OPERATIONS MANAGEMENT

WAITING LINE ANALYSIS OF

Mc Donalds RESTAURANT

SUBMITTED TO-

SUBMITTED BY-

Prof. Venkat Rao Korasiga

Amisha Garg (seat no.10)

Operations Department

Aditya Narayan (seat no. 11)

Dhruv Ahuja (seat no. 37)
Sakshi Suri (seat no. 40)
Abbas Shahzad (seat no. 54)
Aman Bajaj (seat no. 58)

CONTENTS
1. INTRODUCTION

1.1 McDonalds Corporation

1.2 McDonalds in India

2. McDonalds HYDERABAD

3. BLUEPRINT OF McDonalds HYDERABAD

4. PROCESSES IN Mc Donalds

4.1 Mc Donalds Old Process

4.2 Mc Donalds New Process

4.3 Service Design Matrix

4.4 Measuring Process Performance

5. WAITING LINE ANALYSIS OF McDonalds HYDERABAD

10

5.1 Important Notes On Waiting Line Analysis

11

5.2 Analysis Of The Chart

12

6. VISIT DETAILS

13

7. RECOMMENDATIONS AND CONCLUSION

14

INTRODUCTION

1.1 McDonalds Corporation

McDonald's Corporation is the world's largest chain of hamburger fast food restaurants,
serving around 68 million customers daily in 119 countries. Headquartered in the United States,
the company began in 1940 as a barbecue restaurant operated by Richard and Maurice
McDonald; in 1948 they reorganized their business as a hamburger stand using production line
principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He
subsequently purchased the chain from the McDonald brothers and oversaw its worldwide
growth.
A McDonald's restaurant is operated by a franchisee, an affiliate, or the corporation itself. The
corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as
sales in company-operated restaurants. McDonald's revenues grew 27 per cent over the three
years ending in 2007 to $22.8 billion, and 9 per cent growth in operating income to $3.9 billion.
McDonald's
primarily
sells hamburgers, cheeseburgers, and
chicken, French
fries, breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer
tastes, the company has expanded its menu to include salads, fish, wraps, smoothies and fruits.

1.2 McDonalds in India

Indian McDonald's restaurants do not serve beef and pork products, in deference to Hindu and
Islamic beliefs respectively. The only animal products available are chicken and fish. Meat and
vegetarian meals are prepared in separate areas of the restaurant due to religious laws; cooks
preparing vegetarian dishes wear a distinctive green apron. All McDonald's restaurants in India
are certified halal.
Apart from selling the regular international McDonald's products such as McChicken, Chicken
McNuggets, Chicken McGrill and Filet-O-Fish, McDonald's has developed a wide variety of
vegetarian products exclusively for the Indian market, as a large number of Indians are
vegetarians. Some of these products are the McAloo Tikki Burger (a burger with an aloo tikkiinspired patty made out of potatoes, peas, and spices), the McVeggie burger (the vegetarian
equivalent of the McChicken), the McSpicy Paneer burger (a burger with a fried paneer patty
breaded with Mexican and Cajun spices) and the McSpicy Paneer Wrap (a Mexican wrap
equivalent of the McSpicy Paneer burger).

