Project Management Report

SS 372 Launch of McDonald’s’ First Outlet In Pakistan 1
Project Management
Report
Launch of McDonald’s’
First Outlet in Pakistan
QULB E ABBAS
Executive Summary
Our group has chosen to delineate the country launch of

McDonald’s first eatery in Lahore, as a case-study for our project
management course. For this purpose, we visited McDonald’s’
Lahore head-office and interviewed the appropriate personnel in
order to know the preparation that went into the debut of
McDonald’s in Pakistan.
In the definition phase, we have given the relevant activities as

well as a little historical background on McDonald’s and analyzed
their motivation behind choosing Pakistan.
During the planning stage, we have given the structure of the

resources, the budget that was allocated and the assessment of
the risk and the counter-measures they took. Also we have
discussed their market assessment and the marketing strategy
they chose based on the assessment.
The execution period describes the actual steps taken to acquire

the land and then construction of the restaurant, including
interior decoration, while conforming to the international
standards set by McDonald’s. Also training of their low-level
employees, basically, the operations department to prepare them
to deal with customers etc. is also discussed. We have also
analyzed the success of McDonald’s’ marketing strategy which
was in place by this time. We have also documented the issue
logs for this project.
At the time of delivery, some staff was re-assigned, while a

couple of new departments were set up. By now McDonald’s was
ready to serve the Lahori population for their first ever taste of
international standard McDonald’s’ trademark food. We have also
mentioned the lessons learnt by Pakistan’s McDonald’s’
management by the end of this project.
Table of Contents
Executive
Summary ...............................................................................................
.............. 1
1
Definition ...............................................................................................
............................... 3
1.1 History:
McDonald’s .............................................................................................
................ 4
1.2 Country: Why
Pakistan? .................................................................................................
...... 5
1.3 City: Why
Lahore? ...................................................................................................
.............. 6
1.4 Location: Why
Gulberg? .................................................................................................
..... 6
1.5 Goals &

Specifications ..........................................................................................
............... 7
1.6 Responsibilities &
Teams .....................................................................................................
7
2
Planning .................................................................................................
................................ 9
Appendix
A .....................................................................................................
...................... 22
Project
Scope .....................................................................................
....................... 23
Major Characteristics of the
Project ..................................................................... 24
Strategic Management
Plan .................................................................................... 25
Definition
1.1 History: McDonald’s
McDonald’s is the world's leading food service retailer with more

than 30,000 restaurants in 119 countries serving 47 million
customers each day. It is one of the world’s most well-known and
valuable brands and holds a leading share in the globally branded
quick service restaurant segment of the informal eating-out
market in virtually every country.
Richard and Maurice McDonald were pioneers of McDonald’s and

the quick service restaurant industry. Ray Kroc was the founder
of McDonald's Corporation. McDonald’s’ success today is rooted
in the work of all three. They converted their barbecue drive-in
with car hops into the world's first McDonald's limited-menu, self-
service, drive-in in 1948, in San Bernardino, California.
In 1954, Ray Kroc was granted exclusive U.S. franchising rights

by the brothers. He opened his first McDonald's in Des Plaines,
Illinois in April 1955, and founded the company that evolved into
McDonald's Corporation. The strong foundation that he built
continues today with McDonald's vision and the commitment of
the talented executives to keep the shine on McDonald's arches
for years to come.
The world's leading food service organization is headquartered

just outside Chicago; in Oak Brook, Illinois. Approximately 2,800
employees provide a wide variety of support functions to the
30,000 McDonald's restaurants in 119 countries around the globe
through a network of divisional, regional and local-country
offices.
McDonald’s has always been a franchising company and has

relied on its franchisees to play a major role in its success.
McDonald’s remains committed to franchising as a predominant
way of doing business. Approximately 70% of McDonald’s’
worldwide restaurant businesses are owned and operated by
independent businessmen and women.
1.2 Country: Why Pakistan?
By the end of 1996, McDonald’s had gained strong foothold in

major parts of the world. McDonald’s opened its door to India in
October 1996. Due to the overwhelming response from their
Indian customers and its commitment to expansion, McDonald’s
next target was none other than the neighboring county,
Pakistan.
In order to introduce McDonald’s to Pakistan, they had to first

