Fast Food Restaurants
The fast-food industry is one of the major revenue generators in the USA. It has contributed enormously to the country’s economy because of the tax collected from the many fast-food chains in the country. The various fast-food chains have also created many job opportunities because they have employed many people throughout the country and in different parts of the world where they have branches. McDonald’s and Burger King are among the biggest chains in the fast-food industry, and they have various strengths and weaknesses. This paper aims at examining the SWOT analysis of both chains.
McDonald’s
McDonald’s is considered the largest restaurant in the world in terms of revenue and has about 38000 franchises in nearly 100 countries worldwide. It serves an average of 70 million customers daily, and the number keeps rising because of their effort to open more branches.
Strengths
- International Brand Recognition
There are various strengths and competencies associated with McDonald, which are responsible for its meteoric rise. The first strength is that it has International brand recognition. Regardless of where you go, the chain is internationally recognized as a household name. It has been successful in getting global recognition because of its expert marketing efforts, strategic branding, and established integrity. After all, no one would ever fail to identify those golden arches. The value of its brand is about $126.04 billion according to research done in 2018. There was no other brand which came close to it in value in the fast-food industry according to the research. Starbucks came second in brand value with its worth being estimated at $44.5 billion.
- Service and Product Consistency
Regardless of your location in the world, food from McDonald’s’sMcDonald’s’s tastes the same. Among the greatest strength that the chain possesses is its efficient system which contributes immensely to its consistent and quality products and services found in all its branches throughout the world. It has helped it establish credibility which customers can connect with instantly.
- Real Estate Company
Most people are not aware that McDonald’s has a huge real estate empire other than selling fries and burgers. It has thousands of prime locations throughout the globe. By 2018, it had 38,000restaurants in more than 100 countries. 35, 085 were franchises while the rest were company-operated restaurants. Its franchise work a bit differently. It does not only provide its brand name, ingredients, processes and recipes to franchisees, but it also has ownership of the land the restaurants are situated and therefore makes revenue by collecting rent payments.
- Technology Initiative
The chain is making use of revolutionary technology initiatives to achieve its dream of providing a futuristic experience. Such initiatives like kiosks with self-service, mobile ordering and payments have benefited the image of McDonald as a restaurant that is dedicated to improving the future.
- Leader in quick-service
According to Statista, The chain is the leader in terms of quick-service restaurants in the USA. Its transactions were at the top of the chart in 2019 with a revenue of $38.52 billion.
Weaknesses
Various shortcomings are associated with McDonald’s structured composition and strategy which affects its overall growth
- The Franchise model of business
The McDonalds’ provides among the best international franchising models. However, this has exposed the franchise to certain risks. It suffers from the risk of low revenue generation, customer dissatisfaction, financial deterioration and mismanagement. The restaurant depends on a franchise system where it has no control over the performance of the various branches, and this directly affects the brand. It can be changed into a strength by ensuring the franchisees are well trained to ensure high performance in all its branches.
- Supply chain interruptions
As an always busy chain, it is often faced with the problem of supply chain disruptions. It leads to a limit of products that are critical for its operations. As a result, expenses of operation increase, resulting in lower profitability and reduced revenue. This limitation can be changed into a strength by sourcing raw materials from reliable international suppliers that will be accountable when shortages occur.
- Shortage of Skilled Workforce.
Most of the employees at the McDonald’s chain are unskilled workers or are students that are looking for means to cater for their college expenses. It leads to high levels of attrition the service quality of the restaurant. It can be changed into a strength by ensuring all employees are well trained and certified.
- Junk food Label
The restaurant is the one that always comes at the top when there are talks regarding junk food and the negative effects attached to them. With the ever-growing campaigns against obesity and many other disorders related to junk food, most customers will likely distance themselves from this brand. It can be turned into a strength by including healthier options to its menu.
Opportunities
- Innovative Products
McDonald’s should put efforts to include new and innovative dishes on its menu so that customers consider using their services in comparison to other fast food outlets. It should also diversify its menu to cater to people in the various geographical background.
- Global Expansion
The chain rules in the US but struggles in other international markets. However it has a potential of getting bigger by focusing opening more branches on international markets instead of new ones in different states.
- Online Ordering and Delivery
There is a huge untapped market online and McDonalds should use it more as a platform to advertise its products and get more customer. It should also improve its delivery services to cater for customers that can access the stores physically.
Threats
The threat factors are connected to phenomenon that stops the restaurant from utilizing full benefits or advantages that can be obtained from the strengths available.
- Risky Investments Made on Technology Initiatives
Investment in technology has made the restaurant get a positive outlook though but it is still a risky venture. The pace at which the public adapts the new technology might slow down rate of return on investment. It can be made into an opportunity by proper consultation of tech-savvy personal before adapting any new technology.
- Cultural Threat in Various Countries
By operating globally, the restaurant has faced many cultural threats in various locations and this has caused harm to the brand image. This can be changed into an opportunity by customizing cultural aspects of the various countries