The McDonald's Turnaround Story

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Case Details:

Case Code : BSTR142
Case Length : 17 Pages
Period : 1999-2004
Organization : McDonald's
Pub Date : 2004
Teaching Note : Available
Countries : U.S.A
Industry : Fast-Food

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Please note:

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.

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No Longer the 'Great American Meal'

Through the decades, McDonald's had promoted itself as the provider of the 'Great American Meal'. However, by the 1990s, it was clear that the company had lost its claim to that title. Changing customer eating habits, increased competition and complacence on the part of the company and its franchisees, were the main reasons for the difficulties experienced by McDonald's in the 1990s. (Refer Exhibit III on the Fast Food Industry) Comparable store sales, a retail metric that measures growth obtained from stores open for at least one year, had stagnated in the 1990s and towards the end of the decade began to decline...

The Golden Arches Rise Again

After McDonald's announced its first quarterly loss in 38 years in 2003, the board realized that big changes were required in the company's strategy and direction.

The board ousted Greenberg and installed Cantalupo as the CEO. Cantalupo had led McDonald's international expansion through the 1980s and 1990s and had been one of the contenders in the CEO race won by Greenberg. In 2003, he was brought back from retirement to lead the company's turnaround.

Soon after taking over, Cantalupo prepared the 'Plan to Win', which outlined McDonald's strategy for the next three years. The Plan streamlined the company's operations and aimed to create a McDonald's that was more geared to the new conditions in the fast food industry...

Will New Formats Work?

Analysts said that the fast food industry was undergoing a transformation in the early 2000s. Hamburgers, fries and soda, which epitomized fast food, were being replaced by sandwiches and salads. Given this, analysts believed that diversification was the only option available to fast food chains to ensure their long-term success. Most fast food chains were diversifying into other areas or developing new concepts to protect their interests...


Exhibit I: Key Statistics For Mcdonald's
Exhibit II: Comparitive Revenues and Stores of Fast Food Majors
Exhibit III: A Note on the Fast Food Industry
Exhibit IV: History of Low-Fat Products in the Industry
Exhibit V: Franchising Model
Exhibit VI: Comparable Store Sales
Exhibit VII: Mcdonald's Historical Share Price


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