McDonald's

McDonald's
Public
Traded as
ISIN US5801351017
Industry Restaurants
Genre Fast food restaurant
Founded McDonald's: May 15, 1940 (1940-05-15)
San Bernardino, California
McDonald's Corporation: April 15, 1955 (1955-04-15)
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
Products
Revenue
  • Decrease US$24.622 billion (2016)[2]
  • Increase US$7.745 billion (2016)[2]
  • Increase US$4.686 billion (2016)[2]
Total assets
  • Decrease US$31.024 billion (2016)[2]
Total equity
  • Decrease 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

McDonald's is an American hamburger and fast food restaurant chain. It was founded in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald, in San Bernardino, California. In 1948, they reorganized their business as a hamburger stand, using production line principles. The first McDonald's franchise using the arches logo opened in Phoenix, Arizona in 1953. Businessman Ray Kroc joined the company as a franchise agent in 1955 and subsequently purchased the chain from the McDonald brothers. Based in Oak Brook, Illinois, McDonald's confirmed plans to move its global headquarters to Chicago by early 2018.[3][4]

Today, McDonald's is one of the world's largest restaurant chains, serving approximately 69 million customers daily in over 100 countries[5] across approximately 36,900 outlets as of 2016.[6] McDonald's primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, wraps, and desserts. In response to changing consumer tastes and after facing criticism for the unhealthy nature of their food,[7] the company has expanded its menu to include salads, fish, wraps, smoothies, and fruit. A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The McDonald's Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants. According to a BBC report published in 2012, McDonald's is the world's second largest private employer (behind Walmart with 1.9 million employees), 1.5 million of whom work for franchises.

History

McDonald's corporate logo used from November 18, 1968, to 2006. It still exists at some restaurants
The oldest operating McDonald's restaurant was the third one built, opening in 1953. It is located at 10207 Lakewood Blvd. at Florence Ave. in Downey, California (at 33°56′50″N 118°07′06″W / 33.9471°N 118.1182°W / 33.9471; -118.1182).

The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald at 1398 North E Street at West 14th Street in San Bernardino, California (at 34°07′32″N 117°17′41″W / 34.1255°N 117.2946°W / 34.1255; -117.2946). Their introduction of the "Speedee Service System" in 1948 furthered the principles of the modern fast-food restaurant that the White Castle hamburger chain had already put into practice more than two decades earlier. The first McDonald's with the arches opened in Phoenix, Arizona in March 1953. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger-shaped head whose name was "Speedee". In 1962, the Golden Arches replaced Speedee as the company symbol. A new mascot, Ronald McDonald, was introduced in 1965. The clown-like man having puffed out costume legs appeared in advertising aimed at children.[8]

On May 4, 1961, McDonald's first filed for a U.S. trademark on the name "McDonald's" with the description "Drive-In Restaurant Services", which continues to be renewed. On September 13, 1961, the company filed for a trademark on a new logo—an overlapping, double-arched "M" symbol. By September 6, 1962, this M-symbol was temporarily disfavored, when a trademark was filed for a single arch, which appeared over many of the early McDonald's restaurants in the early years. Although the "Golden Arches" logo appeared in various forms, the present version as a letter "M" did not appear until November 18, 1968, when the company applied for a U.S. trademark.

The present corporation dates its founding to the opening of a franchised restaurant by businessman Ray Kroc in Des Plaines, Illinois on April 15, 1955, the ninth McDonald's restaurant overall; this location was demolished in 1984 after many remodels. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the company became listed on the public stock markets ten years later. Kroc was also noted for aggressive business practices, compelling the McDonald brothers to leave the fast-food industry.

Kroc and the McDonald brothers feuded over control of the business, as documented in Kroc's autobiography. The San Bernardino restaurant was demolished in 1976 (1971, according to Juan Pollo) and the site was sold to the Juan Pollo restaurant chain. This area now serves as headquarters for the Juan Pollo chain, as well as a McDonald's and Route 66 museum.[9] With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics, and consumer responsibility.

