For decades, McDonald’s was almost universally admired as the leader in the fast-food industry. Its franchise system was the envy of virtually all the other fast-food chains. But at the start of the new millennium, problems that had been festering during the late 1990s began not only to undermine McDonald’s enviable reputation but also to hit the top and bottom lines. Same-store sales fell off by as much as 10 percent for many units and net profits went down even more. Ironically, a major cause of the problem McDonald’s was experiencing resulted from an attempt to improve its products. McDonald’s and many of its franchisees made a huge investment in kitchen technology to enable the restaurant to custom make food to individual customer orders so it would be fresher and tastier than the premade products kept hot under warming lights. But the new approach, which McDonald’s called “Made for You,” slowed down service dramatically. This in turn created a “chain reaction” of unhappy customers as well as employees who felt frustrated at not being able to meet customers’ demands for speedier service. Moreover, the employees felt abused when customers complained to them. McDonald’s claims the franchisees have not learned how to use the new kitchen technology properly, while the franchisees say the new technology is flawed and poorly designed. What do you think is going on here? Does McDonald’s really understand the needs and problems of its franchisees? Was the support in the form of an attempt to provide a better product for the customer misdirected? Discuss.
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