McDonald’s Vision 2020

“A Golden Arch to Happiness” “The Choice is Yours”

Game Plan Where we are? •  Declining Revenues

•  (1)% in 2014 •  Declining trend in 2015

•  Declining same store guest count by 3.6% in 2014

•  Unclear Positioning •  Changing customer

preferences •  Losing market share to

competitors •  Offering simpler menus

and customized burgers under the same brand

•  Disgruntled Franchisee owners

Where we want to be? •  Consistent revenue growth by

2% in 2016 and 3% in the next 4 years

•  Regain lost guest count and increase by 5%

•  Clear Positioning •  Tackle changing needs by

introducing a new brand for customized products

•  Streamline existing business

•  Consistent menu optimization

•  Long term relationship with franchisee owners

ROOTS &

SHOOTS

Company

Strengths - Well-known brand - Big marketing budget - Strong purchasing power - High operational efficiency - Strong international presence to hedge risks - Franchise model to generate revenue streams

Weaknesses - Unclear vision - Too big to change - Complex menu - Long servicing time - Associated with unhealthy food image

Opportunities - Growing international F&B consumption - Diverse customers’ food preferences

Threats - Rising competition - Changing customers’ tastes - Disgruntled franchise owners - Increasing costs of production

SWOT

Customers

•  Quest for readily-available food •  Complex menu lengthening servicing

time

•  1st-tier: value for money and cheap food options

•  2nd-tier: Customized healthier options willing to pay a premium

à Gap in value proposition

Context – Issues at hand

•  Increasing costs of production

•  Changing political dynamics e.g. Russia

•  Economic cycles in different countries

•  Change in leadership internally and organizational restructuring

Collaborators

Franchisees

•  Disgruntled •  Revenue decline •  Guest count decline •  Complex menu (growth by

70%) •  Company’s plan to shift from

81% to 90% franchising by 2018

Suppliers

•  Quality issues •  Bargaining power of McD

because of the volumes •  3 legged stool strategy

allows a long term relationship

Competitors Aspect   McD   KFC   Taco  Bell   Shake  Shack   Chipotle  Food  Type   Fast  food  –  

quick,  convenient  and  cheap,  first  mover  with  long  history  and  customer  base  

Fast  food   Fast  food   Fancy  and  revolu>onized  burger  

Healthy  food  op>ons  

Revenue  Performance  

Decline  by  2%  in  2014  

Decline   NA   Growing   Growing  

Price   low  price            $1-­‐5  dollar  burger  

low  price       high  price  –  premium  burger  

   

Markets   Interna>onal   Interna>onal       mainly  in  the  US   mainly  in  the  US  

Declining revenues – Unclear Positioning – Growing Competition – Changing Customer Preferences

Decision Matrix A.

Stick to traditional fast food business

B.

Revolutionise McDs to meet

fancier demands

C. Incorporate A

& B under McDs

D. McDs stick to

roots; Establish NEW Brand to meet fancier

demands Reaching maximum

customers

Sustainable model

Cost of implementation

Ease of implementation

Building brand equity

Total score

2 1 4 5 3 15

2 2 1 2 3 10

*5 being highest

3 3 2 2 2 12

4 4 2 3 5 18

Decision Matrix A.

Stick to traditional fast food business

B.

Revolutionise McDs to meet

fancier demands

C. Incorporate A

& B under McDs

D. McDs stick to

roots; Establish NEW Brand to meet fancier

demands Reaching maximum

customers

Sustainable model

Cost of implementation

Ease of implementation

Building brand equity

Total score

2 1 4 5 3 15

2 2 1 2 3 10

*5 being highest

3 3 2 2 2 12

4 4 2 3 5 18

Roots (McDonald’s fast food :

“Golden Arch to Happiness”

Shoots (New brand on

healthy foods): “The Choice is

Yours” Roots & Shoots

Strategy

McDonald’s Return to Roots : “Golden Arch to Happiness”

•  Build localized teams to strengthen customer relations and franchisee relations • Quarterly menu optimization process •  Revamp food safety auditing procedures •  Consistent scrutiny of suppliers’ products •  Remove “ in-store customization” – leads to operational efficiency. •  “Franchisee incentive” scheme.

