McDonald’s Speedee System

As explained on McDonald’s website, “Dick and Mac McDonald moved to California to seek opportunities they felt unavailable in New England.” In 1948 they launched Speedee Service System featuring 15-cent hamburgers as the restaurants gained traction, leading the brothers to begin franchising their concept until they reached nine operating restaurants. The Speedee System was the foundation of the success of the first McDonald’s in San Bernardino, California.

Quick History

A native Chicagoan, Ray Kroc, in 1939, was the exclusive distributor of a milkshake mixing machine called Multimixer. In short, he was a salesman.

He visited the McDonald brothers in 1954 and was impressed with their business model, which led to him becoming their franchise agent.

He opened the first restaurant for McDonald’s System, Inc., until in 1961, he acquired McDonald’s rights to the brother’s company for $2.7 million.

The McDonald brothers’ speedee system enabled the first store to operate quickly and efficiently while serving a great burger.

In fact, while the initial take from the McDonald brothers was that you could make great burgers quickly and inexpensively, those could still be done with great ingredients and maintain high quality.

McDonald’s would be able to serve them at low prices thanks to its low operational costs; since there were no servers, it was mostly a self-service experience, and the menu was minimal.

While the concept of Fast Food developed in the early 1900s, it took off later on as the McDonald brothers opened their first restaurant.

However, as Ray Kroc took over McDonald’s, the concept changed in meaning. Indeed, as the restaurants scaled their operations, the focus was more and more on speed, thus bringing the quality of food down and associating fast food with a lesser food experience.

Early blueprints for signature McDonald’s Red and White restaurant with Speedee road sign (source McDonald’s).

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Who Owns McDonald’s

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The major institutional shareholders comprise The Vanguard Group (8.83%) and BlackRock (7.1%). Major individual shareholders include Kevin Ozan (Executive Vice President and Chief Financial Officer), Stephen Easterbrook (President and CEO), and John Rogers, Jr., an investor, philanthropist, and Ariel Capital Management founder. And a few other individual shareholders.

McDonald’s Business Model

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McDonald’s is a heavy-franchised business model. In 2022, over 60% of the total revenues came from franchised restaurants. The company’s long-term goal is to transition toward 95% of franchised restaurants (by 2022, franchised restaurants were 94.7% of the total). The company generated over $23 billion in revenues in 2022, of which $8.75 billion was from owned restaurants and $14.1 billion from franchised restaurants.

McDonald’s Revenue

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Of over $23 billion in revenue in 2022, $8.74 came from company-operated stores, while $14.1 billion came from franchised restaurants. Of over $23 billion in revenue in 2021, McDonald’s generated almost ten billion dollars from company-operated restaurants, while it generated $13 billion from franchised restaurants.

McDonald’s EV/Revenue Multiple

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In 2022, McDonald’s EV/Revenue Multiples was 8.33 in 2022, compared to 8.53 in 2021.

McDonald’s Profits

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In 2022, McDonald’s generated $6.18 billion in net profits, compared to $7.54 billion in 2021. The company runs a heavily franchised business model, where it has reached its target of 95% franchised restaurants worldwide.

McDonald’s Strategy

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McDonald’s finally transitioned to a heavily franchised business model in 2022, reaching its long-term objective of 95% of franchised restaurants vs. its total restaurants worldwide. Approximately 95% of the restaurants at year-end 2022 were franchised, including 95% in the U.S., 89% in International Operated Markets, and 98% in the International Developmental Licensed Markets.

McDonald’s Employees

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McDonald’s had 150,000 employees in 2022, compared to 200,000 employees in 2021 and the same in 2020. The company runs a heavily franchised business model, where most stores are franchised restaurants vs. owned ones. In 2022, McDonald’s franchised locations employed over two million individuals.

McDonald’s Margins

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McDonald’s runs a heavily franchised business model, where most of its margins come from franchised restaurants vs. operated ones. For instance, in 2022, franchised restaurants generated $11.75 billion in margins vs. its operated restaurants, which generated $1.37 billion in margins.

Who Owns Burger King

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Burger King is an American multinational chain of fast-food restaurants that is headquartered in Miami, Florida. The first Burger King restaurant, then known as Insta-Burger King, was opened in Jacksonville, Florida, in 1953 by Keith Cramer and his stepfather Matthew Burns. Burger King Worldwide merged with the Canadian coffee chain Tim Hortons in 2014. This precipitated the formation of parent company Restaurant Brands International, which is part-owned by former Burger King owner 3G Capital.

McDonald’s Organizational Structure

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McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

McDonald’s PESTEL Analysis

mcdonalds-pestel-analysis

McDonald’s SWOT Analysis

mcdonalds-swot-analysis

Franchising Business Model

franchising
Franchising is a business model where the owner (franchisor) of a product, service, or method utilizes the distribution services of an affiliated dealer (franchisee). Usually, the franchisee pays a royalty to the franchisor to be using the brand, process, and product. And the franchisor instead supports the franchisee in starting up the activity and providing a set of services as part of the franchising agreement. Franchising models can be heavy-franchised, heavy-chained, or hybrid (franchained).

Coca-Cola Business Model

coca-cola-business-strategy
Coca-Cola follows a business strategy (implemented since 2006) where through its operating arm – the Bottling Investment Group – it invests initially in bottling partners operations. As they take off, Coca-Cola divests its equity stakes, and it establishes a franchising model, as long-term growth and distribution strategy.

Coca-Cola Mission Statement

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Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”

Read Also: McDonald’s Business Model, Coca-Cola Business Model, Coca-Cola Distribution Strategy.

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