case study fast food restaurant

How Shake Shack Flipped the Burger Restaurant

Written by The Blue Ocean Team

Shake Shack, the gourmet fast-food chain, started out as a hot dog stand in New York City in 2001. Today, it has become a global phenomenon with 180 locations globally and is expanding all the time. So how did it create a new market in the fiercely competitive restaurant industry? Our analysis shows they took a blue ocean approach.

The Restaurant Industry in the United States

Restaurant industry sales in the United States have been growing over the past decade and exceeded US$536 billion in 2016. US$259 billion was attributed to the full-service restaurant sector, which includes premium restaurants and fine dining. The limited-service restaurant sector represented US$223 billion of sales. These include the traditional fast food outlets like McDonald’s and also the newer category of gourmet fast food outlets – like Panera Bread and Shake Shack. The restaurant industry can be segmented into three major categories:

1. Full-service (premium) restaurants

Premium restaurants represent 48% of the industry but it is a highly fragmented market, consisting of many small businesses rather than a few big ones. Market players strive to maintain a reputation for delivering a unique, satisfying and memorable customer experience. Even if they can afford to expand and open new restaurants, they are often reluctant to because it may negatively affect this reputation in the perception of customers.

The main advantages in this category are that customers are willing to pay premium prices for the high-quality dining experience on offer. However, the fragmented nature of this market means customers can easily find substitutes and new restaurants can enter the market relatively easily. Also, premium restaurants do not have strong bargaining power with their suppliers. In many cases, the ingredients used are scarce, forcing premium restaurants to accept prevailing market prices.

2. Limited-service fast food restaurants

This category of restaurants is huge. Nine out of the top ten restaurants in the United States by revenue come from this category. Despite its huge size, it represents a typical red ocean market dominated by McDonald’s for now. The success of these companies is largely dependent on huge media expenditure and economies of scale. Customers have plenty of fast food options to choose from, making price an important competitive factor in this category. Not surprisingly, the fierce rivalry among competitors is accompanied by high marketing budgets.

However, players in this category have two advantages. First is the high barrier to entry – new fast-food restaurants simply cannot compete on the economy of scale or brand recognition of established chains. Second is the weak bargaining power of their suppliers – fast food restaurants can negotiate the best deal as there are so many suppliers of meat, flour, and potatoes to choose from.

3. Premium fast food restaurants

Premium fast food is a hybrid category that combines high-level customer experience and convenience with moderate price. In general, players in this category open restaurants based to satisfy certain market niches. For example, Panera Bread, the largest restaurant in this category, targeted customers demanding healthier options that used fresh and organic food. Other players sought to reduce menu choices and improve quality such as the hamburger chain, Five Guys. Customers are generally the young middle-class segment that can afford to pay a relatively higher price for fast food.

Shake Shack Success Story

So how do you compete with the category killer such as McDonald’s with 34,000 restaurants? Or with a premium niche player that relies on higher pricing for premium food in the fast-food category like Five Guys or Panera Bread? By not competing, but rather by creating a new market space through the simultaneous pursuit of differentiation and low cost. And that is what Shake Shack did.

The three tiers of noncustomers

It all starts with shifting the focus from better serving customers of an industry to identifying and converting noncustomers into customers. Shake Shack was able to attract three groups of noncustomers of premium fast-food restaurants, as specified in Chan Kim & Renée Mauborgne’s three tiers of noncustomers framework .

© Chan Kim & Renée Mauborgne.

First-tier noncustomers

The first-tier of soon-to-be noncustomers for the premium fast food market are sitting at the edge of the market. They do want healthier fast-food options and a higher-quality customer experience but are not the premium pricing that comes with these. They tend to seek cheaper restaurant options and may visit fast-food outlets such as McDonald’s, Subway and Burger King.

Second-tier noncustomers

The second-tier are refusing noncustomers. They refuse the premium dining experience because of its price. They want a nice place to hang out with their friends in an atmosphere that does not feel like a standardized food chain and comes without the hefty price of premium dining.

Third-Tier Noncustomers

The third-tier are unexplored noncustomers. They usually do not even consider going to fast-food restaurants but rather choose bars to stay out late and enjoy a drink or more with friends.

Factors Shake Shack Eliminated, Reduced, Raised and Created

To unlock these tiers of noncustomers Shake Shack created a new uncontested market space in the fast-casual food space. It did so by answering four basic questions  that are at the core of the blue ocean approach.

1. What factors should be eliminated that the industry has taken for granted?

Kids Place and Happy Meals: Shake Shacks are built to feel more modern and grown-up than the cartoony, red-and-yellow-decorated fast food chains that lure kids with happy meals, toy gifts and play places. Whether it is the quiet green and black color scheme, a modern sleek logo, or an open kitchen layout that is visible upfront rather than hidden in the back, Shake Shack attracts the millennial adult who is willing to pay more for an informal and comfortable dining and hangout experience. Gone are the costs associated with building play places and offering happy meals.

Tipping: Shake Shack has also eliminated tipping, offering customers a worry-free dining experience. The company compensates employees by providing above average compensation and benefits. From a psychological perspective, this attracts more customers and makes Shake Shack distinct from the local bar and grills where tips are standard.

2. What factors should be reduced well below the industry standard?

Speed of Service: Fast food restaurants emphasize speed over customer care – a critical factor in the fast food industry. But not Shake Shack. In a functional-oriented fast food restaurants industry, Shake Shack is thriving by creating emotional experiences for its customers. Factors like speed and price, which are so important to fast food players, became secondary to more significant aspects that customers care about.

Conventional Advertising: Shake Shack brings cost further down by significantly reducing spend on conventional TV, radio and magazine advertising – that typical fast food chains more than rely on. Instead it focuses its effort on reaching millennials via social media. This significantly reduces their marketing spend compared to traditional fast food chains. The fulcrum of its social media strategy is user-generated content – a strategy that has helped the brand amass hundreds of thousands of fans and followers who help the company spread its concept and story in their communities. Social media plays an important part in making customers feel that they are part of the Shake Shack brand through fun online interactions while Shake Shack uses these interactions for data analytics to better understand customer expectations and improve their product and service offerings.

3. What factors should be raised well beyond industry standard?

Premium natural ingredients: Shake Shack’s premium natural ingredients are at the center of its identity, both because of how the food tastes and because of their pedigree: 100% all-natural meat (vegetarian fed, humanely raised, antibiotic and hormone free, source verified, ground fresh from full-muscle cuts rather than scraps), non-GMO vegetable produce, zero artificial additives, real sugar instead of corn syrup and milk from dairy farmers who have pledge not to use artificial growth hormones.

Friendliness and Hospitality: At the center of Shake Shack’s mission is CEO Danny Meyer’s philosophy of “enlightened hospitality”, where the idea is to create a welcoming atmosphere first for employees, next for customers, and then for the outside community, suppliers, and, finally, investors. Shake Shack’s emphasis on hospitality and friendliness is evident in its hiring policy that lists “fun, intelligent, super friendly, high energy individuals” as requirements for hiring staff, rather than the usual pedigree and experience. This is based on its belief that friendly workers take good care of customers and will bring them back. Staff, who are called team members, are paid on an average $2 above minimum wage paid to workers in other fast food chains. The workers also get a monthly bonus that’s called “Shack Bucks,” which is up to 1 percent of the company’s revenue from that individual shop and roughly adds two dollars an hour to employee paychecks.

Shake Shack invests heavily in staff training to make sure all staff offers a high level of customer service. The result is a better overall customer experience that goes beyond the mere purchase of a hamburger. In this way, Shake Shack successfully gained those customers who used to go for cheaper options. Many of Shake Shack’s executives have been groomed from within, and it’s not uncommon for hourly employees to get bumped up to a manager, general manager, and beyond. Opportunity, then, is a big part of the company’s strategy to attract the best talent who have an opportunity to prove their excellence, friendliness to customers and have a real future with the company.

4. What factors should be created that the industry has never offered?

Gourmet Fast Food: “Shake Shack is just an ordinary fast-food joint, said nobody ever”, writes a food critic. Shake Shack takes the cake for gourmet fast food classics, offering a modern-day take on retro roadside burgers, fries, hot dogs, frozen custards, shakes, and more. Shake Shack disposed of the notion that fast food had to be precooked or even prepared quickly. Instead, it focuses on quality ingredients and enjoyable customer experience and is known for a fast-casual environment where people do not mind waiting in long lines for fresh and cooked to order food. Shake Shack restaurants are appearing in more and more cities across the world with always evolving localized menus with some items that are exclusive to each Shack. At Shake Shack’s newest burger-and-shake joint that just opened in New York’s West Village on Tuesday, customers can order—in addition to its classic menu—new items like chick’n bites, black sesame shakes or cold brew matcha lattes that no other Shake Shack location in the U.S. serves yet. And to celebrate Shake Shack’s 10th anniversary, it recruited five celebrity chefs to create five special edition burgers bringing brand new excitement to its customers. Offering high-quality craft beers and specialty wines further propels Shake Shack to a new frontier. By offering alcohol and staying open until midnight, Shake Shack attracted customers who want to enjoy alcohol with their burgers, as well as those who just wanted to have a drink with friends.

Community Hangout: In 2001, Shake Shack debuted as part of an art project for the community in New York’s Madison Square Park. Community has since been the keyword for Shake Shack, and throughout the years, it has strived to become a community gathering place with its motto being ‘the bigger we get, the smaller we need to act’. Unlike traditional fast-food chains, Every Shake Shack location is specifically designed with a unique aesthetic to fit contextually into their neighborhood but with essential branding elements repeated to maintain the restaurant’s essential character. Additionally, Shake Shacks are designed to feel as lively on the outside as they are inside. Ping-Pong and foosball tables, bocce courts, giant life-size puzzles, local art installations all encourage customers to hang out longer. This generates a sense of locality and authenticity for Shake Shack’s stores, exuding the charm of a local mom-and-pop shop. This combination of your local restaurant and a typical fast-food franchise creates a brand new experience bringing in customers, who may not be attracted to either category.

Blue Ocean thinking has led to the shake shack success story.

Shake Shack’s Blue Ocean Strategy

With pricing that is just slightly more than the typical fast-food burger like McDonald’s, Shake Shack’s offering is irresistible for an increasingly large group of American diners, especially those between the ages of 18 and 34, who are willing to dash out dining dollars on good quality food. Millennials are also socially conscious and demand that companies they patronize be socially responsible. Shake Shack addresses this point not only by having environmentally friendly products but also through a corporate policy that supports local communities and doing good.

The result is a full dining and drinking experience that is both fun and affordable. People flock to Shake Shack as a place to socialize rather than just another dining option. Shake Shack’s blue ocean strategy has enabled it to achieve double-digit growth at a time when most market players are struggling to maintain modest growth. For now, Shake Shack is in full swing and expanding its operations around the world. But to stay ahead of the game, the burger giant will need to find new ways to renew its blue ocean.

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McDonald's Corporation: The World's Leading Fast Food Chain [Case Study]

Devashish Shrivastava , Anik Banerjee

McDonald's Corporation is an American fast-food organization established in 1940 as a café by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a burger stand and later transformed the organization into an establishment; the Golden Arches logo being presented in 1953 at an area in Phoenix, Arizona.

Ray Kroc, a businessperson, joined the organization as an established operator in 1955 and continued to buy the chain from the McDonald's siblings. McDonald's had its base camp in Oak Brook, Illinois, and moved its worldwide base camp to Chicago in mid-2018.

McDonald's is worth $185+ bn today. It is the world's biggest eatery network by revenue. It was last registered to be serving 69+ million customers each day in more than 120 countries across over 39,000 outlets.

Although McDonald's is best known for its burgers, cheeseburgers, and french fries, its menu also includes chicken items, breakfast things, sodas, milkshakes, wraps, and sweets. In light of changing buyer tastes and a negative backfire on account of the wretchedness of its food, the organization has added mixed greens, fish, smoothies, and natural products to its offerings.

McDonald's Corporation's income originates from leases and charges paid by the franchisees. According to two reports distributed in 2018, McDonald's is the world's second-biggest private manager with 1.7 million representatives (behind Walmart with 2.3 million workers).

Here's bringing you the McDonald's company profile that will present to you McDonald's company overview, when was McDonald's founded, McDonald's growth over the years, about McDonald's, McDonald's owner name, founder of McDonald's corporation, McDonald's history and background, McDonald's case study marketing, and more.

