McDonald's Tackles Repair of 'Broken' Service

McDonald's Tackles Repair of 'Broken' Service

By JULIE JARGON

McDonald's Corp., battling back from recent earnings disappointments, is putting unusual emphasis on a longtime challenge: getting its far-flung workforce to provide service with a smile. 

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A restaurant in New York City.

The fast-food giant, whose restaurant sales in the U.S. began to slip last year, is pushing franchisees to improve staffing and service amid mounting complaints about rude employees.

McDonald's is battling back from recent earnings disappointments, is putting unusual emphasis on a longtime challenge: getting its far-flung workforce to provide service with a smile. Joe Barrett reports. Photo: Getty Images.

In a webcast McDonald's executives held with franchise owners last month, the company said 1 in 5 customer complaints are related to friendliness issues "and it's increasing," according to a slide from the presentation reviewed by The Wall Street Journal. The webcast identified the top complaint as "rude or unprofessional employees."

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One slide said that complaints about speed of service "have increased significantly over the past six months." Another mentioned that customers find service "chaotic."

"Service is broken," said a slide from part of the webcast delivered by Steve Levigne, vice president of business research for McDonald's USA.

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One franchisee said McDonald's has renewed emphasis on customer service since Chief Executive Don Thompson installed Jeff Stratton, the chain's global chief restaurant officer, as president of McDonald's USA in November, after two consecutive quarters in which the company missed Wall Street's earnings expectations.

"The new leadership has decided to focus on customer satisfaction as a real driver for us to build the brand and build sales," this franchisee said, adding that the company had been gaining market share for years. "So for us to maximize the potential that's out there, we've got to be the leader in guest satisfaction," the franchisee said.

A McDonald's spokeswoman wouldn't comment on the webcast or on what the company is doing to address complaints, and declined to make executives available for interviews, citing a quiet period ahead of the company's earnings on April 19.

A McDonald's outlet in Des Plaines, Ill., in 1955. The chain is rolling out a new ordering system in the U.S. But she said the company continually evaluates its performance "through restaurant inspections [and] customer and employee feedback," and that "McDonald's USA and our franchisees are absolutely committed to doing even more to consistently deliver a great restaurant experience for every customer at every visit."

McDonald's, which has more than 14,000 U.S. restaurants, performed well throughout most of the economic downturn by sticking to its strategy of remodeling and tidying up restaurants and rolling out a steady stream of new menu items at a range of prices—from inexpensive snack wraps to more costly fruit smoothies—intended to appeal to more consumers.

But achieving speed and friendliness of service across the chain has been a particularly elusive goal, at least in part because about 90% of McDonald's restaurants in the U.S. are owned by independent operators.

In QSR Magazine's annual Drive-Thru Study, the only comprehensive industry comparison of customer service at fast-food chains, other restaurants have consistently outperformed McDonald's in those areas. In last year's study, the average service time at the McDonald's drive-through studied was 188.83 seconds, compared with 129.75 for industry leader Wendy's Co. Chick-fil-A had the top friendliness ratings. Out of the seven major chains in the study, McDonald's was second to last in the "very friendly" ranking, just above Burger King .

"I think it's an ongoing problem, and it always will be," another McDonald's franchisee said.

After McDonald's posted its first monthly same-store sales decline in nine years last October, company executives told investors that they underestimated the importance of "value" offerings for cash-strapped customers. The company has since added more items to its Dollar Menu and promoted those items in its ads.

That formula has started to help. In January, the company reported fourth-quarter earnings that beat analysts expectations, but Mr. Thompson cautioned that economic uncertainty still is expected to affect the company.

McDonald's shares have also rebounded since they took a hit last fall. In 4 p.m. trading Wednesday, they were up 43 cents at $101.49, near their record of $102.22 in January 2012.

Some analysts say McDonald's is continuing to lose customers.

During its webcast, McDonald's told franchisees that customers rate good service almost as highly as dollar value, pointing to a National Restaurant Association survey.

The reason behind the rise in customer complaints is unclear, but some franchisees say it could be partly because customers now have more ways to supply feedback. In recent years, the company has added an email address to its food packaging where customers can direct complaints, and restaurants in some regions of the country have recently started asking customers to fill out an online survey, using information on their receipts.

High employee turnover also could be a contributor. While McDonald's declined to comment on its turnover, fast-food restaurants have an average annual turnover rate of 60%, according to a 2010 report from the National Restaurant Association.

Monica George, a McDonald's employee in Brooklyn, N.Y., said she can understand why customers complain, and that there are frustrations on both sides of the counter. "Let's say I'm in front at the register and the grill's not pushing out food quickly enough. So you have to wait on food, and the customer is getting aggravated at you because you're not giving them the food quick enough, and the grill gets aggravated with the cashier because we're asking where the food is," she said.

Ms. George, who says she earns $7.25 an hour, said one problem behind slow service and inaccurate orders is that employees are trained to do specific tasks and don't always understand what other employees are doing.

Franchisees say the company is doing several things to improve service, from boosting staffing at peak hours to rolling out a new system for taking orders.

Under a new "dual point" ordering system that is being rolled out nationwide, the customer places an order at one end of the counter and is given a receipt with a number. When the order number appears on a screen, the customer picks up his food at the other end of the counter. The new position of "runner" has been created to do things like hand out cups and sauce packets, and fetch juice boxes for Happy Meals, freeing up the order taker to focus on the customer. The employee who delivers the food at the other end of the counter is supposed to thank customers and ask them to come again, according to franchisees.

"Dual point provides personalized one-on-one service which directly improves order accuracy," according to a memo the company has sent to some franchisees, and which was reviewed by the Journal. "To the customer, we appear friendlier and better organized."

At a downtown Chicago McDonald's that doesn't yet have the screens to display order numbers, but is starting to implement dual-point ordering by calling out the number on the receipts, service was fast and friendly on a recent day. Karen O'Mara, a legal assistant who has been a customer there for the past seven years, said she has noticed a change since the restaurant began using the new system last year. "It's gotten faster," she said.

"The service varies so much depending on which McDonald's you visit. It can vary from very friendly to very rude," said Jane Fiedler, an office manager who occasionally visits the same downtown Chicago location.

McDonald's also began using new software recently that helps restaurant owners decide the optimal number of employees to have on hand at a given time. And a new management structure, in which each manager is held accountable for a specific area of the operation, such as the kitchen or service, is expected to improve the customer experience, according to franchisees.

Write to Julie Jargon at julie.jargon@wsj.com

A version of this article appeared April 11, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: McDonald's Says 'Service Is Broken,' Tries a Fix.