Supply chain Comparison - McDonalds, Dominos, Pizza Hut India

FAST FOOD INDUSTRY World’s largest growing food type. Industrial growth is 40% a year. The organized pizza market in India is worth about Rs.675 crore. Foreign investments are worth Rs.3600 million (1/4th total investment in this sector) McDonalds India is the market leader in this industry.

MAJOR PLAYERS

McDonald’s History It started as a drive-in-restaurant in the late 1940’s. In 1966, McDonald’s was listed on the New York Stock Exchange. In June 1967, McDonald’s opened its first restaurant outside U.S in Canada. In 1996, McDonald’s entered India in a joint venture. McDonald’s now has a network of over 160 restaurants across the country

McDonald’s System – the World’s Best QSR experience World Market Leader in the QSR area (Quick Service Restaurant) Franchise System (75%) System employees: 1.6 million Customers Per Day: 58 million Corporate Strategy: QSC&V: Quality, Service, Cleanliness and Value Plan To Win -> Successful business revitalization

Products Vegetarian Menu

Non-Veg Menu

McCafe

Desserts

McDonald’s SUPPLY CHAIN McDonald’s Supply chain is based on the three-legged stool concept : Company – Franchisees – Suppliers Logistics  100 sales items in the restaurant  400 SKUs in the warehouse  200 restaurants per DC (~180 DCs globally)  Delivery frequency: ~3/wk, higher in urban areas  2-3 stops per route  Exclusive distributors (3PL)  Strong quality focus (Cold Chain, HACCP, QIP)

McDonald’s took 4 years and around Rs 450 crores to set up the food supply chain even before opening its 1st restaurant. McD India has pioneered the cold chain management system. They provided assistance in the Selection of high quality seeds Drip-irrigation technology Refrigerated transportation system

SUPPLIERS 1. Dynamix Dairy Industries (Supplier of Cheese) Fully automatic international standard processing facility. Network of milk collection centres equipped with bulk coolers. Dedicated quality program. Dedicated R&D centre

2. Trikaya Agriculture (Supplier of Iceberg Lettuce) Specialized nursery with a team of agricultural experts Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant. The pack house, pre-cooling and cold room are located at the farms itself to ensure no delay.

3) Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and Vegetable products)

World class infrastructure and support services. Separate processing lines for chicken and vegetable foods. Hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as -35⁰C.

DISTRIBUTION Radhakrishna Foodland Ltd.

Specialized in providing services procurement quality inspection storage inventory management deliveries data collection recording and reporting

Dry and cold storage facility Transportation trucks maintained at 22⁰ C Implemented ERP software.

OUTSOURCING THE INGREDIENTS ITEM

PLACE

Cheese

Dynamix Dairy Industries Ltd., Pune

Dehydrated onions

Jain Foods, Jalgaon

Iceberg lettuce

Trikaya Agriculture, Pune

Chicken patty

Vista Foods, Taloja

Veg. Patty, Veg. Nuggets, Pie’s

Kitran Foods, Taloja

Chicken (dressed)

Riverdale, Talegaon

Buns

Cremica Industries, Phillaur

Eggless mayonnaise

Quaker Cremica Pvt. Ltd., Phillaur

Sesame seeds

Ghaziabad

Fish fillet patties

Amalgam Foods Ltd., Kochi.

Vegetable for the patties

Finns Frozen Foods, Nasik and Jain Foods, Jalgaon

Mutton and Mutton Patties

Al Kabeer, Hyderabad

Quality Inspection Programme (QIP) carried out in the Cold Chain system. Hazard Analysis Critical Control Point (HACCP) Based on HACCP guidelines, control points and critical control points for all McDonald's major food processing plants and restaurants in India have been identified.

SUPPLY CHAIN INTEGRATION

OVERVIEW Founded in 1965 by Tom Monaghan. Second-largest Pizza chain in the United States. about 8,500 corporate and franchised stores in 55 countries. Domino's Pizza outlet in India opened in 1996. Close to 274 outlets in 55 cities of India. 70 percent of its revenue comes from home delivery service & around 30 percent is over-the-counter sales.