McDonald's - Company Highlights

McDonald's - Startup Story and History McDonald's - Mascot/Logo McDonald's - Business Model And Market Strategy McDonald's - Target And Mission McDonald's - Growth McDonald's - Restaurants And Services McDonald's - Future

McDonald's - Startup Story and History

Richard and Maurice McDonald in 1940, opened the primary McDonald's at 1398 North E Street at West fourteenth Street in San Bernardino, California; however, it was not the McDonald's you know today. Ray Kroc made changes to the siblings' business and modernized it.

The siblings presented the "Speedee Service System" in 1948 by extending the standards of cutting-edge drive-thru eatery that their antecedent White Castle had tried over two decades earlier. McDonald's emerged with a delivery model where it made its food on a supply belt and delivered it within 2 minutes.

It looked like a fantastic and impossible eatery that had:

• Only burgers, fries, and shakes on the menu • No plates or waiters to serve the customers

However, when Ray Kroc came, he was astonished by the never-ending waiting lines that were there waiting for their orders from McDonald's.

Kroc was then 50 already and was selling milkshake mixers door to door. Ray Kroc had earlier tried his hand in many things but never had attained success in his whole life. He already worked as a musical director, pianist, and had also worked as a real estate guy, in the paper cup industry, and as a seller of kitchen appliances, but he couldn't hold on to one thing among them all. Thus, Kroc was a person who lived from paycheck to paycheck.

Kroc came to McDonald's to deliver an absurd order of 8 milkshake mixers for just one area. He wondered "why would someone want to make 40 milkshakes at a time?" This is why he drove to California, at McDonald's to see the place himself.

Seeing the huge demand for McDonald's burgers, fries, and shakes, Kroc sensed a huge opportunity. He soon pushed the founders of the store to embrace a franchise model. The McDonald's brothers who owned the business, were living a comfortable life then, getting rich by the day, and buying Cadillacs as they filled their pockets. They didn't have vision nor they were eager to expand. However, Ray convinced them and rushed to work, as soon as he did that.

He assumed the role by taking 2 major steps back to back:

• Mortgaging his house when he was already 52
• Opening 18 new outlets in the very first year

This has helped the company scale big time, and McDonald's now boasts of:

• Serving 2.3+ billion burgers a year
• Serving 39,000+ restaurants across more than 120 countries
• Being the 4th largest employer in the world
• Being the largest toy distributor in the world

Though it was Ray's idea and the expansion was promising, the McDonald's brothers made an unfair deal with him. Kroc was allowed only 2% of the profits. McDonald's being to scale aggressively but the founders of McDonald's wasn't really happy with Ray and his scaling. This is why Ray borrowed and bought them out for $2.7 mn, thereby becoming the 100% owner of McDonald's.

The organization attributes its success to Ray Kroc. Kroc later bought the McDonald siblings' value in the organization and was responsible for McDonald's overall reach. He was seen as a forceful colleague, driving the McDonald siblings out of the business. Kroc and the McDonald's siblings battled for control of the business, as recorded in Kroc's life account.

The San Bernardino eatery was torn down (1971, as indicated by Juan Pollo) and the site was offered to the Juan Pollo chain in 1976. This zone currently fills in as central command for the Juan Pollo chain, and a McDonald's and Route 66 museum.

With the development of McDonald's into numerous universal markets, the organization has turned into an image of globalization and the American lifestyle. Its unmistakable quality has additionally made it a regular point of open discussions about heftiness, corporate morals , and shopper obligation.

McDonald's - Mascot/Logo

The first mascot of McDonald's was a cooking cap over a burger who was alluded to as "Speedee" . In 1962, the Golden Arches supplanted Speedee as the all-inclusive mascot. The image of jokester Ronald McDonald was presented in 1965. Ronald McDonald showed up to promote amongst children.

On May 4, 1961, McDonald's initially petitioned for a U.S. trademark on the name "McDonald's" with the portrayal "Drive-In Restaurant Services". By September 13, McDonald's, under the direction of Ray Kroc, petitioned for a trademark on another logo—a covering, twofold curved "M" image.

Before the twofold curves, McDonald's used a solitary curve for the design of its structures. Even though the "Brilliant Arches" logo showed up in different structures , the present form was not utilized until November 18, 1968, when the organization was given a U.S. trademark.

McDonald's - Business Model And Market Strategy

The business and revenue model of McDonald's includes almost 37000 outlets which spread to more than 120 nations. Today, McDonald's is the biggest eatery network on the planet in terms of income.

Initially launched as a Drive-In Hamburger Bar, the idea was advanced in 1940 by The McDonald Brothers, Richard James (Dick), and Maurice James (Mac) McDonald. It was after the presentation of the Speedee Service System with shakes, fries, and burgers costing as low as 15 pennies that the McDonald Brothers started the establishment of McDonald's Hamburgers.

In 1954, Ray Kroc turned into the establishment operator of the McDonald Brothers. The main McDonald's eatery was opened by Kroc in 1955 in Des Plaines, Illinois, USA. It was in the year 1961 that the rights to the eating joint of the kin were obtained by McDonald's for a powerful total of $2.7 million.

You may likewise be astonished to realize that when the first McDonald's eatery opened, the extremely well-known McD french fries were eaten with no ketchup! The revenue model of McDonald's, the world's quickest developing food chain, is an interesting one.

McDonald's - Target And Mission

McDonald's endeavours hard to be its clients' "most loved spot and approach to eating". McDonald's plan of action is fixated on the ground-breaking strategy "Plan To Win", which is placed into requests around the world.

With the mission of "Quality, Service, Cleanliness, and Value", McDonald's has clung to each of these characteristics. Client experience is improved by the selection of five fundamentals: people, products, place, price, and promotion.

Additionally, McDonald's plans to give high-review nourishment, at effectively reasonable costs to individuals over the globe. The deals at McDonald's are furrowed through an efficient deals channel which guarantees remarkable consumer loyalty on all occasions.

Astounding Vision

When Ray Kroc opened the Original McDonald's in Illinois, he had a dream of expanding the franchise across the globe with more than 1000 outlets in the States itself. Remaining consistent with its guarantee, McDonald's widened its worldwide handle by opening joints outside the US as early as 1967.

The first international outlets were opened in Canada and Peurto Rico. By January 2018, McDonald's was situated in 120 nations and had about 37200 cafés with 1.9 million workers. It was serving more than 69 million individuals every day. At one point in time, McDonald's was opening a new outlet every 14.5 hours!

Significant Growth Strategy

McDonald's has clutched a promising development technique to serve customers and spread its wings. The presentation of the "Speed Growth Plan" in March 2017 enhanced the development of the business.

McDonald's development system depends on retaining, regaining, and converting. McDonald's strives to hold on to its old clients, recapture the lost trust, and convert easygoing clients into ordinary ones.

What's more, it has additionally embraced three quickening agents: digital, food delivery, and experience of things to control its monstrous development. It keeps on reshaping cooperation with clients and raising the level of consumer loyalty and experience through innovation and human endeavours.

Decent Variety

Monetarily, McDonald's has affected the world more significant manner than some other organizations. McDonald's adheres to the conviction "Decent variety is Inclusion" and doesn't leave a solitary opportunity to make each person from every network feel regarded. Its suggestion of "Decent variety is Inclusion" has affirmed its situation at the top position.

The McDonald's way of life revolves around the following: customer-obsessed, better together, and committed to lead. These coupled with its conviction has caused the fast-food chain to exceed expectations in the field of business enterprise and showcasing.

McDonaldization

McDonald's can appropriately be named as one of the best organizations to be involved in the worldwide system. The worldwide broadening of the McDonald's is regularly alluded to as "McDonaldization." Its accomplishment in more than 120 nations can be credited to its hierarchical structure.

The hierarchical structure of McDonald's mulls over expanding localization, and in this way, the entire plan of action of McDonald's is normally redone thinking about the mass intrigue in different nations.

Fruitful Acquisitions

The McDonald's Corporation Mergers and Acquisitions (M&A) have, since its inception, entertained itself with cautious acquisitions. Donato's Pizza which is a Midwestern chain of 143 eateries was obtained by McDonald's on 6 May 1999. Aside from securing Donato's, it acquired the Boston Market on 18 May 2000. Boston Market is a drive-through eatery chain that essentially focuses on home-style sustenance.

Supporting Employees

McDonald's doesn't, in any capacity, hamper the development of its workers. It bolsters its representatives in every possible way and empowers them to set up business systems.

At McDonald's, the work environment is brimming with positivity, connections are advanced, professional openings are supported, and business development is sustained.

Coaches, good examples, and backers are accessible at all times to direct the employees on successful initiatives, professional procedures, and prosperous business.

Engagement Of Community And Education

Aside from being one of the best good-quality fast food options, McDonald's investigates every possibility to endeavour for the network it serves. It effectively takes part in network administration and continues to have a critical effect on assorted networks.

The Global Diversity, Inclusion, and Community Engagement Team alongside its key accomplices have fabricated cherished relations with different network-based associations. McDonald's Hamburger University readies its workforce to maintain the multi-billion dollar business and worldwide initiative improvement programs.

McDonald's - Growth

McDonald's eateries are found in 120 nations and serve 69 million customers each day. McDonald's operates 39,000 restaurants/cafés around the world, utilizing more than 210,000 individuals as part of the arrangement. They help operate 2,770 organization possessed areas and 35,085 diversified areas, which incorporates 21,685 areas diversified to regular franchisees, 7,225 areas authorized to formative licensees, and 6,175 areas authorized to remote affiliates.

Concentrating on its centre image, McDonald's started stripping itself of different chains it had gained during the 1990s. The organization possessed a large stake in Chipotle Mexican Grill until October 2006 when McDonald's was completely stripped from Chipotle through a stock exchange .

Until December 2003, it likewise claimed Donatos Pizza, and it claimed a little portion of Aroma Café from 1999 to 2001. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.

Outstandingly, McDonald's has expanded investor profits for 25 back-to-back years, making it one of the S&P 500 Dividend Aristocrats. The organization is positioned 131st on the Fortune 500 of the biggest United States companies by revenue.

In October 2012, its month-to-month deals fell without precedent for nine years. In 2014, its quarterly deals fell without precedent for a long time, when its deals last dropped for the whole of 1997.

In the United States, McDonald's accounts for 70% of sales in drive-throughs. McDonald's shut down 184 eateries in the United States in 2015, which was 59 more than what they wanted to open.

Starting in 2017, the income was roughly $22.82 billion. The brand estimation of McDonald's is more than $88 billion; outperforming Starbucks with a brand estimation of $43 billion. The total compensation of the organization in 2017 was $5.2 billion; this worth saw an ascent of about 11% from the previous year.

McDonald's is, without a doubt, the quickest developing drive-thru eatery chain on the planet. In 2018, McDonald's developed as the most profitable inexpensive food chain with a brand worth nearing $126.04 billion. Also, the all-out resources of McDonald's were almost $33.8 billion.

The world's quickest developing cheap fast food chain partitions its market into four unique areas: U.S., International Lead Markets, High Growth Markets, and Foundational Markets and Corporate.

According to the report set forth by the organization in the year 2017, the market in the U.S. created the biggest measure of income at $8 billion. The International Leads Markets which includes Australia, Canada, France, Germany, and the U.K. created an income of $7.3 billion.

The High Growth Markets which incorporate China, Italy, Korea, Poland, Russia, Spain, Switzerland, the Netherlands, and comparative brought in about $5.5 billion in revenue.

The Foundational Markets and Corporate incorporate the rest of the business sectors. Furthermore, it additionally incorporates a wide range of corporate exercises. The income created by this section of the market represented roughly $1.9 billion.

McDonald's - Restaurants And Services

In certain nations, "McDrive" areas close to roadways offer no counter administration or seating. interestingly, areas in high-thickness city neighbourhoods frequently preclude pass-through service. There are likewise a couple of areas, found for the most part in the downtown locale, that offer a "Walk-Thru" administration instead of a Drive-Thru.

McCafé is a bistro-style backup to McDonald's cafés and is an idea conceived by McDonald's Australia (likewise known, and promoted, as "Macca's" in Australia), beginning with Melbourne in 1993. As of 2016, most McDonald's outlets in Australia have McCafés situated inside the current McDonald's eatery.

In Tasmania, there are McCafés in each eatery, with the rest of the states rapidly following suit. After moving up to the new McCafé look and feel, some Australian eateries have seen up to a 60% expansion in deals. There were more than 600 McCafés around the world some time back.

Create Your Taste

From 2015–2016, McDonald's attempted another gourmet burger administration and eatery idea dependent on other gourmet cafés, for example, Shake Shack and Grill'd. It was taken off without precedent for Australia in early 2015 and extended to China, Hong Kong, Singapore, Saudi Arabia, and New Zealand with progressing preliminaries in the US showcase.

