CHAPTER III RESEARCH MATERIAL & METHODOLOGY As the title of the Thesis mentions the researcher embarked on the study prompted by a desire to find out what areas should a fast foods business man concentrate on to deliver customer satisfaction. There obviously would be several pointers to the issue. But the researcher based on past professional and work experience felt that supply chain dynamics played a definite role in bringing about efficiency in many business, and fast foods would be no exception. Hence the researcher chose the topic of role of supply chain efficiency in enhancing customer satisfaction in fast foods business. Customer satisfaction is an area, that has a lot of complexity. What may satisfy one customer may not hold true for another one. Even for a particular customer the satisfaction parameters and levels may change time to time. In case of fast foods outlets the offering is a combination of tangible products comprising the food items served. This would comprise not only the main food items but also may have with it accompanying materials comprising the cold or hot beverages, sauces and fillings as well as fresh vegetables and salads. The taste, freshness, preparations, temperature conditions all would have a role to play in delivering customer satisfaction. Even the level of garnishing, levels of spice and conditioners all would have a role to play. Adding to this the price of the product may also have a significant role to play in the process. While some may like a cheap product there may be others who would look down upon cheap priced items, making a mental association of cheap items with substandard products. Just because the item is cheap may not appeal to certain individuals who may be very finicky about quality. Fast foods being a service customers would also look at issues beyond the usual four elements of the marketing mix viz. product, price, place, and promotion, and which are people, processes, and physical evidence. The product in this case being fast foods which means a quick service meal, the price would have that much influence as price can have in case of impulse purchases. Hence in terms of customer expectations and satisfaction levels, the marketer would have to look at the areas of processes, people, and physical evidence. Some one looking for a meal would
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CHAPTER III
RESEARCH MATERIAL & METHODOLOGY
As the title of the Thesis mentions the researcher embarked on the study prompted by a desire to
find out what areas should a fast foods business man concentrate on to deliver customer
satisfaction. There obviously would be several pointers to the issue. But the researcher based on
past professional and work experience felt that supply chain dynamics played a definite role in
bringing about efficiency in many business, and fast foods would be no exception. Hence the
researcher chose the topic of role of supply chain efficiency in enhancing customer satisfaction
in fast foods business.
Customer satisfaction is an area, that has a lot of complexity. What may satisfy one customer
may not hold true for another one. Even for a particular customer the satisfaction parameters and
levels may change time to time. In case of fast foods outlets the offering is a combination of
tangible products comprising the food items served. This would comprise not only the main food
items but also may have with it accompanying materials comprising the cold or hot beverages,
sauces and fillings as well as fresh vegetables and salads. The taste, freshness, preparations,
temperature conditions all would have a role to play in delivering customer satisfaction. Even the
level of garnishing, levels of spice and conditioners all would have a role to play.
Adding to this the price of the product may also have a significant role to play in the process.
While some may like a cheap product there may be others who would look down upon cheap
priced items, making a mental association of cheap items with substandard products. Just
because the item is cheap may not appeal to certain individuals who may be very finicky about
quality.
Fast foods being a service customers would also look at issues beyond the usual four elements of
the marketing mix viz. product, price, place, and promotion, and which are people, processes,
and physical evidence. The product in this case being fast foods which means a quick service
meal, the price would have that much influence as price can have in case of impulse purchases.
Hence in terms of customer expectations and satisfaction levels, the marketer would have to look
at the areas of processes, people, and physical evidence. Some one looking for a meal would
necessarily expect to have the locale and surroundings clean and inviting. If minimum standards
of hygiene are not met every possibility exists of the customer shying away from the outlet. This
being a hygiene factor a study was felt necessary as to which could be the motivating factors that
could ensure customer delight. It was obvious that in case of a food outlet issues concerned with
supply chain would definitely play a very decisive role.
Objectives
1. This study was undertaken to examine in details the role of supply chain management in the
proper functioning of large fast food outlets in the Mumbai Metropolitan area.
2. It was also to study in detail the supply chain processes deployed by large fast food outlets.
3. The study would establish customer satisfaction parameters in large fast food outlets in the
city of Mumbai.
4. The study would configure yard sticks for evaluating efficient supply chain functioning.
5. The study would find linkages between efficient supply chain functions and customer
satisfaction at fast food outlets.
6. The findings would have value for large fast food entrepreneurs in their supply chain
strategy formulations.
7. The study would also document separate ways of managing supply chains by different
players.
This would serve as a model guide for large fast food business operators.
Hypothesis
Based on above objectives, the researcher proposed the following hypothesis:
H1 Efficient Supply Chain Management in large Fast Food outlets ensures enhanced customer
satisfaction.
H2 Inefficient Supply Chain Management in large fast Food outlets results in customer
dissatisfaction.
In case fast foods outlets which had efficient supply chain management were to be termed A and
fast foods which did not have efficient supply chain management B, then the study would have
to establish that there would be significant difference between A and B as far as customer
satisfaction was concerned.
Methodology
Based on the above objectives, the researcher decided to approach the study from the following
angles:
A detailed review of articles in the field of marketing, touching upon consumer behavior and
customer satisfaction, would give insights into aspects that influence customer delights.
Simultaneous review of literature and articles in areas of supply chain management, would give
clarity on aspects of logistics and supply chain management which fast foods outlets could
concentrate upon for better supply chain management.
The study was based partly on secondary research, through literature survey, collation of data
available on the internet, published papers dealing on the subject, and lay publications viz. news
papers and magazines. The other part viz. Primary research was carried out covering fast foods
outlets as well as customers of fast foods outlets.
The research philosophy was to study how successful fast foods outlets run their supply chains.
This could be done by meeting up with such outlets, observing their functioning, talking and
discussing with their officials and from that drawing up conclusions. Apart from the running and
administration of the supply chains these fast foods outlets also ensure that customers
patronizing their outlets obtain overall satisfaction. How they look after those aspects also was
observed by the researcher.
Sampling & sample size
Estimated universe of large fast food outlets in Mumbai Metropolitan was pegged at around
ninety. (http://yellowpages.sulekha.com/fast-food-restaurants_mumbai) Out of this a sample
of 10% ie. 9 large fast food outlets were studied, in terms of their supply chain processes and
practices. These outlets were visited by the researcher, and observational research was carried
out. The times of visit were altered to ensure capturing of operations at different times of the day,
so that the study could bring out data that were not influenced by similar timing.
As to research covering customers, convenience sampling was used. The sample was picked
from representative target consumers. While circulating questionnaires to prospective
respondents, randomness was ensured by having male, female, different age groups ranging
between 18 years and 50 years, in the respondent groups.
To decide on the sample size the researcher looked at two parameters viz. margin of error, to
establish confidence intervals and also confidence levels. Margin of error is the positive and
negative deviation one allows on the survey results for a sample. This in other words is the
deviation between the opinions of the respondents and the opinion of the entire population.
For example if 90 % of the survey respondents give an opinion then a 5% margin of error would
mean that one can be sure that between 85% (90% - 5%) and 95% (90% + 5%) of the entire
population would give the same opinion. Confidence level would indicate how often the
percentage of the population that gave the opinion would actually lie within the boundaries of the
margin of error. Thus at a 95% confidence level one can say that 95% of time the populations
opinion would be within 85% and 95% of the same opinion as given by the sample surveyed.
