A Deciding Product Mix at Mcdonalds

A live project submitted to theAccman

Institute of Management for the partial
fullfilment of the PGDM

Submitted To: Prof.Amit Kumar

Submitted By:
Mohd.Arish

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 Certificate

To Whom It May Concern:

This is to certify that under mentioned students have carried out an original research work
on the topic “Optimization” No part of this project work has already been published for
award of any degree or diploma.

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 Acknowledgement

We like to thanks Mr Ashish the Manager of McDonalds and our Faculty Dr Rakesh
Kumar for helping us in making this project.

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 Contents

S No Title Page No

1 Cover Page 1

2 Certificate 2

3 Acknowledgement 3

4 Contents 4

5 Company Profile 5

6 objective and Problem Formulation 30

7 Profit Maximization and LPP 33

8 Conclusion 35

9 Bibliography 36

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 Company Profile

McDonald's

McDonald's

McDonald's Corporation (NYSE: MCD) is the world's largest chain of fast food
restaurants, serving nearly 47 million customers daily.McDonald's primarily sells
hamburgers, cheeseburgers, chicken products, French fries, breakfast items, soft drinks,
milkshakes, and desserts. More recently, it has begun to offer salads, wraps and fruit.
Many McDonald's restaurants have included a playground for children and advertising
geared toward children, and some have been redesigned in a more 'natural' style, with a
particular emphasis on comfort: introducing lounge areas and fireplaces, and eliminating
hard plastic chairs and tables.

In addition to its signature restaurant chain, McDonald’s Corporation held a minority

interest in Pret A Manger (a UK-based sandwich retailer) until 2008, and owned the
Chipotle Mexican Grill until 2006 and the restaurant chain Boston Market until 2007.
The company has also expanded the McDonald's menu in recent decades to include
alternative meal options, such as salads and snack wraps, in order to capitalize on
growing consumer interest in health and wellness.

Each McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation

itself. The corporations' revenues come from the rent, royalties and fees paid by the
franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew
27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating
income to $3.9 billion.

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Some More Information
Type Public (NYSE: MCD)
Founded May 15, 1940 in San Bernardino, California; McDonald's Corporation, 1955 in
Des Plaines, Illinois
Founder(s) Dick and Mac McDonald McDonald's restaurant concept; Ray Kroc,
McDonald's Corporation founder.
Headquarters Oak Brook, Illinois, USA
Number of locations 31,000+ worldwide
Area served Worldwide
Key people James A. Skinner (Chairman) & (CEO)
Industry Restaurants
Products Fast Food (hamburgers • chicken • french fries • soft drinks • coffee •
milkshakes • salads • desserts • breakfast)
Market cap US$ 60.07 billion (2008)
Revenue ▲ US$ 22.79 billion (2007)
Operating income ▼ US$ 3.879 billion (2007)
Net income ▼ US$ 2.359 billion (2007)
Total assets ▲ US$ 29.391 billion (2007)
Total equity ▼ US$ 15.279 billion (2007)
Employees 400,000 (2008)
Website www.McDonalds.com

History
The McDonald's concept was introduced in Southern California by Dick and Mac
McDonald of Manchester, New Hampshire. It was modified and expanded by their
business partner, Ray Kroc, of Oak Park, Illinois, who later bought out the business
interests of the McDonald's brothers in the concept and went on to found McDonald's
Corporation.

Timeline

1937: Brothers Dick and Mac McDonald open a hot dog stand called the Airdrome at the
airport in Monrovia, California.
1940: The brothers move the Airdrome building to San Bernardino, California, where
they open the first McDonald's restaurant, on U.S. Route 66, at 14th and E St., on May
15. Its menu consists of 25 items, mostly barbecue. As was common at the time, they
employed around 20 carhops. It became a popular and highly profitable teen hangout.
1948: After noting that almost all of their profits came from hamburgers, the brothers
closed the restaurant for several months to implement their innovative "Speedee Service
System", a streamlined assembly line for hamburgers. The carhops are fired, and when
the restaurant reopens it sells only hamburgers, milkshakes, and french fries. At 15 cents,
the burgers are about half as expensive as at standard diners, and they are served

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immediately. The restaurant was extremely successful, and its fame spread by word of
mouth.
1953: The McDonald brothers begin to franchise their restaurant, with Neil Fox the first
franchisee. The second McDonald's opens in Phoenix, Arizona at N.Central Ave and
Indian School Road. It was the first to feature the Golden Arches design; later that year
the original restaurant was rebuilt in the same style.
1953: Third McDonald's restaurant opened in Saginaw, Michigan at the corner of State
Street and N. Center Road, it was rebuilt in 2006 but has stayed at that location since
opening.
1953: Fourth McDonald's restaurant opens, in Downey, California at the corner of
Lakewood Blvd and Florence Avenue, and is the oldest McDonald's restaurant still in
operation.

Fourth McDonald's restaurant in Downey, California, at the corner of Lakewood Blvd

and Florence Ave. It is the oldest McDonald's restaurant still in operation.

1954: Entrepreneur and milkshake-mixer salesman Ray Kroc becomes fascinated by the
McDonald's restaurant during a sales visit, when he learns of its extraordinary capacity
and popularity. Others who had visited the restaurant and come away inspired were
James McLamore, founder of Burger King, and Glen Bell, founder of Taco Bell. After
seeing the restaurant in operation, Kroc approaches the McDonald brothers, who have
already begun franchising, with a proposition to let him franchise McDonald's restaurants
outside the company's homebase of California and Arizona, with himself as the first
franchisee. Kroc works hard to sell McDonald's. He even attempts to prevail on his
wartime acquaintance with Walt Disney, in the failed hope of opening a McDonald's at
the soon-to-be-opened Disneyland.
1955: Ray Kroc founds "McDonald's Systems, Inc." on March 2, as a legal structure for
his planned franchises. Kroc opens the ninth McDonald's restaurant in Des Plaines,
Illinois, in suburban Chicago on April 15. The first day's revenues are $366.12. The
company's literature usually refers to this date as the "beginning" of the company, then
already 15 years old, writing the McDonald brothers out of its history in favor of
"Founder" Kroc. The company still refers to this restaurant as "McDonald's #1". In July,
Ray Kroc opens his second McDonald's restaurant in Fresno, California, operated by Art
Bender, Kroc's first subfranchisee. The Fresno site is referred to as "first McDonald's
restaurant franchised by Ray Kroc" on a plaque on the site, which has been rebuilt to
resemble the 1950s-style restaurants.

