Technology and Fast Food

When you enter a McDonald’s, there’s a certain noise that you hear. Noise that consists of sizzling, frying, packing, talking, and pouring. This is the noise you’re used to, noise you want to hear. When you stop to listen though, you notice a lot of white noise, background sounds you don’t really focus on. These are all the beeps, clicking, whirring, from the computer command center of every fast food restaurant.

1. Monitors

Monitors everywhere. The registers, the ceiling, the kitchen, the drive-thru. Flat screen monitors are there to convey information and duties. At the drive-thru, the monitor shows you your order to avoid confusion, and tells you what you have to pay. Inside, the registers are all touch screen monitors, enabling endless customization. The customer menus are all screens that can change in an instant. Up on every corner of the ceiling behind the counter, are monitors displaying orders and customer wait times. This allows everyone to be on the same page, eliminating confusion and miscommunication. There are even monitors for cameras outside that show when cars are pulling in to the drive-thru, letting employees gauge the situation and prepare themselves. Basically, a fast food kitchen is run like a hospital E.R.

2. Transaction Processing System (TPS)

When a customer places an order, computer systems don’t just deal with how much change to give the customer. At McDonald’s, a transaction goes through several calculations instantly and is stored as data. From this data, the system will figure out how much the restaurant has made, what to pay employees, what supplies were used, and how much more to buy from the supplier. With millions of transactions everyday, McDonald’s must be using some serious server power to compute and store all this data.

3. Free WiFi

In the mid-2000s, McDonald’s began offering wireless internet access, for a fee. A decade later, in 2010, McDonald’s promised to provide free WiFi in 11,000 of its 13,000 locations. Now, it’s no surprise to walk into a McDonald’s and see people on their laptop or tablet while enjoying their meal. Some people may stay too long just to use the WiFi, but hey, if they get thirsty, there’s a McDonald’s counter just a few feet away.

McDonald’s IPO

IPO: Initial Public Offering

When a company’s stocks are offered to the general public for the first time. Also known as “going public.”

McDonald’s went public in 1965 with $22.50 per share. Since then it has had 12 stock splits. Right from the start, McDonald’s stock price has gone up. When we reach the early 2000s we see that it took a pretty long decline but came back up between 04-06. Then we see the price stay still from 07-09, possibly from the recession. Then from 09-10 we see another nice increase, but not before taking another dip between 2011-2012. 

As of right now, MCD is at $95.71 per share.

Accounting Statements

Each year or quarter, companies must compile all their accounting data to create accounting statements. This will consist of mainly 3 things: Income statement, Balance sheet, Cash Flow statement.

The income statement is basically what its name implies, it shows the retained income for a particular time frame.

A balance sheet, which shows whether the company has financial assets to pay bills and/or buy capital. It also presents the company’s assets, liabilities and shareholders’ equity.

A statement of cash flows, which basically shows where the company’s money is coming from and where it is going to.

Here is McDonald’s 6 year summary taken from their 2012 annual report. What’s very interesting is that around when the recession began, McDonald’s revenue actually increased. It’s been said before that many people, during the recession, relied on the low cost McDonald’s food. Their revenue steadily increased all they way to 2012. Recent news however has pointed out that 2013 was not a great year for the restaurants, but an annual report will tell us for sure.

McDonald’s Hamburger U

Learning Today, Leading Tomorrow

Probably the most unique and quirky characteristic of McDonald’s is its training center. Started out as a meeting in basement, Hamburger University is now a prestigious facility that could probably pull it off as an actual college. The main “campus” is a 130,000-square foot facility on an 80-acre campus located at McDonald’s Corporate Offices in Oak Brook, IL.

Focusing on churning out leaders, their curriculum is focused on management to executive level command. An interesting note, the facility can accommodate 28 languages using interpreters.

What makes Hamburger University stand out from other corporate training facilities is that you can apply to get college credit! Now that’s something to motivate young employees with. Good on you McDonald’s.

“Since 1961, class attendance has grown from an average of 10 students to more than 200 students each week, and more than 5,000 students a year participate in Hamburger University courses and learning activities.”

Slogans Over the Years

Like other companies, McDonald’s has changed its slogan every few years or so. They obviously want to be an adapting business which is never a bad thing.

