McDonalds case: Failure in new markets

Mcdonald's is undoubtedly one of the leading American fast-food brands in the world and has had a major international presence since the 1950s. People recognize the logo instantly and most have had a burger and fries at some point in their lives as part of an outing with family or friends.

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Its historical rivalry with Burger King has generated inevitable comparisons to choose which of the two brands prepares the tastiest and most varied combos and offers the best value for money. However, the truth is that Mcdonald's has made a name and worldwide popularity that only its competition has achieved with force in recent decades. With so much ground traveled, what could go wrong? But the truth is that not everyone loved fast food.

After an extensive permanence and success of more than 70 years in the market, no one would think that the giant McDonald's is capable of failing in any market segment it is targeting. It turns out that its trading strategy could also fail. This is what happened in Bolivia, and in this new case study, we tell you why it was not successful. Discover the Mcdonald's case.

McDonald's history

Brothers Dick and Mac McDonald's first restaurant was opened in 1940. At that time, the company was called McDonald's Famous Barbecue. In 1948, the founders closed for a few months and then opened a fast-food system to market, especially hamburgers. When the restaurant reopened, it was renamed McDonald's Famous Hamburgers and sold hamburgers, fries, and milkshakes.

Starting in 1953, Mcdonald's created the first restaurant franchises. Neil Fox opened the first one in Arizona, along with the second restaurant. He was the first to use the golden arches logo and shortened his name to simply Mcdonald's. In 1954, Ray Kroc joined the firm and persuaded the Mcdonald's brothers to sell the company's main location. At the same time, he unsuccessfully tried to open a franchise at Disneyland, but Walt Disney would not let him.

Since 1960, the multinational seeks to promote the image that Mcdonald's is a family-oriented product, so they decide to hire actor Willard Scott to play the new mascot, the clown Ronald McDonald. The comedian gained wide popularity, but the company agreed that the actor was not the right fit to play the character.

In the 1970s, the first restaurant in Latin America opens. It was in Costa Rica, the second after it began operating in Canada. Throughout this decade, the most emblematic combos of the brand were created, such as the Big Mac and the Quarter Pounder. Later, in the following decades, it continued its expansion to other countries, opening fast-food restaurants with more and more varieties of combos and promotions.

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The setback of McDonald's in Bolivia

The first fast-food restaurant in Bolivia opened in 1998 and it was a great event that attracted the attention of a large part of the population, hoping that the American franchise would finally bring modernity to the country. From then on, the brand sought to attract customers through new dishes that weren't accepted by consumers.

Now, what triggered the failure of Mcdonald's? One of the main obstacles that caused the fall in Bolivia was the price since it was too high compared to the local gastronomy. Consumers saw no business in spending so much money on an imported hamburger when they could pay less for a menu with fewer calories and more variety.

But the excessive price problem was not the only one, since Mcdonald's bases its strategy on selling the same type of menu in all restaurants. For the industrialized mentality of this multinational, this represented a competitive advantage because they could replicate the characteristic flavor of their popular hamburgers and fries in basically the entire world.

But for Bolivia, a country that is characterized by the rich variety of its typical foods, a strategy that repeats the same elaboration processes does not work in a market like the Bolivian one, which prioritizes the diversity and customization of its products, strongly oriented to the defense of the cultural heritage.

It took 13 years for a new restaurant to open in the country without much success, if we compare that after the failure of Mcdonald's, traditional food began to gain more relevance. The failure of the presence of the foreign brand suggests that Bolivia has managed to reinvent itself after futilely trying to be what it was not.

This failure of the franchise reveals that not all markets are compatible with a given business strategy. For this reason, in cases such as McDonald's, marketing specialists had to investigate a little more into this market niche that constituted Bolivia, trying to know the preferences of consumers in gastronomic matters before inserting the product.

With an exhaustive study, they would have noticed that Bolivian cuisine was not an easy market to access if the menus were not personalized for a wide variety of tastes, accustomed to typical and elaborate foods.

Perhaps Mcdonald's is a product aimed at people from big cities, office workers who don't have time to cook, or the patience to wait for an executive menu in a restaurant. But in a country where people tend to value national production more, it is certainly difficult for them to adopt an imported brand that does not offer them something far superior to what they generate with their economy.

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In final words, the Mcdonald's case is an example that an international presence does not always imply an easy penetration in any market, since the main mistake of this multinational was to assume that they could introduce their fast food products in any country as if it were the US market. And it is well known that not all markets respond to the same stimuli.

In addition, industrialized markets like the United States will be used to a standard, generic, and depersonalized type of product, but markets with a national economy place more value on what they can produce, based on the most deeply rooted traditions of their culture. Will Mcdonald's be able to diversify its product line and focus on customer value after this bad experience? Only time will tell.