Executive Insights | May 2010 | By Staff

One on One with Jim Skinner

The CEO of McDonald’s sat down with QSR to discuss the five principals guiding his industry-leading company.

Since taking over the burger giant, which now has 32,000 restaurants worldwide, CEO Jim Skinner has restructured McDonald’s, redesigned the restaurants, and revolutionized the menu. Aside from the addition of premium coffee offerings, McDonald’s menu also features healthier choices such as Fruit & Walnut Salads and Chicken Wraps. Skinner also earns high marks for offering better value and improved marketing.

His winning strategy, christened the Plan to Win, focused all team members’ attention on improving service, food, and ambience and not necessarily on opening new stores.

Aside from reducing energy output and working with suppliers to establish healthier environmental operations, Skinner puts a lot of muscle behind talent management and leadership development. High-potential employees are put through a leadership institute, and diversity is an important value at the company. Those are just some of the reasons Skinner was not only the cover subject of QSR’s May 2010 issue, but also why he was selected as one of the industry’s 10 Most Innovative People.

Hear from Skinner himself what propels his company to the top of the segment.

QSR: Where did the idea for the Plan to Win come from?

Jim Skinner: The advent of the Plan to Win was in the spring of 2003 when we were in at the start of a revitalization.

“Yes, our traffic increases, but a lot of it was from customers who had always gone to McDonald’s.”

There were a number of tenets to the revitalization, the most important one was focusing on the things that were important for our brand and the restaurant business for 40 plus years before we had this little blip in performance, and that is to our customers and the restaurants.

So the Plan to Win was an aspirational plan to get our system focused on what was important both to our customers and for us as an organization. That was the operating plan, so that Plan to Win served us well.

Has anything about the Plan changed since then?

When you look at the tenets of the Plan to Win, the five P’s, I always like to say it’s not profound in itself but the alignment around people, products and place, the opportunity to strategize through those five things is infinite, the continuum of trying to do a better job for your customers.

So nothing has changed except for the fact that we try to get better at what we do in each of those strategies around the Plan to Win. And in every market, in every segment, in every country around the world. If you were me, you’d be delighted to know that every team has its own Plan to Win, even the restaurant solutions group.

So nothing has changed. The format has not changed, and all our planning around the Plan to Win remains the same. This is our vehicle for strategizing and trying to give our customers a better experience at the front counter or the drive through, which I always like to say is the moment of truth. It is the only place where we could make a difference.

We spend millions of dollars on marketing, but when I screw up your order at the front counter or the drive-thru, it’s all lost, because you don’t care how good our last commercial was.

What improvements are happening at the company moving forward?

First, if you look at people. The ability of the crew and the managers in our restaurants to deliver this better experience at the front counter and drive-thru through the enhancement of technology and the point of sale in particular, the cash registers, is very, very important.

And training and educating our people, we’re ramping up our efforts around that.

And then also staffing. We’re one of the fortunate companies today that can hire, and continued to hire, not just because we’ve opened new restaurants but because we’ve been successful.

And then of course there’s the reimaging. We’re ratcheting up our efforts at re-imaging—we’ll probably re-image 2,300 restaurants or more this year. If you look at capital expenditures, we’ve upped that by about $300 million. Much of that will go against re-imaging, but we’re also going to open a thousand new restaurants, which is up from a year ago.

POS systems are ever-changing. The technology is ever-changing. It’s important for us to have the appropriate interface capability for our crew and management, so it’s easier for them with the face of the keyboard and the complexity of the menu, it’s a point of importance in terms of being able to point to the product. Instead of having to go through four different steps, you end up having one or two steps, for the speed of the order-taking.

What is the reaction from the franchisee community regarding all of this?

Good. Cash flow is at an all-time high here in the U.S. We’ve always had a good relationship with our franchisees, but it’s always better when the results are better.

We didn’t have a lot of dissention around the combined beverage program. But any time you’re embarking on a billion-dollar project and implementing something in 14,000 stores, 85 percent of them managed by franchisees, you’re going to have a difference of opinion on how to implement that. That was nothing more than the normal collaboration of leadership of franchisees and McDonald’s, which we pride ourselves on…working out the kinks in terms of how we’re going to implement this.

What’s your favorite menu item?

The Angus burger is outstanding. It’s now my favorite. I have a lot of favorites on the menu, but that sandwich is a good sandwich.

Will the Great Recession leave a permanent impression on McDonald’s?

I don’t think so, because what people have to realize is we have changed our menu as much. The only thing we’ve changed is now we have a Dollar Breakfast Menu across the nation. The rest of the dayparts, we were operating from a position of strength as we went into the recession because we had everyday affordability and value.

It was a luxury for us not to have to change.

“When I screw up your order at the front counter or the drive-thru, it’s all lost, because you don’t care how good our last commercial was.”

We’ve never been at a point where we moved up and down because of our strategic response to the economy. We price according to what’s appropriate for the marketplace, for our consumers, and making sure that they get a great value.

We perform better in a robust economy than in a down economy. There’s a lot of bad information out there about us being cheap eats—“Oh, what’s McDonald’s going to do now that the economy is coming back?” We increased market share last year and the year before that, and we will be getting our fair share if we get more traffic and more spending from consumers.

This notion, Oh, I can’t go to a white tablecloth restaurant, so I’m going to go to McDonald’s. Yes, our traffic increases, but a lot of it was from customers who had always gone to McDonald’s. It didn’t change their lifestyle relative to McDonald’s.

What mark would you like to leave on McDonald’s?

If you just looked at the financial results, I’d say the best, ever. But it would be meaningless for me to say that. I think my legacy will be one of talent management and development—making sure that we had the right people in the right place and they developed their successors.

