McDonald's buying power
Take the snack wrap, which came about when restaurants started to see a plateau in sales volume of its Chicken Selects. McDonald's executive chef, suppliers, and franchisees got together at headquarters to figure out how to ramp up the turn of the crispy chicken strips. After chefs, food scientists, suppliers, and members of the menu-management team and advertising agency weighed in on how to define the product and pricing, the snack wrap had to pass muster with 150 to 200 consumers in focus groups. It then went into a four- to six-week operational test in a handful of restaurants to determine if changes needed to be made in crew positioning or equipment. McDonald's had mastered the bun, but with the snack wrap, the menu-development team had a lot of work to do operationally around tortillas: What was the right packaging? How do you get them at the right temperature for the customer? What's the right amount of flexibility in the tortilla?
Snack wraps made it to market in 2006, 18 months after executives began discussing them. One of the fastest launches the company has ever had, it accomplished what McDonald's has increasingly tried to do: hit another price point on the menu and offer some food news that gives customers a reason to go back into its stores. The process also helped McDonald's realize the potential of the snacking market -- the growing segment that wants to nibble between meals -- and the chance to increase traffic between mealtimes. An added bonus: The product team then took the same formula for the snack wrap and applied its tortilla know-how at breakfast to create the McSkillet Burrito. Both products use the same tortilla, so the kitchen isn't further complicated with another ingredient.
Skinner likes a new hit product as much as the next guy, but, he says, at this point in McDonald's history another breakout blockbuster is unlikely. Growth these days is about scaling and executing. Hence the operational zeal, which has evolved into a strategy that places a relentless focus on the stores. Whenever his people travel on business, he wants them checking out the local McDonald's. Robbie Hofmann, president of McDonald's supplier North Side Foods and a friend of Skinner's for 30 years, says that whenever they travel together, Skinner always coerces him into stopping for coffee at the nearest McDonald's, where he spends the next half hour chatting with the crew -- after he's secured one of his back-up lids for his drink, of course.
Skinner knows the restaurants are the only place the cash register rings. Headquarters can cook up any idea it wants, but if it overly complicates the kitchen, the product won't fly. This doesn't always endear him to his finance executives, to whom he's been known to say, "I want to remind you that it's a lot harder to make money than it is to count it!" At one time the company floated the idea of putting deli sandwiches on the menu. The deal killer? The crew couldn't get it done in 55 to 60 seconds. "We talk about hospitality, we talk about friendly relationships, but we live in a world of speed today," Skinner says. McDonald's customers at the drive-through don't want to be chatted with, and they don't want to wait two minutes for a turkey sandwich.
