McDonald's Australia: Navigating Challenges in the Retail Sector

This report examines how McDonald's Australia is adapting to the evolving retail landscape amidst increasing competition and changing consumer preferences. It highlights the impact of factors such as increased customer information, online delivery services, and new market entrants on McDonald's business operations. The report notes a decline in sales, outlet visits, and online orders, attributing this to increased awareness of alternative dining options and the convenience offered by online food delivery applications. Furthermore, it emphasizes the need for McDonald's to enhance customer experience, integrate online and physical channels, and implement customer loyalty programs to regain market share. The analysis concludes with recommendations for McDonald's to adapt its business model, leverage social media, and enhance its marketing techniques to thrive in the competitive Australian fast-food retail sector. Desklib provides students access to similar reports and solved assignments.

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Executive Summary
The business environment is highly competitive and hence, it becomes the duty of any business
enterprise to ensure that in order to be successful in the long run, it would be required to change
its operations. The Australian retail landscape has undergone a huge change and for this reason,
all Australian retail businesses would be required to take proper initiatives which would then
assist them to survive. The report throws light on the changing needs and requirements of the
businesses in Australia with an example of the Mc Donald’s food retail chain stores. A brief note
of the business will be provided which shall then be followed by the ways in which their
business has been affected and how should the business alter in order to support these needs.

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Table of Contents
Introduction......................................................................................................................................3
Discussion....................................................................................................................................3
About McDonalds Australia........................................................................................................3
About the change in retail landscape...........................................................................................4
Application to Mc Donald’s........................................................................................................5
The new entrants and their impact...............................................................................................6
Recent trends...............................................................................................................................7
Future Implications......................................................................................................................7
Conclusion.......................................................................................................................................8
Recommendations............................................................................................................................8
References......................................................................................................................................10

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Introduction
With the changing business landscape in the global competitive environment, the retail
scenario in Australia has changed considerably. The retailers are now looking out for newer and
better ways to engage their customers so that they are successfully able to grab a larger market
share. However, as the international players have entered the industry like Amazon and Aldi, the
original retailers have been finding it difficult to survive and are hence, looking out to make use
of efficient technologies to improve their standing (Kpmg.com. 2018). The aim of this analysis is
to examine the changing trends of the retail sector in the country of Australia with the help of an
example of the Mc Donald’s food retail outlets and assess its impact on the business operations
of the retailers. This will be done by making use of various journal articles and peer review
articles. The latter half of the report will be providing recommendations based on which the Mc
Donald’s retail outlet will be able to compete with the other present in the industry.
Discussion
About McDonalds Australia
The McDonalds Australia is originally a fast food company from America and was found
in the year 1940 in California. The business started as a hamburger stand but was later on turned
into a franchisee with the Golden Arches Logo introduced in Arizona. The retail food chain is
the largest outlet by revenue and served more than 69 million customers in more than 100
countries at present. As of 2017, the company has more than 37000 outlets (Verhoef, Kannan
and Inman 2015). Along with their trademark hamburgers, the firm also sells cheeseburgers,
wraps, milkshakes, desserts and soft drinks. The company has very often received a backlash
from the international critics and hence, it has added a healthy meal to the different outlets like
salads, smoothies, fish and fruits. The organization earns its revenue from royalties, rent, fees

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and other related franchisees (Mcdonalds.com.au. 2018). The organization has the second
largest private employer with around 2 million employees. The firm earned a revenue of
$22.820 billion and has outlets in various parts of the globe. However, its tenure in Australia has
been very risky with the outlet pleaded guilty to around five charges of employing under 15
children.
About the change in retail landscape
It cannot be denied that the retail landscape of the fast food segment in Australia has also
undergone a considerable change. This is because, it has been observed that the manner in which
the Australian consumers prefer eating out has changed considerably. However, before
understanding the change which has been taking place on the retail front of the food sector it is
critical to understand the different factors which are leading to the change (So et al. 2016). The
first factor which is leading to the given change can be essentially described as the increase in
customer information. The manner in which the consumers have been gaining information has
changed considerably and now all the details of all the restaurants are available on various
mobile applications like Zomato and Uber Eats using which the consumer can get pricing as well
as other related data for the different plans (Insideretail.com.au. 2018). Hence, this availability of
information has bought about a huge impact on the choices which are made about the customer
food preference. Secondly, the second factor as influencing the change in the retail food sector is
that the availability of online delivery (Thornton, Lamb and Ball 2016). As stated previously, the
major trend which is currently present in the given environment is the availability of the option
of home delivery.
Although various restaurants in the food and beverage segment already had the option of
home delivery, with the increasing presence of the online applications of Zomato and Uber Eats