Table No. 3.1: A typical sample size calculator would be
Population
size
Confidence level 95% Confidence level 99%
Margin of error Margin of error
5% 2.5% 1% 5% 2.5% 1%
1000 278 606 906 399 727 943
10000 370 1332 4899 622 2098 6239
100000 383 1513 8762 659 2585 14227
500000 384 1532 9423 663 2640 16055
1000000 384 1534 9512 663 2647 16317
Source: Didier Dierckx
So with a 5% margin of error and at 95% confidence level, the researcher gathered responses
from three hundred and eighteen respondents and analyzed the same. To understand customer
satisfaction parameters, two focused group discussions were held on the basis of a mixed lot of
large fast food out let customers. A questionnaire was prepared on the basis of focused group
discussions and 300 odd customer responses were obtained. Customer responses were pertaining
to all fast food outlets which they might have patronized in the recent past. In the questionnaire
they were given names of 27 fast foods joints about which they were to comment on two
parameters. One was about their rating each of the outlet in terms of performance on parameters
indicative of good supply chain practices, and the other was about their recording of satisfaction
levels experienced at that particular fast foods outlet, patronized by them. Linkages of efficiency
or inefficiency in the supply chain and customer satisfaction or otherwise were thus established.
Scope & Limitations
Scope of study
The study covered large fast food outlets. Large fast food outlets were those who had more than
one out let in the Mumbai metropolitan area. They might have take away as well as seating and
eating in facility.
Limitations of research project
Small fast food outlets including road side vendors were not part of the study.
Utility of the research project
The research would contribute to knowledge base in the area of supply chain management.
Management students would understand the role of supply chain management in the
enhancement of customer satisfaction levels. Practitioners would also benefit from the findings,
to use resources and budgets for successful implementation of supply chain management
initiatives, in the fast foods industry. The research would also open up scope for further research
in related issues, like amending supply chain processes to improve customer experiences in the
fast food category.
Profile of Fast Foods outlets selected for study in Mumbai
Now coming to Mumbai, one can say that in terms of fast foods consumption Mumbai has come
a long way. Mumbai and its people have developed a taste for fast foods. Even though one may
call it unhealthy, one may call it unhygienic, and one may even claim to avoid it, but fast food in
a fast city like Mumbai is almost unavoidable. In terms of variety fast foods may range from the
samosa one picks up at a joint when hungry, or the batata vadas vended openly at street corners,
or french fries one relishes as a snack at a little upmarket stall, all of these constitute the fast food
chains in the city.
A city like Mumbai is brimming with buying power and people with selective lifestyles. News
papers carry articles regarding eating habits of Mumbai populace be they adults or children.
There are instances of school going kids who simply hate home cooked foods. They would like
to gorge on burgers and noodles every time they feel like eating and to top it all they would
wash the same down with some cola based soft drink.
The Associated Chamber of Commerce and Industry of India has gone on record stating that the
food habits of people in most of the metropolitan areas has undergone a sea change. Rise in
income accompanied by both of the spouses working and therefore having irregular home return
times, all the members are becoming dependent on out of home eating. Availability of numerous
food joints nearby is only fuelling further this propensity to patronize fast foods joints. So it can
be reasonably successfully predicted that urban population will remain and continue to be the
largest consumers of processed foods because of their ever growing income levels and changing
lifestyle. These attractions have grown in intensity because the customers’ habits and eating
ways have also changed radically.
Most of the population comprising people who work for a living, and living in cities in nuclear
units, find the proliferation of fats foods joints actually a blessing as it allows them to cut on their
energy, costs and save time as well. Some of the fast food which may come under the ready to
cook category also help them to save time that was earlier required to prepare and cook , and so
give them the benefit of time on hand for other works. The marketers of such fast and ready to
cook foods also have developed the art to make foods of the customers’ choice.
Any occasion some one talks of fast foods the picture that comes to mind is only French fries,
burgers of different kinds, and sodas and milk shakes. But of late an increased awareness about
nutritional values in food and consciousness about the harmful effect of common fast foods
customers are leaning towards low calorie, low fat, and light to eat items. Today fast foods are no
longer limited to French fries and burgers alone. They are also catering items which are
reasonably high on health quotient.
While the general intake and patronage of fast foods are on the ascent and more so when the
younger generation are concerned a simultaneous concern about the not so healthy repercussions
due to excessive intake of such foods is also raising its head. At times fast foods such as ham
burgers, and other traditional items such as vada pav, samosas, fried potatoes and chicken are not
very good for health, because not only are they steeped in saturated fats and trans fats, but at the
same time they lack any semblance of fibre not to speak of vitamins or for that matter mineral
supplements.
The net effect of such consumptions are that they build up fat deposits around the waist line and
clog the heart flowing arteries and other tubes through which the heart is supplied blood with low
density lipo proteins. These in turn result in several maladies which currently are termed broadly
as life style maladies viz. blood sugar problems, blood pressure problems, cardio vascular
diseases, and mere overweight problems. The disturbing trend is that these symptoms are now a
days manifesting even in young children some times not older than six to seven years.
In order to ascertain what factors may contribute to customer delight in an Indian fast foods
outlet, 5 focus group discussions were conducted, amongst target group of fast foods outlets
customers.
The constituents of these focus groups ranged between 7 and 10 personnel per group.
Selection of constituents was on basis of convenience, but representation was given to males and
females, and the age group was kept between around 15 years and around 50 years, bearing in
mind the fact that personnel below the lower limit and above the upper limit, may not be making
decisions regarding choice of outlets very independently on their own.
Some of the comments captured during the focus group discussions were:
1. “The food of the fast food restaurant should be hygienic and fresh. Restaurant should not
serve food which is stale or which they have purchased long time back.”
2. 2.“The food items need to be safe for consumption. It should not happen that when we
consume the food, we fall ill. The food should be of good quality”.
3. “The surroundings of the joint needs to be clean”.
4. “If the place is dirty or looks unhygienic people would not like to visit the fast food joint.
Dirty place gives a feeling of unhygienic food as well”.
5. “The food that is served should be tasty. If the food is not tasty then people will not prefer to
go there”.
6. “The fast food joint should provide a good variety of food items on their menu. If there are
very limited food items then people will prefer a place which offers a wider variety of food
items”.
7. “The food should not be very expensive. It should be affordable enough to buy or else they
will prefer other food joints”.
8. “The ambience of the place should be good. If the place is too loud or noisy then people will
not prefer it”
9. “The waiters should be friendly and kind to the customers”
10. “The service should be quick. They should take as minimum a time as possible to serve them
and complete their orders”.
11. “All the food items on the menu should be served at any time to the customer, for a customer
it is very frustrating to hear that the item that they ordered is not available today or cannot be
served because it’s over”.
12. “The seating arrangements should be comfortable, the chairs or couches should be
comfortable so that customers can enjoy their food comfortably”.
13. “The fast food joint should play some good music which would add to the great mood while
enjoying the food”.
