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TABLE OF CONTENTS S.No. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 2.0 2.1 2.2 2.3 3.0 4.0 5.0 6.0 CONTENTS Problems & Issue of the case Brief Chain of Events Speedee Service System Hamburger University QSCV Franchisees and Suppliers Key Dates Applications, Techniques, Methods Business Model Operation Strategy Operations Management Recommendations Learning from the case Application in other areas Bibliography Page No. 3 5 11 12 13 16 18 23 23 24 25 27 28 29 30
PROBLEMS AND ISSUE OF THE CASE : McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, more than 32500 globally, serving around 64 million customers daily in 117 countries. Headquartered in the United States, the corporation was founded by businessman Ray Kroc in 1955 after he purchased the rights to a small hamburger chain operated by Richard and Maurice McDonald. McDonalds provides it customer a unique and uniform experience in all its restaurants. It does so by practicing an operating system that ensures product & process uniformity throughout the chain. Hence, its products were not only of exceptional quality but also consistent everywhere. Its operating system of efficient service has become the benchmark for the fast food industry. In this case study, we discuss in detail the operating system at McDonalds and the chains competitive position at the start of 2000. Though the companys operational system was a model of excellence, McDonalds was plagued with a series of problems ranging from industry saturation to poor service standards at its restaurants. We will see how the company reached a low point in 2001 and managed to make the biggest comeback by rediscovering value.
GOALS AND OBJECTIVES: 1. McDonalds vision is to be the worlds best quick service restaurants experience. 2. McDonalds is committed to maintaining and developing the best food products in the quick service restaurant market. 3. In order to deliver this, the company has made a number of commitments to food safety and nutrition. 4. Lead the Quick Service Restaurant market by a program of site development and profitable restaurant openings, and by attracting new customers. Increasing sales through promotions will enable them to continue their program of expansion. 5. McDonalds have an objective to continual enhance and improve their menu. This will better satisfy their customers and give customers more reason to visit. Many ideas for new items on the menu come from the franchisees responding to customer demand. 6. Consumer tastes change over time and McDonalds has to respond to these changes. MISSION STATEMENT: "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
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BRIEF CHAIN OF EVENTS : 1) McDonalds started off in 1941 as a drive-in restaurant, which later on became a self-service restaurant. Richard and Maurice identified speed, customer service and cleanliness as critical success factors and implement their innovative Speedee Service System The brothers designed their kitchen with assembly line procedures similar to that of Fords. They standardized food preparation methods. This self-service proved useful and soon many small businessmen expressed interest in taking up franchises.
2) Ray Kroc founded the McDonalds chain. He bought out the brothers share and named the company McDonalds corporation. He also emulated Fords mass production techniques and designed a system to apply the same rigor to the preparation of sandwiches and hamburgers. He established a training program called the Hamburger University where franchisees were taught about the scientific methods of running a successful McDonalds. He founded a new corporate policy Quality, Service, Cleanliness and Value.
3) During the 1990s McDonalds began to face problems. To face competition it started to fill every possible niche area for fast food. It also opened smaller outlets known as express stores. Under Greenberg it decided to diversify its food offerings. It bought Donatos Pizza chain, took a minority stake in Chipotle Mexican Grill and acquired Boston market restaurants. In 2001 it opened up a gourmet coffee shop McCafe. 4) In 2001 McDonalds underwent a comprehensive review operation to ensure quality and service levels. It planned to scrutinize operations through the use of mystery shoppers. Customers were provided with toll free telephone number for complaints. 5) McDonalds introduced the Made for You concept where customers could choose their own ingredients. McDonalds operating procedures concentrated on Improving the product, Developing outstanding customer relationships, providing a clean ambience and Training and monitoring franchisees QSCV. It refined the production system; crewmembers began to perform specialist functions. McDonalds began the practice of cooking and packing food instead of waiting for orders. Standards were also developed on when to discard cooked products that had not been purchased. 6) McDonalds treated its suppliers as partners. It employed quality assurance and purchasing specialists, who worked closely with suppliers to ensure that every product met the quality norms. 7) McDonalds also worked closely with its franchisees. Kroc saw them as business partners, not as customers. Kroc sold them the operating systems instead of just the ingredients. McDonalds developed an extensive training program for its franchisees.
