Professional Documents
Culture Documents
strategy
Dr Amit Rangnekar
McDonalds 2010
Market cap
Sales
Sales Growth
Net Profit
Outlets
Operates in countries
Total employees including
franchisees
Daily customers
McDonalds
$ 79b
$ 24b
6%
$ 5b
32,000
120
15 lakh
50 m
Fun facts
50m customers daily, 17b annually- 3x global
population
McCafe adds $1b profits annually, 14 thousand
McCafes globally
320m pounds / 150m kgs potatoes every year
560 million Big Macs a year.
Origin
1940s- Rick & Mac McDonald- McDonald Bros
Hamburger Stand, San Bernadino, LA, Ca
Large crowds- Burger 15 (4 cheese extra), /fries +
5 coffee + 20 milkshake within 1 minute
3 grill men only flipped burgers, 2 guys only
milkshakes, 2 only french fries, brothers +2 men at
the counter, 2 for packaging
Cheap, easy dinner, kid friendly
Progress
1954, Ray Kroc (52), went to McDonalds to sell
Multimixers
Kroc "This will go anyplace chain idea, appointed
exclusive franchising agent for $950- Kroc 1.4% on
sales, bros 0.5%
1955 McDonald's System Inc, standard practices,
consistency
Kroc bought strategic sites, leased to franchisees,
money, control
1956- 12 franchisees, 1960- 228, 1965, No1 US food
Subway
India 2010
Expansion
$250m for 100 new restaurants pa for N5Y- in
India
Fast food industry growth @3x of Indian economy
Hardcastle now a licensee of McDonald's in India
30-40% growth
One minute guarantee of service
14 core suppliers, total 40
4 Distribution Centers, 40 cities, 217 restaurants,
650,000 customers daily
One outlets every 10 days in India for L3Y
31000 restaurants globally, 5,000,000 customers
daily
Informal dining out industry India $74b
Stages
1990-96
1996-03
2003-10
2011+
setting up
Pre launch
US teams- Indias logistics industry- effectiveness,
reliability, transportation, infrastructure
Set up
MIPL
WS- Hardscastle- JV
NE- Connaught Plaza- Development
Licensee
Monitor, scrutinize, promote
McDonalds in India
Entry strategies
Brand/ Company
Franchisee /
Entry strategy
McDonald
Owner
Hardcastle &
JV
Dominos,
Connaught Plaza
Jubilant
Master
Dunkin Donuts
KFC, Pizza Hut
Foodworks
Franchisee
Yum Restaurants 100% subsidiary
Regional
Costa Coffee,
Cream Bell
Subway
Devyani Intl
franchisee
Master
(Jaipuria)
Subway Systems
Franchisee
100%
India
subsidiary /
Restaurants
Street Food / Stalls 14%
Fast Food
Organised 47 %
Full Service
Restaurants 24%
Insights
Most of those eating out are
from the 20-30 age group closely
followed by the 15-19 section
p46
35% of Indians enjoy south
Indian cuisine, 27% North Indian,
and 24% Chinese. P46
Market Segmentation
Restaurant
Industry
Road-side location
No technical standards
No accounting
standardization
Unorganized
Full-Service
Restaurants
QSRs
Fine Dining
Take-away
Casual
Dining
Home
Delivery
Eat-in
22
Organized
Bars and
Lounges
Accounting Transparency
Organized Supply Chain
Quality Control
Sourcing Norms
Multiple Outlets
Dominated by Global Players
Kiosks/Carts
Dominos
McDonald
s
Subway
Pizza Hut
Nirulas
Outlets
09 12
300 430
187 219
Cities
Food Type
09 12
70 95 Pizza
44 54 Western
183 300
26
160 200
75 150
37
10
KFC
Sagar
Ratna
Yo China
74
52
230
88
14
24
42
100
12
Bikanerwa
la
35
148
13
36 Sandwich,
Rolls
40 Pizza
10 North Indian
NV
40 Western
39 South Indian
Veg
15 Chinese
27 Namkeen,
Chaats
Position
Delivery
XP
Health
XP
Taste
XP
Taste
Convenien
ce
Taste
McDonald suppliers
Identify local Indian businesses, which share
McDonalds level of commitment and dedication
in satisfying customers by supplying them the
highest quality products.
