Background
McDonald’s is one of the most successful fast food chain in the world. It originated in California in the USA in 1954 and has become one of the most respected and recognized brands in the world. The company’s success includes the establishment of more than 30,000 franchise stores in 119 countries, which serve more than 47 million people daily, and generate about $15 billion in revenues annually. McDonald’s uses various formulating strategies to achieve their success (Han, 2009), some of them include, carrying out research and development on its foods, pricing, building brand loyalty among others.
Problem Statement
In 2015, McDonald’s US restaurants began serving Egg muffins and other morning fares at all hours. “Expanding breakfast had been a long time request from customers and it was a key strategy that enabled the company to pull out of domestic sales slump last year” said Chief Executive Officer, Steve Easterbrook on a conference call (Giammona, 2017). The change elated customers and increased its fourth quarter sales of 2015 by 5.7 percent. However, the effect is now waning, while overall earnings beat analysts’ estimates last quarter, domestic same-store sales fell by 1.3 percent (Giammona, 2017). The company’s sales decrease during the fourth quarter was blamed on the “challenging comparison” with the all-day breakfast boost it got a year earlier. The decrease in sales can also be attributed to increased stiff completion against “fast casual” chains that are gaining popularity such as Chipotle and Shake Shack. Other reasons such as economic uncertainty and decrease in grocery prices have also been attributed to the decrease in sales.
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