By Larry Barrett, Sean Gallagher  |  Posted 2003-07-02 Print this article Print

McDonald's planned to spend $1 billion over five years to tie all its operations in to a real-time digital network, but the project failed before it even got off the ground.


McDonald's challenge is painfully obvious from a May visit to a franchise on Midwest Road in Oak Brook, only a few miles from where Cantalupo spoke to stockholders.

In a restaurant last redecorated in the 1980s, among faux black marble wall tiles and fraying brown leatherette booth benches, a manager repeated the same phrase to customers as their orders were finally filled: "I'm sorry about the wait." With only three customers at the counter, an order for a single Extra Value Meal took more than seven minutes to fill.

As the result of a process reengineering the company forced on its restaurants in the late 1990s, the quality and speed of service is, as Cantalupo acknowledges, at an unacceptable nadir. The restaurant built on the "15-second burger" now finds itself losing its share of customers because of slow and sometimes shoddy service.

The American Customer Satisfaction Index (ACSI), which surveys more than 65,000 customers, has tracked McDonald's lackluster service performance for the past nine years. The study measures customer expectations, perceived quality, perceived value, customer complaints and customer loyalty—scoring each company on a scale of 1 to 100.

In 1994, the first year of the study, ACSI respondents gave McDonald's a score of 63, well below competitors such as Wendy's (71) and Burger King (66), as well as Yum Brands' Pizza Hut (69) and KFC (67) units. In 1995, McDonald's managed to score a 65—the highest level it would attain during the nine years of polling—before slipping back to a 61 in 2002. Meanwhile, its leading competitors have consistently scored from the mid-60s to low-70s over this same period.

Taking a closer look, every fast-food restaurant points to its drive-through window as the benchmark for its service performance.

The most recent data collected by QSR Magazine, a quick-service restaurant trade publication, shows that McDonald's drive-throughs took 162.7 seconds to fill an order between June 7 and July 28 of last year. That's slightly faster than the 165.8-second average of the top five burger-centric fast food restaurants.

However, random secret shoppers hired by McDonald's and other independent watchdogs, such as QSR Magazine, report that orders can take between five and 10 minutes to fill and actually take longer during nonpeak operating hours.

Now, say Cantalupo and McDonald's President and Chief Operating Officer Charlie Bell, the technology efforts of the company will be focused on improving its customers' experience; speeding up the trip through the drive-through or to the counter, and making the trip more convenient so that Quarter Pounder lovers will come back again.

This summer, the company begins its rollout of credit- and debit-card payment systems to about a quarter of its U.S. restaurants. These systems will require no signature for purchases, reducing the time it takes for a credit card transaction to go through to roughly the same time as a cash transaction. McDonald's hopes that taking credit cards will boost its flagging sales—Visa found in a study of credit card use in quick-service restaurants that customers spent 30% to 50% more when they used a credit or debit card than when they spent cash.

But restaurants need to configure their point-of-sale systems to take electronic payments before these systems can be installed—according to one integrator familiar with the McDonald's trial, it costs $12,000 for each McDonald's location to be configured to handle the technology.

Cantalupo says the company also plans to test kiosks that allow customers to punch in their own orders at the drive-through or while waiting to get to the counter—theoretically cutting down on the wait in line and reducing order-errors by cutting McDonald's minimum-wage employees out of that part of the transaction. And, says Bell, the company will focus on other basics of good service—like having clean bathrooms. "We're going to have the cleanest bathrooms in the business," he declared at the stockholder's meeting.

Having clean bathrooms was always a tenet that Ray Kroc insisted be at the forefront of McDonald's image. He would often tell McDonald's insiders that kids can't tell the difference between the quality of one cheeseburger or another but mothers would always know and remember which bathrooms were clean and which weren't.

But information systems don't scrub toilets and they don't fry potatoes.

Senior Writer
Larry, of San Carlos, Calif., was a senior writer and editor at CNet, writing analysis, breaking news and opinion stories. He was technology reporter at the San Jose Business Journal from 1996-1997. He graduated with a B.A. from San Jose State University where he was also executive editor of the daily student newspaper.

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