Other vegetarian products exclusive to India are the Pizza McPuff and the McCurry Pan. The
Pizza McPuff is the Indian savoury snack called the puff stuffed with vegetarian pizza fillings
and is similar to acalzone. The McCurry Pan is a mince pie-inspired dish where instead of meat,
vegetables and cheese is used. The latter product had been discontinued, but there are plans to relaunch it in the exclusive vegetarian restaurants McDonald's is planning in the country.
McDonald's has also developed variations of its international non-vegetarian products
exclusively for the Indian market. The Big Mac burger is sold as the Chicken Maharaja Mac,
where instead of beef patties, chicken patties are used. A spicy version of the McChicken, the
McSpicy Chicken burger and its Mexican wrap equivalent, the McSpicy Chicken Wrap are also
sold. It is to be noted that the McSpicy Chicken burger is the Indian equivalent of the actual
McChicken burger in the USA, albeit served on a sesame bun, while the Indian McChicken
burger is served on a sesame bun and is not spicy. In 2012, McDonald's India introduced the
McEgg burger exclusively for the Indian market, keeping in mind the large eggitarian population
in the country. The McEgg burger comprises of a poached egg between two steamed buns and is
extremely popular among college students. Discontinued McDonald's products in India include
the Crispy Chinese burger (a Chinese cuisine-inspired vegetarian burger) and the Mexican Spice
chicken and vegetarian burgers.
In September 2012, McDonald's announced plans to open its first vegetarian-only restaurant in
the country by 2013. The first location will open near the Golden Temple in the Sikh holy city
of Amritsar in northern India. The second store will be near the Vaishno Devi cave shrine
in Jammu and Kashmir.

McDonalds HYDERABAD
For our study we have visited the store of McDonalds in Hyderabad which is located in City
Centre mall in Banjara hills. Our purpose of study is to evaluate the process analysis and waiting
line analysis of McDonalds. As per our company guide we have been told that the peak hours of
the store is from 12 noon to 3 pm in the afternoons and from 7 pm to 10 pm in the evenings. We
have used the above time period for all our analysis. Also we had a store visit where we designed
the blueprint of the store.

McDonalds Hyderabad map

BLUEPRINT OF McDonalds HYDERABAD

PROCESSES IN Mc Donalds

4.1 Mc Donalds Old Process

Customer
places
order
Finished
goods

Raw
material

Cook

Assemble

Deliver

4.2 Mc Donalds New Process

Customer
places order
Raw
material

Cook

WIP

Assemble

Deliver

Interpretation:
Earlier we can see from the figure that McDonalds used to follow a make to order process
where the company used to serve the customer only once the order was placed. However later it
changed it process to a combination of a make to order and make to stock which makes it a
hybrid process. Thus the company uses latest cooking techniques and clever process engineering
which has helped the company in developing a quick response rate. It takes just 45 sec for
preparation of a burger and 15 sec for order placing. Thus the company is able to serve its
customer in a minute which is highly appreciated throughout.

4.3 Service Design Matrix

4.4 Measuring Process Performance

Bun Toasting

Assembly

Wrapping

(11 seconds)

(20 seconds)

(14 seconds)

Storage (0
seconds)

Buffer

Starving

Customer Service

(9 seconds)

(6 seconds)

(45 seconds)

Bun Toasting =11 seconds

Assembly = 20 seconds
Wrapping = 14 seconds
Storage = Picked up immediately
Customer Service = 45 seconds(11+20+14)
Buffering - refers to a storage area between stages where the output of a stage is placed prior to
being used in a downstream stage. Buffering allows the stages to operate independently.
Buffering = 9 seconds
Starving If one stage feeds a second stage with no intermediate buffer, then the assumption is
that the two stages are directly linked. When a process is designed this way, the most common
problems that can happen are Starving. Starving occurs when the activities in a stage must stop
because there is no work.
Starving = 6 seconds
Cycle time - is the end-to-end delay in a business process. The business processes are the supply
chain process and the order-to-delivery process. There are two types of categories in cycle times:
supply chain cycle time and order-to-delivery cycle time. The order-to-delivery cycle time is the
time elapsed between the placement of an order by a customer and the delivery of products to the
customer. If the items are in stock, then it is equally distributes the cycle time and order
management time. If the items are made to order, then it will be the sum of supplier cycle time,
manufacturing cycle time, distribution cycle time, and order management time. To calculate
the cycle time, the number and the nature of workstations need to be defined. It is basically the
elapsed time between starting and completing a job.
Cycle time = 20 seconds

