ABSTRACT

This paper explains differences in burger

process between Burger King and

McDonalds, Burger Kings inventory

management appropriateness in accordance

with its processes and peak period

performances analysis and evaluation of

Burger King and McDonalds.

BURGER KING
Faham Asghar
CASE MGMT E 5060 Operations Management

March 5, 2015
Burger process differences between Burger King and McDonalds

Burger King has 22% (see Exhibit 2) slower regular burger assembly time as compared to McDonalds

whereas 54% (see Exhibit 2) faster burger assembly for a big burger (Whopper or Quarters) because

Burger Kings both patties used for a regular or big burger is of same thickness and require same time

to be cooked while McDonalds Quarter patty requires 54% more time to be assembled.

Both restaurants have same number of patty cooking plates bur Burger King has one less bun heater

than McDonalds but in comparison to patty chain it moved twice as fast, although, because of different

demand patterns, this doesnt affect the production/assembly time for Burger King. McDonaldss heat

plates could hold 75% (see Exhibit 2) more regular patties than Burger King but both restaurants have

same individual batch load of 12 patties.

The major difference between burger processes for both restaurants is their promise of restaurants.

McDonalds focuses standardized burgers whereas Burger King focuses customized burgers. This is

one of the reasons why both restaurants have different door-to-door time. Another major difference is

how both restaurants manages their burger inventory levels. While Burger King assemble the burgers

(finished good) and hold, McDonalds assemble the burgers as the order has been punched in. Burger

King holds the finished product in steam table while McDonalds prepares the components of a burger

and holds in the bin. Burger King holds finished burgers whereas McDonalds does not. Finished burgers

are held in the chute. Both restaurants use ready to cook materials in their burger production process

except for tomatoes, which, Burger King cuts into slices every morning as part of their opening.

One of the major differences between both restaurants is in the application of condiments. Whilst

McDonalds uses containers storing condiments such as sauces which are dispensed using a lever in

premeasured amounts, Burger King stores sauces etc. in plastic bottles and is spread manually by the

crew member who is assembling the burger. Burger King microwaves an assembled burger whereas

McDonalds doesnt which is also another difference in burger process. Food flow and burger

preparation process of both restaurants is given in Exhibit 3, 4 and 5.

Inventory holding at Burger King and its appropriateness to support their processes

Burger King has two walk-in freezers, a walk-in refrigerator and two small open-top freezers near their

broilers and fry vats to hold the inventory. It receives three to four deliveries from local suppliers of bun

and milk and one from Distron, a Burger King subsidiary. Since the local supplies come three to four

time a week, this means the inventory costs will be high as any bulk discounts will be forgone and

multiple orders will result in more use of resources (more touches). But this strategy will result in less

food being discarded because of being stale.

All foods arrive ready to use or cook except for the tomatoes, which are received whole and sliced every

morning. Dry goods such as paper ware are stored in high shelves of the production area. The holding

of inventory suits their food flow with easy access to frozen materials, such as open top freezers near

broilers and high shelves paper ware to be used in the assembly.

One of the notable points is that Burger King does not use premeasured amounts of condiments,

instead, squeeze from bottles. This support their business promise of customized burgers as the

quantity of what a customer wants could differ. Although this support their process but could lead to

increased wastage and varied level of stock which will eventually affect budgeting and inventory costs.

The restaurant holds finished burgers with a timer of ten minutes in the steam table, this leads to higher

inventory costs if the burger is not sold within ten minutes as this results in wastage of buns, patties

and condiments altogether. If the burger is not held finished, this could reduce costs of condiments

wastage. Burger King also holds popular drinks ready to serve in the refrigerator with a holding time of

five minutes. This strategy supports their process during the peak hours but will result in wastage and

higher costs if drinks and burgers are also held during the slow periods.

Peak period performance analysis and evaluation between Burger King and McDonalds

Burger King has 11% (see Exhibit 1) more sales revenue at peak hour than McDonalds and hourly sales

revenue as a percentage of weekly sales is 23.2% (see Exhibit 1) less than McDonalds. Which means

that peak time performance is better than McDonalds because even after having weekly sales revenue
less than McDonalds, Burger King is generating 11% more sales revenue in the peak hours. To support

this, Burger King also has 11.6% (see Exhibit 1) bigger average check size as compared to McDonalds.

Although average customers at peak hour are 31% (see Exhibit 1) less in comparison to McDonalds but

average number of sandwiches per customer at peak hour (assumed average number is applicable to

peak hours as well) is 14.5% (see Exhibit 1) more at Burger King than McDonalds. This means that an

average customer is ordering more at Burger King than McDonalds but given that 31% less customers

at Burger King with total sandwich demand at peak being at 20.7% (see Exhibit 1) less at Burger King

than McDonalds along with the market share Burger King has is 68% (see Exhibit 2) less than

McDonalds, shows that McDonalds is better at handling customer load at the peak hours.

