McDonald’s Case Study: Sustainability Strategy in the Fast-Food

Industry and Its Implementation Challenges

Yangxuefei Peng

1,＊

, Kairui Wang

and Lixuan Zhao

Rotman Commerce Business School, University of Toronto, Ontario, Canada

School of Management, Guangzhou College of Commerce, Guangzhou, 510320, China

Tianjin Farragut School, Tianjin, China

Keywords: McDonald’s, Business Analysis, Report.

Abstract: McDonald's faces sustainability challenges amidst a fiercely competitive industrial environment. This paper

examines the strategies of McDonald's on sustainability issues, such as sustainable sourcing, waste reduction,

and greenhouse gas emission targets. It also outlines the operational challenges related to high costs, supply

chain complexity, and changing consumer preferences toward healthier and environmentally responsible

options. Using SWOT and Porter's Five Forces, this report identifies its strengths in McDonald's strong

franchise network and its digital innovations while threats emanate from increased competition and pressure

on sustainability. The recommended action plan includes menu innovation, conducting in-depth market

research and developing healthy dishes, adding healthy options, regularly updating the menu, adopting eco-

friendly packaging materials to enhance sustainability efforts, and leveraging digital technology to adapt to

the ever-changing consumer demands. It is suggested to integrate these strategies through a comprehensive

approach to maintain competitive advantage and ensure the brand's long-term relevance.

1 INTRODUCTION

In recent years, the trend of healthy eating has

become increasingly prominent globally, with

consumers' demands for food no longer limited to

satisfying hunger but rather focusing more on

nutrition and health. Among them, the demand for

low-fat, low-sugar, organic, and vegetarian foods has

shown a rapid growth trend. With the increasing

demand for healthy eating and environmental

sustainability among consumers, the quick-service

restaurant industry faces transformations such as

international development, requirements for

environmental protection and sustainable

development, personalized customization, and

technology application (McDonald's Corporation,

2023b).

At the same time, it also needs to address

challenges such as cultural differences. The order

volume growth of traditional fast-food giants, known

for their high-calorie and high-fat offerings, has

slowed down and even declined in some regions. In

contrast, new fast-food brands featuring healthy

ingredients, organic vegetables, and low-sugar sauces

have rapidly emerged, attracting a large number of

young consumers who pursue a healthy lifestyle. As

a global fast-food giant, McDonald's is attempting to

reshape its brand image through menu innovation and

sustainable development practices. However, the

implementation of this strategy involves supply chain

adjustments, high-cost investments, and coordination

with franchisees, posing challenges to its global

operations (Harvard Business School, 1995).

Factors that have contributed to McDonald's

declining sales from maintaining dominance in the

industry include customer dissatisfaction, operational

inefficiencies, and threats of competitors in the fast-

food industry. McDonald's has put in a great effort to

bring back its reputation through modernizing by

menu customization, trying to make it more creative.

Additionally, McDonald's aims at changing its

structure while taking digital initiatives. However, the

company had to grapple with overly complicated

menus, issues with labor, delays in service, and

pressure exerted by franchisees (McDonald's

Corporation, 2023b).

McDonald's is also suffering from global

economic pressure due to currency fluctuation and

food safety scandals while consumer preference is

shifting towards healthier and more high-quality food

124

Peng, Y., Wang, K. and Zhao, L.

McDonald’s Case Study: Sustainability Strategy in the Fast-Food Industry and Its Implementation Challenges.

DOI: 10.5220/0013987100004916

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on Public Relations and Media Communication (PRMC 2025), pages 124-129

ISBN: 978-989-758-778-8

options. The most important issue that McDonald's is

facing now is the rebranding of the company to

recapture consumer loyalty by upgrading their

operational streamline and sustaining long-term

profitability in the competitive fast-food industry.

This report will analyze the challenges McDonald's is

currently facing as well as future opportunities.

2 SITUATIONAL ANALYSIS

It is crucial that McDonald's have a proper

understanding of the prevailing internal and external

factors affecting its business to ensure continued

leadership in the markets. This Situation Analysis

looks at these factors using the SWOT analysis and

Porter's Five Forces framework.

