McDonald SWOT Analysis
A. Strengths
- McDonalds has strong global presence and is considered as a market leader in both the domestic as well as the international markets, it is known as one of the world’s most recognized logos, which has built up huge brand equity.
- A global brand that owns 34,000 restaurants serving in 119 countries. Of these 34,000 restaurants at least 14,000 restaurants are situated in the US. It is the No. 1 fast-food company by sales. 5.6% sales growth located itself in major airports, cities, highways, tourist locations, theme parks. Large amounts of investment have gone into supporting its franchise network, 75% of stores are franchises.
- It uses economies of scale for reducing the cost, as its huge expansion diversifies the overall risk involved with the economic performance. It also adapts to the cultural differences regarding the region where the restaurant is set up.
- They own an active children’s charity by the name ‘The Ronald McDonald House’. It has branded menu items such as Big Mac, Chicken Mc Nuggets, which further promote McDonalds
- It takes steps in adjusting the ingredients and product offerings in order to comply with the upgraded health standards so it is recognized as a socially responsible and community oriented firm. It takes food safety extremely cautiously It was the first to provide the customers about nutrition facts.
- It has an efficient food preparation style that follows the process in a systematic way, it has loyal staff and strong management team, good innovation and product development. It continually innovates to retain customers in the business with a variety of choices
B. Weaknesses
- It uses advertising that mostly targets children, which is a vulnerable and sensitive target
- There is a high employee turn-over.
- It has not yet accomplish going on the trend of organic food. Core product line out of line with the trend towards healthier lifestyles for adults and children. Product line heavily focused towards hot food and burgers.
- Price competition with the competitors results in low revenue.
- There is a lack of disruptive innovative products.
- Few of the products are seasonal (salad, ice-cream)
- There is a rise of quality issues across the franchise network.
C. Opportunities
- It can adapt to the needs of the societies and undergo an innovative product line by optional items. It can create new product offerings, use mobile text messaging to offer services that appeal to consumers. McDonald’s also responds to social changes – by innovation within healthier lifestyle foods for example it moves into hot baguettes and healthier snacks (fruits) have supported its new positioning. The new “formats”, McCafé, having Wifi internet links should help in attracting segments, also installing children’s play-parks and focusing on educating consumers about health, fitness
- It may continue focus on corporate social responsibility, reducing the impact on the environment and community linkages by researching ways to use ‘green’ energy and packaging which will work as a part of their promotional effort as well as fulfill their social responsibility.
- It can upscale some of its restaurant settings at luxurious locations to attract more customers.
- It can slow down the level of expansion in order to increase the profitability of the organization.
- It may increase joint ventures with retailers (e.g. supermarkets) and offer better locations for franchisees.
- Use of CRM, database marketing should be used to more accurately market to its consumer target groups. It could identify likely customers (based on modeling and profiles of shoppers) and prevent brand switching. Strengthen its value proposition and offering to encourage customers who visit coffee shops into McDonalds.
- It can implement deeper international expansion into emerging markets of Asia
D. Threats
- Foreign currency fluctuations are regarded to be a major problem as it uses standard pricing for its food items. Recession or turn down in economy may affect the retailer sales, as household budgets tighten reducing spend and number of visitors. The recession also negatively impacts the holding position of the firm regarding its revenue streams, even though they are quite diversified.
- Social changes in consumer groups are encouraging balanced meals, 5 fruits and vegetables per day? “Mangez, Bougez!”.
- Emergence of major fast food competitors: Burger King, Starbucks, Wendy’s, Taco Bell, KFC. There are competitive pressures as new entrants are offering value and greater product ranges and healthier lifestyles products. E.g. subway, supermarkets, M&S.
- Pressure of environmental and health issues regarding the fast food chain, McDonald’s was sued various times for unhealthy food, usually addictive. Consumers now focus on nutrition and healthier lifestyles.
- Heavy investments on promotional campaigns which decrease the gaining of market share.
