McDonald's Corporation

Date Founded: 1940

Industry: Restaurants

Corporate Headquarters: Chicago, Illinois

Type: Public

McDonald’s Corporation is a chain of fast-food restaurants that was headquartered in Oak Brook, Illinois until corporate operations moved back to Chicago in 2018. It is one of the largest fast-food chains in the world. By 2023 the company operated over 41,800 restaurants in nearly 120 countries, serving, on average, over sixty-eight million customers every day. According to the company, franchisees operated 95 percent of its restaurants worldwide at that time, with the other restaurants under the company's direct control.

McDonald’s was founded in 1940 by two brothers, Richard "Dick" and Maurice "Mac" McDonald, and it was later taken over by businessman Ray Kroc, who turned it into a chain and popularized the franchising concept.

The company’s primary menu item is the hamburger, but McDonald’s has adapted its menus in different countries to cater to local tastes. McDonald’s is also famous for its French fries, children’s meals (called Happy Meals), chicken, fish, and breakfast items.

McDonald’s logo consists of the iconic golden arches, which form an M. The logo originally came about before the age of mass media. The golden arches were built into the building’s exterior in order to announce the restaurant’s presence to potential customers. By the late 1960s, as other avenues for advertising grew, the arches took on a life of their own as a symbol of the company.

History

The first McDonald’s restaurant, called McDonald’s Bar-B-Q, opened in 1940 in San Bernardino, California. Brothers Dick and Mac McDonald ran a drive-in restaurant with a sizeable menu. In 1948 they changed to a self-service drive-in model with a much more limited menu, the principal item being the fifteen-cent hamburger. In 1954 Ray Kroc, who sold Multi-mixers (for making milkshakes) for a living, investigated why McDonald’s was buying large numbers of Multi-mixers. Impressed by the business model and the brothers’ dedication to efficiency and quality, Kroc convinced the two men to let him start a chain of franchises across the country. A few years later, he bought the trademarks, copyrights, recipes, and rights to the McDonald’s name.

Kroc touted four principles—quality, service, cleanliness, and value—that had to be adopted by the chain’s many franchisees. This system’s approach meant that a McDonald’s burger in one part of the country would taste exactly the same as a burger in a completely different region. These principles have remained a part of McDonald’s business philosophy for more than half a century. By 1963 the company had sold over one billion burgers, and by 1993 the number had exceeded one hundred billion.

One reason for the company’s global success over time has been its ability to cater to varying tastes and dietary requirements in different countries. For example, McDonald’s stores in France have traditionally served wine, and in India, McDonald’s does not use beef because a large portion of the country’s population is Hindu.

In late 2014, in response to declining profits in the previous few years, McDonald’s announced plans to restructure its organization in the United States to better cater to customers’ preferences in different regions.

In early 2015 Steve Easterbrook, a British executive, stepped in as McDonald’s new CEO. Partially as a result of the criticism that the company has faced over time regarding the lack of nutritional value in its food, Easterbrook was determined to transform McDonald’s to meet modern dietary trends for high-quality and nutritious foods. Shortly after Easterbrook started at McDonald’s and in response to the growing concern that people were developing resistance to antibiotics due to their widespread use in poultry and livestock, the company announced that it would begin serving chicken that had not been raised with such medicines.

In 2019, the company embraced technology to improve service and labor costs with the implementation of digital kiosks for ordering and partnered with Uber Eats to expand its ability to deliver food to customers. Additionally, McDonald's began to see an increase in sales related to the 2018 decision to switch to using fresh beef quarter-pound burgers instead of frozen. Similarly, the company announced in 2018 that it was removing artificial ingredients from all of the burgers offered, which also extended to the buns and sauces used. In an effort to compete with fast-food chains such as Popeye's, McDonald's had also begun testing a premium chicken sandwich by the end of 2019.

Despite its flexible approach to changing consumer preferences, McDonald's faced multiple setbacks in the early 2020s. In early 2020 the company began to feel the impact of the COVID-19 pandemic, which had spread globally by March of that year and led to lockdowns and restaurant closures in many countries, along with a global recession. The company's profits declined 68 percent in the second quarter of June 2020 compared to the same period in 2019.

