Who Owns McDonald's? - FourWeekMBA (2024)

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.

Aspect	Description	Analysis	Examples
Products and Services	McDonald’s offers a menu of fast-food items, including burgers, fries, chicken sandwiches, salads, breakfast items, desserts, and beverages. The company is known for its consistency in product quality and taste across its locations worldwide. McDonald’s also provides drive-thru, takeout, and delivery services.	McDonald’s generates revenue primarily through the sale of its fast-food menu items. The company’s focus on consistency and standardized preparation processes ensures a uniform customer experience across its vast network of restaurants. Drive-thru, takeout, and delivery options cater to customers seeking convenience.	Fast-food menu, burgers, fries, chicken sandwiches, salads, breakfast items, desserts, beverages, product consistency, standardized preparation, drive-thru, takeout, delivery services, convenience.
Revenue Streams	McDonald’s revenue primarily comes from company-operated restaurants and franchise fees. Company-operated restaurants earn revenue from food sales, while franchisees pay fees for the right to operate under the McDonald’s brand and system. Rental income from real estate properties owned by the company is another revenue source.	McDonald’s dual revenue model, combining company-operated restaurants and franchise fees, provides a stable income stream. Franchise fees, which include rent and royalties, offer consistent revenue without direct operational costs. Real estate holdings generate rental income, adding to the company’s financial stability.	Revenue from company-operated restaurants, franchise fees (rent and royalties), rental income from real estate properties, dual revenue model, financial stability, consistent income streams.
Customer Segments	McDonald’s serves a diverse customer base, including families, children, teenagers, working professionals, and travelers. The brand’s affordability, convenience, and menu variety make it appealing to a wide demographic. McDonald’s also targets health-conscious consumers with menu options like salads and healthier beverage choices.	McDonald’s caters to a broad customer base seeking affordable, convenient, and familiar fast-food options. Its menu variety accommodates different preferences, including those of health-conscious consumers. The brand’s worldwide presence makes it a convenient choice for travelers and tourists.	Families, children, teenagers, working professionals, travelers, affordability seekers, convenience seekers, health-conscious consumers, menu variety, global presence.
Distribution Channels	McDonald’s distributes its products through its vast network of restaurants, which includes company-operated and franchised locations. The company embraces various service models, including dine-in, drive-thru, takeout, and delivery, to cater to customer preferences. McDonald’s also leverages digital platforms and mobile apps for online orders and payments.	McDonald’s extensive network of restaurants serves as the primary distribution channel for its products. The company adapts to evolving consumer habits by offering multiple service models. Digital platforms and mobile apps enhance convenience and customer engagement, facilitating online orders and payments.	Company-operated and franchised restaurant locations, dine-in, drive-thru, takeout, delivery services, digital platforms, mobile apps, online orders, payment convenience, customer engagement.
Key Partnerships	McDonald’s partnerships include relationships with franchisees who operate its restaurants worldwide. The company collaborates with suppliers to ensure a consistent supply of ingredients and products. McDonald’s also forms promotional partnerships with brands and sponsors events to drive marketing and sales. Delivery service providers are essential partners for expanding the reach of delivery options.	Franchisees are integral partners in expanding McDonald’s presence globally. Supplier partnerships are crucial to maintaining consistent product quality. Promotional collaborations and event sponsorships bolster marketing efforts and drive sales. Partnerships with delivery service providers extend the reach of delivery options, aligning with changing consumer preferences.	Franchisee partnerships, supplier collaborations, promotional partnerships, event sponsorships, delivery service provider partnerships, global expansion initiatives.
Key Resources	Key resources for McDonald’s include its brand recognition and reputation, menu development and product quality standards, supply chain and distribution networks, real estate holdings, restaurant infrastructure, and digital technology infrastructure. McDonald’s iconic brand is a significant asset.	McDonald’s relies on its brand recognition and reputation, menu development expertise, and product quality standards to maintain customer loyalty. The company’s supply chain and distribution networks ensure consistent ingredient availability. Real estate holdings provide long-term revenue streams, and restaurant infrastructure supports operations. Investment in digital technology enhances customer engagement and convenience.	Brand recognition, menu development expertise, product quality standards, supply chain and distribution networks, real estate holdings, restaurant infrastructure, digital technology infrastructure, customer loyalty, operational support.
Cost Structure	McDonald’s incurs various costs, including expenses related to food and beverage ingredients, labor (staff salaries and benefits), rent and maintenance of restaurant properties, marketing and advertising campaigns, technology investments, franchise support, and administrative overhead. Food costs and labor are significant operational expenses.	Costs associated with McDonald’s operations encompass food and beverage ingredient expenses, labor costs (staff compensation), rent and maintenance of restaurant properties, marketing and advertising campaign expenditures, technology investments, franchise support, and administrative overhead. Food costs and labor represent substantial operational expenses in the fast-food industry.	Food ingredient costs, labor expenses, rent and maintenance costs, marketing and advertising campaign expenditures, technology investments, franchise support costs, administrative overhead, operational expenses, fast-food industry cost structure.
Competitive Advantage	McDonald’s competitive advantage lies in its strong brand recognition, global presence, and standardized menu offerings. The company’s ability to maintain consistency in product quality and taste across locations enhances customer trust. McDonald’s adaptability to changing consumer preferences, such as healthier menu options and digital ordering, ensures its continued relevance in the fast-food industry.	McDonald’s stands out with its powerful brand recognition, extensive global reach, and menu consistency. Consistency in product quality and taste builds customer trust and loyalty. The company’s agility in responding to shifting consumer preferences, including healthier menu choices and digital convenience, secures its position in the competitive fast-food landscape.	Strong brand recognition, global presence, standardized menu offerings, product quality consistency, customer trust, adaptability to consumer preferences, fast-food industry competitiveness.