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1955: Ray Kroc hires Harry J. Sonneborn as his Chief Financial Officer. Sonneborn
remained a key influence in the McDonald's corporation till his resignation in 1967.
1955: Ray Kroc hires Fred Turner (later CEO and Chairman) as a grillman in his store in
Des Plaines.
1958: McDonald's worldwide sold its 100 millionth hamburger.
1959: The 100th McDonald's restaurant opens in Fond du Lac, Wisconsin.
1959: McDonald's begins billboard advertising.
1960: Kroc's company is renamed "McDonald's Corporation".
1961: The McDonald brothers agree to sell Kroc business rights to their operation for
$2.7 million, a sum that Kroc borrows from a number of investors, including Princeton
University; Kroc considers the sum extreme, and it strains his relationship with the
brothers. In a handshake agreement, the brothers would also receive an overriding royalty
of 1% on the gross sales. At the closing table the brothers told Ray that they were giving
the real estate and rights to the original unit to the founding employees. Ray closed the
transaction, then refused to acknowledge the royalty portion of the agreement because it
wasn't in writing. The brothers keep their original restaurant, but in an oversight they fail
to retain the right to remain a McDonald's franchise. Renamed "The Big M", Kroc drives
it out of business by opening a McDonald's just one block north; he attends the opening.
Had the brothers maintained their original agreement, which granted them 0.5% of the
chain's annual revenues, they or their heirs would have been collecting in excess of $100
million per year today. Had the brothers closed their handshake agreement with Ray,
these royalties would have doubled.
1961: Hamburger University opens in the basement of the Elk Grove Village, Illinois,
McDonald's restaurant Bachelor of Hamburgology degrees went to graduating class of
15.
1962: McDonald's first national magazine ad appears in Life magazine.
1962: The first McDonald's restaurant with seating opens in Denver, Colorado.
1963: One of Kroc's marketing insights is his decision to advertise McDonald's
hamburgers to families and children. Washington, D.C. franchisees John Gibson and
Oscar Goldstein (Gee Gee Distributing Corporation) sponsor a children's show on WRC-
TV called Bozo the Clown, a franchised character played by Willard Scott from 1959
until 1962. After the show was cancelled, Goldstein hires Scott to portray McDonald's
new mascot, named Ronald McDonald. According to Scott, they wanted to pay him in
stock, but Scott decided to take the money. Scott, looking nothing like the familiar
appearance of any McDonaldland character as is known today, appeared in the first three
television advertisements featuring the character. After changing the character's first
name to "Ronald" and replacing Scott with a new actor, and giving him the more familiar
red, white, and yellow clown features, the character eventually spreads to the rest of the
country via an advertising campaign. Years later, an entire cast of "McDonaldland"
characters is developed.
1963: The Filet-O-Fish is introduced in Cincinnati, Ohio, in a restaurant located in a
neighborhood dominated by Roman Catholics who practiced abstinence (the avoidance of
meat) on Fridays. It is the first new addition to the original menu, and goes national the
following year, with fish supplied by Gorton's of Gloucester. See also Lou Groen
1963: McDonald's sells its one billionth hamburger.
1963: The 500th McDonald's restaurant opens in Toledo, Ohio.

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1964: McDonald's issues its first annual report.
1967: The first McDonald's restaurant outside the United States opens in Richmond,
British Columbia.
1967: The chain's stand-alone restaurant design which is still most common today, with
mansard roof and indoor seating, is introduced.
1968: The Big Mac (similar to the Big Boy hamburger), the brainchild of Jim Delligatti,
one of Ray Kroc's earliest franchisees, who by the late 1960s operated a dozen stores in
Pittsburgh, Pennsylvania is first introduced in the Pittsburgh, Pennsylvania market in
1967, before going system/nationwide a year later, following its great local success. The
Hot Apple Pie is also introduced this year.
1968: The 1000th McDonald's restaurant opens in Des Plaines, Illinois.
1970: McDonald's opens in Costa Rica, its third country after the United States and
Canada, and its first restaurant in Latin America.
1970: Having changed hands in 1968, the original "Big M" restaurant closes. It is
demolished two years later, with only part of the sign remaining; this has since been
restored.

An early-1970s McDonald's sign in Austin, Minnesota, showing the number of burgers

sold. From 1969, the number was displayed in billions, increasing with every 5 billion.
When the total reached 100 billion in 1993, the signs of this era were changed to display
99 billion permanently, as there was only room for two digits, though some signs use the
"Billions and Billions Served" tagline.

1971: The first Asian McDonald's opens in July in Japan, in Tokyo's Ginza district.
1971: On August 21, the first European McDonald's outlet opens, in Zaandam (near
Amsterdam) in the Netherlands. The franchisee is Ahold.
1971: The first McDonald's in Germany (Munich) opens in December. It is the first
McDonald's to sell alcohol, as it offers beer. Other European countries follow in the early
1970s.
1971: The first Australian McDonald's opens in the Sydney suburb of Yagoona in
December.
1971: The first McDonald's Playland opens in Chula Vista, California.
1972: The McDonald's system generates $1 billion in sales through 2200 restaurants.
1972: The 2000th McDonald's restaurant opens in Des Plaines, Illinois.
1973: The Quarter Pounder is introduced.