Operations

•  Focus on high-growth markets(10% revenue) and foundational markets •  Cultural and festive promotions to heighten sentimental tie-up with McDs • Offer delivery and drive-thru services to increase customer base •  Customer Loyalty programme (points-system to reward customers with unique service

offerings e.g. birthday/anniversary parties) •  Target corporate and sports events

Revenue Generation

• Promote collaboration and sharing of best practices between stores and franchisees

• Develop a platform for sharing of ideas to gauge customer preferences e.g. McDs Idea of the Month Competition

• Continuously develop and test new products (within the bandwidth of traditional fast food) to upgrade suite of food offerings

Innovation

McDonald’s Return to Roots : “Golden Arch to Happiness”

• Set at mass market price points • Seasonal product and coupon promotions

Marketing - Price

• Dispose in-store burger customization and return to consistent food menus • Maintain highest standard of cleaniness and food quality with transparency • Every month sell one burger that has been a superhit in another country.

Marketing - Product

• Return to roots: “Golden Arch to Happiness” • Step up CSR efforts to offset increasingly negative public health concern

Marketing - Promotions

• Increasing franchising in existing business especially in developing markets

Marketing - Place

• Enhance contingency mechanism and take immediate shock absorption procedures • Conduct immediate audits and press conferences to clarify issues when crisis arises

Public Relations

McDonald’s Return to Roots : “Golden Arch to Happiness”

McDonald’s New Brand: Refresh “The Choice is Yours”

•  New brand focusing on healthier F&B options with Self-owned outlet •  Geographically start from the US and international lead markets as these

are relatively mature markets with higher demand for healthier foods •  Supported by strong R&D team on customer preferences and health foods •  Core executives to oversee new brand launch

Business Model

•  Through premium pricing strategy •  In the long-term, the new brand can go on franchising model

Revenue Generation

• A premium of 40 - 50% of the current McDs price • Super Premium products at100% premium

Marketing - Price

• Soups, customized salads, fresh juices and bundled meals. • Customized wraps and rolls using high quality and fresh ingredients

Marketing - Product

• Highlight on healthy lifestyle and food ingredients • Tie-up with hospitality partners

Marketing - Promotions

• Difference locations from McDs. • Good corporate heavy locations.

Marketing - Place

McDonald’s New Brand: Refresh “The Choice is Yours”

Estimated - Revenue Outlook

Assumption: •  2015 revenue projected by 2 times over 1st half •  3% growth rate in existing business •  5% growth rate in new brand in first 2yrs, 10% growth rate in new brand from

2018 onwards

 15,000    

 20,000    

 25,000    

 30,000    

 35,000    

2013   2014   2015   2016   2017   2018   2019   2020  

McD  Revenue  Trend  -­‐  in  $mil  

Revenue  -­‐  Golden  Arch   Revenue  -­‐  New  Brand  

Estimated - Business Portfolio

96%  

4%  

2016  

Exis>ng  Business  

New  Brand  

95%  

5%  

2020  

Exis>ng  Business  

New  Brand  

Assumption: •  3% growth rate in existing business •  5% growth rate in new brand in first 2yrs, 10% growth rate in new brand from

2018 onwards

ROOTS

Timeline Short Term 2016-2017

Long Term 2018-2020

SHOOTS

•  Revamp food auditing processes

•  Quarterly menu optimization process

•  Innovative ideas collaboration

•  Long term relationship management with franchisees and suppliers

•  Customer loyalty programs

•  Develop strong R&D teams

•  International expansion with franchisee heavy

•  Launch new brand in July 2016

•  Focus on healthier FnB options with self owned outlets

•  US