offer a window for a company to better its overall structure and business model for short and long-term gains.

By employing better value meals, controlled expansion in the untapped regions, and technologically-driven options, McDonald’s can take advantage of opportunities.

Better Value Items

McDonald’s has always been experimenting with value meals. By offering a vast range of food items with different price tags, it will easily increase its customer net.

Innovation

From breakfast meals to tropical drinks, McDonald’s can do and should do more in terms of innovative food items at its locations. This will keep the customers coming for more, including online food delivery industry options.

Centrally-Controlled Expansion

Instead of a loose franchise system, McDonald’s should resort to centrally-controlled expansion in the international markets as a market leader. This will allow the company to better control over products, services, and consumer trust. Thus, it can truly become a leading quick service restaurant around the globe.

Brand Rebuilding

These days, fast food chains are struggling with the label “junk food factories”. McDonald’s is in the position to customize the existing menu or introduce healthy and innovative items that are in line with current trends and standards.

Better & Diverse Options

McDonald’s healthy options are limited compared to its competitors. There is a great potential in offering better and more diverse options to its customers based on their dietary preferences.

Threats

McDonald’s faces a lot of threats that can severely destabilize its business model as well as its operations in the long run.

High-Risk Investments

McDonald’s is sparing no expense in adopting new and innovative technology. Yet, the adoption of those technological initiatives by the public is still hard to gauge and declare successful. If the pace continues to go this way, the company is facing losses in the foreseeable future.

Competition

McDonald’s may reign supreme but small players are largely getting bigger and bigger. In a short period, Chick-fil-a and Burger King are quickly catching up with McDonald’s, especially in the QSR category.

Regional Controversies

McDonald’s still faces a lot of threats in the form of controversies abroad. Not long ago, many Muslim countries accused the company of using ingredients that were not “Halal” or sanctioned by the religious creed.

Incidents like these are detrimental to the brand’s image and growth.

Budding Trends

Millennials and Gen Z often consider McDonald’s to be an old-fashioned thing. One of the things responsible for this outlook is the almost unchanged main menu of the company.

Competitors, like Burger King, are taking full advantage of the situation by introducing and experimenting with new and exciting fast food trends.

Environmental Issues

The company is facing a lot of criticism and pressure from environmental groups. The packaging materials used by the fast food giant and items used by the company have been under immense scrutiny. McDonald’s needs to take initiatives to keep the interest and goodwill of the public.

Stiff Regulations

Fast food overall, McDonald’s specifically, is facing a lot of pressure. Many regions and states have enacted laws and regulations limiting sales and trust.

In a recent drive, nine countries, including Iceland, Bolivia, and many more. By developing menus for health conscious consumers, McDonald’s can regain its consumer base.

McDonald’s SWOT Table

Strengths

Lucrative Brand Value
Tasty Food Hegemony
Real Estate Ventures
Technological Application
Acquisitions
Top Fast Food Brand Globally
Excellent Health & Safety Protocols
Rapid Services
Social Initiatives & Campaigns

Weaknesses

Franchise Business Model
Supply Chain Issues
Dwindling Employee Satisfaction
Flop Menu Items
Controversies
Poor Publicity
McDonald’s External Factors

Opportunities

Better Value Items
Innovation
Centrally-Controlled Expansion
Brand Rebuilding
Better & Diverse Options

Threats

High-Risk Investments
Competition
Regional Controversies
Budding Trends
Environmental Issues
Stiff Regulations

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