The best example of catering digitalization, how did McDonald's do digitalization?

As a world-renowned fast food platform, McDonald's has been operating on a larger and larger scale in recent years. How can it operate smoothly with tens of thousands of stores? With a digital system, McDonald's can easily control its chain stores across the country. How did it do this?

Starting from the market, the catering industry has built a complete standardization system.

Not long ago, McDonald's China became a hot topic, saying that it plans to open 10,000 stores within four years.

This number is actually not uncommon in the catering industry. Last year, KFC had more than 10,000 stores. In China, Mixue Bingcheng, Luckin Coffee, and Wallace also have more than 10,000 stores.

But their most obvious differences are in their business methods and order volumes. McDonald's operates both directly and franchised businesses, and store costs, supply chains, and product SKUs make opening stores more complicated. The latest data shows that McDonald's has more than 6,000 stores in China, with a peak daily order volume of several million, serving more than 1 billion consumers, a scale far exceeding most players.

In the current market, almost all restaurants, especially chain stores, are pursuing digitalization. However, the one that may become a benchmark may not be any new brand, but McDonald's.

From the perspective of consumers, the most intuitive manifestation of catering digitalization is onlineization, building a small program, app, or a QR code for ordering food on the table.

McDonald's App has three main functions: takeaway ordering, in-store ordering, and membership operation. In simple terms, it moves the offline consumption process to the online, eliminating the tedious work of consumers ordering and waiters keeping accounts one by one.

On the surface, the McDonald’s App has simple functions, but if it wants to serve such a huge market, it must deal with the mobilization of supply chain, materials, and inventory behind each purchase operation, the back-end supply, and the front-end fulfillment. The entire operation process is quite complicated.

How did McDonald's accomplish this?

In 2017, more than 1,750 McDonald's directly-operated stores in mainland China and Hong Kong were converted into franchise stores, and this part of the business was taken over by CITIC. In the eyes of the outside world, the entry of Chinese capital means that McDonald's has begun to localize in China in a true sense and entered the "Golden Arches Era". In the same year, an independent app was developed and launched.

Looking at this move today, it is still a very important turning point.

Prior to this, McDonald's had done the same thing globally, but a food delivery app reportedly took five years of internal processes before it was launched, and the actual usage effect was not very good. This revealed the limitations of the previous headquarters' R&D process, the organization's lack of flexibility after the holidays, and the lack of awareness of digitalization.

The traditional waterfall development rules emphasize order, strictness, and conservatism. Each process link must be completed and confirmed in sequence, and the product is qualified only after it has been internally unified.

This approach embodies rigor, but on the other hand, innovative ideas are likely to be weakened and changed during multiple reviews and interruptions. A large amount of unnecessary resources will be consumed during the long process, and the final product will be out of line with market demand.

Therefore, after McDonald's China became an independent operation, the first thing it did in promoting digitalization was to resume its market orientation and launch a new independent app.

At that time, WeChat Mini Programs had just been launched and attracted a lot of developers. Taking into account the difference in interaction methods and the consideration of in-depth brand construction, McDonald's China launched both Mini Programs and Apps at the same time, but clearly focused on the latter.

According to market reports, McDonald's App will be able to reduce the time from ordering to payment to within 15 seconds in 2020. With the real-time cooperation of the front-end and back-end, the user's waiting time for meal is also controlled within five minutes.

This is very instructive in the fast food industry.

Specifically, the premise of efficient operation of the front and back ends is based on a complete set of standardized systems from supply chain, inventory, to store service processes. The IT team even has to rotate to the front line in order to understand the daily operation of the store, the back kitchen processing, the front desk food delivery and other links and sequences, and then write all of these into code to establish a complete system that meets the needs of all employees.

In the past, when taking inventory in the warehouse, the remaining quantity of various materials had to be counted one by one on paper forms. After the digital transformation, McDonald's can help restaurant managers conduct inventory from three aspects: people, goods, and venues, freeing them from many complex and time-consuming tasks such as personnel management and daily inventory.

Through the digital food safety system, McDonald's has realized the electronic management of restaurant food safety, improving the efficiency and quality of food safety management. At the same time, McDonald's has also developed the "RGM BOSS" system to help restaurant managers improve management efficiency from the three aspects of people, goods and venues, provide real-time operational data support, and help managers make timely optimization adjustments.

In the view of McDonald's China's senior executives, digital transformation, as a strategic-level strategy, is essentially a top-level project, because it requires unified cognition, clear digital vision and task priorities, and what kind of needs are most likely to solve the problem. This must be led and judged by the top leader.

OKR is also used in McDonald's China. On the one hand, it is used to connect all collaborative goals among organizations. On the other hand, it adopts the Growth X small team operation method to concentrate the core technical and expert forces across departments to analyze and solve specific problems.

Although many people knew about big data in the past, many data departments were still reporting departments. Big data is not about pulling reports, but about solving practical problems based on algorithms and models. In the view of CITIC Capital, the key to digital transformation is to find the best people and teams, not to save money, and the person in charge has enough power and voice.

The talent team should be built around Internet thinking, and digitalization should have an independent team that follows the company's strategy.

Today, at least 90% of McDonald’s orders come from digital channels. In the subsequent optimization process, the R&D team’s focus is still on the market and user experience. For example, in order to solve the problem of too many entrances making consumption inconvenient, the McDonald’s mini program has adjusted the different mini programs that were previously set up for different scenarios, such as takeout, in-store, and dessert stations, to an all-in-one strategy.

In fact, many of McDonald’s China’s business methodologies and tactics can be replicated in the market.

For example, in terms of private domain operations and customer interaction, through tools such as WeChat for Business, McDonald’s private domain social network has established roles such as “McMai Grass-Seeding Officer” and “McMai Service Officer”, covering tens of millions of users. This large-scale private domain operation enables McDonald’s to establish close ties directly with consumers.

Products, positions, processes, and businesses are all highly controllable. It took 18 years for McDonald's to open its first 1,000 restaurants in China, while the most recent 1,000 took less than two years. This is the most intuitive effect of digitalization.

It even makes a lot of investments that seem unnecessary for catering brands.

For example, it established an IT R&D center in Nanjing, with R&D directions covering new retail catering, smart terminal platforms, smart restaurant equipment, big data platforms, artificial intelligence and other fields; it acquired AI voice company Apprente and launched a new AI customer service solution;

We have developed a one-stop self-service R&D platform called "Ninja", which integrates a variety of mainstream third-party tools in the industry to achieve end-to-end delivery process automation from demand planning to monitoring.

Since the first launch of the "Restaurant of the Future" in 2019, the introduction of touch screens, mobile phone ordering, table service, home delivery and wireless charging in the store, the entire McDonald's store now looks like a huge, high-speed standardized fast food machine.

Behind all the measures, McDonald's is pursuing business certainty under digitalization. This is a typical successful transformation that is continuously promoted from top to bottom regardless of investment. In the specific implementation process, it also abandons the R&D logic of engineering thinking and pays more attention to the real needs of the market and consumers.

From these perspectives, McDonald’s China’s digital transformation is not limited to the catering industry.

Author: Lu Yao

Source: WeChat public account: "Xinmou"

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