DECLINE: Changing Customer Preferences The company reached a low point in 2001, when customer-satisfaction surveys showed McDonald's was falling well behind its direct rivals, Wendy's and Burger King. Customers were also switching to healthier offerings, such as Subway's freshly filled sandwiches. Lots of money was spent opening yet more stores, but margins were shrinking and complaints about dirty restaurants and indifferent staff were growing. The firm's philosophy of QSC&Vquality, service, cleanliness and valuejust was not working any more. McDonald's ended 2002 with its first quarterly loss since 1954. And there was growing concern about obesity and junk food. McDonald's was even sued (so far, unsuccessfully) for making people fat. Even now, long after its debut in America, Morgan Spurlock's film Super Size Me is making overseas audiences cringe at how he made himself ill and gained 25 pounds (11kg) by eating only McDonald's food for 30 days.
Poor service standards & customer complaints A company memo sent to franchisees in North Carolina in July bluntly summed up the situation: "We are meeting our speed of service standard only 46% of the time, and 3 out of 10 customers are waiting more than four minutes to complete their order. Our 800 number has confirmed that the number of complaints for rude service, unprofessional employees and inaccurate service has risen steadily." Franchisee problems A major area of contention was McDonalds continuous expansion as a result of which, revenues and profits of franchisees per store fell by 30 percent in the 1990s. Many franchisees claimed that for every new restaurant that was opened nearby, McDonalds outlets lost anything from 6 percent
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to 20 percent of their revenues. A survey of franchisee showed that only 28 percent of them thought the companys strategy was on the right track. Most of them felt that the long term focus was missing. Industry saturation The challenges facing McDonald's come supersized. Its home market is all but saturated, its sterling reputation for fast, friendly service and cleanliness is tarnished, and customers are putting a growing premium on freshness and taste, neither of which McDonald's is renowned for.
Competition McDonalds faced crossroads in the early 1990s. Domestically, sales and revenues were flattening as competitors encroached on its domain. In addition to its traditional rivalsBurger King, Wendys, and Taco Bellthe firm encountered new challenges. On the higher end, Olive Garden and Chilis had become potent competitors in the quick service field, taking dollars away from McDonalds, which was firmly entrenched in the fast-food arena and hadnt done anything with its dinner menus to accommodate families looking for a more upscale dining experience. Its average annual return on equity was 25.2% between 1965 and 1991. But the company found its sales per unit slowing between 1990 and 1991. In addition, McDonalds share of the quick service market fell from 18.7% in 1985 to 16.6% in 1991. Plus growth in the quick service market was projected to only keep pace with inflation in the 1990s.
Environmental Issues While these competitive wars were being fought, McDonalds was gathering flak from environmentalists who decried all the litter and solid waste its restaurants generated each day. To counter some of the criticism, McDonalds partnered with the Environmental Defense Fund (EDF) to explore new ways to make its operations more friendly to the environment. In the late 1980s, McDonalds began recognizing the importance of maintaining an ecologically correct posture with the public, which was becoming more concerned about the environment. Its no surprise, then, that McDonalds sought a way to reduce its solid waste while providing a more environmentally acceptable face to the public. Beginning in 1989, it partnered with the Environmental Defense Fund, a leading organization devoted to protecting the environment, to seek ways to ease the companys environmental burden on the landscape.
COMEBACK: In the late 1990s, McDonalds abandoned its traditional batch, Make-to-Stock production process and replaced it by a batch, Assemble-to-Order system, known as the Made-for- You process. Yet, this was not universally successful. The problem lay in the food and the menu. The food was not seen as being fresh enough and menu seemed to be out of step with a society that was becoming more concerned by carbs. Yet, by late 2003, McDonalds seemed to have turned the corn e r. Profits are up; sales are up; customers are returning to McDonalds. The secret to this turn a round McDonalds has rediscovered value. In the interview, Mr.Cantalupo talked about the challenge of expanding a mature company in a fast-changing consumer landscape. At the heart of his response were the following actions: Removing initiatives that didnt focus on our restaurants or our customers. Getting back to focus and discipline speed at the drive through, friendly service, marketing leadership, product innovation. Making sure that the food sold by McDonalds was tastier and better. Recognizing that McDonalds is a mass marketer and, as such, it must broaden its appeal. The focus must be on the customer and on what theyre looking for. McDonalds will listen to them and give them choice, variety, and satisfy as many of their needs as they can. The shift to low-carb is driven by what the customers want. McDonalds will deliver superior value to its customers
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HAMBURGER UNIVERSITY:
In 1961, the McDonald's Corporation founded Hamburger University, marking the starting point for the corporate university. The first courses were held in the basement of a McDonald's restaurant in Elk Grove Village, Illinois. Hamburger University was designed exclusively to instruct personnel employed by McDonald's Corporation or by McDonald's Independent Franchisees in the various aspects of the business and operations of McDonald's. There, franchisees and operators were trained in the scientific methods of running a successful McDonalds. Hamburger University also had a research and development laboratory to develop new cooking, freezing, storing and serving methods. During the following four decades, more than 65,000 managers in McDonald's restaurants graduated from Hamburger University, which eventually moved to a 130,000 square foot, stateof-the-art facility on the McDonald's Home Office Campus in Oak Brook, Illinois. There, a faculty of 30 resident professors can teach and communicate simultaneously in 22 languages with the help of translators and technology. By the end of the twentieth century, Hamburger University had branches in England, Japan, Germany and Australia. Today, more than 80,000 people have graduated from the program.
