McDonald's has been losing market share in the adult market. They have been unsuccessful in launching new products that will recapture the adult population. The whole McDonalds strategy needs to find new ways or methods to reintroduce its products to its former customers. .
McDonald's was founded in 1937 and has since grown to become a chain of 29,000 restaurants globally with 40 billion in annual system wide sales. In fact, the company has grown so large, that in many markets in the US and Europe, it is running out of places to build new locations. .
Each day approximately 20 percent of the U.S. population eat at fast food restaurants. The reasons for patronizing such establishments are convenience, perceived lack of time to shop and prepare meals at home, fast food's taste and texture, the need to pacify nagging children, and cost. All of these factors show that their past successes were due in part to the McDonald's philosophy which is "To be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we make every customer in every restaurant smile."" .
Children and teenagers may still love to visit the Golden Arches, but adults are proving to be much tougher to keep satisfied. Now struggling in a slow growth market, the chain is looking for baby boomers, their previous major customer base, to rejuvenate its sagging US business. In spite of the fact that they carry 42% of their market share for the past few years, McDonald's has posted negative domestic store sales. US operating income and margins have dropped as well. This is due in part because their former customers, the adult segment, have been drifting away. .
Anyone who offers an alternative eating-out experience is potentially a competitor of McDonald's. Pizza Hut and Taco Bell became other options in the fast food industry. Within the burger segment itself, McDonald's growth in the 1990's has slowed to about 5% annually.
