FULL DESCRIPTION

McDonald's Corporation (McDonald's), incorporated on December 21, 1964, operates and franchises McDonald's
restaurants. The Company's restaurants serve a locally relevant menu of food and drinks sold at various price
points in over 100 countries. The Company's segments include U.S., International Lead Markets, High Growth
Markets and Foundational Markets and Corporate. McDonald's franchised restaurants are owned and operated
under various structures, including conventional franchise, developmental license or affiliate. The Company is
primarily a franchisor. Under a conventional franchise arrangement, the Company owns the land and building or
secures a long-term lease for the restaurant location and the franchisee pays for equipment, signs, seating and
decor.

The U.S. segment focuses on offering a platform for authentic ingredients that allows customers to customize
their sandwiches. Its High Growth Markets segment includes its operations in markets, such as China, Italy,
Korea, Poland, Russia, Spain, Switzerland, the Netherlands and related markets. The International Lead markets
segment includes the Company's operations in various markets, such as Australia, Canada, France, Germany,
the United Kingdom and related markets. McDonald's High Growth markets are focused on creating customer
excitement through menu, promotions and value, and implementing a digital strategy with specific mobile
solutions and actions. The Foundational markets and Corporate segment is engaged in operating restaurants
and increasing convenience to customers, including through drive-thru and delivery.

McDonald's menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-
Fish, several chicken sandwiches, Chicken McNuggets, wraps, French fries, salads, oatmeal, shakes, McFlurry
desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages. In
addition, the restaurants sell a range of other products during limited-time promotions. McDonald's restaurants in
the United States and many international markets offer a full or limited breakfast menu. Breakfast offerings may
include Egg McMuffin, Sausage McMuffin with Egg, McGriddles, biscuit and bagel sandwiches, and hotcakes.

McDonald’s
McDonald’s (MCD) is a fast food, limited service restaurant with more than 35,000
restaurants in over 100 countries. It employs more than four million people.
McDonald’s serves 70 million customers per day, which is greater than the
population of France. According to IBISWorld, in 2014, McDonald’s had the largest
share in the fast food restaurant industry of 17% in the U.S. The closest competitor,
Yum! Brands (or YUM), had a market share of 11%.

Food services
McDonald’s offers a uniform menu that includes fries, the Big Mac, chicken
sandwiches, chicken nuggets, hamburgers, the quarter pounder with cheese, salads,
wraps, desserts, soft drinks, and other beverages. However, to ensure that it
connects with the international markets, McDonald’s offers locally relevant food
menus as well. For example, it serves gazpacho in Spain, the black and white burger
in China, and the Veg Pizza McPuff in India. In the U.S., McDonald’s main
competitors are Burger King (BKW) and Wendy’s (WEN).
Company values
Companies in the restaurant industry, which investors can access through the
exchange-traded funds (or ETFs) like the PowerShares Dynamic Leisure and
Entertainment (PEJ) and the PowerShares Dynamic Food & Beverage (PBJ), use
various strategies to differentiate themselves from the competition. McDonald’s
delivers an experience to its customer through its trademark “quality, service,
cleanliness, and values (or QSC&V).” To deliver this experience it uses what it calls
a “Plan to Win” strategy supported by its three-legged stool approach. Plan to Win is
a strategic initiative that focuses on customer experience through the five Ps–
People, Product, Place, Price, and Promotion. Three legs being the owners or
operators, suppliers, and company employees. Without these three legs, the stool
won’t stand firm.

Revenue breakdown
McDonalds divides its revenues into company-operated and franchised. In the
previous chart, McDonalds earned 67% of its revenues from company owned
restaurants at the end of December, 2013. McDonalds earned only 33% of revenues
from franchise. Revenue contribution was highest from Europe, at 43%, under the
company owned model and highest from in the U.S., at 47%, under the franchise
model. Let’s look at why franchises contribute to only one third of the revenues and
whether it’s better than company-owned.