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1973: The Egg McMuffin, invented by Herb Peterson, owner and operator of a Santa
Barbara franchise is introduced to the menu.
1974: On October 12, the first McDonald's in the United Kingdom opens in Woolwich,
southeast London. It is the company's 3000th restaurant.
1974: The first Ronald McDonald House opens in Philadelphia, Pennsylvania.
1975: Drive-Thru is introduced in January in Sierra Vista, Arizona in order to serve
meals to soldiers from nearby Fort Huachuca who were not allowed to wear BDUs while
off post except while in a vehicle. The Drive-Thru is later known as "McDrive" in some
countries.
1976: McDonald's pays its first cash dividend.
1977: McDonald's adds a breakfast line to the U.S. menu.
1978: The 5000th McDonald's restaurant opens in Kanagawa, Japan.
1978: Hamburger University celebrates the graduation of its 15,000th student.
1979: The Happy Meal is introduced in the U.S.
1979: The first McDonald's in France opens, in Strasbourg.
1979: The first McDonald's in Southeast Asia opens, in Singapore.
1980: McDonald's introduces the McChicken sandwich, its first poultry item. It flops, and
is removed from the menu, but is later reintroduced after Chicken McNuggets prove
successful.
1980: The 6000th McDonald's restaurant opens in Munich, Germany.
1981: The first Ronald McDonald House outside the U.S. opens in Toronto, Canada.

A McDonalds in a Toronto, Ontario, Canada Wal-Mart store. Notice the maple leaf on
the Golden Arches.

1982: The first McDonald's in Malaysia opens, at Jalan Bukit Bintang, Kuala Lumpur.
1983: The Chicken McNuggets are introduced to the menu and instantly become a
success.
1984: Ray Kroc dies on January 14.
1984: The company is a main sponsor of the 1984 Summer Olympics. Its U.S. restaurants
lose money on the game "When The US Wins, You Win" after the Soviet bloc nations
boycott the Games, leading to a high number of medals won by the U.S (this is later
parodied in an episode of The Simpsons, with Krusty the Klown's Krusty Burger chain
suffering a similar fate).
1984: On 18 July, James Huberty committed the worst mass murder (at the time) in the
US, when he opened fire at the San Ysidro branch, killing 21 people before he was
gunned down by a SWAT team sniper.

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1985: McDonald's opens its first restaurant in Italy, Bolzano.
1988: McDonald's opens its first restaurant in a communist country, in Belgrade,
Yugoslavia (now Serbia). Budapest, Hungary follows in the same year.
1990: On January 31, the first Soviet McDonald's opens, in Moscow. At the time it is the
largest McDonald's in the world . For political reasons, McDonald's Canada is
responsible for this opening, with little input from the U.S. parent company; a wall
display within the restaurant shows the Canadian and Soviet flags. To overcome Soviet
supply problems, the company creates its own supply chain, including farms, within the
USSR. Unlike other foreign investments, the restaurant accepts rubles, not dollars, and is
extremely popular, with waiting lines of several hours common in its early days.
In this year many other McDonald's restaurants opened in Eastern Europe.

1990: In October, the first McDonald's opens in mainland China, in the city and Special
Economic Zone (SEZ) of Shenzhen, Guangdong province.

McDonald's in Sanya, Hainan (China). This one is a soft drink/ice cream stand.

1992: The first McDonald's opens in Africa, in Casablanca, Morocco.

1992: Stella Liebeck receives third-degree burns from coffee purchased at a McDonald's
drive-through. She sued in what became known as the McDonald's coffee case.
1992: Derek Wood, an employee, and two friends rob a McDonald's in Sydney River,
Nova Scotia, killing three and severely injuring another. Wood is serving a life sentence
for his role in the Sydney River McDonald's Murders.
1992: On April 23, the world's largest McDonald's opens in Beijing, China (over 700
seats). Along with adjacent buildings, it is later demolished.
1992: The fried apple pie is replaced with a baked apple pie (fried pies can still be found
today in some locations, see the Fried Apple Pie Locator).
1993: The company launches its first sea-going restaurant aboard the Finnish cruiseferry
Silja Europa, sailing between Helsinki and Stockholm.
1994: The Catalyst Award is given to McDonald's in honour of their program to foster
leadership development in women.
1995: McDonald's receives complaints from franchisees that too many franchises are
being granted, leading to competition among franchisees. McDonald's starts conducting
market impact studies before granting further franchises.
1995: In an effort to cultivate a more "adult" image, McDonald's launches the Arch
Deluxe sandwich with a massive ad campaign. Both the campaign and sandwich fail
miserably and are quickly discontinued.
1996: Following the end of apartheid, the first McDonald's in South Africa opens.

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1996: First McDonald's opens in Belarus, marking the chain's 100th country (by its own
calculation; however, this total included many non-sovereign territories). At the opening
ceremony, the Belarusian militia are accused of brutality toward members of the public
hoping to enter the restaurant in Minsk.
1996: The first Indian McDonald's opens.
1997: McDonald's wins the "McLibel" case, in what many consider to be a Pyrrhic
victory in terms of the company's image. Only about half of the counts are in McDonald's
favour despite enormous legal resources deployed against self-representing defendants.
1997: The McFlurry is invented by a Canadian franchisee.
1998: Jack M. Greenberg succeeds Michael R. Quinlan as CEO.
1999: First McDonald's Restaurant opens in Tbilisi, Georgia. Jack Greenberg is elevated
to Chairman and CEO.
1999: French leftist activist José Bové and others gain worldwide attention when they
destroy a half-built McDonald's franchise in Millau (Aveyron). The incident follows a
European Union ban on American meat imports, on the grounds that they use hormone
treatments; in response the U.S. had increased import duties on French Roquefort cheese
and other European Union products. Bové was sentenced to three months in prison for his
role in the incident.
2000: Eric Schlosser publishes Fast Food Nation, a book critical of fast food in general
and McDonald's in particular.
2000: The company opens its 1000th British store, inside the Millennium Dome.
2001: The FBI reports that employees of Simon Worldwide, a company hired by
McDonald's to provide promotion marketing services for Happy Meals and the
'Millionaire'/'Monopoly' contest, stole winning game pieces worth more than $20 million.
2002: A survey in Restaurants and Institutions magazine ranks McDonald's 15th in food
quality among hamburger chains, highlighting the company's failure to enforce standards
across its franchise network.
2002: McDonald's posts its first quarterly loss ($344m), for the last quarter. It responds to
the stiff competition from other fast-food restaurants, offering higher quality burgers and
more variety, by attempting to move more upmarket by expanding its menu and refitting
restaurants. It announces it is withdrawing from three countries (including Bolivia) and
closing 175 underperforming restaurants.
2002: In October of this year, McDonald's opens the first of 2 corporate stores in Lincoln,
Nebraska to test concept restaurant called "3N1". the concept incorporated a "Sandwich
& Platter" casual dining area, a "bakery and ice cream" area featuring gourmet coffees,
and a traditional McDonald's into one building. The second store is launched
approximately six months later. The concept is spearheaded by Tom Ryan, who was
Executive Vice President and Chief Concept Officer at the time. The concept is
abandoned in less than a year, and Ryan leaves McDonald's to join Quiznos Sub.
2003: James Richard Cantalupo is elected Chairman and Chief Operating Officer,
succeeding Jack M. Greenberg. Just prior to assuming his post Cantalupo shuts down
Project Innovate, a global consulting project that had already spent $170 million of a
projected 5-year budget of $1.2 billion.
2003: McDonald's starts a global marketing campaign which promotes a new healthier
and higher-quality image. The campaign was labeled "i'm lovin' it" and begins
simultaneously in more than 100 countries around the world.