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McDonalds operating system concentrated on four areas: improving the product; developing outstanding supplier relationships; improving equipment; and training and monitoring franchisees. In its quest for improvement, McDonalds revolutionized the entire supply chain, introducing innovations in the way farmers grew potatoes and ranchers raised beef, altering processing methods for both potatoes and meat, and inventing efficient cooking equipment tailored
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to the restaurants needs. Most revolutionary, perhaps, was McDonalds attention to detail. Never before had a restaurant cared about its suppliers product beyond the price, let alone the suppliers methods of operation. McDonalds was able to spend as much time and effort as it did in perfecting its operating system because it restricted its menu to ten items. Most restaurants in the 1960s and 70s offered a variety of menu items, which made specialization and uniform standards rare and nearly impossible. Fred Turner, one of Krocs original managers and later Senior Chairman of McDonalds, stressed the critical importance of menu size in attributing success of the companys operating system: It wasnt because we were smarter. The fact that we were selling just ten items, had a facility that was small, and used a limited number of suppliers created an ideal environment for really digging in on everything. Turner developed the first operations manual in 1957, which, by 1991, reached 750 detailed pages. It described how operators should make milk shakes, grill hamburgers, and fry potatoes. It delineated exact cooking times, proper temperature settings, and precise portions for all food items even prescribing the quarter ounce of onions to be placed on every hamburger and the 32 slices to be obtained from every pound of cheese. French fries were to be 9/32 of an inch, and to ensure quality and taste, no products were to be held more than ten minutes in the transfer bin.
McDonalds patrolled suppliers and franchisees scrupulously. The meat in McDonalds hamburgers, for example, had particular specifications: 83% lean chuck (shoulder) from grass-fed cattle and 17% choice plates (lower rib cage) from grain-fed cattle. Fillers were unacceptable. Whereas other restaurants merely accepted what suppliers provided and complained only when meat was visually inferior, McDonalds routinely analyzed its meat in laboratories. In 1991 McDonalds spent $26.9 million on its field service operation to evaluate and assist each of its restaurants. Each of the companys 332 field service consultants visited over 20 restaurants in the US several times every year, reviewing the restaurants performance on more than 500 items ranging from rest room cleanliness to food quality and customer service. Turner was the first corporate employee to visit and evaluate each restaurant, and, as early as 1957, he summarized his
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evaluations by assigning a letter grade to a restaurants performance in three categories: quality, service, and cleanliness (QSC). For more than thirty years, therefore, McDonalds had prided itself on QSC and a fourth letterV for value. McDonalds meticulous attention to detail and careful analysis of quality and procedures did not come from an unbending need for regimentation. Instead, McDonalds sought to study every component of its operation to learn what worked and what failed, to determine how best to offer consistently good service and food. Whereas other chains ignored both franchisees and suppliers, McDonalds sought to elicit commitment from themcommitment that required not only adherence but experimentation. Turner explained: We were continuously looking for a better way to do things, and then a revised better way to do things, and then a revised, revised better way.
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FRANCHISEES:
The franchising system soon turned out to be a bad idea as many franchisees did not understand and hence did not maintain McDonalds standard of cleanliness, service and product uniformity. From the moment he opened his first McDonalds, in Des Plaines, Illinois, Kroc made the operating system his passion and his companys anchor. Whereas many competitors could prepare products that were similar to McDonalds, most focused on recruiting franchisees, whom they promptly ignored, and on identifying the lowest-cost suppliers. Kroc, on the other hand, sought (i) (ii) (iii) to make sure McDonalds products were of consistently high quality, to establish a unique operating system, and to build a special set of relationships between the McDonalds corporation, its suppliers, and its franchisees.