In committed "Make Your Taste" (CYT) booths, clients could pick all fixings including a kind of bun and meat alongside discretionary additional items. In late 2015, the Australian CYT administration presented CYT servings of mixed greens.

After an individual had requested, McDonald's prompted that hold up times were between 10–15 minutes. At the point when the nourishment was prepared, the prepared group ('has') carried the sustenance to the client's table.

Rather than McDonald's typical cardboard and plastic bundling, CYT nourishment was exhibited on wooden sheets, fries in wire bushels, and servings of mixed greens in china bowls with metal cutlery. A more expensive rate connected. In November 2016, Create Your Taste was supplanted by a "Mark Crafted Recipes" program intended to be increasingly proficient and less expensive.

McDonald's Happy Day

McHappy Day is a yearly occasion at McDonald's during which a portion of the day's deals goes to philanthropy. The collections on this day go to Ronald McDonald House Charities.

In 2007, it was celebrated in 17 nations: Argentina, Australia, Austria, Brazil, Canada, England, Finland, France, Guatemala, Hungary, Ireland, New Zealand, Norway, Sweden, Switzerland, the United States, and Uruguay. As indicated by the Australian McHappy Day site, McHappy Day brought $20.4 million up in 2009. The objective for 2010 was $20.8 million.

McDonald's Monopoly Donation

In 1995, St. Jude Children's Research Hospital got a mysterious letter stamped in Dallas, Texas, containing a $1 million winnings McDonald's Monopoly game piece. McDonald's authorities went to the medical clinic, joined by a delegate from the bookkeeping firm Arthur Andersen, inspected the card under a diamond setter's eyepiece, took care of it with plastic gloves, and checked it as a winner.

Although game guidelines disallowed the exchange of prizes, McDonald's deferred the standard and made the yearly $50,000 annuity instalments for the full 20-year time frame through 2014, even in the wake of discovering that the piece was sent by an individual associated with a theft plan meant to cheat McDonald's.

McRefugees are destitute individuals in Hong Kong, Japan, and China who utilize McDonald's 24-hour cafés as transitory lodging. One out of five of Hong Kong's populace lives underneath the destitution line. The ascent of McRefugees was first archived by picture taker Suraj Katra in 2013.

McDonald's - Future

The reported objective is to source all visitor bundling from inexhaustible, reused, or ensured sources, reuse visitor bundling in 100% of eateries, and overcome framework challenges by 2025.

McDonald's turned into the principal eatery organization on the planet to set an endorsed Science-Based Target to lessen ozone-depleting substance emanations. It also joined the "We Are Still In Leader's Circle", driving activity to relieve environmental change.

McDonald's USA completed five years as the sole worldwide café organization to serve MSC-ensured fish in each U.S. area. It united with Closed Loop Partners to build up a worldwide recyclable and additionally compostable cup arrangement through the NextGen Cup Challenge and Consortium. Official pioneers called for atmosphere activity and offered arrangements at the primary Global Climate Action Summit (GCAS).

McDonald's co-facilitated the "Way to Greenbuild" occasion with Illinois Green Alliance at its new worldwide home office. The structure, a collaboration among Sterling Bay, McDonald's, and Gensler Chicago, got USGBC LEED Platinum accreditation.

McDonald's is establishing the tone for other inexpensive food organizations to pursue. Given the present want by numerous buyers to spend cash on organizations that are doing great on the planet, where McDonald's leads, others will pursue.

Who is the founder of McDonald's?

McDonald's was founded by Richard McDonald and Maurice McDonald on 15 April 1955 in California, United States.

Who is the CEO of Mcdonald's?

Chris Kempczinski is the CEO of Mcdonald's since Nov 2019.

Who is the owner of McDonald's in India?

In India, McDonald's is a joint-venture company managed by two Indians- Amit Jatia (M.D. Hardcastle Restaurants Private Ltd) and Vikram Bakshi ( Connaught Plaza Restaurants Private Ltd).

When was the fast-food chain McDonald's founded?

Mcdonald's was founded in 1940 in San Bernardino, California.

How much does a Mcdonald's franchise owner make?

An average Mcdonald's franchise generates $150,000 annually.

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How McDonald's Became The Benchmark For Fast Food

Table of contents.

The McDonald brothers developed a system to make it all happen. Yet we know them for Ray Kroc, who created one of the world's largest chains of restaurants, real estate and toy retailers, while 'outmaneuvering' the founders. 

Although McDonald's has not been the largest fast-food chain in the world since 2011, it is still the best-known brand. Even in Israel's Negev Desert, 100 kilometers from the nearest city, there is a restaurant, because franchising has given the company such a huge boost worldwide. 

A few key facts about McDonald’s:

• The Kellogg Company was founded in 1940. 
• McDonald’s and its franchise partners employ more than 200,000 people globally.
• McDonald’s reported $8.1 billion in sales by corporate-owned restaurants and $10.7 billion by franchise partners .
• The gross profit in 2020 was $4.7 billion .
• Global comparable sales decreased 7.7% in 2020 , mainly due to the COVID-19 pandemic.
• McDonald’s spent over $100 million on the international markets to boost marketing in hope of recovery. 
• McDonald's operates more than 39,198 restaurants in more than 100 countries around the world .

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You Don’t Sell Burgers! It’s A Real-Estate Business! 

The first burgers.

Richard (Dick) and Maurice (Mac) McDonald opened their first diner together, a hot dog stands in Monrovia, California, in 1937. Later, in 1940, they moved to nearby San Bernardino and opened McDonald's Bar-B-Que. Over time, the eatery became more popular and profitable, but the brothers realized they could cut a lot of costs if they rethought their concept. They developed a series of revolutionary ideas and strategic measures that proved to be closely linked: reducing the range of products, preparing ingredients properly, keeping potatoes warm with an infrared lamp, and building a kitchen where food could be prepared more quickly. They also encourage people to take their orders and target families rather than young people.

In 1948, the McDonald brothers closed a well-established restaurant and reopened it a few months later with a slimmed-down menu - and by then under the McDonald's name. They realized that most of their income came from selling burgers, so they reduced the selection to almost nothing. (To give you the full picture, the fries and milkshakes were replaced with French fries and patties for a short time.)

Effectiveness above all

Kitchen work was sped up by having only two things to bake. Washing up was also kept to a minimum, as the food was served in disposable packaging. In 1952, the restaurant was closed again for several months to remodel the kitchen so that food could be served more quickly and efficiently than before. The new kitchen and associated system allowed all orders to be filled in as little as half a minute. Since the operation was supported by the "fast system," it's not hard to guess where the term "fast food" came from.

McDonald's goal at the time was to get people to store there, but not to eat there, but to take something there. This was achieved not only by the packaging of the products but also by the fact that there was no built-in canteen in the first restaurant; if you did not want to take what you bought home with you, you could either eat your lunch in your car or sit on a bench nearby. For a while, they also experimented with serving drinks in cone-shaped cups that customers could not put down, which encouraged them to eat faster.

Thanks to this incredibly efficient and fast operation, they were able to sell burgers for 15 cents - about half the price of other places. The fast service, consistent quality, and low price amply compensated customers for the inconvenience. Soon, the McDonald brothers wanted to open more restaurants, but they were not nearly as successful as their first location. The reason was simple: they could not be everywhere; they could only be personally responsible for quality assurance at the first restaurant. At the same time, the oldest McDonald's still in operation today opened in Downey, California.

The arrival of Ray Kroc

The brothers realized that they did not necessarily have to open new locations themselves to expand, but that others would do it for them. So in 1948, they began to reform their business model and set up a franchise system. By 1954, they had sold the royalties from 21 franchises. 

1954 marked a turning point in the McDonald brothers' lives. To further speed up service, they ordered a new type of mixer that could ensure the preparation of multiple servings at once. The order put them in contact with Ray Kroc, a travel agent. Kroc was amazed at how efficiently the restaurant operated. He wanted to get into the business and eventually convinced the brothers to make him their franchise representative. From then on, he was in charge of who and where they could open new restaurants.

The new buildings were now built the way the McDonald brothers envisioned their dream restaurant. A clean, red and white exterior with a neon yellow golden arch on either side of the building attracts potential clients (aka bypassers) to the restaurant. The juxtaposition of these two golden arches became the familiar Meki logo, which also forms an "M," a reference to the initials of their name. It took on a similar look to today's image after Ray Kroc became the owner, or rather founder, of the company.

In 1955, Kroc founded the forerunner of today's McDonald's Corporation (McDonald's System, Inc.) and opened its first new restaurant. The first was followed by the second, the third, and within a year, the 18th. Kroc was entitled to 1.9% of gross sales for each of these restaurants, but under his agreement with the brothers, they were entitled to 0.5%. He could barely cover his expenses with the remaining amount. Then he met Harry Sonnenborn, who gave him a new perspective: McDonald's was in fact a huge real estate business.

Turn of events

Sonnenborn encouraged Kroc to buy the land on which he wanted to build restaurants and then lease it to operators. Kroc listened to him and took the biggest step toward owning the entire chain. This way, he received a steady stream of income and did not have to give any of it to the McDonald brothers. The latter, of course, was not happy about this situation. Everything in the restaurants had to continue to be done the way the brothers wanted, although Kroc tried to introduce several innovations. Finally, in 1961, Kroc bought out the brothers for $2.7 million. To raise this sum, he had to take out loans, 14 million of which he was later able to repay.

Years of rapid expansion

As part of the agreement, the brothers would continue to own the restaurant in San Bernardino, but they had to change the name because Kroc already owned the naming rights to McDonald's. So they continued to run the restaurant under the name "The Big M," but Kroc was upset that he could not have it. Soon after, he opened a Meki just around the corner from the M, which allowed the McDonald brothers to close the location in a few years. They probably regretted the deal for life, because, with their 0.5% share at the time, it would have guaranteed them $15 million a year until the late 1970s, while their heirs would have received $305 million in 2012. And Kroc probably got a good deal on that loan.

By 1965, the company was operating more than 700 restaurants. That year, they went public. McDonald's stock started at $22 a share, but within a week the price had risen to $49. By the end of the decade, they had 1,500 restaurants worldwide and has started at Sonnenborn's suggestion, they continued to own the land on which the Meccas operated. Now they are looking for new land with fairly high standards: it should be about 4,600 m2, with the possibility of building on 370 m2, and located on the corner of at least one, but preferably two, busy roads.

Also in 1965, the then very limited offer was expanded: the Filet-O-Fish sandwich was added to the national menu. The fish burger was invented to give Catholic customers a choice during Lent. In 1968, the Big Mac, the iconic double-decker burger, was introduced. The Egg Muffin was introduced in 1975, the Happy Meal in 1979, and Chicken McNuggets in 1983. Of these, the Happy Meal is perhaps the most interesting, as it has made McDonald's one of the largest toy sellers in the world: 1.5 billion toys are sold each year thanks to the Happy Meal.

Ray Kroc never stopped working for McDonald's until he died on January 14, 1984. To this day, McDonald's provides its customers with great-tasting, affordable food, franchisees and crew members with job opportunities, and suppliers with reliable ingredients and products.

Key takeaways

Successful market penetration does not always require a complete upheaval of the rules of the sector. The McDonald brothers did not invent any truly new dishes, but they did let awareness guide the design of their restaurants. So the number-one success factor for McDonald's is professional design and process management.

The second success factor is sales behavior. While other restaurants were slower to offer their products, the excellent policies encouraged employees to sell customers as many extras as possible. Even today, "go big" accounts for a significant portion of restaurant profits (industry rumors say 40%). 

The third approach is the real estate-based approach. The franchising system that Ray Kroc perfected is still used today, and we know from the annual report that the company makes more revenue from franchisees than it can generate itself.

The McDonald’s Products

Core products.

McDonald's core products include burgers, which typically consist of a slice of beef, cheese, and sauce sandwiched between two halves of a bun - in all combinations and sizes. The smallest product is the standard burger, while the largest is the Big Mac. The sandwiches are available with chicken and fish, as well as localized versions in many countries around the world.

Core products include French fries, which also come in a variety of sizes. In addition, the Happy Meal menu specifically for children, as well as shakes and soft drinks, continue to be an integral part of fast food restaurant menus in almost all countries. According to market research , an average McDonald’s menu includes around 145 items. 

Seasonal products

National holidays, Halloween, Christmas, or even Easter - whatever the occasion, McDonald's introduces new seasonal products every month in every country around the world. Some are country- or region-specific (for example, the foie gras sandwiches are made specifically for the European audience), but most products are available in other countries after a limited local testing period. 

