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MARKETING PLAN Of mcdonald’s

Group 5-ABM12 | Marketing | January 6, 2018

Introduction McDonald’s is one of the leading biggest Fast Food Chains not only in the U.S but in other parts of the globe. In 2011 McDonald’s ranked 2nd for the Biggest Quick Service Restaurants (or QSR’s) in the U.S but ranked 1st in 2012, as ranked by the QSR Magazine. (Forbes 2012). The Founder of McDonald’s Ray Kroc rose from humble beginnings, in 1917, 15-year-old Ray Kroc lied about his age to join the Red Cross as an ambulance driver, but the war ended before he completed his training. He then worked as a piano player, a paper cup salesman and a Multimixer salesman In 1954, he visited a restaurant in San Bernardino, California that had purchased several Multimixers. There he found a small but successful restaurant run by brothers Dick and Mac McDonald, and was stunned by the effectiveness of their operation. They produced a limited menu, concentrating on just a few items – burgers, fries and beverages – which allowed them to focus on quality and quick service. In 1954, he visited a restaurant in San Bernardino, California that had purchased several Multimixers. There he found a small but successful restaurant run by brothers Dick and Mac McDonald, and was stunned by the effectiveness of their operation. They produced a limited menu, concentrating on just a few items – burgers, fries and beverages – which allowed them to focus on quality and quick service. They were looking for a new agent and Kroc saw an opportunity. In 1955, he founded McDonald’s System, Inc., a predecessor of the McDonald’s Corporation, and six years later bought the exclusive rights to the McDonald’s name. By 1958, McDonald’s had sold its 100 millionth hamburger. They were looking for a new agent and Kroc saw an opportunity. In 1955, he founded McDonald’s System, Inc., a predecessor of the McDonald’s Corporation, and six years later bought the exclusive rights to the McDonald’s name. By 1958, McDonald’s had sold its 100 millionth hamburger. Now McDonald’s has around 30, 000 outlets in more than 120 countries and thus it have been considered among world’s largest food chains. Their affluent time began with their founder Ray Kroc’s vision and his dedication, changed in their brilliant managers, and this will maintain the polish on McDonald’s name for years to come.

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History of McDonald’s in the Philippines It was in 1981 when George T. Yang opened the first McDonald’s Restaurant in the Philippines along the Morayta, Manila and in 2005, McDonald’s Philippines became a 100% Filipino owned company under the name Golden Arches Development Corporation. His son Kenneth S. Yang, the current President and CEO of McDonald’s Philippines has grown to become one of the country’s leading quick service restaurants, with 400 stores nationwide that proudly serves global icons, such as the Big Mac, Chicken McNuggets and World Famous Fries, as well as food specially made to delight the Pinoy palate, like the Chicken McDo, Burger McDo and McSpaghetti.

More than great tasting food, McDonald’s Philippines offers world-class services that cater to the changing lifestyles of its customers. With 24-hour restaurants and delivery services, via McDelivery, Drive-Thru and Dessert Centers, McDonald’s Philippines ensures convenience for its customers, anytime, anywhere. In its commitment to the Filipino family, McDonald’s has continuously strived to bring happiness to children through its CSR programs under Ronald McDonald House Charities (RMHC). RMHC is committed to making a difference in the lives of Filipino children through its banner programs “Bright Minds Reads (BMR)”, a beginning reading program for Grade 1 students, “Bahay Bulilt”, which aims to build low-cost day care centers for children aged 2-5 years old, and “Bigay Tulong”, a program to provide immediate aid to affected families during natural calamities. The McDonald’s system has over 27,000 employees all over the country, each with a commitment to deliver quality service and a delightful customer experience. Employees enjoy a dynamic working environment, support, training and opportunities to help them deliver the best possible results and advance their career.

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Mission, Vision and Values (Philippines)

Mission McDonald’s Philippines aims to not only offers great tasting food but also offers a world class services that offers a great experience for their customers. They offer a 24-hour restaurant and delivery services, through the McDelivery, Drive-Thru and Dessert Centers, To ensure the convenience of the Pilipino customers anytime and anywhere in the McDonald’s Philippines.