Corporate overview

Facts and figures

By 1993, McDonald's had sold more than 100 billion hamburgers. The once widespread restaurant signs that boasted the number of sales, such as this one in Harlem, were left at "99 billion" because there was space for only two digits.
The McDonald's in Northport, Alabama commemorates U.S. President Ronald Reagan's visit

McDonald's restaurants are found in 120 countries and territories around the world and serve 68 million customers each day.[10][11] McDonald's operates 36,899 restaurants worldwide, employing more than 375,000 people as of the end of 2016.[6][10] There are currently a total of 5,669 company-owned locations and 31,230 franchised locations, which includes 21,559 locations franchised to conventional franchisees, 6,300 locations licensed to developmental licensees, and 3,371 locations licensed to foreign affiliates, primarily Japan.[6]

Focusing on its core brand, McDonald's began divesting itself of other chains it had acquired during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until October 2006, when McDonald's fully divested from Chipotle through a stock exchange.[12][13] Until December 2003, it also owned Donatos Pizza, and it owned a small share of Aroma Cafe from 1999 to 2001. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.[14]

Notably, McDonald's has increased shareholder dividends for 25 consecutive years,[15] making it one of the S&P 500 Dividend Aristocrats.[16][17] In October 2012, its monthly sales fell for the first time in nine years.[18] In 2014, its quarterly sales fell for the first time in seventeen years, when its sales dropped for the entirety of 1997.[19]

In the United States, it is reported that drive-throughs account for 70 percent of sales.[20][21] McDonald's plans to close 184 restaurants in the United States in 2015, which is 59 more than it plans to open.[22][23] This is the first time McDonald's will have a net decrease in the number of locations in the United States since 1970.[23]

Business model

The company currently owns all of its property – valued at an estimated $16 to $18 billion. However, in recent times, there have been calls to spin off the company's US holdings into a potential real estate investment trust. The company earns a significant portion of its revenue from rental payments from franchisees. These rent payments rose 26 percent between 2010 and 2015, accounting for one-fifth of the company's total revenue at the end of the period.[24] The company announced at its investor conference on November 10, 2015, that it would not spin off its property into a real-estate investment trust. The CEO, Steve Easterbrook discussed that pursuing the REIT option would pose too large a risk to the company's business model.[25]

The McDonald's logo painted on the tail of a Crossair McDonnell Douglas MD-83 in 1999.

The United Kingdom and Ireland business model is different from the U.S, in that fewer than 30 percent of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and management at Hamburger University in Oak Brook, Illinois.[26][27] In other countries, McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other, local entities or governments.[28]

According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. Employees are encouraged by McDonald's Corp. to maintain their health by singing along to their favorite songs in order to relieve stress, attending church services in order to have a lower blood pressure, and taking two vacations annually in order to reduce risk for myocardial infarction.[29] Fast Food Nation also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies to some extent based on the culture of the host country.[30]

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.[31] McDonald's moved into the Oak Brook facility from an office within the Chicago Loop in 1971.[32]

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 former site of Harpo Productions (where the Oprah Winfrey Show and several other Harpo productions taped) and open in early 2018.[3][4]

Board of directors

As of November 2014, the board of directors had the following members:[33]

On March 1, 2015, after being chief brand officer of McDonald's and its former head in the UK and northern Europe, Steve Easterbrook became CEO, succeeding Don Thompson, who stepped down on January 28, 2015.

Global operations

Countries with McDonald's restaurants, showing their first year with its first restaurant
McDonald's on Nathan Road, Kowloon, Hong Kong.

McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. The Economist newspaper uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. Switzerland has the most expensive Big Mac in the world as of July 2015, while the country with the least expensive Big Mac is India[34][35] (albeit for a Maharaja Mac—the next cheapest Big Mac is Hong Kong).[36]

McDonald's, Paulista Avenue, São Paulo, Brazil

Thomas Friedman once said that no country with a McDonald's had gone to war with another.[37][38] However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Exceptions are the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia war. McDonald's suspended operations in its corporate-owned stores in Crimea after Russia annexed the region in 2014.[39] On August 20, 2014, as tensions between the United States and Russia strained over events in Ukraine, and the resultant U.S. sanctions, the Russian government temporarily shut down four McDonald's outlets in Moscow, citing sanitary concerns. The company has operated in Russia since 1990 and at August 2014 had 438 stores across the country.[40] On August 23, 2014, Russian Deputy Prime Minister Arkady Dvorkovich ruled out any government move to ban McDonald's and dismissed the notion that the temporary closures had anything to do with the sanctions.[41]

McDonald's, Old Mahabalipuram Road, Chennai, India

Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East[42] looked at the impact McDonald's had on East Asia and Hong Kong, in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. McDonald's has taken to partnering up with Sinopec, the second largest oil company in the People's Republic of China, as it takes advantage of the country's growing use of personal vehicles by opening numerous drive-thru restaurants.[43] McDonald's has opened a McDonald's restaurant and McCafé on the underground premises of the French fine arts museum, The Louvre.[44]