McDonalds referred to its 3,500 U.S. franchisees as its partners for good reason. By 1992, McDonalds generated 39% of its revenues from franchise restaurants. When Ray Kroc first sold franchises, he made sure that his partners would make money before the company did, and he insisted that corporate revenue come not from initial franchise fees but from success of the restaurants themselves. That philosophy continued to be at the center of McDonalds franchise and operating practices. Franchise owners did indeed see themselves as partners, developing such products as the Filet-OFish sandwich and the Egg McMuffin in the 1960s and the McDLT in the 1980s. Franchisees also formed powerful regional cooperatives for both advertising and purchasing. Their regional advertising budgets enabled them to customize local promotions while also supporting national programs, and the buying cooperatives gave franchisees a channel for challenging suppliers to be innovative, even when those suppliers were meeting corporate requirements.
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SUPPLIERS:
A simple handshake secured every arrangement between McDonalds and a supplier, and it symbolized the way McDonalds revolutionized the entire relationship. Jim Williams, head of Golden State Foods, which supplied McDonalds with meat, contrasted the traditional supplierrestaurant relationship with the changes McDonalds introduced: Deals and kickbacks were a way of life. How long you let a guy stretch out his payments was more the determining factor of whether you got the business than the quality of the product you were selling. Kroc brought a supplier loyalty that the restaurant business had never seen. If you adhered to McDonalds specifications, and were basically competitive on price, you could depend on their order. When McDonalds first approached the established food processing giants, such as Kraft, Heinz, and Swift, the restaurant chain received a cold response. The established suppliers refused to accept McDonalds concepts and specifications and continued to concentrate solely on the retail market. Only small, fledgling suppliers were willing to gamble on McDonalds, and in turn, McDonalds created a whole new set of major institutional vendors. Each McDonalds restaurant ordered 1,800 pounds of hamburger meat per week and 3,000 pounds of potatoes. By meeting McDonalds strict standards and price requests, suppliers were guaranteed future volumes from a burgeoning restaurant chain. Kenneth Smargon, whose Interstate Foods supplied McDonalds with shortening, described the novel relationship that developed: Other chains would walk away from you for half a cent. McDonalds was more concerned with getting quality. They didnt chisel on price and were always concerned with suppliers making a fair profit. A lot of people look on a supplier as someone to walk on. But McDonalds always treated me with respect even when they became much bigger and didnt have to. Thats the big difference, because if McDonalds said Jump, an awful lot of people would be asking How high? Suppliers grew alongside McDonalds and were thus carefully attuned to the companys needs. As one supplier commented, Youve got to be deaf, dumb, and ignorant to lose McDonalds business once you have it.
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KEY DATES:
1937: Patrick McDonald opens a hamburger and drinks stand called "The Airdrome" on historic Route 66 (now Huntington Drive) near the Monrovia Airport in Monrovia, California. 1940: Brothers Richard and Maurice McDonald open the first drive-in restaurant in California Its menu consisted of 25 items and they employed around 20 carhops (waiters). 1941 : McDonalds started off as a drive-in restaurant, which later on became a self-service restaurant. Richard and Maurice identified speed, customer service and cleanliness as critical success factors and implement their innovative Speedee Service System 1948: After noting that almost all of their profits came from hamburgers, the brothers closed the restaurant for several months to implement their innovative "Speedee Service System", a streamlined assembly line for hamburgers. The carhops are fired, and when the restaurant reopens it sells only hamburgers, milkshakes, and french fries. At 15 cents, the burgers are about half as expensive as at standard diners, and they are served immediately. 1953: The McDonalds begin to franchise their restaurant, with Neil Fox the first franchisee. The second McDonald's opens in Phoenix, Arizona at N. Central Ave and Indian School Road. It is the first to feature the Golden Arches design; later this year the original restaurant in San Bernardino is rebuilt in the same style. 1954 : Ray Kroc, who held the national marketing rights to the multimixers used in the restaurants to make milk shakes, met the McDonald brothers in 1954. He was so impressed by their restaurant and its potential that he became a national franchise agent for the brothers, and founded the McDonalds chain. Like the McDonald brothers first restaurant in San Bernardino, California, the McDonalds chain featured a limited menu, low prices, and fast service. He also emulated Fords mass production techniques and designed a system to apply the same rigor to the preparation of sandwiches and hamburgers 1955: Kroc opens his first McDonald's restaurant in Des Plaines, Illinois. 1955: Ray Kroc hires Fred Turner (later CEO and Chairman) as a grillman in his store in Des Plaines. 1960: Kroc's company is renamed "McDonald's Corporation". 1961: The McDonald brothers agree to sell Kroc business rights to their operation for $2.7 million
