Question

What are the lessons learned from McDonals, KFC and Burger King, in doing business for another company that wanted to expand their fast food overseas? Are there any lessons for service or manufacturing companies in their approaches?

Answer 1

McDonalds,Burger King,KFC are known and have their restaurant chains worldwide and it is all as a result of the franchising model adopted by these business giants.The success of these businesses can be attributed in part to the taste of the iconic shakes and burgers and fries. But the real secret ingredient has everything to do with how these companies have quietly become more a real estate company than a restaurant chain.

Most part of these business are represented by franchisee-run locations—people who agree to operate individual restaurants with a licensed privilege to the branding. But rather than collect a lot in royalties or sell its franchisees cooking equipment, these companies make much of its revenue by buying the physical properties and then leasing them to franchisees, often at large mark-ups.

When it comes to expansion, this business model allows McDonalds,burger king,KFC to have its cake and eat it, too. It keeps franchisees' skin in the game, reduces the amount of capital that these companies itself must dedicate to build new locations, but still allows the company to deploy a common set of standards, products, and procedures that are employed throughout the company.

This mantra of expansion is what that has led to the huge success of these restaurant chains and helped them to become a global phenomenon with thousands of restaurants in other parts of the world in such a less time.

There are numerous benefits of this approach and the other manufacturing and service companies can learn from this expansion model adopeted by these companies:

• First and the most important thing is that expansion requires a huge amount of capital and when that expansion is planned in a whole new country and continent altogether then the amount of investment required is unimaginable.Following the franchise model the job becomes way more easier and less time consuming as you partner with an already existing unit in a particular location saving yourself the trouble of all the infrastructure and everything.
• Second, most imporatnt part of expanison is the knowledge of the local market.If we see these restaurant chains then throughout the world they have maintained consistency with the infrastructure,service protocols and the product (here food) range but they modify their menu according to the culture of the paticular region or country.For eg they started to offer more vegetarian options when they expanded their business to India.The other companies too can adopt the same technique to offer better services and products in different regions.
• The tie ups with local local restaurant chains helps them to understand the culture and tastes better since these local units already know the culture and norms of the particular place.
• Franchises get up and running faster than other forms of ownership

• They are profitable more quickly.Supplies are cheaper for the franchisee by leveraging the company's supply chain

Thus there are lot of lessons that can learned from these restaurant chains which can help other companies expand their business worldwide and gain success in it.