The company stated it would open vegetarian-only restaurants in India by mid-2013.[45] Foreign restaurants are banned in Bermuda, with the exception of KFC, which was present before the current law was passed. Therefore, there are no McDonald's in Bermuda.[46]

On January 9, 2017, 80% of the franchise rights in the mainland China and in Hong Kong were sold for US$2.080 billion to a consortium of CITIC Limited (for 32%) and private equity funds managed by CITIC Capital (for 20%) and Carlyle (for 20%), which CITIC Limited and CITIC Capital would also formed a joint venture to own the stake.[47]

Countries with 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.[48]

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[49], replacing chicken skin, safflower oil and citric acid found in Chicken McNuggets with pea starch, rice starch and powdered lemon juice. [50]

International menu variations

A McDonald's Ebi Feast meal sold at branches in Singapore, November 2013. McDonald's is known for tailoring its menus in different markets to cater to local tastes

Restaurants in several countries, particularly in Asia, serve soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia, or Ebi (prawn) Burger in Singapore and Japan).

In Germany and some other Western European countries, McDonald's sells beer. In New Zealand, McDonald's sells meat pies, after the local affiliate partially relaunched the Georgie Pie fast food chain it bought out in 1996.

In the United States, after limited trials on a regional basis, McDonald's plans to offer an all-day breakfast menu whenever its restaurants are open, although eggs cannot be cooked at the same time on the same equipment as hamburgers due to different temperature requirements.

Restaurants

Types of restaurants

Counter service in a McDonald's restaurant in Dukhan, Qatar

Most standalone McDonald's restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating.[51] Drive-Thru, Auto-Mac, Pay and Drive, or "McDrive" as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined;[51] it was first introduced in Arizona in 1975, following the lead of other fast-food chains. The first such restaurant in Britain opened at Fallowfield, Manchester in 1986.[52]

McDrive

In some countries, "McDrive" locations near highways offer no counter service or seating.[53] In contrast, locations in high-density city neighborhoods often omit drive-through service.[54] There are also a few locations, located mostly in downtown districts, that offer a "Walk-Thru" service in place of Drive-Thru.[55]

McCafé

A Montevideo McCafé

McCafé is a café-style accompaniment to McDonald's restaurants and is a concept created by McDonald's Australia (also known, and marketed, as "Macca's" in Australia), starting with Melbourne in 1993.[56] As of 2016, most McDonald's in Australia have McCafés located within the existing McDonald's restaurant. In Tasmania, there are McCafés in every restaurant, with the rest of the states quickly following suit.[51] After upgrading to the new McCafé look and feel, some Australian restaurants have noticed up to a 60 percent increase in sales. At the end of 2003, there were over 600 McCafés worldwide.

"Create Your Taste" restaurants

From 2015–2016, McDonald's tried a new gourmet burger service/restaurant concept based on other gourmet restaurants such as Shake Shack and Grill'd. It was rolled out for the first time in Australia during the early months of 2015 and expanded to China, Hong Kong, Singapore, Arabia and New Zealand, with ongoing trials in the US market. In dedicated "Create Your Taste" (CYT) kiosks, customers could choose all ingredients including type of bun and meat along with optional extras. In late 2015 the Australian CYT service introduced CYT salads.

After a person had ordered, McDonald's advised that wait times were between 10–15 minutes. When the food was ready, trained crew ('hosts') brought the food to the customer's table. Instead of McDonald's usual cardboard and plastic packaging, CYT food was presented on wooden boards, fries in wire baskets and salads in china bowls with metal cutlery. A higher price applied.

