Does McDonalds Offer A Model Which Other Businesse

This essay has a total of 3241 words and 15 pages.

Does McDonalds Offer A Model Which Other Businesses Should Follow

Does McDonald's 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.
McDonald's 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 McDonald's, 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 McDonald's 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, McDonald's 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,
McDonald's 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 company's flagship product, the Big Mac.
Throughout the 1970's, McDonald's 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, McDonald's 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, McDonald's 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 McDonald's 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 Children's 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 McDonald's Corporation is the largest worldwide franchised food service organisation.
In the 1960's, 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 McDonald's 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 McDonald's' intention
that by the end of this year, franchised restaurants will represent over 30% of the total
UK business. McDonald's 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 McDonald's' revenues.
McDonald's can also boast that it is the largest retail property owner in the world.


Quality, Service, Cleanliness
McDonald's use the finest available products and carefully developed formulae. They also
encourage their employees to check products that they prepare or serve. McDonald's 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. McDonald's firmly believe that a smile does as much to bring a customer
back as does the best food in the world. McDonald's 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. McDonald's believe that
through delivering great levels of QSC, (Quality, Service, Cleanliness), 100% customer
satisfaction can be achieved, enabling them to become the UK's favourite quick service
restaurant.


Treatment of Workforce
McDonald's state that they value people most by being:
Reliable - In doing what they say they'll 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 McDonald's 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 company's goals of 100% customer
satisfaction, increased market share, and increased profitability. An ongoing programme of
training evaluation enables McDonald's to keep training procedures up to date, and
relevant to the needs of the business. McDonald's 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 McDonald's policy to actively promote from within. Promotion is offered to employees
who show initiative and a desire to advance. Many of McDonald's' finest managers and
senior company personnel have been promoted from crew. This way, skills are kept in the
firm, with training costs minimised.


McDonald's believe that people are their most important asset. Loyalty and dedication are
the foundation of every successful business, and McDonald's 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 McDonald's, 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 year's
continuous service. To try and improve team-working skills and reduce the 60% staff
turnover, McDonald's organise regular nights out and activities for its employees.


McDonald's 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 18-21 year olds, with a starting salary of £16,500 per year. It also offers
its employees the opportunity to become part of the corporation through buying McDirect
shares.


Standardisation
A key feature of the McDonald's model is the manner in which all of their operations are
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