How does McDonald’s compete in a monopolistic competition?
Monopolistic competition is a market structure where many companies sell similar products, but are not identical. So how has McDonald’s managed to compete with other monopolies? McDonald’s have their own profitable specialty coffee in the form of McCafes, a concept taken from Starbucks. Recently, McDonald’s has remodeled the design of some of there restaurants, replacing their fiberglass tables and industrial steel chairs with wooden tables, comfortable faux leather chairs, and have painted their interiors of muted colors of orange, yellow, and green. McDonald’s not only have borrowed Starbucks’ concept of coffee, but have also begun borrowing the same design and feel. McDonald’s has gone under this remodeling with their restaurants to bring down other top competitors such as Burger King and Wendy’s since they are not as successful and cannot afford such upgrades to their own restaurants.
Non-price competition is a way of how firms attract consumers with factors other than price, such as style, service, or location. So how has McDonald’s used non-price competition to convince customers to come to them instead of other burger places? McDonald’s has over 31,000 restaurants found all worldwide in 119 different countries. McDonald’s has divided their dining areas into separate zones for larger groups, eat-and-run customers, and for those who stay there to rest. McDonald’s has also had many of their locations add a second drive-through to up service both in and outside of the restaurant. McDonald’s has also added flat-screen TV’s to many of their locations despite less than half of the remodeled restaurants will display them.
McDonald’s has not only been trying to beat other top competitors in the burger industry. It has also been competing with restaurants that are not even fast food chains. One of the examples of non fast food chains that McDonald’s has been trying to draw customers away from is Panera Bread. McDonald’s has also been trying to bring customers away from Chipotle, a Mexican chain that was originally owned by McDonald’s until October 2006. As stated before, McDonald’s has also competed with Starbucks Coffee with the selling of their McCafes.
With McDonald’s being able to survive in the monopolistic competition, how has McDonald’s made use of their market power?