The Impact of Covid-19 on McDonald’s Business: A Case Study of Malaysia

The purpose of the study is to identify the impacts of Covid-19 on McDonald’s business in Malaysia. McDonald’s is one of the largest fast-food franchises, and its franchisee is expanding yearly in the global market. Its mission is to become the favorite place and way to eat and drink. A total of 100 respondents were surveyed. Results indicated that the Covid-19 has an impact on its business performance. The impacts are the drop in sales, an increase in operational costs as well as changes in their operation.


INTRODUCTION
McDonald's has also grown into the world's largest restaurant organization by sales. In over 100 countries, there are around 36,000 McDonald's serving millions of customers daily (Tribune, 2018). Meanwhile, there are 300 restaurants nationwide in Malaysia, serving over 13.5 million customers in a month.
McDonald's has breakfast, soft drinks, wraps, and desserts. They are best known for their french fries and hamburgers. They also introduced seafood, vegetables, smoothies, and fruit to its menu due to the negative feedback of unhealthy food (Robbins, 2017). About 200 McDonald's food set was simplified. For the idea of health, McDonald's also uses a healthier ingredient to replace the old one. At the same time, McDonald's also eliminated chemical preservatives from their product, such as Chicken McNuggets. Besides, to make the food healthier, they replaced rice starch, pea starch, and powdered lemon juice with acid identified in Chicken McNuggets (Polansek, 2016). The example of products is Big Mac, Big N' Tasty, McFeast, Mc Chicken, McNuggets, and McMuffins. Royalties, rentals, and fees charged by the franchisees are the revenue of McDonald's (McDonald's, 2020).
Companies all over the world have been affected by the Covid-19 as it has caused changes in the behavior of businesses and consumers (Donthu, & Gustafsson, 2020).
McDonald's has developed more rigorous food safety to assure its citizens' and consumers' health and welfare since the starting of the Movement Control Order, also known as MCO, was declared by the Prime Minister. The fast service restaurant chain proclaimed its payment system will be more on the e-wallet or debit card method in March 2020. McDonald's clients and workers' benefit is their highest priority at McDonald's Malaysia. They were stepping up their efforts during the challenging period, particularly for their delivery service.
For its distribution operation, McDonald's Malaysia has taken a few steps to ensure its client safety since customers themselves are extremely dependent on basic items, such as food. McDonald's was able to use key resources to meet customer needs (Singh, Kumar, Panchal, & Tiwari, 2020). Seetharaman (2020) also stated that despite the need in the daily life of people, physical items necessary for nature have been reluctantly allowed to be made. Firstly, before entering McDonald's premises, wearing a mask and sanitizing both hands are required by riders who accepted an order from the client. At the same time, riders need to go through a temperature check to ensure that the rider does not exceed the specified temperature. Second, before the food is prepared into their delivery bags, each rider's respective bags will be sanitized and cleaned by a crew member. Third, the pick-up points for the riders who receive orders from the different platforms are isolated. Additional protection mechanisms and strengthened social distancing activities have been set in motion with the contactless distribution program's launch. The riders will contact the client after they compassed at the client's destination, with the client's ordered food. Meanwhile, to avoid client touch, riders must always keep a distance from the client. Huang, Makridis, Baker, Medeiros, & Guo (2020) stated that after the company closure policy was enforced by the government, there is a reduction between 15-30 percent in daily-paid workers, working hours, and the number of companies in the food and drink industries, including McDonald's. They also stated that since there are several issues, such as insufficient between the testing and result reporting process, the result may be impacted. Besides, Bartik et al. (2020) stated that there are about 41.3% of the company choose to temporarily close their company, and 1.8% are permanently closed due to COVID-19. Also, the number of employees in the company, including McDonald's, was declined 32% between January and March 2020. This means that these companies were facing a financial crisis at the time and had to lay off employees to minimize losses.
McDonald's successful business strategy has made it one of the most successful companies. It's a rapid embracement of globalization, the companies have been able to grow and maintain considerable growth (Mutjaba & Patel, 2007). The most successful strategy is that McDonald created a menu that is only available in one country to attract more people to consume at McDonald's (Rajawat et al., 2020). Besides, McDonald's also has a place in Malaysia's fast-food chain. It recorded the highest sales performance ever in 2018. Since reaching its highest sales in 2018, McDonald's Malaysia has set a goal of reaching RM3 billion in sales in 2019.
However, the ongoing global Covid-19 pandemic has led to businesses failing and millions of people losing their jobs, apart from placing the healthcare system worldwide under enormous strain. According to Bartik et al. (2020), if the crisis continues for more than 4 months, it will be difficult to continue operating in some sectors such as restaurants, tourism, and personal services. Undoubtedly, McDonald's business has been significantly affected. McDonald's sales have plummeted since March because most of the restaurants have closed and the "shelter-in-place" guidelines have been implemented (McDonald's Corporation, 2020).
Malaysia's government has adopted a unique plan tailored to control the Covid-19 pandemic (Ganasegeran, Ch'ng, & Looi, 2020). One of the unique plans is the new conditional movement control order (CMCO), under which restaurants could be reopened. However, McDonald's Malaysia announced that it would not be accepting any dine-in customers during this period. The reason is that the customer's safety is their key focus, thus it keeps the dine-in area closed. Therefore, the loss of dining customers seriously affected McDonald's sales.
