Modern technology strengthens their facilities.Self-service kiosks are useful in McDonalds because it is quicker to order thefood in this way. They are effective for McDonalds instead having high volumeof customers standing in queue to order food at the tills. However, there aredrawbacks of this service such as touch screen issues, printing error or ordernot completed due to the technical faults. Also, every customer may not able touse these facilities. If the restaurant is busy and there are kiosks free,customer may still wait for counter to order if they don’t know how to usethem.
McDonalds cannot expect every customer to know how to order the food. Inaddition to this, only card payments can be accepted in this kiosk. Thesemachines do not have the facility to pay cash. Building new restaurants is not the best solution to dealwith capacity as it requires a lot money to invest. The most important factoris how the existing restaurants can cope with this situation and make surewhenever customers come they still get the best experience. Firstly, having a home delivery service can help theMcDonalds to avoid the capacity problems at the restaurants which does notrequire customers to dine-in. It can help the McDonalds to reduce the employeesin lobby area as less cleaning required.
To do this, the organisation need tobe careful as the quality of the food need to be same and the food must bedelivered at the right temperature where the right equipment need to be usedduring the delivery to keep the food warm. One of the key point to consider is,McDonalds has ‘food for thoughts’ survey option for customer to give theirfeedback on the food and service which allows them to get food at discountedprice using voucher in their next visit (Mcdfoodforthoughts.com, 2017). Thismotivation is good for McDonalds as it encourages customers to visit again,however this can represent a drawback for the organisation due to the capacityof the restaurant.
One of the effective decision to keep McDonalds and customerhappy is to have limitation on those vouchers. Terms and condition of vouchercould be ‘only applicable for home delivery’. Customer can still use thevoucher by placing home delivery order online and at the same time McDonaldsalso reducing the volume of customers inside the restaurant without losingthem.
Secondly, developing an online application to order thefood from anywhere could help to reduce the number of customers dining insidethe restaurant. This application can help the customer to order their food atany time and just collect it in short period of time instead waiting insiderestaurant. This idea will reduce the number of customers who are waiting forthe food. Fast food restaurants like pizza hut (www.pizzahut.co.
uk) and dominos(www.dominos.co.uk) good example of successful businesses where onlineapplication is used to order the food online which allow the customers tochoose the method of collection or delivery. In addition to this, McDonalds gets overflow of customersat some point. When customer come to restaurant in large number of groups on abusy day, firstly a member of staff could approach towards them and find outare they going to dine-in or take away knowing the fact that the restaurant hasno space to sit down. As a fast-food restaurant staff members cannot ask theother customers to leave who are already having food inside.
There are a fewcomplaints (www.consumeraffairs.com) about customers asking for refunds for thefood they paid for as there is no space for them to sit. I would stronglyrecommend advising the customer beforehand about how full they are. When thishappens, a loyal customer would not mind waiting to have happy family meal atMcDonalds.
Fast-food restaurants formed competition within the foodindustry. An explanation suggests that “rivalry is especially destructive toprofitability if it gravitates solely to price because price competitiontransfer profits directly from an industry to its customer.” (Michael E.
Porter, 2008, p.85). One of the major problem for McDonalds as a fast foodrestaurant is represented by its competitors. Burger King is their maincompetitor as they produce similar product range. Operators compete on prices,strategic location, food quality, product consistency and presentation style.For example: The East Gates McDonalds in Leicester is sitting in the middle oftheir competitors around such the Burger King, Five Guys and the recentlyopened Gourmet Burger. There are chances for new entry as easy access to themarket due to the low start-up cost but they are limited because of the marketsituation and regulations. The fast-food industries are combined with theeconomies of scale, distribution channels and technological advances.
Forinstance, Gourmet Burger that is located next to East Gates McDonalds wasconsidered as a new major threat for them as they entered into the same marketproducing substitute products. However, considering their customer loyalty andtheir income, McDonalds has not seen a drop in their sales even though therewas a threat of new entry. McDonaldsdoes not seem to be affected because of their affordable prices. Customers arehappy pay full set of family meals whilst Gourmet Burger is more in to fantasyfood with expensive price.
Globally McDonalds are still in advantage as theycount with brand loyalty that makes it hard for new entrants to pose a threat.One of the main reason behind their success is that the fact they are known as’family restaurant’ and their traditional methods of McDonalds by havingsignature collection and happy meals. There are high chances of substitute products thatreplace McDonalds which include instant food like sandwiches and pizza, dine-inrestaurants, deliveries and other meals supplied from convenient stores. One ofthe reason for considering these substitutes is that customers become aware ofthe health effects by the fast foods through social medias. Substitutecompanies spend money on advertising their healthy products and meals whichtend to attract the customers.
McDonalds could only cope if they change theimage that customers have and this can be done by making their meals healthieras well as advertising to the market in appropriate ways. McDonalds is working hardtowards their ad to persuade parents that “Happy Meals are now healthier” by “showingthe quality of ingredients it uses and addressing myths and concerns about itsfood” (Campaignlive.co.uk, 2017). McDonalds has contributed a lot towards the community andthe environment since 1974. The annual contribution to the local areas withinthe UK economy is £9.