Typically, a traditional product, such as a standard burger, is enhanced with additional ingredients (e.g., spices, additional meat, or a special design) to reflect the seasonal event.

Localized products

McDonald’s has achieved this global success through maximizing localization techniques and appealing to local audiences. The company manages the menus to fit culturally and socially accepted norms; tailoring their traditional Big Mac meals to suit a local audience with specific requirements.

• Argentina: McFiesta burgers are available at McDonald's restaurants in Argentina, which are quarter pounders with mayo instead of ketchup. There are typical US sides here like French fries and Coca-Cola. Consider getting ice cream in an Oreo cone for dessert.
• France: Typically, you'd find the McBaguette combo at Mcdonald's in France - a sandwich that is topped with two hash browns and includes breaded chicken, ham, and cheese. The 'Le McWrap' and the 'Le Menu Happy Meal' are also available. Try their apricot and lime macarons for dessert, or their cherry tomatoes as a side dish.
• Hungary: In Hungary, specialized seasonal menus are very common, both in terms of ingredients and appearance. This is also facilitated by the fact that, since 2019, Hungarian McDonald's restaurants have been managed by a centralized, Hungarian-owned company, while the American McDonald's company provides only the brand and franchise rights. Foie gras is a regular item on Hungarian menus, as is "Dotted McFlurry" (a cottage cheese-based ice cream) made in cooperation with a very popular local dairy supplier. ‍
• India: McDonald's has created the Maharaja Mac by substituting chicken patties for the traditional beef patties in its Big Macs. In India, cows are regarded as sacred animals, thus the reasoning behind this change. Indians also enjoy the Vegetable Pizza McPuff, a unique side dish. However, fries and Coca-Cola are just as popular here as they are everywhere else.

• Middle East: Specifically for Middle East dining, Mcdonald's has created the McArabia Pita, which is served with beef or chicken patties (pork is not allowed in the predominantly Muslim diet), onions, and tahini sauce. 
• New Zealand: Despite being removed from the permanent McDonald's menu in New Zealand, the 'Georgie Pie' is still available in some restaurants. With fries and frozen Coke, a square pie topped with steak and cheese is served.
• Sweden: Scandinavian countries tend to favor healthy diets, especially vegetarian food. McDonald's capitalizes on localization with its vegetarian McBean Patty. Served in a bun with lettuce, tomato, and sauce, it has cannellini and kidney beans, onions, green peppers, and carrots.
• Thailand: There is a Samurai Pork Burger on Thailand's national McDonald's menu, which is a pork patty dipped in teriyaki sauce with lettuce, onions, tomato, and mayonnaise. Besides the usual apple pie, you'll also find corn and pineapple pies that aren't available anywhere else.

Partnerships with other companies

• Coca-Cola: The story of McDonald's and Coca-Cola began in 1955 when the fast-food restaurant was looking for a soft drink supplier. The partnership has continued ever since, with Coca-Cola selling not only soda but also other products to the restaurant chain.
• Oreo: Oreo is a worldwide popular dessert brand that mainly produces biscuits. The filled biscuits have become so popular that McDonald's has become a major supplier of Oreo to Mondelez International. In most countries, the biscuit pieces are served with ice cream, but in 2019, McDonald's China team tested the market with a burger with spam and Oreo biscuits . (It was not a global hit.)
• Beyond Meat: The trend toward vegetarian diets is spreading like wildfire around the world, and McDonald's is no stranger to it. According to the BBC , the McPlant burger will be available in British and Irish outlets as early as next year. The beef patty, made with pea protein, is available in 10 restaurants in Coventry, England, in the first round since the end of September, and then throughout the United Kingdom next year. The product's main ingredient is made for McDonald's by Beyond Meat, a publicly-traded startup.
• Local suppliers: Whether we're talking about the US or any other country in the world, one of McDonald's main and most forward-thinking efforts is to source its ingredients from local suppliers. To ensure that the fish, meat, or burger bun is always made to the same standard, McDonald's applies incredibly strict and centralized guidelines. 

Healthy or not healthy?

The restaurant chain has made great strides in the area of healthy eating in recent years: think supply chain with only local suppliers or the introduction of gluten-free, lactose-free, and vegetarian options. The calorie content of a hamburger today is much lower than that of a burger from 1980. In addition, the McDonald's team places great emphasis on healthy living - and they are trying to recruit new colleagues who will promote this corporate image. But that's just one side of the big picture.

A very interesting post came to light in 2008 when Karen Hanrahan revealed a shocking picture. Out of curiosity, she had set aside a McDonald's burger she bought in 1996 to see how quickly it would disintegrate (since there were theories about "plastic" foods in the past). After 12 years, the burger looked exactly like the one she had just bought, except it had shrunk a bit.

Although this is not part of the company's strategy, the following sources have been criticized the company:

• Jamie Oliver and his legal battle against the company
• Super Size Me , a movie in which the protagonist eats only McDonald’s products 
• In 1986, Greenpeace distributed flyers against obesity, naming McDonald’s among the ones responsible.
• There are also a lot of myths (most of them already busted) around the company’s procedures and products.

The product portfolio is the company's strength, so it's no wonder McDonald's is constantly improving and perfecting its recipes. Although the company has yet to build its healthy food image, its fast service and delicious, robust flavors win over millions of customers every month. 

The range includes flagship products available in all restaurants (except were banned for religious or legal reasons). These include traditional burgers, fries, and cola.

The company also diversifies its menu with seasonal and localized items. In the latter category, offerings vary from country to country and region to region, usually in partnership with local businesses and brands.

Franchise System

What is a franchise system.

Franchising has spread throughout the world not as a separate form of business, but as a special kind of business.

Franchising is a form of business based on close cooperation in which the franchisor or the owner of the system sells a complex system that has been carefully designed professionally and commercially in every respect and successfully tested in a market environment. The system is handed over to the franchisee with full training, branding, and ongoing support and supervision. Franchisors operate the franchise system to the specifications of the transferor, in the agreed territory, for a fee, for a fixed period.

McDonald’s Franchise Costs & Requirements

When purchasing an existing restaurant or a new restaurant, an initial down payment of 40% is required. Down payments must be made from non-borrowed personal resources, such as:

• cash on hand
• vested profit sharing
• business or real estate equity

The down payment amount will vary depending on the total cost of the restaurant. McDonald's generally requires $500,000 of non-borrowed personal resources before considering a new franchise partner. With less cash available, most opportunities to participate in the program are limited and depending on the transaction's specifics, financial requirements may be much higher. Additional or multi-restaurant opportunities may be more available to those with additional funds.

Franchise financing

To purchase a McDonald's restaurant, the buyer must pay a down payment of at least 25% cash. It is possible to finance the remainder of the purchase price for a period of up to seven years. Although McDonald's does not offer funding the project, McDonald's Owners/Operators benefit from established relationships with many national lenders.

Franchise - Ongoing Fees

• Service fee: Currently, a service fee of 4.0% of monthly sales is based on the restaurant's sales performance. 
• Rent: Rent that is based on a percentage of sales monthly.

Other costs of setting up a new franchise

Costs usually range from $1,2 million to $2,2 million. Most of the costs are related to the construction of the restaurant, such as building and interior design, but the franchisee also pays for equipment, furniture, and kitchen appliances.

General franchising strategy in 2021

McDonald's restaurants provide quality food and beverages in 119 countries, which are franchised and operated by the company. At year-end 2020, McDonald's will have 39,198 restaurants, of which 36,521 are franchised, or 93 percent.

McDonald's franchise restaurants fall into one of the following categories: conventional franchises, development licenses, and affiliates. Optimal ownership structures for restaurants, trading areas, and markets (countries) depend on a variety of factors, including financial resources and entrepreneurial abilities, as well as legal and regulatory frameworks in key areas such as property ownership and franchising. McDonald's business relationship with independent franchisees is governed by standards and policies, which are of fundamental importance to the company's performance as well as its brand protection.

McDonald's franchise partners are not financial investors, but committed partners who not only put up the capital to open a restaurant, but are also willing to participate in the day-to-day operations and running of the restaurant. They know all the ins and outs of the business, but they also reinforce the McDonald's brand through their involvement in the local community.

The potential partner does not have to have a suitable location, as the location of the restaurants is always determined by the company and handed over to the franchisee.

The Company’s Old/New Strategies

Accelerating the Arches is the Company's new growth strategy for 2020. As the leading global omnichannel restaurant brand, McDonald's Strategy encompasses all aspects of the company's business as well as updated values and new growth pillars that leverage the company's competitive advantage.

Growth Pillars

• Marketing: Investing in new, culturally relevant marketing approaches to effectively communicate the brand's story, food, and purpose. Customers will be provided with more personal services through enhanced digital capabilities. 
• Products: Focusing on serving delicious burgers, chicken, and coffee. Chicken and beef will be the company's primary focus as they represent the largest growth opportunities. McCafe’s brand, experience, value, and quality will be leveraged by the markets to drive long-term growth for McDonald's.
• Digital, Delivery, and Drive-Thru: McDonald's plans to accelerate technology innovation to meet the needs of customers as they interact with the company.
• Digital Experience: Known as "MyMcDonald's", the new digital experience platform will transform the company's digital offerings across drive-thru, takeaway, delivery, curbside pickup, and dine-in options. Through the digital tools available on the platform, customers will receive tailored offers, will be able to enroll in a new loyalty program, and will have the option to order and receive McDonald's food using their preferred channel. 
• Delivery expansion: McDonald's has expanded its delivery service to nearly 30,000 restaurants in the last three years and plans to expand further.
• The increasing importance of Drive-Thru: More than 25,000 restaurants globally have drive-thrus, including nearly 95% of the over 13,000 in the U.S. This channel has gained in importance since the COVID-19 outbreak, and leadership expects that it will play an even greater role as customers demand more flexibility and choice. In the U.S. and International Operated Markets, the vast majority of new restaurants will have a drive-thru. In addition to automated order taking, the Company plans to test a drive-thru express pick-up lane for customers with digital orders and a restaurant concept that offers drive-thru, delivery, and takeaway only for customers to enjoy a faster and more convenient experience.

For decades, McDonald's sales efforts focused on the cash register and drive-thru. One of the strongest elements of this was the introduction of the "Go Large" theme. By sizing and pricing the products, even those who had no real need chose the largest product, believing it to be the best and most appropriate offering. 

Today, in addition to physical sales, digital sales have become a priority. An app developed by the company not only speeds up the ordering process but also offers additional discounts that can further increase the cart value per customer.

With the introduction of home delivery, McDonald's has begun working with several partners including UberEats, FoodPanda, and Wolt. For a long time, these online marketplaces did not offer fast food products like McDonald's, but they have now become serious players in the market. The company's offering is particularly strong when it comes to speed: on average, food is delivered in 15-20 minutes, compared to 50-80 minutes for a traditional restaurant.

There are several cornerstones of the company's marketing strategy that have contributed greatly to McDonald's success:

• The Ronald McDonald figure: An owner of a McDonald's franchise introduced Ronald McDonald in 1967. To appeal to children, franchise partners decided to use a clown icon as an advertising tool. 96% of American children knew the name Ronald McDonald by 1973. Ronald McDonald is the second most recognizable fictional character among US schoolchildren, behind Santa Claus.

• The McDonald’s logo: There's no doubt that McDonald's golden arches are one of the most recognizable logos in the world. It was created in 1940. During the '60s, McDonald's decided to simplify their logo and focus on branding the company. A brilliant move was choosing the golden arches as the logo for the fast-food restaurant. The McDonald's logo looks very much like two golden-brown French fries bent into a letter M, and this is one of the most effective design features of the logo. McDonald’s is advertising one of its most popular menu items without viewers even noticing it.

• “Para PaPa Paaaa… I’m lovin’ it”: McDonald's has been using this jingle for a very long time. McDonald's jingle highlights a positive dining experience. The musical theme makes the diners feel at home during their meals there, as well as conveys how friendly and helpful the staff is.
• Promotion campaigns: Television advertising has become a favorite field for all fast-food restaurants with the proliferation of TVs. To this day, McDonald's is a loyal advertiser on channels aimed at children and their parents. Its campaigns focus on delicious food, fun, natural ingredients, and health. 