From a medium-term economic perspective, the reduction in the frequency of people going out to work seems to lead to a decline in overall restaurant sales (Cummins et al., 2020). This means that more Malaysian start cooking again during the lockdown period. According to the result of the interviews of Benker (2021), the interviewees intend to learn about the lockdown experience and change their eating habits, where they start to learn cooking methods during the lockdown period. Gerritsen et al., (2020) also stated that the impact of lockdown affects the New Zealanders' cooking and eating behavior. The data also show that more Malaysians were interested in recipes and cooking during the lockdown period (Durai, 2020). Thus, as more Malaysians prefer to cook by themselves, McDonald's sales will decline.
The Covid-19 pandemic will also influence McDonald's costs. According to Wolfe (2020), McDonald's is taking measures to ensure the safety of employees and customers, such as standards for social distance, crew protective devices, and improving hygiene and cleaning process. Besides, McDonald's has changed the inside of restaurants, further enhancing food safety and cleanliness standards. McDonald's also ensures that the restaurants will be cleaned after the closing hours. Face masks and gloves must be worn by the manager and employees during the cleaning process (McDonalds, 2020). Consequently, this will lead to increased costs.
Since the implementation of CMCO (Conditional Motion Control Order) on May 4, 2020, certain specific guidelines have been set down by the authorities, such as the standard operating procedures (SOP). All restaurants wishing to open for dining must comply with the SOP. It is a set of step-by-step instructions written by an organization to help workers perform complex routines. Some requirements of the SOP will increase the cost of McDonald's, which is the mandatory use of alcohol-based hand sanitizers or provision of hand-washing area, washing liquids with sodium hypochlorite, and face masks and gloves for employees (Povera, Harun, & Arumugam, 2020). Therefore, the implementation of preventive measures has also incurred costs and weakened the business.
When the first restaurant was opened by Richard and Maurice McDonald from the point of view of the work operation, the definition of an 'assembly line' was established where it was possible to prepare a reduced menu cheaper and quicker, resulting in better customer turnover (UKEssays, 2017a). Another impact of the Covid-19 on McDonald's business is that work operations have changed due to the SOP. This implementation is for all commercial organizations, especially the food and beverage service, including McDonald's. All the normal operating procedures must be rescheduled like operating hours, numbers of customers allowed, worker capacity, tracking the body temperature of workers upon entry, and informing workers on personal hygiene at the premises. Malaysian Prime Minister, Tan Sri Muhyiddin Yassin has declared that restaurants would reopen for dine-in customers starting the following Monday, May 4, yet other health and safety measures were needed (Thum, 2020).
Working in a restaurant is highly different from working in offices, where most employees are computer-based, providing a simple transition to remote work (work from home), particularly during the MCO. Restaurants face major differences as restaurant workers perform operational tasks, which means that if they are not in the restaurant, they will not perform their work (Lai, Abidin, Hasni, Karim, & Ishak, 2020). This will cause employees to feel stressed and affect their work efficiency. Another argument is that increasing employees' workload will also cause them to feel stressed because they need to do extra work to fulfill the SOP request like hygiene and cleaning management to disinfect the restaurant and temperature check for every customer. Therefore, we can use the study of stress to explain this situation. Psychologists define stress as the body responds to a transition that needs physical, psychological, and emotional adaptation or reaction (Morrow, 2019). Because the work operation has changed, McDonald's employees need to manage their mentality and pressure to do their best during this pandemic. Even though the impact of the Covid-19 will still affect the business including employees' bad attitude when serving guests, poor food quality, and low work efficiency. Businesses face significant disruptions to their business-as-usual practices during an epidemic like the Covid-19 pandemic and will suffer low results for the duration of the crisis (Alao & Oladejo, 2020).
There are a set of executive committees at McDonald's to inspect the consistency and effect of nutritional goods on the prosperous company. Quality operation and quality monitoring were fully inspected by the executive team. The team in quality control will manage quality support and quality monitoring (UKEssays, 2017b). Besides, as the impacts of the pandemic on McDonald's business, sales were reduced since the foods' stock became stale. Due to the decrease in customer volume and sales during the MCO, McDonald's food inventory problems appear, and all inventory management is disrupted. Old stock of food will affect McDonald's taste and freshness since they mainly focus on fast food processed from frozen food. It should not be left for too long, which will change the taste. On top of that, this will affect its reputation. Base on the recent report, consumer's survey showed that McDonald's had the lowest-quality food of all multinational fast food restaurants. In a survey carried out by RBC Capital Markets, the franchise was put in the number 12 spot, a worldwide investment company (out of 12) (Fox News, 2017). This is why they must pay more attention to its food quality in this pandemic.
Besides that, during the Covid-19 pandemic, almost all of these kinds of food supply chains have been seriously interrupted, especially the fresh items such as vegetables, fruits, bakery products, perishable products, and food grains (Ivanov, & Dolgui, 2020). In such a tight lockdown that much of the logistics operations have been suspended, shortages of food supplies are imminent. As described in the emulation of a report on the PDS network in this article, the food delivery system was severely impacted during lockdown due to the inaccessibility of staff and truck operators (Singh et al., 2020).
For this situation, we can link to the study of leadership by which a leader respond all challenges and act as a manager to control the inventory during this pandemic. Leadership is a mechanism by which citizens are influenced to engage in the accomplishment of corporate or collective targets. It is the responsibility of the leader to achieve people's dedication to achieving these goals. Leadership is the main increase above mechanical conformity with the general orders of the organization. Hence, all leaders play an important role in avoiding the stale product outflow to the customer, thereby affecting McDonald's good reputation.