Vision In its commitment to the Filipino family, McDonald’s has continuously strived to bring happiness to children through its CSR programs under Ronald McDonald House Charities (RMHC). RMHC is committed to making a difference in the lives of Filipino children through its banner programs “Bright Minds Reads (BMR)”, a beginning reading program for Grade 1 students, “Bahay Bulilt”, which aims to build low-cost day care centers for children aged 2-5 years old, and “Bigay Tulong”, a program to provide immediate aid to affected families during natural calamities.

Values The McDonald’s system has over 27,000 employees all over the country, each with a commitment to deliver quality service and a delightful customer experience. Employees enjoy a dynamic working environment, support, training and opportunities to help them deliver the best possible results and advance their career.

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Situational Analysis

Market Analysis McDonalds is a usually acknowledged marketplace Leader in the quick nourishment Industry or also called the "Burger" business. The organization has productively perceived a prominent brand picture. Indeed, the extensions of quick nourishment have been named subsequent to the association as 'McDonaldization'. Advertising includes distinguishing what clients require and endeavoring towards satisfying their requests. Promoting Audit includes investigating the organization's different viewpoints and assessing the organization's advertising technique. It includes in drawing out the pitfalls in the associations execution. McDonald's is the world 'stop organization in the fast food industry. It has more than 30,000 eateries in more than 100 nations serving millions of individuals around the worldwide.

Market Size Targeting implies choosing specific groups identified as a result of segmentation to sell products. How does McDonalds select/target the right segments? Iacobucci (2014) advices that marketers iterate between understanding corporate fit and having information about segment size and likely profitability. Types of segmentation

Geographic

Segmentation

McDonald’s

Criteria

target segment

Region

Domestic/International

Density

Urban/rural

Age

8-45

Gender

Males/Females

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Bachelor Stage: young, single people not living at home Life-cycle stage

Full Nest II: youngest child six or over

Demographic

Behavioral

Newly Married Couples: young, no children

Income

Low and middle

Occupation

Students, employees, professionals

Degree of loyalty

‘Hard core loyal’ and ‘Switchers’

Benefit sought

Cost benefits, time efficiency

Personality

Easy going and careless

User status

Potential and regular fast food eaters

Social class

Lower, working and middle classes

Psychographic

McDonald’s targets Resigned, Struggler and Mainstreamer individuals according to Cross Lifestyle

Cultural Consumer Characterization developed by Young and Rubican

Market Growth Rate

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Earning Growth Rate 16 14 12 10 8 14.16 6 9.62

8.67

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6.45 2 0 Dec-16

Dec-17

Dec-18

0 Dec-19

Long term 5 yr

Growth Rate

Market Profitability

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Return on sales Gross profit margin Operating profit margin Net profit margin Return on Investment Return on equity (ROE) Return on assets (ROA)

Dec 31, 2016

Dec 31, 2015

Dec 31, 2014

Dec 31, 2013

Dec 31, 2012

41.45%

38.52%

38.10%

38.79%

39.24%

31.45%

28.12%

28.97%

31.18%

31.21%

19.03%

17.82%

17.34%

19.87%

19.82%

–%

63.90%

37.02%

34.89%

35.73%

15.11%

11.94%

13.88%

15.25%

15.44%

Industry Cost Structure McDonald’s cost structure is very similar to the industry average, with raw materials (purchases) being the largest component, followed by labor. Breakdown: 

31.00% on Purchases



24.60% on Wages



14.00% on Rent and Utility



3.50% on Depreciation



3.40% on Marketing

Distribution Channels The most prominent place McDonald’s products can be found are at its restaurants. Other places where the company uses to sell its products are:

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

Kiosks



Post mates website and app



McDonald’s mobile app

Hence, the company is using the selective distribution channel maintaining a push-and-pull marketing communication.

Market Trends Nullatech AI, predicted 71.33% of McDonald’s Corporation (MCD) market trends correctly in last 300 weeks. McDonald’s is an American fast food restaurant chain. Two brothers founded McDonald’s in 1940 and today is one of the world’s largest restaurant chains. McDonald’s stock is among the 3 Dividend Aristocrats Over the Last 10 Years. There are more than 36.000 of McDonald’s branches worldwide. so it makes sense that McDonald’s stock has grown this much through these years.