14. “The place should not be too crowded”
15. “There should be no waiting time to get a seat”.
16. Based on the above a list of a few of the identified attributes that decide the level of customer
satisfaction in a fast foods outlet were :
1) Freshness
2) Taste
3) Variety in menu
4) All time availability of all items on the menu
5) Promptness in service
6) Ambience
7) Friendly approach in service to customers
8) Food should not be very costly – price should have a parity with the offering
9) Quantity per serve
10) Cuisine
A few other factors which were mentioned were :
11) Parking facility
12) Happy hours
13) Crowd at location
14) Reservation facility
15) Size of family that could be accommodated at a time
These attributes were grouped into
1. External Factors
2. Internal Factors
1. Some of the external factors were:
1) Increase in disposable income levels
2) Population Growth
3) Changing lifestyle
4) Standardization of taste and quality
5) Rise in BPO culture
6) Urbanization and globalization
2. Some of the internal factors which drove the sales, on the other hand were:
1) Served fresh and hot
2) Standardization of taste and menu throughout the nation
3) Quickly served
4) Clean and hygienic
5) Standardization of ingredients used for cooking.
6) Most of the items on the menu were available till the end of the day.
7) Happy meals with toys for kids.
8) Facility of celebrating birthday parties.
Of the above internal factors the two factors which were highly influenced by supply chain
management were:
1. Standardization of ingredients used for cooking.
2. Most of the items on the menu are available till the end of the day.
The reasons being Suppliers had to be very particular about the quality and standardization of the
product that they supplied to the fast foods outlet, since these products were used as ingredients
in making the food that was served at the outlets.
Any change in the quality of the products supplied would directly influence the food taste and
quality. As most customers came to the outlet considering the fact that they knew how the food
would taste, maintaining such taste and quality was very critical for the business. Thus all
ingredients that were supplied should be fresh and should meet the quality checks and standards.
Maintaining the stock of these ingredients was also an important part of the business. Since the
outlets as a standard service should ensure that all items on the menu were available throughout
the day till the shop closed, maintaining the stock levels was a major task to be managed. And
meeting such orders and demand on time by the suppliers became mission critical. It directly
affected the reputation of the outlet, and thus ensuring that they deliver the required quantity
within the promised time was of utmost importance.
At this point a study was made to capture the supply chain strategies adopted by some of
the reputed fast foods outlets. The study was conducted in Mumbai.
Study of their organization, their strategies and methods
Some of the popular fast food joints in Mumbai are: KFC, Subway, McDonalds, Candies,
Domino’s Pizza, Papa John’s, Smokin Joe’s, Tibbs Frankie.
The researcher studied a majority of these stores in detail.
1.McDonalds:
1. McDonalds Corporation is by far the WorldMarketLeader in the QSR area(QuickService Restaurant).
2. Headquartered in the UnitedStates it serves around sixtymillion customers on a dailybasis across ahundred
nineteencountries through over thirtyfive thousand outlets. The companybegan operations in 1940 as a
barbecque restaurant operatedbyRichard and MauriceMcDonald and in about eight years time they
reorganized their business asa hamburger servingputlet usingproduction line principles in their operations.
3. A majorpartof their business theyoperate on Franchiseebasis.About seventyfive percent of theirbusiness
theyoperate through thismode. Whileprimarilytheyconcentrateon hamburgers, cheeseburgers, chicken
burgers, French fries, softdrinks andmilkshakes, changingdemand patterns havemade them diversifyinto
salads, fish, smoothies andevn fruits.
4. McDonalds employs about amillion anda halfof employees across the world McDonalds earns revenue not
onlythrough runningrestaurantsbut it also makes a lotofmoneythrough investments in properties as well as
through franchisingoutlets.
McDonalds’ CorporateStrategy can besummed up as QSC & V:
1. Quality 2. Service 3. Cleanliness and 4. D Value
McDonald’s India operations started with their opening of their first outlet at vasant Lok in Delhi
in October 1996. It was also the first McDonalds outlet in the world which did not serve beef or
pork. It’s Indian entry was through joint ventures with Connaught Plaza restaurants in North &
East India, and with HardCastle Restaurants for West and South India. The chain had to contend
with areas of concern in the Indian consumers mind as to how they were preparing the burgers
offering the cheapest burgers was not an easy task. Besides preparing totally vegetarian
items was also a challenge. Additionally they also had to change items in order to cater to the
distinct separate taste of the Indian customers. Wide ranging products such as McAloo Tikki,
McVeggie, nuggets atal had to be introduced to cater to the distinct taste of the Indian consumer.
McDonalds Supply Chain
The researcher studied in detail the supply chain of McDonalds: It was observed that
1. McDonald’s Supply chain is based on the three-legged stool concept :
2. Company – Franchisees – Suppliers Logistics
3. they normally had 100 sales items in the restaurant
4. they were having 400 SKUs in the warehouse
5. they had 200 restaurants per Distribution Centres (~180 DCs globally)
6. their delivery frequency: was approx. 3 times/week, higher in urban areas
7. their vehicles had about two to three stops per route
8. they had Exclusive distributors (3PL)
9. they had a very strong quality focus (Cold Chain, HACCP,QIP)
The main suppliers of McDonalds were
1. Dynamix Dairy Industries (Supplier of Cheese)
1) they had a fully automatic international standard processing facility.
2) they operated a network of milk collection centres equipped with bulk coolers.
3) they had a dedicated quality program.
4) they also had a dedicated Research & Development centre
2. Trikaya Agriculture (Supplier of Iceberg Lettuce)
1) they operated a specialized nursery with a team of agricultural experts
2) they used Drip and sprinkler irrigation in raisedfarm beds with fertilizer mixing plant.
3) Their pack house, pre-cooling and coldroom were located at the farms itself to ensure no
delay in supplies
3. Vista Processed Foods(Supplier of Chicken and Vegetable Products)
1) they had world class infrastructure and support services.
2) they had separate processing lines for chicken and vegetable foods.
3) they operated Hi-tech refrigeration plants for manufacture of frozen food at temperatures
as low as -35⁰CMcDonald’s distribution setup was through RadhaKrishna Foodland Limited who
1. Specialized in providing services
2. they also carried out procurement qualityinspection,storage, inventory management, deliveries
data collection, recording and reporting
3. they had dry and cold storage facility Transportation trucks maintained at 22⁰ C
4. they implemented ERP software
Supply Chain Integration of McDonalds:
Figure 3.1. Flow diagram of McDonalds’ supply chain
Source: through website by researcher
Study of the supply chain practices of McDonalds reveals that there are some very unique
practices adopted by this chain which others can emulate for better efficiency. This chain is
spread across so many countries (over a hundred) and they manage over thirty thousand fast
foods outlets such a wide spread of locations. Besides they ensure a very high standard of
customer expectations in areas of cleanliness, hygiene, taste consistency and speed of delivery.
Much of this obviously is the credit of the way they manage their entire operations. In India too
they are spread across more than forty cities and have over two hundred fifty outlets.