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along with other local brands, ordering food has become quite easy and now a days the
consumers prefer to have the experience of the restaurant at the convenience of their homes. For
this reason, due to the increased information, increased number of options and the availability of
home delivery technology, the footfall as present in the restaurants have come down
considerably (News.com.au. 2018). Although the restaurants have been coming up with various
offers, they are required to see to it that they are able to provide a lasting experience to the
customers.
Application to Mc Donald’s
Mc Donald’s can be stated to be the number one family fast food chain. However, over
the years, especially after the shift in the retail landscape, this has changed considerably and the
popularity of the chain has come down. This can be largely attributed to the availability of the
information to the different customers who are now aware of the other different restaurants
which have better menu options and facilities than the Mc Donald’s fast food chain restaurant
(Sutton-Brady, Patty and Taylor 2015). Secondly, the increase in the number of applications
which can be used to be provide home delivery have also increased and therefore, the sales at Mc
Donald’s have been impacted severely due to this. Moreover, although Mc Donald’s has an
online delivery option along with a call and delivery option as well, it does not offer adequate
discounts as available in the online food delivery applications (Eloise et al. 2018). The online
food delivery applications have stolen the show and they have been successful in engaging a
wider audience for their business concerns. Along with this, there does not to be a minimum
option plan in case the consumer orders using an online application system. However, with Mc
Donald’s, in case the consumer wants to order using their website, they will be required to order
at least minimum amount.

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The new entrants and their impact
Along with the changing trends and the factors as discussed earlier, there has been a
considerable impact from the different international competitors as well. Previously, there
existed the presence of only a few international food retail chains as present in the country of
Australia. However, this has changed considerably and has had a negative impact on the
business. At present, McDonalds does not enjoy the fast food monopoly and there are various
companies like KFC, Domino’s Pizza, Hungry Jacks , Red Rooster, Pizza Hut, Nando`s and
Zambrero which provide intense competition to the company, Mc Donald’s. In addition to this
there are several smaller food chains as well which are local in nature but have been coming up
with competitive pricing as well as trendy menu options. This menu goes a long way in attracting
the target audience as they now prefer having authentic Australian food made from natural
ingredients and other such facilities other than having junk food from the trendy fast food
restaurant services. For this reason, the Mc Donald’s and its business has been impacted in the
following manner:
 Decrease in sales: The sales of the Mc Donald’s has gone for a serious blow whereby the
sales and the units being sold have decreased considerably.
 Decrease in outlet visits: The number of outlet visits have also been stated to be
decreased. Earlier, the footfall in the outlet used to be quite high, however, recently this is
not the case and the footfall eve during the peak hours have decreased (Choudhary and
Singh 2017).
 Decrease in online orders: The number of online orders which are generally made
through the website and the application have also decreased in number.

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Recent trends
As per the analysis done in the previous section, it can be understood that the trend in the
fast food retail sector in Australia have changed considerably and one might wonder about the
present trends in the chosen market. For this reason, it is crucial to understand the current rules
of the given game. According to Thornton et al. (2016), the different consumers no longer visit
the outlets of the restaurant in order to just order the food and have it but to gain a new
experience and to ensure that the price which they are paying is worth the experience. For this
reason, it will become important for Mc Donald’s to not only compete with the different other
fast food chain retailers in terms of the price and the menu variety to be provided but to compete
in the form of the experience. The ambience of the outlets are required to be altered in order to
meet the new demands of the consumers. Mc Donald’s can try this procedure by linking the
online as well as physical experience in order to ensure success.
Future Implications
Hence, with respect to the future of the given fast food retail chain, it can be stated that
the business model and store design will undergo a huge change (Treadgold and Reynolds 2016).
As the medium and channel routes have undergone a change from the side of the customers and
they prefer ordering online, Mc Donald’s is left with just a few options in order to revive their
business strategy. This means that, either Mc Donald’s would now be required to ensure that
they are now targeting the consumers using various gift cards or loyalty programs or widening
their channel base (Businessinsider.com. 2018). They need to appear more available to the
different consumers and thus, ensure a wider market share. Along with this, Mc Donald’s will

