The Day Mcd Blinked

In: Business and Management

Submitted By thenaysh
Words 4416
Pages 18
no. 1-0049

Food Fight: The Day McDonald’s Blinked
Jack Greenberg, CEO and Chairman of McDonald’s smiled as he walked to the podium to summarize the first quarter results for 2000. The market had already reacted that morning to McDonald’s 12% increase in earnings, sending the stock up 8 percent. After almost no stock increase in 1999 and a 15% drop since the beginning of the year, Jack was happy to have some good news. More importantly, the $180M investment in the Made for You cooking program was finally in place with significant improvements both in food quality and service speed. After decades of spectacular growth, McDonald’s had become an American icon and the world’s most ubiquitous restaurant. Starting as a hot dog stand, the McDonald brothers’ first restaurant had no play area, no happy meals, and didn’t even serve hamburgers. Ray Kroc transformed that concept into a fast food machine, starting first with hamburgers and fries and then always changing with American tastes and culture. By 2000, more than 43 million people visited one of McDonald’s 26,000 restaurants in 120 countries every single day. That translated to more than 15 billion customers a year with system-wide sales of over $40 billion. Yet the previous ten years had been traumatic for McDonald’s. In search of growth, the company had rushed from pizza and veggie burgers to popcorn and pasta. Massive campaigns to increase dinnertime sales with adult-targeted sandwiches like the Arch Deluxe were utter flops. And while McDonald’s was the clear market leader with 42% of the fast food burger share, competitors like Wendy’s had steadily nibbled at their core customers. Caught in the dot.com market excitement of 1999, little that McDonald’s did caught Wall Street’s attention. Even investments in food.com, a fast food delivery service, received nothing but yawns. To contain its archrival, Burger King, it…...

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