Customer Analysis To build long-term business it is essential to retain people once they have become customers. Customers are not all the same. Market research identifies different types of customers. These examples represent just a few of

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McDonald's possible customer profiles. Each has different reasons for coming to McDonald's. McDonald’s wants to recognize and emphases a lot focus on buyer behavior. It usually asks the following questions in Oder to understand the market needs and wants in term of what they want to buy, when they want to buy? Where they want buy? On other hand there are many different segments when it comes to McDonald's such as geographic, demographic, age, gender, income, and ethnic. McDonald's offers not only hamburgers, but also chicken sandwiches, fish burgers, beef wraps, and chicken wraps. With this much variety McDonald's can attract way more customers

Competitive Analysis Market Share of Leading Brands In U.S (2015)

Other

58.90%

Chipotle

2.20%

Wendy's Company

4.40%

Subway

6.70%

Yum Brands Inc.

10.80%

McDonald's

17% 0%

10%

20%

30%

40%

50%

60%

70%

McDonald’s is one of the leading fast food chain in the industry and it’s market share as observed on the chart above, compare to other competitor in U.S like chipotle, Wendy’s, Subway and Yum Brands Incorporation, McDonalds’ have been successful in surpassing it’s competitors due to their Emphasis on aligning with local taste, Multi-domestic strategy, high level of Diversification and Related-Constrain. With just only a year it’s competitors bench market their method.

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In the Philippines, comparison between McDonalds’ no.1 competitor Jollibee especially in Metro Manila as of early January 2017 shows a surprising result. At 253, the number of Jollibee branches in the National Capital Region's 17 cities easily overwhelms McDonald's 164 stores. The figures were compiled from the two fast-food chain's websites and mobile apps as of January 5, 2017. However, McDonald's managed to edge past Jollibee in three of four business districts--Makati City, Bonifacio Global City in Taguig, and Binondo, the country's biggest Chinatown, in Manila. In BGC, McDonald's even has more than double Jollibee's stores. It's only in Ortigas Center, where Jollibee has its main office, that it outnumbers McDonald's.

SWOT Analysis Strengths 

Strong brand name, image and reputation McDonalds’ is one of the leading fast food chains with more than

31,000 restaurants serving burgers and fries in almost 120 countries for over 62 years and establish their brand so well that the image of McDonalds is recognized everywhere. This brand is in top ten of the most powerful brand names in the world with Coca-Cola, Nokia or GM. In 2003 McDonald’s brand value was placed at 8th number among worlds most valuable brand with $24.69 billions (source: interbrand). Brand image is the totality of consumer perceptions about the brand, or how they see it. Companies have to work hard on theconsumer experience to make sure that what customers see and think is what they wantthem to. (Temporal, 2002 & Marino, 2004) 

Large market share

McDonalds is considered as the largest player in size and global reach. When Wendy’s or Burgers King are losing market share in 2006, McDonalds still

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increases its market share. Market share of McDonalds in the recent time is about 19% while Yum!Brands is 9% and both Wendy’s and Burger King is 2%. 

Specialized training for managers

McDonalds is very serious on training managers. This company has its own program to train managers the most professionally, which is called Hamburger University. As a result, McDonalds has many good managers who can help company development well. 

McDonalds Plan to Win

McDonalds customer – focused Plan to Win provide a common framework for its global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of its Plan to Win – People, Products, Place, Price and Promotion – McDonalds has enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in each of the last eight years. This Plan, combined with financial discipline, has delivered strong results for company’s shareholders. 

Introduction of new production

McDonalds is considered the first one enters to fast food industry. It initiates to other brand to enter this industry. As a result, when think about fast food, customers always remember McDonalds first. In fact, in some big countries, especially in US, McDonalds is the first choice of a large number of customers. 

Technology Innovative

McDonald’s is keeping at the forefront of technology around the globe. For example, In Brazil McDonald’s is currently studying the installation of Internet access terminals in some outlets as well as enabling customers to order online. This will create a more efficient process that will reduce the amount of lag time between a customer’s orders and pick up of the order.

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

Good marketing strategies No matter the continent, children and adults know the face of Ronald

McDonald is synonymous with the colossus restaurant chain. This results in wonderful marketing strategies among management which conducts a very thorough market analysis, resulting in much success around the globe.

Weaknesses 

Unhealthy food image McDonald's has been impacted by negative press like the

documentary "Supersize Me" by Morgan Spurlock in which he contributed our society’s obesity to McDonald's and other fast food chains. In fact, each McDonalds dishes provides large amount of calories but not too much nutrition. 