The unique feature of their supply chain is that they outsource majority of their operations. Some
of the theories of operations management such as lean manufacturing, multi layered supply
chain, hub and spoke model are widely used by them. The researcher found that they invest a lot
in training their staff and give high priority to their front level staff being good and efficient in
their jobs. In the process they also rely on a hierarchy which is well defined and roles and
responsibilities are clear.
When McDonalds sought to open in India, one of the first issues they had to address was
cultural and religious issues connected with menu and ingredients. Different ethnic groups had
different preferences and at times taboos, which had to be respected. This would bring a lot of
pressure in standardization of menus, and consequent inventory management of ingredients. This
apart there also lay a huge problem in terms of extremely weak and patchy logistics back ups
existing in the country. So the organization devised a supply chain system that was tiered in its
approach and composition.
They created a tier I supplier group. This group was responsible for supplying products which
went into plates like French fries, potato wedges, vegetable and chicken patties, et al. now these
tier I suppliers were procuring their raw materials from another lot of suppliers who would form
the tier II group. They comprised the agricultural and animal husbandry producers who would be
supplying the raw materials such as lettuce, potato, chicken, coating ingredients and such other
items that were required by the tier I suppliers. With McDonalds controlling both these tiers of
suppliers they could ensure quality was delivered across the supply chain.
McDonalds have also invested in sprucing up the logistics support infrastructure, by arranging
either through ownership or dedicated contractual arrangement special refrigerated trucks which
transport materials from the tier II suppliers to the Tier I suppliers and also from them to the
outlets or central distribution centers under well regulated and maintained temperature
conditions.
Another feature of McDonald’s supply chain system is their ensuring that most of the truck
movements are not unidirectional but also carry back freight. This practice of reverse logistics
being factored in ensures better utilization of freight. To carry out this process effectively they
use cartons, trays, jars that can be refilled, and recycled. They also have strategically located
distribution centers across the country. For the north they have a distribution center at Noida.
Mumbai distribution center caters to the Mumbai and western region. Similarly they have a
distribution center at Kolkata and one in Bangaluru. They very well use the classical hub and
spoke model, the distribution centers acting as hubs which take care of outlets around them. A
few of their important suppliers are Dynamix for cheese and dairy products, Jain Foods for
dehydrated onions, Iceburg & Trikaya for lettuce, Vista foods for chicken patties, Kiran foods,
Riverdale, Cremica for buns, , Radhakrishnan Foodlands, McCain Foods , Amalgam Foods for
fish fillets, AlKabeer for mutton patties. These have already been stated above.
McDonalds ensures consistency in quality by strict adherence to quality standards. The onus on
maintenance of quality is put on the suppliers. They try to bind the discharge of quality
responsibility of the suppliers with satisfaction of customers. Hence if customers are not satisfied
the onus lies on the suppliers. This effectively puts the suppliers on a strict quality regimen.
McDonalds also leverages on water quality management practices of their beverage partner
CocaCola to have their own staff trained in maintaining water quality across the chain.
The researcher also found that McDonalds normally tries to stick to one supplier for one product,
and not have multiple suppliers for similar products. This has two big benefits. The supply
consistency is maintained and this is very critical in food items if taste standards have to be
maintained. The other benefit is the supplier also gives in its best to maintain status. Of course
for this process to be successful, the supplier must be chosen only after due rigorous audit. A
look at average McDonald’s menu will make it clear that they normally offer something like
thirty to thirty five items at their outlets. The offerings however come in various combinations.
They further have complexity in terms of combinations in the meals offered, such as small,
medium, large, and other such variations. These add to the pressure of stock keeping and
inventory levels. McDonalds outsourced its distribution to an outside party viz. Radhakrishna
Foodlands who manage the distribution centers. They control on the overall the truck movements
across the country. They are responsible for on time delivery. Obviously this activity requires a
lot of control over documentations. These may include invoices, delivery and dispatch
documents. Records have also to be kept properly. McDonalds has in turn set up several key
performance indicators through which it can keep track on performance of its service provider.
The factors on which they are assessed are administrative efficiency, total number of cases
managed per man hour, warehouse efficiency, overtime as a percentage of total man hours
worked, in transportation number of cases handled per trip, and overall truck utilization in terms
of capacity and mileage.
In areas of cold chain transportation, there would be different items which would require
different temperature ranges. Some products may be requiring - 18˚ some - 25˚ and others that
may just have to be transported chilled. Products would also be of types which need
transportation at just ambient temperatures. So the transporter ahs to make modifications to suit
the requirements. A particular innovative feature of McDonalds transport vehicles is that they
have side doors which enable unloading and loading of materials without disturbing the order
across the entire truck.
Another unique feature of McDonalds’ supply chain was their orientation towards a pull based
model rather than a push based one. It was replenishment oriented rather than allocation oriented.
A collaborative plan sharing basis of indenting ensures that suppliers are aware in advance of
future requirements on a very transparent mode. This helps them to in turn plan their production
and procurement. In operations a concept known as Make to Order MTO, is generally adopted
here which ensures minimum investment in manufactured inventory. Asking concerned staff the
researcher came to know that the suppliers in most of the cases were able to achieve a near 99%
fill rate.
Another unique feature of the McDonald’s supply chain method was their demand forecasting
system. Named 31Q, of which 3 stands for three years, the period the fast foods chain would
keep checking it’s plans, which normally would mean a rolling plan period, 1 standing for the
immediate next year period, for which detailed forecast is to be made, and again during this one
year period, quarterly breakups would be tracked, denoted by Q of the 31Q method. In this
exercise the suppliers are involved and hence are aware of the entire plan process. Thus there is
total transparency and collaboration cum sharing of information across the supply chain, which
in turn brings about so much of seamless integration across the process.
Individual outlets usually give a three days’ to a week’s advance notice to the distribution centers
for materials required. The Distribution Centers while catering to these requirements, raise a
three months’ rolling indent on the suppliers, and thus the chain is geared up to cater to demands
on a more or less real time basis. With over two hundred and fifty outlets spread all over the
country the other critical aspect that the system has to cope with is on time delivery. The lead
times are planned and maintained with rigor, because delays could jeopardize the efficiency of
delivery, which in turn could adversely affect the supply chain parameter of availability of all
items at all times, as well as the speed of service. Hence the supply chain system needs to ensure
that the outlets get to know the exact time of delivery of each item indented. Hence the
distribution centers need to work backwards to integrate the flow of indents, supply, and
information. The chain is known to keep a maximum of ten days inventory in the system, which
in turn can achieve a thirty six times turn around of inventory.
All the above are achieved with a complete control over the quality and adherence to food safety
requirements. Hazard analysis critical control point HACCP in short, certification is adhered to
and this in turn ensures the quality of food items which maintains quality. HACCP is an accepted
industry level certification process. McDonalds also has some in house methods to maintain and
ensure quality of food. Named supplier quality management systems SQMS and distributor
quality maintenance program DQMP these are two in house methods used by McDonalds to
ensure food quality safety standards. The first one viz SQMS is a worldwide McDonalds system
which is mandatory for adherence by their suppliers across all places. Apart from HACCP
standards this also incorporates some of McDonalds’ own methods and practices. The DQMS
applies mostly to the operations of the chains’ distribution centers. McDonalds also has team of
in house auditors to monitor and control implementations.
