McDonald’s

Burger King Vs. McDonalds

Posted on by mason30121f14

1104_BKGlobal                          1104_BKAmerica

Burger King and McDonalds have historically been pretty similar companies. They both provide fast and convenient food for a low price, and tend to offer similar types of food. This past year, however, the two companies have been losing some of those similarities. As a result of this, both have been performing differently as well.

For almost every player currently in the fast food industry, the last couple of years have been rough. Consumer preferences have been changing, there is more competition, and economic problems have hit the industry hard in comparison to many other industries. Burger King, however, has been able to make some progress while their biggest competitor, McDonalds, has continued to take a hit. The reason behind this seems to be the difference in strategy both companies have chosen.

As Burger King continues their attempts to rebrand themselves, they’ve done a couple things that have worked out well for them. Most notably, they have reduced the size of their menu but increased the quality of items they continue to offer. McDonalds on the other hand continues to develop and offer more items. This has caused an increase in complexity and a decrease in the quality of what they’re offering. After looking at how both companies have performed over the last year, it’s pretty obvious that Burger King has taken the better route.

When attempting to choose the process strategy of a company, the executives need to focus on customer requirements, cost, and efficiency. Burger King’s strategy has done a good job in all of these aspects. They’ve been able to increase the quality of the products they offer, tailoring them the preferences of their customers, while also reducing cost. Their money isn’t tied up in new product development or in item lines that aren’t attractive to the market. McDonalds has basically done the opposite. By continuing to develop and introduce multiple new products, their cost has risen and they haven’t been able to focus on what their customers’ preferences are. McDonalds is big enough and does have the money to do this and not notice any substantial loss in market share, but if they continue to do it, that might not continue. If the trends of this last year continue, the gap between them and Burger King is only going to get smaller.

The view of McDonalds seems to be that their strategy has worked in the past, so eventually it should work again. Do you think that Burger King is just utilizing a recovering economy, and that their new strategy will eventually stop working when it fully recovers, or is this a trend likely to continue? Is it better for a fast food restaurant to place more value on quality or variety?

Source:
http://www.businessweek.com/articles/2014-11-05/hard-times-for-hamburgers-hurt-mcdonalds-more-than-burger-king#r=read

How Chipotle Rolled to Success

Posted on by katherin30121f14

Obama-Chipotle-MemeStep into Chipotle during lunch or dinner hours (or after class), and you can almost guarantee a line that stretches far past their service counter. With articles such as one from Business Insider teaching consumers how to get more food for the same price and the story of President Obama committing the ultimate faux pas while ordering his burrito bowl, it’s safe to say Chipotle has become a cultural phenomenon.

Chipotle can contribute their success and expansion to several factors such as a clear brand message that commits to serving fresh, healthy and natural food at affordable prices; however, depending on external funds by franchising their restaurants isn’t one of them.

Several of the most successful restaurant chains can credit franchising to their rapid growth including Subway, McDonald’s, Dunkin Donuts, Starbucks, KFC, Dairy Queen and Buffalo Wild Wings.

With just around 1,600 locations, which pale in comparison to many popular franchises (Subway has 43,000 locations), why hasn’t Chipotle considered franchising?

The answer is simple. They don’t need nor do they want to. So how have they managed to succeed among the sea of franchises?

One of Chipotle’s greatest contributing factors lie within their management approach called the restaurateur program.

Starting in 2005, shortly before their divesture from the McDonald’s Corporation, the company implemented a system that heavily relies on internal promotion to motivate their employees and provide opportunity for career growth beyond most fast food corporations. The same year the restaurateur program was initiated, it was quoted that 20% of managers gained their position through the program. As of 2013, 86% of salaried managers and 96% of hourly managers were internally promoted.

chipotlecareer_004

A general manager can only rise to the rank of being a restaurateur based on their performance of how well they manage their restaurant and staff. After being selected, restaurateurs make well over $100,000 and are given a $10,000 one-time bonus, stock options, a company car and an additional $10,000 for each of their crew members that are promoted to general manager.