Customer loses due to fierce competition McDonalds has to compete with many strong brand name in fast food

industry such as Wendy’s, Burger King or Yum!Brands. This fierce competition makes McDonalds loose a large number of customers who prefer favor of other brands. 

Problem related to health issue McDonalds use Trans - fat and beef oil in their food. Although it is not

illegal, it affects badly on customer’s health because Trans – fat is causes of some kind of cancer. Consequently, a number of customers who care about their health stop eating at McDonalds restaurants. It makes revenue of company decrease. 

Legal action

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McDonald’s has been involved in a number of lawsuits and other legal cases in the course. For example, there are many case which involved with trademark issue. McDonald’s force many others restaurant, company of just a coffee shop to change their brand name because of keeping “Mc” letters. 

Unbalance meals

Although McDonalds tries to update its menu by healthy criteria, McDonald’s meals are still unbalance. For example, there are many dishes with chicken (both grilled and fried), bacon, beef, rib or egg. Besides, just several dishes are salad with vegetable and fruit. Moreover, amount of fruit or vegetable is not much. 

High employee turnover rate

Although McDonalds has many good managers as well as skillful employees, the turnover rate is still high. Every year many of their employees are fired out of the restaurants. Moreover, many others quit their jobs, especially part time employees because of low salary as well as too high working pressure. 

Action related to environmental issue

McDonalds uses HCFC – 22 to make polystyrene that is contributing to ozone depletion. The company has to repair this weakness if doesn’t want to be criticized. 

Dissatisfied Franchisees

Franchisees are beginning to become very dissatisfied with the fees that McDonald’s are forcing them to pay. As the company continues to expand, they are also increasing the amount of fees franchisees have to pay for the use of the notorious fast-food brand. Many people are not very happy about this and as a result many franchisees are selling their businesses.

Opportunities

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

Growth of the fast food industry Fast food industry now is developing significantly. The change of

lifestyle leads to the change in people eating habit. In the past, if just workers, drivers or someone who had to work busily and didn’t have enough time for a home meal choose fast food; nowadays, almost people eat fast food and a major of them like fast food very much. It is a huge chance for fast food brand to increase their revenues, especially McDonalds. 

Conservation McDonald should research green energies and green packaging

solutions and incorporate these finding as a part of their marketing strategies and advertisements. 

Globalization, expansion in other countries McDonalds has more than 31,000 restaurants serving in almost 120

countries. Of the 31,000 restaurants, at least 14,000 are in US. However, now, because the care of McDonalds about favors and cultures in each country it enters, McDonalds can open more restaurant in new areas such as China or India – the countries which culture influences on people lifestyle deeply. They are very potential markets. The expansion of these areas is big opportunities For McDonalds. 

Low cost menu is preferred by large number of customers With low cost menu, McDonalds can attract customers who just have

low income. This segment makes up a fairly remarkable part, especially in the recent time, when global economic is struggling. It is not difficult for McDonalds to apply low cost menu on all restaurants. 

Appearance of freebies and discounts

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Discounts given on every food item may help them gain more customers. Moreover, a new trend is rising among customers that they like freebies and discounts, even when they don’t need it or don’t use these freebies after. 

Diverse tastes and needs of customers Customer’s tastes now become more diverse. As a result, they

require new format of service in order to satisfy them. McDonalds, with new format of business such as McCafe, it can attract new segment of customer; for instance, civil service, who prefer coffee as well as want to use Wi-Fi to work when drink coffee. 

Growing health trend among the customers: Although people concern about how McDonalds influence badly on

their health, it is also a chance for McDonalds. This company can develop new products, specifically fresh burger or healthy dessert.

Threats 

Intensity competitors Along with the development of fast food industry, there are many

new fast food brand enter to the market. It is nothing to say if there is no strong brand which can compete with McDonalds. However, in fact, there are some and they are stronger gradually, for example Yum!Brands, Wendy’s or Burger King. Although market share of these brand are lower than McDonalds, they try to gain more customers from McDonalds. Moreover, more casual dining restaurants increase their burger offering and decrease the price. If we are not really hurry, we may choose this kind of restaurant instead of fast food restaurants. They also become the competitors of McDonalds. 

Public health crisis

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With a growing number of obesity cases among Americans, fast food chains like McDonalds will continued to be overshadowed by their previous products offerings, for example Supersized Meal, no fruit or yogurt, slim salad selection. Besides, people nowadays are facing heart problem more seriously. As a result, they require nutritious and healthy food as well as lifestyle. 

