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Encyclopedia > MacDonalds

McDonald's Corporation (NYSE: MCD (http://www.nyse.com/about/listed/lcddata.html?ticker=MCD)) is the world's largest chain of fast-food restaurants [1] (http://biz.yahoo.com/p/eatingmktd.html). Although McDonald's did not invent the hamburger or fast food, its name has become nearly synonymous with both.


Corporate overview

McDonald's trademark Golden Arches. The maple leaf indicates a Canadian location.

McDonald's brand is in 121 countries around the world. In addition, the company operates other restaurant brands, such as Aroma Café, Boston Market, Chipotle Mexican Grill, Donatos Pizza and Pret a Manger. Revenues for 2001 were US$14.87 billion, with net income at $1.64 billion.

Most McDonald's offer both counter and drive-through service, with indoor and sometimes outdoor seating. Drive-throughs often have separate stations for placing, paying for, and picking up orders, though often the latter two steps are combined.

(In early 2005, it was announced that the company was experimenting with using a call center in Fargo, North Dakota to take the drive-through orders from more than a dozen stores in Oregon and Washington states. The minimum wage in North Dakota is significantly lower than that in Oregon or Washington.)

In some countries "McDrive" locations, near highways, offer no counter service or seating. Locations in high-density neighborhoods, as in many downtowns, often omit drive-through service.

Specially themed restaurants also exist, such as Rock-and-Roll McDonald's 50s themed restaurants. A select few McDonald's in many areas, such as suburban areas and certain cities feature large indoor or outdoor playgrounds, called McDonald's PlayPlace. These were primarily created in the 1970s and 1980s in the USA, but later internationally; much of Canada didn't have them until the mid-1990s. Older locations often retain the name Playland.

Times Square McDonald's

The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees, supplies and percentage of sales, McDonald's also collects rent, partially linked to sales. As a condition of the franchise agreement, McDonald's owns the property on which most McDonald's franchises are located. According to Harry J. Sonneborn, one of McDonald's founders:

"We are in the real estate business. The only reason we sell hamburgers is because they are the greatest producer of revenue from which our tenants can pay us rent."

McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois.

According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the US has at some time been employed by McDonald's. The book also states that McDonald's is the largest private operator of playgrounds in the US, as well as the single largest purchaser of beef, pork, and potatoes.


50s-themed McDonald's sign in Bangor, Maine
  • 1940: The first McDonald's restaurant was founded on May 15 by brothers Dick and Mac McDonald in San Bernardino, California.
  • 1948: The McDonald's restaurant gained fame when the brothers implemented their innovative "Speedee Service System", an assembly line for hamburgers.
  • 1954: entrepreneur and milkshake-mixer salesman Ray Kroc became interested in the McDonald's restaurant when he learned of its extraordinary capacity. After seeing the restaurant in operation, he approached the McDonald brothers with a proposition to open new McDonald's restaurants, with himself as the first franchisee. Kroc worked hard to sell McDonald's. He even attempted to prevail on his wartime acquaintance with Walt Disney, in the failed hope of opening a McDonald's at the soon-to-be-opened Disneyland. Eventually he opened his first restaurant in Des Plaines, Illinois. It was an immediate success.
  • 1955: Kroc founds "McDonald's Systems Inc.", on March 2.
  • 1960: The company was renamed "McDonald's Corporation".
  • 1961: McDonald's brothers agreed to sell Kroc business rights to their operation for $2.7 million, which Kroc borrowed from a number of investors (including Princeton University). The agreement allowed the brothers to keep their original restaurant—renamed "The Big M"—which remained open until Kroc drove it out of business by opening a McDonald's just one block north. Had the brothers maintained their original agreement, which granted them 0.5% of the chain's annual revenues, they would have been collecting nearly $180 million per year today.
  • early 1960s: One of Kroc's marketing insights was his decision to market McDonald's hamburgers to families and children. A Washington, DC franchisee sponsored a children's show called Bozo's Circus, 'Bozo' was a franchised character, played (in Los Angeles) by Willard Scott. After the show was canceled, Goldstein hired Scott to portray McDonald's new mascot, "Ronald McDonald" in the first three television advertisements featuring the character. The character was eventually spread to the rest of the country via an advertising campaign, although it was decided that both Scott and his version of the original costume were unsuitable for the role. An entire cast of McDonaldland characters was developed.
  • 1971: The first Australia McDonald's opened in the Sydney suburb of Yagoona.
Restaurant interior, circa 2000
McDonalds in a Malaysian mall
  • 1992: Stella Liebeck receives third degree burns from coffee purchased at a McDonald's drive-through. She sued in what became known as the McDonald's coffee case.
  • circa 1995: McDonald's receives complaints from franchisers that too many franchises were being granted, leading to competition among franchisees. McDonald's started conducting market impact studies before granting further franchises.
  • 1997: McDonald's wins the "McLibel" case, in what many consider to be a Pyrrhic victory in terms of its image.
  • 2001: The FBI reported that employees of Simon Worldwide, a company hired by McDonald's to provide promotion marketing services for Happy Meals and the 'Millionaire'/'Monopoly' contest, stole winning game pieces worth more than $20 million.
McDonald's in
McDonald's in St. Petersburg, Russia
  • 2002: A survey in Restaurants and Institutions Magazine, ranked McDonald's 15th in food quality among hamburger chains.
  • 2002: McDonald's posted its first quarterly loss ($344m) for the last quarter. It responded to the stiff competition from other fast food restaurants, offering higher quality burgers and more variety, by attempting to move more upmarket by expanding its menu and refitting restaurants.
  • 2003 McDonalds started a global marketing campaign which promotes a new healthier and higher-quality image. The campaign was labeled "I'm lovin' it™" and began simultaneously in more than 100 countries around the world.
  • 2003: According to Technomic, a market research firm, McDonald's share of the market has fallen 3% in five years and is now at 15.2%. [2] (http://www.nytimes.com/2003/03/03/business/03BURG.html?ex=1047272400&en=5a465b7c664cef9e&ei=5062&partner=GOOGLE)
  • 2003: The firm reports a $126m loss for the fourth quarter [3] (http://news.bbc.co.uk/2/hi/business/3432155.stm).