I think employee motivation is a crucial factor that’s often overlooked to successful operations management and have found it refreshing to learn that a company I frequent so often offers great employee incentives and benefits. In addition, not conforming to industry norms by trusting the skills of their employees to adjust recipes such as if a crate of jalapeños is hotter than usual, in my opinion, creates a superior product, service and experience. Do you think Chipotle chose the right track by not franchising their restaurants?

On the other hand, it takes more than a management handbook to keep a system running smoothly. Recently, a Chipotle near Penn State University experienced almost their entire management and crew resign citing near sweat-shop working conditions due to understaffing. This forced operations to shut down. Do you think this was an isolated incident by poor management at this particular location or are there bigger problems within the Chipotle Corporation?

Overall, what do you think of Chipotle’s restaurateur program?

Sources:
http://qz.com/183224/how-chipotle-transformed-itself-by-upending-its-approach-to-management
http://www.businessinsider.com/why-chipotle-doesnt-franchise-2014-10
http://www.huffingtonpost.com/quora/what-are-the-keys-to-chip_b_5916086.html

Beef Prices at an All-Time High a Good Thing?

Posted on by spr1313jmusolino

In the recent months, commodity prices have soared to record highs, with the sharpest increase being in the price of beef. The reason for this increase is partially due to last summer’s drought, but it is much higher than most analysts predicted. This has begun to affect the profits of large restaurant chains such as Burger King, Wendys, and most importantly McDonalds.

1C7301038-130509_angus_hmed_1213p.blocks_desktop_smallIn early May, McDonalds announces that it would remove its Angus Third Pounders from their menu. The company said the removal of this burger was done to make room for other food options, but most experts agree that the profit margins are too low for beef items like these to remain profitable.

This has resulted in McDonalds and other restaurant chains to begin to retool their supply chain to put a heavier emphasis on chicken products, which is more profitable than beef. McDonalds has already begun to roll out new items such as the premium chicken wraps. This will definitely be more costly in the short run, but with rising prices, and more health-conscious consumers, it is a good long-term strategy.

With obesity at all time highs, and consumers becoming more health-conscious, this rise in beef prices could not come at a better time. Chicken is much healthier that beef, having significantly less calories and fat. With chicken prices being low, this could benefit both the restaurants and the consumer.

This situation can be compared to gas prices hitting an all time high in 2008.  Once prices hit the high, there was a sudden demand for more fuel-efficient vehicles, planes, trains, etc. They use less fuel, are much more efficient, and produce significantly less emissions that harm our environment. Similar to beef prices, consumers had no reason to switch to the better option until it became cost-effective.

In any industries of this size, change has to be gradual. Switching from beef to chicken is easy for consumers. On the contrary, in order to fulfill demand, restaurants like McDonalds have to completely re-tool their supply-chain. Farms need to change their facilities to accommodate more chickens, processing plants need to change all their machinery, and restaurants need to change how they cook and prepare the final product.

I personally believe that this will benefit both the profit-minded producer, along with the health-conscious consumer. The fast food world is changing, and these companies know that innovation is essential to adapt to the changing taste buds of consumers.

What is your eating preference at these fast food chains? Do you think this rise in commodity prices is a good thing? Have you become more health-conscious?

http://www.nbcnews.com/business/wheres-beef-mcdonalds-dropping-angus-burgers-us-menu-1C9864163

Winner! Winner! Chicken Dinner!

Posted on by spr1312tkulawiak

starbucks_vs_mcdonaldsCorporate America is full of big successful companies who reward their investors nicely and have a winning management strategy. There are two companies that are consistently making progress, growing, and paying dividends. They go by the name of McDonald’s and Starbucks. Both of these companies success could be attributed to their management strategy.

