McDonalds is one of 10 companies currently on our Failure Watch, its latest initiative seems to have not just stalled but potentially backfired…. with its franchisee’s. Several media outlets like the International Business Times and the NY Post picked up on a survey conducted by Japanese finance company Nomura of 29 franchise operators who own 226 restaurants throughout the U.S. True not a statistically significant survey, considering there are 12,867 McDonald’s locations in the US, in which case the survey sample size should be closer to 985 locations but not an omen to be dismissed either. The main complaints seem to be that, while meant to increase revenue, the “all-day breakfast has in fact been a nightmare. Increased demand has forced owners to hire new employees, and small stores have been overwhelmed by a lack of space.” This initiative also aggravates the bloated number of menu items McDonald’s currently has. Quotes such as “the lack of consistent leadership from Oak Brook is frightening, we continue to jump from one failed initiative to another” seem to be par for the course. Apparently the strategy is a let’s see what sticks approach… in China, for example, they launched a gray colored bun, which not surprisingly had mixed reviews.
“Brilliant on the Basics”
When taking over the Green Bay Packers, Lombardi was asked what changes he would make: new players? new tactics? No…just be brilliant on the basics Lombardi replied. McDonalds has lost sight of its core target market; by trying to be everything to everyone, McRibs, salads, gray buns, etc. it has lost sight of its core base– mothers and their children. If McDonalds was paying close attention to Lombardi’s “Brilliant on the Basics” it would notice that, for example, in Dallas County, out of 186 locations, half of those locations fall below a 90 score on the Dallas County Health Inspection score card. Is there a correlation between potentially dirty locations and a declining core customer base? Maybe, a relatively easy and back to the basics type of fix in any case.
But what does Engineering have to do with McDonalds?
Nothing with engineering per say but rather with a technique frequently used by engineers: Failure Mode & Effects (FMEA). In Breaking Failure, we detail how this inductive technique should be used when launching any new initiative. One of the franchisee complaints was that McDonald’s management “continue to jump from one failed initiative to another.” The FMEA, is an inductive technique used before launching any major initiative (proven for over 60 years) whereby you try to anticipate all the things that can go wrong with the initiative; unfortunately the technique is not used in marketing or most areas of business. In the FMEA you come up with a list of potential causes of failure and more importantly create a scorecard looking at the severity of a failure, its likelihood to occur and your ability to detect it before it occurs. Once the score is calculated, you can prioritize which failure is more important. The beauty of the technique is that you can see what controls you have or don’t have in place so as to prevent or mitigate the failure.
I will give McDonald’s the benefit of the doubt and assume that they at least did some testing but something seems to have gone wrong when scaling up the initiative. Perhaps the stores used in the test were smaller or not the best from an operational viewpoint, and thus not reflective of the larger base. In any case, why not use a relatively no-cost technique to mitigate or prevent failures like these?