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2003: According to Technomic, a market research firm, McDonald's share of the U.S.
market had fallen three percentage points in five years and was at 15.2%.
2003: The firm reports a $126M USD loss for the fourth quarter .
2003: McDonald's introduces their premium salads, the McGriddles and the chicken
selects.
2004: Morgan Spurlock directs and stars in Super Size Me documentary film in which he
eats nothing but McDonald's food for 30 days to the great detriment of his health.
2004: After the release of Super Size Me, McDonald's does away with their Supersize
options.
2004: Chairman and CEO Jim Cantalupo dies suddenly at the age of 60 in his hotel room
of an apparent heart attack while attending the annual franchisee convention in Las
Vegas, Nevada on April 19th. A 30-year veteran of the organization, Cantalupo had
previously served as President and CEO of McDonald's International. He is credited with
introducing the premium salad line and reformulating Chicken McNuggets to include
leaner, all-white meat.[6][5] Andrew J. McKenna, Sr., a prominent Chicago businessman
and a McDonald's director, is elected Nonexecutive Chairman and Charlie Bell of
Sydney, Australia is elected President and CEO of McDonald's Corporation. A month
later Bell is diagnosed with colorectal cancer during a physical exam required for his new
post and passes away in January of the next year. Like retired chairman and former CEO
Fred L. Turner, Bell began his McDonald's career as a crew member. He was promoted
frequently, serving as the corporation's Chief Operating Officer and as President of both
McDonald's Europe and of the Asia/Pacific, Middle East and Africa Group.
2005: Jim Skinner is elected President and CEO. Skinner began his McDonald's career as
a trainee restaurant manager at a McDonald's in Carpentersville, Illinois in 1971 after
serving nearly ten years with the US Navy.

First McDonald's restaurant in Zamboanga City, Philippines opened February 28, 2005

2005: McDonald's experiments with call centers for drive-through orders. The center,
located in Fargo, North Dakota takes orders from more than a dozen stores in Oregon and
Washington. The experiment is in part motivated by labor costs, since the minimum wage
in North Dakota is over 40% lower than that in Oregon or Washington.
2005: Owing in part to competitive pressure, McDonald's Australia adopts "Made for
you" cooking platform in which the food is prepared from pre-cooked meat after the
customer orders (as opposed to the firm's normal procedure since 1948, in which the food
is cooked then sold as needed). It should become standard practice in all Australian
restaurants by 2007. Some restaurants in New Zealand also follow suit. The practice had
earlier been tested, and abandoned, in the U.S.

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2005: McDonald's in Singapore began their McDelivery service: customers place their
food orders over the phone, and it is delivered to wherever they are. The service is
available 24 hours a day, 7 days a week.
2005: McDonald's opens a Wi-Fi service in selected restaurants with Nintendo for
Nintendo DS.
2005: A fired employee, who was terminated for hitting a female customer, murdered his
former manager at a McDonald's outlet in West Sussex, England. Shane Freer stabbed
Jackie Marshall (57) to death during a children's party at the fast food restaurant she was
supervising. Freer was convicted and sentenced to life in prison by Lewes Crown Court.
2005: Ronald McDonald gets a leaner, sportier look.
2006: McDonald's announces that it will include nutritional information on the packaging
for all products beginning in March and that its upcoming menu changes will emphasize
chicken, salads, and other "fresh foods" rather than hamburgers.
2006: McDonald's and Disney end their 10 year promotional partnership. Split allegedly
mutual although the generally accepted reasons were that McDonald's no longer sees
benefit from sticking with one studio; due to the increased competition from other
studios, as well as having to promote flop films, and Disney no longer wants to be
associated with a company so strongly tied to childhood obesity.
2006: McDonald's begins their "forever young" branding by redesigning their restaurants.
2006: Anna Svidersky was murdered by David Sullivan while working in an Anderson
Road McDonald's in Vancouver, Washington.
2007: McDonald's reintroduces its 42-ounce super-size soda under the name Hugo.
2008: Mcdonald's introduces the Mcskillet burrito. This larger button constants of
scramble eggs, red & green bell peppers, onions potatoes and Red Rojo Salsa and sausage
all wrapped in a warm folor tortilla. Later in the year, Chicken was added.
2008: McDonald's introduces the Chicken Biscuit and the Southern Style Chicken
Sandwich.
2008: In November, McDonald's starts phasing in new designs for their containers. They
also introduced a new menu board design that featured warmer, darker colors, more
realistic photos with the food on plates and drinks in glasses. The design should hit nation
wide come 2009.
2009: McDonald's now serves cappuccinos, mochas, & lattes.