When looking through all of McDonald’s slogans, we see that the more recent ones tend to focus on the customer. Using the word “you” gives the customer a sense of entitlement, a sense that McDonald’s cares about what you like. This is the focus of McDonald’s operations, to make the customer happy. One could argue that their current slogan was chosen mostly because it is catchy, but its a slogan focused on the customer. Their older slogans, were obviously about getting the name out there. There were slogans that mentioned their low prices, their beef patties, the Big Mac. In current times, McDonald’s could have anything for a slogan because everyone knows what McDonald’s is.

Here are some examples of long running slogans:

1960s – The first slogan took advantage of the new, striking architecture of the restaurant.

2000s – The slogan my generation grew up with, it lasted so long that the new one felt out of place.

Current – This slogan wouldn’t be so successful if it weren’t for that catchy jingle it comes with.

The Ronald McDonald House Charities

“When you keep a family together, a child heals faster and copes better.”

I always knew that RMHC was a charity for sick kids, but had no idea it was a place for them to stay and heal. This really opened my eyes to the scope of responsibilities involved in this charity. After learning this, I wanted to volunteer, but it wrong to do so because of a class requirement. I plan to volunteer at RMHC, but only when I can give them a lot of my time and effort.

RMHC merely adopted the McDonald’s image. They aren’t actually affiliated with the company. Even though this may have been requested by McDonald’s as a business strategy, part of it must have been a genuine desire to help all those kids. Plus the fact that McDonald’s put in good effort to donating and setting up donation boxes, it’s obvious the corporate leaders were caring people.

I had an idea of what a RMHC facility would be like, in my head I saw a small kids hospital with maybe 1 or 2 doctors and several nurses. In actuality, RMHC locations are built to be homey and comfortable. And they’re all run by volunteers, who have responsibilities that could match those of hospital nurses. This really gives you a different image of the program. Now, when I imagine a Ronald McDonald’s House, I see a home.

For the restaurant, it may be a way to market a better image, but also a way to help those kids. Ray Kroc was known to take the welfare of children very seriously, and the charity was named so in his honor. If the big guys didn’t care, McDonald’s would not be RMHC’s largest corporate donor.

McDonald’s of the World

McDonald’s is all over the planet, East to West. Does this mean that McDonald’s is serving up the same food everywhere you go? No, it doesn’t, because McDonald’s knows how to make the customer happy, no matter where they’re from. Obviously each country has their own menu from the restaurants, so I’m going to list one interesting fact about 3 locations in unique countries.

As seen on the map, Japan is trailing the USA in number of McDonald’s. This is quite a surprise since you would consider Japan to be more of a seafood place. I went to the McDonald’s in Tokyo and immediately noticed something. Everything was a tad bit smaller. The cups, the fries, were smaller serving sizes. As seen in the image below, the cups really tell the story.

 

In India, there exists the only McDonald’s locations that are completely vegetarian.

 

Meanwhile in Germany, McDonald’s is serving its customers beer.

McDonald’s Secret Sauce to Success: Operations

Why do we study McDonald’s? Why am I writing a blog post about a fast food restaurant? Well it is definitely not because their food is worth glorifying, nor are their restaurants so enjoyable that we must appreciate being able to walk in to one. We study McDonald’s because it is an almost perfect example of how to run your business operations. Three reasons as to why:

1. Consistency

Kroc pioneered this concept when first started franchising his restaurants. His goal was that no matter where you were, every McDonald’s you visit would give you the same atmosphere and taste as the next one.

There were standards at every McDonald’s restaurant and Kroc made sure those standards were met. He even started a training facility, now famously known as Hamburger University, to drill employees on how to make a “by the book” Big Mac. To further this concept, Kroc adapted the assembly line set up that the McDonalds brothers had developed in their small burger joint. With employees trained to do one simple task, each providing a part of the finished meal, it reduces the chance of human error. Thus, every McDouble that comes out of the kitchen will always taste and look the same. This is worth noting because it may have been the first restaurant chain to start doing this.

2. Affordability

Probably what McDonald’s is most famous for is keeping its prices so low. A burger for only $1? That’s insane, but it’s real. When times are hard, McDonald’s can be your savior. There are many rumors circulating around about how they keep prices that low, but none have ever been confirmed. The only official explanation from the restaurant is that they buy their supplies in bulk. McDonald’s buys around 70 million pounds of beef each year, and passes on the savings to the customer it seems. What some may not know is that the Dollar Menu is a loss leader for the restaurants. McDonald’s sells the McDouble or Double Cheeseburger at a loss, but this gets customers into the store and thus more likely to spend on other items. The higher tier selections is where the profit is, but good ole’ McDonald’s is smart enough not to throw out the Dollar Menu. Remarkably, the prices on this menu have changed only slightly in this economy of inflation.