The company is one of the biggest innovators in the food industry and is credited with inventing or perfecting the following:

• McDonald's put in place order-taking kiosks in 2015, making it one of the first fast-food chains to do so. A touchscreen machine located near the front of restaurants lets customers place their orders without the need for a cashier.
• The introduction of specialty coffee at McDonald's changed McDonald's from a fast-food restaurant to something more. McDonald's introduced its specialty coffee line in mid-2007.
• The company separated a part of larger restaurants and re-branded it as McCaffes, a place where customers can buy coffee and desserts. Now it competes with Starbucks for coffee-lovers.
• McDonald's was one of the first fast-food chains to organize even the smallest details of its operations in a manual. This manual is still being improved today.

The 2020 growth plan contained nothing new compared to the path taken a year earlier. The key elements were digital customer access, which was a key driver of the company's continued growth during the COVID epidemic.

Sales and marketing go hand in hand at McDonald's: over the past 80-plus years, the techniques used have been perfected, all aimed at getting customers to buy. Advertising builds on this image of cheap and healthy food.

Final Thoughts And Key Takeaways

Growth by the numbers.

McDonald's has seen steady growth since its founding. Because of the relative cheapness of its products, it is a truly crisis-proof company, which even COVID could not bring to its knees - unlike millions of small catering businesses.

The company has emerged from the crisis as a winner, thanks in particular to digital developments, drive-thru, and the spread of home delivery.

Key takeaways from the McDonald’s story:

• Real estate business: The McDonald's business model has evolved from a restaurant to a complex system in a relatively short period, with some revenue coming from franchise fees, some from land leases, and some from food sales. 
• Thoughtful processes: While other restaurants are constantly experimenting with food, McDonald's has focused on improving its production technologies from the beginning. In addition to innovative machinery, internal processes have also been organized to ensure that products reach customers as quickly and consistently as possible.
• Franchise system: Behind the amazingly dynamic growth of McDonald's has been a well-constructed franchise system, the foundations of which were laid by the McDonald brothers, but perfected by Ray Kroc. 
• Core, seasonal and localized products: The main feature of the company's product range is that it is extremely consistent, as we can also get fries and cola in the farthest corners of the world. At the same time, local companies, at their discretion, can launch the menu with seasonal and localized products, enabling them to engage their customers even more.
• Strong marketing: Mcdonald’s has consciously built up the dining experience - regardless of whether we’re eating a hamburger in the car, in a restaurant, or at home. The logo, the iconic clown figure, the company’s theme song, the packaging, the internal design, and many other elements add up to become an unforgettable experience.
• Home delivery: Delivery was the largest innovational step from McDonald’s for decades, and partnering with food delivery startups, like UberEats or Wolt helped the company not only to survive the pandemic but get in shape for rapid growth.

Consumer opinion on McDonald's is certainly divided: some say it's plastic, others say it has grown up to meet consumer expectations. As a publicly-traded company, the owner of the golden arch has no choice but to march forward, pioneering innovation as it has throughout its history. What does the future hold for the company? An even broader product range, a stronger home, and digital experience - and, investors expect, continued revenue growth.

• Open access
• Published: 04 June 2020

Satisfaction and revisit intentions at fast food restaurants

• Amer Rajput 1 &
• Raja Zohaib Gahfoor 2  

Future Business Journal volume  6 , Article number:  13 ( 2020 ) Cite this article

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This study is to identify the positive association of food quality, restaurant service quality, physical environment quality, and customer satisfaction with revisit intention of customers at fast food restaurants. Additionally, word of mouth is investigated as moderator on the relationship of customer satisfaction with revisit intentions of customers at fast food restaurants. Data were collected through a questionnaire survey from 433 customers of fast food restaurants through convenience sampling. Hypotheses of proposed model were tested using structural equation modeling with partial least squares SEM-PLS in SMART PLS 3. The results confirmed the positive association of food quality, restaurant service quality, physical environment quality, and customer satisfaction with revisit intentions of customers at fast food restaurants. However, word of mouth does not positively moderate the relationship of customer satisfaction with revisit intentions of customers at fast food restaurants. This study emphasizes the importance of revisit intention as a vital behavioral reaction in fast food restaurants. This study reveals revisit intention’s positive association with food quality, restaurant service quality, physical environment quality, and customer satisfaction based on stimulus-organism-response (S-O-R) theory. Furthermore, it is identified that social conformity theory does not hold its assumption when consumers experience quality and they are satisfied because word of mouth does not moderate the relationship of customer satisfaction with revisit intention of customer.

Introduction

Background of the study.

Hospitality industry is observing diversified changes in highly competitive environment for restaurants [ 1 ]. Consumers are becoming conscious of food quality (FQ), restaurant service quality (RSQ), and physical environment quality (PEQ) of the fast food restaurants. Consumers switch easily in case of just one evasive experience [ 2 , 3 ]. Fast food restaurants must attract new customers and retain the existing customers. There is a growing trend in Pakistani culture to dine out at fast food restaurants with family, friends, and colleagues [ 4 ]. Restaurants focus to provide a dining experience by combining tangible and intangible essentials [ 5 ]. Decisive objective is to achieve customer satisfaction (CS), word of mouth (WOM), and future revisit intention (RVI) at fast food restaurant.

Restaurants differ in offerings, appearance, service models, and cuisines; this classifies restaurants as downscale and upscale [ 6 , 7 ]. Revisit intention is the willingness of a consumer to revisit a place due to satisfactory experience. Customer satisfaction generates a probability to revisit in presence or absence of an affirmative attitude toward the restaurant [ 8 ]. Revisit intention is a substantial topic in hospitality research [ 8 , 9 , 10 ]. To date there has been little agreement on that word of mouth can affect revisit intention after experience of customer satisfaction. For instance, when a customer is satisfied at a fast food restaurant experience, however, the customer’s family and friends do not share the same satisfying experience. Will this word of mouth affect the customer’s revisit intention? Food quality is acknowledged as a basic component of the restaurant’s overall experience to affect consumer revisit intention. Fast food quality is substantially associated with customer satisfaction and it is an important predictor of behavioral intention [ 11 ]. Service quality is an essential factor to produce consumers’ revisit intentions [ 12 ]. Furthermore, physical environment quality affects behavior of consumers at restaurants, hotels, hospitals, retail stores, and banks [ 13 ]. Physical environment quality is a precursor of customer satisfaction [ 9 ]. This suggests that customer satisfaction is associated with fast food quality, restaurant service quality, physical environment quality, and revisit intention.

Aims of the study

This study is to investigate the association of fast food quality, restaurant service quality, physical environment quality with customer’s revisit intention through mediation of customer satisfaction using S-O-R theory and moderation of word of mouth on the relationship of customer satisfaction with revisit intention based on social conformity theory. This study empirically tests a conceptual research framework based on S-O-R and social conformity theory adding value to the knowledge. Objectives of the study are given below.

To investigate the association of fast food quality, restaurant service quality, and physical environment quality with revisit intention through customer satisfaction based on S-O-R theory in the context of Pakistani fast food restaurants.

To investigate moderation of WOM on relationship of customer satisfaction with revisit intention based on social conformity theory in the context of Pakistani fast food restaurants.

Furthermore, little empirical evidence is present about customer satisfaction with respect to fast food restaurant service quality [ 14 ]. Customer satisfaction is a post-consumption assessment in service industry. Customer satisfaction acts as the feedback mechanism to boost consumer experience [ 15 ]. Customer satisfaction brings competitive advantage to the firm and produces positive behavioral revisit intention [ 16 ]. Marketing literature emphasizes customer satisfaction in anticipation of positive word of mouth, revisit intention, and revisit behavior [ 5 ]. Behavioral intention is assessed through positive WOM, and it is important in service industry [ 15 ], whereas social influence in shape of WOM affects the behavior of individuals toward conformity leading to a driving effect based on social conformity theory [ 17 ].

• Food quality

Food quality plays a central role in the restaurant industry. Food quality is essential to satisfy consumer needs. Food quality is a substantial condition to fulfill the needs and expectations of the consumer [ 18 ]. Food quality is acknowledged as a basic component of the restaurant’s overall experience. Food quality is a restaurant selection’s most important factor, and it is considerably related to customer satisfaction [ 11 ]. Food quality affects customer loyalty, and customer assesses the restaurant on the basis of food quality [ 19 ]. Food quality entails food taste, presentation, temperature, freshness, nutrition, and menu variety. Food quality influences customers’ decisions to revisit the restaurant [ 20 ]. Academic curiosity is increasing in the restaurant’s menus, as variety of menu items is considered the critical characteristic of food quality [ 11 ]. Taste is sensual characteristic of food. Taste is assessed after consumption. Nonetheless, customers foresee taste before consumption through price, quality, food labels, and brand name. Taste of food is important to accomplish customer satisfaction. Presentation of food enhances dining customer satisfaction [ 21 , 22 ]. Customer’s concerns of healthy food substantially affect customer’s expectations and choice of a restaurant [ 23 ]. Freshness is assessed with the aroma, juiciness, crispness, and fresh posture of the food. Food quality enhances customer satisfaction [ 24 ].

• Restaurant service quality

Quality as a construct is projected by Juran and Deming [ 25 , 26 ]. Service quality is comparatively a contemporary concept. Service quality assesses the excellence of brands in industry of travel, retail, hotel, airline, and restaurant [ 27 ]. Restaurant service quality affects dining experiences of customers. Service quality creates first impression on consumers and affects consumers’ perception of quality [ 28 ]. Service industry provides good service quality to the customers to attain sustainable competitive advantage. Customer satisfaction depends on quality of service at the restaurant [ 29 ]. Service quality entails price, friendliness, cleanliness, care, diversity, speed of service, and food consistency according to menu. Customer satisfaction also depends on communication between restaurant’s personnel and the customers [ 30 ]. Consumer’s evaluation of service quality is affected by level of friendliness and care. Service quality leads to positive word of mouth, customer satisfaction, better corporate image, attraction for the new customers, increase revisits, and amplified business performance. Service quality increases revisits and behavioral intentions of customers in hospitality industry [ 12 ].

• Physical environment quality

PEQ is a setting to provide products and services in a restaurant. Physical environment quality contains artifacts, decor, spatial layout, and ambient conditions in a restaurant. Customers desire dining experience to be pleasing; thus, they look for a physical environment quality [ 31 ]. Physical environment quality satisfies and attracts new customers. PEQ increases financial performance, and it creates memorable experience for the customers [ 9 ]. Consumers perceive the quality of a restaurant based on cleanliness, quirky, comfortable welcoming, physical environment quality, and other amenities that create the ambiance [ 32 ]. Effect of physical environment quality on behaviors is visible in service businesses such as restaurants, hotels, hospitals, retail stores, and banks [ 33 ]. Physical environment quality is an antecedent of customer satisfaction [ 34 ]. Thus, restaurants need to create attractive and distinctive physical environment quality.

• Customer satisfaction

Customer satisfaction contains the feelings of pleasure and well-being. Customer satisfaction develops from gaining what customer expects from the service. Customer satisfaction is broadly investigated in consumer behavior and social psychology. Customer satisfaction is described “as the customer’s subjective assessment of the consumption experience, grounded on certain associations between the perceptions of customer and objective characteristics of the product” [ 35 ]. Customer satisfaction is the extent to which an experience of consumption brings good feelings. Customer satisfaction is stated as “a comparison of the level of product or service performance, quality, or other outcomes perceived by the consumer with an evaluative standard” [ 36 ]. Customer satisfaction constructs as a customer’s wholesome evaluation of an experience. Customer satisfaction is a reaction of fulfilling customer’s needs.

Customer satisfaction brings escalated repeat purchase behavior and intention to refer [ 37 ]. Dissatisfied consumers are uncertain to return to the place [ 38 ]. Satisfactory restaurant experience can enhance revisit intention of the consumer. Positive WOM is generated when customers are not only satisfied with the brand but they demand superior core offering and high level of service [ 15 ].

• Word of mouth

Word of mouth is described as “person-to-person, oral communication between a communicator and receiver which is perceived as a non-commercial message” [ 39 ]. WOM is also defined as “the informal positive or negative communication by customers on the objectively existing and/or subjectively perceived characteristics of the products or services” [ 40 ]. Moreover, [ 41 ] defines it as “an informal person to person communication between a perceived non-commercial communicator and a receiver regarding a brand, a product, an organization or a service”. WOM is described as a positive or negative statement made by probable, actual or former customers about a product or a company, which is made available through offline or online channels [ 42 , 43 ]. WOM is an important and frequent sensation; it is known for long time that people habitually exchange their experiences of consumptions with others. Consumers complain about bad hotel stays, talk about new shoes, share info about the finest way of getting out tough stains, spread word about experience of products, services, companies, restaurants, and stores. Social talks made more than 3.3 billion of brand impressions per day [ 44 ].