Taste is the next factor on which the organization keeps a close watch. To maintain and
effectively improve delivery on this requirement the chain has a very advanced sensory program
in place. For the Asia Pacific region their central control point is located in Hong Kong. Sensory
experts are trained here. The experts are sourced from the suppliers’ as well as the quality
assurance teams. At the source itself namely at the producers and suppliers plants the outputs are
tested and rated by a sensory team member. The food item is also given a grade. The scoring has
a cut off and those scoring above are only allowed out of the plant. This is also followed up by
cursory checks at the outlets, on a surprise random basis. At half yearly or quarterly periods
management teams carry out a product tasting exercise at suppliers’ locations, when they may
fry, taste and allot scores to products and ingredients. This ensures maintenance of consistency
and high quality. Besides all the above the chain also has a system of picking random samples
from outlets and getting the saem tested at the laboratory in Hong Kong.
All the above is driven by a very robust SAP based ERP system. They also have some other
systems which are integrated to offer a seamless smooth flow of information. These systems help
in maintaining high visibility of operations across the entire chain, automated replenishment
orders, progress of sales, and tracking inventory on a real time basis. The organization has
leveraged the best of many disciplines to give it a cutting edge over competition, and enhance
customer satisfaction through the best of processes and systems. .
Domino’s Pizza:
Domino’s Pizza is an American restaurant chain, which specializes in franchisee based pizza
delivery operations. It is headquartered at the Domino Farms Office Park in Ann Arbor chartered
township, Michigan US. Founded in 1960 it is the second largest pizza outlet chain in US.
Domino’s introduced a slew of innovative and novel marketing concepts in 2007 and 2008,
including franchising arrangements, mobile ordering and tracking systems. It also reinvented the
type of pizzas that the outlet served, improving the taste and formats. Hiring a new CEO it
improved its sales significantly in 2010. In 2012 Domino’s Pizza removed the word Pizza from
its name logo, to emphasize it’s foray into non Pizza business.
Domino’s experimentation with the assured delivery within thirty minutes ran into some
problems due to delivery boys getting into street accidents and settling consequent lawsuits. So
in 2007 the company introduced a new slogan “ypu got 30 minutes” which alluded to the earlier
slogan but stopped short of promising delivery within 30 minutes or refunding amounts and or
delivering the pizza free. However the company continues to offer the thirty minutes guarantee
in Colombia, India, Vietnam & Turkey. India has become the largest international Pizza market
for Domino’s outside it’s home market. In India the franchise is run by Jubilant Food Works. In
India the company had to adapt to local tastes by way of chicken tikka masala, kima dopyaza,
which inturn the company has also adopted internationally.
Supply Chain of Domino’s
The chain’s procurement process for Raw Materials is highly organized.
Raw materials like wheat, baby corn, tomatoes and spices are got, out of which wheat was
bought in from Jalandhar and then sent to the commissaries in refrigerated trucks.
They have four commissaries which are Regional Centralized Facilities. These are located at
Delhi, Bangalore, Kolkata, and Mumbai
After procurement the chain’s distribution system is organized as under:
The Pizza dough processed from the wheat is sent to the retail outlets again in refrigerated
trucks. The organization also takes care of the logistics requirement for sending frozen foods, at
a temperature of minus 18⁰C. In case of prepared foods the same are sent in refrigerated trucks
that maintain temperature range of between 1 to4⁰C.
Figure 3.2. Flow diagram of Domino’s supply chainDomino’s Supply Chain of Domino’s
Source: through website by the researcher
In early 2000, when Domino’s in India, wanted to inject more capital into its operations, through
investments from bankers as well as even a planned IPO, the chain was advised to ramp up its
operations. This in turn needed a re look at its supply chain activities, involving the entire gamut
of sourcing raw materials to transporting them to central locations for processing, to delivering
Wheat
Dough
Warehouse
Refrigerated Trucks
Retail Outlet
them to customers. Upto that point Domino’s model was a relatively simple one. It operated on
the basis of three bases which procured and sold groceries and such items. These were located in
Mumbai, Bangalore, and New Delhi. These units procured their own wheat, tomatoes, and other
ingredients on their own, processed them and delivered to outlets in refrigerated trucks. However
this model would have to be changed to cope with increased pressure of volume.
In case of Domino’s the supply chain played a more critical role as their offering being more
home delivery oriented transportation and handling costs played a very important role in overall
costs and profitability. Because Domino’s was more of a home delivery based model, it’s
dependence was more on transport rather than in locations. It also had to have in place a very
efficient back up system to take orders on call and route them properly. When Domino’s was
looking at revamping its’ supply chain management system, it could definitely look at
McDonald’s model but in terms of operational procedures and spread there were fundamental
differences between the two. Because of location spread differences centralization which could
work for McDonalds could not work that smoothly for Domino’s. So Domino’s decided to
concentrate on centralized procurement of wheat, maize, corn, tomatoes, and spices. Since wheat
was cheapest in Punjab and adjoining areas the chain concentrated on procurement there and
transportation to the Delhi processing center in refrigerated vehicles to make the dough for it’s
pizza bread. The dough thereafter would be dispatched to the outlets in refrigerated vehicles. The
chain invested in maintaining regulated temperatures in the refrigerated vans to ensure that the
dough retained proper consistency when being transported across different distances depending
on the outlets’ locations. A method adopted and perfected by them was that the dough after
receipt would have to be consumed within three days. The condition was such controlled that if
the dough was not consumed within the three days the balance would have to be discarded. What
Domino’s did was that if they found the trucks had to pass important cities en route they opened
outlets there so that the transportation would happen without incurring extra costs. Thus since the
dough trucks had to pass Chandigarh while on its way between Delhi and Jallandher, they
opened outlets at Chandigarh. This was a logic for their scaling up of operations.
Many fast foods outlets at times adopt pricing strategies keeping in tune with market demands
and customer expectations. So one may see an outlet trying aggressively to build market share by
adopting a penetration pricing on the main item and making up on the margins on other side
items. Here the logic is that the price conscious consumers who at any time form the bulk of the
customer base need to be wooed on a constant basis and for them the lower price platform may
work very effectively. The fringe customers who by and large may not be that price conscious
may be given other benefits and not only obtained through lower prices. Some times the fast
foods outlets may deliberately keep high ticket items to attract niche customers. Since price
competition is very acute in the quick service restaurant category, pricing has to be adopted with
caution and also must be accompanied with regular follow ups. While pricing by itself is a
differentiation parameter in foods category, in fast foods outlets study has shown that the issues
covered under supply chain management play a more crucial role in the whole matter. Whenever
they resort to special categories and offers where they carry out a strategy of making different
margins in separate food items the role of the supply chain becomes even more demanding.
Availability of the separate ingredients in adequate quantities to deliver the entire product mix
assumes even more significance. One can easily see that in McDonalds there is always an
emphasis to sell more of potato fries and cold drinks along with their value meals. Similarly one
would observe Pizza centers trying to sell more of garlic breads and wedges along with value
meal pizzas.