In November 2016, Create Your Taste was replaced by a "Signature Crafted Recipes" program designed to be more efficient and less expensive.[57]

Other

Some locations are connected to gas stations/convenience stores,[58] while others called McExpress have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in Walmart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops.[59]

In Sweden, customers who order a happy meal can use the meal's container for a pair of happy goggles.[60] The company created a game for the goggles known as "Slope Stars.[60]" McDonald's predicts happy goggles will continue in other countries.[60] In the Netherlands, McDonald's has introduced McTrax that doubles as a recording studio; it reacts to touch.[60] They can create their own beats with a synth and tweak sounds with special effects.[60]

Special diet

A kosher Express McDonald's outlet in the Malha Mall in Jerusalem

The first kosher McDonald's was established in 1997 at the Abasto de Buenos Aires mall in Buenos Aires, Argentina. This is in addition to many kosher branches in Israel.[61][62]

Playgrounds

A McDonald's in Panorama City, Los Angeles, California with a Playplace designed to promote a family-friendly image

McDonald's playgrounds are called McDonald's PlayPlace. Some McDonald's in suburban areas and certain cities feature large indoor or outdoor playgrounds. The first PlayPlace with the familiar crawl-tube design with ball pits and slides was introduced in 1987 in the US, with many more being constructed soon after.

McDonald's Next

McDonald's Next in Admiralty, Hong Kong

McDonald's Next use open-concept design and offer "Create Your Taste" digital ordering. The concept store also offering free mobile device charging and table service after 6:00 pm. The first store open in Hong Kong in December 2015.[63]

2006 redesign

An American McDonald's in Mount Pleasant, Iowa in June 2008; this is an example of the "new" look of American McDonald's restaurants

In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of its restaurants, the first major redesign since the 1970s.[64][65]

The goal of the redesign is to be more like a coffee shop, similar to Starbucks. The design includes wooden tables, faux-leather chairs, and muted colors; the red was muted to terracotta, the yellow was shifted to golden for a more "sunny" look, and olive and sage green were also added.

To create a warmer look, the restaurants have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Many restaurants now feature free Wi-Fi and flat-screen TVs. Other upgrades include double drive-thrus, flat roofs instead of the angled red roofs, and replacing fiber glass with wood. Also, instead of the familiar golden arches, the restaurants now feature "semi-swooshes" (half of a golden arch), similar to the Nike swoosh.[66]

Smoking ban

McDonald's began banning smoking in 1994 when it banned smoking within its 1,400 wholly owned restaurants.[67]

Treatment of employees

A kiosk for placing orders at the Denton House McDonald's in Long Island, New York
A McDonald's employee takes an order in the Philippines

Automation

Since the late 1990s, McDonald's has attempted to replace employees with electronic kiosks which would perform actions such taking orders and accepting money. In 1999, McDonald's first tested "E-Clerks" in suburban Chicago, Illinois, and Wyoming, Michigan, with the devices being able to "save money on live staffers" and attracting larger purchase amounts than average employees.[68]

In 2013, the University of Oxford estimated that in the succeeding decades, there was a 92% probability of food preparation and serving to become automated in fast food establishments.[69] By 2016, McDonald's "Create Your Taste" electronic kiosks were seen in some restaurants internationally where customers could custom order meals. As employees pushed for higher wages in the late-2010s, some believed that fast food companies such as McDonald's would use the devices to cut costs for employing individuals.[70]

Wages

On August 5, 2013, The Guardian revealed that 90 percent of McDonald's UK workforce are on zero hour contracts, making it possibly the largest such private sector employer in the country.[71] A study released by Fast Food Forward conducted by Anzalone Liszt Grove Research showed that approximately 84 percent of all fast food employees working in New York City in April 2013 had been paid less than their legal wages by their employers.[72]

From 2007 to 2011, fast food workers in the US drew an average of $7 billion of public assistance annually resulting from receiving low wages.[73] The McResource website advised employees to break their food into smaller pieces to feel fuller, seek refunds for unopened holiday purchases, sell possessions online for quick cash, and to "quit complaining" as "stress hormone levels rise by 15 percent after ten minutes of complaining."[74] In December 2013, McDonald's shut down the McResource website amidst negative publicity and criticism. McDonald's plans to continue an internal telephone help line through which its employees can obtain advice on work and life problems.[75]

Liberal thinktank the Roosevelt Institute accuses some McDonald's restaurants of actually paying less than the minimum wage to entry positions due to 'rampant' wage theft.[76] In South Korea, McDonald's pays part-time employees $5.50 an hour and is accused of paying less with arbitrary schedules adjustments and pay delays.[77] In late 2015, Anonymous aggregated data collected by Glassdoor suggests that McDonald's in the United States pays entry-level employees between $7.25 an hour and $11 an hour, with an average of $8.69 an hour. Shift managers get paid an average of $10.34 an hour. Assistant managers get paid an average of $11.57 an hour.[78] McDonald's CEO, Steve Easterbrook, currently earns an annual salary of $1,100,000.[79]

Strikes

Fast food workers on strike outside of a McDonald's in St. Paul, Minnesota.