As of late one of their management focuses is to keep their push on international expansion. Both companies have a great global presence and China remains a strong point for them. Starbucks recently opened 500 new stores in China, bringing the total to 1500 in the country. McDonald’s is currently working on diversifying their menus in top countries such as China.

Hiring great leadership and accountability are also two strategies that are strong in both companies. Starbucks company founder Howard Schultz continues to come up with innovative products to expands the company’s product portfolio. An example of trying to retain top talent and hold managers accountable was in late 2012 when McDonald’s let go of former head of US operations Jan Fields, as the companies earning were disappointing.

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Another strategy that is seen in both companies is the constant flow of product diversification. McDonald’s continues to broaden its product portfolio by offering high quality coffee and healthy drinks. They offer these products in their traditional restaurants and their cafes. Also, Starbucks founder Howard Schultz continues to introduce different products.

Year in and year out, McDonald’s and Starbucks are the most social companies in the world in the restaurant business. Recently it was said that Starbucks lost its position to McDonald’s as the most social company. The main reason was that in late 2012, McDonald’s put up a campaign of what goes down in behind the scenes and it also opened up to any questions from the public. Because of this McDonald’s social reputation and audience has been on the rise ever since.

As we can see, management strategy plays a big role in both of these companies as both them continue to grow and show profit. New product innovation is huge for both of these companies. McDonald’s rolled out the McCafe in order to compete with store like Starbucks and Dunkin Donuts. In my opinion, this was a great success. I have many friends that actually prefer McDonald’s coffee to Starbucks and Dunkin Donuts. The day I found that out, I was in utter shock, as I did not think people would be going to McDonald’s for their morning coffee over companies such as Starbucks and Dunkin, where coffee is their specialty.starbucks

The question that comes into play is do McDonald’s and Starbucks have what it takes to keep up in their industries, continue to introduce a wide range of products, and produce at such a high level? In my opinion, there is no doubt that both of these companies will continue to succeed on the same as they are both industry leaders. What are your thoughts on this subject?

 

Refrences

http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-and-mcdonalds-winning-strategy/

http://www.forbes.com/sites/haydnshaughnessy/2013/02/21/how-mcdonalds-toppled-starbucks-from-the-social-top-spot/

http://www.marketwatch.com/story/4-strategies-for-mcdonalds-management-2012-11-21

 

Angus got kicked out!!

Posted on by spr1321schow

As the economy keeps changing, products’ prices keep are raising as well. A lot of the companies made a lot of changes to adapt to this economy. Not only supermarket and clothing stores are affected by the economy, so are fast food restaurants. The fast food industry are facing higher beef prices and McDonald’s have to change their menu to adjust to this change. McDonald’s have to decide what changes will keep costs low and balance customers demand. Recently, McDonald’s announced that they will have three new quarter pounders added to their menus, replacing the Angus burger.

McDonald’s tried to control their cost of operating and total revenue, but not affecting the customers too much. Therefore, they made a decision to create three new Quarter Pounders to replace the Angus burgers. The product decision have met product strategy options, there are different burgers produced with low costs. Also, they made a lot of concerns of these new burgers. For example, they understood the customers’ needs; they can attract more teenagers for the new innovation of quarter pounders. They also knew that if they raise the prices, they will scare customers away. Instead of raising the prices of their burgers, McDonald’s created and changed products to reduce costs and not affect customers demand. Moreover, the most concern of the new change is the price-conscious customers and traditional fast-food chains because McDonald’s are trying to meet fast-food market demand and provide high quality food like its competitors.

In addition, “McDonald’s executives say the strategy is necessary to steal away customers at a time when the restaurant industry is barely growing” (Choi). They have met the Product Focus, one of the basic process strategies. In product focus, products are in high volume and low variety, therefore, McDonald’s decides to bring Angus Burgers down and bring up Quarter Pounders to replace it. They did it not only for the price, but also the changes of value. Since Angus Burgers were the most expensive item on McDonald’s menus and it hasn’t made any newer variety of the Angus burgers, it would be a great decision to balance McDonald’s sales and profits. This strategy will also attract more customers to try out more new products other than quarter pounders. The value of quarter pounders is healthier and better than Angus burgers. McDonald’s provide healthier items on their menus to meet customers’ demand and new customers that are loyal to other fast food restaurants..