Franchise margins
With the franchise model, McDonalds earns revenues from rents and royalties based
on the percent of sales and initial fees from new restaurants. McDonalds also earns
revenues from a new franchised term, which could last for as much as 20 years.
With the licensing model, McDonalds doesn’t earn revenues from rent, although it
takes its share of revenues on a percentage basis. Due to low commodity and
operating costs, franchises have higher operating profit margins. As of fiscal
year 2013, franchised margins,calculated as revenues from franchise less the
company’s occupancy cost—rent and depreciation over revenues from franchise,
were 82.4% compared to company operated margins, which were 17.5%.

Company Perspectives:
McDonald's is the world's leading food service organization. We generate more than
$40 billion in Systemwide sales. We operate over 30,000 restaurants in more than
100 countries on six continents. We have the benefits that come with scale and a
strong financial position. We own one of the world's most recognized and respected
brands. We have an unparalleled global infrastructure and competencies in
restaurant operations, real estate, retailing, marketing and franchising. We are a
leader in the area of social responsibility. We actively share our knowledge and
expertise in food safety and are committed to protecting the environment for future
generations. Yet, we have not achieved our growth expectations for the past several
years. So, our challenge is to leverage our strengths to profitably serve more
customers more ways more often.

History of McDonald's Corporation

Since its incorporation in 1955, McDonald's Corporation has not only become the
world's largest quick-service restaurant organization, but has literally changed
Americans' eating habits--and increasingly the habits of non-Americans as well. On
an average day, more than 46 million people eat at one of the company's more than
31,000 restaurants, which are located in 119 countries on six continents. About
9,000 of the restaurants are company owned and operated; the remainder are run
either by franchisees or through joint ventures with local businesspeople.
Systemwide sales (which encompass total revenues from all three types of
restaurants) totaled more than $46 billion in 2003. Nine major markets--Australia,
Brazil, Canada, China, France, Germany, Japan, the United Kingdom, and the
United States--account for 80 percent of the restaurants and 75 percent of overall
sales. The vast majority of the company's restaurants are of the flagship McDonald's
hamburger joint variety. Two other wholly owned chains, Boston Market
(rotisserie chicken) and Chipotle Mexican Grill (Mexican fast casual), along with Pret
A Manger (upscale prepared sandwiches), in which McDonald's owns a 33 percent
stake, account for about 1,000 of the units.

McDonald’s Vision Statement & Mission

Statement Analysis
UPDATED FEB 5, 2017 PAULINE MEYER

A McDonald’s in
Santa Clara, California. McDonald’s vision statement and mission statement are
comprehensive, although some adjustments could improve their relevance. (Photo: Public
Domain)

McDonald’s Corporation’s mission statement and vision statement are guides for the
company’s leadership in the global fast food restaurant industry. Founded in 1940 and
established as McDonald’s Corporation in 1955, the firm follows its mission statement to
design and develop its goods and services. On the other hand, McDonald’s follows its vision
statement to continue its top position in the global fast food restaurant market. With more
than 36,000 locations worldwide, McDonald’s shows resilience and success through
innovation and aggressive marketing. McDonald’s success is an indicator of business
effectiveness in attaining the aims in its mission statement and vision statement.
McDonald’s mission statement guides the company’s strategies and strategic objectives for
developing business operations. McDonald’s vision statement guides the company’s overall
strategic direction toward its current leadership position in the global fast food restaurant
market.

McDonald’s Vision Statement

McDonald’s vision statement is as follows: “Our overall vision is for McDonald’s to become
a modern, progressive burger company delivering a contemporary customer experience.
Modern is about getting the brand to where we need to be today and progressive is about
doing what it takes to be the McDonald’s our customers will expect tomorrow. To realize this
commitment, we are focused on delivering great tasting, high-quality food to our customers
and providing a world-class experience that makes them feel welcome and valued.”
McDonald’s vision statement covers a number of business aspects. The company implies
innovation to satisfy current market needs, as stated in the “contemporary customer
experience” component of the vision statement. Also, McDonald’s characterizes its products
in the “great-tasting, high-quality food” component of the vision statement. In saying
“modern, progressive” McDonald’s shows that its vision statement defines the kind of
business approach it uses for organizational development. A strategic objective linked to this
vision statement is the innovation of McDonald’s goods and services to match consumer
preferences and expectations.