Early in 2022, McDonald's joined a number of international chains, including Starbucks, when it decided to close all of its restaurants in Russia following the country's invasion of Ukraine in February of that year. The company had operated in Russia since it opened its first restaurant in Moscow in January 1990 and had roughly 850 locations and 65,000 employees in the country by 2022. The move, which the company said was prompted by humanitarian concerns in the wake of the invasion, cost McDonald's an estimated $1.2 billion in losses as it withdrew from one of its most significant European markets and sold its restaurants to a local owner, who later rebranded and reopened most of the former McDonald's locations.

Despite the loss of its Russian operations, McDonald's continued to expand in subsequent years, with 2023 and 2024 marked by significant growth. In late 2023 the company announced that by 2027, it planned to open 9,000 new locations worldwide.

Impact

McDonald’s has originated a variety of iconic menu items over the years. The most classic is the Big Mac, a triple-decker hamburger with lettuce, onions, American cheese, pickles, and sauce, which was invented by Pittsburgh, Pennsylvania, franchisee Jim Delligatti in the early 1960s. It made its way onto the national McDonald’s menu in 1968, and it is now seen as representing American capitalism. There is even an economic scale called the Big Mac Index, inspired by the sandwich, that was designed to determine how currencies are valued.

In 1962 franchisee Lou Groen invented the Filet-O-Fish in Cincinnati, Ohio, in response to his difficulty selling hamburgers on Fridays to his primarily Catholic customers. Shortly after the federal government published guidelines about cholesterol intake, chicken entered the McDonald’s menu in the early 1980s. The company was concerned that customers would start avoiding beef and was eager to meet their demand with a leaner option. Eventually, 40 percent of McDonald’s sales would come from classic items such as the Big Mac and the Chicken McNugget. Another product, the McRib sandwich, was originally introduced on the menu in 1981, but it was removed in 1985 due to weak sales. However, it has acquired a cultlike following among some consumers and is often added to the menu seasonally in many of the chain’s restaurants.

McDonald’s invested in Chipotle Mexican Grill in 1998 when Chipotle had thirteen stores. McDonald’s eventually came to own over 90 percent of Chipotle and helped it grow to over five hundred stores before divesting its stake in 2006.

McDonald’s engages in philanthropic work. It is the largest corporate partner of the Ronald McDonald House Charities, a nonprofit organization that provides services such as housing near hospitals for families with very ill children, rooms in hospitals for families to rest and regroup, scholarships for children in need, and mobile health care clinics for children. By 2022 there were over 375 Ronald McDonald Houses, more than 265 Family Room programs, and roughly forty-five Care Mobiles worldwide.

All McDonald’s managers and franchise owners are required to complete a weeklong program at the company’s Hamburger University. Hundreds of thousands of people have completed this highly selective program, earning degrees in Hamburgerology. Hamburger University includes modules on customer service and how to run a business, and credits earned there can be used toward a college degree. The school has campuses at McDonald’s Illinois headquarters and also overseas.

McDonald’s has faced controversy in several realms over the years. In 2003 documentary filmmaker Morgan Spurlock did an experiment during which he ate nothing but McDonald’s food for a month, which he documented in his film Super Size Me. During this time, he gained eighteen pounds and suffered severe liver damage, although the results of this experiment, along with Spurlock's methods, later came under scrutiny. Still, the film helped raise awareness about the obesity epidemic in the United States and how McDonald’s and other fast-food chains could be contributing to the problem.

Furthermore, McDonald’s has faced criticism for underpaying its restaurant workers. In late 2012, workers started pushing for higher pay, and in early 2015 the company promised to raise wages for workers at company-owned stores by $1. However, workers argued that this was not enough, and protesters outside the 2015 McDonald’s shareholders’ meeting demanded a $15-per-hour wage. McDonald’s maintains that it has no control over wages at franchised stores. In early 2019, the company announced that it was ending its efforts to lobby against the fight to increase the minimum wage. The company also made attempts to offer workers other benefits; for example, in 2024, McDonald's announced plans to partner with colleges to establish ways for employees to earn college credits through their work that would count toward degrees in hospitality, culinary arts, and other fields.

Through philanthropy and controversy, McDonald’s remained one of the most globally-recognized brands throughout the twenty-first century and continued seeking ways to innovate its restaurants using the latest technology.

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