Does McdonaldS Offer A Model Which Other Businesses Should Follow? Does McDonalds offer a model which other businesses should follow? At first, most people must have laughed at the idea of a chain of restaurants selling identical products all over the country, but little did they know that the genius idea that they had mocked would go on to revolutionise the business environment of the future. McDonalds is now the international market leader for fast food, and has been ever since its pioneering first restaurant was launched in San Bernardino, California in 1948. Historical Background The original founders of McDonalds, and the fast-food concept, were brothers Dick and Mac McDonald. In 1948, they modified their drive-in restaurant, creating the standard for the contemporary fast-food restaurant of modern times. From the introduction of a limited menu of just nine items, and by focusing on efficient production and service, the brothers were able to halve the price of their hamburgers to 15 cents.
Ray Kroc, who, at this time was a 52-year-old milkshake machine salesman, heard of the brothers generation of around $350,000 in annual revenues, and instantly became convinced that its concept could work in other cities. Kroc became the first franchisee appointed by the McDonald brothers, and opened his first restaurant the following year in Des Plaines, Illinois. In 1961, Kroc bought all the rights to the McDonalds concept from the McDonald brothers for $2.7 million. Kroc was somewhat of an obsessive individual, fixated with rules, regulations, procedures, and obedience to his strict rules of discipline. Kroc was especially concerned with maintaining McDonald’s clean image, as well as that of life in general, and could regularly be seen picking up litter outside of his restaurants in order to maintain the high standard of cleanliness upon which many of his principles were based.
During the 1960s, McDonalds invested a great deal of capital into advertising and marketing campaigns. In 1962, the golden arches were adopted as its corporate logo, with the introduction of Ronald McDonald as its mascot arriving the following year. In 1965, McDonalds Corporation went public, and by 1966 was listed on the New York Stock Exchange. In 1967, its first restaurants outside of the United States were opened in Canada and Puerto Rico. 1968 saw the introduction of the companys flagship product, the Big Mac.
Throughout the 1970s, McDonalds became involved with a lot of charity work, establishing its own charity called the Ronald McDonald House, providing temporary housing for the families of seriously ill children. Kroc had always believed in giving something back to the community in order to make the world a better place. In 1973, McDonalds added breakfast items to its menu. The Quarter Pounder was introduced in the subsequent year, as sales reached $1 billion. 1974 saw the opening of the first restaurant in the UK, in Woolwich, South London.
In 1975, McDonalds introduced drive-thru window service, which allowed motorists to order and receive food from their cars. Nowadays, this type of business accounts for around half of all McDonalds sales in the United States. In 1983, Chicken McNuggets were added to the menu, giving customers an alternative to beef. Founder Ray Kroc died in 1984. Ronald McDonald Childrens Charities was founded in his remembrance to raise funds in support of child welfare.
In 1989, McDonald’s became listed on the Frankfurt, Munich, Paris, and Tokyo stock exchanges. Through the 1990s smaller outlets known as Express stores were opened in hospitals, zoos, airports, and even on ferries. These outlets served a limited menu and lacked some of the amenities of larger stores. In 1996, McDonalds signed a 10-year agreement with The Walt Disney Company. This agreement has led to the introduction of restaurants at Disney theme parks, and the promotion of Disney films through McDonald’s.
Packaging is the primary source of advertising, along with the addition of limited edition products added to the menu. Examples include Pocahontas and The Lion King. Franchises The McDonalds Corporation is the largest worldwide franchised food service organisation. In the 1960s, Ray Kroc franchised restaurants for the low sum of $950, demanding 1.9% of sales. As the success of Kroc and his organisation depended on the prosperity of the franchisees, this mutual interest was a key factor in McDonalds success.
In the USA, 87% of restaurants are owned and operated by franchisees. In the UK, this figure lies at just over 20%, with 119 of the 577 restaurants being franchised. It is McDonalds intention that by the end of this year, franchised restaurants will represent over 30% of the total UK business. McDonalds charge franchisees a levy on sales. This levy consists of a service fee of 4%, and a rent charge of 7%. Clearly, an increase in the number of franchised restaurants leads to the direct effect of an increase in McDonalds revenues. McDonalds can also boast that it is the largest retail property owner in the world.
