Case Memo of Mcdonald

From the information given by the case, McDonald’s encountered several problems that led to its downturn:

- McDonald’s faced a rapidly fragmenting market where changes in the tastes of consumers have made once-exotic foods like sushi and burritos everyday options. Also, consumers are taking more care of their health and started to switch to food that is healthier. Thus, McDonald’s in fact encountered a big threat that there are a lot of substitute products in the market.

- In 1990s expansion, headquarters stopped grading franchises for cleanliness, speed and service. Also, the tighter labor market forced McDonald’s to cut back its training on employees because they found hard to recruit new staffs. Therefore, the above causes result in a dramatic decrease in the skills of its employees, as well as lengthen the average service time.

In order to fix the problems, McDonald’s increased its emphasis on healthier foods and introduced new product, salad and breakfast sandwich; which provide customers with healthier and more diversified food. This results in a great success of McDonald’s by bringing about 1 million new customers every day.

In addition, Cantalupo realized that it is critical to deliver consistent, fast, friendly service and enjoyable experience to customers. However, the skills of McDonald’s employees dropped a lot as a result of 1990s expansion. Cantalupo cut back the opening of new outlet, shifted the emphasis on generating more sales from existing outlets. Also, McDonald’s tried to inspire and retrain all of its employees as well as franchisees, hoping to bring back the good experience to customers. McDonald’s also reinstituted a tough “up or out” grading system to kick out franchisees that are underperforming.