McDonald’s maintains its top position in the fast-food industry amidst several internal and external factors that affect business operations, but you may be unaware of what these operations entail.
Therefore, if you’d like more insight into McDonald’s strengths, weaknesses, opportunities, and threats, keep reading to see what I discovered!
What is McDonald’s SWOT Analysis In 2022?
McDonald’s SWOT analysis presents the company’s strengths in establishing a solid brand name through numerous global expansion strategies in 2022. However, the analysis also highlights weaknesses in the company’s franchise model and unhealthy food options. Additionally, the SWOT analysis presents opportunities in menu diversification and global expansion amidst threats from new trends in the food industry.
If you’d like more information on McDonald’s strengths, weaknesses, opportunities, and threats, keep reading for more useful facts!
What Strengths Does McDonald’s Have?
In the SWOT analysis of McDonald’s, the company’s strengths highlight internal strategic factors that contribute to the company’s success.
McDonald’s strengths in the fast-food restaurant market include the following:
- Strong brand name and image
- Stable income
- Tasty foods
- Technological innovations
- Real estate ventures
- Global expansion strategies
- Strategic acquisitions
- Effective and efficient marketing strategies
- Health and quality control protocol improvements
- Leading quick-service restaurant
1. Strong Brand Name and Image
McDonald’s has been listed among the world’s most valuable brands, owing to its strong reputation, brand name, and image.
With its high brand value, it becomes easier for the company to dominate the fast-food industry amidst its strong reputation.
Currently, McDonald’s operates more than 31,000 restaurants spread across 120 different countries.
2. Stable Income
Since most of McDonald’s locations are operated by franchisees, the parent company does not involve itself in monitoring the daily functioning of each venue.
Instead, the firm benefits largely by collecting royalties and rent, calculated as a percentage of sales made by the franchises.
Thus, McDonald’s maintains a predictable revenue and cash flow, a reduction in resource requirements, and fewer capital requirements.
3. Tasty Foods
According to fast food industry experts, McDonald’s french fries have been marked as the best tasting of all other fast food restaurants.
McDonald’s maintains its delicious offering by collaborating with both domestic and international vendors for consistency.
For example, a Big Mac in Tokyo will taste the same as one in Pittsburg due to close supervision of the multinational franchise network.
As such, people traveling in foreign countries may find comfort in purchasing familiar foods.
4. Technological Innovations
To achieve its ‘Experience of the Future’ vision, McDonald’s strives to take innovative steps through several digital initiatives.
The firm maintains the concept of being a “restaurant of the future” through innovations like mobile order and payment systems, self-service systems, and kiosks.
5. Real Estate Ventures
Among McDonald’s strengths is that the company is more than just a restaurant making fries and hamburgers.
Rather, the company operates a multibillion-dollar real estate empire that generates a majority of the company’s revenue.
With several franchise locations in different countries, McDonald’s licenses the company’s trademark, brand name, ingredients, recipes, and processes to franchisees.
In addition to this, McDonald’s may own the land or building in which the franchise operates and collects rent as the landlord.
6. Global Expansion Strategies
McDonald’s maintains effective global expansion strategies that make the company a market leader in terms of global reach and size.
The different franchises operating in different countries mitigate the culture shock of operating in foreign markets and also make adaptation to local tastes much easier.
As a result, McDonald’s has managed to gain a higher market share ahead of its competitors Yum! Brands, Wendy’s, and Burger King.
McDonald’s market share is approximately 19%, while Yam! Brands are 9%, and Burger King and Wendy’s are at 2%.
7. Strategic Acquisitions
McDonald’s makes strategic acquisitions that further enhance its product and service offerings.
Among McDonald’s recent acquisitions is the Dynamic Yield, a company that specializes in personalization and decision logic technology.
With these acquisitions, McDonald’s can provide its customers with a more personalized customer experience.
8. Effective and Efficient Marketing Strategies
McDonald’s maintains an effective marketing mix strategy that combines both localization and standardization.
The strategy of localization and standardization has made McDonald’s realize its past success and consider local preferences while maintaining its standard menu.
Due to these marketing strategies, McDonald’s has gained its global positioning.
9. Health and Quality Control Protocol Improvements
McDonald’s is largely known for its high-quality standards, as it maintains strict protocols for monitoring the safety and quality of ingredients purchased from third-party intermediaries.
For instance, McDonald’s recently restricted the usage of high-value human antibiotics in a bid to prevent hazardous superbugs.
This move is immensely applauded by numerous public health and consumer advocacy organizations.
10. Leading Quick Service Restaurant
According to Statista, McDonald’s prides itself as the leading Quick Service Restaurant (QSR) in the United States. As a result, it attracts more customers in different markets across the world.
What are the Weaknesses of McDonald’s?
McDonald’s weaknesses in the company’s SWOT analysis elaborate the internal strategic factors that limit the firm’s full potential.
The main weaknesses of McDonald’s include the following:
- Unhealthy food image
- International franchise model
- Disruptions in supply chain
- Aggressive competition
- Employee dissatisfaction
- Easily imitated menu items
- Dissatisfied franchisees
1. Unhealthy Food Image
Negative reviews and propaganda have antagonized McDonald’s progress in the fast-food industry.
For instance, the documentary “Super Size Me,” by Morgan Spurlock blames McDonald’s and other fast-food restaurants for society’s obesity.