WOM has substantial impact on consumer’s purchasing decision; therefore, a vital marketing strategy is to initiate positive WOM [ 45 ]. However, negative WOM is more informative and diagnostic where customers express their dissatisfaction [ 38 ]. Word of mouth communications are more informative than traditional marketing communications in service sector. WOM is more credible than advertisement when it is from friends and family [ 46 ]. WOM is a vital influencer in purchase intention. WOM escalates affection that enhances commitment of consumer purchase intention. WOM is generated before or after the purchase. WOM helps the consumers to acquire more knowledge for the product and to reduce the perceived risk [ 47 ]. WOM in the dining experience is very important. People tend to follow their peers’ opinions when they are to dine out.

• Revisit intention

To predicting and to explain human behavior is the key determination of consumer behavior research. Consumer needs differ and emerge frequently with diverse outlooks. Revisit intention is to endorse “visitors being willing to revisit the similar place, for satisfactory experiences, and suggest the place to friends to develop the loyalty” [ 48 ]. Consumer forms an attitude toward the service provider based on the experience of service. This attitude can be steady dislike or like of the service. This is linked to the consumer’s intention to re-patronize the service and to start WOM. Repurchase intention is at the core of customer loyalty and commitment. Repurchase intention is a significant part of behavioral and attitudinal constructs. Revisit intention is described as optimistic probability to revisit the restaurant. Revisit intention is the willingness of a consumer to visit the restaurant again. Furthermore, the ease of visitors, transportation in destination, entertainment, hospitability, and service satisfaction influence visitor’s revisit intention.

Consumer behavior encircles the upcoming behavioral intention and post-visit evaluation. Post-visit evaluation covers perceived quality, experience, value, and the satisfaction. Restaurant managers are interested to understand the factors of consumer revisit intention, as it is cost effective to retain the existing customers in comparison with attract new customers [ 49 ]. Substantial consideration is prevailing in literature for the relationship among quality attributes, customer satisfaction, and revisit intention. There is a positive association between customer satisfaction and revisit intention. Indifferent consumer, accessibility of competitive alternatives and low switching cost can end up in a state where satisfied consumers defect to other options [ 2 ]. Consumer behavior varies for choice of place to visit, assessments, and behavioral intentions [ 50 ]. The assessments are about the significance perceived by regular customers’ satisfactions. Whereas, future behavioral intentions point to the consumer’s willingness to revisit the similar place and suggest it to the others [ 51 ].

S-O-R model is primarily established on the traditional stimulus–response theory. This theory explicates individual’s behavior as learned response to external stimuli. The theory is questioned for oversimplifying ancestries of the behaviors and ignoring one’s mental state. [ 52 ] extended the S-O-R model through integrating the notion of organism between stimulus and response. S-O-R concept is embraced to reveal individual’s affective and cognitive conditions before the response behavior [ 53 ]. S-O-R framework considers that environment comprises stimuli (S) leading changes to the individual’s internal conditions called organism (O), further leading to responses (R) [ 52 ]. In S-O-R model, the stimuli comprise of various components of physical environment quality, organism indicates to internal structures and processes bridging between stimuli and final responses or actions of a consumer [ 9 ]. Behavioral responses of an individual in a physical environment quality are directly influenced by the physical environment quality stimulus [ 54 ]. S-O-R framework is implemented in diverse service contexts to examine how physical environment quality affects customer’s emotion and behavior [ 55 ]. The effect of stimulation in an online shopping environment on impulsive purchase is investigated through S-O-R framework [ 56 ]. The effects of background music, on consumers’ affect and cognition, and psychological responses influence behavioral intentions [ 57 ]. Perceived flow and website quality toward customer satisfaction affect purchase intention in hotel website based on S-O-R framework [ 58 ]. Therefore, this study conceptualizes food quality, restaurant service quality, and physical environment quality as stimuli; customer satisfaction as organism; and revisit intention as response.

Moreover, social conformity theory (SCT) is to support the logical presence of WOM in the conceptual framework as a moderator on the relationship of customer satisfaction and revisit intention. Social conformity influences individual’s attitudes, beliefs and behaviors leading to a herding effect [ 17 , 59 ]. Thus, social influence (WOM) moderates the relationship of customer satisfaction and revisit intention. Following hypotheses are postulated, see Fig.  1 .

Conceptual research framework

Food quality is positively associated with customer satisfaction in fast food restaurant.

Restaurant service quality is positively associated with customer satisfaction in fast food restaurant.

Physical environment quality is positively associated with customer satisfaction in fast food restaurant.

Customer satisfaction is positively associated with revisit intention of customer in fast food restaurant.

Customer satisfaction mediates between food quality and revisit intention of customer in fast food restaurant.

Customer satisfaction mediates between restaurant service quality and revisit intention of customer in fast food restaurant.

Customer satisfaction mediates between physical environment quality and revisit intention of customer in fast food restaurant.

WOM positively moderates the relationship between customer satisfaction and revisit intention of customer in fast food restaurant.

There are two research approaches such as deductive (quantitative) and inductive (qualitative). This study utilized the quantitative research approach as it aligns with the research design and philosophy. Quantitative research approach mostly relies on deductive logic. Researcher begins with hypotheses development and then collects data. Data are used to determine whether empirical evidence supports the hypotheses [ 60 ]. The questionnaires survey is used. This study chose the mono-method with cross-sectional time horizon of 6 months. Deductive approach is utilized in this study. Cross-sectional time horizon also known as “snapshot” is used when investigation is related with the study of a specific phenomenon at a particular time [ 61 ]. Questionnaire survey is mostly used technique for data collection in marketing research due to its effectiveness and low cost [ 62 ]. Data are collected through self-administered questionnaires. Following the footsteps of Lai and Chen [ 63 ] and Widianti et al. [ 64 ] convenience sampling is applied. Famous fast food restaurants in twin cities (Rawalpindi and Islamabad) of Pakistan were chosen randomly. Furthermore, 650 questionnaires (with consideration of low response rate) were distributed to the customers at famous fast food restaurants. Moreover, researchers faced difficulty in obtaining fast food restaurant’s consumers data.

It yielded a response rate of 68.92% with 448 returned questionnaires. Fifteen incomplete questionnaires are not included; thus, 433 responses are employed for data analysis from fast food restaurant customers. The obtained number of usable responses was suitable to apply structural equation modeling [ 65 , 66 , 67 , 68 ].

Sample characteristics describe that there are 39.7% females and 60.3% males. There are 31.4% respondents of age group 15–25 years, 48.3% of age group 26–35, 12.2% of age ranges between 36 and 45, 6.7% of age ranges between 46 and 55, and 1.4% of age group is above 56 years. The educational level of the respondents indicates that mostly respondents are undergraduate and graduate. Occupation of respondents reflects that 28.6% work in private organizations and 24.9% belong to student category. Monthly income of 29.3% respondents ranges between Rupees 20,000 and 30,000 and 25.6% have monthly income of Rupees 41,000–50,000. Average monthly spending in fast food restaurants is about Rupees 3000–6000, see Table  1 .

Measures of the constructs

Food quality is adopted from measures developed by [ 69 ]. Food quality contains six items such as: food presentation is visually attractive, the restaurant offers a variety of menu items, and the restaurant offers healthy options. Restaurant service quality is adopted with six items [ 70 ]. This construct contains items such as: efficient and effective process in the welcoming and ushering of the customers, efficient and effective explanation of the menu, efficient and effective process in delivery of food. Physical environment quality is adopted with four items [ 71 ], and one item is adopted from measures developed by [ 70 ]. The items are such as: the restaurant has visually striking building exteriors and parking space, the restaurant has visually eye-catching dining space that is comfortable and easy to move around and within, and the restaurant has suitable music and/or illumination in accordance with its ambience. Revisit intention is measured through four adapted items [ 8 ]; such as: I would visit again in the near future and I am interested in revisiting again. Customer satisfaction is measured by three adopted items [ 29 ]; such as: I am satisfied with the service at this restaurant, and the restaurant always comes up to my expectations. Word of mouth is measured with four adopted items such as: my family/friends mentioned positive things I had not considered about this restaurant, my family/friends provided me with positive ideas about this restaurant [ 72 ]. Each item is measured on 5-point Likert scale, where 1 = strongly disagree, 3 = uncertain, and 5 = strongly agree.

Results and discussion

Validity and reliability.

Validity taps the ability of the scale to measure the construct; in other words, it means that the representative items measure the concept adequately [ 73 ]. The content validity is executed in two steps; firstly, the items are presented to the experts for further modifications; secondly, the constructive feedback about understanding of it was acquired by few respondents who filled the questionnaires. Each set of items is a valid indicator of the construct as within-scale factor analysis is conducted.

The factor analyses allotted the items to their respective factor. Fornell and Lacker’s [ 74 ] composite reliability p is calculated for each construct using partial least squares (PLS) structural equation modeling and Cronbach’s coefficient α [ 75 ]. Cronbach’s α is used to evaluate the reliability of all items that indicates how well the items in a set are positively related to one another. Each Cronbach’s α of the instrument is higher than .7 (ranging from .74 to .91); see Table  2 .

Common method bias

Same measures are used to collect data for all respondents; thus, there can be common method bias [ 76 ]. Firstly, questionnaire is systematically constructed with consideration of study design. Secondly, respondents were assured for the responses to be kept anonymous [ 77 ]. Common method bias possibility is assessed through Harman’s single factor test [ 78 , 79 , 80 , 81 , 82 , 83 ]. Principal axis factor analysis on measurement items is exercised. The single factor did not account for most of the bias and it accounted for 43.82% variance that is less than 50%. Thus, common method bias is not an issue [ 80 , 81 ].

SEM-PLS model assessment

Survey research faces a challenge to select an appropriate statistical model to analyze data. Partial least squares grounded structural equation modeling (SEM-PLS) and covariance-based structural equation modeling (CB-SEM) are generally used multivariate data analysis methods. CB-SEM is based on factor analysis that uses maximum likelihood estimation. PLS-SEM is based on the principal component concept; it uses the partial least squares estimator [ 84 ]. PLS-SEM is considered appropriate to examine complex cause–effect relationship models. PLS-SEM is a nonparametric approach with low reservations on data distribution and sample size [ 84 ].

Measurement model assessment

To evaluate convergent validity measurement model (outer model) is assessed that includes composite reliability (CR) to evaluate internal consistency, individual indicator reliability, and average variance extracted (AVE) [ 85 ]. Indicator reliability explains the variation in the items by a variable. Outer loadings assess indicator reliability; a higher value (an item with a loading of .70) on a variable indicates that the associated measure has considerable mutual commonality [ 85 ]. Two items RSQ 14 and PEQ 24 are dropped due to lower value less than .60 [ 86 ]. Composite reliability is assessed through internal consistency reliability. CR values of all the latent variables have higher values than .80 to establish internal consistency [ 85 ]; see Table  2 .

Convergent validity is the extent to which a measure correlates positively with alternative measures of the same variable. Convergent validity is ensured through higher values than .50 of AVE [ 74 ], see Table  2 . Discriminant validity is the degree to which a variable is truly distinct from other variables. Square root of AVE is higher than the inter-construct correlations except customer satisfaction to hold discriminant validity [ 74 ]. Additional evidence for discriminant validity is that indicators’ individual loadings are found to be higher than the respective cross-loadings, see Table  3 .

Structural model assessment

Structural model is assessed after establishing the validity and reliability of the variables. Structural model assessment includes path coefficients to calculate the importance and relevance of structural model associations. Model’s predictive accuracy is calculated through R 2 value. Model’s predictive relevance is assessed with Q 2 , and value of f 2 indicates substantial impact of the exogenous variable on an endogenous variable in PLS-SEM [ 85 ]. SEM is rigueur in validating instruments and testing linkages between constructs [ 87 ]. SMART-PLS produces reports of latent constructs correlations, path coefficients with t test values. The relationships between six constructs of food quality, restaurant service quality, physical environment quality, customer satisfaction, word-of-mouth, and revisit intention are displayed in Fig.  2 after bootstrapping. Bootstrapping is a re-sampling approach that draws random samples (with replacements) from the data and uses these samples to estimate the path model multiple times under slightly changed data constellations [ 88 ]. Purpose of bootstrapping is to compute the standard error of coefficient estimates in order to examine the coefficient’s statistical significance [ 89 ].

