McDonald’s is a fast-food restaurant chain headquartered in Oak Brook, Illinois. McDonald’s had slumping sales in 2014 and 2015. In 2014, “its overall profit plunged to $812 million, or 84 cents per share, from $1 billion”. As a result of this downslide, in January 2015 CEO Donald Thompson announced his retirement to take effect in March 2015, when Steve Easterbrook, who was the chief brand officer, took over as CEO. Easterbrook inherited a large number of problems with the company that were difficult, possibly impossible to solve. “Revenue fell 11% in the first quarter, as it experienced across-the-board sales declines” When taking over, Easterbrook’s position for fixing the company’s problems was addressed when he made the following statement: “McDonald’s management team is keenly focused on acting more quickly to better address today’s consumer needs, expectations and the competitive marketplace. We are developing a turnaround plan to improve our performance and deliver enduring profitable growth”. Although Easterbrook wanted to fix the problem, the question remained: How could McDonald’s stop the decrease in sales? Easterbrook wanted to better address customer needs. For years customer feedback has requested all-day breakfasts from McDonald’s. Since 2007 tens of thousands of customers had requested all-day breakfasts on McDonald’s Twitter page. However, McDonald’s has never wanted to do this, stating “limited grill space prevented the company from offering breakfast past a certain time each day”. In an attempt to fix slumping sales Easterbrook decided to listen to customer feedback and ran a trial of all-day breakfasts in select stores in the San Diego area in April 2015. After testing all-day breakfasts in several stores, the company announced that it would begin implementing them in all of its stores in October 2015. The all-day breakfast had a different menu based on region. Some regions would get a McMuffin menu and some regions would get a biscuit sandwich menu, but not both. The decision on which was made at the local level. Both menus had options for hotcakes, sausage burrito, parfaits, and oatmeal. The availability of hash browns varied by location, with some stores having them and some stores not. Easterbrook counted on this limited all-day breakfast menu to fix McDonald’s problems, but would it fix McDonald’s slumping sales or would it cause more problems?

Issues/business performance

McDonald’s was having many issues with its business performance. In 2015 before Easterbrook took over “Revenue fell 11% in the first quarter, as it experienced across-the- board sales declines”. In the first quarter of 2015 store sales in the U. were down 2 percent. Some store sales in other regions such Asia, Africa, Pacific, and the Middle East were down 8 percent for the quarter . Shares had been “down 5% over the past 12 months”. The company was losing customers to fast food competitors and fast casual restaurants.

Students McDonald’s has done a strong marketing campaign for students offering perks such as being part of the restaurants with special discount cards for food , free Wi-Fi, scholarships, internships, students’ business studies (offering case studies and real business situations to be analyzed by the students to provide a viable solution), and more. McDonald’s advertises its free Wi-Fi at over 11, slowed, lowering the value proposition at the same time, and McDonald’s pricing doesn’t make sense to many customers.

Traditionally customers have gone to McDonald’s to get inexpensive food, with quick service. The larger menu risked making wait times longer. By offering higher-priced options and attempting to compete with other companies like Panera Bread, Starbucks, and Dunkin’ Donuts McDonald’s was doing the opposite of its traditional market and risked upsetting its traditional market segment. “When there are a bunch of burgers for under $2 in the Dollar Menu & More section, it’s puzzling why anyone would pay $5 or so for what seems like a very similar burger on the regular menu”.

McDonald’s has also lost some of its traditional customers to competitors such as Burger King and Wendy’s. Both companies offer similar products at similar prices for breakfast, lunch, and dinner. Even with the new all-day breakfast McDonald’s faces competition from companies like Starbucks, Dunkin’ Donuts, and Panera Bread who also offer all-day breakfast. By adding an all-day breakfast, McDonald’s will have even more menu items at once and risk making service even slower. It could also cause problems for employees trying to adjust to the new routine. Will the McDonald’s all day breakfast reverse the company’s declining sales? Or will it create more problems?

Instructions:

re-read the cases at least three times in order to catch all of the important details that could lead to the discovery of a problem and its resolution.

Follow the below format in solving case analysis:

I. Problem

II. Objectives

III. Areas of Consideration

IV. Alternative Course of Action

V. Recommendation

VI. Plan of Action

VII. Potential Problems

VIII. Contingent Plan of Action

Answer rating: 100% (QA)

ANSWER I Problem The problem is that McDonalds is facing declining sales In 2014 its overall profit plunged to 812 million or 84 cents per share from 1 billion As a result of this downslide in January ... View the full answer