McDonald’s is the world’s largest chain of burger fast food restaurants. Daily they serve more than 58 million people in around 130 countries. 70% of the McDonald’s restaurants around the world are operated and owned by local businessmen and business women. In India McDonald’s is managed by Cosmonaut Plaza Restaurants Private Limited – North & East India and Hard-castle Restaurants Private Limited- South & West India. Subway is a fast food restaurant that primarily sells various kinds of sandwiches and salads. It claims to sell healthy and low fat eatables to its customers.
For subway India as a business spot holds a pivotal spot in its expansion map. Subway opened its first restaurant in the year 2001 at New Delhi and has grown now rapidly operating about 376 restaurants in sixty eight cities pan India. Domino’s on the other hand is a restaurant which primarily serves pizza to its customers. It has a large variety of menu and also promise a 30 minute delivery to their customers. Domino’s is a market leader in the organized pizza market with about 54% market share overall. Domino’s is known for its home delivery and it has 70% market share in India in pizza home delivery segment.
Parameters to measure service quality McDonald’s, Domino’s and Sub Way serve three different kinds of food and have adopted three different operational models to create service quality. We try to gauge their service quality based on the five quality parameters * Cost * Quality * Speed (beginning to end of process) * Dependability (honoring delivery time) * Flexibility (Range and response) Further each parameter is sub-divided into the following sub- parameters which are summarized in the table given below. Service Quality Parameters I I Division to labor I Standardization I I Flow rate (for high production)
I Simplification ( for productivity) I Quality I Conformance to Specifications I Robust design I I Technology I Speed( beginning to end of process) I Mechanization( to increase output per unit) I Automation (to reduce variation in delivery time) I I Lead time reduction I I Uniformity of process Flow I I Business Process Reengineering I I Efficient Supply chain management I I Low customer presence I Dependability(honoring delivery time) I Speed and dependability are linked Flexibility(Range and response) I Product flexibility : Design I I Mix flexibility: technology I
I Volume flexibility: capacity I I Delivery flexibility: technology I 1. COST Division of Labor McDonald’s: The tasks for each and every employee are categorized into the following: Manager: Planning & Management * Cooks: Producing hamburger, potato slices, * Receptionist: Welcomes customers * Salesperson : Receive orders from customers at the counter * Cleaners: Cleaning The salient features of such a division have the following advantages: * The productivity of the employees increases by specialization which allows the individual to build up experience and to continuously improve his skills. McDonald’s teeth of making burgers is in the form of deskilling and division of labor. * The process has been simplified by firstly grilling the burger, putting in lettuce and tomatoes, adding sauce etc, putting onto rolls and then wrapping it up. * Break down of the Jobs by having individuals do each task improves efficiency as well creates specialized personnel. Domino’s: Domino’s Pizza workers go through an elaborate training system called the “Pizza College” In which they learn to perform very specific tasks and specialist in them.
At the outlet, pizzas are made in an assembly-line style with different workers making he dough, spreading the toppings, putting the pizza in and taking it out of the oven, and cutting the pizza and packaging it. The idea behind this minute division of labor is increasing through put. Sub Way: As there is customization in the product offering there is a need of employees whose specialization lies in serving the customer. There is a back end set up for baking of breads and front end handling billing and satisfying customer needs of customized subs.
Standardization Global standardization involves developing standardized products that are marketed through a standardized marketing mix worldwide. Standardization also meaner methods and sequences for performing the Job sequentially. The main benefit of this strategy is cost savings. Using standardized products across all your markets and business units helps achieving economies of scale. These savings can be utilized for a variety of purposes like business margins, lower prices for consumers, or can retained for use in research and development purposes.
Mac Donald uses the same brand name and the same slogan for the same products (little localization exists) all over the world. This strategy of McDonald is sometimes also called Big Mac and used s a measure of purchasing power parity, the McDonald index or the Big Mac Index. McDonald has established the sequence of in depth working standards, both for workers and processes, which guarantee every product must be of high quality in every outlet.
Mac Dona’s uses the cost savings generated by them through product standardization for providing products at lower price to consumers and makes its profits with smaller margins spread across a bigger market. In case of Subway the customization is possible at each stage of the burger preparation, starting from bread selection to sauce selection. This kind of strategy compels them to maintain huge inventory and variety of raw materials, leading to a higher cost for them. Domino’s also provides range of flexible options in main as well as side items, in main food.
The processes and the sequences are also well defined. So in case of domino’s the processes and menu is can be customized to a bit but are on overall basis tend to be standardized. This notion of having standardized operations and having variety leads to them to higher cost of products. The standardization should be preferred only in those cases where the customers do not want customization, then only then an use standardized procedures for their operation, and thus lower their costs. Flow Rate Flow rate affects the productivity and in turn the costs.
McDonald’s in terms of volume handling is quick enough as they have the capacity to deliver the order in a minute or two. Also the bulk order can also be delivered quickly enough. That is if there is high demand McDonald’s is able to produce more and deliver the same quickly. So McDonald’s has a high flow rate (high production) and as such able to cover large consumer base and reach economies of scale. This in turn helps in reducing the cost. Subway has the capacity to handle 1 or 2 subs depending on the no. Of counters in the store at a particular time.