Bootstrapping and path coefficients

Food quality is positively associated to customer satisfaction in fast food restaurant; H 1 is supported as path coefficient = .487, T value = 8.349, P value = .000. Restaurant service quality is positively associated with customer satisfaction; H 2 is supported as path coefficient = .253, T value = 4.521, P value = .000. Physical environment quality is positively associated with customer satisfaction in fast food restaurant; H 3 is supported as path coefficient = .149, T value = 3.518, P value = .000. Customer satisfaction is positively associated with revisit intention of customer in fast food restaurant; H 4 is supported as path coefficient = .528, T value = 11.966, P value = .000. WOM positively moderates the relationship between customer satisfaction and revisit intention of customer in fast food restaurant; H 8 is not supported as path coefficient = − .060, T value = 2.972, P value = .003; see Table  4 .

Assessing R 2 and Q 2

Coefficient of determination R 2 value is used to evaluate the structural model. This coefficient estimates the predictive precision of the model and is deliberated as the squared correlation between actual and predictive values of the endogenous construct. R 2 values represent the exogenous variables’ mutual effects on the endogenous variables. This signifies the amount of variance in endogenous constructs explained by total number of exogenous constructs associated to it [ 88 ]. The endogenous variables customer satisfaction and revisit intention have R 2  = .645 and .671, respectively, that assures the predictive relevance of structural model. Further the examination of the endogenous variables’ predictive power has good R 2 values.

Blindfolding is to cross-validate the model’s predictive relevance for each of the individual endogenous variables with value of Stone–Geisser Q 2 [ 90 , 91 ]. By performing the blindfolding test with an omission distance of 7 yielded cross-validated redundancy Q 2 values of all the endogenous variables [ 88 ]. Customer satisfaction’s Q 2  = .457 and RVI’s Q 2  = .501; this indicates large effect sizes. PLS structural model has predictive relevance because values of Q 2 are greater than 0, see Table  5 .

Assessing f 2

Effect size f 2 is the measure to estimate the change in R 2 value when an exogenous variable is omitted from the model. f 2 size effect illustrates the influence of a specific predictor latent variable on an endogenous variable. Effect size f 2 varies from small to medium for all the exogenous variables in explaining CS and RVI as shown Table  6 .

Additionally, H 5 : CS mediates between food quality and RVI is supported as CS partially mediates between FQ and RVI. Variation accounted for (VAF) value indicates that 70% of the total effect of an exogenous variable FQ on RVI is explained by indirect effect. Therefore, the effect of FQ on RVI is partially mediated through CS. Similarly, the VAF value indicates that 70% of the total effect of an exogenous variable RSQ and 35% VAF of PEQ on RVI is explained by indirect effect. Therefore, the effects of RSQ and PEQ on RVI are also partially mediated through CS. H 6 is supported as the effect of CS is partially mediated between RSQ and RVI of customer in fast food restaurant. H 7 is supported as the effect of CS is partially mediated between PEQ and RVI of customer in fast food restaurant, see Table  7 . This clearly indicates that customer satisfaction mediates between all of our exogenous variables (food quality, restaurant service quality and physical environment quality) and dependent variable revisit intention of customer in fast food restaurant [ 88 , 92 ] (Additional files 1 , 2 and 3 ).

This is interesting to note that food quality, restaurant service quality, physical environment quality, and customer satisfaction are important triggers of revisit intention at fast food restaurants. However, surprisingly, word of mouth does not moderate the relationship of customer satisfaction with revisit intention of customer at fast food restaurant. The results of the study correspond with some previous findings [ 15 , 29 , 32 , 69 , 93 ]. Positive relationship between customer satisfaction and revisit intention is consistent with the findings of the previous studies [ 5 , 8 , 94 , 95 , 96 ]. Food quality is positively associated with revisit intention; this result as well corresponds to a previous study [ 24 ]. Furthermore, interior and amusing physical environment is an important antecedent of revisit intention at a fast food restaurant; this finding is congruent with previous findings [ 29 , 70 , 97 , 98 ] and contrary to some previous studies [ 9 , 15 ].

Intensified competition, industry’s volatile nature, and maturity of the business are some challenges that fast food restaurants face [ 5 ]. Amid economic crunch, competition becomes even more evident, driving fast food restaurants to look for unconventional ways to appeal the customers. In fact, these findings somehow show that significance of physical environment quality in creating revisit intention is probably lower in comparison with food quality and restaurant service quality. Nonetheless, fast food restaurant’s management should not underrate the fact that physical environment quality considerably affects the revisit intention. Due to this, the importance of physical environment quality must not be overlooked when formulating strategies for improving customer satisfaction, revisit intention and creating long-term relationships with customers.

Managerial implications

The results imply that restaurant management should pay attention to customer satisfaction because it directly affects revisit intention. Assessing customer satisfaction has become vital to successfully contest in the modern fast food restaurant business. From a managerial point of view, the results of this study will help restaurant managers to better understand the important role of food quality, restaurant service quality and physical environment quality as marketing tool to retain and satisfy customers.

Limitations

There are certain limitations with this study. This study is cross sectional, and it can be generalized to only two cities of Pakistan. Scope of research was limited as the data were collected from two cities of Pakistan (Islamabad and Rawalpindi) using convenience sampling.

Future research

A longitudinal study with probability sampling will help the researchers to comprehensively investigate the relationships among the constructs. Moreover, it would be useful for future research models to add information overload as an explanatory variable and brand image as moderating variable in the research framework. Additionally, moderation of WOM can be investigated in other relationships of conceptual model.

The study encircles the key triggers of customer satisfaction and revisit intention in fast food restaurants. It also offers a model that defines relationships between three factors of restaurant offer (food quality, restaurant service quality, and physical environment quality), customer satisfaction, word of mouth, and revisit intention at fast food restaurants. The model specially focuses the revisit intention as dependent variable of conceptual model despite behavior intentions. The findings suggest the revisit intention is positively associated with customer satisfaction, food quality, restaurant service quality, and physical environment quality in a fast food restaurant.

However, contrary to the findings of a previous study [ 99 ], WOM do not positively moderate between the relationship of customer satisfaction and revisit intention. The empirical findings confirm the significant impact of food quality, restaurant service quality, physical environment quality, and customer satisfaction which are important antecedents of revisit intention at fast food restaurant through mediation of customer satisfaction. Moreover, findings of the research support the assumptions of SOR theory strengthening our conceptual model which states the external stimuli (FQ, RSQ, PEQ) produced internal organism (CS) which led to the response (RVI). However; assumption of social conformity theory failed to influence the satisfied customer. In other words, customer satisfaction plays dominating role over social influence (i.e. WOM) in making revisit intention. Therefore, WOM was not able to influence the strength of relationship of CS and RVI.

Availability of data and materials

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Abbreviations

Social conformity theory

Stimulus-organism-response

Structural equation modeling with partial least squares

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The authors gratefully acknowledge the conducive research environment support provided by Department of Management Sciences at COMSATS University Islamabad, Wah Campus and Higher Education Commission Pakistan for provision of free access to digital library.

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PLS Algorithm.

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Bootstrapping.

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Blindfolding.

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Rajput, A., Gahfoor, R.Z. Satisfaction and revisit intentions at fast food restaurants. Futur Bus J 6 , 13 (2020). https://doi.org/10.1186/s43093-020-00021-0

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10 Case Studies of Using Robots in Fast Food Restaurants

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• Food Industry

Introduction:

Fast food restaurants are no strangers to technological advancements, and one of the latest trends making waves in the industry is the integration of robots. From order-taking to food preparation, robots are becoming an integral part of the fast-food landscape. In this article, we’ll delve into 10 case studies that highlight how various fast-food chains are incorporating robots into their operations.

Table of Contents

What is the use of robots in restaurants.

Robots have become increasingly popular in the fast-food industry as they offer a range of benefits to restaurant owners and customers. They can improve speed and efficiency in preparing and serving meals, reduce labor costs, and minimize the risk of human error in food preparation. Self-service kiosks and robotic arms for cooking, such as Flippy from Burger King, have proven to be successful tools for many fast-food chains in streamlining and automating their operations. With the ongoing COVID-19 pandemic, there has also been a heightened interest in robotics technology as it provides contactless service, an essential factor in ensuring customer safety. As technology continues to evolve, we can expect to see more advancements and innovations in the use of robots in restaurants.

Benefits of introducing robots in fast-food restaurants

1.     increased efficiency.

Robots can work much faster than human workers, reducing wait times and increasing the number of orders that can be processed within a given time.

2.     Reduced labor costs

Robots require less training and maintenance than human workers, reducing the overall cost of labor.

3.     Improved accuracy

Robots can perform tasks with a greater degree of precision and accuracy than human workers, reducing the potential for errors.

While the use of robots in fast-food restaurants may raise concerns about job displacement and the future of work, these technological advancements are likely to continue to shape the industry in the coming years.

What Fast Food Restaurants Use Robots?

Burger king’s flippy robots:.

• Introduced to kitchens for burger, fries, and onion rings preparation.
• Aims to streamline operations and enhance efficiency.

KFC’s Self-Ordering Kiosks:

• Utilize facial recognition technology for personalized ordering.
• Represents a move towards enhanced customer experiences through automation.

Domino’s Pizza and Nuro’s Partnership:

• Testing autonomous pizza delivery robots in Houston, Texas.
• Demonstrates a commitment to exploring innovative delivery solutions.

Caliburger’s Robotic Innovations:

• Showcases the industry’s interest in cutting-edge technology.
• Specific robotic applications not detailed but indicative of broader adoption trends.

Wendy’s Drive-Thru Automation:

• Implemented automated order-taking kiosks.
• Aims to improve the overall drive-thru experience for customers.

Dunkin’ Donuts’ Technological Integration:

• Specifics not provided, but inclusion highlights a broader trend in the industry.
• Implies a commitment to adopting technology for operational improvements.

While the use of robots in fast-food establishments is still evolving, the examples mentioned demonstrate a clear trend among major chains to integrate technology for operational enhancement and improved service delivery. As these initiatives progress, the fast-food industry is likely to see further innovations and a deeper integration of robots into various aspects of its daily operations.

Case Studies of Using Robots in Fast Food Restaurants

Case study 1: flippy the robot at caliburger.

Fast-food chain Caliburger made headlines with the introduction of Flippy, a robot designed to perform tasks such as grilling burgers, frying chicken, and making chips. Flippy employs a combination of artificial intelligence, cameras, and sensors to operate, and is capable of learning and adapting as it performs tasks. The robot has been touted for its speed and efficiency, with Caliburger claiming that it can cook up to 2,000 burgers in a day. While Flippy has received praise for its impact on productivity, some critics have raised concerns about the future of low-skilled jobs in the restaurant industry.

Case Study 2: Pepper the Robot at Pizza Hut

Pepper , a humanoid robot developed by SoftBank Robotics, has been deployed in select Pizza Hut locations in Asia to provide customers with a unique and interactive experience. With the help of artificial intelligence and sensors, Pepper can take orders, interact with customers, and even make recommendations based on their preferences. The robot has been praised for its ability to engage customers and create a memorable dining experience. However, some have expressed concerns about the cost of implementing such technology and the impact on the job market. Nevertheless, Pizza Hut sees Pepper as a valuable addition to their brand, helping them stand out in a competitive industry.

Case Study 3: Zume Pizza’s Robotic Kitchen

Zume Pizza, a startup based in Silicon Valley, has been revolutionizing the pizza industry with its robotic kitchen. The company uses robots and artificial intelligence to automate a large portion of the pizza-making process, from rolling the dough to placing toppings. In addition to speed and efficiency, Zume Pizza’s robotic kitchen also offers unparalleled consistency and quality control. The company’s use of robots has attracted both praise and criticism, with some seeing it as a way to improve productivity and others fearing job displacement. Nevertheless, Zume Pizza believes in the potential of robotics to change the food industry for the better.

Case Study 4: Wendy’s Robot Fry Cook

Wendy’s is a fast-food chain that has been experimenting with robotics in its kitchen operations. The company has developed a robot fry cook that is capable of frying French fries with precision and consistency. The robot uses sensors and artificial intelligence to determine when the fries are cooked to perfection, and then it automatically dispenses them into a holding area for employees to serve to customers. Wendy’s claims that the robot fry cook has reduced cooking time for French fries by 50%, allowing employees to focus on other tasks, such as assembling and serving orders. The robot fry cook also ensures consistency in the quality of the fries, reducing waste and improving customer satisfaction. Wendy’s sees robotics as a way to improve efficiency and customer service in the fast-food industry.

