McDonald’s wants to move fast food faster

Los Angeles TimesNovember 19, 2013 

MCDONALDS EARNINGS PREVIEW

Customers receive their cold drinks at a McDonald's Corp. drive-through window in San Francisco, California, U.S., on Wednesday, July 20, 2011.

DAVID PAUL MORRIS — Bloomberg

— McDonald’s is trying to put the "fast" back in fast food.

Amid slowing sales and service, the world’s largest burger chain is banking on a third drive-thru window to speed things up.

Currently, patrons in cars pull up to one window to pay for their order, then pick up their meal at another window.

But starting next year in new and rebuilt restaurants, McDonald’s will implement what it calls a Fast Forward Drive-Thru. The arrangement will allow customers whose orders aren’t ready to bypass the second window and pull up to a third window to wait.

“This test, along with other recent additions like double-lane and side-by-side drive-thrus, will enable us to better serve more customers quickly with the fast, friendly service they have come to expect from McDonald’s,” spokeswoman Lisa McComb said in a statement.

McDonald’s says that its first drive-thru opened in 1975 near an Arizona military base, serving soldiers prohibited by their superiors from leaving their cars while in uniform.

Back then, fast-food restaurants derived roughly 40 percent of their sales through drive-thrus, according to John A. Gordon, principal with Pacific Management Consulting Group.

Now, as the car culture has boomed and consumers increasingly seek out convenient ways to eat, “easily two-thirds of their sales” come through the windows, he said.

Patrons also tend to order more from their vehicles, often getting food for fellow passengers or to deliver to others at home or work, Gordon said.

“drive-thrus are so critical to their business model,” Gordon said of quick-service outlets. “People are lazy and might not want to get out of their cars.”

But McDonald’s is running behind its rivals in the drive-thru line.

New items slow service

An annual report from industry publication QSR magazine in October showed cars waiting 189 seconds between ordering and pickup at McDonald’s, falling behind the 134 seconds at Wendy’s, 158 seconds at Taco Bell and 181 seconds at Taco John’s. It beat out chains such as Burger King and Chick-fil-A.

McDonald’s average performance was its slowest ever. Researchers attributed some of the industrywide slowdown to more complicated menu items and an increase in the average number of vehicles in line at any given time.

Jeff Stratton, president of McDonald’s USA, told investors this week that “internal challenges” this year included the seemingly interminable launch of new products and limited-time offers. The “cadence of change” probably slowed service, Stratton said.

“In retrospect, I probably would have taken a little more time on that,” he said.

In recent months, the chain has introduced McWraps, a blueberry pomegranate smoothie, Egg White Delight McMuffins, Fish McBites and Mighty Wings. Then there’s the updated Dollar Menu, which now includes meals priced as high as $5.

“While the balance between our core products and new menu news was right, the pace of product introduction, in my opinion: too fast,” Stratton said.

Heavy competition

Drive-thru visits might also be sliding in general, according to data from the NPD Group. In the year that ended in September, there were 47.9 billion total visits to quick-service restaurants, a 1 percent increase from last year. In the same period, drive-thru visits dropped by 1 percent to 12.3 billion visits, according to the group.

This year, McDonald’s executives have spoken often about the effects of heavy competition in the quick-service industry and high unemployment among its customers. After handily outpacing fast-food rivals during the recession, the chain has recently lost some of its momentum.

In the third quarter, which ended Sept. 30, same-store sales at units open at least a year in the U.S. rose 0.7 percent – a slower rate than the 1 percent increase in the second quarter. The first quarter saw a 1.2 percent slide. In October 2012, the 1.8 percent monthly same-store sales decline was the chain’s first in nearly a decade.

McDonald’s told investors at its headquarters last week that it plans to spend $3 billion opening as many as 1,600 new restaurants in the next year while revamping 1,000 locations. The company already has more than 14,000 restaurants in the country, which together generate more than 30 percent of McDonald’s total revenue.

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