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1961: Hamburger University opens in the basement of the Elk Grove Village, Illinois, McDonald's restaurant. Bachelor of Hamburgology degrees went to graduating class of 15. Here franchisees were taught about the scientific methods of running a successful McDonalds. He founded a new corporate policy Quality, Service, Cleanliness and Value. 1962: The first McDonald's restaurant with seating opens in Denver, Colorado. 1963 : The Golden Arches was adopted as the Corporate logo. 1963: The Filet-O-Fish is introduced in Cincinnati, Ohio. 1965 : McDonalds goes public selling its shares @ $22.50 each. 1967: The first McDonald's restaurant outside the United States opens in Richmond, British Columbia. 1968: The Big Mac (similar to the Big Boy hamburger), the brainchild of Jim Delligatti, one of Ray Kroc's earliest franchisees, is first introduced in the Pittsburgh market in 1967, before going system/nationwide a year later, following its great local success 1971: The first Asian McDonald's opens in July in Japan, in Tokyo's Ginza district. 1973: The Egg McMuffin, invented by Herb Peterson, owner and operator of a Santa Barbara franchise, is introduced to the menu. 1976: McDonald's pays its first cash dividend. 1979: The Happy Meal is introduced in the U.S. 1980: The Chicken McNuggets are introduced to the menu and instantly become a success by early1984: Ray Kroc dies on January 14. 1984: The Company is a main sponsor of the 1984 Summer Olympics.
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1990: On January 31, the first Soviet McDonald's opens, in Moscow. At the time it is the largest McDonald's in the world. 1990: In October, the first McDonald's opens in mainland China, in the city and Special Economic Zone (SEZ) of Shenzhen, Guangdong province. 1992: Stella Liebeck receives third-degree burns from coffee purchased at a McDonald's drive-through. She sued in what became known as the McDonald's coffee case. 1995: McDonald's receives complaints from franchisees that too many franchises are being granted, leading to competition among franchisees. McDonald's starts conducting market impact studies before granting further franchises.
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1998: Jack M. Greenberg succeeds Michael R. Quinlan as CEO. 2000: Eric Schlosser publishes Fast Food Nation, a book critical of fast food in general and McDonald's in particular. 2001: it opened up a gourmet coffee shop McCafe. 2002: A survey in Restaurants and Institutions magazine ranks McDonald's 15th in food quality among hamburger chains, highlighting the company's failure to enforce standards across its franchise network. 2002: McDonald's posts its first quarterly loss ($344m), for the last quarter. It responds to the stiff competition from other fast-food restaurants, offering higher quality burgers and more variety, by attempting to move more upmarket by expanding its menu and refitting restaurants. It announces it is withdrawing from three countries (including Bolivia) and closing 175 underperforming restaurants. 2003: McDonald's starts a global marketing campaign which promotes a new healthier and higher-quality image. The campaign was labeled "i'm lovin' it" and begins simultaneously in more than 100 countries around the world. 2003: According to Technomic, a market research firm, McDonald's share of the U.S. market had fallen three percentage points in five years and was at 15.2%. [5]
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2003: The firm reports a $126M USD loss for the fourth quarter [6]. 2003: McDonald's introduces their premium salads, the McGriddles and the chicken selects. 2004: Morgan Spurlock directs and stars in Super Size Me, a documentary film in which he eats nothing but McDonald's food for 30 days to the great detriment of his health. 2004: After the release of Super Size Me, McDonald's does away with their Supersize options. 2005: Jim Skinner is elected President and CEO. 2005: Owing in part to competitive pressure, McDonald's Australia adopts "Made for you" cooking platform in which the food is prepared from pre-cooked meat after the customer orders (as opposed to the firm's normal procedure since 1948, in which the food is cooked then sold as needed). It should become standard practice in all Australian restaurants by 2007. Some restaurants in New Zealand also follow suit. The practice had earlier been tested, and abandoned, in the U.S. 2006: McDonald's announces that it will include nutritional information on the packaging for all products beginning in March [9] and that its upcoming menu changes will emphasize chicken, salads, and other "fresh foods" rather than hamburgers [10]. 2006: McDonald's begins their "forever young" branding by redesigning their restaurants. 2006: McDonald's and Disney end their 10 year promotional partnership. 2007: Dreamworks Animation and McDonald's begins promotional partnership. 2009: 20th Century Fox and McDonald's begins promotional partnership. 2010 : 92 consecutive months of global sales increase by end of 2010, with operations in 117 countries with 32737 restaurants.
