Believe it or not, today’s manufacturing plants and fast-food restaurants have a surprising amount in common. What production lessons can manufacturers learn from the modern fast-food industry?

Step behind the scenes at one of today’s major fast-food restaurant chains and you’ll see an organization that is closer in spirit to a highly efficient manufacturing plant than a diner. The fast-food industry is remarkably profitable, and much of that success stems from the innovative methods used in managing restaurant supply chains, tracking inventory and maximizing the speed and quality of the food products delivered.

“Go into the kitchen of a Taco Bell today, and you’ll find a strong counterargument to any notion that the U.S. has lost its manufacturing edge,” Bloomberg BusinessWeek explains. “Every Taco Bell, McDonald’s, Wendy’s and Burger King is a little factory, with a manager who oversees three dozen workers, devises schedules and shifts, keeps track of inventory and the supply chain, supervises an assembly line churning out a quality-controlled, high-volume product and takes in revenue of $1 million to $3 million a year, all with customers who show up at the front end of the factory at all hours of the day to buy the product.”

According to the National Restaurant Association, the United States fast-food industry is forecast to bring in $167.7 billion in sales this year, a 3.3 percent increase over 2010. But this is only the latest gain in an industry that has steadily expanded over the past 50 years, thanks largely to its process-focused approach. Fast-food companies have typically relied on technological innovations and an increasingly sophisticated assembly line strategy as the foundation for their business model.

In most cases, the efficiency of the assembly line determined the texture, shape and taste of the food, with major fast food brands making their menu decisions according to what was operationally possible as much as on taste. This made an individual fast-food restaurant, in essence, a miniature factory.

“I think at Unilever, we had five factories,” Taco Bell CEO Greg Creed, formerly of the detergents and personal products division of Unilever, told BusinessWeek. “Well, at Taco Bell today I’ve got 6,000 factories, many of them running 24 hours a day.”

The similarities between manufacturing and fast food are so strong that seven years ago, the president’s Council of Economic Advisors considered reclassifying fast-food restaurants as manufacturers rather than segments of the service sector.

Yet in many ways, fast-food companies face a different set of operational challenges than manufacturers, especially considering the requirements of meeting direct customer demands and adapting their product offerings at short notice without compromising production efficiency. This degree of versatility can serve as a useful principle for manufacturers.

“[T]hink about how often a car plant changes over models. Sure one plant might build several models on a common platform and do an annual model change. But that model change is largely trivial; major changes happen much more sporadically,” economics blog Seeking Alpha notes. “Fast-food chains, however, compete in part by offering special, short-lived offerings. Thus, product design must be constrained by the production process while still offering the customer novelty.”

It’s also worth noting that fast-food chains must incorporate these strategies across thousands of locations, each of which is supposed to provide the same quality of products and services. Consequently, the production system must be flexible enough to handle a broad range of labor and consumer markets.

Business efficiency blog ValueStreamGuru.com offers additional fast-food principles that can, and in some cases already do, prove useful in manufacturing:

• Standardization of products and processes. A Big Mac is a Big Mac wherever you purchase it in the U.S., and this emphasis on reliable and highly standardized product offerings, as well as uniform production processes, is something fast-food companies have perfected.
• A production process approach, in which different work cells within an individual restaurant combine to make the finished product, allowing for maximum efficiency in each work unit.
• Just-in-Time (JIT) production that enables a quick run of products as they are needed, while also maintaining low volumes of popular products ready for sale.
• A flexible and multi-skilled workforce with each employee specializing within a role but also being trained to step into other areas whenever needed.
• Lean production that maximizes the use of a facility’s space. Fast-food kitchens are rarely large, but their output is tremendous, meaning they get the most from the limited space available.

Of course, not every fast-food restaurant operates in such a pitch-perfect manner. Someone only needs to pop into their local fast-food eatery to realize that franchises don’t always function precisely the way they are intended to on paper. However, the major chains have also refined their work processes in a way that minimizes discrepancies. This level of consistency, coupled with a focus on improving the customer experience, is arguably the key to fast-food success.

“The best restaurants are known for more than the food. People come for the experience: the anticipation and fulfillment; the lush scents and shared energy; the emotions and memories stirred. More than that, people come to renew relationships,” the American Management Association explains. “In business, you’re judged on every interaction. Often, it only takes one bad experience (or, more to the point, how it’s handled) to lose a customer — and that doesn’t count the damage from bad word of mouth (let alone online message boards). No, there are rarely second chances when you make a mistake.”

Earlier: Beefing up Food Industry Regulations

Resources

Taco Bell and the Golden Age of Drive-Thru
by Karl Taro Greenfield
Bloomberg BusinessWeek, May 5, 2011

Restaurant Industry Sales Turn Positive in 2011 after Three Tough Years
National Restaurant Association, Feb. 1, 2011

In the New Economics: Fast-Food Factories?
by David Kay Johnston
The New York Times, Feb. 20, 2004

Does American Manufacturing Expertise Now Reside at Fast Food Restaurants?
by Marty Lariviere
Seeking Alpha, May 9, 2011

What Can a Manufacturing Plant Learn from McDonald’s?
ValueStreamGuru.com

Business Lessons…from Burger King
by Jeff Schmitt
American Management Association, March 30, 2011