MKT 101 - SWOT Final - SWOT analysis on McDonalds McVeggie PDF

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SWOT analysis on McDonalds McVeggie...

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Written Assignment Situation Analysis Report for Scenario - McDonald's Canada - Vegetarian Burger Decision

By Manahil Tirmizi 07 Elizabet Uzel 73 Hamdi Abdulaziz 46 Martin Simo 67

Sec.141

Submitted To: Professor Paul Gillespie Ted Rogers School of Management in partial fulfillment for the requirements for MKT100 – Principles of Marketing

Submitted On: October 22, 2019

Ryerson University

McDonalds SWOT Analysis 1

Strengths ● Financial - McDonald’s has strong financial support meaning introducing a new product will not be a challenge financially for the company ● Financial - Consumer perspective of low cost for high-value food allows the company to sell products at a low rate bringing in more consumers and generating more profit ● Financial - Locations accessibility is convenient as the company has a branch everywhere allowing their consumer market to widen with vegetarians and profit to rise Opportunities ● Social - opens doors to a new consumer market (vegetarians) ● Social - a trend towards anti-animal cruelty has led consumers to turn away from meat towards alternative vegetarian options ● Regulatory - by law, McDonalds is required to state calories and nutritional facts which is beneficial because it will show that vegetarian options are healthier alternatives

Weaknesses ● Management - negative publicity in regard to healthy eating with high fat and carb products ● Management - high staff results in the company needing to hire and train new employees constantly especially when a new item is brought to the menu ● Financial - the introduction of a new product specifically a vegetarian or vegan option cost more to make in comparison to a normal beef burger

Threats ● Economical - Low Vegetarian population results in high prices ● Competition - basic products make the company vulnerable to competition, “beyond meat” partnerships within fast food chains such as A&W pose as a threat to the vegetarian consumer market ● Social - Trend towards healthier eating causes consumers (specifically vegetarians) to steer away from McDonalds due to a bad reputation of unhealthy food

Strengths

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McDonald's is one of the top fast-food restaurants in Canada with a sturdy brand name through nursed product innovations and geographic development. McDonald has been successful in new menus such as McCafé, McFlurries, and also giving customers the add on options. Introducing a non-meat burger would not be a great challenge according to today's Zack stock, "McDonald has a revenue approximately 21 billion, an operating profit of around $8.6 billion, and Its net income from continuing operations was $5.92 billion" and administering the internal financial support to a new product looking at the "image" of the company known for producing new menus or innovations.

McDonald is acknowledged to consist of a range of burgers,

desserts, beverages and healthier menu options. The company provides more inexpensive cost, drawing in more consumers compared to the company's competitors such as Burger King, A&W, Subway, and Harvey's. For instance, the one dollar any size soft drink or coffee or the one free cheeseburger with any purchase. This strategy has been proven to somehow succeed in bringing more customers than previously and generating more sales. It also paved the way for McDonald to establish a different strategy than its other competitors. McDonald has a lot of accessible locations in the country, operating from coast to coast in more than 1,400 restaurants and employs more than ninety thousand employees. With the people progressing towards more health concerns or becoming vegans across the globe and an increase in vegetarian’s population across the nation, the company's convenient spots open across the coast help generate sales as well. According to the examination at Dalhousie University, "there are 2.3 million vegetarians in Canada[...]Another 850,000 people consider themselves vegan. Those two numbers add up to 9.4 percent of the Canadian population.", meaning almost a quarter percentage of Canada's population. Approaching these new consumers, the non-meat burger would generate more sales coming into the company.

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Weaknesses For the past years, McDonalds has been one of the top leaders in the fast food category and have opened up restaurants all over Canada at a rapid pace. McDonald’s idea to launch a new meatless burger poses some weaknesses for the company. As McDonald’s decides to launch, they’re beyond meat burger, they may receive negative publicity. McDonald’s has been recognized in the past as the company that promotes unhealthy eating and has not really paid attention to putting items on the menu that have low calories. McDonalds’ big mac has been around for a very long time and comes in at 520 calories a sandwich, their crispy chicken wrap comes in at 600 calories and their quarter pounder BLT comes in at 650 calories. These items specifically are three of McDonalds’ best-selling items. Therefore, launching a new meatless burger will introduce an item that has less calories on the menu but will not change McDonalds’ image on the brand. However, McDonald’s step to introducing healthy items to its menu is a great push to achieve their goal of getting rid of their “unhealthy image” for the future. Another internal weakness that McDonald’s faces regularly is the hiring of new employees or to train existing employees when new food items come to the menu. The non-meat burger will introduce new ways the burgers are kept, warmed, stored and made so that they can be fresh and delicious. This all is dependent on the workers who learn all there is about the non-meat burger and follow the right orders as in the past with McDonalds employees, they do not show much interest in procedures as their pay is not high enough or if they do not plan on staying with the company long-term. This will set themselves up in the future to hopefully make it easier to train employees and find ways to engage them more for the future. Finally, the new addition of a meatless burger option will cost McDonalds a bit more amount of money to make then a normal beef burger. A meatless burger would cost McDonald’s around three to four dollars to make vs a regular beef burger which costs around fifty cents to one dollar to make. This will mean that even though McDonald’s is planning to introduce new low calorie and vegan option to its menu, they will have to make the meatless burger option on their menu to be a bit more expensive to buy versus a regular beef burger as they are trying to make a profit. For McDonald’s future, this may show the public that McDonald’s is just going to keep getting more and more expensive as they try to have healthy options on their menu.

