A PROJECT ON

MANAGEMENT CONTROL SYSTEM

OF

FAST FOOD RESTAURENT

McDONALD’s

FACULTY GUIDE: SUBMITTED BY:

Prof. Sujoy Dhar Dyuti Lal

IBS Kolkata 09BS0000728

INTRODUCTION

McDonald’s:

The McDonald's concept was introduced in San Bernardino, California by Dick and Mac

McDonald of Manchester, New Hampshire. It was modified and expanded by their business

partner, Ray Kroc, of Oak Park, Illinois, who later bought out the business interests of the

McDonald's brothers in the concept and went on to found McDonald's Corporation.

The McDonald Brothers had been in the restaurant business since 1937. In 1948, they

closed down a successful carhop drive-in to establish the streamlined operation Ray Kroc saw in

1954. The menu was simple: hamburgers, cheeseburgers, french fries, shakes, soft drinks, and

apple pie. The carhops were eliminated to make McDonald's a self-serve operation. Mac and

Dick McDonald had taken great care in setting up their kitchen like an assembly line, to ensure

maximum efficiency.

Believing that the McDonald formula was a ticket to success, Kroc suggested that they

franchise their restaurants throughout the country. When they hesitated to take on this additional

burden, Kroc volunteered to do it for them. He returned to his home outside of Chicago with

rights to set up McDonald's restaurants throughout the country, except in a handful of territories

in California and Arizona already licensed by the McDonald brothers. Kroc's first McDonald's

restaurant opened in Des Plaines, Illinois, near Chicago, on April 15, 1955, the same day that

Kroc incorporated his company as McDonald's Corporation.

McDonald’s is the world’s leading food service retailer with more than 31,000

restaurants in 119 countries serving more than 50 million customers each day.

McDonald’s India:

In India, McDonald’s is a joint venture company managed by 2 Indians, Mr. Amit Jatia, M.D

Hardcastle restaurants Pvt Ltd owns and spread heads McDonald’s in west and south India and

Mr. Vikram Bakshi, Connaught Plaza restaurant Pvt Ltd, manages north and east India.

McDonald’s has 160 restaurants across the country, with its first restaurant launched in 1996.

McDonald’s has developed a menu especially for India with vegetarian selections to suit

Indian tastes and culture. Special care is taken to ensure that the vegetable products are prepared

separately using dedicated equipment and utensils.

McDonald’s Restaurant at Mani Square in Kolkata:

It is 137th outlet of McDonald (out of 160 in which this is second outlet in Kolkata) opened at

Mani Square Mall in Kolkata. First outlet in Kolkata was opened at Park Street. Mani Square

Mall is located in EM Bypass near Salt Lake. Mani Square Mall has the following features :

Movie Theater

Fast Food Shops

Retail Shops

Luxury Shops

Electronics Store

Due to these stores there is huge footfall in weekends as well as weekdays in this mall.

McDonald’s attracts family as well as young people due to its fast service and optimal price.

Management Control System

Definition:

Management control systems are methods of collecting information that are used to guide and

direct the behavior of staff members and management in order to achieve a company's goals.

Management control systems are established to maintain management control on a

routine basis, and can include budgets and budgetary controls, credit control, working

procedures, inventory control, production processes, and quality measures or controls. Hence we

can say that management control system is the process of evaluating, monitoring and controlling

the various sub-units of the organization so that there is effective and efficient allocation and

utilization of resources in achieving the predetermined goals.

While doing management control system, one has to look into various factors such as

economic, technological, environmental, political and socio-cultural.

Formal Management control system (MSMM Model):

InfrastructureOrganization structure

Level of AutonomyStrategy and Operation

Transfer PricingResponsibility Centre

RewardLong Term/Short Term

Individual/GroupPromotion

Co-ordination & IntegrationFormal Conference

Standing CommitteeInvolvement Technique

Formal Control SystemBudgeting and Capital Budgeting

Strategic PlanningOperational Planning

Cost AccountingProject ManagementVariance Analysis

Informal Management control system (MSMM Model):

Management Control System of McDonald’s at Mani Square Mall:

McDonald’s at Mani Square Mall is a

Franchise outlet which offers vegetarian

and non-vegetarian fast food preparation

of Burger, French fries, Coke Coffee and

desserts.

Order Taking Process:

Customer has to go to the counter, give the

order to the person standing on the counter

by consulting menu card or the pictures shown near the counter. Customer can pay cash or can

use their debit or credit card to pay the bill. Within 3 – 5 minutes after bill is generated

customer’s order is served right at the counter and customer takes his/her order and moves

towards the seating arrangement area.

