MCDONALD'S: FALLEN ARCHES

WITH MARKET SATURATION AND CHANGING TASTES SLICING INTO MCDONALD'S ONCE CERTAIN GROWTH, NO WONDER SOME FRANCHISEES ARE CRANKY

McDonald's serves jillions of Happy Meals each year, but not many are being shared around the company's pleasant headquarters in a Chicago suburb these days. "There's no question we've been under more stress than we're used to," says McDonald's USA chairman Jack Greenberg, who runs the company's 12,100 domestic restaurants.

Top management is unhappy because sales in U.S. stores have been flat as a frozen beef patty in the past two years and profit margins are eroding. Some of the 2,750 franchisees are unhappy--some downright testy--because rapid store expansion has cannibalized sales and the company's advertising and promotion, although ubiquitous, have...

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