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Opportunities There are many fast- food chains that have veggie burgers. These fast food chains include KFC, burger king, Harveys and A&W. These are major competitors for McDonald. Creating a veggie option will be a huge opportunity in getting a market share. McDonald will be losing customers to these brands if a vegetarian option is not provided. By selling a vegetarian burger McDonalds will attract the vegetarian market, promote anti-animal cruelty and create a healthier option. When a new product is introduced from a brand it could be a method to expand sales. By diversification McDonald’s will be introducing a new product and opening up to a new market. There is a huge trend of vegetarianism all over the world. This market is also growing within Canada. There are 2.3 vegetarians in Canada according to a research done by Dalhousie University. Almost 10 percent of Canadians consider themselves vegetarian and/or vegan. If McDonald’s starts selling a vegetarian option, vegetarian customers will be added to McDonalds’s consumer market. This will be an opportunity since McDonald’s can also serve vegetarian population with the new burger and expand its market. There is also growing trend against animal cruelty. Many people consume products and brands that are against animal cruelty. McDonalds has made some progression in this category by promoting their cage-free eggs in some counties. However, this is not enough considering the meat they used for burgers and especially chicken burgers. Introducing the veggie burger would attract consumers who are looking for brand that the least animal cruel if not completely against it. With the veggie burger McDonalds can set a high standard in this category compared to other fast food chains and attract new customers who stand by this movement. In Canada food chains need to be able to provide nutrition facts to customers and also display calorie count for each item. Customers often make their decision by looking at the nutrition facts. With the population becoming more health conscious customers want healthier fast-food options. The veggie burger is healthier than the regular burger. There are fewer calories and less saturated fat in the veggie burger. Most veggie burgers contain 1 to 5 grams of saturated fat whereas McDonalds beef burger has anywhere from 3 to 22 grams and chicken burger has 3 to 9 grams. The chicken and beef sandwiches range anywhere between 400 to 800 calories whereas veggie burgers tend to be 330 to 500 calories. When these nutrition facts have to be listed the ones that are healthier appeal to more customers.

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Since every brand has to display these facts and the veggie burger is healthier this option will attract customers to McDonald in order to consume the healthier option. Threats Fast food production is generally considered mass production. This meaning the more your company invests in the labor and capital needed, the cheaper the product becomes. The production levels of a product are based off of the consumer base. When we focus on vegetarian options, products of this category tend to be produced in lower quantities in comparison to mainstream meat products because they have a smaller consumer audience. McDonalds has upheld a reputation as a company that produces the basic fast food consumers want at a lower price. However, this reputation may alter with the introduction of the McVeggie skewing the pricing due to a low vegetarian population. If the market for vegetarians is not large, the production of the McVeggie will be lower meaning producing the item will cost more which is why it will be presented to consumers at a higher price. This poses as a threat to the company because it harms their initial consumer perspective of a company producing good food at a low cost. The external factor of the vegetarian population will negatively affect the company as prices will increase for vegetarian products making the McDonalds menu seem pricier. The price, product, and placement aspects of the marketing mix are essential in this scenario. The products price is based off of its target audience which means the placement or distribution of the product is essential. Allowing the introduction of the McVeggie into communities that are heavily vegetarian based could result in higher demand for the product leading to a lower cost production whereas introduction of the product in areas with minimal vegetarians may result in little to no demand causing production levels and pricing to increase. 8.6% of British Columbia’s population considers themselves vegetarian which is why the McVeggie may do better there in comparison to the Atlantic region that only has 5.2% vegetarian population. Although British Columbia has a strong vegetarian population, it is still minimal in comparison to the non-vegetarian market proving that the vegetarian population throughout Canada is low which poses as a threat to the McVeggie. Another major threat to McDonalds is that their company produces a basic product. McDonalds produces an elastic product making it easily replaceable with any competitor.

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Currently, the McVeggies largest competitor is Beyond Meat. Beyond Meat has partnered up with many fast food chains such as A&W producing vegetarian options that consumers tend to love. This poses as a threat because the external competition of competing fast food chains makes McDonalds vulnerable to losing consumers as the McVeggie is a basic, easily replaceable product. McDonalds also entered into the vegetarian market later than most fast food chains meaning some consumers may stay loyal to brands such as A&W leading McDonalds to have created a non-profitable product. Furthermore, the price increase on the menu may cause consumers to go to producers that are offering the same product at a lower cost. McDonalds will go from being one of the cheapest fast food chains to one that is slightly pricier with the introduction of the McVeggie driving away consumers. Many people are vegetarian due to religious reasoning while others willingly change their dietary lifestyle for a healthier alternative. There are over 3 million vegetarians or vegans within Canada, out of which 850 thousand have willingly chosen this as a healthier life choice. When fast food chains such as McDonalds introduce vegetarian options on their menu their main target audience are consumers who are purely vegetarian and then others who enjoy eating vegetarian meals but are still able to consume other meat options. McDonalds introduction of the McVeggie will be targeted towards the same audience, however, McDonalds is a fast food chain that is constantly associated with an unhealthy image. Over the course of several years McDonalds has been criticized of serving fake, unhealthy food to its consumers. This poses as an external threat to the company because the consumer audience that choose to be vegetarian may steer away from McDonalds due to its unhealthy reputation.

