Mcdonald Success

10 ingredients of McDonald’s ‘secret sauce’

Of course, the big question is what makes McDonald’s such an incredible corporate success story? What’s behind the eightfold increase in the company’s share price from its 2003 low of $12? Here are my thoughts:

1. Franchising

Worldwide, 80% of McDonald’s restaurants are franchised; in Australia, this proportion is two-thirds. Franchising enables McDonald’s to harness individual talent and effort, while still retaining control of its brand, menu and pricing.

2. International expansion

McDonald’s is simply huge in the US, but it also has a presence in 118 other countries. In Australia, McDonald’s has been an established brand for 41 years and is as much a part of our suburbs and shopping strips as well-known brands such as Woolworths Limited (ASX: WOW) and Commonwealth Bank of Australia (ASX: CBA).

3. Global, but local

While McDonald’s is a multi-national giant, it adapts its business and menu to suit local markets. This ‘global, but local’ approach enables it to tailor its offerings to suit the local palate. For example, in some countries, McDonald’s sells beer and, in India, where Hindus don’t eat beef, McDonald’s menus have vegetarian and non-beef options. Australia was the birthplace of the McCafe concept and, perhaps not surprisingly, the McOz burger.

4. The brand is the business

The McDonald’s brand is one of the most valuable in the world, being easily and universally recognised. Everywhere you go, McDonald’s restaurants have an instant ‘recognisability factor’ — the familiar red-and-gold livery, plus the ‘Golden Arches’ and the world’s favourite clown, Ronald McDonald.

5. ‘Old and new’ menu

The McDonald’s menu sticks rigidly to old-fashioned favourites such as the Big Mac and Chicken McNuggets. However, the group is also willing to experiment, adding or deleting items from its menu according to their popularity and local tastes. For example, its new healthier menus and inexpensive all-day coffee have...