When one looks at supply chains one observes that the process of procurement involves
balancing and getting an answer to the mix of demand and supply cum sourcing of commodities
and items required to carry on the day to day business. Due to demand pressure and rising costs
of sourcing the suppliers are mostly asking for increased prices for items required by fast foods
outlets. The fast foods outlets on their turn are also most of the times not in a position to drive
hard bargains. At the same time the outlets are not very easily able to pass on the rising costs to
the customers. Herein therefore comes the criticality of the supply chain management efforts.
In this balancing act one would come across proponents of centralized procurements where in
they can drive economies of bulk buying, whereas there may be others who do not subscribe to
this theory, and would like to depend more on close to outlets sourcing which could ensure better
management. Some times the issue of reducing carbon footprints through movement of foods
over long distances could also affect decision process. Freshness and local tastes could also be
influencers in such decision factoring.
Subways the chain of sandwiches follows a method where under orders are placed every
Tuesdays and are received every Fridays, at their central depots. Each outlet places it’s order to
the central call center in such a way that these orders are routed to the central location and from
there supplies are made by bike supported delivery boys. The outlets are supplied on a
replenishment basis on a real time basis. Some outlets also dispense with central locations for
certain items altogether. Local procurement of sauces and such items are quite common.
At times these fast foods outlets may also adopt aggressive expansion plans even during periods
of slow downs. The motivation might be hopes of having real estates across the country and
capitalize on a future upturn and having a head start over competition. This may sometimes be
the reason why fast foods chains are planning to spread across tier II cities in a big way.
Quick service stores will come to depend heavily on efficient procurement strategies. Uncertain
and extremely fluctuating raw material prices are any procurement manager’s biggest headache.
Apart from rate fluctuations, inflation also is a big spoilsport. Lack of good quality common
infrastructure compounds the matter further. Every where the available common infrastructure
are either of a low order or are not maintained properly. Firms can upto a point invest and
improve infrastructure but overhauling major infrastructures are extremely costly. In this context
local sourcing and procurement assumes a lot of significance. Thus local vendors start assuming
a significant important role in the whole system. The researcher earlier in the chapter had
elaborated about McDonalds structuring their procurement on a multi layered basis. Local
sourcing also has the effect of controlling costs of materials. Many foreign fast foods outlets
operating in India, have realized that adapting to the Indian taste and palate they have to depend
on many locally sourced materials. Innovations in the areas of material contents are also being
carried out by Indian branches of fast foods outlets so that dependence on imported items can be
reduced. Some of the coffee chains have totally changed over to local sourced coffee as
McDonalds have done regarding lettuce.
ERP systems have also helped such outlets to keep track of inventory levels and supplies.
Technology has been always a great enabler of controls and efficiency. Subway has greatly
moved in to e procurements. Fast foods outlets are also realizing that instead of treating vendors
as adversaries, if the level of cooperation and sharing of plans are enhanced it may help all. At
times when any promotional offer gets underway, the vendors are able to fulfill requirements if
they are given access to the plans of the afst foods chain. The fast foods chains on their part are
also realizing that this sharing of plane ultimately helps them only, because then chances of
running out of stocks become less. Hence collaboration is slowly taking precedence over in
house competition. Of course spurts or slacking of actual demands vis a vis planned demands can
still happen but the disruption can be smoothed to very large extent. Here also the outlets are
planning on sharing or inter unit transfer of inventory to mitigate such risks. So procurement
flexibility and multiple supply chain configurations are becoming the order of the day.
Effective vendor management would therefore entail building long term working relations rather
than short term cost cutting and building margins. It is a well known fact that too much of price
squeezing on suppliers often turns counter productive, because the suppliers in turn may adopt
shortchanging tactics to cover losses or reduction in margins. In the end such measure may result
in compromising of quality or other service standards and would definitely adversely affect
customer satisfaction levels. Rather investing in means which may improve efficiency in
consumption parameters and also reduction of wastes may help. Instead of changing vendors
frequently it would help to have long term arrangements based on trust and dependability. Even
as McDonalds has done training vendors people in the ways of the fast foods chain cango a long
way in improving standards of performance. The researcher found that Costa Coffee (though not
included in the current research) had a practice of sharing with their partners like air lines
catering who would serve on board food the actual costs of items like sandwiches and agree to a
predicted commission structure such that all parties are aware about the margin build up and
sharing. This organization have also gone into reduction of costs by indigenously procurements
of paper cups which could end up in massive savings just because of the volumes involved.
Items to be streamlined are selected on the basis of Pareto principle of 80:20.
Moving further Subway has gone in for creating international purchasing cooperatives in various
regions. Being formed into cooperatives they ensure steady supplies and also ensure quality
because of long term ongoing relations. Regional supply chain advisory groups guide such
cooperatives. At times hedging short term procurements with long term procurement
arrangements are also resorted to on order to reduce impacts of fluctuations in supplies demands
as well as prices. Costa coffee has a system of three year long term contract along with short
term six monthly arrangements which keep on updating. These in combination can to a great
extent modify price fluctuations and volatility in the markets. At times in order to reduce
overdependence on single source supply units in some instances may arrange to have tie ups with
more than one supplier in certain ingredients.
The quick service restaurants often follow some broad strategies in their procurement policies
and initiatives. They often selectively pick up a few of the product items on the basis of either
Pareto principle of 80:20 or ABC classification of 10:20:70 and concentrate on those items
which can have a harder impact on profitability than the others. Thus for example in the case of a
chicken serving chain, the chicken, oil, flour, and seasoning may be the key ingredients, whereas
for a pizza outlet the important items may be wheat, flour, cheese and tomatoes. Depending on
the comparative criticality of these items the procurement emphasis may change.
The chains have to periodically reexamine the entire procurement process and flow. While a rise
in basic costs may affect the procurement price, there are several other items that migh also
impact the procurement costs. These are packaging costs, transportation costs, local taxes and
levies, as well as cost of credits. Changing minimum and maximum ordering quantities,
purchases in larger packs or lots, changing frequencies of orders, changing the format of item
like tomato puree instead of tomato sauce, obtaining at centralized location and such other
measures could also have softening effects on price volatility. At times cutting short the supply
chain by buying direct instead of through intermediaries could also play a price softening effect.
Going directly to contract manufacturers by passing the main manufacturer can also reduce
prices. These work particularly where the value chain is long. Negotiating prices with contract
manufacturers can also result in reducing intermediate mark ups and reduce overall cost of
procurement. Outlets should wherever possible realign their product portfolio in line with
procurement price indications. So if there is certainty of procurement price of certain items going
up it might make sense to realign products based on reduced dependence on such items. Lastly it
would make a lot of sense to be keenly observant of price trends on a regular basis. Vigilance
always pays.
Pizza Hut
Pizza Hut is an American restaurant chain and international franchisee who are known
worldwide for their Pizzas and side dishes. In the market the chain is known as Pizza Hut Inc. It
is a subsidiary of Yumi Brands. In 2012 the company had more than six thousand outlets in US
alone. It also had presence in more than ninety countries across the world, serving Pizzas through
over five thousand outlets.