Bottle neck - A bottleneck in operations management occurs in sequential manufacturing when a

backup happens in one step of the sequence. For example, if there are three machines on an
assembly line and the first and last machines can produce 100 units per hour, but the second
machine can produce only 50 units per hour, it will cause a bottleneck to occur. This is because
the second machine cannot produce enough units to keep pace with the other machines. A
bottleneck has a terrible effect on the efficiency of production. The stages following the
bottleneck must function below their capacity because they do not receive enough input to
operate at full capacity. The stages before the bottleneck need to slow down production because
the subsequent stages cannot handle the capacity. As a result, the overall efficiency of the system
is significantly reduced.
Bottleneck = 20 seconds.
Throughput time - Manufacturing throughput time is the amount of time required for a product
to pass through a manufacturing process, thereby being converted from raw
materials into finished goods. The concept also applies to the processing of raw materials into a
component or sub-assembly. The time required for something to pass through a manufacturing
process covers the entire period from when it first enters manufacturing until it exits
manufacturing. The concept of manufacturing throughput time is primarily oriented toward the
reduction of time required by the manufacturing process, so that you can increase the amount of
throughput flowing through your system and thereby increase profitability. It includes the time
that the unit spends actually being worked on together with the time spent waiting in a queue.
Throughput time = 45 seconds.
Throughput rate - The throughput rate is the output rate that the process is expected to produce
over a period of time.
Throughput Rate = 1/ Cycle time.
= 1/20sec = 0.05 seconds.
Process Velocity (also known as throughput ratio) is the ratio of the total throughput time to
the value- added time. Value- Added Time is the time in which useful work is actually being
done on the unit. Assuming that all of the activities that are included in the process are valueadded activities, value -added time should be the sum of the activity operation times in the
process. By taking the same assumption so, we can say that value-added time is equal to
throughput time.
Velocity = Throughput time/Value-Added time.
= 45seconds/45seconds = 1 second.

Efficiency - Operational efficiency is the ability for an organization to execute its tactical plans
while maintaining a healthy balance between cost and productivity. In other words, it's your
ability to get things done without costing the company an arm and a leg. Typically, this is
affected by the productivity of the organization which is measured by examining the amount of
output (product or service) for a given amount of input (assets, employee work hours, etc.) In
order to increase operational efficiency, you strive to increase the output without a change in
input of a similar order of magnitude. It is the ratio of the actual output of a process relative to
some standard.
In our project McDonalds peak hours are 12pm-3pm (weekdays) and 7pm-9pm (weekdays).
They said that during peak hours they would be able to serve around 650-700 customers and if
they assume that every customer order at least 1 burger so in one hour they would make 216
burgers. But in order to avoid shortage they usually make 300 burgers per hour.
Efficiency = Actual output/Standard output.
= 216/300 = 0.72.
(Assuming that Mac Donald produce 216 burgers per hour consider as an actual output
and 300 burgers per hour as a standard output)

WAITING LINE ANALYSIS OF McDonalds HYDERABAD

WEEKDAYS
7p.m. 11a.m
12noo
.n10p.m 11p.m
3p.m.
.
.
NUMBER OF
CUSTOMERS
ARRIVAL RATE (in
minutes)
AVERAGE SERVICE
TIME (in minutes)
NUMBER OF ACTIVE
COUNTERS
SERVICE RATE
AVERAGE NUMBER
WAITING IN LINE
AVERAGE TIME
WAITING IN LINE (in
seconds)
AVARAGE NUMBER IN
SYSTEM (customers)
AVERAGE TOTAL TIME
IN SYSTEM (in
seconds)

N
=n/
time(minutes
)

WEEKENDS
7p.m. 11a.m
12noo
.n10p.m 11p.m
3p.m.
.
.

