The McDonald's brand is almost as universal as Coke. The group's 39,000th restaurant opened during 2020, and those golden arches now spread across 119 countries, welcoming some 70m customers every day. Systemwide sales topped $100bn for the first time in 2019. Not enough, the company still says. On any day McDonald's still only serves less than 1% of the world population, leaving plenty of room for growth. However profits fell dramatically in 2002 and the group took unprecedented steps to close under-performing outlets, even pulling out of a few markets altogether. That move appeared to have paid off by 2004, and McDonald's reported strong growth for much of the following decade, even in the face of an economic downturn. A key factor was the broadening of the menu with an enhanced range of breakfast items, healthier chicken and salad meals and premium beverages. The company also pushed aggressively into the coffee shop sector in several key international markets as well as the US with its McCafé brand. However the reviving US economy brought fresh challenges from 2013 onwards. Domestic sales suddenly stalled, despite a frenetic burst of menu innovation, as customers moved away to less established rivals, while international performance was dented by a variety of different challenges in regional markets. Even after several changes of both management and strategy those troubles have yet to be fully resolved. The biggest problem seems to be securing consistent growth in the company's key market, the US. There were signs that the group was finally on the right track by 2018 as a result of new innovations such as all-day breakfast and other menu adjustments, in-store digital order kiosks, home deliveries and other such introductions. At the same time, the chain has set about reducing the number of company-owned outlets in favour of franchised stores. By the end of 2020, only around 2,677 of the chain's 39,198 outlets were directly owned. As a result company revenues have steadily declined - to $19.2bn in 2020 - even as profits and systemwide sales have increased; until the Covid pandemic, that is. Having hit a high of $6.0bn in 2019, net profits fell to $4.7bn in 2020, while system sales slipped 7% to $93.3bn. The declines were all in international markets; system sales were unchanged in the US, which now accounts for more than 43% of system sales. CEO Steve Easterbrook left the group abruptly during 2019 following an inter-office romance with a subordinate in contravention of company policy. He was replaced by Chris Kempczinski.
Capsule checked 30th January 2020
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Historical profile information for McDonald's
Adbrands Daily Update 28th Sep 2020: In a major break with long-established tradition, the German outpost of McDonald's has, for the first time anywhere, awarded sole custody of its creative account to a unit of WPP. For decades, the fast-feeder's business has been managed around the globe by either Leo Burnett or one of the big three Omnicom networks of DDB, TBWA and BBDO. The first crack in that tradition came in 2014 when McDonald's Germany selected Leo's Thjnk Tank, a joint venture between Leo Burnett and WPP-owned Thjnk. Then, last year, independent agency Wieden & Kennedy triumphed over DDB's dedicated We Are Unlimited agency for the US market. Now, at the beginning of November, the McDonald's Germany account will transfer from Leo's Thjnk Tank to WPP's Scholz & Friends.
Adbrands Daily Update 11th Aug 2020: In a startling sequel to the abrupt departure of McDonald's CEO Stewart Easterbrook last year, the fast food giant issued a lawsuit against its former leader demanding the return of severance pay estimated at more than $50m. Easterbrook agreed to leave after he admitted to a sexual relationship with a subordinate, in contravention of company rules. However, following a whistleblower tip received after Easterbrook left the company, McDonald's discovered a collection of images (including nude photos) and text messages which the ex-CEO had deleted from his company phone before he handed it over last year to investigators, but which remained on the main corporate server. These revealed that he had conducted sexual relationships with at least three other employees; something Easterbrook had denied when originally interviewed by the board. The fact that he knowingly deceived the board and also attempted to destroy evidence of his activities puts Easterbrook in breach of the terms of his severance.
Adbrands Daily Update 9th Jun 2020: Alistair Macrow, former top marketer at McDonald's in the UK, has been promoted to the top job of global chief marketing officer, filling a position that has been empty since Silvia Lagnado left last year. For the past two years, Macrow has been leading marketing for the group's top eight international markets, including the UK. At the same time, the role of US CMO Morgan Flatley has been expanded. Her new title is chief marketing & digital customer experience officer. Colin Mitchell, previously SVP global marketing, is to depart the company.
Adbrands Daily Update 30th Jan 2020: "Perfect Made Perfecter". Wieden & Kennedy New York debuted its first work for McDonald's during the Grammys telecast, and we'd have to say it's the tastiest US campaign for years from the fast food giant. It's quite a back-to-basics approach, concentrating on the food and nothing but the food. In fact, just the Quarter Pounder. But the whole exercise gains considerable impact from a memorable slogan, fabulous photography, clever scripts, and also the deliciously mellifluous tones of Logan Roy - sorry, Brian Cox - who's really come into his own in the past couple of years. It's not often that you'll find yourself physically salivating over an ad, but this is one of those times. Admittedly, I've never seen a McDonald's Quarter Pounder that looks quite as good as this in real life... but I can always dream.
Adbrands Daily Update 10th Dec 2019: McDonald's completed a reshuffle of top executives in the wake of Steve Easterbrook's shock ousting last month. Ian Borden was named as president of all international markets. He had previously led international licensed markets, where the McDonald's business is managed by local franchisees. Joe Erlinger had been president of international operated markets, where the group retains a direct local presence. Borden now combines both roles following Erlinger's promotion last month to president, USA.
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