McDonald’s Moves to Franchise-Level Analytics to Elevate Performance

by   |   August 29, 2013 1:35 pm   |   1 Comments

McDonald’s is using analytics to evaluate local store performance data at restaurants like the one above in Broken Arrow, Oklahoma, efforts that include examining videos to assess the performance of drive-through service windows. Photo via McDonald’s.

McDonald’s is using analytics to evaluate local store performance data at restaurants, efforts that include examining videos to assess the performance of drive-through service windows. Photo  of restaurant in Broken Arrow, Oklahoma, via McDonald’s.

With 33,500 restaurants in 119 countries feeding 69 million people daily, not to mention 29.5 million “Likes” on Facebook, McDonald’s Corp. has no trouble cooking up data projects.

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Not unexpectedly, these projects range from analyzing the impact of the fast food giant’s billion-dollar advertising campaigns to measuring how consumers react to various menu combinations.

But what about the restaurants themselves? Those buildings with the iconic “Golden Arches”? (Trivia: The arches were introduced in 1953, when Richard and Maurice McDonald were building their first franchised outlet in Phoenix.)

Meet Rainer Dronzek, director of operations research at the McDonald’s Corporate Innovation Center.

“We innovate [for] the facilities and processes, but not the food, which has its own group,” he said.

Dronzek was one of more than a dozen speakers at the Institute for Operations Research and the Management Sciences (INFORMS) Midwest Conference on Aug. 21 in Chicago. The half-day event, co-hosted by the University of Chicago’s Graham School, attracted more than 100 analytic professionals. (See related article about ConAgra’s work to use social media data for marketing analytics.)

How much analytical rigor can you bring to the business of serving hamburgers and French fries? Quite a lot, it turns out.

Dronzek’s team of six—augmented by 12 or 15 consultants—unpack the traffic inside and outside the buildings, using point-of-sale data, as well as video analytics and 3D simulations of traffic patterns outside the restaurants. Their goal is to improve traffic flow and efficiency, thereby improving customer experience and McDonald’s bottom line.

“It’s a factory for inspiration,” Dronzek says, referring to the McDonald’s Romeoville, Ill., Innovation Center, an unmarked building that contains multiple testbed restaurants, staffed by a crew of 100 to 200, which often work with real point-of-sale data.

The simulated restaurants make food that can be rapidly reconfigured to test new cooking and sales processes or equipment. (Anticipating a question from the audience, Dronzek confirmed that he and his staff eat the food.)

“We look at a restaurant as a system,” Dronzek said, adding that optimizing these interconnected processes requires lots of analytics and testing.

Among the data sources available to Dronzek are the following:

• McDonald’s own global data warehouse and BI platform

• POS transaction-level feeds

• Store performance systems

• Primary and secondary research data, such as customer and crew experience, operations and marketing

• Third-party store-level analytics

• Third-party datasets (such as demographics)

• Supply chain partner data

Moreover, his work is integrated with development efforts elsewhere inside McDonald’s, such as a forthcoming smartphone app that will let diners order their meals before they reach the restaurant. (McDonald’s current mobile app only provides nutrition information and a store locator.)

Applying Analytics in the Field
To answer why drive-through orders are sometimes wrong, Dronzek’s team used video, audio and POS data.

“We can pinpoint where the error occurred,” he said, adding that a 2005 study performed by his team led to new order-taking procedures and upgraded audio equipment.

Another project, still in the testing phase, uses the store’s external cameras to capture car traffic patterns, which can later be used to optimize the design of drive-through lanes and windows.

“Within two years, I’m confident we will have the car-video analytics,” Dronzek said.

Even further out are software tools to visualize these data-driven, optimized configurations.

For instance, Dronzek demonstrated how data insights about drive-up lanes can be fed into a 3-D model. McDonald’s consultants may soon present these models to franchise owner-operators, perhaps as an augmented-reality app on a tablet. Eventually, owner-operators may interact with the visualization tools themselves, Dronzek said.

Such efforts to spread the influence of analytics fit into a larger context at the company. McDonald’s in currently upgrading its store interiors, and has announced plans to “reimage” more than 1,600 locations this year, according to the company’s 2012 annual report. It plans to spend around $1 billion of its $3.2 billion capital investment budget this year on store facelifts, part of a plan to achieve operating income growth by 6 percent to 7 percent.

Ellis Booker is a freelance journalist based in Evanston, Ill. Email him at ellisbooker@gmail.com. Follow him on Twitter: @EllisBooker.








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One Comment

  1. anna.brown@sas.com
    Posted September 17, 2013 at 11:55 am | Permalink

    Very interesting indeed, I especially like the idea of an augmented-reality app.

    Here’s a quick animation video further explaining how McDonald’s uses analytics in a drive-thru scenario: http://bit.ly/1aIcJwI

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