RESEARCH METHOD
The paper aims to examine the impact of Covid-19 on McDonald's business. We used a quantitative method. We employed a questionnaire distributed to the respondents, who are the customers of McDonald's, on several inquiries about a related topic of the impact of Covid-19 on McDonald's in Malaysia. We used an online survey because it is the foremost convenient platform to collect more information from respondents. By conducting this, we managed to collect all information from 100 targeted respondents by encouraging them to answer the survey truthfully. This online questionnaire was distributed through social media such as Facebook, WhatsApp, and WeChat to reach up to 100 respondents, as these platforms are the easiest and fastest way to share. Table 1 presents the summary of the respondents' profile. A total of 100 customers responses were collected. By sex, 54% of the respondents are female. Over half of the respondents (56%) were between 21 to 40 years old, 29% of respondents were between 41 to 60 years old, 9% of respondents were between 20 years old and below, and 6% of respondents are between 61 years old and above. The greatest number of respondents falls in private sector employee for the occupation, which is 36% of respondents, 33% of the respondents were students. By respondents' races, most of the respondents were Chinese (47%), followed by Malay (37%), and Indian (16%). By income, those with income below RM2,500 occupy the majority of respondents (52%) (see Table 1). As for to purchase methods, the majority of respondents (65.3%) preferred walk-in, followed by 21 respondents (21.4%) who prefer drive-thru, 7 respondents (7.1%) using McDonald's app, and other food delivery app. This concludes that walk-in is the easiest method to purchase McDonald's before MCO.

RESULTS AND DISCUSSION
For the payment methods, the majority of respondents (72.4%) used cash followed by 17 respondents using debit card or credit card, and 10.2% of respondents preferred e-wallet, such as Touch 'n Go eWallet, GrabPay, and Boost. This explicates that most of the respondents believed that cash is a more suitable method to purchase.   By the aspect of awareness in Table 3, 68 respondents (68%) agreed and strongly agreed that the Covid-19 declines McDonald's sale. Also, 67 respondents (67%) supported and strongly agreed that the implementation of the SOP increases McDonald's operating costs as the ingredients become expensive due to supply shortage. A total of 76% of respondents supported and firmly agreed that the use of masks and sanitizers increased McDonald's operating costs. Besides, 74% of respondents supported and strongly agreed that the implementation of the standard operating procedures helps McDonald's improve food hygiene. This confirmed that more than half of the participants believed that the hygiene of McDonald's has been increased.
By the implementation of the contactless and cashless system, 83% of respondents agreed and strongly agreed helps McDonald's improves safety. This showed that most of the respondents prefer contactless and cashless systems especially during the outbreak of Covid-19. Concerning the safety to dine in McDonald's if SOP is strictly followed, 64% of respondents agreed and strongly agreed. Therefore, McDonald's should strictly follow the SOP to decrease the impact of Covid-19 on the business. Moreover, 82% of respondents agreed and strongly agreed that McDonald's implements measures to keep customers and crew safe. In addition, 81% of respondents agreed and strongly agreed that McDonald's focuses on protecting the health and safety of the people and customers. These all conclude that McDonald's brings happiness and cares to the people.

CONCLUSIONS
As the analysis has demonstrated, the outbreak of Covid-19 has some impacts on McDonald's Malaysia's business. The sales of McDonald's have been affected. There is a decrease in the number of customers compared to that before the pandemic. Consumers are changing their way to purchase McDonald's by using the drive-thru, McDonald's app, and other food delivery apps instead of the walk-in. This also goes to the payment method as people are using more e-wallet. To protect customers and employees, McDonald's purchases hygiene products such as masks and hand sanitizers. This increases the operating costs of McDonald's.
If the outbreak of Covid-19 continues, it will lose a lot of its franchisees due to financial problems they faced. McDonald's work operation is also influenced as it cannot operate 24 hours. This also declines its sales. However, due to McDonald's actions, strictly following the standard operating procedures, the restaurant hygiene and the safety of its customers and employees are ensured. Customers will have no problem dining in the shops and employees can work in a safe place. The introduction of cashless and contactless in McDelivery makes customers order the food safely and so can the deliverers. This is a good impact on McDonald's as it always focusing on protecting its employees and customers. McDonald's has done a great job in coping with the impacts of Covid-19. To sum up, despite the negative impacts it brings to McDonald's, the Covid-19 also makes McDonald's take a good step to cope with it.