December 13, 2013
Have you ever thought about how powerful a company McDonald’s is?
The little hamburger stand that has grown to be behemoth has taught us many lessons about business that are still used every day, in many industries. Most of these lessons were not original, but McDonald’s did them better.
Have you every gone to a McDonald’s and ordered a hamburger, cheeseburger, or Big Mac, without being offered fries? As any business person, sales person, CEO, CFO will tell you, one of the keys to growing and building your sales is the add on sale. McDonald’s is the King of the add on sale and made the phrase “will there be fries with that” a staple in the English language. In fact, when I use to run retail stores, I would travel around and ask employees what their “fries question” was. Was it an item of the week, batteries, tape, or something else, with a high gross margin, they were trying to move to impact the average sales dollar. Everybody needs a fries question. Think about the millions of dollars McDonald’s generates daily, by asking “will there be fries with that”. Yes, millions daily!
Added value has also been popularized by McDonald’s in the form of their value pack – reduced price for getting three items for your 3 course meal. Again, a strategy to increase their sales via increasing the average transaction. Then they took added value to the next level by asking “would you like to super size that?” Millions and millions of dollars in sales generated daily, by getting their sales force (order takers) to ask 2 simple questions – flawlessly. How effective are your sales people at asking/suggesting one simple add on, much less two?
As I was reminded the other day when re-reading The E Myth Revisited, McDonald’s was not the first to franchise, but Ray Kroc took it to the next level by making it fool proof. Systems were the key. Systems that anyone that is disciplined could execute. As a result, McDonald’s is the model of consistency. You can visit McDonald’s in Iowa, New York, or Los Angeles and you know what you are going to get. Can you say that about all of your outlets?
I no longer visit McDonald’s as often as I once did. I try to eat healthier. I have switched to their fish sandwich, but every once in awhile, I enjoy a guilty pleasure of a double cheese or a Big Mac. And every time I visit, I reflect on how this great business model, has impacted our lives as many, many businesses have employed their strategies. The next time you drive by the Golden Arches, think about their business model and how many of their tactics and techniques you have adopted in your business.