Corporate overview
Facts and figures

McDonald's restaurants are found in 119 countries and territories around the world and
serve nearly 47 million customers each day. McDonald's operates over 31,000 restaurants
worldwide, employing more than 1.5 million people. The company also operates other
restaurant brands, such as Piles Café, and has a minority stake in Pret a Manger. The
company owned a majority stake in Chipotle Mexican Grill until completing its
divestment in October 2006. Until December 2003, it also owned Donatos Pizza. On
August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.

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Types of restaurants

Most standalone McDonald's restaurants offer both counter service and drive-through
service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and
Drive, or McDrive as it is known in many countries, often has separate stations for
placing, paying for, and picking up orders, though the latter two steps are frequently
combined; it was first introduced in Arizona in 1975, following the lead of other fast-
food chains. In some countries "McDrive" locations near highways offer no counter
service or seating. In contrast, locations in high-density city neighborhoods often omit
drive-through service. There are also a few locations, located mostly in downtown
districts, that offer Walk-Thru service in place of Drive-Thru.

Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s
rock-and-roll themed restaurant. In Victoria, British Columbia, there is also a
McDonald's with a 24 carat (100%) gold chandelier and similar light fixtures.

To accommodate the current trend for high quality coffee and the popularity of coffee
shops in general, McDonald's introduced McCafés. The McCafé concept is a café-style
accompaniment to McDonald's restaurants in the style of Starbucks. McCafé is a concept
of McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in
Australia have McCafés located within the existing McDonald's restaurant. In Tasmania
there are McCafés in every store, with the rest of the states quickly following suit. After
upgrading to the new McCafe look and feel, some Australian stores have noticed up to a
60% increase in sales. As of the end of 2003 there were over 600 McCafés worldwide.

Some locations are connected to gas stations/convenience stores, while others called
McDonald's Express have limited seating and/or menu or may be located in a shopping
mall. Other McDonald's are located in Wal-Mart stores. McStop is a location targeted at
truckers and travelers which may have services found at truck stops.

Playgrounds

Some McDonald's in suburban areas and certain cities feature large indoor or outdoor
playgrounds, called "McDonald's PlayPlace" (if indoors) or "Playland" (outdoors). The
first PlayPlace with the familiar crawl-tube design with ball pits and slides was
introduced in 1987 in the USA, with many more being constructed soon after. Some
PlayPlace playgrounds have been renovated into "R Gym" areas.

"R Gyms" are in-restaurant play area that features interactive game zones designed for
children aged 4 to 11. Equipped with stationary bicycles attached to video games, dance
pads, basketball hoops, monkey bars, an obstacle course, and other games which
emphasize physical activity.

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The "R Gym" features the Toddler Zone, an active play environment with age appropriate
games that develop physical coordination and social skills; the Active Zone, designed for
children aged four-to-eight that promotes physical fitness through fun play; the Sports
Zone which features a series of sport oriented activities to promote aerobic exercise for
children aged 9-to-11; the Parent Zone which features seating and provides a monitoring
area for their children; and the Dining Area which allows families to eat.

Redesign

In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of their
restaurants, the first major redesign since the 1970s.

The new design will include the traditional McDonald's yellow and red colors, but the red
will be muted to terra cotta, the yellow will turn golden for a more "sunny" look, and
olive and sage green will be added. To warm up their look, the restaurants will have less
plastic and more brick and wood, with modern hanging lights to produce a softer glow.
Contemporary art or framed photographs will hang on the walls.

The exterior will have golden awnings and a "swish brow" instead of the traditional
double-slanted mansard roof.

The new restaurants will feature areas:

The "linger" zone will offer armchairs, sofas, and Wi-Fi connections.
sssThe "grab and go" zone will feature tall counters with bar stools for customers who eat
alone; Plasma TVs will offer them news and weather reports.
The "flexible" zone will be targeted toward families and will have booths featuring fabric
cushions with colorful patterns and flexible seating.
Different music targeted to each zone.

Business model

McDonald's Corporation earns revenue as an investor in properties, a franchiser of

restaurants, and an operator of restaurants. Approximately 15% of McDonald's
restaurants are owned and operated by McDonald's Corporation directly. The remainder
are operated by others through a variety of franchise agreements and joint ventures. The
McDonald's Corporation's business model is slightly different from that of most other
fast-food chains. In addition to ordinary franchise fees and marketing fees, which are
calculated as a percentage of sales, McDonald's may also collect rent, which may also be
calculated on the basis of sales. As a condition of many franchise agreements, which vary
by contract, age, country, and location, the Corporation may own or lease the properties

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on which McDonald's franchises are located. In most, if not all cases, the franchisee does
not own the location of its restaurants.

The UK business model is different, in that fewer than 30% of restaurants are franchised,
with the majority under the ownership of the company. McDonald's trains its franchisees
and others at Hamburger University in Oak Brook, Illinois.

In other countries, McDonald's restaurants are operated by joint ventures of McDonald's

Corporation and other, local entities or governments.

As a matter of policy, McDonald's does not make direct sales of food or materials to
franchisees, instead organizing the supply of food and materials to restaurants through
approved third party logistics operators.

According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in
the U.S. have at some time been employed by McDonald's. (According to a news piece
on Fox News this figure is one in ten). The book also states that McDonald's is the largest
private operator of playgrounds in the U.S., as well as the single largest purchaser of
beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies with the
culture of the host country.

Controversies
As a prominent example of the rapid globalization of American fast food industry,
McDonald's is often the target of criticism for its menu, its expansion, and its business
practices.

The McLibel Trial, also known as McDonald's Restaurants v Morris & Steel, is an
example of this criticism. In 1990, activists from a small group known as London
Greenpeace (no connection to the international pressure group Greenpeace) distributed
leaflets entitled What's wrong with McDonald's?, criticizing its environmental, health,
and labor record. The corporation wrote to the group demanding they desist and
apologize, and, when two of the activists refused to back down, sued them for libel in one
of the longest cases in British civil law. A documentary film of the McLibel Trial has
been shown in several countries.

In 1999, French anti-globalisation activist José Bové vandalized a half-built McDonald's

to protest against the introduction of fast food in the region.

