11 Dec 2017
Growing from Within
What McDonald’s learns from running its own restaurantsby Dan MorrellTopics:
Photo courtesy of Paulo Pena
The great majority of McDonald’s U.S. restaurants are run by external owner/operators. Paulo Pena (MBA 2004) is responsible for the rest. As vice president and managing director of McDonald’s USA, Pena manages all McDonald’s-operated locations in the US, and counts consumer experience, increased sales, and sustainable profits among his charges. We asked him about the pros of corporate ownership, the data that drives his strategy, and—naturally—his regular order.
McDonald’s owns and operates about 10 percent of its own restaurants, and there’s an obvious cost to that arrangement. But what are the benefits that company ownership offers McDonald’s?
In the US, the McDonald’s Operating Company, McOpCo as we call it, plays an important role for the McDonald’s system: providing direct access to customers to understand their expectations; helping us understand impact at the restaurant level of initiatives we are rolling out; and developing a pipeline of talent for the company.
What have you seen as the largest growth drivers in the past 12 months?
It all began with a renewed focus to better understand our customers through insights and the competitive landscape. This led us to the comprehensive multi-year growth plan we are rolling out today. Our customers have responded very well to new menu offerings we have launched this year including our Signature Crafted sandwiches and new McCafé flavors as well the our value offerings including our $1 any size soft drink promotion.
Our future also requires that we keep challenging ourselves to improve and innovate and we are excited about the way we are elevating the customer experience through more modern restaurants, delivery and mobile ordering and pay. When we combine execution with ambition, I have no doubt we will make the most of our strategic priorities—for our customers and our business.
What are the numbers that you pay the most attention? What data helps you get a picture of a store’s overall health?
We are a metrics-driven organization. We look at sales and guest counts on a daily basis across the restaurant portfolio as well as operating metrics such as speed and accuracy of service and food quality. Also very important are customer and people metrics. The success of our business largely depends on the engagement and motivation of our restaurant teams, therefore I pay close attention to our people metrics, particularly those relating to crew retention. In addition, we also want to know what our customers are telling us and experiencing at the restaurants every day.
All of these metrics combined give us a good picture of a restaurant’s performance and now it’s delivering on customers’ expectations.
How did your previous experience at Wyndham and Starwood translate into this role?
My prior experience in hospitality has been very relevant. At their core they are both consumer-branded service businesses where delivering great hospitality and customer service are important. We track closely the voice of the customer. Both hotels and quick service restaurants are also primarily people businesses where having high-performing teams that are engaged and motivated at the store level, restaurant or hotel, is critical to the delivery of great customer service. My earlier experience at Coca-Cola has been very helpful as it instilled a strong focus on the consumer. Listening to our customers and delivering on their expectations is key to our growth strategy. From my experience, growth comes through focus. Focusing on a few important things and doing them really well helps drive growth and success.
What’s your go-to McDonald’s order?
Egg McMuffin with McCafe Cappuccino for breakfast and Signature Sriracha burger for lunch. As a kid, a cheeseburger with fries after school was my daily routine.
Class of MBA 2004, Section G