McDonald's Wants To Fix Its Speed Problem
Over the past decade, McDonald's has put a massive distance between itself and its major competitors in large part by adding a bunch of new products to the menu and then fixing up its stores, thus giving consumers more reason to enter its doors and then making those locations more desirable.
But lately, it seems, McDonald's massive menu has put a strain on service. "Menu complexity" has become arguably the biggest challenge for the chain's franchisees, who are struggling to consistently serve customers as quickly as a fast-food chain's customers would demand.
That's what makes the company's announcement this week that it plans to shift much of the focus of its U.S. capital spending so interesting. The company said it planned to delay some reimage programs scheduled for 2014. It instead plans to focus its spending on kitchen improvements, as a way to boost service levels.
The most interesting comment came from Jeff Stratton, president of McDonald's in the U.S. and Canada. "During 2013, we introduced a number of significant products and limited time offers to provide more variety and flavor options for our customers," he said, noting that "the pace of product introduction (was), in my opinion, too fast." That "created challenges for our restaurants from a training and staffing standpoint that limited their contribution to our top-line performance."
Stratton will get no argument from me. A high percentage of my own recent visits to McDonald's have been marked by poor service, and many times it's clear that those service challenges are due to the high number of items on the chain's menu.
As company executives noted frequently during their Investor Day presentation, competition in the QSR business has become more aggressive, and yet the number of customers remains stagnant. This makes performance at the store level so vital. While McDonald's did a great job improving the look of its stores over the years, to make them more palatable to the typical customer, if those customers have bad experiences inside the stores they're likely to go somewhere else. And now, unlike previous years, the chain's competitors are providing a compelling option. Burger King has remodeled many of its stores and now boasts a low-calorie French Fry. Wendy's has delicious burgers on pretzel buns.
So next year, McDonald's plans to add new refrigerators and high density prep tables to its kitchens so its stores can increase customization of orders and move products through more quickly. It also plans to add new ordering technology to increase speed of service. The company also plans to slow the pace of some limited time offers while focusing its attention on marketing core items.
It remains to be seen whether this will work. But McDonald's has spent years making sure its restaurants look good. Now it must ensure that they perform well.