In 2001, Eric Schlosser's book Fast Food Nation included criticism of the business
practices of McDonald's. Among the critiques were allegations that McDonald's (along
with other companies within the fast food industry) uses its political influence to increase
its profits at the expense of people's health and the social conditions of its workers. The
book also brought into question McDonald's advertisement techniques in which it targets

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children. While the book did mention other fast-food chains, it focused primarily on
McDonald's.

In 2002, vegetarian groups, largely Hindu, successfully sued McDonald's for

misrepresenting their French fries as vegetarian.

Morgan Spurlock's 2004 documentary film Super Size Me said that McDonald's food was
contributing to the epidemic of obesity in society, and that the company was failing to
provide nutritional information about its food for its customers. Six weeks after the film
premiered, McDonald's announced that it was eliminating the super size option, and was
creating the adult happy meal.

Anthony Bourdain on his show, No Reservations, has criticized McDonald's among other
fast-food restaurants for its culinary blandness.

The soya that is fed to McDonald’s chickens is supplied by agricultural giant Cargill and
comes directly from Brazil. Greenpeace alleges that not only is soya destroying the
Amazon rain forest in Brazil, but soya farmers are guilty of further crimes including
slavery and the invasion of indigenous peoples’ lands. The allegation is that McDonald's,
as a client of Cargill's, is complicit in these activities.

Arguments in defense of McDonald's

In response to public pressure, McDonald's has sought to include more healthy choices in
its menu and has introduced a new slogan to its recruitment posters: "Not bad for a
McJob". (The word McJob, first attested in the mid-1980s and later popularized by
Canadian novelist Douglas Coupland in his book Generation X, has become a buzz word
for low-paid, unskilled work with few prospects or benefits and little security.)
McDonald's disputes the idea that its restaurant jobs have no prospects, noting that its
CEO, Jim Skinner, started working at the company as a regular restaurant employee, and
that 20 of its top 50 managers began work as regular crew members. In 2007, the
company launched an advertising campaign with the slogan "Would you like a career
with that?" on Irish television, outlining that their jobs have many prospects.

In a bid to tap into growing consumer interest in the provenance of food, the fast-food
chain recently switched its supplier of both coffee beans and milk. UK chief executive
Steve Easterbrook said: "British consumers are increasingly interested in the quality,
sourcing and ethics of the food and drink they buy". McDonald's coffee is now brewed
from beans taken from stocks that have been certified by the Rainforest Alliance, a
conservation group. Similarly, milk supplies used for its hot drinks and milkshakes have
been switched to organic sources which could account for 5% of the UK's organic milk
output.
McDonald's announced on May 22, 2008 that, in the U.S. and Canada, it will be
introducing cooking oil for its french fries that contains no trans fats. The company will

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use canola-based oil with corn and soy oils by year's end for its baked items, pies and
cookies.

Environmental record

Discarded McDonalds packaging contributes to the urban litter problem in cities

worldwide.

In April 2008, McDonald's announced that 11 of its Sheffield restaurants have been using
a biomass trial that had cut its waste and carbon footprint by half in the area. In this trial,
waste from the restaurants were collected by Veolia Environmental Services and used to
produce energy at a power plant. McDonald's plans to expand this project, although the
lack of biomass power plants in the U.S. will prevent this plan from becoming a national
standard anytime soon. In addition, in Europe, McDonald's has been recycling vegetable
grease by converting it to fuel for their diesel trucks.

Furthermore, McDonald's has been using a corn-based bioplastic to produce containers

for some of their products. Although industries who use this product claim a carbon
savings of 30% to 80%, a Guardian study shows otherwise. The results show that this
type of plastic does not break down in landfills as efficiently as other conventional
plastics. The extra energy it takes to recycle this plastic results in a higher output of
greenhouse gases. Also, the plastics can contaminate waste streams, causing other
recycled plastics to become unsaleable.

The U.S. Environmental Protection Agency has recognized McDonald's continuous effort
to reduce solid waste by designing more efficient packaging and by promoting the use of
recycled-content materials. McDonald's reports that they are committed towards
environmental leadership by effectively managing electric energy, by conserving natural
resources through recycling and reusing materials, and by addressing water management
issues within the restaurant.

When McDonald’s received criticism for its environmental policies in the 1970s, it began
to make substantial progress towards source reductions efforts. For instance, an “average
meal” in the 1970s—a Big Mac, fries, and a drink—required 46 grams of packaging;
today, it requires only 25 grams, allowing a 46 percent reduction. In addition,
McDonald’s eliminated the need for intermediate containers for cola by having a delivery

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system that pumps syrup directly from the delivery truck into storage containers, saving
two million pounds of packaging annually. Overall, weight reductions in packaging and
products, as well as the increased usage of bulk packaging ultimately decreased
packaging by 24 million pounds annually.

Legal cases
McDonald's has been involved in a number of lawsuits and other legal cases, most of
which involved trademark disputes. The company has threatened many food businesses
with legal action unless they drop the Mc or Mac from their trading name. In one
noteworthy case, McDonald's sued a Scottish café owner called McDonald, even though
the business in question dated back over a century (Sheriff Court Glasgow and
Strathkelvin, November 21, 1952).

It has also filed numerous defamation suits. For example, in the McLibel case,
McDonald's sued two activists for distributing pamphlets attacking its environmental,
labor and health records. After the longest trial in UK legal history, McDonald's won a
technical victory for showing that some allegations were untrue. But it was a massive
public relations disaster, since the judge also found that more than half of what was on
the pamphlet was truthful, or were simply the opinions of the activists and therefore non-
prosecutable.

McDonald's has defended itself in several cases involving workers' rights. In 2001 the
company was fined £12,400 by British magistrates for illegally employing and over-
working child labor in one of its London restaurants. This is thought to be one of the
largest fines imposed on a company for breaking laws relating to child working
conditions (R v [2002] EWCA Crim 1094). In April 2007 in Perth, Western Australia,
McDonald's pleaded guilty to five charges relating to the employment of children under
15 in one of its outlets and was fined AU$8,000.

Possibly the most infamous legal case involving McDonald's was the 1994 decision in
The McDonald's Coffee Case.

