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McDonalds Business Process

By June 25, 2014 No Comments

McDonaldsYou may think McDonalds sells reasonably good burgers, however is it gourmet food? I think we both agree that it’s not 5 Star, however they are the most successful Restaurant Chain in the world. So how did they become the most successful restaurant chain in the world by only serving fast food? Well here’s the p lain and simple truth!

They have the best PROCESSES AND SYSTEMS that can be had. They leave nothing to chance. Everything, and I do mean literally everything is precision execution in motion, that’s from Operations, Purchasing, Finance, Sales & Marketing through Product Innovation. You may not think their food is 5 Star, however McDonalds Business Process, their Operation and Business Strategy is ABSOLUTELY 5 Star!

We have talked about Value and Pareto, and along with that, what are the processes etc, that you and your team to day in day out? These are the things you ABSOLUTELY MUST DO EFFECTIVELY!

When you arrive in a McDonalds, and yes we’ve all done it at some stage, all you get to see is literally some drinks dispensers, Fries bank, Burger Shoot and a few other things along with a friendly service using very slick suggestive selling tactics. However what goes on behind the scenes is the secret to their success.

So lets just take a small example that is within the single Franchise.

The 4 High Level Policies that filter exceptionally well down to their teams of the ground are

  1. Operations Excellence
  2. Service Delivery
  3. Quality
  4. Hygiene

So lets take a deeper look

Going back to those shoots behind the counter where they pick the burgers from? That is standard work in play, where they Rinse & Repeat the ‘GOOD STUFF’. What you don’t see in the background is that they have a specific way of making burgers, which you can’t see and once it’s completed, they put it in a certain shoot. And by the way, those shoots only contain their ‘Runner’ products (A Runner Product is one which is predictable in High Frequency and Volume). Their runner products which would be a Big Mac, Quarter Pounder, chips, hamburger etc, they have to produce those Runner products with absolute precision (OPERATIONS EXCELLENCE), as their profits depend on it. Why?McDs Kanban

Well, they are high volume and simply put they will either make money faster or lose money faster. So each person behind the shoot is taught a very specific way of making burgers so that the managers will know they will be able to produce ‘X’ amount of burgers per hour at the required quality. Their business depends on it and they do it so well, not once in the history of McDonalds has one franchise ever closed.

Another thing to note here, they only make a burger when there is a gap in the shoot as there is a buffer in front which still fulfills customer requirements so in essence, the customer doesn’t have to wait for a burger to be made, it’s called off immediately. This Buffer does 2 things

  1. Improves Service Delivery by being available immediately for the customer thus delivering an effective Customer Experience
  2. Acts as a signal to the burger makers in the back that when there is a gap, they have to fill it, this way they don’t over produce (OPERATIONS EXCELLENCE) and only produce what is required. This way they always know what to make next

Along with that, they have split the total waiting time in between queuing time and service time (SERVICE DELIVERY & OPERATIONS EXCELLENCE). By that I mean, once you pay, they ask you to move to the side while they are preparing your food and also so that they can serve someone else which gives the customer the perception of flow and continuous movement. The total time may not change, however as its spread between different stages, the perception of the waiting time as reduced.

The knock on effect here is that it reduces idle time at the cash register therefore reducing the amount of registers required and therefore the amount of staff. They are maximising their process effectiveness.

This system is the only one we see, they have this working between them and their suppliers, so every morning when a supplier arrives, they look for the gaps and they fill them. Therefore there is no waste through any aspect of the process.

When preparing the order, the also print off a copy onto the tray and they use that as a checklist so they know when they are giving it to the customer it’s 100% correct all the time, applying the principles of RIGHT FIRST TIME (QUALITY)!

And then there is the burger making process. They use 2 people to make a burger, by splitting the process in half. Why do they do that? So that gap in the Buffer Shoot is filled ASAP (SERVICE DELIVERY & OPERATIONS EXCELLENCE)! And a 3rd person to pack the product. In fact, it’s a typical Assembly process no different to that in a manufacturing plant where they constantly gather productivity and performance data so they can constantly improve their process and service delivery.

McDonalds have no choice to get these things right first time. They need to have cost effective labour and materials, their profits depend on it. Their products move so fast they have a choice of making a small profit margin per product which in the whole scheme of things translates into substantial profits through the shifting of so much product.

OR

Lose a small bit of money per product which will translates into substantial loses for the same reason of moving high volume.

They have no room for error and so they achieve this out of necessity!

However, what if someone at the counter in McDonalds asked for a regular hamburger with no gerkin in it? Well guess what, this would be considered a ‘Stranger’ product (one that is not important to their efficiency as it is only executed a small percentage of the time) which will not follow the shoot process. This will be done a different way. When this happens a staff member will say to the customer that the burger will take 5 mins and that they will bring to where ever they are sitting. So when they can’t meet the speed, they will improve the customer service (SERVICE DELIVERY) and tell you to sit and your food will be brought to you. Will this cost more? Yes it will, however as it’s a Stranger process / product it doesn’t happen much, so the cost of extra service will be negligible in the whole scheme of things

And their Hygiene Standards are always top class (SERVICE DELIVERY) and have always marketed their achievements well in this regard.

And please note, we aren’t even touching the surface here when you consider Product Research and their Sales & Marketing Process.

In essence, their success is completely attributed to having highly effective processes akin to something you would see in Toyota throughout the full Supply Chain that’s all the way to their last customer and all the way back to their first supplier.

Their systems lead to

  • Low labour Cost
  • Minimal Idle time of Cash Registers
  • Continuous Processing of Orders
  • High Productivity
  • Controlled flow of raw ingredients and finished product
  • High Service Delivery
  • Fast moving Queues
  • High & Consistent Customer Experience no matter where you go
  • Use of Standard Work to ensure consistency leads to High Quality Processes
  • Minimal Congestion

And if they didn’t have these processes running as effectively as they have, they would not last long and would certainly lose their top position in the fast food industry very fast.

McDonalds Business Process LEAVE ABSOLUTELY NOTHING TO CHANCE

So why should you?