determine whether a demand for what they were offering existed
or not. One of the questions posed was how the Pakistani market
would react to a foreign brand. After all, who would eat burgers
and chips at a higher price when there is a more affordable

alternative of “bun-kebabs” and Mr. Burger etc?
According to Mr. Raza1, a feasibility report had been conducted

which concluded that living standards in this part of the world
were increasing. People enjoyed a much higher level of income
than their predecessors. Also there was certainly more awareness
of the hygiene and quality of food they ate. The communication
medium had also developed which was a necessity so as to
enable the top management to correspond with their country
managers. Internet had revolutionized the country and people
had become more conscious about foreign brands. Furthermore,
its competitors like KFC and Pizza Hut were already enjoying their
share of the market. So basically, the ground work was laid and
all set for McDonald’s to stamp their mark and conquer the food-
loving Pakistani population.
McDonald’s had to determine whether the conditions in Pakistan

were conducive to their style of management and one big
concern was procurement. McDonald’s success is dependent on
the support from the local authorities and quality suppliers. For
example, McDonald’s can only serve Coke’s soft drinks with their
food since they have a partnership with them; hence they needed
to ensure a smooth supply of Coke.
1.3 City: Why Lahore?

1
Mr. Raza was one of the people we interviewed, he holds the position of Marketing Head at McDonald’s,
Lahore.
Being two of the largest commercial hubs of Pakistan and

enjoying a large population with reasonable incomes, Karachi and
Lahore were the most suitable cities to kick off the project.
McDonald’s had decided to inaugurate their outlet in both cities
at the same time. Two independent teams were formed and both
had their own schedule. The Lahore team managed to finish on
schedule while Karachi experienced a delay2, so the top
management decided to go ahead with the opening of Lahore
outlet. Karachi followed suit in a week’s time.
1.4 Location: Why Gulberg?
To serve most people of Lahore, the location of the first outlet

had to be worked out. The major requirements were that it had to
be easily accessible by the potential customers of Lahore. Being
a fast food restaurant, the potential customers were identified to
be employees working in offices, people in shopping plazas and
students from educational institutions. What all these customers
had in common was how they valued time. So minimizing the
time that would have to be spent in driving or walking to the
restaurant, the area to be chosen had to be highly concentrated
with these customers. Gulberg suited all these requirements well
as it is the heart of the city. Moreover, the presence of other
restaurants also made it the most productive area in town. So the
2
The reasons for which we were unable to find out since the Lahore office had no knowledge as to the
cause of the delay.
ground work of the very first outlet started at a piece of land in

Gulberg.
1.5 Goals & Specifications
For the sake of clarity, we felt the goals and specifications were
better explained through the various documents we have
submitted in Appendix A.
1.6 Responsibilities & Teams
Integration at various levels of the organization was required in

order to successfully complete the project in time. The major
departments involved in the launch were;
(i) Finance: & Information Technology:

(ii) Development
(iii) Purchasing
(iv) Human Resources
(v) Corporate Affairs
(vi) Operations
(vii) Marketing
(viii) Quality Assurance & Product Development
(ix) Legal and Company Secretarial
At the grass root level crew members were to be appointed and

then in order to supervise them, Floor managers and Restaurant
manager were to be appointed. The restaurant manager holds a

key position and is given the following responsibilities:
• A Restaurant Manager is responsible for running an

independent, multi-crore restaurant.
• Training, motivating and leading a team of 50-100
employees.
• Independently managing the restaurant's operations in
terms of sales, profitability and community relations.
• Delivering 100% Total Customer Satisfaction to every
customer - every time.
The organizational structure set was quite transparent and

possessed all key ingredients required to make a successful
employee force.
Planning
2 The Plan
After reviewing the above factors and making the necessary

adjustments, it was time for the next phase. This essentially dealt
with how the Joint Venture system had to be set up and operated.
A three year plan was drawn which addressed all likely

occurrences during the growth phase. But we believe, had it been
a five or ten year plan, it would have been even more beneficial.
In the short run a three year plan is good enough but as the
organization aimed at capturing the local food market and in
order to vision the target properly, a long term plan would have
been much more beneficial. This is important because there is
usually little opportunity to make structural changes once
franchise agreements have been signed by your first franchisees.
The following were addressed under the business plan:
2.1 Reviewing the Market