2.1 SWOT Analysis

2.1.1 Strength

McDonald's, as a dominant player in the fast food

industry, also has a powerful global presence

associated with affordability and consistency.

McDonald's also has a well-established franchise

model across over one hundred countries providing

consistent cash flow from franchise fees (Harvard

Business School, 1995). The franchise model is a

significant strength, giving area for rapid growth with

minimal capital investment from the corporation.

This generates a stable revenue stream through

franchise fees while enabling operational agility

through local franchisee management.

McDonald's has also adopted many digital

innovations such as mobile ordering, self-service

kiosks, and partnering with food delivery platforms to

make it more convenient for consumers (McDonald's

Corporation, 2023b). Digital innovation can also

reduce wait time through streamlined operations and

increase the accuracy of orders. McDonald's also

localizes its menu to appeal to broader customer

preferences, even in the international market.

2.1.2 Weakness

McDonald's has a very complex menu which

continuously expands over time across many

categories. Although diversity is a strength that a

corporation has, in McDonald's case, this has led to

many inefficiencies in operations while service time

also increases, and the supply chain becomes more

complex (McDonald's Corporation, 2023b). A large

menu is great, but it causes more preparation steps

and ingredients, which slows down service time—a

key aspect of fast food.

The labor issue that the company is facing, along

with public criticism, particularly with low wages and

poor working conditions, is another major challenge

(McDonald's Corporation, 2023b). How McDonald's

treats workers largely impact service quality and

increases recruitment and training costs, especially

due to low wages. Disagreements between corporate

and franchisees also create tension, making it harder

for McDonald's to address labor issues.

Additionally, one significant weakness

McDonald's faces is the increase in supply costs

caused by rising costs for raw materials,

transportation, packaging, and labor. These factors all

contribute to higher operational expenses, which

directly affect profitability (McDonald's Corporation,

2023b). Due to factors like global demand,

environmental challenges, and geopolitical events,

raw material prices such as meat and vegetables

fluctuate. Transportation costs, sustainable packaging

requirements, and labor shortages further compound

these expenses (McDonald's Corporation, 2023a).

2.1.3 Opportunity

Consumer preferences are also shifting towards

healthier eating, which provides McDonald's a great

opportunity to expand its menu options (McDonald's

Corporation, 2023b). As more consumers become

more health-conscious, McDonald's implements

more organic, plant-based, and lower-calorie options

to meet consumer demand and lifestyle preferences.

Expanding the McCafé brand has been successful in

offering healthier beverage options as well as

reinforcing this strategy.

There is also potential growth in emerging

markets such as Africa, Asia, and Latin America.

With the rise in population income and increasing

urbanization, the demand for fast food is growing.

McDonald's is well positioned to capitalize on these

expanding economies (McDonald's Corporation,

2023b). Digital innovation is also an ongoing

opportunity, with McDonald's continuing investment

in its app, delivery system, and loyalty program

allowing it to maintain competitiveness by improving

consumer experiences.

2.1.4 Threats

McDonald's faces threats from competition with other

traditional fast-food competitors and emerging fast-

casual brands (McDonald's Corporation, 2023b).

Examples of rivals include Burger King, Wendy’s,

and Yum! Brands' Taco Bell. Brands like Chipotle

McDonald’s Case Study: Sustainability Strategy in the Fast-Food Industry and Its Implementation Challenges

125

and Panera Bread emphasize healthier and higher-

quality food, attracting a growing segment of

consumers who are willing to pay more for premium

options. The rise of digital-first and delivery-only

competitors also presents a significant threat, such as

companies like DoorDash and UberEats (McDonald's

Corporation, 2023b).

Environmental concerns are another key threat.

McDonald's has been criticized for excessive use of

plastic and its reliance on meat, which contributes to

a significant carbon footprint (McDonald's

Corporation, 2023a). As consumer demand for

sustainability grows, McDonald's faces pressure to

demonstrate its responsibility and initiative in

creating meaningful environmental improvements.

Economic downturns, such as recessions, could

also reduce consumer spending on discretionary

items like fast food (McDonald's Corporation,

2023b). As disposable income fluctuates, customers

may opt for cheaper alternatives, further impacting

sales.