- Some parents criticize the firm for maintaining marketing strategy that focuses on kids, who later on take it as a trend to their adulthood.
- The expansion has made the firm vulnerable to the slow economies of the other countries as more restaurants give a rise to increasing their food offering and declining the price
Author: Maya Al Chaarani
Editor: Sandra ESSAFI
Burger King SWOT Analysis
A. Strengths
- Global brand name: Burger King is a globally recognized fast food brand thanks to the famous hamburger ‘whopper’ and it’s slogan “have it your way”. The grand has a high brand awareness in the fast food industry according to QSR magazine right behind McDonald’s and KFC.
- Franchises diversification: At the end of September 2012, Burger King reported it had 12,667 restaurants in 73 countries which 66 percent are in the United States, others are established in international locations such as Africa, Asia and the Middle East. While the majority of franchises are smaller operations, several have grown into major corporations in their own right. The brand also ranked the 5th in Top 100 Global Franchises rankings.
- Established market share: Burger King is second only to McDonalds and holds a 15% share of the United States among fast food restaurant chains. The company’s profitability has also increased in recent years.
- Growth plan: The company is able to grow while minimizing large capital expenditure, meanwhile it collects fees and royalties from each franchise.
B. Weaknesses
- Heavily concentrated in the United States: Although the company operates in many international venues, the majority of restaurants are in the United States. This concentration of operations in one geographic area company’s exposure to local factors.
- Relies on franchises: The company doesn’t have enough corporately owned stores which means it relies heavily on franchises to excite its promise.
- High calorie food: It’s always an issue that fast food with high fat and high calorie is not good for health conscious people. And there is some indication that Burger King may have been slow to transition to leaner and healthier restaurant to please its long term customers who are fans of the big sandwiches.
- Burger King dose not advertise their products like their competitors.
C. Opportunities
- Rethink the restaurant experience with new design which combine new technologies devises and redefine a clear mantra of the brand to strengthen the position of the brand into the audience mind
- Harmonize the company image and identity worldwide with a strict and unique segment for the restaurant decor and web site
- Possibility to connect their home delivery with an application and improve their clients database
- Involving the customers through digital game in order to raise loyalty (such as a “BK Nation or Lovers”) and implement a crow-funding strategy
- Increase co-branding with different partners for the condiments as for the desserts (ice-cream and cakes)
- Emphasis the new healthier menus like they do with the new “satisfies fries” and highlight the fact that contrary to their main competitors most of their items are more healthier
- They should put a focus on corporate social responsibility, by introducing clean energy and packaging to respond to the social change and lifestyle. Underline and expand the BK McLamore Foundation worldwide
- Product improvement, tailoring it as per tastes of people around the world, in order to match with their slogan “Have it your way”
- Upgrade the varieties of children menus by making it more appealing (digital games or create co-branding with important brand in the toys industry and video-games)
- Put forward value menu featuring six items at less than $1
- Diversification of their services, for instance with a coffee corner in the most profitable restaurants which will serve Seattle’s Best Coffee (a Starbuck’s brand)- “The King coffee” a possible way to compete with the “Mc Coffee”
- New opportunities in growing economies (India, China, Singapore, and Malaysia)
- Reduce cost of entry for Burger King franchise and under performing outlets
D.Threats
- Changing consumer eating habits towards healthier food alternatives. Campaign against obesity target directly fast food chain such as Burger King.
- Intense competition from other chains such as McDonald’s, Wendy, KFC but also little fast food restaurants targeting specific segments. (ex: delivered food, healthy fast food, fine dining fast food etc.)
- Local fast food restaurant chains.
- Increasing labour cost putting pressure on margins and is a threat to keep low price and quality expected by consumers.
- Slow recovering economy that has slow down Burger King international development.
- Saturated fast food markets in the developed economies
- Currency fluctuations
Author: Bingying Zhang
Editor: Viriginie Mialon
Editor: Marvy Lungyeki
Burger War 