Page 57 - Martin Westley Speaking 33-1/3

2
2004 Stewardship Report
People
Helping you provide friendly, accurate, fast service.
24 Hours/365 Days,
the Coca-Cola Technical
Team Works to Support
Your Restaurant Sales
The strength of a partnership is rarely revealed when everything’s going right. To get a true picture, take a look at how problems are solved. And for the McDonald’s and Coca-Cola partnership, the Customer Communications Center (CCC) at Coca-Cola is a good place to see efficient problem solving in action. All day, every day, the process is put to the test by standards of speed, accuracy, and friendliness. ®
The core technical services managed through the CCC are Phone Fix, which offers sup- port over the phone and saves restaurant managers from having to bring in a technician; SMILE Service, which dispatches technicians to restaurants for either reactive or scheduled service; and the Quality Maintenance Program, which performs a 400-point diagnostic in restaurants twice a year.
2004 Technical Support Highlights:
• Calls were answered in less than 2 rings 85% of the time.
• Phone Fix calls were handled in an average of 4.5 minutes,
with savings to restaurants totaling over $3 million.
• Technicians of on-site SMILE Service were dispatched within two minutes and arrived within four hours 60% of the time.
• 70,021 small parts were shipped to restaurants free of charge.
• In addition to Phone Fix Technicians, a team of four Quality Service Analysts, with an average of 20 years’ experience each, were on call for McDonald’s. They also provided 20 weeks of on-site equipment maintenance training.
• A rigorous new certification program was developed for third-party technicians performing Quality Maintenance Calls. (See story on p. 8)
Helping Restaurant Managers Focus on Sales
Over the years, the core services of the CCC have expanded to take advantage of the data collection capabilities and technical expertise of The McDonald’s Group. Victor Esposito, Group Manager of McDonald’s Operations Support Team, explains, “We focus on making the restaurant manager’s life easier. We do everything we can to help them serve and satisfy more customers.”
For example, the Warranty Collections Program saved restaurant managers the hassle of recovering over $174,000 on claims for defective parts. And through the Auto-Ship Program, 9,000 restaurants received filter cartridge packages in advance of their Quality Maintenance Calls so they didn’t have to worry about filter replacements that could be handled by the technicians while on location.
Spotting Trends, Making Improvements
3
What’s Inside Your 2004 Stewardship Report
The 2004 edition of our McDonald’s Stewardship Report honors the
50th anniversary of the McDonald’s Corporation and its partnership with The Coca-Cola Company. We appreciate your business and know that this great legacy was built on day-to-day teamwork with Owner/Operators.
As proud as we are of our mutual accomplishments, the true value of the
McDonald’s Philanthropy Inspires Coca-Cola Contributions
The Coca-Cola Company is proud to have supported the Ronald McDonald House Charities (RMHC) since the very beginning. From 1974, when the first house was built in Philadelphia, up to the present, Coca-Cola has contributed every year through grants and local fund-raisers, while employees have given time and talent by serving on RMHC boards and volunteering through local chapters.
Over the past 31 years, Coca-Cola has supplied free beverages to every Ronald McDonald House in the world. The proceeds from drinks sold by RMHC for a quarter each go back to the houses. With nearly 23 million sold, the total value exceeds $5.7 million!
Coca-Cola-Sponsored Crew Parties Support Fund-raising Success
McDonald’s restaurants gave customers the opportunity to “buy a hand” as a donation to RMHC on World Children’s Day in November 2004. To help build excitement around the fund-raising effort, The Coca-Cola Company sponsored $500 crew parties for 100 restaurants that sold the most hands. On this one day, McDonald’s raised over $8.6 million for RMHC.
How the Partnership Touches Lives Everywhere
Mike Slocum, The Coca-Cola Company’s Director of
Customer Relations, member of RMHC’s Global Advisory
Council, and recent host of the RMH/RMHC Executive
Directors during their conference in Atlanta, appreciates the opportunity to contribute to communities everywhere. “We can help make a difference in the lives of seriously ill chil- dren and their families through our association with Ronald McDonald House Charities. It has helped us fulfill our promise to McDonald’s to refresh and benefit everyone touched by the Coca-Cola brand.” ●
Partnership:
CELEBRATING 50 YEARS ON A HANDSHAKE
G. Scott Uzzell
Vice President, North America The McDonald’s Group of
The Coca-Cola Company
Stewardship Report is not in the history. We believe stewardship is about being careful, responsible managers of the beverage business you have entrusted to us. We look to the past to help us build the success of the future.
