I have chosen to compare three different fast-food restaurants for this project; Stogey’s, McDonald’s and Burger King. I will discuss the differences in the input, operations and output stages of these companies. I will explore the various components of the OMM costs these companies have and how they affect their OMM operations. I will also discuss how companies design their own operating systems to give them a competitive advantage. Finally, I will identify the sources of operating costs and how they can impact these companies profitability (Jones, 2007).
Burger King and McDonald’s are both global franchised chains, while Stogey’s remains a privately owned family business which currently operates in only one location in Joplin, Missouri. All three restaurants primarily sell hamburgers and french fries. Burger King and McDonald’s works with hamburger beef producers and bun manufacturers to ensure the fast food it produces is as fresh as possible; McDonald’s supplier’s conduct over 2000 quality checks of their beef patty’s daily (McDonald’s Corporation 2008).
Their use of suppliers rather than their own plants keeps the cost low, and they avoid plant and capital costs.
Stogey’s uses 100% beef patties free of fillers and preservatives. Stogey’s own butchers remove the bones, grind the meat, and make it into hamburger patties. Stogey’s also makes their own hamburger bun’s fresh every single day. This could potentially cost Stogey’s more due to additional overhead and capital costs. All three restaurants rely on delivering great tasting fast food quickly at a good price to their customers. Stogey’s, McDonald’s and Burger King all use the just-in-time system to keep their food and produce fresh, this ensures it is delivered fresh to their restaurants on a consistent basis.
This system lets the inputs and components needed to deliver the products to the operating system just as they are needed so that inventory can be kept to a minimum in the local restaurant (Jones, 2007). The food is delivered fresh each day, it is never frozen nor has it been warehoused for days or weeks before being used. Each restaurant strives to keep their labor cost low by effectively scheduling their employees when they are busiest; breakfast, lunch and dinner.
To keep distribution costs low they have soft drink manufacturer’s ship syrup and mix it with carbonated water later (Jones, 2007). Many of the foods these three restaurants serve are from the “same trusted brands consumers purchase at the grocery store to enjoy at home – Dannon, Kraft, Nestle, Tyson, Dasani, Newman’s Own, Heinz, Minute Maid and many others (McDonald’s Corporation 2008). ” Both McDonald’s and Burger King used mass production as their form of operating system by developing a machine to quickly and inexpensively make their food (Jones, 2007).
Stogey’s has a simple menu with only three choices although they will make them specific to each customer’s specifications. Stogey’s uses the small batch production as their form of operating system. Although times have changed, little has changed at Stogey’s. When these restaurants respond to their customer’s desires to have healthier choices on the menu their store managers have to be retrained, and they have to retrain all of the employees, which can be a costly endeavor (Jones, 2007).
Many of the McDonald’s franchises have also installed clocks in their restaurants to show customers and employees the time it takes to complete an order, these clocks increased employees productivity and the speed of service to customers. These types of processes are known as the value- creation cycle; when a company uses the revenue it earns to buy additional resources to better satisfy its customers (Jones, 2007). The employees are organized similarly in each of these restaurants often working in teams.
All three restaurants have store managers, cooks and cashiers which keeps everyone organized. Interestingly, I noticed that the employee’s at Stogey’s seemed to enjoy their job’s more then those at both McDonald’s and Burger King. While researching these three fast food chains I found out that Stogey’s associates are treated like part of the family; many have been employed for many years. Stogey’s starting wages are $8. 00 per hour for frontline employees; store manager’s make nearly $40,000 annually and most have been promoted from within.
McDonald’s and Burger King’s starting wages for frontline employees are minimum wage and their manager’s wages were not posted. Stogey’s clearly pays more giving them a competitive edge against other fast-food restaurants because it enables them to recruit and hire better associates. These three restaurants are leaders in the fast-food industry. Whether globally franchised or privately owned, each has established an operating system that makes them competitive in the marketplace. Some use suppliers to perform quality checks while others do it themselves.
They are all faced with the same sources of operating costs: raw materials, plants, labor, inventory and distribution (Jones, 2007). They create ways to improve productivity and innovation while controlling expenses which in turn creates more revenue. All of them use their revenues to reinvest in additional resources to satisfy customers and increase profitability. And they all continuously look for ways to improve the quality of their products while reducing costs. These three fast-food restaurants have a proven track record of using an Operations and Materials Management system that works and is very successful.
Burger King (2008). Burger King Investor Relations. Retrieved November 15, 2008, from http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-irhome Jones. (2007). Jones: Introduction to Business: How companies Create Value for People. The McGraw Hill Companies McDonald’s Corporation (2008). McDonald’s Fact Sheets. Retrieved November 15, 2008, from http://www.mcdonalds.com/corp/about/factsheets.html
Cite this Develop Good Business Sense
Develop Good Business Sense. (2017, Mar 22). Retrieved from https://graduateway.com/develop-good-business-sense/