InfrastructurePersonal ContactNetwork OrientedMinimal StructureExpertise Oriented

Emergant Role

Co-ordination & IntegrationTelephonic Discussion

Based On TrustPersonal Memo

Informal Control SystemUncertainity Coping

Adhoc IdeaAlternative Searching

Order Processing in Kitchen:

Once the order is taken, it is passed to the

kitchen with the order number. Orders are

processed in their kitchen in assembly line

fashion. Raw materials or the components of

dishes are prepared beforehand for the most of

the menu item, only assembling and there proper

dressing has to be done and the order becomes

ready within few minutes. For order processing

in assembly line, equipments supporting this are

used.

Supply Chain Management:

McDonald’s is a fast food chain with restaurant all over the world. It serves burgers and other

fast food items customized to local taste. Its philosophy has been ‘One World One Burger’,

Which mean that the burger must be consistent in terms of cost and quality. To meet such high

standards in India, McDonald’s had a very well orchestrated supply chain, called the ‘Cold

Chain’. In the supply chain management, the distribution center holds special place for bringing

food right to the outlet counters. For McDonald’s India, the distribution centre came in following

order: Noida and Kalamboli (Mumbai) in 1996, Bangalore in 2004 and the latest one in Kolkata.

Various suppliers for McDonald’s are

Radhakrishna Foodland

Trikaya agriculture

Dynamix diary

Vista Processed food private Ltd

Amrit Foods

McCain Food Pvt Ltd.

These distribution centers are responsible for procurement, the quality inspection

program, storage, inventory management, deliveries to the restaurant and data collection,

recording and reporting. All these suppliers are HACCP certified.

McDonald’s Staff: Their Recruitment & Training:

McDonald’s restaurant consists of crew members and a restaurant manager. They have to meet

the criteria specified by the McDonald’s and then the recruitment and selection process begins.

Managers receive their training first in Mumbai or Delhi and then get to work in the restaurant.

At Mani Square Mall, many staff of McDonald’s restaurant are part time workers.

But they also have to undergo training first and then only the work in the restaurant. So the

process is standardized one. This leads to increase in operational efficiency at each of the food

joint, because of the similar kind of training given to all employees (part or full time).

Rewards and Recognition:

These are based upon the customer handling time, order serving time, cleaning time, customer

feedback etc. Most of the rewards are related to employee recognition such as best performer,

star performer or employee of the month etc. These employees are awarded small gifts,

certificates or sometimes a bonus too from the franchise owner or from head office.

Strategic and Operational Planning:

Strategic planning such as business and marketing strategy and operational planning is done by

the mother McDonald’s company. Franchisee has only control over the location, rent of the

outlet, compensation to its employees, sales and profit/loss of the outlet. Franchisee has to pay

franchise fee (at the time of taking franchisee of Mc Donald’s) and 4 percent of outlet’s sale, fee

to the suppliers is also being paid by the franchisee owner.

Safety and Cleanliness:

McDonald’s at Mani Square (franchisee owner) has to keep in mind the safety norms, hygiene,

ambience and cleanliness and have to meet the standards specified by the mother company.

Otherwise non-compliance with the standards can lead to loss of franchise. Hence this is a formal

control process.

Co-ordination & Integration among employees:

Success of the outlet depends on the competent, courteous and reliable personnel to provide

quality product and service. Quality service can be provided in long run by trusting and

motivating the employees. Co-ordination and Integration among employees is an informal

control process at McDonald’s Mani Square Mall. To maintain co-ordination personal touch and

telephonic discussions are used by the franchisee.

OBSERVATION

By studying McDonald’s at Mani Square Mall it has been observed that this franchisee has

adopted mixture (hybrid) of formal and informal control mechanism.

Here infrastructure is mixture of formal and informal control process.

Organizational style and control is formal control process.

Formal control system is a formal and informal control process.

Co-ordination is informal control process.

Rewards is an informal control process

InfrastructureStrategy

OperationMinimal StructureExpertise Oriented

RewardIndividual/Group

Responsibility

Co-ordination & IntegrationTelephonic Discussion

Based on Trust

Formal & Informal Control SystemStrategic Planning

Operational PlanningBudgeting and Capital Budgeting

Cost Accounting

CONCLUSION

From the management control process of McDonald’s at Mani Square Mall, it has been seen that

the control process used by them is hybrid (mixture) of formal and informal control process

mechanism.

This is because

1. It is a franchisee outlet.

2. Mother company takes care of branding, promotion, supply chain and strategy part.

3. Franchisee owner has to take care of its employee, their compensation, cleanliness of the

outlet, its rent, delivering of products to the customer by meeting mother company standards

etc.

Key variables for the success of McDonald’s are:

1. Location of the outlet

2. Operational efficiency.

3. Supply chain.