Quality, Service, Cleanliness McDonalds use the finest available products and carefully developed formulae. They also encourage their employees to check products that they prepare or serve. McDonalds believe that cleanliness is a magnet drawing customers to their restaurants (McDonald’s Crew Handbook 1996), and therefore aim to ensure that their restaurants are spotless at all times, both inside and out. Quality and cleanliness, however, are wasted without fast, courteous service. McDonalds firmly believe that a smile does as much to bring a customer back as does the best food in the world. McDonalds always reminds its employees that the customer is the most important single factor in their business.
They also train their employees to treat everyone, especially the customer, in the way that they would want to be treated themselves. Mystery Diners, employed by the company, visit each store once a month checking that overall customer service requirements are met. McDonalds believe that through delivering great levels of QSC, (Quality, Service, Cleanliness), 100% customer satisfaction can be achieved, enabling them to become the UKs favourite quick service restaurant. Treatment of Workforce McDonalds state that they value people most by being: Reliable In doing what they say theyll do. Safe In operating practices which protect their customers, employees, and reputation. Responsible In making decisions which balance short, medium, and long term aspirations.
Consistent In their delivery of quality, service, cleanliness, and value. Trustworthy In their dealings with each other, their customers and their business partners. The Leader In advancing their position by being innovative, flexible and goal orientated. Customer driven In listening and responding to their customer needs. Ethical In their internal and external policies and practices. Well Run Through visionary leadership and focused management.
A Good Employer In recognising that their employees are the key to customer satisfaction. Source: McDonald’s Crew Handbook 1996. Training It is the aim of McDonalds to create a learning environment, which facilitates the development of the highest level of skill among all employees. Their training programmes have been designed to enable all employees to achieve the companys goals of 100% customer satisfaction, increased market share, and increased profitability. An ongoing programme of training evaluation enables McDonalds to keep training procedures up to date, and relevant to the needs of the business.
McDonalds believe that training is the foundation of their success, and that it is an ongoing process that belongs to all of their employees. The uniform is an example of standardisation, as there is little variation throughout the world. Different colours are used in certain countries due to religious circumstances. Rules and Regulations About 4 times each year, each restaurant (excluding franchises) is checked rigorously by Area Managers, who make sure the crew and managers are carrying out operations correctly, as well as other general checks. Once a year, a restaurant experiences what is known as a full field, where area managers, other restaurant managers, and trainee managers perform a comprehensive check on the whole operation.
The results of these inspections are put into tables, and there is always fierce competition between stores with regard to scores received. Employee Relations It is McDonalds policy to actively promote from within. Promotion is offered to employees who show initiative and a desire to advance. Many of McDonalds finest managers and senior company personnel have been promoted from crew. This way, skills are kept in the firm, with training costs minimised.
McDonalds believe that people are their most important asset. Loyalty and dedication are the foundation of every successful business, and McDonalds feel that they are especially fortunate in having so many highly skilled and motivated people. Loyalty points are awarded to employees who reach certain service milestones. There is a catalogue called Maritz from which employees can redeem their accrued points in exchange for goods. This scheme gives employees an incentive to remain loyal to McDonalds, reducing training costs, and also improving efficiency.
Crew meetings are held about once a month to discuss policy, procedures, products, and problems in the restaurant. Smaller sessions are also held a few times each year for the purpose of discussing ideas, suggestions and problems. These sessions give employees the opportunity to make their views known to the company. Private medical care is provided to employees who have worked in the company for 3 continuous years. Life Assurance is provided to employees who have completed one years continuous service.
To try and improve team-working skills and reduce the 60% staff turnover, McDonalds organise regular nights out and activities for its employees. McDonalds supports its employees through university, giving grants of up to 1500 per year depending on the type of course. It also runs its own Junior Business Management Programme for …