Economic recession The company's revenue streams are diversified, but depending on the

length of this "recession", they will inevitably be negatively impacted by the trickledown effect. Recession or down turn in economy may affect the retailer sales, as household budgets tighten reducing spend and number of visitors. 

Serious environmental issue Environment is one of the hottest topics all over the world. Any action

which influence on the earth and human life is criticized strongly. Consequently, if McDonalds keep using HCFC -22, it may lose customers, especially who really care about the earth.

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Market Objectives Currently McDonald’s is focusing on service delivery time because of customer don’t have much time today while using electronic media for promotion.

Profitability McDonald's is a large corporation, therefore, must remain profitable to stay in business. To remain profitable, McDonald's offers quality products at remained profitable, even during global recessions, by offering a cheap alternative to sit-down meals.

Quality Service McDonald's aims to offer quick, efficient products at a reasonable price. Its strives to expand and increase awareness of nutritious menu items. For example, McDonald's has expanded food and beverages containing fruit and vegetables across the menu, and has increased awareness of fruit, vegetable and dairy options available for children on the menu. Their fast, convenient meals won't result in an unsatisfactory product.

Customer Satisfaction Customer loyalty is an important objective of McDonald's. Without customer loyalty, there would be a decrease in customers meaning less positive word of mouth from customers to friends and family members. Customer satisfaction involves marketing, as McDonald's identifies the needs and requirements of its consumers in a better way than its competitors. Many consumers choose McDonald's because of its friendly, inviting atmosphere. Restaurants offer comfortable seating, televisions and playgrounds for

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children. Convenience is also important, as customers want their food produced in a fast, efficient manner.

Reputable Image McDonald's opened its first restaurant in 1954. As of 2011, McDonald's operates more than 32,000 restaurants serving more than 60 million people in more than 100 countries every day. McDonald's strives for uniformity. If you are in Paris, you can find many similar products on the menu as you would in New York City. McDonald's seeks to continually improve its image as a pathway to a career, rather than a provider of "minimum-wage, dead-end, burger flipping jobs."

Community Outreach McDonald's strives to increase its financial and volunteer support to Ronald McDonald House Charities through communication outreach. It is involved in many schools, community organizations and nonprofit organizations that benefit citizen in communities all over the world. Currently McDonald’s is focusing on service delivery time because of customer don’t have much time today while using electronic media for promotion.

Overall Objectives  Easy accessibility of product and services to the customers  Easy accessibility for providing essential services and value-added services  Easy complaint handling process  Covering whole target market.

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Marketing Strategies

Distribution Strategies McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving more than 58 million customers daily. In addition to its signature restaurant chain, McDonald’s Corporation held a minority interest in Pret A Manger until 2008, was a major investor in the Chipotle Mexican Grill until 2006, and owned the restaurant chain Boston Market until 2007.

A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.

McDonald's primarily sells hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks, shakes, and desserts. In response to obesity trends in Western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include alternatives considered healthier such as salads, wraps and fruit.

McDonald's distribution channel and the way in which this fast-food restaurant chain gets its products to the market. In the theory of the Marketing Mix, place (distribution) determines where the product will be sold and how it will get there. In fact, as noted on www.mcdonalds.com, McDonald's is the leading global foodservice retailer, with more than 30,000 local restaurants serving nearly 46 million people each day in 121 different countries. Approximately 80 percent of all McDonald's restaurants company wants to be the first in the market and establish the brand as rapidly as possible by advertising very heavily. This effective distribution strategy (place) has helped McDonald's develop a strong market share in the fast-food market around the

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world. Moreover, according to Kotler stores must have a planned atmosphere that suits the target market and moves customers to buy. In addition, McDonald's has pre-determined the locations for many of its stores to help reach a variety and diverse population. Conclusion. In conclusion, McDonald's has an intensive distribution process which is a credit to their Marketing department. As businesses and other organizations move forward, the challenge of making their products

The McDonald’s executive claimed that it was about being part of Disney and their theme parks, their movies and their characters because now you can buy a Happy Meal at the Happiest Place on Earth. There are multiple places in Disney World to buy a Happy Meal or more so to buy McDonald’s products. A McDonald’s kiosk can be found in between Frontier land and Adventureland and restaurants in Downtown Disney and next to the Disney All-Star Resorts. Not only can you find these restaurants, they are also a few of the best McDonald’s. The kiosk in the Magic Kingdom is decorated as a Conestoga wagon depicting the theme of Frontier land. The McDonald’s in Downtown Disney is huge and offers children a great place to play as does the one next to the All-Star Resort. Although Disney offers a wide range of restaurants and food, visitors flock to the McDonald’s because they know their children love the food, the price is right, the quality of food is good and it gives their children a place to play during the meal. This delivery channel was ingenious on McDonald’s part; they recognized all they had to gain by joining in a partnership with the Disney Corporation.