So we can say in terms of capacity subway lacks a bit. Therefore Subway has a low flow rate and low production. As a result Subway is able to serve lesser number of consumers and this leads to a higher cost for them in terms of serving lesser consumers with more variety. Domino’s can handle multiple pizzas at one point, and for the different pizzas ordered, preparation run parallel . The tool rate to Domino’s is higher in the pizza providing outlets but if compared with burger Joints like McDonald’s it has a slower low rate.
This slow flow rate leads to coverage of a smaller consumer base (as compared to McDonald’s). This smaller consumer base accompanied along with maintaining a larger variety leads to a higher cost for them. Simplification (for productivity) 1 . Simplified Menu: The product offering is very prominently displayed at the outlets Just near the billing counter. As the products are mostly standard, the level of customization is less and hence quick delivery. 2.
Simplified Processes: Standard process followed which improves efficiency with each employee having dedicated work. Established processes which reduce waste. 1 . The menu is comparatively complex as it offers customization and a higher variety offered in terms of Pizza Size, Toppings, Pizza Base, etc. 2. As the pizzas are not made before hand but the processes are standard, the delivery time is more. 3. As the menu is not simple, they have to maintain higher level of inventory and variety which makes the inventory costs higher. 4.
In most of the cases, the Home Delivery model is followed after finding out the exact time to deliver. Sub Way: 1 . Considering very high level of customization for the products offered, the amplification in that offering is less. 2. Again, the inventory and variety of raw materials has to be kept higher. Again as the freshness of the raw materials has to be maintained inventory management is a tougher task as compared to McDonald’s. 3. The server at the outlet has to be more efficient considering each customer has a different product demand. 2.
QUALITY Quality Conformance does not mention about the level of quality but it talks about the ability of the service provider to deliver the same quality of service each time. McDonald’s core competency is to provide an identical dining experience anywhere n the world. The main objective behind conformance to quality at McDonald’s is to satisfy the customers’ requirements and expectations of exactly similar Burger every time he orders one at McDonald’s. This is possible only because of the laid down tools and processes to ensure conformance to specifications.
Subways value proposition to its customers has always been the nutritional content of its products. It has striver to achieve a position of nutritional leader through its continuous efforts to provide healthier products like lowering the sodium content in its sandwiches, designing eels to meet the American Heart Association’s Diet and Lifestyle Regulations etc. Domino’s approach to conformance to quality is similar to McDonald’s as it focuses on delivering the same quality on each order anywhere in the world.
It has successfully achieved conformance to quality through its highly trained workforce and a structured procedure to make the product. Standardization McDonald’s NAS highly standardized product ranges which help them to stick to a considerably less delivery time while Subway offers customization at every step of preparing a Sub. Even then Subway, because of its product category, can manage to deliver the product within 5 minutes. Domino’s offer a restricted customization in the side dishes and extra toppings which make the combination a little complex but its products are quite standardized.
Robust Design This aspect of quality mainly focuses on the robustness of an encounter with the customer which can be designed with it’s framework – Task to be performed, Tangible things in the environment and Treatment of the customer during the social interchange. McDonald’s has a highly robust service due to their focus on uniform inning experience and trained workforce who continuously work towards making the customer satisfied with the service. In case of Subway, the robustness is more as a customer gets to choose each item of her order on by one while the trained person on the other side of the counter abides by her choice.
The Subway counter-holders get to interact more with their customers in the process and hence get the opportunity to make a better impression. Domino’s main differentiator is its Home- Delivery service which brings down the tangibility of the service due to the absence of focus on Restaurant Environment etc. Nevertheless, Domino’s too has a robust service when it comes to the Task and Treatment of the customers. Technology Technology is no more a differentiating factor in this industry; it is a necessity without which the companies cannot survive in the market.
In the present times, the technology at the POS has been upgraded to touch screen and self-service devices. McDonald’s has a highly technologically advanced system to deliver the orders fast. In 1970, Mac Donald converted its manual counters to computerized Point-of- Sales. Subway has implemented Torte Quick Service POS solution globally to infuse highest tankards of flexibility and reliability into the system. Apart from the contemporary technological advancements in this field, Domino’s launched Domino’s Heat Wave, an Industry Innovation by the company that keeps pizza oven-hot to the customers’ doors. . SPEED Level of Automation and Customer Contact While comparing similar services, lead time is usually directly proportional to customer contact inversely proportional to the level of automation. However, in the fast food Joints under consideration, the one with the highest level of automation (8 out of 10) I. E. Domino’s has the maximum lead time as well. This is mainly due to the difference in the product preparation requirements- baking time in the oven (about 10 minutes).
