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Assess The Current Global Performances Of Mc Donnalds. What Impact Will This Have On The Fast Food Service Industry As A Whole?

1602 words - 6 pages

Assessing Global performanceMcDonalds global has not been doing to well of late. Over the last three years we have seen their stock slide 60%, which is catastrophic by any organisations standards. This year McDonalds had their first quarterly loss in their 47-year history. Despite their dismal performance in the USA, sale in Europe are only down by 1%. In the USA, McDonalds is only adding 200 outlets to its 6,070 that it already has which is 30% fewer then last year. In Japan McDonalds will be closing down 176 stores due to economic depression in the region. In the USA McDonalds has closed 200 outlets in 2002 and is expected to closed 519 in by the end of this year."Jack Greenberg, chairman and chief executive, said the company will "dramatically reduce restaurant openings" to 600 additional McDonald's units worldwide in 2003, down from 1,050 this year and from a high of nearly 2,000 in 1996. In the U.S., it will add 100 McDonald's in 2003, down from about 300 to 350 this year".Recently, a consumer surveys in the USA had shown that McDonalds is lacking in quality against its main rivals. In the early 90s, McDonalds headquarters decided to stop benchmarking their franchisees for cleanliness, skills, speed and other attributes that are vital to most organisations. The training programme got worst as restaurants fought for workers. As an obvious result, McDonalds had poorly trained staff, outlets that would not have met the standards for cleanliness and a slow moving shop floor.This is a far cry from the days when potential franchisees were only too eager to be apart of the McDonalds dream. Now the franchises are seeing very difficult times and are making a less money then they were 10 years ago. One franchise in the US sold off his 14 stores and moved on into the "Fast casual" segment that is growing day by day. Eating habits in the USA and the rest of the western world are changing. Every movie that Hollywood produced in the 80s and early 90s seemed to have a scene where somebody would be enjoying a hamburger, fries and a coke. Now we have sitcoms like Friends, Ali McBeal and Sex in the City where the whole eating ethos is based on the "fast casual" segment where we see more sandwich shops, coffee shops and sushi bars. They are more appealing and trendy. Not only are the eating habits rapidly changing but it almost seems that the large burger chain is slowly becoming unfashionable to today's consumer."Reggie Webb, who operates 11 McDonald's restaurants in Los Angeles, says his sales have dipped by an average of $50,000 at each of his outlets over the past 15 years. "From my perspective, I am working harder than ever and making less than I ever had on an average-store basis," says Webb. He'll have to open his wallet again if McDonald's includes his units in the next 200 restaurants it selects for refurbishing. Franchisees pay 70% of that $150,000 cost."Causes for this situationThere is a combination of factors as to why McDonalds are seeing hard...

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