Reasons Why Burger King Is Better Than McDonalds

Strategic Management and Business Policy

(MGNT 341)

CASE STUDY

on

(Top Ten Reasons Why Burger King is better than McDonalds)

Submitted By:

Bernas, Arthaliah Grace B.

Grabato, Christine Joy G.

Maratas, Loligen Art O.

Morales, Adraine Kayle

Teodosio, Rozel Grace Z.

Submitted To:

Ms. Ma. Aurora A. Villanueva, PhD.

July, 05 2018

I. PROBLEM

        Through the years, McDonald's has been on the top of any other fast food chain in the industry.  In the minds of customers, creating a uniform and consistent product is one of the most important aspects of McDonald’s success. No matter where you go, once you see the ubiquitous “golden arches” you know exactly what you’re going to get. Especially when you’re in a hurry, why take the chances with someplace else? They’re not known for high quality food, service, or atmosphere—but as evident from the enormous amount of customers they serve, McDonald’s is the clear leader in cost, speed and consistency.

        However, as the years passed by and competitors, such as the Burger King, had its big break, the once successful McDonald's started to lose the brand it has persistently built for years.

        According to surveys, Burger King has better and more food and toy offerings than McDonald's. Also, the consumers are not satisfied with McDonald's slow service and extra charges. And lastly, consumers think that Burger King has better deals than McDonald's, which renders McDonald's as an overrated fast food chain in America.

        All these opinions from consumers boil down to one main problem- because of McDonald's' consistency, it has failed to go with the flow of the ever changing social preferences of the market. Thus, Burger King has taken over its place as number one.

II. OBJECTIVES        

        To further understand and gain extensive knowledge regarding the given article, this output is accomplished thorough research and analysis concerning the problem of McDonalds with the following objectives.

On the completion of this case study, the researchers will be able to:

• Determine the statistics, surveys, and data of McDonalds
• Figure out the weak points of McDonalds and come up with solutions to eliminate these factors based on their SWOT analysis
• Provide a recommendation as to how McDonalds could improve their services and products
• Come up with strategies that will attract more customers, and, strengthen and maintain McDonalds’ standing in the fast food industry
• Understand how competition in fast food chains work
• Discover the key factors that make a fast food chain stand out among others and the factors that can cause a fast food chain’s downfall

III. AREAS OF CONSIDERATION

        McDonalds began its humble beginnings in the 1940s in San Bernardino, California when the McDonald brothers Richard and Maurice opened their first restaurant which focused on a limited menu such as burgers, fries and some beverages. The problem that they had is how to compete with others in the same line of business and realized immediately how popular quickly served meals have been, and decided to use a Speedee Service System which allows the, to make burgers at a faster rate without compromising the quality of their products and service. Meanwhile, they were looking for a new franchising agent and until sales-minded Ray Kroc got the opportunity and founded the McDonalds System Inc., a predecessor of McDonalds Corp. and now successfully established in more than 100 countries. But what happened after almost 78 years of legacy for McDonalds is what we will find out.

Strengths

1. The second-largest restaurant network serving customers in over 120 countries

As of 2018, McDonald’s operates the second-largest restaurant network in the world. In total, the company and its franchisees operate 37,241 restaurants in 120 countries.

In terms of sales, McDonald’s outrivals any other QSR chain in the world with US$22.820 billion in sales in 2017 alone (earning slightly more than Starbucks). The sheer size of the company’s restaurant network is a strength that provides many advantages over competitors, including:

• Economies of scale. The company can share its fixed costs over many restaurants locations, which makes McDonald’s one of the cheapest places to eat at.
• Huge gains from implementing best practices. The company can identify better ways of performing tasks, managing restaurants or hiring new employees and can achieve huge gains by implementing these best practices in its vast network of restaurants.
• Market power over suppliers and competitors. Due to its size, McDonald’s can exercise its market power over suppliers by requiring lower prices from them. The company clearly demonstrates this with The Coca Cola Company. Because of McDonald’s and The Coca Cola Company’s agreement, no other restaurant chain can sell Coca Cola drinks for lower prices than McDonald’s, even if it means losing the business to PepsiCo. The Coca Cola Company could easily get out of such agreement if McDonald’s wouldn’t be so huge and would generate less income for The Coca Cola Company. McDonald’s can also use its size to affect the competition by underpricing some of its items or driving them out of the best locations.
• Wide audience reach. McDonald’s restaurant network allows the chain to reach more customers than most of its rivals could reach. According to the Company’s CEO[6], in five of its largest markets, 75% of population lives within 3 miles of McDonald’s restaurants. Wide audience reach does not only help the company to target more customers and increase brand awareness, but also to introduce new services, such as home delivery.

2. The most recognizable brand in restaurant industry

Since McDonald’s opened its first restaurant in 1940, it has become the world’s largest restaurant chain in terms of revenue with the most recognizable brand in the market. According to Forbes and Interbrand, McDonald’s brand is 9th and 12th most valuable brand in the world, worth US$40.3 billion and US$41.533 billion, respectively. Usually, the more valuable a brand is the better it is recognized worldwide. McDonald’s, which operates in 120 countries, where billions of people live, enjoys some of the greatest brand awareness among all global corporations. Brand awareness also helps to introduce new products or sell the current ones faster as the company needs to spend less money on advertising.