McDonalds has 16.7% (see Exhibit 2) more capacity to produce burgers than Burger King and 5.4%

excess capacity after meeting the peak hourly demand, this does not affect performance because both

are able to meet the peak hour demand.

Burger Kings turnaround time (door-to-door time) is almost double as compared to McDonalds but

this is in line with their standard budgeted TAT which is also 100% more for Burger King. Both

restaurants have almost same level of adverse TAT variance (see Exhibit 2) with Burger King

performing slightly better with 1.6% lower variance. Given this information, Burger King also has 40%

(see Exhibit 2) less cash registers as compared to McDonalds. The reason behind higher TAT is less

cash registers being available resulting in more wait in the order line as the cooking time is only 22%

(see Exhibit 2) more at Burger King than McDonalds and TAT is 100% more. Hence, McDonalds has

better peak time performance because it can deal more customers at one time.

Conclusion (cost, quality, delivery, satisfaction)

Burger King is better at peak hour sales revenue generation but McDonalds is better at handling

customer load with high quality meal in pleasant surroundings (quality and satisfaction) with excess

capacity to cater the demand (delivery) at a lower average check size (cost). Therefore, given the

information available McDonalds performs better at the peak period.

 Exhibit 1

McDonalds Burger King Comparison

First Calculation - Comments

Establishing Revenue
per Hour at Peak

Peak Period is Friday

from 12-1
Friday Percentage of 17.80% 18% From Case
Business (17.8%)
12 - 1 Time Period 14.90% 17.90% From Case
(14.9%)
Percentage of Sales at 2.7% 3% 11% pos Calculation
Peak

Second Calculation -
Determine Daily
Sales Revenue

Monthly Sales = 20699 13,172 Assumes a 31

1.1million /12 multiplied day month
by 7/31 to get daily
revenue
$700,000/12 multiplied
by 7/31 to get daily
revenue
2.7% x 20669 $548.98 $421.50 23.20% neg Daily Sales
Revenue

Third Calculation
Determine the
Amount of
Customers per Hour

Daily Sales Revenue $548.98 $421.50 Calculation

(peak hour sales
revenue)
Average Check size $2.24 $2.50 11.60% pos From Case

Customers per Hour 245 169 31% neg Calculation

at Peak
Fourth Calculation -
Determine the
Number of
Sandwiches per
Customer

Number of Sandwiches 55703 34,227 Exhibit 1

Sold
Number of Customers 42645 22,750 Exhibit 1

Number of 1.31 1.5 1405% pos Average

Sandwiches per
Customer

Total Sandwich 320 254 20.70% neg 245 customers x

Demand at Peak Number of
Sandwiches
 Exhibit 2

Burger McDonalds Burger King vs.

King McDonalds
percentage
difference
Door-to-door time in seconds (standard) 180 90 100
Door-to-door time in seconds(actual) 245 123 99.18699187
Variance 65 33 96.96969697
Adverse variance percentage 36.1% 36.7% -1.607629428

One supply of fries delivers (servings) 24 20 20

Pies shelf life in minutes 120 90 33.33333333

Market share 11% 35% -68.57142857

Cash registers 3 5 -40

Hours of operations 1000-0000 0700-0000

(14 hrs) (17 hrs)

Grill/Broiler capacity (regular patty) * 12 48 -75

Grill/Broiler capacity (big patty) ** 8 20 -60

Number of patty cooking plates 2 chains 2 (one for

each size)
Number of buns heaters 1 chain 2 (one for
each size)

Shelf life of sandwiches in minutes 10 10 0

Total time in seconds (frozen patty to 122 100 22

sandwich) ( R ) ***
Total time in seconds (frozen patty to 122 270 -54.81481481
sandwich) ( B ) ***

Hourly capacity ((3600/122)x12), 360 432 16.70%

((3600/100)x12)
Hourly demand 254 320 20.70%
Excess capacity 106 112 5.40%

*individual batch didn't exceed 12 for

both
**individual batch didn't exceed 10 for
McDonalds
***broiler time 80 + assembly time 30 + microwave time
12
 Exhibit 3

Burger King process

 Exhibit 4

McDonalds process
 Exhibit 5

Burger King food flow

McDonalds food flow

Drive-thru Counter Counter: Counter:

dining room takeout
Burger King 39% 61% 60% 40%
McDonalds 35% 65% 70% 30%
 Exhibit 6

Burger King burger preparation

McDonalds burger preparation

Exhibit 3, 4, 5 and 6 are a reproduction from the original Harvard Business School cases 9-681-044 and 9-681-045.