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also be required to ensure that they integrate the best of internet technologies and outlet designs
to ensure success in the long run of the firm.
Conclusion
Therefore, from the given analysis it can be rightfully stated that the shape of retail
landscape has changed extensively in Australia and there have been various developments as
present in the chosen industry. The given report lays down several ways in which the food retail
chain, Mc Donald’s has been affected with respect to the changing trends. The trends have been
discussed extensively along with their impact on the chosen business.
Recommendations
Therefore, from the given analysis it can be rightfully stated that in order to be successful
in the competitive business environment, Mc Donald’s is thereby required to make certain
changes in its Business model which will then assist the business in achieving success in the long
run.
The recommendations have been made as follows:
 Mc Donald’s needs to create certain customer loyalty programs: If Mc Donald’s will be
successfully able to create adequate loyalty and referral programs through its
applications, then just like the online ordering applications, Mc Donald’s will be
successfully able to provide adequate perks to the consumers which can then bring them
closer to the firm and build an everlasting relationship with them.
 It needs to make use of social media tools and technologies in order to create awareness
about the products. Mc Donald’s is required to level up its marketing techniques which
will then assist them to gain a larger market share (Azavedo and Walsh 2018). Moreover,

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it can run various online contests and other such promotional offers to increase the
footfall at the stores and provide the customers through a unique experience.
 Along with this Mc Donald’s can successfully integrate the online as well as physical
outlet experience by providing premium services to the different consumers online. This
can be done by using virtual reality in the stores. Through this technique, the firm will be
able to improve the ambience and also be able to ensure that the customers gain a unique
experience in the stores.

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References
Azavedo, M. and Walsh, J., 2018. How important is Food at Farmers’ Markets? Evidence from
Bardon Farmers’ Market, Brisbane, Queensland, Australia.
Businessinsider.com., 2018. Mcdonalds changes in the past year. [online]. Available at:
https://www.businessinsider.com/mcdonalds-changes-in-the-past-year-2015-5 (Accessed on: 19
Sept. 2018).
Choudhary, S., and Singh, T., 2017. Role of Retail Store Attributes on Store and Customer
Engagement in Food Industry. International Journal of Marketing & Business Communication,
6(3), 1-10.
Eloise, H., Hankey, C., Allman-Farinelli, M., Bauman,A., and Freeman,B., 2018. ‘Buying Salad
Is a Lot More Expensive than Going to McDonalds’: Young Adults’ Views about What
Influences Their Food Choices. Nutrients, 10(8), .
Insideretail.com.au., 2018. Mcdonalds records somber results. [online]. Available at:
https://www.insideretail.com.au/news/mcdonalds-records-somber-results-201701 (Accessed on:
19 Sept. 2018).
Kpmg.com., 2018. Home insights. [Online]. Available at:
https://home.kpmg.com/au/en/home/insights/2018/04/bernard-salt-next-5-years-retail-future-
australia.html (Accessed on: 19 Sept. 2018).
Mcdonalds.com.au., 2018. Mc Donalds Australia. [online]. Available at:
https://mcdonalds.com.au/ (Accessed on: 19 Sept. 2018).

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News.com.au., 2018. Why maccas is on a downward spiral. [online]. Available at:
https://www.news.com.au/finance/business/retail/why-maccas-is-on-a-downward-spiral/news-
story/ddd98347653157be382e83160871e445 (Accessed on: 19 Sept. 2018).
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retail service brands: the role of customer engagement. Journal of Service Management, 27(2),
pp.170-193.
Sutton-Brady, C., Patty,K., and Taylor, T., 2015. A model of supplier-retailer power asymmetry
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Thornton, L.E., Ball, K., Lamb, K.E., McCann, J., Parker, K. and Crawford, D.A., 2016. The
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Thornton, L.E., Lamb, K.E and Ball. K., 2016. Fast food restaurant locations according to
socioeconomic disadvantage, urban–regional locality, and schools within Victoria, Australia.
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Treadgold, A. and Reynolds, J., 2016. Navigating the new retail landscape: a guide for business
leaders. Oxford university press.
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