Mcdonald's Creative + Strategic Plan by Marisol Hurtado

Marisol Hurtado McDonaldâ&#x20AC;&#x2122;s Creative + Strategic Planning ADVA207 Summer 2015

Table of Contents

Executive Summary

Vision + Mission Statement

SWOT Analysis

Macro Environmental Analysis

Financial + Corporate Data

Research

Goals + Objectives

Creative Brief

Advertisements

Evaluation

References

Executive Summary Founded May 15, 1940 in San Bernardino, California (as McDonald’s) April 15, 1955 in Des Plaines, Illinois (as the McDonald’s Corporation) Founders McDonald’s - Richard and Maurice McDonald McDonald’s Corporation - Ray Kroc Headquarters Oak Brook, Illinois, U.S. Number of Locations 36,000+ worldwide Area served Worldwide Key People Andrew J. McKenna (Chairman) Steve Easterbrook (President and CEO) Products Fast food, hamburgers, chicken, fries, soft drinks, coffee, milkshakes, salads, desserts, breakfast

Brief History In 1954, Ray Kroc visited a restaurant in San Bernardino, California that had purchased several Multi-mixers. There he found a small but successful restaurant run by brothers Dick and Mac McDonald, and was stunned by the effectiveness of their operation. They produced a limited menu, concentrating on just a few items—burgers, fries and beverages— which allowed them to focus on quality and quick service. Kroc pitched his vision of creating McDonald’s restaurants all over the U.S. to the brothers. In 1955, he founded McDonald’s System, Inc., a predecessor of the McDonald’s Corporation, and six years later bought the exclusive rights to the McDonald’s name. By 1958, McDonald’s had sold its 100 millionth hamburger. [1]

Vision + Mission Statement

McDonald’s Current Vision Statement: McDonald’s mission statement is “to be the best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile.” My Vision Statement: Our new vision for McDonald’s would still place a very important emphasis on quality, service, cleanliness, and value. It would also focus on changing the people’s perception of McDonald’s by completely re-branding our image and our business tactics.

SWOT Analysis Company

SWOT Analysis Product

SWOT Analysis

Target Demographic: Millennials

Macro Environmental Analysis Political As concerns of childhood obesity increase in the developed world, more and more governments and politicians are becoming involved in passing legislation to help reduce incidents of childhood obesity (Hughes, 2007). Michelle Obama (wife of former US President Barack Obama) spearheaded a program to decrease obesity in children and increase parental involvement in making healthy food choices for children. This has had an indirect effect on fast food retailers and especially on McDonald’s as more and more people see McDonald’s type food as an ‘unhealthy choice’. As a result, the company has had to change some of it’s menu items and offer a healthier choice in certain countries. (Hughes, 2007) Economical Even though the company has been faced with a lot of pressure due to it being seen as an unhealthy choice in terms of food, the recent economic downturn was advantageous to the company. As disposable incomes decreased and discretionary spending was reduced by consumers, many families and individuals opted to eat at McDonald’s instead of going to a more expensive restaurant. Therefore even though there were fears that McDonald’s type food is unhealthy and causes obesity, in an economic downturn, people tend to choose the unhealthy choice due to price attractiveness. Further as emerging economies such as China, India and Brazil and many others continue to see their middle classes growing, McDonald’s found its business booming and continues to see potential in these markets as more and more people are able to afford eating at McDonald’s. (Beng-Huat, 2000).

Macro Environmental Analysis Continued

Social As more and more individuals become health-conscious and make a determined effort to change their lifestyles and make healthy choices, McDonald’s has seen its brand being pointed to as an unhealthy choice (Gubman, & Russell, 2006). It is expected that increased awareness of the health risks caused by obesity will continue to increase and McDonald’s will be seen as a brand to be shunned. Therefore it has made changes to its menu items to help consumers make healthy meal choices while still continuing to offer its signature items like the Big Mac Burger (‘McDonald’s Celebrates 50’, 2005). Technological When compared to the competition McDonald’s has been very apt at keeping its pricing down while continuing to innovate its menu. One of the main reasons for the company to be able to keep its prices down when compared to the competition is because it has access to a very strong supply chain management system (Kramer, 2000). It is due to this excellent supply chain management system that the company is able to work very efficiently and effectively and thus reduce waste and pass on the benefits of the same to its consumers (Drummond and Ensor, 2005). McDonald’s continues to upgrade its information technology and supply management systems as it sees much return on investment from the same. Legal Unlike big retail operations in the USA like Wal-Mart, McDonald’s owns most it’s suppliers and producers and has been faced with many scandals as a result of that. There have been many occasions on which producers and suppliers have accused the company of discrimination and high-handed tactics (Alfino, Caputo & Wynyard, 1998). Even though the company tries its best to project a very friendly image, there have been allegations of employee exploitation etc which have caused many problems to McDonald’s. Also, the company has also faced many legal challenges brought from health as well as consumer groups and it is expected that the same trend will continue well into the future (Royle & Towers, 2002). 8