Indian suppliers- expand business, access to
latest technology, exposure to advanced
practices, access to overseas markets
Diverse and multi layered
Food ingredients- 2 layers of suppliers
Tier II- Growers (lettuce, potato, poultry farms)
supply to
Tier I- processors (patties coaters, french fries,
potato wedges, sauces, batters)
Suppliers
Tier I
14 core suppliers who supply directly
Vista processed foods, taloja
Dynamix dairy
Ms Bector
Mix of local and global
Tier II
Forward ingredients to Tier I suppliers
Total 40 suppliers
Stellar performance expected
Quality maintain at their end
No legal signed agreements, handshake
relationships
One one supplier per product / item, no back ups/
Potato Farming
Pre launch- Rs. 450 crore investment in food
supply chain
Right Potato quality unavailable
McCain Foods, world's largest French Fry firm,
worked with farmers in Gujarat, Maharashtra to
develop potato varieties
McCain Foods, 1957, 100+ countries, $5.5b sales,
55 plants
Trikaya Agriculture
Fresh Iceberg Lettuce, only winter, now year roundTalegaon
Special herbs, oriental vegetables
Farm infrastructure - nursery, agri experts, High
quality seeds, drip irrigation, pre-cooling/ cold room,
refrigerated transport
Vacuum pre-cooling room- within 30 minutes of
harvesting
Cooled to 2C within 90 minutes
Refrigerated van- 1- 4C temperature, 95% relative
Radhakrishna FoodlandDC
1993, Handshake agreement- Distribution
Centre
4 DC- Noida, Mumbai, Bangalore, Kolkata +
transportation
'Cold, Clean and On-time Delivery- freshness,
quality, delivery
Hub and spoke- 1 stop shop- Procurement, quality
inspection, storage, inventory management,
deliveries, data collection, recording,
reporting
DC efficiency
Calibrate performance, KPI
Admin- cases managed / man hour
Warehouse efficiency
Overtime
Transportation time
Truck utilisation
Turnaround time
Cases handled online
Sort issues together
Other suppliers
Except Foodland only Coke (own set up)and Buns
(perishables) sent directly to outlets
SCM fundas
Culturepartnership
and
collaboration
Each leg
equally strong
so foundation
stronger
Transparency
at both ends,
all plans shared
3 legged stool
Operators
Company
Suppliers
SCM
100% outsourced, locally
Perishability- product shelf life 2- 270 days
Supplier relationships- exclusive
Technology- all pervasive
Network- Food procurement, processing,
warehousing, transportation and retailing under
controlled temperatures
SCM Investment Rs 50cr before 1st outlet, Rs
300cr by 2000
New crops, agri and food processing practices
Cold Chain
Saves operational wastage, freshness, nutritionintegral to SCM
52% food products stored in 18C to 4C
70% through cold chain, even at Tier II suppliers
Multi temperatures trucks
Frozen foods- -18 to-25C, Chilled -1-4C, 3 doors- rear
+ 2 side
Dry products- ambient temperature
With a Cold Chain in place, there is practically no
need for a knife in the restaurant. Chopping & food
Local Sourcing
Food and supplies- local sourcing
Restaurants- local architects, contractors, labour
and material
Suppliers- expand business, access to
technology /practices / export markets
Distribution
AFL logistics- 50:50 JV AirFreight & FX Coughlinsuppliers to DC
4 DC- Match supplier production- deliveriesrestaurant needs
Aim to enhance quality of storage operations
Emphasis on economies of scale-storage volumes
high
QIP (Quality Inspection Program)- Quality checks20 SCM points
Demand forecasting
Restaurant 3-7 day forecast to DC
DC 3 month rolling plan to supplier
31Q system- 3 year monitoring, N1Y, Q is
quarterly
NPL and new restaurants factored in
Annual budgets
Production schedules set
Taste
Sensory programme- train sensory experts
Every batch sample checked pre despatch- score
Tech
Systems upload orders at restaurant level
Track outlet sales daily
Schedule staff
Match sales forecasts, change if required
Anvil- connect DC to suppliers
SCM
Distributi
on Centre
Procurem
ent
VAS
Informati
on
Managem
ent
Transpota
tion
Distribution
Centre
Quality
Inspectio
n
Warehous
ing
Chiller
Processing
Center
Lettuce
farm
Quality
Inspection
Programme
Transportati
on
Outlet
DC
Sourcing
S
S
S
D
C
S
D
C
S S
D
C
S S
S S
SS
D
C
S
S
Key Suppliers
City
Stat
e
Supplier
Item
N Ludhiana
Pun
Bectors
Sauces / toppings
N Chandiga
rh
Pun
Pagro
Frozen Veggies
N Noida
UP
Bectors
Bun
N Ghaziaba
d
UP
Amrit
Dairy mix
N Shimla
UP
Binay
Lettuce
W Mehsana
Guj
McCain
Wedges, fries,
Hashbrowns
W Taloja
Mah
Vista
W Khopoli
Mah
Bectors
Bun
Mah
Cargill
Oil
W Baramati
Mah
Dynamix
Cheese
Mah
Packaging
Mah
Godrej
Chicken
Sauces
/Bun/
Toppings
Bector,
Punjab, UP/
MS
Frozen Veggies
Pagro, Chandigarh
Lettuce
Trikaya / Binay/ Meeta/
Green Earth- HP/ Utt/TN
Dairy Mix
Amrit, Ghaziabad
Fries,
Wedges
McCain,
Mehsana
Oil
Cargill,
Maharasht
ra
Cups, Straws,
Napkins,
Maharashtra
Cheese
Dynamix,
Baramati
Chicken,
Veg
Patties
Vista,
Taloja
Fish
Innovativ
e
Kochi
Chicken
Godrej
Tyson
Maharashtr
a
Coimbatore
/
SCM components
Tier II
Lettuc
e
growe
rs
Potato
growe
rs
Poultr
y
Coatin
g
syste
ms
Tier I
Patties- Vista
PotatoMcCain
Dairy- Amrit,
Dynamix
BakeryBector
SaucesBector
FishInnovative
BeveragesCoke
Inbound
logistics
DC
Radhakrishna
Foodlan
d
Noida
Mumbai
Bangalo
re
Kolkata
Outboun
d
logistics
Dedicate
d
Multi/uni
temperature
fleet
40 cities
217
stores