4 P’s

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Evaluation and Control Internal Factor Evaluation 

McDonalds performing well on strengths and weaknesses.



Taking competitive advantages.



Being the icon of fast-food worldwide by franchising.



Catching the current market trends and changing.

External Factors Evaluation 

Increasing sales by low price menu & McCafé.



Creating more diversified menu with low price.



Having more competitive advantages and opportunity.



Biggest weakness is healthier issue and lawsuit issue.

Action Evaluation McDonalds should: 

Forward integration



Product Development



Quality control involves the business working towards maintaining and improving the provision of quality service and products. McDonald’s has made this an important performance objective. The company has made it compulsory for any individual who wants to own a McDonald’s franchise to attend a course where they are taught on the main operations of a McDonald’s store. These activities are split into operations in the McDonald’s kitchen and employee management. This course aims at ensuring that the food quality at McDonald’s store is not compromised and that there is proper working order in all stores. The interior and exterior

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décor and architectural design of all stores are consistent in all stores. This requirement ensures that the environment of all stores is the same thus the customer is assured of the same ambiance in all McDonald stores. To maintain the quality of supplies, McDonald’s has a list of approved suppliers that all franchisees must adhere to. This ensures that the quality of food is not compromised. 

Quality control is also practiced in the selection of potential franchise owners. The selection process is rigorous as all applicants must satisfy all the set-out requirements. The first element is that an applicant must comply and be conversant with the operations and training manual that is prepared by McDonald’s. The 600-page manual explains McDonald’s business standards and procedures in detail which may be a challenge for most applicants to grasp all the content in it. Second element is the training program that potential franchisees must pay to attend at the Hamburger University. Third element is that those that graduate from Hamburger University and are allowed to open a McDonald’s franchise store, have to sign a franchise agreement that outlines the obligations of the owner and the corporation with regards to quality control.



The business has field consultants who regularly monitor if the franchise stores are adhering to the signed agreement. These officers frequently inspect the stores and fill out an items checklist as well as an inspection form. Franchise stores that perform poorly on these inspections are at a risk of losing their franchise license on the basis of failure to meet the setout standards.

Production Process 

The performance objective in this area is to minimize costs and maximize output and thereby becoming a cost leader in the food service industry. McDonald’s has sought to increase its efficiency in production such that minimum cost possible is used in the inputs required without

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compromising the quality of the desired output. McDonald’s has been able to reduce its input costs by simplifying the processes involved in cooking of food. These processes are easy to learn and execute and their failure rate is minimal. The simplified processes ensure that production and delivery are carried out quickly and efficiently. 

McDonalds follows a Just In Time (JIT) inventory management system. Use of JIT means that they only cook or assemble their food only after a customer makes an order. This method was recently introduced after they realized that a lot of food was wasted as a result of overproduction when the food was pre-cooked. Additionally, their customers were not able to enjoy freshly made food, or they would only eat fresh food after making a special order. However the JIT system is made even more reliable by the introduction of sophisticated burger making technology.



Some of the benefits of using JIT include the quality of food is better as it is fresh, and the cost is also low. The customer confidence is enhanced as the quality of customer service is high. The system has enabled McDonalds to adapt to demand a little better. Initially higher demands would cause panic as the safety stock may not be sufficient. The system has also enabled the business to save ordering and holding inventory costs.



McDonald’s has a list of its approved suppliers where all its franchise stores get their supplies from. The suppliers are expected to deliver quality products and services in a timely manner. The fact that McDonald’s has a list of suppliers means that costs that are involved with delays in delivery, and the delivery of poor quality supplies are eliminated. The business is also able to negotiate purchase prices with their suppliers. The company has an e-procurement system that ensures purchase orders are made on time in all its franchise stores.

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