Mcdonald's Corporation - Success Strategies in Recessionary Environment
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Case Code: BSTR322 Case Length: 21 Pages Period: 2007-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: McDonald's Corporation Industry: Food and Beverage Countries: US Themes: Business Environment |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Over the last few years we've really beefed up our consumer insights research. Knowing what our customers expect and then filling their needs and wants are important. They're pinched everywhere they go today. And we feel obligated to make sure they don't come to McDonald's to suffer the same fate. We're somewhat recession-resistant-not recession-proof, but we're attracting more customers today than ever before."
- Jim Skinner, CEO, McDonald's Corporation, in 2009.
"There's nowhere else we'd rather go in restaurants right now. Remember, when people are down, they turn to the clown."
- John Glass, Stock Analyst, Morgan Stanley, in 2008.
A 'Recession-Resistant' Company
In February 2009, the US-based McDonald's Corporation (McDonald's), one of the world's leading fast food restaurant companies, reported that its global comparable sales for January 2009 had increased by 7.1%. Comparable sales in the US grew by 5.4%. McDonald's attributed the revenue growth in the US to its 'value for money' product offerings. While some analysts attributed the growth to the fact that recession-gripped consumers were seeking low-cost alternatives to dining out, others were of the view that McDonald's provided the customers with the products they demanded at affordable prices, thus giving them more value for their money.
According to Carol Pepper, Head of Pepper International, "I think they have a winning formula from a bottoms-up perspective. As a company, it is providing value for the dollar, convenience and it's helping consumers weather the recession in the US." McDonald's was one of the two companies on the Dow Jones Industrial Index to post a higher stock price at the end of 2008 as compared to the beginning of the year.
The stock price of McDonald's increased by 6% during the year. The company's profit for the year increased by 80% from US$ 2.3 billion in 2007 to US$ 4.3 billion in 2008. However, McDonald's did not fare well in the last quarter, when its net profit fell to US$ 985 million from US$ 1,273 million in the fourth quarter of 2007. Commenting on the company's performance, www.america.gov, a website stated, "But few companies, if any, have performed better than McDonald's and Wal-Mart during the current downturn...All fast-food restaurants benefit from consumers switching to cheaper alternatives when dining out, but none so much as McDonald's."...
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