In a McDonald's American Idol figurine promotion, the figurine that represents "New
Wave Nigel" wears something that closely resembles Devo’s Energy Dome, which was
featured on the band's album cover, Freedom of Choice. In addition to the figurine's
image, it also plays a tune that appears to be an altered version of Devo's song "Doctor
Detroit." Devo copyrighted and trademarked the Energy Dome and is taking legal action
against McDonald's.

Products
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McChicken, Filet-O-Fish, Chicken McNuggets, French fries and fried chicken sold by
McDonald's in Bangkok.

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and

products, French fries, soft drinks, breakfast items, and desserts. In most markets,
McDonald's offers salads and vegetarian items, wraps and other localized fare. Portugal is
the only country with McDonald's restaurants serving soup. This local deviation from the
standard menu is a characteristic for which the chain is particularly known, and one
which is employed either to abide by regional food taboos (such as the religious
prohibition of beef consumption in India) or to make available foods with which the
regional market is more familiar (such as the sale of McRice in Indonesia).

Advertising
McDonald's has for decades maintained an extensive advertising campaign. In addition to
the usual media (television, radio, and newspaper), the company makes significant
use of billboards and signage, sponsors sporting events ranging from Little League
to the Olympic Games, and makes coolers of orange drink with their logo available
for local events of all kinds. Nonetheless, television has always played a central
role in the company's advertising strategy.

To date, McDonald's has used 23 different slogans in United States advertising, as well as
a few other slogans for select countries and regions. At times, it has run into trouble
with its campaigns.

Gallery

21
The Rock N Roll McDonald's in Chicago, Illinois where the company celebrated its 50th
anniversary.

A McDonald's store front in Times Square.

22
The interior of a McCafé concept located in Dublin, Ireland.

The site of the first McDonald's to be franchised by Ray Kroc is now a museum in Des
Plaines, Illinois. The building is a replica of the original, which was the ninth
McDonald's restaurant.

McDonald's in Riga, Latvia.

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McDonald's in Bratislava, Slovakia.

A McDonald's in Meknes, Morocco

A McDonald's delivery vehicle in Seoul, South Korea.

24
A McDonald's in Shenango Township, Pennsylvania just outside of New Castle was
rebuilt in 2007 with the new "Forever Young" look.

A refurbished stand-alone McDonalds in Portsmouth, England. Unlike international

McDonald's, British McDonald's are simply being refurbished rather than rebuilt.

Not-so-traditional storefront of the McDonald's in Times Square.

25
McDonalds in Corfu, Greece

A McDonald's restaurant with a Playplace in Moncton, Canada

26
Global operations

Countries with McDonald's stores

McDonald's has become emblematic of globalization, sometimes referred as the

"McDonaldization" of society. The Economist magazine uses the "Big Mac Index": the
comparison of a Big Mac's cost in various world currencies can be used to informally
judge these currencies' purchasing power parity. Scandinavian countries lead the Big Mac
Index with four of the five most expensive Big Mac's. Norway has the most expensive
Big Mac in the world as of July 2008, whilst the cheapest country is Malaysia.

The brand is known informally as "Mickey D's" (in the US and Canada), "Macky D's" (in
the UK and Ireland), "Mäkkäri" (in Finland), "McDo" (in France, Quebec, the Philippines
and the Kansai region of Japan), "Maccer's" (in Ireland), "Macarrannis" (in Mexico),
"Maccas" (in New Zealand and Australia), "McD's" (in New Zealand), "Donken" (in
Sweden), "de Mac" (in the Netherlands), Mäkkes (in Germany), "Mac" (in Brazil),
"Makku" (in most of Japan; "Makudo" in the Kansai region); "Mek" (in Serbia), "Mekáč"
(in the Czech republic), "Mak-Dak" (in the Russia), Mac (in Portugal) and "MacDon's' (in
Canada).

McDonald's has also acquired derogatory nicknames, such as "McVomit's" (in parts of
America).

Thomas Friedman once said that no country with a McDonald's had gone to war with
another. However, the "Golden Arches Theory of Conflict Prevention" is not strictly true.
Careful historians point to the 1989 United States invasion of Panama, NATO's bombing
of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia War as exceptions.

27
Some observers have suggested that the company should be given credit for increasing
the standard of service in markets that it enters. A group of anthropologists in a study
entitled Golden Arches East (Stanford University Press, 1998, edited by James L.
Watson) looked at the impact McDonald's had on East Asia, and Hong Kong in
particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to
consistently offer clean restrooms, driving customers to demand the same of other
restaurants and institutions. In East Asia in particular, McDonald's have become a symbol
for the desire to embrace Western cultural norms. McDonald's have recently taken to
partnering up with Sinopec, China's second largest oil company, in the People's Republic
of China, as it begins to take advantage of China's growing use of personal vehicles by
opening numerous drive-thru restaurants. The only countries in Europe not to have
McDonald's stores are Albania, Armenia, Bosnia and Herzegovina and the Vatican City.

Global locations

• Argentina • Ecuador • Luxembourg • Slovakia

• Australia • Egypt • Macedonia • Slovenia
• Austria • El • Malaysia • South
• Azerbaijan Salvador • Malta Africa
• Bahamas • Estonia • Mauritius • South
• Bahrain • Fiji • Mexico Korea
• Bangladesh • Finland • Moldova • Spain
• Belarus • France • Morocco • Sri Lanka
• Belgium • Georgia • Netherlands • Sweden
• Botswana • Germany • Aruba • Switzerlan
• Brazil • Greece • New Zealand d
• Bulgaria • Guatemala • Nicaragua • Syria
• Canada • Guyana • Norway • Thailand
• Chile • Honduras • Oman • Turkey
• People's • Hungary • Pakistan • Ukraine
Republic of • Iceland • Panama • United
China • Italy • Peru Arab Emirates
• Hong Kong • India • Paraguay • United
• Macau • Indonesia • Philippines Kingdom
• Republic of • Ireland • Poland • Cayman
China • Israel • Portugal Islands
• Colombia • Japan • Qatar • Gibraltar
• Costa Rica • Jordan • Romania • United
• Croatia • Kuwait • Russia States
• Cuba • Latvia • Samoa • American
(Guantanamo • Lebanon • Saint Lucia Samoa
Bay Naval • Saudi Arabia • Guam
Base) • Lithuania • Serbia • Puerto
• Cyprus Rico
• Czech • Singapore • United
Republic States Virgin

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• Denmark Islands
• Dominica • Uruguay
• Venezuela
• Dominican • Yemen
Republic
• Zimbabwe

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 Objective and Problem Formulation

Linear Programming Problem

Introduction
• Linear Programming was developed by George B Dantzing in 1947 for solving
military logistic operations.

