When Ray Kroc realized that the McDonald brothers had unusually high milkshake sales, he paid them a visit. After seeing how they speedily served a huge lunch time crowd. Kroc bought their name and perfected the fast food concept,
Still now, speed is important.
Drive-Thru Speed
McDonald’s drive-thru times are going in the wrong direction. In 2012, average drive-thru time at McDonald’s was 188.83 seconds. In 2018, it rose to 273.29 seconds. Now, it’s 311.
In its July investor call, McDonald’s explained that they were trying to shave 20 seconds off drive-thru time. While, “staffing challenges” slowed the improvement, their app achieved the opposite. Last November, they said they were experimenting with an express line and dedicated pickup spots. Also, a simpler menu was supposed to make a difference.
Drive-Thru Seconds
Compared to Burger King and Starbucks, McDonald’s 311 seconds look good. But not next to Taco Bell’s 268:
Accuracy
Although Taco Bell is at the top for speed, their accuracy is not. McDonald’s also is close to the bottom of the accuracy ranking::
Vehicles in Line
One reason for longer wait times could be the number of vehicles (2.2). At 4, only Chik-fil-A has more:
Our Bottom Line: Monopolistic Competition
McDonald’s competes in a monopolistically competitive market structure. Because you just need a grill and hamburger meat, market entry is easy. But to have some price making power, you require something unique. You need your McSpicy chicken sandwich and a McRib. You also care about reducing drive-thru time by 20 seconds.
Along the following market structure continuum, the firm’s power increases as we move closer to monopoly. Less powerful, each McDonald’s restaurant would be close to monopolistic competition:
My sources and more: Always handy for fast food facts, QSR Magazine has the yearly data. From there, some CNN Money analysis was a nice complement as was the investor meeting transcript. You also might want to look at how speedy McDonald’s once was.