280

450

1000

350

520

1300

1.556

2.500

1.389

1.944

2.889

1.806

C
=c/t
Lq = 2 / ( )

3
3

3
3

2.5
2.5

3
3

3
3

2.5
2.5

0.558

4.167

0.694

1.194 25.037

1.878

21.54 100.00

30.00

36.84 520.00

62.40

Wq = Lq /
Ls = / ( - )

Ws = Ls /

1.08

5.00

1.25

41.54 120.00

54.00

1.84

26.00

2.60

56.84 540.00

86.40

5.1 Important Notes On Waiting Line Analysis

Following is the waiting line analysis of McDonalds situated in City Center, Banjara Hills, Road
no. 1, Hyderabad:

As per the details provided by the Manager, we have calculated the service and waiting
times of customers served at the outlet.

We have done our calculations for the peak times and the whole day during weekdays
and weekends.

The store is opened from 11 a.m. to 11 p.m. every day.

The peak times are 12 noon to 3 p.m. and 7 p.m. to 10 p.m.

There are 3 working counters. All of them are active during the peak hours and 2 are
active during other times of the day.

The numbers of footfalls are mentioned in the chart.

5.2 Analysis Of The Chart

As per the details given by the manager, the number of customers visiting the store are as
follows:
Weekdays

Weekends

12 noon to 3 p.m.

- 280

7 p.m. to 10 p.m.

- 450

Whole day

- 1000

12 noon to 3 p.m.

- 350

7 p.m. to 10 p.m.

- 520

Whole day

- 1300

The arrival rate of customers is 1.56 per minute during the day time and 2.5 per minute during
the night time in the weekdays respectively.
The arrival rate of customers is 1.94 per minute during the day time and 2.88 per minute during
the night time in the weekend respectively.
The arrival rate of customers for the whole day of weekdays and weekends is 1.38 and 1.80
respectively.
The average service time taken to serve each customer is on an average 1 minute during both
peak and non-peak hours.
During peak hours, no. of active counters are 3 but during non-peak hours, no. of active counters
are generally 2.
Service rate during weekdays and weekends in the peak hours is 3 customers served each minute
i.e. 1 minute service time and 3 active counters.
Average number of customer waiting in the line during peak hours in the weekdays is 0.558 and
4.167 respectively.
Average number of customer waiting in the line during peak hours in the weekends is 1.194 and
25.037 respectively.
Average number of customer waiting in the line for the whole day during weekdays and
weekends is 0.694 and 1.878 respectively.
Average waiting time for each customer waiting in line during weekdays in the peak hours is
21.54 seconds and 100.00 seconds respectively.
Average waiting time for each customer waiting in line during weekends in the peak hours is
36.84 seconds and 520.00 seconds respectively.

IMPROVING SUPPLY CHAIN PERFORMANCE

6.1 McDonalds E-Procurement System

McDonalds E-Procurement System is basically a main reason for their successful supply chain
management. It is so efficient that it provides the backbone not only to all the logistics but the
whole McDonalds supply chain management.
E-MAC Digital: Internet procurement site designed for McDonald's Corporation's 34,000
franchises
E-MAC Digital Company is E-Procurement website which is jointly owned by McDonalds and
Accel-KKR Internet Co.It is a procurement hub launched in 2001 allow all of McDonald's
franchises across the globe to buy everything needed to run their restaurants.

In the process of procuring a product, a typical McDonalds franchise restaurant places an

order through E-MAC digital website.

The order is sent to the suppliers. Suppliers order is processed and managed by the
logistics.

The logistics sends the order of the products to the franchise restaurants. It is the
responsibility of the E-MAC and logistics that the products are sent to the restaurant.

All the above, steps are handled and executed by the E-MAC digital.

McDonalds Suppliers
Following are the McDonalds suppliers of food;

Gavia Gourmet Coffee: Our 25-year relationship with Gavia has delivered countless
cups of delicious coffee.

Lopez Foods: McDonalds 100% pure beef patties are produced to the highest quality
standards.
Keystone Foods: Innovation and Chicken McNuggets
100 Circle Farms: The potatoes for our World Famous Fries are grown with efficiency,
precision and heart.
Jiangsu Dingneng Foods Co. Ltd: Dehydrated onions

Following are the McDonalds suppliers of equipment and other items;

Zhengzhou Kerry Machinery Equipment Co., Ltd.