Case Study 5: Creator’s Robot Burger Maker

Creator is a high-end burger restaurant that has added a touch of automation to its operations. The restaurant has developed a robot burger maker that can create gourmet burgers in a matter of minutes. The robot takes orders from customers and selects the appropriate ingredients from a refrigerated unit. It then grinds the meat, shapes the patties, cooks them to perfection, and assembles the burger with the customer’s selected toppings. The robot’s speed and precision allow the restaurant to serve more customers, while maintaining consistent quality. The robot burger maker has also reduced labor costs and increased efficiency. With the implementation of robotics, Creator is leading the way in the restaurant industry’s adoption of automation to improve customer satisfaction and operational efficiency.

Case Study 6: Miso Robotics’ Kitchen Assistant

Miso Robotics has developed a versatile kitchen assistant that aims to make commercial cooking more efficient and safer for chefs. The robot arm, aptly named “Flippy,” can be integrated into existing kitchen setups, where it handles tasks, such as flipping burgers, frying chicken, and cleaning grills. Flippy uses thermal imaging and 3D sensors to determine the temperature and position of food, ensuring precision cooking every time. It also frees up kitchen staff to perform other complex duties and reduce workplace injuries. With Flippy, restaurants can improve their speed of service while keeping up with demand during peak hours. Miso Robotics’ kitchen assistant may redefine how commercial kitchens operate, leading to a faster and safer future for the hospitality industry.

Case Study 7: Robotics in McDonald’s

McDonald’s is one of the largest fast-food chains globally, serving millions of customers per day. Recently, the company has been implementing robotic technology in its restaurants to improve service efficiency and customer experience. One of its most notable robotic implementations is the “Cicly,” a robotic arm that automates the beverage-making process, freeing up employees from repetitive tasks. The arm also dispenses drinks precisely, reducing waste and improving accuracy. McDonald’s is also testing the “McRobots,” navigating robots that work alongside human staff by taking orders and delivering food, which could potentially reduce waiting times for customers. The implementation process involves extensive testing and data analysis before implementation, ensuring that the robots meet quality standards and customer satisfaction. McDonald’s continues to innovate, embracing robotic technology that transforms the fast-food industry and provides a better way for both customers and employees.

Case Study 8: Starship Technologies’ Delivery Robot

Starship Technologies’ delivery robot is revolutionizing the food service industry by providing a faster and more convenient way of delivering food to customers. The robot moves through pedestrian areas autonomously, using real-time sensors and artificial intelligence algorithms to avoid obstacles and navigate pathways. Customers can easily order their food online, and the robot will deliver the food to their doorstep, providing a hassle-free and efficient way of getting their food. Starship Technologies is currently partnering with several restaurants and food delivery companies, such as DoorDash, to implement this technology. With the use of delivery robots, businesses can significantly reduce their delivery times and delivery costs, improving customer satisfaction and loyalty. As technology continues to evolve, it’s exciting to see how much more innovation will shape the food service industry.

Starship Technologies’ delivery robot is popularizing the food service industry by providing a faster and more convenient way of delivering food to customers. The robot uses real-time sensors and AI algorithms to traverse pedestrian areas independently, avoiding obstacles and finding the best routes to the customers’ doors. Customers can place their orders online, and the robot will deliver the food to their doorsteps, providing a seamless and efficient way of getting their food. Starship Technologies has partnered with several food delivery companies, such as DoorDash, to implement this technology. The use of delivery robots significantly reduces delivery times and costs, enhancing customer satisfaction and loyalty. Technology is still evolving, and the future is ripe with new developments to shape the food service industry.

Case Study 9: Burger King

Burger King has been an early adopter of robotics technology in the fast food industry. In 2018, the company began testing a robotic broiler for cooking burgers, which can quickly and precisely cook a large volume of patties at once. This technology not only improves the speed and efficiency of cooking but also ensures consistency in the quality of the food being prepared.

Case Study 10: KFC

Similar to Burger King, KFC has also embraced robotics technology in their operations. The fast-food chain has utilized robots for cooking and preparing their famous fried chicken. These robots not only speed up the process but also ensure consistency in the quality of the food being served to customers.

Apart from using robots in the kitchen, KFC has also introduced self-ordering kiosks to improve the ordering process. This technology allows customers to place and customize their orders without the need for human interaction, which has significantly reduced wait times and improved customer satisfaction.

In conclusion

As the fast-food industry continues to evolve, robots are playing an increasingly prominent role in enhancing efficiency, consistency, and customer satisfaction. The case studies discussed above demonstrate how major fast-food chains are leveraging robotic technology to revolutionize various aspects of their operations. From burger flipping to pizza making and even delivery, robots are becoming indispensable in the fast-food landscape. The integration of robots not only streamlines processes but also opens up new possibilities for customization and innovation, ensuring that the industry remains at the forefront of technological advancement. As the use of robots in fast-food restaurants becomes more widespread, it prompts us to envision a future where human and robotic collaboration defines the next era of fast-food service.

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• Repair/Restore vs. Replace
• The Science of Surfacing
• Waterproof Wall Coating
• Fade-Resistant Waterproof Wall Coating
• Fuel Island Process
• Manufacturer + Installer
• The Science of Surfaces
• CASE STUDY: Fast Food Restaurant

Check out how this restaurant was able to take care of their concrete damage and save both time and money without doing a complete tear out and replacement.

LOCATION: FALLS CHURCH, VA

A popular fast food restaurant had significant concrete issues in several locations at the facility, including the sidewalk entrance, the dumpster pad and the drive-thru. A concrete tear out and replacement would not only be costly, but it would also significantly impact business.

Simon HD 1,525 sq. ft.

Concrete Repairs 225 sq. ft.

Simon Surfaces determined the sidewalk entrance could be repaired and resurfaced with Simon HD heavy duty system. This epoxy mortar solution blends repairs across a large surface for an even, restored look. It also provides added durability and strength when compared to standard concrete.

For the smaller dumpster pad and drive-thru areas, basic concrete repairs were necessary. To minimize impact on operations, the Simon Surfaces team successfully performed the concrete repairs to the drive-thru overnight. The quick curing time of the concrete repair products meant the drive-thru never needed to be shut down – it was ready for traffic in the morning.

The existing concrete bases were in good working condition, so a tear out and replacement was not necessary. This repair/resurfacing approach resulted in significant cost savings and never impacted customer flow, by foot or by car.

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Fast food chains, workers are bracing for California's minimum wage increase: What to know

Chains such as chipotle and mcdonald's said they plan to raise menu prices as a way to offset the costs of higher wages in california..

In California, more than half a million  fast food workers  are set to get a major raise on Monday.

Democratic Gov. Gavin Newsom signed the Fast Act back in September to require fast food chains with 60 or more locations nationwide to meet that wage increase.

"This is a big deal," Newsom said alongside union members in September. "That's 80% of the workforce."

Most of California's fast-food workers will be paid at least $20 an hour, up from $16 an hour. The bill also establishes a fast food council that will develop standards, rules, and regulations for the fast food industry.

Chains such as Chipotle and McDonald's have already said they plan to  raise menu prices  as a way to offset the costs of higher wages in California.

Minimum wage: These states are raising their minimum wages

Advocates celebrate minimum wage bump for fast-food workers

Proponents of Assembly Bill 1228  say it will set standards for minimum sectorial wages, working hours and workplace conditions. The Service Employees International Union , a champion of the law, said that California fast-food workers are more than  twice as likely  to live in poverty than other workers, and are more likely to rely on public assistance.

In a statement from December, SEIU said, "The establishment of a Fast Food Council represents an opportunity for workers, employers and state officials to come together to help communities across the state address the rising cost of living and improve health and safety conditions on the job."

More than half a million fast-food workers will feel the effect of a pay bump – a majority of those workers being people of color, immigrants, and women. The SEIU estimated the law will apply to about 3,000 employers.

Fast food industry says expect increased costs, layoffs

Advocates for the restaurant industry fear that operating hours will reduce, prices will increase and jobs will be cut as employers deal with new labor costs. International Franchise Association President and CEO Matt Haller said restaurants are facing $250,000 in increased operating costs with the four-dollar minimum wage bump.

Jot Condie, President and CEO of the California Restaurant Association said the restaurant industry has notoriously low profit margins. "It's going to be tough to absorb these labor costs without making some adjustments." Condie said, "Their survival depends on it."

Very few of these quick service restaurants in California are corporate owned stores, Condie emphasized. "These are mostly small business owners who run these franchises."

Condie anticipates that some restaurants will adopt technologies like kiosk counters or robotics in the food prep areas in order to reduce costs.

Brian Hom is the franchise owner of two Vitality Bowls in San Jose, California. He's been operating for seven years with the help of his wife, two sons, and extended family. "We're a family business, it's not like we make big profits," said Hom.

In order to offset costs associated with the minimum wage increase, Hom is raising menu prices five to ten percent. "It's a good thing we'll bring in more revenue, but at the same time, I might have less sales because customers can't afford to eat out now," Hom said.

About 80% of Hom's employees are high school and college students. While he's happy his employees will make more money, Hom is also worried about keeping business open. "We'll have to see come Monday what the real impact is."

Advocates say there is no one-size-fits-all approach for franchises and small businesses. Those with more market leeway have more flexibility to raise prices while others fear losing customers to raised prices. They say the only alternative is to cut labor costs more. 

Restaurants making cuts are mostly pizzerias, according to a  report published by The Wall Street Journal.  Multiple businesses have plans to axe hundreds of jobs, as well as cut back hours and freeze hiring, the report shows.

Pizza Hut announced cuts to more than 1,200 delivery jobs in December.

A case for higher minimum wages without job cuts

A report from The Roosevelt Institute, a progressive think tank, found that some of the largest fast-food firms in the nation raked in record level profits over the past decade. The researchers argue that the fast-food industry's profits provide sufficient room to absorb the operating costs associated with higher wages.

Fast food prices have increased a lot faster than overall inflation, said Alí Bustamante, Deputy director of Roosevelt Institute's worker power and economic security program and co-author of the report. At the same time, the fast food industry has substantially grown since 2014: fast-food establishments in California increased by about 27.8% since 2014. And fast-food jobs increased about 20.1% between 2014 and 2022.

As the industry grew, Bustamante found that markups –the price difference between what businesses are charging and the actual cost of operating– increased over the past decade. The researchers said that profit markups paved the way for increasing profit margins in the fast-food industry.

"The industry is raking in record level profits," Bustamante said. "It really paints this picture- this has been a growing industry. But it's growing in a way that has largely focused on practices that characterize as profiteering– raising prices unnecessarily and passing those profits on to stockholders."

Economists weigh into minimum wage debate

Some economists say that raising wages for the lowest paid workers can lead to their upward mobility. The negative effects of a higher minimum wage are minimal – when wages increase by 10%, production costs in the restaurant industry usually increase by about 2% to 3%, one economist told Cal Matters.

Other economists say the cost of raising the minimum wage is job loss: while a corporation like McDonalds can afford to pay their workers higher wages, it doesn't mean they won't respond to price changes, said David Neumark, a professor of economics at the University of California, Irvine.

"These places can't function with no low-skilled labor, but they can function with less low-skilled labor," said Neumark.

The professor said that some workers will continue to keep their jobs and have minimal hours cut. Others may lose their jobs all together or see a substantial decrease in work hours.

Which workers are impacted by the California minimum wage law?

The Department of Industrial Relations published  an 18-item FAQ   in March outlining which businesses will be required to pay the new fast food minimum wage.

Those who work at a national fast food chain or coffee shop are entitled at least $20 an hour starting Monday. Here's the catch: If an employee works at a fast food establishment located inside a grocery store, they are not entitled the same pay under the law, Cal Matters reported.

“The vast majority of fast-food locations in California operate under the most profitable brands in the world,” Joseph Bryant, SEIU’s executive vice president said in a statement. “Those corporations need to pay their fair share and provide their operators with the resources they need to pay their workers a living wage without cutting jobs or passing the cost to consumers," as reported by Cal Matters.

Contributing: Emilee Coblentz

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Stay connected, additional links, 'to russia with love:' wingstop opening soon in moscow.

Dec. 5, 2012

Wingstop has signed a master development agreement to expand its international presence into Russia.

The agreement with Baxtor Limited is for 50 Wingstop restaurants to be opened throughout Russia over the next 10 years. The first location is expected to open in Moscow by the end of 2013.

"We are thrilled to announce another international development milestone for Wingstop," said Dave Vernon, chief development officer at Wingstop. "Baxtor Limited is a very strong franchise group with a tremendous operations team, and Aurelian Global Holdings has a proven track record for developing brands overseas. They will make a perfect partner for developing the Winstop brand throughout Russia."

Internationally, Wingstop has 14 locations open in Mexico and a master agreement for 120 stores to be opened in the next decade. The chain has more than 530 units in the United States.

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