3. Speed

The most obvious bit of McDonald’s operations is their dedication to decreasing customer wait time. With the assembly line in the kitchen, machines for every menu item, and a multitude of young workers ready to go, it’s a fast food pit stop. Even though they have suffered longer wait times in recent weeks, this was mainly due to their expanding menu. On a good day however, McDonald’s has set times in which it wants the food to reach the customer. 90 seconds is how long you should be waiting from ordering your food to receiving it. Since service has slowed, McDonald’s is now purposing to add a third window to the drive-thru system. Only time will tell if it will work, but it is a relief to know that the chain modifies its operations to make the customers happy.

McDonald’s Mission Evaluation

Mission & Values

“McDonald’s brand mission is to be our customers’ favorite place and way to eat and drink. Our worldwide operations are aligned around a global strategy called the Plan to Win, which center on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers’ experience.”

Quick, easy, and satisfying.

Just like their burgers, McDonald’s mission statement doesn’t hold back on the beef. The very first word is their name, there’s no mystery meat here, it’s McDonald’s. The first sentence tells you what they strive to be, so basically the first sentence is a mission statement all on its own. Second sentence lets us know they are everywhere and they want to be on top. If “Plan to Win” isn’t competitive enough for you, they’ve sprinkled just enough big adjectives to make your mouth water.

Favorite, worldwide, global, exceptional, committed, experience. Then they throw in some juicy verbs like aligned, improving, and enhancing. They’re not cutting corners here, no fillers, just straight to the point. From a quick web search, we can see that they have recently reheated their statement.

“McDonald’s vision is to be the world’s best quick service restaurant experience.” As we can see, they no longer want to be just a “quick service restaurant,” they flat out want to be everyone’s favorite place to eat and drink. This has been evident in their new menu additions, healthier options, and café style renovations. No more fluorescent lights. No more bland diner tables. When you walk into a McDonald’s today, you’re greeted with warm lighting, earth tone wall colors, and comfortable seats. They have made an atmosphere where old or young can hang out instead of just eat and go.

“People, Products, Place, Price, and Promotion.” These five words shine through when you visit a McDonald’s. Each franchise may not be as dedicated as the next, but it is obvious that the people who run the corporation take these five values seriously. And their mission statement couldn’t be any clearer.

Kirk’s Mission Statement:

“To become a real man, I will strive to become an effective member of the community and the global society. To become a leader and provider within my family, and a reliable resource for my friends and their families. Taking on the path that many have walked upon, to ensure it is a path clearly visible to our offspring.”

Three Economist Issues

 1. One issue an economist may be interested in is the rise and fall of the McDonald’s fish McBites. Slumping sales forced McDonald’s to come up with something new and fresh. Thus the fish McBites were released. I’m sure everyone at least saw or heard the commercials for the McBites, because they were heavily marketed. In an effort to go in a healthier direction, McDonald’s used fish. But when sales didn’t improve, the McBites were pulled off the menu. An economist may research why there wasn’t much demand for the item, and why they had to be taken off completely. It’s a shame because I personally enjoyed the McBites, it was a light, protein rich snack. The only thing McDonald’s should have pulled was the horrible jingle that blared through the commercial.

2. I would certainly want to ask an economist for their opinion on this. This being the three cheeseburger variants that McDonald’s offers. Three burgers that are identical, except for the number of patties and cheese slices.I’d ask an economist why McDonald’s thinks this is necessary, and is it a good strategy in the current economy or any economy. With only a few cents difference in price, do people actually care? I do, because I know that I like the McDouble more than the double cheeseburger. What sets them apart? A slice of cheese.

3.  One thing that is certain in current events, is that McDonald’s is losing its edge. They are pumping out new menu items, renovating restaurants, and grouping everything according to nutritional value. Now there’s a new menu for items under 400 calories. They are obviously trying everything they can to come out of their sales slump. An economist could find out why McDonald’s isn’t selling like it used to. They were on top during the recession, but things are different now. Why aren’t people going to McDonald’s as much anymore? Is there an economist out there that could figure out how McDonald’s can come back from their own little recession?