Case 4: McDonald’s

The case:

Founded in 1940 by two brothers, Richard and Maurice, the McDonalds corporation, our focal company for today was sold to Ray Croc in 1955. What started as a hamburger stand is now probably one of the most recognised companies in the world. As of 2018, McDonalds was reputed to serve over 69 million customers daily in 100+ countries and just under 40,000 outlets. The revenues of McDonalds corporation come from rent, royalties and franchise fees as well as direct sales to customers at company-operated restaurants.

Apart from burgers and milkshakes, McDonalds, the second largest employer in the world does its share in contributing to the economy and has even been documented as positively influencing culture. A group of anthropologists in a study entitled the “Golden Arches East” reported that when McDonalds opened in Hong Kong in 1975, it was the 1st restaurant to always have clean restrooms, causing customers to demand this of other restaurants and improving quality across the region of East Asia and Hong Kong. Such impact is the reason why McDonalds has remained successful.

In this series, I analyse two key aspects of McDonalds, and as usual, draw life lessons from them.

  1. First, the business model. Many say McDonalds is more a real estate company than a fast food chain. It owns all the properties of its franchises and makes money from rent. Understanding the true source of your advantage is essential in thriving. Questions such as “Am I a writer or do I write?” can be invaluable in positioning yourself. Using myself as an example, I am a teacher who writes. Therefore, in determining what skills to exploit, teaching always comes before writing.
  2. Secondly, three words synonymous with McDonalds: consistency, simplicity and speed. I remember going on holidays with my kids when they were much younger. The frustration of them not eating anything served in the hotel restaurant was often dispelled by sighting of the golden arches. I was sure that if all else failed at least we had a familiar place to go. In relation to our personal life, it is essential to embrace consistency. People relating with you should know what to expect as this builds trust and ensures that they continue to call on you with lucrative propositions. Additionally, realise that simplicity is always an advantage. The brain naturally gravitates towards simplicity and to ensure we remain prominent and of worthwhile value, we must continuously practise the 3 characteristics of simplicity, consistency and speed.

In conclusion, Simon Sinek in his ‘Golden Circle Theory’ said success comes with the clarity of WHY (purpose); the discipline of HOW (process) and the consistency of the WHAT. This is what McDonalds does well and what we must do well to be successful.