Lessons for Industry from the 'Fast Food' Business

By Cho, W. K.; Ho, Samuel K. M. | Management Services, January 1995 | Go to article overview
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Lessons for Industry from the 'Fast Food' Business

Cho, W. K., Ho, Samuel K. M., Management Services

In recent years, due to the success of Japanese concepts and techniques in manufacturing, people now believe that manufacturing excellence is not only relevant to factory production, service industries can also improve their operations by using techniques and tools similar to those used in manufacturing.

Case Study--'Manufacturing' excellence at McDonald's

McDonald's is a prime illustration of how manufacturing excellence can be interpreted and applied to the service industries, specifically the fast food business.

McDonald's is the largest fast food service organisation in the world. The company, restaurant, managers, franchisees and joint-venture partners operate over 13,000 McDonald's restaurants in 59 countries. Its company motto (Quality, Service, Cleanliness & Value), marketing strategy, training and operational systems are considered the standard for the industry throughout the world.

According to research carried out by Morgan Stanley Capital International, McDonald's ranks as number 80 among the top 1,000 companies. Figure 1 summarises their ranking in the fast food industry. (Figure 1 omitted)

Their philosophy of 'Just-In-Time' stresses the importance of simplicity. To make an organisation work has everything to do with keeping things understandable for the tens of thousands who must make things happen, and that means keeping things simple.

McDonald's follows the rule of simplicity. For example, in food preparation, all of the production procedures are standardised. For instance operators just need to activate an electronic timer and follow the instruction given on a screen. After finishing, a continuous beep signals the operator to remove the food.

The simplicity and standardisation of food preparation procedures enables the company to save money on training. This is especially important in the fast food industry where there is a high turnover of part time staff.

Demand pull strategy

In manufacturing today, fast response, short process cycle, JIT, quality and flexibility must be reconciled in order to meet customer requirements cost-effectively. The demands apply equally in the fast food business.

McDonald's use a production caller system. The main responsibility of the production caller is to regulate production according to the actual demand of customers. If he or she notices that particular products are below the defined stock level, orders will be given to the kitchen. With this flexibility, the quality of the food can be maintained.

The same strategy applies in McDonald's drive-thru restaurants. With a detector in the access road, a communication system, a video camera and headphone, a picture of the customer flow can be established.

Continuous improvement remains a powerful concept for management. Just as Suzaki states 'Even if we are on the right track, we will get turned over if we just sit here.' In this sense, each person and each organisation needs to seek ways of continuous improvement. (Suzaki, 1987).

In McDonald's, restaurant managers are now required to conduct monthly 'customer groups' and share results with their crews to improve customer service. Moreover in order to find out the opinion about new flavours in the 'Flavour of the Month' promotion, a questionnaire survey is carried out within each restaurant to find opportunities for further improvement.

Total quality control

From raw material storage and food preparation to food storage and servicing, strict quality control procedures are applied at McDonald's.

In food storage, a strict stock rotation policy is maintained so that food is 'first come and first served'. Inside the cold room, in order to make sure that all the food is used 'first come first served' a label with words like DO NOT USE is put on to remind staff and ensure correct stock rotation.

In food preparation there is a strict holding time policy.

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Lessons for Industry from the 'Fast Food' Business


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