McDonalds

McDonalds Burger

McDonald's Corporation

McDonald's is a leader in this industry. Originating in the United States, it opened its first store in 1948 in San Bernardino, California, and in April 1954 signed its first franchise agreement. By 1957, McDonald's had 14 stores and in 1967 the first international store was opened in Canada. The company entered a high growth phase during the 1970s and opened about 500 new stores each year. Its first drive-through site appeared in the mid-1970s. During the 1980s, growth slowed as competition from other fast-food operators increased in the United States and the operating environment became increasingly tougher during the 1990s (Smith, 2007). McDonald's is renowned for being a hamburger and sandwich meal specialist, and has not diversified far from this market positioning and consumer perception, preferring to operate other food styles under other brands so as not to devalue its investment in its major brand.

Financial performance

Over the five years to 2010, total global revenue increased from $52.9 billion in 2005 to $77.4 billion in 2010, which is an average annualized growth rate of 7.9% These figures exclude franchise fees and other franchised revenue paid by franchisees to the parent company, which are included in the tables below. Franchise fee revenue increased from $5.10 billion in 2005 to $7.84 billion in 2010 (Yahoo Finance, 2011). IBISWorld expects strong revenue growth for 2011 due to continued expansion and increased sales across Asia, particularly in China, with moderate growth in Europe, and despite low US growth (Carrigan and De Pelsmacker, 2009).

The company experienced strong revenue and profit growth in 2010 due to strong sales of their new menu items and their frappe coffee drinks. The company has benefited from strong sales of their healthy-wrap menu items. Company-operated restaurants reported revenue of $16.2 billion in 2010, with franchise revenue fees accounting for $7.9 billion. In 2009 global revenue performance was low due to strong growth in the previous year and some weakness across global economies as the global recession continued. During 2008, company revenue and guest counts rose strongly as new menu items, increased marketing and competitive pricing increased revenue levels.

During 2007, McDonald's invested $1.95 billion to open about 800 new stores and reinvest in existing ones. It also indicated that it would continue to reduce its holding of company owned stores. It reached agreement to franchise nearly 1,600 existing stores across Brazil, Argentina, Mexico, Puerto Rico, Venezuela and 13 other countries in Latin America and the Caribbean to a developmental licensee led by Woods Staton, for about $700 million in cash and a 20-year license agreement. In August 2007 it sold its investment in Boston Market (Carrigan and De Pelsmacker, 2009).

Recent performance

Over the five years to 2012, global revenue is expected to increase at an average rate of 4.5% per year (with 5.3% forecast growth in 2012), while US revenue is expected to grow at an average rate of 2.4% per year to $8.9 billion (with 4.4% forecast growth in 2012). In the US, in 2012 McDonalds has focused their ...