Mcdonald's Case Study
McDonalds
Operating System Evolution 1980 - 2003
Introduction
Although McDonald’s production processes continue to evolve, their strategy at a store-level granularity has been to make profit by exploiting their process as best they can to make quality burgers and other food quickly. In order to improve their process and product, they need to look at ways to decrease the lead times, enhance the quality of the product while still empowering employees to quickly prepare the product, and automate process to remove human labor costs (even if that would mean increasing capital labor costs).
Production Process (1980 - 2003)
McDonald’s VS. Burger King Operationally, the McDonalds and Burger King stores are quite similar, however, some significant features stand out. First, Burger King (at the time of the case) does not serve breakfast. Additionally, Burger King makes at most 2 sandwiches on each of their board stations at one time, whereas McDonalds makes 6-12 sandwiches at a time, such that McDonald’s operations maintain more of a production line appearance while sandwiches are made. When a “grill” or special sandwich is needed, a paper tag is placed under the first sandwich of a batch of sandwiches and follows the sandwich through the line in McDonalds’ process, while Burger King’s process used a loudspeaker to announce special sandwich orders to the board so that they could be assembled to order. Operationally, Burger King starts to add additional workers at lower sales than McDonalds, but after the first few matches McDonalds in adding them at the same rate. McDonalds has a slightly lower margin than Burger King, but McDonalds also has greater total revenue than its competitor down the street. As shown in the attached exhibit 1, both processes use a production line in order to produce their burgers. A significant difference between the Burger King process and the McDonalds process is that the speed of the cooking step. Burger King’s cooking process takes only
Operating System Evolution 1980 - 2003
Introduction
Although McDonald’s production processes continue to evolve, their strategy at a store-level granularity has been to make profit by exploiting their process as best they can to make quality burgers and other food quickly. In order to improve their process and product, they need to look at ways to decrease the lead times, enhance the quality of the product while still empowering employees to quickly prepare the product, and automate process to remove human labor costs (even if that would mean increasing capital labor costs).
Production Process (1980 - 2003)
McDonald’s VS. Burger King Operationally, the McDonalds and Burger King stores are quite similar, however, some significant features stand out. First, Burger King (at the time of the case) does not serve breakfast. Additionally, Burger King makes at most 2 sandwiches on each of their board stations at one time, whereas McDonalds makes 6-12 sandwiches at a time, such that McDonald’s operations maintain more of a production line appearance while sandwiches are made. When a “grill” or special sandwich is needed, a paper tag is placed under the first sandwich of a batch of sandwiches and follows the sandwich through the line in McDonalds’ process, while Burger King’s process used a loudspeaker to announce special sandwich orders to the board so that they could be assembled to order. Operationally, Burger King starts to add additional workers at lower sales than McDonalds, but after the first few matches McDonalds in adding them at the same rate. McDonalds has a slightly lower margin than Burger King, but McDonalds also has greater total revenue than its competitor down the street. As shown in the attached exhibit 1, both processes use a production line in order to produce their burgers. A significant difference between the Burger King process and the McDonalds process is that the speed of the cooking step. Burger King’s cooking process takes only