4 million and the number of jobs created were 539 (corporate.mcdonalds.com,2017). Martin Brower (one of their main supplier) and McDonalds work togetheras partners and they help to protect the planet. Martin Brower help McDonaldsby recycling their used cooking oil. This is considered as environment friendlyand the recycle turn in the biodiesel which used as fuel for delivery fleetthat saves over 7300 tonnes of CO2 each year (corporate.
mcdonalds.com, 2017). Oneof their distribution centre is set to be fossil fuel central neutral whichhelp them to carry the delivery product in environmentally-friendly way.
McDonalds engaged in strong position in the globalmarket. One of their strong strength is brand name and awareness. If someonesays McDonalds, the first thing that comes to mind is the ‘golden arches’. Itsknown as their corporate logo which recognised by everyone across the world.
Ifsomeone sees golden ‘M’ from anywhere then it is obvious there is McDonaldsover there. Figure 1 at the bottom shows their historic logo development. Since1961, their ‘Golden Arche’ has been there with enormous brand recognition.McDonalds food quality and the happy meal service among their customers is oneof their strong point among their competitors and their food called as ‘Maccy’by their loyal customers.
Every time competitors enter the market they remainsame as sales wise for the fact they know as family restaurant amongcommunities. In addition to this, if a customer goes to Burger King their staffdoes not involve in talking to children, whereby McDonalds get engaged withchildren and they look after them by giving toys or happy meal balloons. Anycustomer who comes to McDonalds as family with their children get treated veryfriendly and that’s what a parent would want in good customer service. Growth of the fast-food industry is one of theiropportunity among their competitors as it is growing wild. The lifestyle ofpeople these days leads them to change their eating habit of buying food fromfast-food restaurants.
Few years back, it used to be a time where people havetime to cook at home but now it has changed and most of the people work tobalance their lifestyle. This does not allow them to have time to cook whichencourage the people to buy food from outside as its quicker. It is great opportunityfor McDonalds to get more revenue if they have wide range of products toattract more target market. To compete, McDonalds must expand their products becausetheir competitors are stronger and have new products gradually.
They shouldspend some more time in their Research and Development to create new products.One of the effective decision they could make is to consider the diversity intheir society. These new products could be developed based on the localcommunities which will gradually bring more customers when there are morechoices available for different community people. Other competitors tend tohave more vegetarian/vegan option while McDonalds focus more on cheese, beef orchicken.
Among its competitors, McDonalds hold 5th position forproducing vegetarian options (oh My Veggies, 2017). Burger King has morevegetarian options (Bk.com, 2017) than McDonalds and they ranked as 3rdposition therefor it is necessary for McDonalds to have some organic productsin their menu. In addition to this to survive among their competitors, if theylisten to their customers and make sure they are satisfied during the visit byproviding a great food that is value for their money, they can easily stay incustomers hearts. Listening to customers is one of the solid solution todeal with them especially when the McDonalds’ focus on what they saying asbrand and business.
Customers want great tasting food in modern contemporaryenvironment. They expect great value served by great people hospitality.Providing a great customer service to customers will make the customers happyand stop having issues with the company. Customers can get attracted easily byproviding excellent customer service by McDonalds employees. Few things forstaff members to consider while providing customer service are dress toimpress, greeting and help them to use new equipment within the restaurants.
Staff members working in the hospitality (lobby) area will be the first personto see when a customer enters inside the restaurant, so a clean crisp andwrinkle-free uniform is a must. Having a friendly greeting to the customer at thebeginning and at the end will satisfy the customer as well as it can bring moreprofit to the business. Giving a simple smile, be genuine and enthusiastictowards customer will make them feel like no one is ignored. Having a quickconversation will make the customer comfortable and this can help therestaurant to reduce complaints as staff can satisfy the needs of the customersin friendly a manner. Using new technology at McDonald’s saves customerwaiting.
Therefore, helping the customers to use this new facility will helpthem to order the food quicker and it would be ideally good to encourage therestaurants to get involved with table service. To conclude, it is necessary for McDonalds to be awareabout their competitors offering similar products. Is it easy for otherorganisation to entry your market if they see you are making a profit? Or cansomeone force you to lower your prices? If the business does not know theanswer then what will happen is you are working hard and still struggling tostay afloat. This is where Porters five forces is useful because it helps todiscover who has the most power in each situation. McDonalds is following customer’sneeds and keep improving their services day by day.
Looking at the PESTLE analysis, overall itshows that there are significant opportunities for McDonalds to increase their growth.Use of technology in efficient way with right strategies will help in theirproductivity. Within the UK, McDonalds are helping local communities to improvethe ‘Lives of Children and Their Families’ – through support of RonaldMcDonalds House Charities and ‘Strengthening Communities’ – involvement ineducation and physical activity. (Mcdonalds.
com)Last but not least, McDonalds are doing well with theircustomer service in general. Since its first McDonalds, there are severalchanges happened to their restaurants and they are focusing on rest of theworld. Their employee turnover is very high. However, they have good diversificationwithin the business which satisfies customers with different backgrounds. Overall,If McDonalds has the right strategies, overcome its challenges and makes use ofadvantages, they will conquest the market and hold first position within thefast-food industry.