McDonald’s Mission Statement

McDonald’s mission statement is officially stated as follows: “Our mission is to be our
customers’ favorite place and way to eat & drink. We’re dedicated to being a great place for
our people to work; to being a strong, positive presence in your community; and to delivering
the quality, service, cleanliness and value our customers have come to expect from the
Golden Arches – a symbol that’s trusted around the world.”
In its mission statement, McDonald’s includes details about its market position, as shown in
the “favorite place and way to eat & drink” component. Also, the human resource
management approach is highlighted in the “great place for our people to work” component.
In addition, McDonald’s mission statement covers its corporate social responsibility position
in the “positive presence in your community” part. The rest of the mission statement indicates
McDonald’s brand image and the character of its products. A strategic objective based on this
mission statement is global brand development to strengthen the company’s ability to attract
customers and investors. A related financial objective based on McDonald’s mission
statement is cost minimization to optimize value.

Headquarters

McDonald's Plaza, located in Oak Brook, Illinois, is the headquarters of McDonald's

The McDonald's headquarters complex, McDonald's Plaza, is located in Oak Brook, Illinois. It sits
on the site of the former headquarters and stabling area of Paul Butler, the founder of Oak
Brook.[29] McDonald's moved into the Oak Brook facility from an office within the Chicago Loop in
1971.[30]
On June 13, 2016, McDonald's confirmed plans to move its global headquarters to Chicago's
West Loop neighborhood in the Near West Side. The 608,000-square-foot structure will be built
on the site of Oprah Winfrey's former Harpo Studios and open in early 2018.

Products
Main article: List of McDonald's products

A typical "eat-in" McDonald's meal as sold in Hong Kong, consisting of French fries, a soft drink, and a
"main product" - in this case, a McSpicy Chicken Fillet. Condiments are supplied in small packets; such a
packet of tomato ketchup is seen in the foreground.

McDonald's predominantly sells hamburgers, various types of chicken, chicken

sandwiches, French fries, soft drinks, breakfast items, and desserts. In most markets,
McDonald's offers salads and vegetarian items, wraps and other localized fare. On a seasonal
basis, McDonald's offers the McRib sandwich. Some speculate the seasonality of the McRib
adds to its appeal.[46]
Products are offered as either "eat-in" (where the customer opts to eat in the restaurant) or "take-
out" (where the customer opts to take the food for consumption off the premises). "Eat-in" meals
are provided on a plastic tray with a paper insert on the floor of the tray. "Take-out" meals are
usually delivered with the contents enclosed in a distinctive McDonald's-branded brown paper
bag. In both cases, the individual items are wrapped or boxed as appropriate.
Since Steve Easterbrook became CEO of the company, McDonald's has streamlined the menu
which in the United States contained nearly 200 items. The company has also looked to
introduce healthier options, and removed high-fructose corn syrup from hamburger buns. The
company has also removed artificial preservatives from Chicken McNuggets.

Industry Restaurants

Genre Fast food restaurant

Founded McDonald's: May 15, 1940; 77 years ago

San Bernardino, California
McDonald's Corporation: April 15, 1955; 62 years ago
Des Plaines, Illinois

Founders McDonald's: Richard and Maurice McDonald

McDonald's Corporation: Ray Kroc

Headquarters Oak Brook, Illinois, U.S. (moving to Chicago in 2018)[1]

Number of locations About 36,900[2] (December 31, 2016)

Area served Worldwide

Key people  Andrew J. McKenna (Chairman)
 Steve Easterbrook (President and CEO)

Products  Hamburgers
 chicken
 french fries
 soft drinks
 milkshakes
 salads
 desserts
 coffee
 breakfast

Revenue  US$24.622 billion (2016)[2]

Operating income  US$7.745 billion (2016)[2]

Net income  US$4.686 billion (2016)[2]

Total assets  US$31.024 billion (2016)[2]

Total equity  US$2.2043 billion (2016)[2]

Number of employees 375,000 (2016)[2]

Website corporate.mcdonalds.com/mcd.html
www.mcdonalds.com/us/en-us.html