Pizza Hut operates through various formats viz. traditional family style dine in locations, store
front delivery and carry out locations. It also has locations that offer a hybrid model which has a
combination of dine in, carry out and delivery system. Catering Italian theme dishes such as
penne pasta, chicken pomodoro, they also run the Italian Bistro under the Pizza Hut brand name.
Pizza Hut ran into some problems with the authorities in UK over excessive use of salt in their
products. Their pizza toppings were found to have salt much more than average safe prescribed
levels. Pizza Hut has massive expansion plans covering it’s Indian operations.
Pizza Huts direct suppliers include PepsiCo for beverages and Cremica Group for Buns and
bread items. They also list several indirect suppliers. They procure their chicken requirements
from Brazil. In vegetables they source potatoes from Australia. The sauces are procured from
various organizations locally.
When it comes to the distribution they outsource their operations to several parties. Snowman
Frozen Foods is their main provider for cold storage facilities. They have around sixteen
warehouses in the country, supported by a fleet of over a hundred trucks that are equipped with
Carrier and Thermo King Transport temperature control units.
The total cold storage capacity at their disposal is between a hundred and twelve hundred tones.
Pizza Hut banks a lot on communicating the freshness of their pizzas. They have roped in film
personalities to emphasize this point. Pizza crusts to be served fresh creates pressure on the
supply chain operations and the chain has to be very careful in constant monitoring of the same.
One of Pizza Huts uniqueness was that unlike Domino’s where the dough is normally prepared
in a central commissary and distributed to locations, Pizza Hut makes the dough in the outlet
itself most of the time. This ensures the freshness better.
Figure 3.3 Flow diagram of Pizza Hut’s supply chain
Source: through website by researcher
KFC Kentucky Fried Chicken
KFC was originally an initialization of the full name Kentucky Fried Chicken. This chain was in
the beginning only in selling fried chicken based fast foods. It is headquartered in Louisville,
Kentucky, US, and that is how it derived it’s name Kentucky Fried Chicken. It’s the world’s
second largest fast foods chain, only after McDonalds. Operating in around a hundred and twenty
Source: through website by researcher
KFC Kentucky Fried Chicken
KFC was originally an initialization of the full name Kentucky Fried Chicken. This chain was in
the beginning only in selling fried chicken based fast foods. It is headquartered in Louisville,
Kentucky, US, and that is how it derived it’s name Kentucky Fried Chicken. It’s the world’s
second largest fast foods chain, only after McDonalds. Operating in around a hundred and twenty
Source: through website by researcher
KFC Kentucky Fried Chicken
KFC was originally an initialization of the full name Kentucky Fried Chicken. This chain was in
the beginning only in selling fried chicken based fast foods. It is headquartered in Louisville,
Kentucky, US, and that is how it derived it’s name Kentucky Fried Chicken. It’s the world’s
second largest fast foods chain, only after McDonalds. Operating in around a hundred and twenty
countries, and through around twenty thousand outlets. KFC is a subsidiary of the Yum Brand
who also operate Pizza Hut, and Taco Bell.
Harland Sanders an entrepreneur started KFC by selling fried chicken from a roadside stall in
Corbin, Kentucky, immediately after the depression in US. In early fifties Sanders realized the
future potential of opening franchisee operations and gave franchisee rights in Utah. KFC
through popularizing chicken as a fast food, broke the strangle hood of hamburgers in the fast
foods apace. Sanders did another marketing initiative and that was branding himself as “Colonel
Sanders” which transformed him into a part of the American culture and even to this day his
picture is widely used in KFC advertising. But subsequent rapid expansions saw KFC selling
itself to an investor group. In the sixties KFC became one of the first fast foods chain opening up
internationally in UK, Mexico, and Jamaica. It’s expansion continued and in nineteen eighty
seven it was the first American restaurant chain to open it’s operations in China. Today China is
KFC’s largest market.
After opening in India by two thousand thirteen KFC was operating over three hundred and fifty
outlets in the country. Adapting to the Indian palate KFC sells vegetarian chick pea burger,
paneer burger, chicken wings and such items. In it’s Bangalore expansion drive KFC also
introduced vegetarian meals like rice meals wraps, and other side dishes. KFC also uses Indian
spices in most of its dishes to suit customer taste.
Adapting to local requirements KFC launched “So Veg, So Good” menu. However KFC local
management aver that through all this they are not moving away from their core focus of chicken
offerings, but these would only help in strengthening and broadening their customer base in the
country.
In Mumbai their menu includes WOW, snacks, burgers, toasted wraps, box meals, the usual
chicken, group meals, rice bowls and desserts. The chain has had to face some protests as well.
People for ethical treatment of animals have been after KFC regarding their practice of fattening
chicken artificially which is a cruel practice. A continued movement by PETA in Bangalore over
some period did bring about some improvements in the way all the fast foods outlets in India
treated their source of animal meat. KFC’s contention has been that on the whole their being in
the country and serving in the fast foods sector generates a lot of employment in the country,
besides their contention is that they do not directly own the chicken farms but source their
requirements from contractors.
Subway
Subway which writes their name in a stylized way and use as their logo, is again an American
restaurant chain that sells submarine sandwiches (subs). A submarine sandwich derives its name
from the fact that the sandwich is made by using a long bread roll (Italian or French bread) which
is split either into two pieces lengthwise in the middle, or it is opened into a V shape at one side
and the bread roll is stuffed with a variety of fillings be thay meat, cheese, vegetables and other
seasonings. The fillings vary place to place and thus can adapt very easily to local tastes.
This chain is owned and operated by Doctor’s Associates Inc. Subway is one of the fastest
growing fast foods chains in the field. The chain is headquartered in Connecticut. While
submarine sandwiches are their main product, they also sell wraps, salads, and a variety of baked
items. Their items vary according to the countries that they operate in. They set up base in India,
in 2001 via a master franchising, at Delhi. In India Subway do not sell beef and pork, and have a
wide range of vegetarian items on their menu. They operate over four hundred outlets in the
country, and are spread across seventy cities. They even opened all vegetarian counters in
Jalandhar and Ahmedabad. Franchisee models usually operate on a low investment cost basis.
And besides the Subway model is relatively easy to run.
Sales ex Subway outlets are highest at airports because they are large footfall areas and also
because the offerings at Subway outlets are very limited the traffic moves fast. Subway plans to
increase their presence in the country in a large way. They plan to invest in training the
franchisee staff to bring about uniformity in operations. They are aggressively planning to spread
their franchisee base across the tier II & tier III towns.
Candies
This is a purely Mumbai based quick service restaurant, and is further very localized in it’s
operations, having three outlets in Bandra West only. This outlets is known for good taste of the
food it serves. It operates take aways, home delivery as well as sit in dine as well. It primarily
sells on pure value for money with no frills attached. The outlet started operations about thirty
years back. They serve a mixed cuisine of snacks, main courses, desserts and drinks. Their
spread of sandwiches, rolls, salads, and desserts are quite wide and can cater to wide range of
tastes.
