McDonald's Corporation is in the fast food industry and operates more than 24,000 restaurants in 111 countries worldwide. In the United States, it has 12,450 US outlets, most of them in stand-alone locations that generate a 42% share of the nation's fast-food hamburger business. Corporate communications states that a new McDonald's restaurant opens every 8 hours.
Eighty-five percent of the restaurants are independently owned and operated, with company-run stores making up the other 15%. Stock increased by 16% in 1994, and 25% of all McDonald's stock is owned by employees, licensees, and suppliers (Hoover's Online, 1999).
McDonald's is a large owner of real estate, since its policy as established by founder Ray Kroc, was that if the company owned the land, it became the landlord, and could evict the tenant at any time, a situation that helped establish a good guarantee of quality control.
The franchise owner only "owns" a 20-year agreement, renewable at the company's option. Under that agreement, the franchisee agrees to equip and run a restaurant and pay McDonald's 12.5% of gross sales in royalty and rent. Other restrictions apply. McDonald's storeowners can not operate any other business, they are not given an exclusive territory, and they take most operating instructions from the Corporate headquarters in Oak Brook, Ill. Franchisees spend a minimum of 4% of sales for marketing (Catain, 1999).
McDonald's specializes in preparing and selling several fast food items in the form of sandwiches made from beef, chicken, fish, eggs, and sausage; french fries; salads; soft drinks and shakes; and desserts. The beef sandwiches, which are all typically marked up 350 percent are: basic hamburger (1/8 lb beef, catsup, pickle); cheeseburger (same as basic but with cheese added); Quarter Pounder (basic but with 1/4 pound of beef); Big Mac (2 beef patties, two buns, cheese, lettuce, tomato, pickle and sauce).
A recent ...