If we just looked at your five year results and your track record, I could name the starting line-up…That’s all well and good, but call me back in three years after I’m gone and tell me if McDonald’s is still the best in class and that you can really say the previous three year’s results were really because of what Skinner did while he was on his watch, you can call me the best.

When you’re in the job, there are any number of things you could do. But the true test of a legacy is to leave a better system. I’m proud of every person I’ve nurtured and put into key jobs.

Comments

I tried to send this to Mr. Skinner directly but it was returned as undeliverable. So maybe he will want to see his interview and see this too. It can not hurt to try.Good Afternoon Mr. Skinner, I wanted to take the time to share with you the recent horrifiying experience I had at a McDonald's Franchise restaurant. I have never experienced such poor customer service and disrespect by a manager of a store in my life! I would like to relay this information for review and recommendation of employee training.This evening I went to the Military Road McDonalds drive thru in Benton, AR. I was greeted by a lady yelling "Go ahead with your order". This in my opinion is rude and is not the proper way to greet a customer. I understand that this is a fast food restaurant and is not a fancy place, but do expect to be greeted with a may I take your order at a minimum. Before I was even able to finish ordering the first item, the lady is yelling again, "is that all?" I finished the order and she stated the total. She did not repeat the order back to me or even allow it to show up on the screen. I know that this was not an isolated event as I heard her take 2 additional orders in the same manner when waiting at the window to pay. The lady that handed me the food was not any friendlier.If this had been the end of my trip to McDonalds, I would have just written this off as poor employee training and not given it another thought.But unfortunately, the food was incorrect, so I had to go inside to get it fixed. I asked to speak to the manager when I went inside, and after about 10 minutes of waiting because he was "busy" he finally came. He stood across the room from me and said "Yes". I told him I felt it was very rude to stand so far and not come out to have a conversation after making me wait 10 minutes to talk to him. He immediately started to raise his voice and said Ok mam, I will come all the way out there to talk to you. There is a mess on the floor and I didnt want to get it on my shoes but I am coming all the way out there to you Then he proceeded to slam his way around the corner and stands towering over me about 3 inches from me. I felt that he was trying to intimidate me by his aggressive behavior and disrespect from my personal space. I tried to tell him the things that I had been waiting to tell him, which were I just thought that you, as the manager, would like to know that when I placed my order the girl did not greet me she just yelled, go ahead with your order and never repeated it and then it was wrong. But it seems you are not interested in talking to me due to your attitude and demeanor He again starts yelling as he is walking off, Since you can read my mind, I will let you talk to someone else! He walks to the back and I asked him for his name. He still yelling, turned around and said It is Vincent Garling Here I will even write it down for you.Never have I felt threatened by a employee or a manager of a fast food restaurant and I definitely did this evening. It was very uncalled for behavior, when I had patiently waited to just make him aware of the problem in their restaurant. Clearly he was part of the problem and not able to correct it as he is the leader of the worlds worst customer service! I would request a phone call from a member of the corporate office staff and a written apology from Mr. Vincent Garling. I feel this is the least that he can do, if he is not reprimanded/relived of duty for his awful behavior.This is not one problem store, but a serious of problem stores as all three of the McDonald's that I have visited recently in the Benton/Bryant area have left me with a feeling of dissatisfaction due to the rude behavior of the staff. I am unsure if the same franchisee is running all three stores, but it seems they all have the same representation of lack of customer service and disregard to importance of customers to their continued success.Thanks for your time and consideration.Regards,Carrie

McDonald's is the armpit of fast food. I don't understand how they say they changed when their customer service is still lack luster and I highly doubt any of their food is any healthier based on past track record. Boycott McDonalds!!

I told my grandhmoter how you helped. She said, "bake them a cake!"

I JUST BEGAN WORKING AT MCDONALDS AND I AM SLOWLY LEARNING THE REGISTER AND HOW TO OPEN THE DRIVE TRU IN THE MORNINGS. I HAVE HAD BAD EXPERIENCES NOT ONLY AT MCDONALDS BUT AT OTHER FAST FOOD RESTARAUNTS AS WELL. THEY SHOULD LIVE UP TO THERE NAME, BUT STILL IT IS ONLY JUST FAST FOOD AND MCDONALDS HAVE BEEN AROUND FOR YEARS.IT DEPENDS BECAUSE THERE ARE A NUMEROUS FAST FOOD PLACES YOU CAN GO TO AND GET EITHER BAD OR GOOD SERVICE.IT JUST DEPENDS ON WHO IS TAKING YOUR ORDER.IT DOESN'T NECESSARILY MEAN THAT THE SERVICE IS JUST TERRIBLE IT MAY BE JUST WHOM EVER IS TAKING YOUR ORDER. PERSONALLY I THINK IF YOU ARE NOT CUSTOMER FRIENDLY THEN YOU DON'T NEED TO WORK IN THAT KIND OF JOB SETTING. BECAUSE IT IS NOT HARD TO SMILE AND GREET PEOPLE REGARDLESS IF THEY GET MAD AT THE SERVICE OR NOT IT IS ALL ABOUT PATIENCE,IF YOU DON'T HAVE PATIENCE THEN YOU WONT SUCCEED IN LIFE NO MATTER WHAT YOU DO. PUT YOURSELF IN THE PERSON'S SHOES THAT MAY BE WORKING AT A mCDONALDS. AND SOMETIMES MCDONALDS GETS VERY RUDE CUSTOMERS AND SOMEONE MAY HAVE HAD A BAD EXPERIENCE WITH A RUDE CUSTOMER SO IT IS THE SAME DIFFERENCE EITHER WAY. BUT IT STILL DOESNT GIVE EITHER THE ORDER TAKER OR THE CUSTOMER TO BE RUDE

you don't have to yell

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