Table of Contents

McDonald’s Board of Directors

McDonald’s compensation structure

As for most listed companies, the executive team is primarily rewarded via a performance-based compensation structure.

For some context, in 2021, most of the CEO’s compensation was performance-based.

Of course, to make the performance-based compensation as much as possible, tied to the company’s actual growth, to align short and long-term, the company looks at various metrics.

Some of these key performance indicators, which make up performance-based compensation, are:

Operating Income Growth.
Systemwide Sales Growth.
Human Capital Metrics.
EPS Growth.
ROIC.
And Share Price Increase.

Origin Story

The American institution that is McDonald’s needs no introduction.

The company is the largest fast-food chain in the world and the second largest private employer after Walmart.

It was also a pioneer of the fast food and franchise business model with over 38,000 restaurants now operating in more than 100 countries.

Let’s take a look at some of the key moments in this celebrated multinational’s history.

The McDonald brothers

In 1926, Brothers Dick and Maurice McDonald left their home in New Hampshire in search of more lucrative employment in California’s emerging motion picture industry. The brothers landed a job at Columbia Movie Studios but found it difficult to make ends meet on a salary of just $25 per week.

When the Great Depression hit, Dick and Maurice observed that the only business making any money was a root beer stand called Wiley’s. In 1937, they shifted into the food service industry and constructed an open-air food stand made from borrowed lumber.

The first McDonald’s restaurant

Sensing that the automobile would afford people more leisure time and mobility, the brothers dismantled their juice stands and moved operations to the desert city of San Bernardino. After enduring many rejections, they eventually secured a $5,000 loan to open their first restaurant.

Known as McDonald’s Barbeque, the drive-in restaurant opened in 1940 and employed women carhops who would jump onto the sideboard of a car to serve customers. The restaurant prospered over the 1940s – particularly after the war – with a team of 20 carhops and a parking lot with room for 125 vehicles.

Despite this success, however, the McDonald’s brothers were not satisfied and wondered how they could prepare menu items as efficiently as possible to maximize profit.

The Speedee Service System

Taking inspiration from the Model T assembly line and prefab homes constructed to fill rapidly expanding suburbs, the brothers introduced the Speedee Service System in around 1948.

The system featured a scaled-back menu of best sellers and a self-service counter that reduced the number of wait staff. To ensure customers received their food quickly, hamburgers were cooked ahead of time and warmed under heat lamps.

These and various other innovations enabled the McDonald’s brothers to charge 15 cents for a hamburger – about 50% less than the competition. After initial hesitation, consumers who were willing to trade choice for speed and price flocked to the restaurant in droves.

Ray Kroc

Ray Kroc – who initially supplied McDonald’s with milkshake machines – was intrigued by the company’s success and wondered whether the brothers’ formula for success could be sold to others in the form of a franchise.

Kroc soon became a franchise agent for the company and established McDonald’s Systems Inc. (now McDonald’s Corporation) in 1955. The first franchises east of the Mississippi were opened soon after, with Kroc also establishing Hamburger University as a way to standardize operations across all stores.

By the 1960s, Kroc’s vision for the company conflicted with the McDonald’s brothers, and he subsequently bought them out for the equivalent of around $23.4 million.

Iconic elements and expansion

The company passed 1000 franchises in the 1960s with the first international outlet opening in Canada in 1967. The 60s also saw the debut of it the golden arches, Ronald McDonald, and the iconic Big Mac which rapidly became the company’s best-selling product

Growth continued unabated over subsequent decades, and at one point in the 1990s, it was said that a new McDonald’s restaurant opened every five hours. Over this period, the company invested more in culturally sensitive menu times and popular Western products such as the Egg McMuffin, Happy Meal, and Chicken McNuggets, among others.

McDonald’s embarked on a brief period of acquisitions in the late 1990s and early 2000s, acquiring Chipotle in 1998 and sandwich chain Pret-A-Manger in 2001. But the company had sold these and others by 2008 to concentrate on its own brand.

Key takeaways:

The American institution that is McDonald’s needs no introduction. The company is the largest fast-food chain in the world and the second largest private employer after Walmart. It was also a pioneer of the fast food and franchise business model.
When the Great Depression hit, Dick and Maurice McDonald observed that the only business making money was a root beer stand called Wiley’s. In 1937, they shifted into the food service industry and constructed an open-air food stand that sold orange juice to travelers and celebrity spotters.
Sensing that the automobile would afford people more leisure time and mobility, the brothers dismantled their juice stand business and opened a restaurant in San Bernardino. They eventually sold the business to Ray Kroc, who introduced the successful franchise model on which the company is still based.