A thorough analysis was undertaken of competitive food-chains

and eateries, and the trends applicable to the product and
services to be provided by McDonald’s. This gave the
management a better knowledge of the market and its demands,
and enabled them to plan with more confidence and
understanding.
It was appropriate to conduct the market survey for better

analysis, but an aspect that came out of this activity was not
incorporated. The public was of the opinion that along with
having traditional McDonald’s burger and assorted fried food,
they would also like to have fast-food made according to local
and cultural taste. Here McDonald’s suffered in comparison to
their competitors; Pizza Hut came up with dishes like “Chapli
Pizza” and “Chicken-tikka Pizza”. McDonald’s finally had to adopt
this strategy as well but the delay caused them to lose out on
market share. In today’s world, customer opinion has tremendous
weight attached to it; since ultimately customer satisfaction
means more sales which is the bottom line for any successful
venture.
2.2 Management & Corporate Structure
There was a need to put the right people in the right place to
have a competent operating structure which would enable the
franchise to grow and mature. The organization provided training
through a very structured method that consisted of both
classroom and practical training as per the standards set by

McDonald's International.
We feel that since the organization was of a substantial size, a

separate department for training would have suited their needs
more efficiently. Professional advice and management
consultancy could also have been followed.
2.3 Expansion and Premises
The organization aimed at expanding its business into all corners

of the country over a short period of 8 years. An initial plan was
set up in order to target the land to be leased and an
approximate estimate was made when to open at the respective
sites.
The parent company wanted to have the following features in the

site:
• Minimum square footage for a McDonald’s site 32,616

square feet
• Corner or corner wrap with signage on two major streets
• Signalized intersection
• Ability to build up to 5,500 square feet of building at any
time
• Parking to meet all applicable codes
• Ability to build a minimum height of 22 feet
2.4 Advertising and Marketing
A national marketing campaign was launched in order to create

awareness among the masses of the impeding McDonald’s
launch.
Considering that the restaurant was initially only set up at Lahore

and Karachi, most of the budget should have been allocated to
media campaigns in respective cities instead of concentrating
more on national campaigns. No doubt the organization targeted
the country as a prospect since it was a country scale debut for
McDonald’s, but initially to establish itself firmly it would have
been more beneficial to market the brand in Karachi and Lahore..
Throughout their promotional campaign, the management

propagated the launching only through print media, choosing to
ignore television which is a strong advertising tool today. When
this was pointed out by us during our interview with the
marketing manager of the organization, he clarified that the
McDonald’s products can only be afforded by 30% of the urban
population. Therefore they did not consider campaigning through
television as they believed that the cost of reaching per person
was too high to be justified in the cost-benefit analysis.
2.5 Budget
A budget of U.S$ 1000000 was set aside initially, in order to

launch the project. It was an estimate which had to be increased
by $ 200,000 at later stages. The total budget was proportioned
among McDonald’s International, Lakson Group Pakistan and

Akbar Group in the following manner
McDonald’s International : 50 %
Lakson Group: 25 %
Akbar Group: 25 %
The group decided to share the revenues generated from the

restaurant in the above manner.
The organization could have prepared a five year financial

forecast based on their business plan. At least the first two years
should be projected on a monthly basis. This would have ensured
that you are aware of your own financing requirements before
you start the organization.
Execution
The execution phase involved the following tasks:
3.1 Acquiring Land
The administrative authorities in the organization chose Lahore to

be one of the ideal cities for the launch of their brand. The
residents of Lahore because of their traditional love of food
forced the authorities to make this decision. Gulberg was ideal
due to its easy accessibility from every corner of the city. With
the location and area defined for the first outlet, the authorities,
after facing some initial difficulties3, did manage to acquire land
and ultimately a two story building was constructed at 63 Main
Boulevard Gulberg 11 Lahore.
By looking at the results initially, one could have easily said that
the authorities had done a great job in choosing an immaculate
location. But if one analyzes, the authorities focused on short
term benefits only and left out long term goals while they were
involved in the land acquiring process.
This flaw is reflected when they cared less to address the issue of
parking for their customers. Moreover they had limited space, so
any extension plans in the future would be hampered. The
limitation on the number of floors by legal authorities also ruled
out the possibility of further extension. They should have
3
We have discussed the issues faced later on in the report
negotiated with LDA and McDonald’s International about this

issue.
Therefore, though the authorities at McDonald’s were successful

in planning an amazing launch of the brand, they lost focus on
long term goals which is reflected by a decline in their success
graph.
3.2 Construction
The construction of the outlet involved a few external personnel.