Guanxing (Shanghai) Import & Export Co., Ltd.

Guanxing (Shanghai) Import & Export Co., Ltd.

Guangzhou Maibao Package Co., Ltd.

Zhengzhou Shuliy Machinery Co., Ltd.

Shantou Eastoys Factory

Shantou Kai Dongfan Plastic Toy Factory

Wenzhou Xiangou Foreign Trade Corporation

Shanghai Tianwan Food & Beverage Equipment Co., Ltd.

Shanghai Xinrui Catering Equipment Co., Ltd.

Wuhan Xinhengyue Industry And Trade Co., Ltd.

6.2 McDonalds Logistics

Logistics is the management of flow of resources between their point of origin and their point of
destination so as to meet some requirements
McDonalds - the largest fast food chain in the world selected Venus Pakistan as its logistic
partner after careful and thorough evaluation. We are responsible for the procurement, imports,
clearing, warehousing and distribution of all products to all McDonalds restaurants in Pakistan.
In McDonalds logistic involves 3 phases

Inbound logistic
Operations
Outbound logistic

Inbound
logistics

Operations

Outbound
logistics

Inbound Logistics

It is the movement of materials from suppliers and vendors into production processes and
storage facilities.

Based on the demand forecast, Manager orders the Venus Distributors on daily basis.

Venus Distributors stores all the raw materials, in its own cold stores and delivers only
one-day material to the restaurant.

Venus Pakistan established its dedicated McDonalds Logistics Operations in 1997.

It also received the DQMP (Distribution, Quality, and Management Process)

Certification from McDonalds USA Audit Team.

Some branch has its own cold storage facility, which is used to store the daily-procured raw
material.

There are only two products buns and Cokes, which are sent directly to the restaurants.

Venus Pakistan has full-fledged facilities to pack locally manufactured products in

sachets such as sugar, tomato ketchup.

The transportation of McDonalds has been completely outsourced and since 80% is in
refrigerated truck movement.

Multi-temperature and single temperature trucks transport the fast food swiftly to the
McDonalds restaurants across the country.

The company has both cold and dry storage facilities with capability to store products up
to -22 C as well as delivery trucks to transport products at temperatures ranging from
room temperature to frozen state.

The specially designed trucks maintained the temperature in the storage chamber
throughout the journey.

Cold Chain Logistics

A cold chain is a temperature-controlled supply chain. An unbroken cold chain is an

uninterrupted series of storage and distribution activities which maintain a given temperature
range.
It is used help extend and ensure the shelf life of products such as fresh agricultural produce,
processed food. McDonalds entire network supply-chain consists of movement of goods
through a cold chain. Suppliers are also a part of this cold chain. McDonalds have the largest
refrigerated movement of products. An interesting and innovative feature of this cold chain is
that the same truck can carry products at different temperatures ranging from:

Frozen products at -18C to -25C,

Chilled products from 1C-4C
Dry products at ambient temperatures

Venus Custom Bonded Warehouse/Carrier owned by The Venus Group of Companies and
operated by the parent company Venus Pakistan is the ONLY Company in Pakistan that enjoys
the exclusive distinction of having its own refrigerated Custom Bonded Warehouse/Carrier
License issued by Pakistan Customs. This means that Venus Pakistan is capable of providing
frozen storage services to its customers without paying duties to Customs. Customers can simply
pay the duties/taxes to Customs only for the quantity required from the Bonded Warehouse
operated by Venus Pakistan. McDonalds expects its distribution partner to meet its standards of
cold, clean and on-time delivery.

Operations
Cooking procedure and recipe is documented so that the products become standardized and
customers get the similar taste, quantity and quality to whichever restaurant they go.
It is the policy of McDonald's to throw away any burger if they remain on heated grill for 15
minutes. All the utensils and equipment used in cooking are washed at the closing of restaurant
every night, with anti-microbial fluid. Kitchen, floor, washrooms and all other restaurant areas
are cleaned after every half an hour.