2.2 Porter’s Five Forces

2.2.1 Threats of New Entrants: Moderate

Barrier to Entry: New entrants face the challenge of

established competitors like McDonald’s who hold

great benefit from brand loyalty and scale. New

Competition: Brands like Shake Shack and Five Guys

have disrupted the market by offering more premium

items. Since McDonald’s already established a global

presence, it limits the treats, but niche competitors

continue to emerge. Capital Requirements: Opening

a single fast-food outlet requires moderate capital, but

replicating McDonald's expansive franchise model

with global supply chain efficiency and brand

recognition is costly and complex. Brand Loyalty:

McDonald’s enjoys strong customer loyalty due to its

reputation for consistency and convenience. New

entrants would need significant marketing

investments to overcome this advantage.

2.2.2 Bargaining Power of Suppliers: Low

McDonald’s also benefits from bargaining power

over suppliers due to its vast volume of sales and also

holding long-term supplier relationships. The

company’s reliance on standardized ingredients

reduces supplier influence and uses its vertical

integration to strengthen its control over the fast-food

supply chain. As a result, suppliers have minimal

power to affect the operation process of McDonald’s.

2.2.3 Bargaining Power of Consumers:

Moderate to High

Consumers have a wide range of choices to select

healthier or fast casual alternatives holding a

moderate to high power because of other rival brands

and delivery flatforms. McDonald’s price sensitive

customer base can easily switch to competitors while

consumer’s preference starts to shift to healthier

menu options which further increase consumer

bargaining power.

2.2.4 Threats of Substitutes: High

Strong substitution threats not only from fast casual

brands like Chipotle and Panera Bread but also from

delivery services such as UberEATS and DoorDash

or from ready to eat meals in grocery stores. These

alternatives provide more convenience and more

variety of healthy dining options that appeal to what

consumers are looking for nowadays which increases

the threats of substitutes.

2.2.5 Industry Rivalry: High

Major players like Burger King, Wendy’s, and Taco

Bell compete aggressively for market share as well,

moreover, premium burger chains like Shake Shack

add to the pressure of industry rivalry. McDonald’s

must continuously innovate and differentiate itself in

this crowded marketplace by engaging in promotions,

price reductions, and launching new products.

Using Porter's Five Forces, it can be gleaned that

McDonald's is threatened by strong rivalry and high

threats of substitute products, driven by fast-casual

alternatives that have disrupted meal delivery service

markets. The bargaining power of suppliers is low

given McDonald's scale, while the bargaining power

of buyers is moderate to high, with many other dining

options. It is paramount that McDonald's keeps

leveraging its strengths for benefit by adapting to

consumer trends and working toward complete

resolution of its operational inefficiencies.

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3 THE CORE CONTENT OF

MCDONALD’S SUSTAINABLE

DEVELOPMENT STRATEGY

3.1 Environmental Protection and

Sustainable Development

Sustainable development has always been a core

keyword in the strategic planning of major

corporations, while environmental protection is the

keyword for development in the 21st century. Since

the 21st century, environmental issues have become

increasingly severe, with white pollution in the

catering industry being a particularly affected area. It

is now the primary objective for the catering industry

to integrate environmental protection with its own

sustainable development. McDonald's most

successful approach in this regard is the adoption of

green packaging, which reduces the use of plastic

packaging in its products.

From July 1, 2020, McDonald's has gradually

phased out the use of plastic straws and switched to

strawless lids. Based on previous data from

McDonald's China, this move is expected to reduce

plastic waste by around 400 tons annually. This is

McDonald's most successful initiative, as it avoids the

difficulties in recycling small and narrow plastic

straws, reduces the cost of each beverage order, and

builds McDonald's brand image as low-carbon and

environmentally friendly, achieving multiple

benefits. While also using eco-friendly packaging to

reduce pollution, McDonald's has taken other

measures, such as using paper takeout bags in 2007,

switching from plastic to paper cups for McFlurry in

2010, and gradually reducing the use of packaging

paper between 2016 and 2018.

3.2 Social Responsibility and Employee

Welfare

The study indicates that employee benefits have a

positive impact on corporate employees (Yang,

2024). There are various ways to demonstrate a

brand's social responsibility, and the most direct

display is through its employee welfare system.

