Leading Fast-Food Restaurants

There has been an ongoing battle between the fast-food restaurants. McDonalds, Burger King, Wendy’s, Taco Bell, and Arby's are the top selling fast-food restaurants today.  The have the same goals to provide quality food, serve quickly, in attractive, clean surroundings.  They are all on top in different areas.  Many of their competitive advantages have come to a halt.  They all have been working on other strategies to beat the competition (1).
 

The McDonalds brothers in Pasadena, California started McDonalds in 1937.  At the beginning, they did not even serve hamburgers.  Their popular item was a hotdog. People would order food and sit in their cars to eat.  Things have changed immensely as time has changed.  Their next biggest competitive advantage was their chicken McNuggets.  McDonalds was known for giving the people what they wanted before they knew what they wanted (2).  But McDonalds has had their sales slow down due to a halt in successful innovations.  In 1998, McDonalds menu was ranked one of the worst tasting of the restaurant chains.   They have not launched a successful new product ever since their chicken McNuggets in 1983.  McDonalds has been the top fast-food restaurant since they have begun in 1937 but the gap between them and their competitors has begun to shrink.  They have tried to come up with new products such as the bagel sandwiches and the McFlurry sundae.  These new products have helped in their sales but it has not helped them rise the gap between them and their competitors.  They are still the largest chain today (3). 
 

James McLamore and David Edgerton founded Burger King Corporation in 1954 in Miami, Florida.   Both of these men had experience in the restaurant business before they opened Burger King.  Burger King become the second largest chain today and has been very successful in many areas.  They are leaders in many areas such as product development, restaurant operation, décor, service, and advertising.  Their WHOPPER was introduced in 1957.  This is their most successful sandwich.  They were also the first fast-food chains to introduce dining rooms and today, they emphasize on their dining rooms.  They take great care in the design and construction of their dining rooms so they will attract their customers.  Burger King has also put a lot of extra effort in their advertisement ads which has helped them in their success (4).

Wendy's is the third largest hamburger chain following McDonalds and Burger King.  They are a newer chain, but not too new, that brought about the drive through windows.  They still use this as their competitive advantage.  Their food makes them well known because it is “home-made food” and supposely not “fast food.”  It is also made to order for each customer.  They have not been as successful as the other two but are edging up on them quickly (5).
 

Arby’s is not an average hamburger chain.  They have different type of food such as roast beef sandwiches.  They are also using different strategies on their customers than the other fast-food chains.  They are targeting the adults where the others, such as McDonalds, target the children.  They realize that the baby boomers are aging and they are a big part of the community. Arby’s believes that roast beef is not really a child’s favorite type of food so, they believe that the adults will enjoy it more.  The decorations in their restaurants are also emphasized on darker colors and intimate, softer seating arrangements.  They want it to be a more desirable place for grown-ups to “hang out and eat beef.”  Many tell them that it is dangerous to target to one group but so far, it has been successful for them (6).

Customers enjoy eating at these restaurants for many different reasons.  It is the restaurant’s responsibility to find out what the people like about their chain and make it even better.  In November, many questions were asked in a survey done by Business Week and Lewis Harris & Associates Inc. about the different chains. 

The best-tasting food?

Wendy’s      36%
Burger King 32% 
McDonald’s 21% 
Other             8% 
Don’t know   2%

Serves the best-tasting burger? 

Burger King 42%
Wendy’s      32%
McDonald’s 17%
Other             7%
Don’t know   2%

They also asked what the most important things that people look for in a fast-food restaurant.  The results were:  (from most important to least)

Quality of Food
Taste of Food
Kids like the food
Speed/Convenience
Low price
Location 

New Strategies

The newest strategy the fast-food chains are looking at is implementing technology into their service.  Today, almost 65% of fast-food revenue are coming from the drive-through business.  Due to this, many chains are working on speeding up their drive-through service.  Last January, Wendy’s had a high-tech timer installed in their drive-through.  This has helped speed up their service by 8 seconds.  At 25 fast-food restaurants ranked in a study, cars were spending an average of 203.6 seconds from the arrival at the menu to the departure from the pickup window.  At Wendy’s, they have gotten this down to 150.3 seconds which is 16.7 seconds faster than McDonald’s and 21 seconds faster than Burger King.  They believe that when people are using the drive-through they are on their way to go somewhere or they are in a hurry.  The customers do not have time to sit in line for an extended period of time.   Many of the other fast-food restaurants are beginning to use these timers.  According to McDonald’s Crop. Chief Executive Jack Greenberg, “Every six seconds saved at the drive-through increases sales by 1%.” (8). 