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Recommendation: In Canada, McDonald’s has been providing its customers with a variety of food options since 1967. A non-meat burger has never been on the menu, therefore, introducing a non-meat burger would be beneficial for the company as they expand and explore new options. McDonald’s should call their nonmeat burger, the McVeggie as it follows the branding strategy while letting consumers know that it is a pure vegetarian option. The simplicity of the name allows consumers to understand what they are buying into, while playing along with the general name theme. The company should set the burger at the price of $4.99 because it costs $3 to make a vegetarian burger allowing a profit margin of $2. To ensure the product benefits the company, they should start by introducing the product in locations such as British Columbia where there is a greater vegetarian market. By following through with this the company can test the product in location where consumers are more likely to purchase it and if it is beneficial, expand production to other locations across Canada. When it comes to the launch of the McVeggie, McDonalds should start off the introduction of their new product with a promotional coupon. During the first week of their launch they should offer consumers a free fountain drink with the purchase of a McVeggie. From a consumer perspective, a drink is essential when having a meal making the promotion more appealing. Fountain drinks are a cheap yet efficient way to drive in more consumers and advertise their new product. Our team has concluded that the introduction of a meatless burger is beneficial for the McDonald's Canada company, hence, they should follow through with our recommendation to ensure a profitable new product.

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References Bedford, E. (2019 9). Vegetarian and vegan share in Canada by region 2018. Retrieved October 24/7 Wall St.: In 2019, Should McDonald’s Be Worth More Than All Direct Competitors Combined? (2019, April 29). Retrieved October 20, 2019, from https://search-proquestcom.ezproxy.lib.ryerson.ca/businesspremium/docview/2216343686/310A98F72D2D48A FPQ/1?accountid=13631. 19, 2019, from https://www.statista.com/statistics/817408/percentage-of-vegetarians-and-veganscanada/. Collins, K. (2005, October 14). The best kind of veggie burger. Retrieved from http://www.nbcnews.com/id/9685441/ns/health-diet_and_nutrition/t/best-kind-veggieburger/#.XauMBS0ZNN0.

Better for you? For the planet? How the new plant-based burgers stack up to beef | CBC News. (2019, May 7). Retrieved from https://www.cbc.ca/news/health/meatsplainerbeyond-burgers-1.5125971. Dwyer, M. (2014, January 13). Eating healthy vs. unhealthy diet costs about $1.50 more per day. Retrieved from https://www.hsph.harvard.edu/news/press-releases/healthy-vs-unhealthy-dietcosts-1-50-more/.

Flanagan, R. (2018, July 25). More than 3 million Canadians vegetarian or vegan: study. Retrieved from https://www.ctvnews.ca/canada/more-than-3-million-canadiansvegetarian-or-vegan-study-1.4027606. McDonald's beats fast-food rivals on animal welfare – but it's far from perfect. (2018, February

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22). Retrieved from https://www.worldanimalprotection.ca/news/mcdonalds-beats-fastfood-rivals-animal-welfare-its-far-perfect. McDonald's fights negative image; Chain looks to reshape unhealthy perception. (2016, December 30). Retrieved October 20, 2019, from https://search-proquestcom.ezproxy.lib.ryerson.ca/docview/1855695135?pq-origsite=summon. McMullen, S. C. (2019, April 5). Why are Veggie Burgers so Expensive? Retrieved from https://stevenmcmullen.com/why-are-veggie-burgers-so-expensive/. Mill, F. (2019, October 1). Mcdonald's Corporation. Retrieved October 20, 2019, from https://search-proquestcom.ezproxy.lib.ryerson.ca/businesspremium/docview/1860751909/fulltextPDF/E48020F DEF2049A8PQ/1?accountid=13631. Nutrition and Allergen Information. (n.d.). Retrieved from https://www.kfc.ca/nutrition-and-allergy-info. BK VEGGIE Burger. (n.d.). Retrieved from https://burgerking.ca/content/bk-veggie-burger. Nutrition Calculator & Information: McDonald's Canada. (n.d.). Retrieved from https://www.mcdonalds.com/ca/en-ca/about-our-food/nutrition-calculator.html. University, R. (Ed.). (n.d.). Major Companies. Retrieved October 20, 2019, from http://clients1.ibisworld.ca.ezproxy.lib.ryerson.ca/reports/ca/industry/majorcompanies.asp x?entid=1980#MP7862. Veggie Burger. (n.d.). Retrieved from https://www.fatsecret.ca/caloriesnutrition/harveys/veggie-burger/1-burger.

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