• Linear Programming (LP) is a mathematical modeling technique useful for the

allocation of limited resources, such as labour, material, machine, time,
warehouse space, capital, energy etc. to several competing activities, such as
products, services, jobs, new projects etc.

• Also, the general LPP calls for optimizing a linear function of variables called the
objective function subject to a set of linear equations and /or inequalities called
the constraints or restrictions.

General Structure of LPP

• Decision Variables

• The Objective Function

• The Constraints

General Structure of LPP

• Decision Variables: The activities that are competing one another for sharing the
resources available. These variables are usually interrelated in terms of utilization
of resources and need simultaneous solutions. All these variables are considered
as continuous, controllable and non-negative.

• The Objective Function: A LPP must have an objective which should be clearly
identifiable and measurable in quantitative terms. It could be of maximization of
profit (sales), minimization of cost etc. The relationship among variables
representing objective must be linear.

• The Constraints: There are always certain limitations or restrictions or

constraints on the use of resources, such as labour, space, raw material, money
etc. that limit the degree to which an objective can be achieved. Such constraints
must be expressed as linear inequalities or equations in terms of decision
variables.

Assumptions of LP Model
• Certainty

• Additivity

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 • Linearity (Proportionality)

• Divisibility (continuity)

Assumptions of LP Model
• Certainty: In all LLP’s, it is assumed that all the parameters; such as availability
of resources, profit contribution of a unit or cost contribution of a unit of decision
variable and computation of resources by a unit decision variable must be known
and fixed. Or we can say that, all the coefficients in this objective function as well
as in the constraints are completely known with certainty and do not change
during the period of study. Thus, the profit per unit of the product,
requirements of material and labour per unit, availability of material etc. are given
and known in the problem. The LP is obviously deterministic in nature.

• Additivity: The value of the obj. function for the given values of decision
variables and the total sum of resources used, must be equal to the sum of the
contributions (profit or loss) earned from each decision variable and the sum of
the resources used by each decision variable respectively. For example, the total
profit earned by the sale of two products A & B must be equal to the sum of the
profits earned separately from A & B. Similarly, the amount of a resource
consumed by A & B must be equal to the sum of resources used for A & B
individually.

• Linearity or Proportionality: This assumption requires the contribution of each

decision variable in both the obj function and the constraints to be directly
proportional to the value of the decision variable. Or we can say that, the amount
of each resource used ( or supplied) and its contribution to the profit (or cost) in
obj. fun must be proportional to the value of each decision variable. For eg., if
production of a one unit of a product uses 5 hrs of a particular resource, then
making 3 units of that product uses 3*5=15 hrs of that resource.

• Divisibility or Continuity: This implies that solution values of the decision

variables and resources can take on any non-negative values, including fractional
values of the decision variables. For eg., it is possible to produce 8.35 quintals of
wheat or 7.453 thousand gallons of a solvent or 43.45 thousand kiloliters of milk.
Such variables are not divisible and hence are to be assigned integer values. When
it is necessary to have integer variables, the integer programming problem is
considered to attain the desired values.

Applications
• Agriculture Applications

• Military Operations

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• Production Management

• Financial Management

• Marketing Management

• Personnel Management

Steps for formulating the LPP

• Identify the Decision Variables

• Identify the Problem data

• Formulate the constraints

Formulate the Objective Function

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 PROFIT MAXIMIZATION LPP

Let X1 is the quantity produced of McAloo Tikki Burger

X2 is the quantity produced of Veg. Pizza Mcpuff
X3 is the quantity produced of Veg. Surprise
X4 is the quantity produced of Chicken Mcgrill
X5 is the quantity produced of Mcveggie Burger
X6 is the quantity produced of McChicken Burger
X7 is the quantity produced of Filet-O-Fish
X8 is the quantity produced of Wrap Chicken Mexican

Objective function :-
Zmax = 450X1 + 45X2 + 35X3 +55X4 + 45X5 + 25X6 +20X7 +10X8
Subject to constraints :-

450X1 + 30X2+ 60X4 +70X5 +30X6 ≤ 800 (Bread)

40X1 + 10X2 + 5X3 +5X5 ≤ 80 (Potato)
20X1 + 5X2 + 2X3+X4+2X5+3X6+2X7+3X8≤50 (Butter)
3X4 + 2X6 + X8≤10 (Chicken)
X7 ≤ 5 (Fish)
2X1 +3X2 +X3 ≤ 7 (Men use in preparing veg. items)
X4 + 2X6 + X7+X8≤6 (Men use in preparing non veg. items)
25X1+15X4+4X5+3X6+2X7 ≤45 (Onions)
X1≥0, X2≥0, X3≥0, X4≥0, X5≥0, X6≥0, X7≥0, X8≥0

X1≥0 , X2≥0 , X3≥0.

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34
 Conclusion
Our project on “The different product mix of Mc. Donalds”
outlet, at Ansal Plaza, Greater Noida was aimed at
maximization of the profit margin by decreasing the costs
input. After careful LPP model formulation, and thereby
solving and analyzing the same we reached a conclusion
that the product mix maximization (Zmax)is at 905.00 and
Iteration of the simplex table came out to be at 7. This
information maybe helpful for formulating future policies
and practices of operation at the above mentioned branch of
Mc. Donalds for maximum profit gain.

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 Bibliography

www.mcdonalds.com

www.wikipedia.com

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