Coca-Cola Receives Three Awards from OPAC and Supply Chain
The awards McDonald’s presented at its U.S. Supply Chain Key Supplier Summit in October 2004 are a reflection of Ray Kroc’s “Three-Legged Stool” phi- losophy about the interdependency of the Company, franchise owners and suppli- ers, and the value of strong partnerships.
The Operator Purchasing Advisory Council (OPAC) “Partnering” award, given to The Coca-Cola Company, rec- ognizes the “partner spirit” in support of the Owner/Operators, restaurants, cor- porate staff, McDonald’s system, and the U.S. Plan to Win. Mark O’Shaughnessy, President of The McDonald’s Group of Coca-Cola, said, “This award means so much to us because it represents our day- to-day partnership with Owner/Operators and their restaurants.”
From the Supply Chain Division, The Coca-Cola Company also received the “Partnership” award and, along with Florida Plastics, the “Teamwork” award for collaborating on introducing new menu-boards system-wide in over 13,000 restaurants in 2004. ●
Continued from Page 1
The framework for this year’s report
is McDonald’s Plan to Win because our goal is to be a strategic partner supporting your growth and profitability. This is the daily focus of The McDonald’s Group at Coca-Cola, and on these pages you’ll have a chance to hear from people who are working on innovative ways to help build your business.
Our stewardship stories cover the breadth of our partnership in 2004
– helping you serve the highest quality drinks your customers want, improving operations support, developing new consumer research tools, and supporting crew and manager morale.
The business section of this report presents a summary of your beverage
sales for 2004 and adds up the value of the partnership to you personally. By many measures, 2004 was a year of success for our partnership. Together we grew the business by 2.8%, selling almost 106 million more beverage servings. And we’re pleased to report a gross profit increase over 2003 totaling $78,613,590 – that’s an average increase of $6,365 per store!
An integral part of this report is the Satisfaction Survey included as an insert. We ask that you take a few moments to share your thoughts and help us measure our performance. The survey responses we’ve received from Owner/Operators in the past have been used for continuous improvement of our programs and procedures.
In the year ahead, supporting your Plan to Win has a strong commitment from every level of our organization. We look forward to new opportunities to help generate more business in your drive-thrus and across your counters!
© 2005 The Coca-Cola Company.
“Coca-Cola,” “Coke,” “Diet Coke,” “Sprite,” “Minute Maid,” “Hi-C,” “Fruitopia,” “POWERADE,” “DASANI,” “TAB,”
“Step With It!,” “Phone Fix,” the Contour Bottle Design, and the Dynamic Ribbon Device are trademarks of
The Coca-Cola Company.
©2005 McDonald’s Corporation.
“McGriddle,” “Happy Meal,” “Go Active!,” “Chicken Selects,” “Super Size,” “Quarter Pounder,” “Egg McMuffin,”
“Filet O’ Fish,” and “Big Mac” are trademarks of McDonald’s Corporation.
NASCAR® is a national trademark of the
National Association for Stock Car Auto Racing, Inc.
The top 100 crews selling hands on World Children’s Day enjoyed parties sponsored by The Coca-Cola Company.
QSA Ronnie Brooks delivers technical prescriptions with a dose of good humor.
The Ultimate Technician: He’ll Fix Your Problem, Make You Smile... and Save You Money
Everyone knows Ronnie... Quality Service Analyst Ronnie Brooks, that is. They know him either because he’s been working for Coca-Cola for 30 years and in The McDonald’s Group for 10 and so many people have had the privilege of working with him, or because he’s so friendly you feel like you’ve known him forever the very first time you meet him.
Hearing his voice of experience punctuated with plenty of southern expressions is calming, even to callers who are sweating out an equipment crisis.
Not only is Brooks trying to keep the beverage equipment running right, he’s always thinking about how to reduce the cost
of installation and repair. Note
his involvement in two of the innovations in 2004 that saved money for Owner/Operators. ●
beverage lineup to include a lemon-lime beverage. They chose Sprite® to replace root beer and requested that Coca-Cola conduct a national conversion in 16 weeks over the summer.
