Insight into McDonald’s Business Model

Updated on: Sep 24, 2021
Business Model of Mcdonalds - featured image | IIDE

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The McDonald’s business model is a fast-food firm channelled through an efficient franchise business strategy worldwide as the world’s largest restaurant chain. McDonald’s serves over 69 million consumers in more than 100 countries each day and they all enjoy McDonald’s business model items.

This blog will enable you to understand how the Business Model of McDonalds has achieved success by being the world’s second-largest private employer with 1,7 million employees. Take a look at our other blog to learn about Mcdonald’s marketing strategy.

So let’s start immediately by knowing the company.

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About McDonald’s


McDonald's Outlet - McDonald's Business Model | IIDE


McDonald’s is an American fast-food company, formed in San Bernardino, California, the USA in 1940 as a café operated by Richard and Maurice McDonald. The company was reborn as a burger stand and eventually evolved into a company. In 1953, in Phoenix, Arizona, the logo of the Golden Arches was introduced. As a well-established specialist, Ray Kroc, financial specialist, joined the firm in 1955 and kept the McDonald Siblings network. In Oak Brook, Illinois McDonald’s had his prior base camp, but in June 2018 he relocated his central world command to Chicago.

Right around 80 years after the fact, the venture has developed to around 38,000 eateries worldwide that serve near 70 million clients — generally 1% of the total populace — each day, all needing a burger, fries, and additionally chicken tenders as fast as possible.4 5 

It has, viably, transformed into the most famous family eatery that advances to youngsters and grown-ups the same and arose as the predominant power in the “Speedy Service Restaurant (QSR)” end of the market.


Key Insights to McDonald’s

  •  In the past few years, McDonald’s has made a determined effort to shift the McJob brand from criticism to a complement in service business motivation of personnel.
  • It includes several inventive human resources (HR) activities to revitalize and pride employees and provide educational and training possibilities.
  • Nearly 80 percent of McDonald’s employees were proud of working at the end of 2008, yet the number of employees declined markedly.





McDonald’s essentially earns money by leveraging their quick meals produced by franchisees who must lease facilities that are typically owned by McDonald’s at hefty markups. According to the 2019 reports, McDonald’s operated 36,059 of the 38,695 restaurants in the remainder. Thus, about 93% of the overall capacity is franchised, which still falls short of McDonald’s long-term target of 95%.

This model benefits from a substantially more steady and, more critically, predictable source of revenues (locality and royalty money derived from franchises) whilst operational costs are far lower, hence facilitating the route to profitability. McDonald’s can leverage its market position to negotiate deals because it has control over land and long-term leases. This is the same as the subscription, which is paid monthly by the subscriber (the franchisee).



1. McDonald’s Target Customer 


McDonald's target customer - McDonald's Business Model | IIDE


McDonald’s primary target audience comprises parents, young children, business clients, and teenagers with small children. The marketing of McDonald’s to youngsters and young children’s parents is perhaps the most evident. Ronald McDonald was initially presented in 1963 and became a crucial component of her business when she began to focus on young children. Parents love to go to McDonald’s because it’s a treat for children and children like the cartoon. As part of its primary business, McDonald’s also targets business customers. During working days, business customers can stop and rely on rapid service and consistently superb cuisine. McDonald’s marketing targets adolescents as the main goal. Teens are particularly attracted to the discount menu and McDonald’s markets are a popular location to socialize and work with their pals.



2. McDonald’s Value Proposition 


The power and position of the brand, which enhances considerable financial reserves and market share in its primary operational jurisdictions, are one of the most widely known brand companies in the world. The Company has a wide, global network of stores in consumer hubs, providing customers with fast and efficient service, allowing access and delivery to certain markets. Their convenience, accessibility, and convenience. The company’s products offer a range of food items that are solely for various geographical markets and that its menu is developed according to the needs of the consumers.

The company has a dire operational presence across the continent of the Americas, Europe, Asia Pacific, Europe, the Near East, and Africa; its supply chain and quality assurance systems, supplied by the company from various independent suppliers to the food, packaging, equipment and other products and operating a network of Quality Centers around the world to ensure that its products are produced in and around



3. McDonald’s Customer Segment


McDonald’s is a fast-food chain that’s family-friendly. It provides a wide range of consumer demographics for its products and restaurants. The company offers consumers comfort and expediency as a quick food supplier. McDonald’s restaurants, however, are also a favorite spot for different consumers and are allegedly still quite popular among thousands of people. The values of younger consumers, particularly millennials, have placed greater importance on quality, choice, and nutrition for the company, leading to the addition of healthcare items to its menu. McDonald’s is a global brand that serves a large client base worldwide. Although the company is still its home market in the U.SIt also serves significant consumers in Latin America, Europe, Asia-Pacific, the Middle East, and Africa, including South Korea, the UK, China, and Russia Asia-Pacific.




4. McDonald’s Revenue Model


McDonald's Revenue Model - McDonald's Business Model | IIDE

The McDonald’s revenue model is Franchising-based. How the franchise model works is based on the use of money by small investors by fast-food restaurant chains, which are exclusively designed to expand rapidly and effectively. Ray Kroc might legitimately be called the father of the McDonald’s income model as he’s the one to whom franchising techniques can be credited. Ray Kroc proposed to extend the scale of the company and not jeopardize product quality.

By becoming the owner of its franchisors, McDonald’s has made enormous revenue. It kept and sold good supplies very carefully a good distance from the franchises. It could be fairly amazing to discover that, although the network itself owns and runs over 120 food stores worldwide, just 15 per cent, with the remaining franchisees. Furthermore, its income model is the adoption by suppliers, franchisees, and McDonald’s of a three-piece stool plan.


With this, we come to the end of McDonald’s Business Model. Let’s conclude this case study in the section below.

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McDonald’s is an organization that is quite well established. McDonald’s success is founded entirely on comprehensive internal and external market research. He has been investigating the behaviour, culture, purchasing power, and social issues of the people of a certain country. McDonald’s has paid special attention to its location, internal and external perspectives, and technologies to achieve maximum output in a short period. The focus was mostly on quality and market dynamics, which affected the company immediately.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]


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