When we compare the other two Joints, with comparatively similar offerings- Subway and McDonald’s, the latter has been able to reduce lead time with a higher level of automation and mix of uniform process flow, lower customer contact and high standardization. Level of Pre – Preparation The reduction in the lead times of the variants of these fast food Joints is greatly affected by the level of pre – preparation done. In both Mac Dona’s and Subway the gettable and other stuffing are pre – prepared and are assembled once the order is placed. Depending on the standardization, the lead time varies.
Restaurants I Contact Level I Remarks I Subway I High I Every ingredient is added as per the requirement of the customer. I Domino’s I Medium I The customer specifies the toppings and type of crust. I Mac Dona’s I Low I Fixed menu, no customization. I On the contrary, in Domino’s the base is also baked once the order is placed depending on the type or size of the crust ordered. This substantially increases the lead time. Uniformity of process flow The process flow at McDonald’s is most uniform where a batch production kind of system is followed.
Burgers and wraps are pre-prepared and kept on a shelf behind the order taker who puts it on the tray- lead time is hence 2 minutes. The variation in process flow at Domino’s is mainly limited to difference in toppings and the type of crust. The process at Subway varies to the largest extent as each customer demands that his sub should be made the way he wants- it may be toasted/non-toasted, 6/12 inch (cut), with/without cheese, choice of breads, toppings, sauces etc. In spite of such variation, Subway is able to prepare the sub in about 5 minutes. . DEPENDABILITY Dependability can be measured in terms of adherence to the promised delivery times by these eating outlets. On the basis of honoring the delivery time, Domino’s scores much higher when compared to Subway or Mac Dona’s. In spite of its lead time being the highest, it promises to deliver in the stipulated time. If not delivered within the promised time of 30 minutes, they give the order (maximum up to RSI. 300) free. On the contrary, both Mac Donald and Subway do not offer any limit to the delivery time.
No commitment about the delivery times is made and additionally no offer is made to the customers in case the order is delayed. Hence Mac Dona’s or Subway cannot be considered highly dependable in terms of home delivery. 5. FLEXIBILITY Product Flexibility: Design McDonald’s, Subway and Domino’s are some of the key players in the fast food market in India. All the Joints have accustomed themselves to the regional tastes. McDonald’s on one hand provides only the set burgers and there is no flexibility when it comes to customizing the burger. E. G. F we order McVeigh, we will get a standard urge with Allow Tick, tomato and lettuce in it baked for some time and will be delivered to the consumer. In case of Subway the customization is possible at each stage of the burger preparation, starting from bread selection to sauce selection. E. G if a consumer need Vega Sashimi, he has option of bread to choose from 6 variants of breads, next he has option of either to choose 6″ or 12″ sub, with the options of choosing baked or unbaked and with or without cheese, then moving on to the option for veggies to be included there are 8 options to choose from and accordingly quantity.
At the last step is choice of sauces to garnish and accentuate the taste of the sub. There are 10 choices to choose for the sauces. Then it is the sub or meal to enjoy. Domino’s also provides range of flexible options in main as well as side items, in main t I. E. Pizza, there are 3 types to base to choose trot biz normal, thin crust or double burst. Then comes the variant in size to choose from 3 sizes, and regarding the toppings if any customization is demented by the consumer that can be fulfilled. Volume Flexibility: Capacity deliver the same quickly.
Subway has the capacity to handle 1 or 2 subs depending opacity subway lacks a bit Domino’s can handle multiple pizzas at one point, and for the different pizzas ordered, preparation run parallel. Delivery Flexibility: Technology All the 3 SIRS have home delivery facility, but there are certain differences in terms of the policies and quantity. McDonald’s have special arm known as Incisively. But the constraint is that the service is not available throughout, instead only in some branches of McDonald’s. The option of breakfast is also available in home delivery from 8 AM to 1 AIM. Subway also has home delivery till 11 PM in the night.
The range n which subway operates is about 3 km. Domino’s exceeds all the above SIRS in home delivery as it guarantees delivery in 30 minutes, only if, the order is 4 or less pizzas. When the order size is more than 4 pizzas, the order is said to be bulk and at that time the clause of 30 minutes stands null. Domino’s operates within 3 km of range. Mix Flexibility: Technology In mix flexibility, it is the ability to handle a wide range of products by using equipment or tools having short setup times. As the demand and lifestyle of the consumers are changing, it is important to keep innovating new products to catch old of customer base.
McDonald’s use qualitative methods, where they rely upon the customers, employees and other experts in gathering the information to assist in decision making process. They look for special segment in which demand is increasing and accordingly forecasts the same. They also innovate the products with short setup time. E. G. Introduction of new Vega balls is an innovation which increases the product range and the customer preferences and options to choose from. Domino’s use statistical tool for analyzing the sales data and offering particular discount on a particular day.
Also they keep a check on the new entrants and new product offerings by competitors, hence increasing the range of products and knocking off the varieties which are not much profitable. Subway on other hand is specialist in subs or sandwiches, they have the customization process in hand, but they need to innovate with new products in a timely manner as there is a threat from competitors in the product offerings and the time they take for that. Conclusion Based on the detail analysis