McDonald's workers have on occasions decided to strike over pay, with most of the employees on strike seeking to be paid $15.00.[80] When interviewed about the strikes occurring, former McDonald's CEO Ed Rensi stated: "It's cheaper to buy a $35,000 robotic arm than it is to hire an employee who's inefficient making $15 an hour bagging french fries" with Rensi explaining that increasing employee wages could possibly take away from entry-level jobs.[81] However, according to current McDonald's CEO Steve Easterbrook, increasing wages and benefits for workers saw a 6% increase in customer satisfaction when comparing 2015's first quarter data to the first quarter of 2016, with greater returns seen as a result.[81]

Working conditions

In March 2015, McDonald's workers in 19 US cities filed 28 health and safety complaints with OSHA which allege that low staffing, lack of protective gear, poor training and pressure to work fast has resulted in injuries. The complaints also allege that, because of a lack of first aid supplies, workers were told by management to treat burn injuries with condiments such as mayonnaise and mustard. The Fight for $15 labor organization aided the workers in filing the complaints.[82]

Animal welfare standards

In 2015, McDonald's pledged to stop using eggs from battery cage facilities by 2025. Since McDonald's purchases over 2 billion eggs per year or 4 percent of eggs produced in the United States, the switch is expected to have a major impact on the egg industry and is part of a general trend toward cage-free eggs driven by consumer concern over the harsh living conditions of hens.[83][84] The aviary systems from which the new eggs will be sourced are troubled by much higher mortality rates, as well as introducing environmental and worker safety problems.[85] The high hen mortality rate, which is more than double that of battery cage systems, will require new research to mitigate. The facilities also have higher ammonia levels due to faeces being kicked up into the air. Producers raised concerns about the production cost, which is expected to increase by 36 percent.[86]

McDonald's continues to source pork from facilities that use gestation crates, and in 2012 pledged to phase them out.[87]

Marketing and advertising

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the FIFA World Cup and Olympic Games.[88] Television has played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions.[89]

India

McDonald's began operations in India in 1996. It retained Leo Burnett (India) to provide authentic Indian insights regarding local favorite items, religious-based food taboos, and India's strong vegetarian tradition. Hamburgers are made of lamb or chicken, instead of beef. Local favorite foods are adapted into menu items such as McAloo Tikki, a breaded potato pancake on a bun. To assure vegetarian customers, kitchens are divided into vegetarian and non-vegetarian zones. Advertising tells Indians that McDonald's bright, inviting restaurants do not mean high prices; profit strategy uses low prices to generate high volume sales. Locally McDonald's of India sponsored sports programs and donations to visible charities.[90]

Space exploration

McDonald's and NASA explored an advertising agreement for a planned mission to the asteroid 449 Hamburga; however, the spacecraft was eventually cancelled.[91]

Children's advertising

Sports awards and honors

McDonald's is the title sponsor of the McDonald's All-American Game, all-star basketball games played each year for American and Canadian boys' and girls' high school basketball graduates

Charity

McHappy Day

A Ronald McDonald House collection box in Framingham, Massachusetts

McHappy Day is an annual event at McDonald's, where a percentage of the day's sales go to charity. It is the signature fundraising event for Ronald McDonald House Charities.[92]

In 2007, it was celebrated in 17 countries: Argentina, Australia, Austria, Brazil, Canada, the United States, Finland, France, Guatemala, Hungary, England, Ireland, New Zealand, Norway, Sweden, Switzerland, and Uruguay.

According to the Australian McHappy Day website, McHappy Day raised $20.4 million in 2009. The goal for 2010 was $20.8 million.[93]

McDonald's Monopoly donation

In 1995, St. Jude Children's Research Hospital received an anonymous letter postmarked in Dallas, Texas, containing a $1 million winning McDonald's Monopoly game piece. McDonald's officials came to the hospital, accompanied by a representative from the accounting firm Arthur Andersen, who examined the card under a jeweler's eyepiece, handled it with plastic gloves, and verified it as a winner.[94] Although game rules prohibited the transfer of prizes, McDonald's waived the rule and has made the annual $50,000 annuity payments, even after learning that the piece was sent by an individual involved in an embezzlement scheme intended to defraud McDonald's (see McDonald's Monopoly).