The three branches of candies have their individual style and have stamp. Candies @
MacRonells is much like a Portugese villa, with blue and white walls accompanied by winding
steps. One can opt for open sitting in the terrace or in air conditioned rooms. Candies at Bandra
Reclamation is more of a low lit intimate space which is perfect for an early dinner, a leisurely
breakfast or even a cup of coffee at any time. The one at Union Park is just for pickups and carry
away type of food. This joint caters to over a thousand customers per day, and has a variety of
items on offer.
It runs it’s supply chain, on the basis of a close knit operation, it’s main advantage being that the
chain not wide spread , the entire span of control is very manageable.
The chain has a kitchen which occupies six thousand five hundred square feet of area. All food
gets cooked at this one kitchen by a fleet of about a hundred cooks. The operations start early in
the morning and continue till evening. So all the items originate from one central place. The
cooks are organized in a way that individual cooks specialize in some specific dishes only.
Foods are prepared in batches and are sent to counters from morning. The supply chain is so tight
that a just in time type of inventory management is followed. But this is also possible to an
extent because the entire operation is not widespread. Some of their best and fast selling items
are chicken sandwiches, chicken tikka rolls and mini pastries. To ensure constant supplies are
maintained uninterrupted they keep sufficient stocks of inventory of raw materials and
ingredients. The supply chain is very well coordinated and controlled.
Papa John’s
Papa John’s is by and large the fourth largest take away and delivery mode pizza chain in the
US. The chain is headquartered at Jeffersontown Kentucky. The chain was founded in 1983 as a
very small outlet built up from used pizza making equipments. However the pizzas proved so
popular that the outlet started expanding. Though some of the outlets have a sitting place to eat
pizzas Papa John’s model is delivery based. The chain works on franchisee mode, the franchisees
paying a royalty of roughly 5% on sales. Advertisement is also co opted. The chain set up shop
in India in 2006. The chain’s operations in India is carried out by Om Pizza & Eats Pvt Ltd. The
chain boasts of offering better ingredients and hence a better pizza. They claim to deliver dough
fresh to their outlets, the green pepper are store cut to ensure freshness, their pizza sauce is
imported from California, and the meat supplied by them has no fillers. They depend a lot on
their supply chain to ensure customer satisfaction.
Smoking Joe’s:
Smoking Joe’s is a Mumbai based pizzeria which was founded in 1993. Over the years it has
expanded and now operates through over sixty stores located in other cities as well. It mainly
concentrates on Pizzas and Pizza related items. It serves both vegetarian and non vegetarian
items. Garlic breads, open submarine sandwiches, desserts, and salads are items that the chain
sells besides pizzas. Again this chain is able to operate on the basis of a close knit supply chain.
Tibb’s Frankie
This outlet was the brain child of Amarjit Singh Tibb, who during a stopover in Beirut tasted a
local Lebanese preparation made of Pita Bread with liberal stuffing of a variety of fillings, and
decides to come out with Frankie which was to have it’s unique blend of Frankie Masala. After
receiving good reviews from friends and acquaintances Frankie was set up in more outlets in
Mumbai. Tibbs over time became associated with not only good taste but also with value for
money. Now the chain boasts of over 250 outlets across the country. Over the years the chain has
made improvements in its menu, and also varieties. They have over twenty varieties of frankies
and different flavours have also been incorporated. The chain has of late redecorated their outlets
décor, they have introduced new ways of packagings, introduced the home delivery model, and
have also moved abroad.
To generally capture the feelings of customers the researcher has recorded the opinions of a few
customers and they are transcripted below:
One customer male, around 45 years of age above middle class
On my “Eating-Out” experience with fast food restaurants, I must admit that as a couple we do
eat-out regularly at a variety of restaurants and have a mixed bag of experience that ranges from
Very Good to just about OK:
McDonalds: It’s a very good experience but over a period of time it gets monotonous as the
service is very robotic to say the least. You walk-in with a greet and Namaste the traditional
India way of welcoming a guest. That’s where the customer empathy stops. Here on the
customer places his order and the order taker punches in the dish ordered and collects the cash
post which within their prescribed one minute you are served with your dish. As a customer I
find an acceptable seating place, relish my dish which at most times fulfils the taste bud needs
and makes the eat-out at McDonalds a fulfilling experience.
The items on their menu whichever you order are always consistent with taste, quality, and
freshness that leaves a fulfilling feeling at the end of the day. This is also true of whichever
location of McDonalds you choose and whatever time of the day.
On the variety offered on their menu it is seen that over a period of time and number of visits
made, the menu is very restricted and one has no choice but order from same limited choice thus
seeping in a sense of boredom for a palate tickling variety seeking customer.
One of the good developments lately, has been McDonalds has introduced breakfast on their
menu thus increasing their offerings as well as getting in a new set of customers.
Dominos: Is yet again a very good experience particularly when it comes to sitting at home
watching your favorite game and also enjoying a well done very delectable pizza. Dominos have
mastered their delivery standards extremely well such that I have had no instance till date where
my order has been delayed by virtue of which I could have been the beneficiary of a free pizza.
On the other hand as any Indian who loves Indian dishes one can’t have a pizza more than once a
month and this is where the experience with Dominos gets restricted to once a month or at best
twice monthly. Dominos too of late has been reviewing their menu spread and fully
understanding the Indian mentality have of late been increasing their options on the toppings as
also some new dishes. More recently they have also been advertising on TV channels very
aggressively which in some ways does influence customer choice.
Pizza Hut: A fast food restaurant that caters to the Indian palate and which in my view has been
evolving over time. The Pizza’s here are tasty and have a good blend of the Indian spices and
aroma that makes them the first choice Pizza for many customers.
Recently they have added a number of other dishes and in the process have expanded their
offerings in the Indian market. They have a wide choice of meals ranging from Value meals to
Weekend meals to family meals thus making it very convenient and an option of first choice.
Having said this, their service in one of their locations for a sit-in meal was found below
acceptable standards, where there were issues relating to a delayed serving, notwithstanding their
stewards being quite process driven and not understanding customer urgency on being served.
KFC: An OK place to sit and eat. KFC too like Pizza Hut is fine only up to a point where you
can help yourself. If they have to serve you then I don’t see any difference between our Udipi
restaurant and KFC as their expertise lies only with a limited menu range and self service.
My experience with KFC also tells me that it varies from location to location and I had a very
bad experience at their South based outlet wherein they erred on the very order that I had placed
vis-a-vis what they finally served me with. To make matters worse the service staff was quite
adamant that he had served me the right dish as ordered by me but was equally willing to change,
which I found very strange.
Kailash Parbhat: Is one place that I really like. This place gives me a very homely feeling and the
ambience is one that gives a warm touch to the kind of food that is served.
The variety offered on their menu makes it a very inviting place and staff serving the customers
too are quite adapt and very natural in their serving style. The food items are very tasty and have
been very consistent over the years no matter how many generations have gone by. They have a
few branches spread across Mumbai and at most of these locations one does experience a similar
service level with the dish tasting almost the same as at their original location at Colaba.
The staff, the ambience, the aesthetics are all vey Indian and it makes one feel quite at ease
especially when you are out with a family for an eat-out.
DP’s a very locally famous restaurant services a large variety of dishes and serves the college
youth largely. This is because DP’s is situated in the midst of Mumbai’s most popular