Environmental As environmental consciousness increases the company is trying to project an image of environmental friendliness. Unfortunately however since the model of McDonald’s is to make maximum use of comparative advantage, it’s entire supply management system is based on such a concept and it is difficult for the company to reduce its carbon footprint in the short run (Livesey, 1999). However as in the past McDonald’s has been very successful at manipulating and projecting a favorable public image without making many changes to the actual operations and thereby has been able to buy favor with its consumers and this trend is expected to continue even in the future (Kotler, Wong, Saunders and Armstrong, 2005). [3]

Financial + Corporate Data Six Year Summary

Financial + Corporate Data Operating Results

[4] McDonaldâ&#x20AC;&#x2122;s Annual Report

Financial + Corporate Data Market Share

[5] Statista.com 12

Research Product

Despite McDonald’s large market share in the fast food arena, sales have been dropping at staggering rates all throughout the United States, Europe, and specifically Asia. An article published in the Canadian newspaper The Financial Post, delves deeper into the matter: McDonald’s says global sales declined again in February, including a 4% drop in the U.S. where it is fighting to reinvigorate its image. The world’s biggest hamburger chain has been struggling to hold onto customers amid shifting tastes and intensifying competition, including a slew of places that position themselves as more wholesome alternatives. In a statement Monday, McDonald’s conceded “consumer needs and preferences have changed” and that its recent performance shows it needs to evolve. Going forward, it said its goal would be to “reassert McDonald’s as a modern, progressive burger company.” Already, McDonald’s has been signaling that changes are on the way. In January, it said CEO Don Thompson would step down and be replaced by Steve Easterbrook, its chief brand officer. That change took effect at the start of March and coincided with a “Turnaround Summit” for U.S. franchisees in Las Vegas last week, which the company said was designed to give “renewed energy and focus” to restaurant operations.

Research

Target Demographic: Millennials For this campaign, we will be focusing on bringing back the Millennial consumer to McDonald’s. We will be using facts conducted by the White House and the U.S. government to develop commercials that target the Millennial lifestyle and culture. Some current facts compiled about Millennials by the White House:

•Millennials are now the largest, most diverse generation in the U.S. population •Millennials are shaped by technology •Millennials have invested in human capital more than previous generations •As college enrollments grow, more students rely on loans to pay for post-secondary education •Millennials are more likely to focus exclusively on studies instead of combining school and work

Dining Habits

Target Demographic: Millennials Compared to other generations before them, Millennials have quite a different take on the usual dining experience. Some key factors involving Millennials and their dining habits are: •They eat out more often. 53% of the group goes out to eat once a week, compared with 43% for the general population •Definition of “healthy” is radically different. While previous generations counted calories, millennials care more about food being fresh, less processed and with fewer artificial ingredients •Increasingly want food with ethics. Young customers are more likely than their parents to say they want to visit companies with good social ethics •Embarrassed to eat fast food. Millennials are still frequenting fast food joints like McDonald’s — but they don’t want you to know it •Fast casual is preferred format. Fast casual refers to when a restaurant serves casual-dining quality food at fast food speeds [7]

Goals + Objectives Out of the many issues that McDonald’s faces as a large corporation, none speak more clearly than that of its image. On one hand, McDonald’s has attempted to emulate fast-casual restaurants such as Panera Bread, Shake Shack, and Chipotle Mexican Grill. These restaurants have amassed a huge amount of customer satisfaction due partly to their more upscale and customizable food offerings. On the other hand, another big problem McDonald’s is facing is that its menu is too large and has grown 70% since 2007. According to the Wall Street Journal, the fast-food giant has added oatmeal, snack wraps and lattes to its U.S. offerings in recent years to appeal to a wider swath of customers. But swelling menus have made the company’s kitchen operations increasingly complex. Its McCafé drinks, for example, require a separate station behind the counter equipped with coffee grinders and blenders, causing longer waits. As a result, some customers have started going elsewhere for their fast-food fix. The new menu items are a burden on employees and have helped contribute to long wait times. Franchisees are also angry about the overloaded menu, saying that the extra ingredients and equipment were costing them money. Redesigning and focusing on a more minimal, healthier approach to the McDonald’s menu is one way to save the company. Our goal would be to not only reinvigorate the target demographics perception of McDonald’s, but to also achieve at least a 10% increase in sales for the next quarter. [8]

