Can McDonald's Make Fast Food Go Even Faster?

More important, should it even try?

Aug 10, 2014 at 11:37AM


Drive-thru? More like hurry up and wait.

Fast food is apparently not fast enough for McDonald's (NYSE:MCD). The burger joint is experimenting with a 60-second food-order guarantee whereby you either get your meal in a minute or less or on your next visit you get a free item. 

The experiment is being run at participating restaurants in Florida where drive-thru customers during certain times will receive a timer upon paying for their meal, at which point the countdown begins. One of the big complaints McDonald's apparently gets is that it takes too long to get a meal, and it often has to ask customers to pull forward or park in a special spot to wait for orders that are taking too long.

QSR Magazine clocked the average service time at McDonald's drive-thru windows at 3 minutes 9 seconds last year, which is the longest wait-time for the chain in the 15 years QSR has been tracking it. In comparison, Wendy's average service time was just 2 minutes 13 seconds, while Burger King Worldwide was a glacial 3 minutes 18 seconds.

But trying to play beat-the-clock also runs the risk of increased order mistakes, an outcome that would hardly endear the restaurant any more to customers.

Considering the market share casual-dining chains like Chipotle Mexican Grill (NYSE:CMG) and Panera Bread (NASDAQ:PNRA) have stolen from fast-food restaurants in recent years, it may be surprising that McDonald's feels a need to focus on speed. After all, the key word in that concept might be "casual." Good food in nice environs, but a pace that's more leisurely.


Lounge in the sun in the great outdoors at Chipotle Mexican Grill.

Yet even fast casual sees the value in picking up the pace. Panera, for example, began last year adding hours to its workweek, streamlining its menu, and upgrading production equipment to overcome the long lines it was experiencing from the lunchtime crowd. Similarly, Chipotle said last year it was its ability to achieve "faster throughput" by an average of about five transactions during the peak lunchtime rush that helped it realize gains.

Of course, Chipotle and Panera are suffering from an excess of riches, of burgeoning demand for their food, which is why they're suddenly experiencing longer lines.

That hasn't quite been the problem for McDonald's. U.S. same-store sales at the burger palace have been persistently weak with only brief periods of respite. So, despite declining customer traffic, it's still taking longer to prepare a customer's order. That's why it just might make sense for the company to try to hurry things up a bit.

There's been an explosion of opportunity in convenience store chains because they've bulked up their food offerings and provide a quick, grab-and-go experience that's been further eating into fast food's market share. The market researchers at Technomic found from a survey of 4,000 convenience store shoppers that 26% ended up not hitting up the local fast-food restaurant because they had already eaten at their local convenience store.

So speed is certainly one factor in McDonald's faltering efforts, but there are deeper problems as well. There's an old saying that goes, "Fast, good, or cheap. Pick any two." The burgermeister has certainly owned that last category, and it seems to be picking the first, but it may really be the middle one that needs to be addressed.

Consumers are viewing fast food darkly these days as the fresher, more wholesome ingredients found at fast-casual dining chains are just more appealing. Until fast food can overcome the image of being little more than a glorified greasy spoon, it might not matter how fast McDonald's gets an order completed.

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Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide, Chipotle Mexican Grill, McDonald's, and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

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Jun 12, 2015 at 5:01PM

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