Some of the other restaurants are creating other ideas that have to deal with the convenience and the speed of the drive-through.  For instance, McDonald’s has come up with the salad in a cup.  This is to help prevent spills and allows the customers to prepare the salad with salad dressing much easier while in a car.  Arby’s has also come up with a “high viscosity” version of its sauce so it is less likely to spill in cars.  One other idea by Burger King is see-through bags so the customers can quickly look at their order to make sure it is accurate (9).

Burger King is one of the restaurants that realize they are producing over half of their sales at the drive-through.  So, they have been fighting others to win the customers.  To help make Burger King faster, they have adopted Wendy’s idea of a separate kitchen.  This is a kitchen just for the drive-through windows.  Their idea is to “have the food beat the customer to the window.”  They believe that this could increase their sales by hundreds of thousands of dollars (10).

McDonald’s has also come up with a new idea.  They are using technology to “rev up” the speed.  This technology allows the driver to bypass the cash window entirely by using the same windshield transponders that automatically pay highway tolls.  It is scanned when they drive by the menu board and then they will be billed to their monthly toll-road accounts.  They have been testing this process in California for three months.  It has shaved off 15 seconds to the drive-through service at McDonalds (11). 

Although many of the other chains have come up with innovations, the timer that Wendy’s uses has been the most popular.  They work by using underground sensors that are located in different spots throughout the drive-through.  They time each step and then time the whole process together.  This type of instrument has been used before but now they are able to measure in much greater detail.  They even beep at the employees when they are running longer than you should be.  Some of them even have automated voices to congratulate you when you finish in a good time.  Since the timer has been so successful for Wendy’s, many of the other chains have begun to implement them (12).

Some of the fast-food restaurants have had some negative experiences with this new technology.  A manager at Taco Bell quit her job because of the timers.  She said that the beeping would just become very obnoxious and the employees would be very intimidated by them and would not want to work at the drive-through anymore.  She could not handle the timers any longer.   Also, McDonalds said that it bothered them too.  They would get large orders through the drive-through and it was physically impossible to finish the order in the time allotted by the timer.  So, it would then begin to beep at them and there was no way to stop it (13). 

Speed is one of the most important aspects of customer service at fast food restaurant.  But if the service is not accurate, it does not work.  Wendy’s had a big problem with this.  Customers would arrive at home and not have their whole order.  They would not come back then.  Burger King came up with an idea to overcome this.  They are testing an intercom at the end of the drive-through so that the customers have time to look through their order and they could call back if there is a problem (14).

Conclusion

 The fast-food restaurants have been fighting for many years to be at the top of the competition.  Since technology is becoming very important today, they are taking advantage of it in their business.  It all depends on who will come up the best idea that will please the customers the most. So far, it is said to be Wendy’s but this could change any day.  They are not in the clear of the competition (15).

Review Questions

1.  Why are the fast-food restaurants implementing technology into their services?

2.  What are some of the different ways that the fast-food restaurants use technology as their competitive advantage?
 

References

1. Ordonez, Jennifer.  “An Efficiency Drive:  Fast-Food Lanes are Getting Even Faster.”  Wall Street Journal.  May 18, 2000, A1:A10.

2. Leonhardt, David.  “McDonalds: Can It Regain Its Golden Touch?” Business Week. (On-Line).  Available: Http://businessweek.com/search.htm

3. Leonhardt, David.  “Getting Off Their McButts.”  Business Week.  (On-Line).  Available:  http://www.businessweek.com/1999/99_08/b3617105.htm

4. “Burger King Homepage – Background”, http://burgerking.com/company/background.htm, May 23, 2000.

5. “Wendy’s Homepage – What’s New with Wendy’s,”  http://www.Wendys.com, May 23, 2000.

6. Brady, Diane.  “There’s a New, Grown-Up Ambience at Arby’s.” Business Week.  (On-Line).  Available:  wysiwyg://content.98/http://businessweek.com/search.htm

7. Leonhardt, Ordonez, Op. Cit.David.  “America’s Best Burger? Not McDonald’s.”  Business Week. (On-Line).  Available:  http://www.businessweek.com/1998/10/b3568010.htm

8. Ordonez, Op. Cit.

9. Ordonez, Op. Cit.

10. Ordonez, Op. Cit.

11. Ordonez, Op. Cit.

12. Ordonez, Op. Cit.

13. Ordonez, Op. Cit.

14. Ordonez, Op. Cit.

15. Ordonez, Op. Cit.