Fast Food Nations (50 points)

McDonalds has announced plans to open 700+ new restaurants in China. Fast food restaurants have been sprouting in diverse global regions. There is some concern that other global regions may be more fruitful locations.

The tab Fast Food Nations contains data on fast food sales, demographics, and economic productivity of 47 countries. Completely describe the distribution of the variable Sales. Build a model linking fast food Sales to demographic and economic characteristics of countries to help McDonalds choose the most promising locations for new restaurants. Fully evaluate the assumptions that underpin the regression model.

How do the "Fast Food Nations" differ on several demographically or economic indicators, from the other countries? Specifically, test the executives beliefs that countries with larger urban populations, and greater populations under 15 years are likely the most fruitful locations for potential fast food establishments.  Also, give them guidance on whether education and economic productivity favors or discourages the fast food industry.

McDonalds Revenue Drivers and Future Prospects (50 pts.)

McDonalds executives believe that success depends on demographics, economic productivity, and the growing fast food industry. They require identification of drivers of revenues, as well as a forecast of revenues over the next five quarters.

The tab McDs QR contains data on quarterly revenues, global GDP per capita among high and upper middle income countries, the global fast food market value, competitor Yum Foods (Taco Bell, Kentucky Fried Chicken and others) revenues, and global population of the youngest segment for the eight year period 2003 through 2011. Each potential driver differs in data availability, with data from some drivers being available as early as March, 2003 and data for other drivers being available only since March 2004.

It is a widely held belief that people’s incomes in developing global regions are growing, and more families are electing to dine out, motivating new restaurants to open. McDonalds is a favorite choice for these new restaurant diners. Experts believe that there is a lag of about twelve quarters before increases in incomes are felt in the fast food restaurant industry.

Yum Foods competes with McDonalds, though McDonalds is substantially larger, both in terms of revenues and number of restaurants. Yum Foods revenues from its varied restaurants are thought to be less seasonal than McDonalds revenues. Following increases in Yum Foods revenues, executives have observed slower growth in McDonalds revenues, about 4 to 6 quarters later.

The global fast food restaurant business is growing. As new restaurant diners enter the market, new restaurants appear, and advertising and promotion levels increase. Following expansion in the industry, McDonalds benefits later, from this growth, and this delayed benefit is thought to occur 8 to 10 quarters later.

Executives are convinced that demographics are key drivers of revenues. There is particular interest in learning whether the youngest population segment is a significant driver as it is a fast growing population segment. Young children are thought to first become fast food restaurant diners between 18 and 24 months of age (e.g., a 6 to 8 quarter delay).

Build a valid model of quarterly revenues, identifying significant drivers, and forecasting revenues in the next five quarters. It is quite acceptable if your model has a DW that falls within the upper and lower limits of the values provided by the Stanford site. Discuss any implications this might have for your model.

Price: $24.15

Solution: The downloadable solution consists of 12 pages, 1215 words and 10 charts.
Deliverable: Word Document