I had wanted to write about successful marketing companies for some time now. Not chronicling their history as much as sharing their secrets of success sprinkled with a few trivia and tidbits. While reading the Fortune magazine today, I spotted one such company that I thought could kick start this series. McDonald’s!
Though quintessentially American, McDonald’s has grown to be a 33,000 restaurant colossus spanning 118 countries with annual turnover of $77.4 billion. Of which, U.S contributes just $24.1 billion. The gargantuan size of the brand could be gauged by its turnover being more than KFC, Subway, Burger King, Pizza Hut and Taco Bell combined! Not bad for a company whose first day sales from its first restaurant in 1955 were a mere $366.12.
64 million people in 118 countries eat at its restaurants every single day! 80% of McDonald’s are operated by independent owners. Read franchisees.
Though the company had a successful first fifty years or so, the brand was stagnating by the turn of the century. To make matters worse, was the sudden demise of their then CEO and his replacement too having to resign since been diagnosed with cancer. During those troubled times stepped in Jim Skinner its current CEO who had started his career in 1962 working in a McDonald’s kitchen. In fact, this is one of the many reasons for the company’s success. Most of its top execs have worked on the shop floor and hence know the pulse of the consumer.
Skinner is a hands-on CEO who perennially checks on his restaurants and delegates powers lower down to make sure the giant organization doesn’t turn bureaucratic. Skinner is obsessed with satisfying customers, even if it comes at the expense of his own ideas and preferences. A few years ago the company did extensive research on new coffee-cup lids and came out with a version that customers liked but Skinner didn’t. Instead of overruling the research, like most CEO’s would have, Skinner approved the new design and, in the process, came up with his own solution: he keeps a stash of the old lids on hand when he drinks coffee!
McDonald’s is renowned for its spotless service delivered day in and day out. Not an easy task considering it has more than 1.7 million employees across the world. How do they manage? Training; and training in their own facility called Hamburger University near their headquarters at Oak Brook, Illinois, a western suburb of Chicago. This sprawling 130,000-square-foot training facility trains McDonald's employees in the various aspects of restaurant management. More than 80,000 restaurant managers, mid-managers and franchisees have graduated from this facility majoring in Burgers and with an elective in French fries!
The other fascinating facet of McDonald’s is the speed with which it delivers its food. While the category is fast food, McDonald’s is even faster! R&D is constantly egged by marketing to come up with new dishes and it constantly does. But if the new product overly complicates the kitchen and slows deliveries, the product is not launched; period. This always doesn’t endear Skinner to his finance department. But he always sides with marketing and dismisses those objections with a simple comment: “I want to remind you that it’s harder to make money than it is to count it!”
As a side dish, pun intended, though not McDonald’s doing but symptomatic of its towering presence and influence, its Big Mac serves not just hungry mouths but eager economists too. Through the Big Mac Index! Developed by The Economist magazine a quarter century ago, the Big Mac index uses the price of McDonald's burger in different countries to construct an informal (but surprisingly accurate) indicator of real exchange rate.
India, which makes a debut in the index this week, was found to have one of the most undervalued currencies vis-a-vis the dollar - even more than the Chinese Yuan. That is some fast food for thought!
McDonald has been growing at more than 5% in U.S and much more across the world. In a slow economy, that’s speedy growth from a fascinating fast food company!
CEO Skinner is now 66 years old and people keep asking him when he is going to retire. His response: ‘When I run out of my old coffee-cup lids’!
7 comments:
why isnt dere a "like" button?!! its a pleasure reading your blog sir
Wow....wonderful post! What a mass of knowledge....Beautiful....So much of information yet so interesting to read....
Rightly so, McDonalds rules and why not! 2 weeks back I was at the Cologne Main station here with my husband and some other relatives. Cologne main station is huge ( read as twice the size of Chennai Central) and probably looks like a Commercial street inside....They wanted to have French Fries and through there was probably a small tiny eat out that sells French Fries just 200 m away, my husband quickly mentioned "There's a Mc Donalds just down this corridor....."(That was probably a two minute alk:))
The McDonalds at the Main station is ever crowded....It probably can seat only 30-35 people but there will be about 60 people inside.....with a big queue sometimes leading to the entrance...But I have seen many times, some prople would wait at the entrance, wait for the queue to clear a bit and then go.....Brand loyalty to the T!
And yes therir service and communication between the employees is excellent....Every McDonald I have been two...I have not waited for more than two minutes when my turn came for what I wanted....The moment I say what I want, there are a half a dozen people running around and in a flash of seconds I have my tray!
Anyways, your article is amazing but what I am more happy about is the fact that you have decided to update your blog more frequently....And not keep hundreds of souls out there waiting.....Honestly, even yesterday I went back to some archives and was reading some old posts about 2 years back...Thats how much I value your blog....And your writing!
And for that lovely soul who had constantly egged you to continue updating your blog, here's a big thank you! You have managed to bring back the smiles on thousands of faces....Whoever you are, whereever you are, a huge thank you!
An example of McD's excellent customer service-At an outlet in suburban Mumbai last week,we gave our order and were told to wait at a nearby table.The server while placing the trays on the table spilt the float accidentally.We were immediately offered a replacement at no extra cost.
Awesome article, didn't realize I read through the whole thing, considering the length!
Hope Skinner's coffee cups and your articles never run out !!
yes buddy you must keep writing..you are an engaging writer.
No wonder i was(still i am) crazy on u and ur classes. This was the first time i'd visited your fb page..oh my!!! the likes and comments to your status updates..i could c there r thousands of guys n gals going crazy on u. I thought it was just me..how ignorant :-(!
Y to talk about McD. 2 yrs back wen i started following your blog, the no of page views were around 2000s. Today..it's shows a huge number there..
Keep rocking! Long live.
As a B-School graduate, having religiously believed & followed what my Professor taught is 'marketing' now it's a shock to realize "Social media has changed the game of marketing". What is your take on this Mr.Professor.
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