Drive-through window

As the world's largest restaurant chain, McDonald's is a target for criticism. Even though the majority interest in its foreign franchise locations are locally owned, the company is seen as a symbol of American domination of economic resources. Urban legends about the company and its food abound and it is often the target of unusual lawsuits.

Some franchises in the Middle East have been targets of arson and other acts of violence because the business represents, to the attackers, an invasion by American business and culture that they oppose based on a nationalist or Islamist ideology.

However, McDonalds has modified its products to cater for local tastes, not least in countries that have special dietary laws. In Muslim countries like Malaysia, bacon is not served in McDonalds burgers or in its breakfast menu, as pork is haram, or not permissible under Islamic dietary law. In Israel, the nature of kosher dietary laws, forbidding the mixture of meat and dairy products, means that cheeseburgers are not popular among Jewish customers; furthermore, all meat not prepared in a certain manner is considered unkosher by strict observers of the dietary laws. McDonalds has taken steps to cater to Jewish customers by opening a kosher McDonalds in Jerusalem and by offering a 'Passover Bun' for the eight-day period in which practicing Jews abstain from leavened bread. In India, the fact that Hinduism forbids the eating of beef has prompted McDonalds to look for alternatives, like lamb.

Soft drinks on offer also vary from country to country, with local brands available on tap alongside Coca Cola, Fanta, etc. For example, Irn Bru in Scotland and Guarana in Brazil are more popular in those countries than the leading international brands.


An anti-McDonald's leafletting campaign in front of the restaurant in Leicester Square, London in 2004

As the world's largest fast-food company, McDonald's has been the target of criticism for allegations of exploitation of entry-level workers, ecological damage caused by agricultural production and industrial processing of its products, selling unhealthy food, production of packaging waste, exploitative advertising (especially targeted at children), and contributing to suffering and exploitation of livestock. McDonald's historic tendency towards promoting high calorie foods such as French fries has earned it the nickname "the starchy arches".

In the high profile McLibel Trial McDonald's took two anti-McDonald's campaigners, Helen Steel and Dave Morris, to court for a trial lasting two and a half years - the longest in English legal history. McDonald's won the case. Despite the fact that many of the campaigners' criticisms of the company were found to be libelous, the suit created a great deal of bad publicity for the company. The judge's summary can be read at this external link (http://www.mcspotlight.org/case/trial/verdict/verdict0_sum.html). For more information on this, see McLibel case.