Employee welfare management constitutes a critical

component of modern human resource management

systems, playing a significant role in motivating

employees and enhancing overall organizational

performance (Yang, 2024). In March 2024,

McDonald's China announced that it would provide

more benefits to its employees, aiming to create a

label of happiness in the fast-food industry.

According to public information, McDonald's China

employees will receive more comprehensive medical

insurance, including but not limited to outpatient,

inpatient, and critical illness insurance.

Additionally, the company will introduce a

flexible scheduling system to accommodate the

lifestyle needs of different employees, particularly

those with family responsibilities, which will greatly

reduce their life pressures. This move by McDonald's

China will have a profound impact on the fast-food

industry. On the one hand, it can spark positive

welfare competition, prompting other brands in the

industry to improve employee treatment. On the other

hand, it will help McDonald's China enhance the

quality of its employees, improve overall service

levels, and indirectly enhance consumer experience.

3.3 Health and Nutrition

With the shift in consumers' dietary preferences, the

focus has gradually expanded from "low sugar" and

"low fat" to equal emphasis on "green" and "low

carbon," making the green and low-carbon

transformation of the catering industry increasingly

important (Dong&Yan, 2024). As a high-carbon

emission industry, the catering sector has tremendous

potential for carbon reduction and has become a key

target of dual-carbon policies. In response to the

requirements for low-carbon, green, and circular

development, McDonald's is actively implementing

green and low-carbon transformation strategies,

including building a drive-through restaurant at

Qunming Lake in Shougang Park, Beijing, as the

world's first "zero-carbon, zero-energy restaurant,"

using 100% recyclable building materials for

restaurant renovation, and comprehensively adopting

recyclable packaging (Peninsula Morning Post,

2022).

These initiatives not only meet consumers'

demands for healthy, environmentally friendly, and

sustainable diets but also promote the development of

new consumption patterns such as green catering and

low-carbon catering. Under the trend of continuous

intelligence, greening, organic transformation,

branding, and clustering in the catering industry,

integrating dual-carbon goals and policies into the

operation and management of catering enterprises

will become an inevitable choice for driving the

future development of the catering industry, opening

up new development spaces for the industry

(Dong&Yan, 2024).

McDonald’s Case Study: Sustainability Strategy in the Fast-Food Industry and Its Implementation Challenges

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4 THE IMPLEMENTATION

EFFECTS OF MCDONALD’S

SUSTAINABLE

DEVELOPMENT STRATEGY

4.1 Performance in the Global Market

McDonald's has actively promoted its green

sustainable development strategy globally, which has

not only significantly elevated its international brand

image but also gained recognition from a

considerable portion of young consumers. It has

successfully embedded the concept of a "green brand"

into consumers' minds, enhancing their trust and

loyalty to the brand. Moreover, McDonald's actions

in environmental protection have served as a model

for other companies in the industry, driving the green

development of the entire fast-food sector.

Simultaneously, McDonald's has collaborated

with the U.S. power grid to promote cooperation in

new renewable energy technologies and adopted eco-

friendly new materials, significantly reducing carbon

emissions from its restaurants. Influenced by

McDonald's green supply chain requirements,

upstream suppliers have shifted to more

environmentally friendly production methods. This

has not only improved the sustainability of the entire

industrial chain but also accelerated the development

of related technologies and standards. These efforts

have received widespread support and recognition

from the international community (McDonald's

Corporation, 2023). The positive impact of the

environmental protection strategy is not only

reflected in the brand image but has also significantly

boosted McDonald's market performance.

Despite the overall positive response, McDonald's

sustainable development strategy also faces certain

doubts and challenges. For example, some consumers

believe that the promotion of environmental

protection initiatives outweighs their actual

effectiveness, and the acceptance of green products in

some markets still needs further cultivation. In

response, McDonald's can strengthen transparent

disclosure of actual achievements, use data and case

studies to enhance persuasiveness, and

simultaneously raise consumers' environmental

awareness through educational activities.

