Extra Credit

McDonald’s is the world's largest chain of hamburger and fast food restaurant, serving around 68 million customers daily in 119 countries across 35,000 outlets. McDonald’s may recently have struggled to lure customers, but it still does far more business at each location than other rivals, such as Burger King. According to the article “How the Average McDonald’s Makes Twice as Much as Burger King” from businessweek.com, McDonald’s drew $2.6 million in revenue last year in the U.S, while Burger King’s average sales was $1.2 million. It is surprising to me that there is such a huge gap between McDonald’s and Burger King since they sell similar foods and have the same target market.

What accounts for the difference? I believe there are 3 factors that drive higher sales volumes at McDonald’s:

1. Happy Meal. Happy Meal in McDonald’s is designed for children. This strategy makes McDonald’s different than Burger King. McDonald’s has the largest share of kid’s meal sales in the fast-food industry. Happy meals attract kids very much. It usually gets around 10% of total sales from Happy Meals. This unique children-oriented marketing strategy is helpful to gain revenue and compete with other rivals.

      2. Off-peak Business. The breakfast business in MacDonald’s is really successful. Food like Egg McMuffin, is part of the fast-food vocabulary in a way Burger King can’t match. And also McCafe has now become a well-known brand that is popular among breakfast consumers. The idea to gets more customers during off-peak hours looks like a good way for McDonald’s to follow.

3. Efficiency. Compared to other fast food restaurant, McDonald is more efficient. Its drive-through service can handle more cars at peak times. McDonald’s restaurants are adding a third service window to get customers through even faster. Its waiting line is much shorter than Burger King when they are in peak hours.

Those 3 factors are what I think are critical and essential for McDonald’s success. There might be other factors I have not considered. Anyway, everything from marketing and site selection to product initiatives and franchisee selection have been historical factors. A good operations management will help a lot.

Reference:

http://www.businessweek.com/articles/2014-03-25/how-the-average-mcdonald-s-makes-twice-as-much-as-burger-king