please see 2 attachments  PLEASE READ THE SECOND ATTACHMENT – MCDONALDS CORPORATION AND ANSWER THE 2 QUESTIONS BELOW. 7-9 SENTENCES PER QUESTION. 1. Describe McD

Harvard Business School 9-693-028
Rev. September 23, 1996

The information presented in this case does not necessarily represent the opinion of McDonald’s Corporation.
Thanks are due to Terri Capatosto and Shelby Yastrow of McDonald’s along with Jackie Prince and Fred Krupp
of the EDF. The following provided background material for this case: John F. Love, McDonald’s: Behind the
Arches (New York: Bantam Books, 1986) and Lois Therrien, “McRisky,” Business Week, October 21, 1991.

Professor David Upton and Doctoral Candidate Joshua Margolis prepared this case as the basis for class discussion rather
than to illustrate either effective or ineffective handling of an administrative situation. Data have been disguised.

Copyright © 1992 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No
part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in
any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the
permission of Harvard Business School.

1

McDonald’s Corporation

Whether in Moscow or Massachusetts, the same experience would greet a customer in any of
the 12,611 McDonald’s quick-service restaurants worldwide. McDonald’s had distinguished itself in
the quick-service industry through its remarkable consistency across all units. To competitors and
customers alike, the Golden Arches—the corporate emblem that adorned every restaurant—
symbolized pleasant, fast service and tasty, inexpensive food.

In the United States alone, McDonald’s served over 20 million customers every day.1
Although such a number testified to the restaurant chain’s success, it also suggested a troubling
question for management. With McDonald’s already serving so many customers, how could it
possibly attract more business? External pressures reinforced the dilemma. Demographic trends were
reshaping American eating habits while competitors were attacking the quick-service giant from all
sides. From chains specializing in speed and service, to those offering wider variety and those that
featured deeply discounted menus, McDonald’s faced competitors poised to challenge the industry
leader on all fronts. McDonald’s had built its success on a legendary operating system that amazed
competitors and the financial community by generating an average annual return on equity of 25.2%
from 1965 through 1991, and an average annual earnings growth of 24.1%. However, sales per unit
had slowed between 1990 and 1991, causing management to wonder whether the company’s
operating system, so vital in guaranteeing uniform quality and service at every McDonald’s outlet,
was suited to the new circumstances the company faced.

Consumers were changing: in addition to an