After reading the article, I believed that McDonald’s are not only making new quarter pounders or McMuffin to attracts customers, they are trying to change traditional fast-food chains to fast-food market demand which they can meet customers demand. As long as they can win back customers from other fast food restaurants, they can make anything that customers like and put them on menus. For example, McDonald’s in Hong Kong even put Chinese food on their menus, even though it is an American fast food restaurant. I think this is unbelievable. In the United States, McDonald’s put Mexican style McWraps and breakfast burrito on their menus.

Do you think the three new quarter pounders can satisfy those customers who like third-pounder angus burgers? Would McDonald’s be affected if their menus contain items other than American style food?

Sources:

http://finance.yahoo.com/news/mcdonalds-adding-3-quarter-pounders-160308861.html;_ylt=AoiOCNv7.6R0UnCgiu4jiiTQtDMD

The simple joy of McDonald’s? Ba-da-ba-ba-ba, i’m hatin’ it

Posted on by spr1314cyoo

 

In 1948, the McDonald brothers re-organized the drive-in and completely restructured food delivery by focusing on quick and efficient “Speedee” self-service system which lowered prices as well as increased speed and volume of sales. Now, the McDonald’s Golden Arches logo can be seen throughout every continent except Antarctica and is one of the most recognizable in the world. McDonald’s Corporation remains to be the world’s largest restaurant chain focused on providing cheap fast food and delivering quick service to their customers.

However, the fast-food giant has been struggling with falling sales due to a vast number of complaints with its service. According to the Wall Street Journal, McDonald’s customer service is “broken,” because too many customers complain about the speed of the drive through, chaotic service, and unprofessional employees.

Slow service and inaccurate orders are known to be caused by management problems. Main reasons include employees being only trained for specific job tasks, lack of communication among fellow employees and poor wages. These problems lead to an increase in employee turnover and according to Wall Street Journal, McDonald’s Corp. contribute to 60 percent turnover rate. Furthermore, customers are outraged by rude or unprofessional employees and leave restaurants disappointed after experiencing chaotic service, which contradicts its traditional practice of “service with a smile”.

It is clear that customer satisfaction has a great impact on sales. What are the solutions to these management problems? First, McDonald’s new leadership has decided to focus on customer satisfaction to expand its brand name. The company will evaluate its performance through restaurant inspections, and conduct customer and employee surveys. The biggest change or improvement will be with the incorporation of the new “Dual-Point” ordering system. This will provide a simple and better service along with improved order accuracy. After the customer orders, he or she will be handed a receipt with a number and that order number will then appear on a screen and the customer will pick up his or her food at the other end of the counter. The “runner” will take on the responsibility of fulfilling requests and making sure the customer is satisfied with the order. Finally, the dedicated employee who delivers the food will thank customers and encourage them to come again.

In addition, new software has been installed to help managers decide the optimal number of employees to have on staff within a time frame. Also, the new management structure will designate managers to each area of the operation in the restaurant for efficiency. At the end of the day, by enacting these new changes to its management, McDonald’s Corporation hopes to win back its customer with improved customer satisfaction and encourage them to keep coming back for more.

There are number of restaurant chains that already carry out the new ordering system, will the new “Dual-Point” ordering system improve overall customer satisfaction for McDonald’s Corporation?

If you were part of the McDonald’s operations management team, what other implementations or suggestions would you incorporate to boost sales?

Sources:

http://online.wsj.com/article/SB10001424127887324010704578414901710175648.html#printMode

http://www.dailyfinance.com/on/mcdonalds-dual-point-ordering-system/