An architect was involved in designing the outlet structure
according to the specifications provided by the parent company
and the administrative authorities such as the LDA. The
architect’s goal was to make the outlet as appealing and inviting
as possible.
Apart from constructing the building itself, McDonald’s enhanced

their environment-friendly image by also building a park adjacent
to their outlet for public use. This served as a good marketing
tactic.
Following is a blue-print provided by McDonald’s International

which was adhered to during the construction phase.
3.3 Interior Decoration
All fixtures and fittings were imported to furnish the interior. Even
the sanitary and toiletry were not local. This requirement was
specified by the parent company as they didn’t want to
compromise on the quality of the material involved. An interior
designer was hired to give the outlet an inviting look.
Even though the interior design of the outlet seems to be

immaculate, the cost involved in achieving this was astronomical.
Had the management negotiated with the parent company to
install local quality fittings, they would have avoided the much
higher cost of importing them.
3.4 Training of Employees
The training department at McDonald’s had done it’s best to

impart quality servicing skills to its crew. Restaurant Managers
were sent to the prestigious Hamburger University to take the
Advanced Operations Course. Similarly employees from other
departments were sent abroad to attend various training
programs. The primary goal of these training programs was to
provide quality service and a clean and hygienic environment to
their customers, while adhering to the guidelines laid down by
the parent company.
Even though McDonald’s has been successful in providing their

customers with quality service, one might think that they could
have done a better job in terms of service providence had they
incorporated local cultural norms. For example, unlike the
western culture, having a female employee in a western outfit at
the reception might not be appreciated in the local culture. To
conclude, the authorities at McDonald’s Pakistan would have
done a better job had they been more innovative in their
approach towards servicing their customers.
3.5 Implementing Marketing Strategies
The marketing team at McDonald’s did an amazing job as far as

popularizing the brand in the market was concerned. The prior
awareness of McDonald’s as a leading fast food chain globally
made their job a lot easier. Nevertheless, they had to market the
brand locally in order to make the project a success.
They approached the youth through offering special deals in

schools. They attracted kids by arranging birthday parties and
offering gifts. Free passes were given to Pakistani celebrities to
attract customers. Thousands of posters and banners with
McDonald’s’ trademark sign, the “golden arches” scattered the
streets.
Despite facing tough competition from fast food chains already in

the market, the marketing team was successful in gaining the
attention of consumers. This is reflected in the fact that the day
McDonald’s was opened; it was so crowded that one of their
doors got broken. Though they could have avoided such a
mishap, this clearly suggests the implementation of effective
marketing strategies by the marketing department.
3.6 Issues Log
1. Difficulties in hiring female workforce: The McDonald’s

management faced problems initially in hiring females to work in
the outlet due to the cultural inhibitions and parent’s reluctance.
But eventually McDonald’s was able to persuade them by show of
good faith and promising strict action against any case of
complaint or harassment.
2. Beautification of surroundings: In the initial project

plan, there was no requirement to build a park next to the outlet
but they had to deviate from their original plan to incorporate this
requirement which was later set by the area authorities. This
constraint the budget further.
3. Real estate problem: problem acquiring land
4. Machinery not installed properly: When the imported

machinery arrived at the project site, the crew faced problems in
installing and operating the machines. Due to this a technical
team from abroad had to be called in to rectify the situation.
5. LDA rules to be incorporated with parent company’s

requirement:
6. Budget went overboard due to imports: McDonald’s

made the mistake of importing pretty much everything for their
first outlet. This is true not just for the food and raw materials but
also for very insignificant things such as paper napkins and cups
etc. This alone caused their budget for this project to go
overboard which had to be revised later on.
7. Import duty increased: During the construction phase,

the government increased the duty on imports by a significant
amount which again placed a strain on the budget.
8. Political instability: Conflict and uncertainty created due

to the nuclear tests carried out in May 1998, caused the parent
company to re-consider investing in Pakistan. Freezing of foreign
currency accounts was especially a big blow to them, but since
the project was near completion they decided to go ahead.
Delivery
Since this project consisted of inaugurating a restaurant, there