Outbound Logistics
Outbound logistics is the process related to the storage and movement of products from the end
of the production line to the users end.
When customers enter the restaurant, they go to the counter, give their order, which they are
served within a single minute.

6.3 MCDONALDS TRANSPORTATION

The distributors receive items from different parts of the country.

The items are stored in rooms with different temperature zones and are finally dispatched to
the McDonalds restaurants on the basis of their requirements.

The company has both cold and dry storage facilities with capability to store products up to
-22 C as well as delivery trucks to transport products at temperatures ranging from room
temperature to frozen state.

The specially designed trucks maintained the temperature in the storage chamber
throughout the journey.

Matching supplier production with deliveries to meet schedules and restaurant needs.

Centralized distribution centers.

Emphasis on economies of scale High storage volumes.

QIP (Quality Inspection Program).

HACCP (Hazard Analysis Critical Control Point) Food safety standards emphasizing
prevention of faults rather than detection through inspection.

No Knife in restaurants.

VISIT DETAILS
We visited Mc Donalds outlet of city centre in Banjara Hills, Hyderabad. Our guide was Mr
Sandeep Mandwa, the Manager in store, who showed us the store operations. We got to see how
different items were prepared at different temperatures and the storage of inventory.
Firstly we started with the booking counter, where the employees book the orders of the
customers. There were 5 systems in a row which meant that 5 customer can book their order
simultaneously. Just below the systems there were racks where sachets of ketchups and straws
were kept, along with them a transparent cap was also kept which the employees had to wear all
the day at work so as to prevent hair fall in any of the products. We them moved on to have a
look at the machines which were used to prepare the food items.
There were 4 machines which were used to prepare French fires. All were fully automated
machines. There was also a special instrument which was used to measure the size of the French
Fries viz, Large, Medium, and Regular. The Oil which was used to fry was used only 4-5 times
and then was replaced with a fresh lot. There were separate machines for the Veg and Non-Veg
products. We got to see the containers and the also the process in which the products were
prepared. Employees had to wash their hands every 2 hrs. Various charts were put up on the wall
showing the process for preparing the products.
We then moved on to the place where the utensils were washed. The utensils were cleaned in
proper manner using water, chemical and again water. After that we moved on to the have a look
at the CO2 cylinders which were used to prepare the soft drinks. Just beside the cylinders there
were the liquefied forms of the soft drink flavours. Then we entered the stored room where the
entire inventories such as the glasses, tissue paper, straws, ketchups etc. were kept. There was
another store room which was just adjacent to the previous room which was a freezer room

where all the vegetables and other items were kept in order to maintain the freshness of the
vegetables.
Some of the basic questions asked by us to the Manager were:
1.
2.
3.
4.
5.
6.
7.

What was the average lead time taken?

How many people generally come in a day (weekdays and weekends)?
In how many days do the inventory stock is replenished?
Average sales in a day?
Working terminology during peak and non-peak hours?
Average wastage of each good in a day
Average amount of order made in a day?

RECOMMENDATIONS AND CONCLUSION

In conclusion, the McDonalds Corporation has successfully maintained their

reputation of being one of the most trustworthy fast food chains worldwide. As a result
of their competitive strategy, strict quality management, efficient raw materials supply
chain, and forecasting, they created an efficient operations management system. The
company continues to utilize an effective operations management processes, which in
turn helps them make their customers happy.
McDonalds continually receives information from customers, employees, and the
industry that effects short, medium, and long term decision making. Different kinds of
information are received from all levels of the corporation and are used to learn more
about the market movement and advertisement structure, including basic everyday
processes in production and packaging of goods for the targeted markets. Forecasting is
done in large by the corporation, as part of their responsibility to the franchisees and
McDonalds shareholders.