Creative Brief Background/Overview For a very long time, McDonald’s has been under scrutiny for various reasons including nutritional practices, employee relations, etc. Fast casual restaurants such as Chipotle and Panera Bread are now dominating the fast food arena given that they provide customizable and healthier options on their menu’s. Problem McDonald’s faces several problems regarding its decline in popularity and preference over the years. Millennials: They love food and dining out, but prefer to visit restaurants that are healthier, more sustainable, that offer customizable options. No new products worth craving: Since its debut in 2003, the McGriddle pancakes breakfast sandwich was the last menu item that appeared and made a big hit. Pricing: Because McDonald’s mostly sells food at such low costs, the assumption is that their food quality is also low. With cheaply made items being sold on the dollar menu, and “gourmet” almost identical products being sold on their McCafé menu, it’s no wonder customers are confused about McDonald’s pricing. Focus McDonald’s menu is probably one of the largest of any fast food restaurant. This has left many franchise owners angry and concerned that the company has lost its sense of focus. Objective The objective of this campaign would be to own size the McDonald’s menu and bring it back to what it once was, a classic all-American burger joint. By cutting down the size of the menu, McDonald’s would be able to focus on just the key menu items that once made it so popular and bring back the taste and quality to their food.

Creative Brief Continued

Target Audience Our target audience will focus primarily on Millennials, since this generation is the one that dines out most often. Focus Our focus is to minimize the size of the McDonaldâ&#x20AC;&#x2122;s menu and create a new, fresh image for the company. Not only will the image be of great importance, but the nutritional changes to its menu items as well. The menu will consist of classic items such as the hamburger, cheeseburger, fries, shakes, soda, beer, and wine. Included in the menu will also be favorites such as McNuggets, Egg McMuffin + McGriddle, and the baked apple pie.

Commercial Treatments This campaign will consist of two series of commercials which will air on both national television and YouTube. Alongside the commercials, there will also be multiple social media campaigns on Instagram, SnapChat, and Facebook, the most popular social media platforms amongst Millennials. These advertisements would run for six months. TV Commercial #1 This commercial will follow the life of a young woman, age 25, living in San Francisco. She wakes up and makes herself some coffee, goes for a morning run, and then bikes to work. She works at a technology start up company, where she is an engineer. What we see next is the young woman going about a very busy and hectic work day. Several meetings need to be attended, many phone calls are answered, and logarithms to be worked on. At the end of the day, she bikes towards home (or so we think). She ends up going to McDonald’s and enjoying a delicious and healthy meal. The commercial ends with the hash-tag #MCLENNIAL and the words “the all new McDonald’s”, with the company’s jingle to conclude it. TV Commercial #2 This commercial follows the life of a young man, age 22, living in Portland. He goes to a local community college during the day to study communications and then bar tends at night. His days are usually very long, but the young man nonetheless remains positive at what life throws at him. After a typical long shift at the bar (the time says 1am), he heads over to the McDonald’s 24 hour drive through window and orders himself a gourmet burger and fries. The car pulls off and the commercial ends with the hash-tag #MCLENNIAL and the words “the all new McDonald’s, with the company’s jingle to conclude it.

Social Media Youtube

Social Media Instagram

Evaluation Once all of these changes have been implemented and the Mclennial campaign has been launched, we would begin to track and monitor net sales at every brick and mortar location. With the help of technology, we would monitor the number of daily visitors to our website using the tags (hash-tags) found on Instagram and Facebook. In conjunction with the aforementioned campaigns, every location would also be handing out booklets to every new customer once their dining session at the new McDonaldâ&#x20AC;&#x2122;s has ended. This booklet will contain a virtual link that when visited, will allow the customer to give their direct feedback on what they though of their experience. Upon the completion of the survey, the customer would kindly be reminded to come back soon and would be presented with a free entree coupon that they would be able to redeem during their next visit. McDonaldâ&#x20AC;&#x2122;s would capture all of this data and continue forth in their efforts to improving the company and its image.

References [1] “Our History.” :: McDonalds.com. Web. 17 Sept. 2015. [2] “Understanding Millennials and the Opportunities They Bring to the Workplace.” Impraise More. Web. 17 Sept. 2015. [3] “Micro And Macro Environment Of Mcdonalds Marketing Essay.” UKEssays. Web. 17 Sept. 2015. [4] McDonald’s Annual Report [5] “Market Share of Leading Brands in the U.S. Fast Food Industry 2013 | Statistic.” Statista. Web. 17 Sept. 2015. [6] “Fallen Arches: Can McDonald’s Get Its Mojo Back?” Fortune Fallen Arches Can McDonalds Get Its Mojo Back Comments. 12 Nov. 2014. Web. 17 Sept. 2015. [7] Lutz, Ashley. “5 Ways Millennials’ Dining Habits Are Different from Their Parents’” Business Insider. Business Insider, Inc, 25 Mar. 2015. Web. 17 Sept. 2015. [8] “McDonald’s Corp Concedes ‘consumer Needs Have Changed’ as Global Sales Decline Again in February.” Financial Post McDonalds Corp Concedes Consumer Needs Have Changed as Global Sales Decline Again InFebruary Comments. Web. 17 Sept. 2015.