were not many typical project related activities at this stage.
However the following tasks took place:
4.1 Release of Unnecessary Resources
Redundant staff of various departments such as real-estate was

cut down since there was not much need for them once the
leasing and construction had been done. A minimal staff was
maintained for future openings in Lahore.
4.2 Reassigning & New Departments
A couple of new departments like Maintenance and I.T are

opened at the time of the launch, since they have no purpose
during the launch itself. Maintenance is, as it name suggests, for
maintaining the premises and the equipment to ensure 100%
performance and that equipment doesn’t malfunction during
work hours. The I.T department is responsible for the networking
and computers so that the McDonald’s’ offices and departments

are well-connected and easily accessible.
4.3 Lessons Learnt
The mistakes made and hence the lessons learnt for McDonald’s
from their inauguration in Lahore were as follows:
1. Home-delivery: Secondly, initially when McDonald’s

opened they did not plan for home delivery. This caused a loss in
revenue since at this time; KFC and Pizza Hut were offering free
home delivery. But they quickly rectified this oversight and in fact
innovated and are currently providing the only drive-in service in
Pakistan. Currently 50% of all sales at the Gulberg branch are
through take-away.
2. Local suppliers not up to the mark: Even though the

management realized that importing every single thing from
abroad was not feasible for them, they could not compromise on
the quality. But they didn’t make the same mistake for the
outlets that they came to open later on. Instead of relying
completely on foreign imports such as bread and ketchup for
their food, they eventually signed agreements with Dawn and
Knorr respectively. They had special machines imported and
installed in their plants to ensure that they adhere to their
international standards of quality.
3. Location of outlet: They should have developed the first

outlet further into the middle class location since high income
class can reach the restaurant regardless of location.
1. They should have developed the first outlet further into the
middle class location since high income class can reach the
restaurant regardless of location.
2. budget went overboard because raw materials such as even
the toilet fittings were imported from abroad. This was an
unnecessary expense.
3. The original blue print given to LDA for approval was
rejected since it didn’t meet the local construction
requirements; hence amendments had to be made which
delayed the project.
4. Installation of the imported machinery was problematic and
a team of technicians had to be called in from the
5. Instead of sending personnel for training to Malaysia, a
department needs to be opened here so that training can
take place locally since in the long-term when more outlets
are opened, they will need to train more people.
6. marketing approach taken did not take into account the
local cultural theme. They alienated the customers by
promoting a totally foreign image. For example, Spicy
burger.
7. Inauguration could have been held on a day of some
national\cultural significance like Basant etc.
8. Combos / deals again did not take into account the local
sensibilities. For example an offering of rice with a big Mac
does not make sense.
Appendix A
Project Scope
Project Objective:
To launch a leading food franchise in Pakistan.

Deliverables:
• A 32616 square feet finished building.

• Kitchen must be equipped with latest machinery, imported
from USA.
• Train the employees.
• Organize the suppliers.
Milestones:
• Completion of building on 1st June, 2002.

• Interior decoration to be finished by 1st July, 2002.
• Start operation from 1st September, 1998.
Technical Requirements:
• Restaurant must meet local building codes.

• Interior must be in accordance with the franchise rules.
• Parking to meet all applicable codes.
• Ability to build a minimum height of 22 feet.
Limits and Exclusions:
• The organization will be built to the specifications and

designs of the original blueprints provided by the parent
company.
Major Characteristics of the Project

1. The project was aimed at successfully launching McDonald’s

in Pakistan and establishing a stable market in this region.
2. The project was to be completed within a time period of 18

months, starting January 1, 1997 and ending on August 31, 1998.
3. Integration at various levels of the organization was

required in order to successfully complete the project in time. The
major departments involved in the launch were:
(i) Finance and Information Technology Department