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Dimension Capacity Facilities Process Technology Vertical Integration Workforce Organization Control Systems
Strategy Growth as needed through additional stores - but capacity added carefully Well-utilized - franchisee's well-being depends on it being used heavily Distributed facilities, each facility being very similar to the next, all focused around the same menu - although the uniformity is beginning to change High degree of process understanding, emphasis on "fool-proof" processes A leader in the technology of fast-food delivery Partnership arrangement Long-term relationship with suppliers to promote innovation and quality improvement Franchisees: well-trained, carefully selected, entrepreneurs Operators: high-turnover, cheap Guidelines provided by corporation, but franchisees push to locally optimize Centralized buying Bulk contracts "Push" system for basic supplies, "pull" system day-to-day in the restaurants
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Job Design Job designing is also an important operation in McDonalds restaurant. Each employee is designed a particular set of jobs. For example, some crew members cook food items in kitchen, some crew member work on the counter, while others look after the customers in the lobby. Also there are employees who manage all the crew member and look after overall wellbeing of the restaurant. While designing these jobs the technical, economical and behavioural feasibility is taken into consideration. Supply Chain Management In McDonalds Corporation , the restaurants also have certain suppliers who supply them the with the raw materials like buns, beef, patties, ketchup, sauce, mayonnaise, disposable cups, food packaging materials etc. Therefore it has to manage its relationship in a effective manner so as to get the raw materials at the right time, in proper quantity, and at acceptable cost. Inventory Management In McDonalds the inventory is managed on the basis of First-In-First-Out basis. This is because most of the inventory consists of perishable items. Therefore delivery of inventory happens thrice or more times a week depending on the business of the restaurant. Moreover inventory is stored in freezer with proper packaging so as to ensure freshness of the food items. All this activities comes under inventory management of the organisation. Quality Management Quality in McDonald restaurant is very important because of two reasons. Firstly because of the legal requirements of the quality of food served. Secondly ,to keep up the good reputation which McDonalds restaurants have earned over the years. Quality of food can be very difficult to maintain and therefore McDonalds restaurant carry on a number of practices to make sure that quality food is served. Some of these practices are the visits by the food inspector from the head office, supervisor checks etc. Maintenance In McDonalds, there are several equipments that are used for the preparation of food. Therefore it is very important to maintain and service those equipments so as to maintain the quality of the product, safety of the employees and to avoid further costs of repairing machines. Another important things that needs maintenance are hygiene, costs, quality etc.
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RECOMMENDATIONS:
McDonalds faces some difficult challenges. Key to its future success will be maintaining its core strengthsan unwavering focus on quality and consistencywhile carefully experimenting with new options. These innovative initiatives could include launching higher-end restaurants under new brands that wouldnt be saddled with McDonalds fast-food image. The company could also look into expanding more aggressively abroad where the prospects for significant growth are greater. McDonalds need to watch for these three headwinds in 2011. Rising food prices: Higher food commodity and energy prices have recently pushed up wholesale and retail food prices. Rise in food price inflation for the year. McDonald's and other big burger chains have largely been unaffected so far, but that might soon change. Limitation of beverages over burgers: McDonald's increasingly diverse menu has helped it become the nation's best-performing restaurant company during the economic slump. The chain has expanded too broadly into beverages, and the plan will eventually catch up with the company. Selling beverages is good but it makes operations more complex. It takes more to make a latte than to pour a Coke. Return on investment: Some franchises worry that their investments will not pay off, a poll of franchisees shows some concern that corporate demands to redo stores and sell more coffee cost too much and might not pay off in the end. The McCafe machines cost $100,000 to install, with McDonald's covering just $30,000 of that.
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BIBLIOGRAPHY:
http://www.aboutmcdonalds.com/ http://en.wikipedia.org/wiki/McDonald's http://money.cnn.com/2011/01/21/news/companies/mcdonalds_slowing_growth.fortune/index.htm "Big Mac's Makeover: McDonald's Turned Around". The Economist. 2004-10-14 http://www.wiley.com/legacy/products/subject/business/forbes/kroc.html Can McDonald's Shape Up? http://www.time.com/time/business/article/0,8599,354778,00.html
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