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Posts Tagged ‘Fast Food’

We have posted in the past on how the burrito-chain Chipotle has increased the rate at which it moves customers through its restaurants, or as an article on Quartz terms it, its burrito velocity (Chipotle continues to refine the science of burrito velocity, Apr 21). The numbers are pretty remarkable.

Over the first three months of 2014, the US Mexican-food chain saw an average increase of seven transactions per hour at both peak lunch and dinner hours—12 to 1pm and 6 to 7pm, respectively. On Fridays, one of its busiest days of the week, Chipotle fielded 11 more customers per hour at lunchtime on average across its stores, a roughly 10% increase. …

Some of Chipotle’s fastest restaurants currently run more than 350 transactions per hour at lunchtime, which equates to a ludicrous near-six transactions per minute. The nationwide average is currently somewhere between 110 and 120, according to Moran. But they’re getting faster, and faster, and faster.

So how do they accomplish this increase in speed? (more…)

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Fast food is supposed to be, well, fast. But is speed everything? If you think about how different chains advertise, they are often emphasizing price or some expansion of their offerings. Essentially no one ever says that they will get you on your way in two minutes. Speed is taken as a given but there has to be some interplay between the range of what a firm offers and how fast they can serve customers.

That gets us to QSR Magazine‘s annual survey of drive-thru lane performance (The Drive-Thru Performance Study, Oct 2013). Drive thrus matter since they can account for 60 – 70% of sales and QSR’s survey is something of an industry standard since they have been at it for 15 years. You can find information on their methodology here and a paper co-written by Gady that uses this data here. The most interesting insight from the survey comes from comparing data on service times (i.e., how long does it take from when you get to the order board until you have your bag of food) this year with last year.

QSR DataAs the data shows, service times are getting slower as a whole. The industry average went up about 5% from 172 seconds to 180. What’s driving the increase?

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What counts as good service at a fast food restaurant? Speed obviously matters but what about staff interactions? No expects a quick service restaurant to have a Zagat’s rating (although some Chicago hot dog stands are graded) but can fast food service slip so much that customers notice?

Apparently the answer is yes, and furthermore McDonald’s hasn’t been doing so well in delivering service (McDonald’s Tackles Repair of ‘Broken’ Service, Apr 10).

But achieving speed and friendliness of service across the chain has been a particularly elusive goal, at least in part because about 90% of McDonald’s restaurants in the U.S. are owned by independent operators.

In QSR Magazine’s annual Drive-Thru Study, the only comprehensive industry comparison of customer service at fast-food chains, other restaurants have consistently outperformed McDonald’s in those areas. In last year’s study, the average service time at the McDonald’s drive-through studied was 188.83 seconds, compared with 129.75 for industry leader Wendy’s Co.  Chick-fil-A had the top friendliness ratings. Out of the seven major chains in the study, McDonald’s was second to last in the “very friendly” ranking, just above Burger King.

So what are the root causes of the problem and what can they do about it? (more…)

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It’s hard to imagine a firm asking its sales force to reign in sales of a new product for which it has high hopes, but that is effectively what McDonald’s is doing with franchisees and its new smoothie offering (McDonald’s Cuts Aggressive Smoothie Promos Ahead of U.S. Launch, Jul 2, Wall Street Journal). Here’s the scoop: The Golden Arches are launching a new smoothie product with the official coming out party scheduled for July 13th.  Expect lots of ads. However, before the advertising blitz, they need to load up the supply chain.  That means, the stores have the stuff and are capable of selling it. And they may well be excited about selling it because drinks generally have fatter margins and the whole point of this product is to drive traffic at otherwise slow times of the day. But having stores jump the gun is messing up McDonald’s launch plans.

McDonald’s is trying to rein in sales in the two weeks before the company throws the full weight of its national marketing machine behind the product, according to internal company documents. McDonald’s has ordered some stores in the South and Midwest to stop offering free samples in stores and to cut down on tasting events, where trucks offer samples at sporting and other gatherings. Some Southern markets are being told to take down posters and other in-store signage promoting Smoothies, unless they have a “Coming Soon” tag.

Smoothies supplies are “flying out too fast and the supply chain was predicting a catastrophe if they didn’t reel it in some,” said one McDonald’s franchisee who declined to be named because the company forbids store operators from discussing internal matters. …

“In an effort to gear up for the national launch and make sure we’re all aligned and have sufficient supply for our national marketing efforts, we have scaled back a bit on some of the local efforts,” [McDonald’s spokeswoman Danya] Proud said.

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When we think about processes (for example, purchasing food in the fast food restaurant or calling a call center) we usually think about the cost of waiting, the fact that customers may leave the line without being served or may choose not to remain loyal to a specific firm due to poor service, but I am not familiar with models that consider the following behavior:

Cop accused of pulling gun while waiting for food: A Denver police officer has been charged with felony menacing for allegedly brandishing his gun at a McDonald’s restaurant after getting tired of waiting for his food.(San Francisco Chronicles, July 22nd. Hat tip to Margaret Pierson for sending it).

While this may seem anecdotal, I would like to refer to a larger study done on the drivers for consumer rage in the service sector, the “Rage Study”. Among other things, the survey studies how people that experienced poor service expressed their displeasure. Apparently, the responses vary between sharing the story with a friend (84%), yelling and raising a voice (24%-33%) to using profanity (9%-16%). In a different study, Prof. Anat Rafaeli from the Technion (The Effects of Angry Customers) studies the impact of angry responses on the performance of agents in a call center. The conclusion from her work is that the service provider’s need to deal with anger expressed by the customer may hurt his performance. So, next time you tell the call center agent on the phone how frustrated you are with the long wait and poor service, you should know that you may be making matters even worse.

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