CORPORATE STRATEGY “ Exceptional people on a mission to be the best pizza delivery company in the world! " 'Think global and act local’ Fun, happiness and convenience

PRODUCTS Pizzas Pastas Breadsticks Cheese Dips Beverages Chocolava

OPERATIONS Indian operations are ranked number one for the past 3 years. Delivers an average of 1 million pizzas per day. Over the last 2 years, they opened stores in 15 new cities. The company operates in three segments: 1. Domestic stores 2. Domestic supply chain 3. International

1. Domestic Stores uses its company-owned stores as a testing ground for new products and technologies which may then be passed onto franchisees. generates income from company-owned stores in the form of store profits. 2. Domestic Supply Chain Vertically integrated supply system automatic delivery of raw materials cuts out a lot of the "back of-store" activities. Helps in keeping down food costs.

3. International consists of 3,469 franchised stores outside the United States. operates six supply chain centers which manufacture dough and distribute food and supplies. International segment accounts for about 41% of Domino's store sales worldwide.

DOMINOS SUPPLY CHAIN 1.

Procurement of raw materials

Raw materials like wheat, baby corn, tomatoes and spices are got, out of which wheat was bought in from jalandhar and then sent to the commissaries in refrigerated trucks. 4 commissaries (Regional Centralized Facilities) 1. Delhi 2. Bangalore 3. Kolkata 4. Mumbai

2.Distribution Pizza dough processed from the wheat is then sent to the retail outlets again in refrigerated trucks. Logistics requirement for sending frozen foods, at a temperature of ₋18⁰C and of refrigerated trucks in which food is sent at a temperature range of between 1 to 4⁰C.

3. Retail Outlets 1. Regular stores 2. Super stores : High traffic, More counters 3. Express stores : those where people were expected to walk in and order rather than ask for home delivery.

SUPPLY CHAIN DIAGRAM RETAIL OUTLET

WHEAT

REFRIGERATED TRUCK

DOUGH

WAREHOUS E

Outsourcing the Ingredients ITEM

PLACE

Wheat

Jalandhar (Punjab)

Cheese

Karnal, Haryana

Tomatoes

Bhubaneshwar, Orissa

Spice

South India

Baby Corn

Nepal

Exotic Vegetables

Sri Lanka

Pepperoni

Australia

Jalapeno

Spain

OVERVIEW one of the flagship brands of Yum! Brands, Inc. Frank and Dan Carney opened Pizza hut in 1958 12,500 restaurants across 91 countries Indian outlet opened in June 1996 in Bangalore. 147 restaurants across 36 cities in India. 27 per cent market share of the eatingout market and over 70,000 footfalls per day.

CORPORATE STRATEGY “We want to satisfy our customer by offering them the best” C.H.A.M.P.S (Cleanliness, Hospitality, Accuracy, Maintenance, Product quality and Speed) 3F’s ( Fun, Friendly and Familiar)

PRODUCTS Sauteed Pastas Beverages Appetizers Soups and Salads Pizzas Desserts

SUPPLY CHAIN SUPPLIERS Direct Suppliers

Pepsi Cremica Group (Buns) Indirect Suppliers

Meat market : Chicken from Brazil Vegetable market : Potatoes from Australia Sauce companies

COLD CHAIN LOGISTICS Snowman Frozen Foods provides cold storage facility 16 warehouses and 110 trucks Equipped with Carrier and Thermo King transport temperature control units. Cold storage capacity is between 100 tonnes and 1,200 tonnes.

Teradata Warehouse Miner largest customer data warehouse Profile and segment customer households Track phone orders & online orders Increased ROI Predict the success of a campaign Simplified data management

CONCLUSION Fast Food industry in India is growing at a fast rate. From the study done among the 3 fast food services – McDonalds, Dominos and Pizza hut, we can clearly come to the conclusion that McD with its superior supply chain management (cold chain) is able to balance between its quality and cost. The setting up of cold chain has enabled it to cut down on its operational wastage.

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