(ii) Development Department
(iii) Purchasing Department
(iv) Human Resource Department
(v) Corporate Department
(vi) Operations Department
(vii) Marketing Department
(viii) Quality Assurance
(ix) Legal and Company Secretarial
4. This project was conducted for the first time in Pakistan;

therefore it possessed high risks and challenges.
5. The key to success depended on satisfying the customers,

which was the focus throughout the project, although the project
also had time, cost and performance requirements.
Strategic Management Plan
1. Definition of Organizational mission
“Customer satisfaction is the key to success.”
The mission of the organization was to become the leading food

franchise in Pakistan within a short span of time (5 years).The
main focus of the organization was that the general public should
develop a taste for burgers and along with it other side-products
such as french-fries , milk-shakes etc. The company was set up
with a mission to provide quality food to masses at affordable
prices.
2. Long-Range Goals and Objectives
In order to materialize the ideas, it was necessary to set the goals

of the organization at the start. It helps the employees move
ahead in the right direction or rather make them concentrate on
a directed path.
• The goal was to target the general public and not a specific
social class.
• The progress shall be measured in term of increased
customers and volume sold.
• The goal was to become leading food chain in Pakistan.
3. Analyze and Formulate Strategies to Reach

Objectives
Marketing strategies were set up to grab the customer focus. A

huge budget was allocated for advertisements and other media
campaigns .The environmental and cultural aspects, such as
female waitresses were analyzed in order to have a better
understanding of the customers and their preferences.
4. Implement Strategies through Projects
To have better skilled labor, employees were hired form the local
market and were sent abroad for a month’s vigorous training
exercise, in order to serve better to the customers.
Organization was set up as a matrix organization so that there

can be better interaction among the employees, to avoid
implementation gaps. Latest equipment was imported into the
country and an IT Department was set up in the head-office, in
order to have an updated record system to continuously monitor
the progress of the organization.
All this measures helped the organization in attaining the goals

set initially by the management.

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SS 372 Launch of McDonald’s’ First Outlet In Pakistan 1

Our group has chosen to delineate the country launch of

In the definition phase, we have given the relevant activities as

During the planning stage, we have given the structure of the

The execution period describes the actual steps taken to acquire

At the time of delivery, some staff was re-assigned, while a

1.5 Goals &

1.1 History: McDonald’s

McDonald’s is the world's leading food service retailer with more

Richard and Maurice McDonald were pioneers of McDonald’s and

In 1954, Ray Kroc was granted exclusive U.S. franchising rights

The world's leading food service organization is headquartered

McDonald’s has always been a franchising company and has

1.2 Country: Why Pakistan?

By the end of 1996, McDonald’s had gained strong foothold in

In order to introduce McDonald’s to Pakistan, they had to first

and chips at a higher price when there is a more affordable

According to Mr. Raza1, a feasibility report had been conducted

McDonald’s had to determine whether the conditions in Pakistan

1.3 City: Why Lahore?

Being two of the largest commercial hubs of Pakistan and

1.4 Location: Why Gulberg?

To serve most people of Lahore, the location of the first outlet

ground work of the very first outlet started at a piece of land in

1.5 Goals & Specifications

1.6 Responsibilities & Teams

Integration at various levels of the organization was required in

(i) Finance: & Information Technology:

At the grass root level crew members were to be appointed and

manager were to be appointed. The restaurant manager holds a

• A Restaurant Manager is responsible for running an

The organizational structure set was quite transparent and

After reviewing the above factors and making the necessary

A three year plan was drawn which addressed all likely

The following were addressed under the business plan:

2.1 Reviewing the Market

A thorough analysis was undertaken of competitive food-chains

It was appropriate to conduct the market survey for better

2.2 Management & Corporate Structure

classroom and practical training as per the standards set by

We feel that since the organization was of a substantial size, a

2.3 Expansion and Premises

The organization aimed at expanding its business into all corners

The parent company wanted to have the following features in the

• Minimum square footage for a McDonald’s site 32,616

2.4 Advertising and Marketing

A national marketing campaign was launched in order to create

Considering that the restaurant was initially only set up at Lahore

Throughout their promotional campaign, the management

A budget of U.S$ 1000000 was set aside initially, in order to

among McDonald’s International, Lakson Group Pakistan and

The group decided to share the revenues generated from the

The organization could have prepared a five year financial

The execution phase involved the following tasks:

3.1 Acquiring Land

The administrative authorities in the organization chose Lahore to

negotiated with LDA and McDonald’s International about this

Therefore, though the authorities at McDonald’s were successful

The construction of the outlet involved a few external personnel.

Apart from constructing the building itself, McDonald’s enhanced

Following is a blue-print provided by McDonald’s International

3.3 Interior Decoration

Even though the interior design of the outlet seems to be