McDonald's has long been the world's largest fast food chain, and it has been the dominant company in the field in the United States for decades. However, this is a highly competitive business, and sales have been reduced for McDonald's even as they have increased for other chains such as Burger King, Taco Bell, and Wendy's. McDonald's sales have continued to increase in foreign markets, but growth was not sustained in the U.S. market and especially was not evident for individual stores. Some of these problems were brought on by McDonald's itself as it tried to open too many stores too close together. Other problems were in the nature of the business and a changing demographic among the customer base.
McDonald's sought new products and new promotions to attract customers. It tried to develop new products, with limited success. It tried to introduce an entire line it labeled "adult" and so damaged its traditional base while failing to attract new customers. It then tried a C-55 Promotion in which customers could purchase a Big Mac for 55 cents if they bought fries and a drink at the regular price. This effort also failed. It was opposed by franchisees who were losing money, and it was did not seem to attract any customers to the stores. This leaves the company uncertain as to what strategy to try next in its effort to improve growth.
The Big Mac promotion in 1996 was intended to increase business for the individual stores based on a belief that lower prices would attract customers. This was not necessarily based on the view that prices were too high but rather on the belief that the problems for the stores were that customers were being drained away by other chains. The fast food industry has been extremely competitive for some time, and each chain tries to emulate the success of other chains while also finding its own niche and its own methods. McDonald's has long been the industry giant imitated by others, and now M...