Smiles a Bit Strained at McDonalds

A year into McDonald's Corp.'s much-publicized overhaul of its kitchens, customers sometimes face an unwelcome trade-off: Hotter, fresher food, but longer waits at the counter. For a company that has long prided itself on quick service, it's an embarrassing problem.

Chicago Tribune
November 16, 2000

Smiles a Bit Strained at McDonalds
The fast-food giant overhauled restaurants’ kitchens to bring customers hotter, fresher meals, but lagging sales—and service times—give it food for thought.
Ameet Sachdev

A year into McDonald's Corp.'s much-publicized overhaul of its kitchens, customers sometimes face an unwelcome trade-off: Hotter, fresher food, but longer waits at the counter.

For a company that has long prided itself on quick service, it's an embarrassing problem. In fact, the Oak Brook-based fast-food chain has only recently acknowledged the service delays after denying earlier media reports that its "Made For You" cooking system was causing longer lines at peak times such as lunch.

"Our service at the front counter has not been going as smooth as we would have wanted," said Alan D. Feldman, president of McDonald's USA, in a recent interview.

But management insists that Made For You, which allows patrons to customize their orders, is only partially to blame for slowing service in restaurants. Company officials say restaurants need to work on executing the system, such as figuring out how to best deploy restaurant crews.

Nevertheless, McDonald's is scrambling to come up with ways to speed up front-counter service, including lining customers up in a single queue and preparing some food in advance of peak hours.

The kitchen makeover was the centerpiece of a massive $400 million investment to jump-start sales at the burger giant's 12,700 U.S. restaurants. Before the makeover, burgers prepared in advance sat under heat lamps in bins.

McDonald's so-called "brand reinvention program" also included spruced-up restaurants and new menu offerings. The company is telling consumers about the changes in a new advertising campaign, featuring the tagline "We love to see you smile."

But the improvements haven't immediately registered with consumers. Through the first nine of months of 2000, sales at U.S. restaurants are up 3 percent to $14.7 billion. U.S. systemwide sales rose 5 percent in 1999.

In the third quarter, U.S. same-store sales at McDonald's grew about 2 percent, according to analysts. By comparison, same-store sales at Wendy's U.S. company restaurants rose 2.8 percent in the quarter.

Mediocre growth combined with international currency woes has made it a tough year for McDonald's investors. Shares fell 25 cents to $31.75 Tuesday, well off their 52-week high of $49.56 on the New York Stock Exchange.

To be sure, there are encouraging signs. Company research indicates that consumer perceptions of McDonald's fare are improving. Some new products, such as breakfast bagel sandwiches and McShaker salads, are hits. And the "smile" commercials seem generally well-liked, especially by women and African-Americans, according to USA Today's Ad Track survey.

While it's hard to say whether the longer lines are driving away business, the delays are a telling signal that there are still kinks to be worked out of the Made For You system.

"I wouldn't make it the Holy Grail of domestic challenges," said Peter Oakes, an analyst at Merrill Lynch. "But they could definitely use some attention to that."

McDonald's is not alone. Faster service is a pressing issue for the fast-food industry because harried consumers want everything at Internet speed. Indeed, consumer expectations may be impossible to meet, suggest restaurant industry consultants.

"No matter how fast you make it, it's not fast enough," said Ron Paul, president of the Chicago-based market research firm Technomic Inc.

Quick-service chains have been focused on improving drive-through speed because almost 65 percent of fast-food revenue comes through the window. McDonald's does about 60 percent of its business at the drive-through, analysts said.

Ironically, Made For You has helped McDonald's drive-through performance, Feldman said, by streamlining order processing and sandwich assembly. The chain has trimmed its average drive-through time by about 40 seconds to 130 seconds, the lowest in three years, according to McDonald's internal research.

At the front counter, however, customers are finding that Made For You tends to extend the wait at lunch and other high-traffic parts of the day.

Some franchisees say the problem is overblown and that there is nothing wrong with the new cooking system. "In my situation, it's working very well," said Marilyn Wright, a franchisee who runs six high-volume restaurants in the Chicago area. "But some don't have their ducks in order. They have to spend a little more time in training and positioning their people."

Indeed, the company is working with restaurants to fine-tune the execution of Made For You. For instance, the company recommends that during high-traffic periods a crew member be dedicated to cooking french fries.

Some franchisees also are experimenting with a single, winding line in front of the counter instead of McDonald's more common multiple lines extending back from the cash registers. "I think the single-line service lends itself to Made For You better than the traditional set-up because you can capture the orders quicker," said Art Sandoval, who owns eight restaurants in Denver.

The tests of different service approaches will be completed by the end of the year, Feldman said. He added: "We will shortly find ways to provide our customers the outstanding service they want inside the restaurants.

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