4.2 Highlights of Regional Markets

Taking the Chinese market as an example,

McDonald's has actively promoted the construction

and promotion of green restaurants since 2018

(McDonald's China, 2024a). As of October 2023, it

has more than 2,500 LEED-certified green

restaurants, with over half located in second- and

third-tier cities, achieving remarkable energy-saving

and emission-reduction results (McDonald’s China,

2024a). Meanwhile, McDonald's China focuses on

the localization and greening of its supply chain,

sourcing over 95% of its raw materials locally and

encouraging the use of clean energy transport

vehicles to reduce carbon emissions (McDonald's

China, 2024b).

McDonald's China has also actively promoted

green packaging, reduced the use of plastics and

packaging materials, and established a

comprehensive recycling system. By hosting green-

themed events and promoting green products,

McDonald's China has raised consumers' awareness

and participation in green consumption. Against the

backdrop of the Chinese government's strong

emphasis on environmental protection and green

development, McDonald's China has actively

responded to policy calls, seized market

opportunities, promoted its own green development,

and received government support and recognition.

4.3 Strengthening Brand Building and

Consumer Communication

Huang Jingwen, Gong Wenjing, Lin Xin, etc. (2018).

The key to creating a unique image in the hearts of

consumers is that McDonald's needs to formulate a

clearer brand positioning and spread the brand story.

If a brand has a clear positioning and an attractive

story, it will be easier for consumers to remember.

Take McDonald's for example, by releasing its own

story through channels such as Douyin, consumers

can have an in-depth understanding of McDonald's

history, culture, and values. In this way, consumers'

trust in the McDonald's brand will increase.

McDonald's actively participates in social public

welfare activities, which is helpful for establishing a

good corporate image. When consumers see

McDonald's making contributions in social public

welfare, they will naturally have a good impression

and respect for the McDonald's brand, and

McDonald's social recognition and reputation will

also be improved. In terms of communicating with

consumers, it is particularly important for

McDonald's to establish a perfect customer feedback

mechanism. With this mechanism, McDonald's can

timely know consumers' needs and dissatisfaction and

then make timely adjustments and improvements.

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4.4 Flexibly Coping with Global

Economic Fluctuations

The global economic situation is constantly changing

and is very unstable. If McDonald's wants to develop

steadily, it must closely monitor the economic

situation and think of countermeasures in advance.

After all, when the economy fluctuates, consumers'

consumption ability and willingness will be affected.

For example, when the economy is not good,

consumers may go out to eat less or choose cheaper

restaurants. At this time, McDonald's can attract

price-sensitive consumers and stabilize the market

share by adjusting the pricing strategy and flexibly

launching promotional activities and packages.

It was also mentioned when analyzing

McDonald's marketing strategy in China,

McDonald's needs to adjust its business strategy

according to the market environment and consumers'

reactions (Huang & Han, 2022). If McDonald's does

not adjust in time according to the economic situation,

its sales volume may decline significantly when the

economy is not good.

For McDonald's, it is particularly important to

strengthen cost control and financial management,

which can improve the enterprise's ability to resist

risks. When the economy fluctuates, costs also

change, which has a great impact on the enterprise's

profit. By optimizing the procurement process,

reducing operating costs and other effective cost

control methods, McDonald's can maintain a certain

profitability even in a poor economic environment. If

McDonald's does not pay attention to cost control and

financial management, it may get into financial

difficulties when the economy fluctuates and affect

the long-term development of the enterprise.

5 CONCLUSION

McDonald's faces intense competition in the fast-food

industry, including shifting consumer preferences,

and growing demand for sustainability. To maintain

its market leadership, McDonald’s must adapt its

strategies to align with these changes. Status Quo is a

strategy that offers stability, it risks losing relevance

in the market. However, the alternatives focusing on

Menu Innovation and Sustainability provide a path to

attract health-conscious consumers and respond to the

increasing demand for corporate responsibility. By

combining elements of these alternatives,

McDonald’s can reposition itself as a modern,

responsible brand while staying competitive in both

product offerings and operational efficiency.

Investing in healthier menu options and adopting

sustainable practices can let McDonald’s secure

future profitability opportunities and stabilize its

brand reputation.

AUTHORS CONTRIBUTION

All the authors contributed equally and their names

were listed in alphabetical order.

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