McRefugee

McRefugees are poor people in Hong Kong, Japan, and China who use McDonald's 24-hour restaurants as a temporary hostel. One in five of Hong Kong's population lives below the poverty line. The rise of McRefugees was first documented by photographer Suraj Katra in 2013.[95]

Criticism

A PETA activist dressed as a chicken confronts the manager of the Times Square McDonald's over the company's animal welfare standards

In 1990, activists from a small group known as London Greenpeace (no connection to the international group Greenpeace) distributed leaflets entitled What's wrong with McDonald's?, criticizing its environmental, health, and labor record. The corporation wrote to the group demanding they desist and apologize, and, when two of the activists refused to back down, sued them for libel in one of the longest cases in British civil law. A documentary film of the McLibel Trial has been shown in several countries.[96]

In the late 1980s, Phil Sokolof, a millionaire businessman who had suffered a heart attack at the age of 43, took out full-page newspaper ads in New York, Chicago, and other large cities accusing McDonald's menu of being a threat to American health, and asking them to stop using beef tallow to cook their french fries.[97]

Despite the objections of McDonald's, the term "McJob" was added to Merriam-Webster's Collegiate Dictionary in 2003.[98] The term was defined as "a low-paying job that requires little skill and provides little opportunity for advancement".[99]

In 2001, Eric Schlosser's book Fast Food Nation included criticism of the business practices of McDonald's. Among the critiques were allegations that McDonald's (along with other companies within the fast food industry) uses its political influence to increase its profits at the expense of people's health and the social conditions of its workers. The book also brought into question McDonald's advertisement techniques in which it targets children. While the book did mention other fast-food chains, it focused primarily on McDonald's.

In 2002, vegetarian groups, largely Hindu and Buddhist, successfully sued McDonald's for misrepresenting its French fries as vegetarian, when they contained beef broth.[100]

Morgan Spurlock's 2004 documentary film Super Size Me claimed that McDonald's food was contributing to the increase of obesity in society and that the company was failing to provide nutritional information about its food for its customers. Six weeks after the film premiered, McDonald's announced that it was eliminating the super size option, and was creating the adult Happy Meal.

Screenshot from McDonald's Videogame

In 2006, an unsanctioned McDonald's Videogame was released online. It is parody of the business practices of the corporate giant, taking the guise of a tycoon style business simulation game. In the game, the player plays the role of a McDonald's CEO, choosing whether or not to use controversial practices like genetically altered cow feed, plowing over rainforests, and corrupting public officials. McDonald's issued a statement distancing itself from the game.[101]

In January 2014, it was reported that McDonald's was accused of having used a series of tax maneuvers to avoid taxes in France. The company confirmed that tax authorities had visited McDonald's French headquarters in Paris but insisted that it had not done anything wrong, saying, "McDonald's firmly denies the accusation made by L'Express according to which McDonald's supposedly hid part of its revenue from taxes in France."[102]

Company responses to criticism

Discreet shopfront in historic Stratford-upon-Avon

In response to public pressure, McDonald's has sought to include more healthy choices in its menu and has introduced a new slogan to its recruitment posters: "Not bad for a McJob".[103] The word McJob, first attested in the mid-1980s[98] and later popularized by Canadian novelist Douglas Coupland in his book Generation X, has become a buzz word for low-paid, unskilled work with few prospects or benefits and little security. McDonald's disputes this definition of McJob. In 2007, the company launched an advertising campaign with the slogan "Would you like a career with that?" on Irish television, asserting that its jobs have good prospects.

In an effort to respond to growing consumer awareness of food provenance, the fast-food chain changed its supplier of both coffee beans and milk. UK chief executive Steve Easterbrook said: "British consumers are increasingly interested in the quality, sourcing, and ethics of the food and drink they buy".[104] In a bid to tap into the ethical consumer market,[105] McDonald's switched to using coffee beans taken from stocks that are certified by the Rainforest Alliance, a conservation group. Additionally, in response to pressure, McDonald's UK started using organic milk supplies for its bottled milk and hot drinks, although it still uses conventional milk in its milkshakes, and in all of its dairy products in the United States.[106] According to a report published by Farmers Weekly in 2007, the quantity of milk used by McDonald's could have accounted for as much as 5 percent of the UK's organic milk output.[107]

McDonald's announced on May 22, 2008, that, in the United States and Canada, it would switch to using cooking oil that contains no trans fats for its french fries, and canola-based oil with corn and soy oils, for its baked items, pies and cookies, by year's end.[108][109]

