McDonalds
Since its inception in 1940, McDonalds has become a brand to be reckoned with. It started up as a barbecue restaurant owned by Richard and Maurice McDonald, the McDonald brothers. In 1948, McDonalds was remodelled into a hamburger stand. Five years later, the first McDonalds franchise opened up in Phoenix. In 1955, Ray Kroc joined the company as a franchise agent. Six years later, Kroc purchased the chain from the McDonald brothers. By 1963, Kroc had opened its 500th McDonald’s restaurant.
Expansion
McDonalds became an international brand in 1967 when Kroc took McDonalds restaurant to Canada. Soon enough, he extended McDonald’s restaurant to Europe and Asia. This brand has been nothing short of success. Ray Kroc, when asked how he created a restaurant business that became an overnight success at the age of 52 said, “I was an overnight success alright, but 30 years is a long, long night”.
Principles
Kroc had a unique philosophy, which has gained the corporation outstanding accomplishments. He wanted to establish a system that would be well known for providing food that had the exact quality and same method of preparation. As a result, the burgers and fries served in Alaska were the same in taste and quality with those served in Alabama. He could not have achieved this without persuading both franchises and suppliers to work together by buying into his vision. That was how he promoted the slogan, “in business for yourself, but not by yourself”.
Even after his death in 1984, Ray Kroc’s legacy lives on. His core principles for Quality, Service, Cleanliness, and Value are still adhered to by franchisees. The system is still aligned around their “Three-legged stool” principle, consisting of their Franchisees, Suppliers, and Corporate Staff working hand in hand.
Progress
Despite the competition McDonalds faces, they have been successful at every “come-back” strategy adopted. In 2014, when they suffered a decline in sales as a result of new competition and an ambiguous menu, they were able to restructure back to a more focused menu.
As at the second quarter of 2016, McDonalds Corporation delivered a 15 percent growth, despite having a sales growth decline of three percent. With its recent move to close down around 500 underperforming locations, profits will likely grow higher as operational cost of these underperforming locations will seize.
Future
Currently having over 37,000 restaurants worldwide, McDonalds is definitely a solid investment with extremely safe stock and a dividend yield of three percent. It is noteworthy to mention that McDonalds has continually increased shareholders’ dividend for 25 years consecutively. This has made it one of the S&P 500 Dividend Aristocrats. With a property value of over $18 billion, the company earns a major portion of its revenue from rental payment of franchisees.
McDonalds is a brand loved by many because of its consistency in quality and affordability. Its flexibility in satisfying customer needs is a strategy other restaurant brands can learn from. Overall, the consistent success record is an evidence of persistence and hard work. As Ray Kroc would say, “If I had a brick for every time I’ve repeated the phrase Quality, Service, Cleanliness and Value, I think I’d probably be able to bridge the Atlantic Ocean with them.”
