McDonald’s: How to “shrink” in order to “expand”

As a giant in the fast food industry, McDonald's status has been seriously challenged in recent years. The financial health of McDonald's operations deteriorated last year and at one point forced a global strategic retrenchment. But poor financial health doesn't fully explain McDonald's "shrink to expand" strategy. Analysys Consulting believes that the proposal of this strategy is more driven by its overall marketing strategy and operational strategy.

McDonald’s has spent heavily to revamp its marketing strategy to launch its first “I’m Lovin’it” themed marketing campaign. McDonald’s new slogan “I’m Lovin’it” is a key part of its massive remarketing campaign and will replace the “We love to see you smile” marketing campaign launched in the US three years ago. However, ultimately it doesn't matter whether people like McDonald's $100 million marketing campaign. What really matters is whether people like the quality and standard of McDonald's service and fast food that its advertising portrays. In fact, many other manufacturers have tried their best to reorganize their declining brands. An important lesson is that if the advertising message over-promises a brand feeling and inspires high public expectations, but the inherent services and systems cannot guarantee its realization, this kind of advertising will only make the brand worse. In view of this, McDonald's must adjust its operating strategy. First, McDonald's must improve its inherent operational shortcomings to ensure that it achieves the core values ??that the McDonald's brand promises to the public: consistent, fast and friendly service; family fun; and a joyful experience all around. Second, McDonald's must rethink its product offering. In the past year, McDonald's has launched many new products and improved many existing products. Only in this way can McDonald's fulfill its brand promise of providing fresh and delicious fast food to the masses. Only in this way can McDonald's attract more adults and their families. In order to implement the new operating strategy, McDonald's has scaled back the addition of new stores and selectively closed some stores, focusing its attention on improving service levels in existing stores and implementing an extensive store rating system. As McDonald's President and Chief Operating Officer Charlie Bell described it, "McDonald's strives to achieve growth by adding more customers to existing stores, rather than adding more stores to existing customers." Of course, McDonald's The contraction strategy also appropriately mitigates the financial burden and risks of rapid expansion. However, the most important significance of the contraction strategy is to improve the quality and level of McDonald's operations and prove McDonald's commitment to consumers--"I'm Lovin'it" with facts. It was also through this "shrinking" strategy that McDonald's achieved excellence in operations and leadership in marketing, and created a new starting point for McDonald's business "expansion." -------------------------------------------------- --------------------------------

This article is provided by Analysys Consulting. As one of the leading consulting groups in China, Analysys International's subsidiaries such as Analysys Consulting, Analysys Research, Analysys Consulting, and Analysys Data are committed to providing customers with first-class consulting, research, consulting and data service solutions. Analysys International has branches in Canada, Hong Kong, Beijing and Shanghai, and has a group of professional and experienced senior consultants and analysts, 90% of whom have a master's degree or above and have many years of experience in providing consulting services to the Chinese local market. . In recent years, Analysys International has not only won wide recognition from the domestic consulting community for its sustained high-quality services, but has also grown into an international-level consulting group through long-term cooperation with international partners. In 2001, Analysys was rated as one of China's most promising high-growth companies by the Wharton School of Business in Pennsylvania, USA. In 2003, Analysys became a founding member of the China Science and Technology Consulting Association.

Yu Hui, General Manager of Analysys International Shanghai Company

*Have worked for Siemens in China and the United States for many years, and served as Product Marketing Manager, General Manager of Distribution Channels, and Senior Consultant of Strategic Planning;

*Experienced in management consulting and corporate finance;