The McDonald's Turnaround Story

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : BSTR142 For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges


Corporate Turnaround
Case Length : 17 Pages
Period : 1999-2004
Organization : McDonald's
Pub Date : 2004
Teaching Note : Available
Countries : U.S.A
Industry : Fast-Food


The case gives a comprehensive account of the decline of McDonald's in the 1990s, and the events that led to the company's eventual turnaround in the early 2000s. McDonald's is the leading fast food chain in the world. Set up as a small drive-in joint in 1937, the company developed a highly successful system of franchising in the 1950s to expand across the US and later, around the world. The USP of McDonald's was cheap fast food, and the company's signature product, the Big Mac hamburger was considered an American icon. However, in the late 1980s and 1990s, the company's growth began to taper off. Analysts attributed this to a growing interest in a healthier lifestyle among people, which made them shun fat-laden fast food, and also increasing competition.

By the late 1990s and the first two years of the early 2000s, the company's profits had decreased drastically. In January 2003, McDonald's posted its first quarterly loss since it went public in 1965. In 2003, under the leadership of Jim Cantalupo, the company announced a turnaround plan aimed to restore the company's tarnished image and crumbling operations. By mid-2004, it was generally acknowledged that McDonald's had turned around.


To analyze the reasons behind the decline of the leader in the fast food industry

To examine the events that led to the turnaround of the company

To study the nature of and trends in the US fast food industry

To understand the challenges faced by fast food companies in the 2000s and the steps that they were taking to meet these challenges

To study the future of the fast food industry, considering the changing trends and preferences of the people


  Page No.
'Happy' Days Again 1
Background Note 2
No Longer the 'Great American Meal' 4
The Golden Arches Rise Again 8
Will New Formats Work? 10
Exhibits 12


McDonald's, Turnaround, Jack Greenberg, Jim Cantalupo, 'Great American Meal', Wendy's, Burger King, 'Mystery Shoppers', Advertising Campaigns, "I'm lovin' it" Campaign, Fast Food Industry, Yum Brands, Chipotle, Fazoli's and Donatos Pizzeria.

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