How McDonald’s Makes Money

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Table of Contents

Introduction
McDonalds’ CEO’s report
Mission statement
Financial health and performance predictability
Conclusion
References

Introduction

McDonalds is a leading company in food service retail. It boasts of more than 33, 000 restaurants, which serve almost 68 million, people daily. These local restaurants are found in 119 countries around the world. McDonalds is a publicly traded hospitality company, and it sells registered securities like stock and bonds to the public, through the stock exchange.

McDonalds has more than 1.7 million employees all over the world, and they occupy the restraint and corporate positions. Jim skinner is the company’s vice chairman and CEO. Most of McDonald’s restaurants are individually owned and, they are locally operated by women and men. In fact, a percentage of more than eighty is owned by individuals. The company’s goal is to become the customer’s favourite in terms of place and service delivery as well as quality (McDonalds, 2012).

McDonalds’ CEO’s report

Jim Skinner, McDonalds CEO, credits McDonalds as having been in business for 55 years, and it has achieved the status of being the most recognised and favourable brands across the globe. Skinner looks at this success as not only a privilege, but also a responsibility (Bartiromo, 2010).

Jim Skinner attributes McDonald’s success to social responsibility, and social responsibility is a piece of McDonald’s heritage. Jim skinner has a record of implementing positive change by partnering, action and record. Skinner affirms that McDonalds will go on using scope, size and influence in order to form a positive change and difference for children, families and societies across the globe.

This step will in turn create value for the company’s stakeholders as well as the company itself. Jim Skinner asserts that McDonalds aims at making a difference by acting in the following five key areas; well- being and nutrition, environmental responsibility, a sustainable supply chain, the community and the employees’ experience (McDonalds, 2012).

According to McDonald’s CEO’s report, the company works to reduce the energy use and to support the community at the restaurant level. At the market and industry level, the company works at evolving the menus, addressing the balance and the use of sustainable sourcing promotion.

Mission statement

McDonald’s mission statement is to be its customer’s favourite place and the way to eat. The mission aligns with the company’s deeds, as the company’s restaurants have managed to become the most preferred, fast food joints. McDonald’s operations are focused across a global strategy referred to as the Plan to Win.

The global strategy centres around customers experience, focusing on people, place, products, price and promotion. This strategy aids the McDonalds Company and restaurants in achieving commitment to continuously enhance customers’ experience by improving their operations (Bartiromo, 2010).

McDonalds Company understands that people want high tasting quality and quality food, and speeds when offering the services since people are always on the move. In line with the company’s mission, McDonalds has managed to provide affordable choices for their customers every day. This has helped the company to gain the customer’s trust and favour, becoming the most preferred restaurants and serving 68 million customers daily.

Financial health and performance predictability

Basing on the 2007- 2010 annual financial reports for the McDonalds, the company’s health is stable. From the balance sheet, it is apparent that the financial health of the McDonalds Company is steady and does not face any risk of collapsing.

Basing on the five year trend from 2007- 2010, the total current assets rose from 3.58B US$ in 2007, to 4.37b US$ in 2010. The total liabilities in 2010 were 17.34B US$, while, the total assets in the same year were 31.98B US$. The cash flow statement shows that the net income before extraordinaire, rose to 4.95B US$ in 2010, from 2.34B US$ in 2007 (Market Watch, 2011).

The income statement shows that the net income of the McDonalds Company has been on the increase from 2007 to 2010. In 2007, it was at 2.34B US$ rising to 5.5B US$ in 2010. The net income growth has also been on the rise from 5.51% in 2009, to 11.26% in 2011 (Market watch, 2011). It is apparent, therefore, that the financial health of the McDonalds Company is not going to suffer a relapse in the near future (Bragg, 2007).

From the annual report, the McDonalds company performance can be predicted in the next five years. Accruing to the fact that the net income growth has been on the rise in the last five successive years, from 5.51% in 2009, to 11.26% in 2011, it is clear that McDonalds will register the same growth in the next five years.

Despite depreciation, the McDonalds has managed to steer itself forward. The total Assets has been on the rise from 29.39B US$ in 2007 to 31.98B US$ in 2010. This has registered a 5.79% total growth of assets in 2010 from -3.16% in 2008. This pace gives room to predict the performance of the Company as promising, when all other factors are constant like inflation.

Conclusion

McDonalds being the leading fast food retailer has proved its power and worth across the globe by having the most joints and commanding the highest clientele. The success is accrued to social responsibility, good leadership and putting the customer’s needs first. Offering a variety of choices for the customers is also another succeeding factor for the McDonalds as well as giving the ownership and management at the local restaurant level.

References

Bartiromo, M. (2010). McDonalds thrives as it sticks to its game plan for success.USA Today. Web.

Bragg, S. (2007). Financial analysis: a controller’s guide. 2nd ed. New Jersey: John Willey & Sons, Inc.

Market Watch. (2011). Annual Financials for McDonald’s Corp.(Wall street journal). Web.

McDonalds. (2012). Vision, responsibility and leadership: tastefully done. Web.

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