With regard to acquiring chickens from suppliers who use CAK/CAS methods of slaughter, McDonald's says that it needs to see more research "to help determine whether any CAS system in current use is optimal from an animal welfare perspective."[110]

Environmental record

In April 2008, McDonald's announced that 11 of its Sheffield, England restaurants have been engaged in a biomass trial that had cut its waste and carbon footprint by half in the area. In this trial, wastes from the restaurants were collected by Veolia Environmental Services and were used to produce energy at a power plant. McDonald's plans to expand this project, although the lack of biomass power plants in the United States will prevent this plan from becoming a national standard anytime soon.[111] In addition, in Europe, McDonald's has been recycling vegetable grease by converting it to fuel for its diesel trucks.[112]

McDonald's has been using a corn-based bioplastic to produce containers for some of its products. The environmental benefits of this technology are controversial, with critics noting that biodegradation is slow, produces greenhouse gases and that contamination of traditional plastic waste streams with bioplastics can complicate recycling efforts.[113]

In 1990, McDonald's worked with the Environmental Defense Fund to stop using "clam shell" shaped styrofoam food containers to house its food products.[114] 20 years later, McDonald's announced they would try replacing styrofoam coffee cups with an alternative material.[115]

The U.S. Environmental Protection Agency has recognized McDonald's continuous effort to reduce solid waste by designing more efficient packaging and by promoting the use of recycled-content materials.[116] McDonald's reports that it is committed towards environmental leadership by effectively managing electric energy, by conserving natural resources through recycling and reusing materials, and by addressing water management issues within the restaurant.[117]

In an effort to reduce energy usage by 25 percent in its restaurants, McDonald's opened a prototype restaurant in Chicago in 2009 with the intention of using the model in its other restaurants throughout the world. Building on past efforts, specifically a restaurant it opened in Sweden in 2000 that was the first to intentionally incorporate green ideas, McDonald's designed the Chicago site to save energy by incorporating old and new ideas such as managing storm water, using skylights for more natural lighting and installing some partitions and tabletops made from recycled goods.[118]

When McDonald's received criticism for its environmental policies in the 1970s, it began to make substantial progress in reducing its use of materials.[119] For instance, an "average meal" in the 1970s—a Big Mac, fries, and a drink—required 46 grams of packaging; today, it requires only 25 grams, allowing a 46 percent reduction.[120] In addition, McDonald's eliminated the need for intermediate containers for cola by having a delivery system that pumps syrup directly from the delivery truck into storage containers, saving two million pounds (910 tonnes) of packaging annually.[121] Overall, weight reductions in packaging and products, as well as the increased usage of bulk packaging ultimately decreased packaging by twenty-four million pounds (11,000 tonnes) annually.[122]

McDonald's has been involved in a number of lawsuits and other legal cases, most of which involved trademark disputes. The company has threatened many food businesses with legal action unless it drops the Mc or Mac from trading names.

Asia

On September 8, 2009, McDonald's Malaysian operations lost a lawsuit to prevent another restaurant calling itself McCurry. McDonald's lost in an appeal to Malaysia's highest court, the Federal Court.[123]

Australia

In April 2007, in Perth, Western Australia, McDonald's pleaded guilty to five charges relating to the employment of children under 15 in one of its outlets and was fined A$8,000.[124]

In 2016, the Australian Taxation Office revealed that McDonald's Asia-Pacific Consortium had generated $478 million in revenue in 2013–14, but had paid no tax on those earnings whatsoever.[125]

United Kingdom

McDonald's has defended itself in several cases involving workers' rights.

The longest running legal action of all time in the UK was the McLibel case against 2 defendants who criticized a number of aspects of the company. The trial lasted 10 years and called 130 witnesses. The European Court of Human Rights deemed that the unequal resources of the litigants breached the defendants rights to freedom of speech and biased the trial. The result was widely seen as a "PR disaster."[126]

United States

A famous legal case in the US involving McDonald's was the 1994 decision in Liebeck v. McDonald's Restaurants where Stella Liebeck was awarded several million dollars after she suffered third-degree burns after spilling a scalding cup of McDonald's coffee on herself.[127]

Use of genetically modified food

In April 2014, it was reported that McDonald's in Europe will use chicken meat that was produced by using genetically modified animal feed. Greenpeace argues that McDonald's saves less than one Eurocent for each chicken burger and goes down a path not desired by its customers.[128]

See also

References

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