Destiny Strategy Culture Experiences

McDestiny McStrategy McCulture McExperiences

McDestiny
}

McDonald’s exists to revolutionize the
fast food industry’s practices to
enhance the welfare of society.
- brandFolio

McStrategy
}

}
Strategic Heritage

Specialize Focus on
in burger families &
sales children
} 1948 1963
1953 1974
Ronald
Ray Kroc’s McDonald
franchise Charity
House

Intensive
I’m Lovin’ It
global
campaign
expansion
}
1990’s 2003
2002 2006
Balanced
Plan to Win Active
Lifestyle

}
Strategic Environment

know thy enemy
fast food chains
coffee joints & bakeries
casual fast-dining restaurants

the power of context
strong criticism against obesity

trend watching
dining experience
hamburger business
breakfast & snacks

}
Strategic Growth

Plan to Win

}
people
products
} places
Plan to Win
prices
promotions

McDonald’s Brand Value
2007
2006
2005
2004
0 7,500 15,000 22,500 30,000
Brand Value ($m)
Interbrand

}
Strategic Positioning

think & act different

Breakfast 24/7 24/7
from 4a.m. Drive-thru McDelivery
24/7 Dessert
McCafe
Dining Kiosks

GROIP
Global Restaurant Operations Improvement Process

Food Improvement Team

Quality, Service, Cleanliness & Value

McCulture
}

How is McDonald’s organized?

}
40 Employees
10 Managers
} Local owners
Rigorous Food
Safety Standards
$2m a year business
Community &
charitable causes

? ?
}
the
three-legged
stool
?

owners/
operators

suppliers

employees

Evaluate Jim

finding the right people
hiring practices
diversity
people principle’s
awards

Crew
Trainer Systems Business
Development Management Management
Crew Shift Restaurant
Management Management
Global Training, Learning & Development Path

Area Department
}
Supervisor Manager
Program Program
Training Field Leadership
Consultant Service Development
Program Operation Program
Program

1/2
of the executive team came
from a restaurant

McJob

79.1%
feel valued

81.6%
would recommend to a friend

promise of golden arches

Employee has an
ethics or compliance
question or concern.
Employee speaks
Employee calls
If not
with the direct resolved
the Business
supervisor or
Integrity Line.
other appropriate
1-800-261-9827
manager.
Concerns
Questions
Global
Compliance
Global
Office
Compliance
assigns ID# for
Office
confidentiality &
provides
initiates an
guidance.
investigation if
necessary.
Employee makes an
Issue is resolved.
informed decision.

McExperience
}

brand identity & global impact

“...set of brand associations...
which represent what the brand
strands for and imply a promise to
customers...”
- David Aaker, Building Strong Brands

$20b
business

120
countries

30,000
restaurants

50m
people

McDonaldization

product

SuperSized

Food Studio

price

product + price = value

Branded
Everyday
Affordability

promotion

Courtesy of Edelman Asia Pac.

place

}
Enter the Brand

“Re-imaging is essential in the
competitive world of retail. We need
to avoid aging faster than our
customers”
- Mr. Hennequin, head of McDonald’s restaurance France

financial
analysis
}

Old strategy:
Growth through
expansion

54%
Debt - 1997 to 2002

35%
Increase in Stores - 1997 to 2002

37%
2000 - 2002 Operating Income

55%
2000 - 2002 Net Income

$40.31
1999
$16.08
2002
Stock Price

“Adding customers to the
restaurant” instead of “adding
restaurants to the customer”
-CEO Jim Skinner, on Plan to Win

32,000
2.5%
29,000
26,000
23,000
20,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Total Systemwide Restaurants

$25,000
$21,250
42%
US$ in Millions
$17,500
$13,750
$10,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Revenue

$4,445.00
109%
$3,333.75
US$ in Millions
$2,222.50
297%
$1,111.25
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Operating Income
Net Income

$5,000
50%
$4,000
US$ in Millions
$3,000
$2,000
$1,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Cash Flow from Operating Activities

$1.00
$1.00
$0.75
$0.50
$0.25
$0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Divided per Share

$50
$44.33
$40
$30
$20
$10
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year-end Stock Price

$57.10
Stock Price Today

Change in Brand Value
$22,000
41%
$16,500
US$ in Millions
$11,000
$5,500
18%
$0
2002 2003 2004 2005 2006
McDonald’s Wendy’s

challenges &
opportunities
}

Challenges
customer worries
saturation in the U.S.
new competition

Opportunities
growth in India & China
cashless payment
greying population

McDonald’s exists to revolutionize the
fast food industry’s practices to
enhance the welfare of society.
- brandFolio

i’m lovin’ it

are you?