OM Mcdonald Gr1

8/7/2019 OM Mcdonald Gr1

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Case synopsisCase synopsis

12,611 quick service restaurants spread world wide.

In the USA alone Mc Donald serves 20 million customers

everyday

Mc Donald brothers opened the first drive in restaurant in1941.

Mc Donalds operating system concentrated on four areas

Improving theproduct

Developing

outstandingsupplier

relationship

Improvingequipment

Training andmonitoring

franchisee


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Contd..Contd..

Continuousevaluation of therestaurants took

place & accordinglyQSC ,V grades were

given.

Mc Donalds achievesuccess by focusing

on limited menu lowprices and fastservice.

Mc Donalds slogan

was what you want iswhat you get.

Mc Donalds mostmenacing competitorswere Burger

King,Wendys,KFC.

In 1990,in collaboration with EDF Mc

Donalds gave an eco friendly dimensionto their business by forming a waste

reduction task force, using brown bags& various other measures.


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Role of supplier and franchisee forRole of supplier and franchisee for

effective operation strategyeffective operation strategyBrought a supplier loyalty that the restaurant

business had never seen.

A simple hand shake secured every

arrangement between Mc Donalds andsuppliers.

Initially small and fledgling suppliers were togamble on Mc Donalds after rufusal of food

processing giants like Kraft,Heinz and Swift.Mc Donalds reffered its 3500 franchisee asits partners.

Partners would make money before thecompany did.


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Phases of life cyclePhases of life cycle

Raw materials Acquisition

Manufacturing Processing andformulation

Distribution and Transportation

Use/Re-use/Maintenance

Recycle

Waste Management

INPUTS

OUTPUT


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Focused on a simple formula- limited menu lowprices and quick service.

Restricted its menu to 10 items, when

restaurants in 60s and 70s offered a variety ofmenus.

In early 1990, Mc Donalds cutting pricesaveraged 20%

Cheeseburgers sold for only 69cents

Mc Donalds Happy Menu (complete childrensmeal)was sold at only $ 1.99.

Factors pertaining to growth

and success of Mc Donalds


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ContdContd

Engineersintroduced a

special french-fryscoop and a grill

that preparedhamburgers halfthe time of others.

Mc. Donaldsengineers has

introduced a pizzaoven that could

prepare pizzaswithin 5 minutes.

To ensure qualityand taste, no

products werekept for morethan 10 minutes inthe transfer bin.

Mc Donalds

distinguish itself inthe quick serviceindustry.


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Primary new challenges of McPrimary new challenges of Mc

Donalds in 1990Donalds in 1990Share of US quick service market dropped

from 18.7% in 1985 to 16.6% in 1991.

Sales per US outlay dropped to 3.7%.

Hamburger consumption fell to 17% in 1990from 19% in 1982.

The quick service industry grew at an annualrate of 8.7% in 1980s but in 1990s during

inflation it tried hard to keep up the pace.The service industry market became

complex with new entries, who emulated McDonalds strategy to capture their ownsegments.


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ContdContd

Entities like Chili, Olive Garden, Sonic andR

ally etc proved to be tough competitors.

Taco Bell owned by PEPSI used the cost

based strategy to compete prices, thus itserved 60%more customers and their andsales rocketed to 63%.


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Basis for the future growthBasis for the future growth

To maintain an uniform growth rate.

To review the work of the task force.

Serving quality foods at a low price.

Maintaining consistency and qualitythrough standardization.

Unprecedented challenges for variety and

flexibility in its services.By allowing greater franchise autonomy.


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OM Mcdonald Gr1

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