![]() ![]() Our success also depends on the willingness and ability of our independent franchisees to implement major initiatives, which may include financial investment, and to remain aligned with us on operating, promotional and capital-intensive reinvestment plans. Any future instances of food tampering, food contamination or food-borne illness, whether actual or perceived, could adversely affect our brand and reputation as well as our revenues and profits. As a consequence of this issue, results in China, Japan and certain other markets were negatively impacted due to lost sales and profitability, including expenses associated with rebuilding customer trust. In 2014, food quality issues were discovered at a supplier to McDonald’s and other food companies in China. However, food safety events, including instances of food-borne illness, have occurred in the food industry in the past, and could occur in the future. Food safety is a top priority, and we dedicate substantial resources to ensure that our customers enjoy safe food products. Our ability to increase sales and profits depends on our System’s ability to meet expectations for safe food and on our ability to manage the potential impact on McDonald’s of food-borne illnesses and food or product safety issues that may arise in the future. If we are unsuccessful in addressing such adverse commentary or perceptions, our brand and our financial results may suffer. Perceptions may also be affected by third parties presenting or promoting adverse commentary or perceptions of the quick-service category of the IEO segment, our brand and/or our operations, our suppliers or our franchisees. For example, nutritional, health and other scientific studies and conclusions, which constantly evolve and often have contradictory implications, drive popular opinion, litigation and regulation (including initiatives intended to drive consumer behavior) in ways that affect the IEO segment or perceptions of our brand and could be material to our business. ![]() Consumer acceptance of our offerings is subject to change for a variety of reasons. Brand value is based in part on consumer perceptions on a variety of factors, including the nutritional content and preparation of our food, our business practices and the manner in which we source the commodities we use. To be successful in the future, we believe we must preserve, enhance and leverage the value of our brand. Leveraging scale, supply chain infrastructure and risk management strategies, the Company also collaborates with suppliers toward a goal of achieving competitive, predictable food and paper costs over the long term. In addition, the Company works closely with suppliers to encourage innovation, assure best practices and drive continuous improvement. A Food Safety Advisory Council, composed of the Company’s technical, safety and supply chain specialists, as well as suppliers and outside academia, provides strategic global leadership for all aspects of food safety. The quality assurance process not only involves ongoing product reviews, but also on-site supplier visits. The Company has quality centers around the world designed to ensure that its high standards are consistently met. The Company has established and enforces high quality standards and product specifications. The Company and its franchisees purchase food, packaging, equipment and other goods from numerous independent suppliers. This business relationship is supported by an agreement that requires adherence to standards and policies essential to protecting our brand. The business relationship between McDonald’s and its independent franchisees is of fundamental importance to overall performance and to the McDonald’s Brand. We continually review our mix of Company-owned and franchised restaurants to help optimize overall performance, with a goal to be 95% franchised over the long term. ![]() The optimal ownership structure for an individual restaurant, trading area or market (country) is based on a variety of factors, including the availability of individuals with the entrepreneurial experience and financial resources, as well as the local legal and regulatory environment in critical areas such as property ownership and franchising. McDonald’s franchised restaurants are owned and operated under one of the following structures - conventional franchise, developmental license or affiliate. ![]() McDonald’s global system is comprised of both Company-owned and franchised restaurants. The Company operates and franchises McDonald’s restaurants, which serve a locally-relevant menu of quality food and drinks sold at various price points in more than 100 countries. ![]()
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