The documentary further illustrates the company’s food products to be nutritionally devoid because they contain many calories.
2. International Franchise Model
Although the company’s franchise model has made it possible for global expansions, it also has its downsides.
The model presents a high risk of mismanagement, which will likely result in customer dissatisfaction and insufficient revenue generation.
Furthermore, due to the independence of the franchises, it may become challenging for McDonald’s to maintain a common worldwide brand that delivers the same quality of service.
3. Disruptions in Supply Chain
Another one of McDonald’s most significant weaknesses is that it often encounters disruptions in its supply chain.
These disruptions reduce the availability of essential products, affecting the company’s smooth operations.
In addition to this, interruptions in the supply chain lead to an increase in the company’s operating expenses, and hence decreased profitability and company revenue.
4. Aggressive Competition
McDonald’s faces aggressive competition from powerful fast-food brands such as Burger King, Wendy’s, and Yum! Brands.
Due to this intense competition, McDonald’s loses many customers who might choose to shift brand preference.
5. Employee Dissatisfaction
Due to high rates of employee dissatisfaction at McDonald’s, several employee activists have resounded a call for the company’s minimum wage.
These activists have staged strikes and rallies that advocate for a $15 minimum wage for employees.
Additionally, the several issues revolving around employee dissatisfaction at McDonald’s, the occasional strikes, and protests have negatively affected the company’s brand name among the masses.
6. Easily Imitated Menu Items
Even though McDonald’s is renowned for its tasty foods, most of its menu items are simple burgers and fries, whose recipes are available online.
Due to the online availability of the recipes, most of the menu items are easily imitated by other fast-food sellers.
As a result, McDonald’s may lose its customer base to other sellers who provide similar food items.
7. Dissatisfied Franchisees
Several McDonald’s franchisees are becoming more disgruntled by the cost of franchising with McDonald’s.
The increase in franchising fees is likely to discourage franchisees who need to use the infamous fast-food name.
Other franchises are also considering selling their restaurants due to high cases of customer dissatisfaction.
What are the Opportunities of McDonald’s?
The opportunities of McDonald’s in the SWOT analysis of the company point out the external strategic factors that are linked to its product mix and global growth.
These opportunities present McDonald’s with a pathway to achieve long-term sustainability.
McDonald’s main opportunities in the fast-food market include:
- Food delivery service
- Innovative products and offers
- Increased demand for healthy food options
- Global expansion
- Rebuilding the brand image
1. Food Delivery Service
The recent surge of food delivery services through online platforms has become one of the promising avenues that McDonald’s can leverage.
McDonald’s initiative to partner with DoorDash and UberEats is an excellent start to take over the online food delivery industry.
2. Innovative Products and Offers
McDonald’s needs to invest more in developing fresh menu items that are likely to appeal to more customers.
For instance, the company’s move to introduce MIX by Sprite Tropic Berry in New York locations provided higher revenue due to innovative products.
Therefore, introducing unique menu items frequently would be a great selling point that refreshes the brand regularly.
3. Increased Demand for Healthy Food Options
With increased awareness of healthy food options, McDonald’s can take up the opportunity to develop more nutritious food options for its customers.
4. Global Expansion
Although McDonald’s presence in international markets is noteworthy, there are still opportunities to venture into international markets rather than focusing on the United States.
5. Rebuilding the Brand Image
McDonald’s has the opportunity to rebrand itself and focus on the principles of the current generation.
For example, since the food chain is among the unhealthy category, the company can take advantage of healthier choices and rebrand.
What are the Threats of McDonald’s?
McDonald’s threats include all external factors and events that limit the development of the company’s business.
Threats faced by McDonald’s include:
- Aggressive competition
- Environmental concerns
- Cultural disarray in foreign countries
- Risky investments in technology
- Growing trends in the fast-food industry
1. Aggressive Competition
In the near past, McDonald’s has witnessed fast-growing competition in the food industry.
Several competitors such as Dominos, KFC, Burger King, and Chick-Fil-A have risen within the industry, creating a division within McDonald’s customer base.
2. Environmental Concerns
A growing ecological concern on the McDonald’s sourcing and production of food items can disrupt the company’s supply chain.
To overcome such threats, the company should address the concerns and include interventions that would correct company processes.
3. Cultural Disarray in Foreign Countries
McDonald’s faces challenges in maintaining its brand image and at the same time supporting the different cultural ethos of different countries.
Although the company incorporates local ingredients into the menu, McDonald’s faces a challenge in managing this disarray.
4. Risky Investments in Technology
Although McDonald’s commitment to innovative initiatives may be favorable to the company, investments in technology are often risky.
In some cases, the new technologies may reduce the return on investment, while the perks of improving customer satisfaction may not be as good as expected.
5. Growing Trends in the Fast Food Industry
Most food items on McDonald’s menu have been regarded as old-fashioned by millennials who do not prefer the traditional menu.
However, other restaurants such as Wendy’s and Shake Shack take advantage of growing trends by frequent experimentation of new recipes and menus.
McDonald’s SWOT analysis reveals that the company is one of the most valuable brands in the world. However, issues such as negative publicity, aggressive competition, and employee satisfaction seem to challenge the growth of the business.
Therefore, McDonald’s must introduce interventions that would overcome the challenges to achieve the business’s long-term goals.