McDonald's has also been criticised for its approach to preserving its image and copyrights - in one case suing a Scottish cafe owner called McDonald for infringement of the name McDonald's, even though the business in question was a family business dating back well over a century. In another case, McDonald's enjoined the creator of Ronald McDonald from performing as, or displaying the likeness of, the character in any form. McDonald's also replaced the performer who portrayed Ronald in the first three television ads (Willard Scott, a former Bozo) which featured Ronald McDonald. In South Africa, however, McDonald's had to battle against the country's trademark laws, which stated that a registered trademark had to be used within a certain period of time. This resulted in a local company announcing plans to launch its own fast food chain using the McDonald's name, although the South African High Court eventually ruled in McDonalds' favor.

In June 2004 the UK's Private Eye reported that McDonald's was handing out meal vouchers, balloons, and toys to children in pediatric wards. This was especially controversial as the report was made within weeks of a British Government report stating that the present generation may be the first to die before their parents due to spiraling obesity in the British population.

In 2004, Morgan Spurlock's documentary film Super Size Me produced negative publicity for McDonald's, with suggestions that McDonald's food was contributing heavily to the rash of obesity in American society. Subsequent to the showing of the film at the Sundance Film Festival, but before its cinematic release, McDonald's phased out its Supersize meal option and began offering several healthier menu items though no link to the film was cited in this decision.

Emblem for globalization

McDonalds in Tokyo, Japan

McDonalds has become emblematic of globalization. The Economist magazine uses the "Big Mac index" (the price of a Big Mac) as an informal measure of purchasing power parity among world currencies. Thomas Friedman suggested that no countries with McDonald's would go to war with each other. This however proved false when NATO bombed Serbia in 1999. McDonalds remains a target of anti-globalization protesters worldwide.


McDonald's on Nanjing Road in Shanghai

McDonald's is also known as

McDonald's TV campaigns and slogans

See: McDonald's TV campaigns and slogans

Food offered at most McDonald's outlets

  • Hamburgers and cheeseburgers, including the Big Mac
  • McGriddle, pancake like bun with a crispy outer texture, hamburger with griddle cheese topped off with a taste of maple syrup throughout.
  • McChicken – a mildly spicy Cajun chicken-burger.
  • Chicken McNuggets – small chicken pieces served with a dipping sauce.
  • Chicken Selects – premium chicken breast strips served with a dipping sauce.
  • Egg McMuffin – bacon and egg sandwiches, served only in the morning.
  • McRib – a pork sandwich released annually on a temporary basis
  • French fries which were, until the practice was discontinued, fried in a mixture of vegetable and beef oil.
  • Salads
  • McLeans An attempt at a lower calorie Big Mac.
  • Milkshakes
  • Carbonated soft drinks such as Coca Cola
  • Ice cream: simple cone, sundae, "McFlurry"
  • Coffee and Tea
  • Big and Tasty

The range of foods offered depends on the time of day. In the morning (usually from 5:00 am or store opening to 11:00 am) when designated breakfast foods are served, certain other items such as the Big Mac are not available.

International adaptations and variations

The traditional hamburger made of ground beef served at most McDonald's is varied in some countries as is the name. In India the Big Mac transmogrifies into the Maharaja Mac, a mutton burger in deference to religious injunctions against the consumption of beef and pork. Also in India vegetarian and meat dishes are prepared in separate areas of the restaurant in respect for vegetarians. In Thailand the Samurai Pork Burger, flavored with teriyaki sauce, is served. In Japan rice dishes are served and a chicken sandwich flavored with soy sauce and ginger. The Australian McDonald's menu features the McOz which is similar to the Big Mac and features beetroot, a popular addition to burgers in Australia. Names of other international dishes include the Kiwi Burger, the McHuevo, the McNifica, the McAfrika and the McLaks.

In the early 1990s, McPizza was introduced in Canadian outlets; it failed quickly, due to fierce competition. McDonalds also now sells poutine, which is a Canadian dish of french fries, cheese curds and gravy.

Possibly in an effort for European nations to become more accepting of the McDonald's concept, the first McDonalds in Italy is widely heralded as the most luxurious McDonald's restaurant. It features indoor fountains, marble walls and floors among other luxuries not enjoyed by customers in other restaurants owned by the company. It also features Wi-Fi. This location is located near the "ritzy" Spanish Steps district of Rome.

In Australia and New Zealand McDonald's is expanding some of its restaurants to include "McCafé" counters, which sell brewed and specialty coffees, frappés, and a range of cakes, biscuits (cookies) and sandwiches in addition to the regular McDonald's menu.

See also

External links

  Results from FactBites:
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