This was a monumental challenge – no simple exchange of one beverage for another. The pungent root beer flavor had pen- etrated the lines, and Coca-Cola engineers concluded there was no way to flush out the lingering taste to use the same line for Sprite. But Rick Shultz, an Operations Manager on the Coca-Cola team, contributed a great idea: In the root beer line, insert a stainless steel liner that the residual flavor couldn’t penetrate. Move Diet Coke® over to this narrower line that only a thinner, sugar-free syrup could pass through. Then install Sprite in what used to be the Diet Coke line.
Coca-Cola dispatched teams of specially trained technicians across the coun- try, working through the night to avoid disrupting business in the restaurants. O’Shaughnessy orchestrated the implementation in the Midwest Region and remem-
bers McDonald’s President Ed Rensi saying, “We asked Coke to do the impossible and they did it.”
Today, Sprite is the world’s leading lemon-lime flavored soft drink, and in 2004, the total gross profit from selling 506 million servings of Sprite in McDonald’s U.S. restau- rants was approximately $356.4 million.
Vision for future profitability
An increasingly effective joint planning process has developed through a partnership based on trust and teamwork. G. Scott Uzzell, TMG Vice President, North America, has worked in The McDonald’s Group for 5 years and understands that this process is key to Coca-Cola’s support of local restaurants in meeting the goals of McDonald’s Plan
to Win.
“Moving forward,” Uzzell says, “we’ll have to be very flexible and innovative
to stay relevant and meet the rising demand for variety among McDonald’s cus- tomers. Our solutions to this challenge will include innovating the core and cap- turing more occasions with new packaging. We’ll continue the development of high-tech systems that increase efficiencies in the supply chain and operations. We’ll see the evolution of dispensing equipment and more space-saving inven- tions. And new technology will be used for product marketing and promotions that support McDonald’s differentiation as a consumer destination.”
In the future, the products, promotion, and delivery in the business shared by Coca-Cola and McDonald’s may change radically, but the formula for partner- ship won’t. It will still include the essential ingredients that the original Owner/ Operator and his Coca-Cola partner put into their relationship: trust, commit- ment to quality, expansive vision, and teamwork for growth and prosperity. ●
In 2004, McDonald’s U.S. restaurants sold 506 million servings of Sprite,® the world’s leading lemon-lime flavored soft drink, delivering a total gross profit of over $356 million.
Innovations That Deliver Savings for Owner/Operators
SMILE analysts solve specific problems, but they have a broader mission to make beverage operations smoother and more cost-efficient for McDonald’s system-wide. Here are a few examples of 2004 innovations that save Owner/Operators time and money: ●
that need only the lift cylinder save 37% off the cost of the standard
kit – almost $400. QSA Kevin Rogers determined that in many cases, only
the lift cylinder was needed out of the standard kit. Starting in June, the number of complete kits ordered was reduced by almost half.
● Up-Front Beverage Bar – A small restaurant saves $1,000 in equipment costs and 17 hours of labor. In 2004, system savings totaled $175,000
and 3,000 labor hours. New, smaller restaurants required so many adjustments to the standard package that QSA Ronnie
Bs a r v o e o d k s m c o r e n a e t y e a d n a d k l a i t b d o e r s . i g n e d f o r t h e m t h a t
● QLT Shell – A new shell is available that comes with a warranty, is cost- effective, and minimizes downtime when a repair is required. When
the QLT failed due to refrigeration components, remanufactured units weren’t available, and restaurants had to buy a new unit or remove and rebuild the old one. McDonald’s Group Operations Manager Dan Bruns and QSA Ronnie Brooks
came up with the innovative alternative
of removing the interior platform and inserting it into a new shell to cause less disruption in the restaurant. Coca-Cola worked with the manufacturer to design the shell. ●
Phone Fix®
Advisor Tim Ward references ABS equipment while coaching a caller through
a repair. Ward says, “McDonald’s employees are good to work with. They’re well-trained and willing to take the necessary steps.”
aintenance data which technicians routinely tention. Then Coca-Cola analysts, technicians, olutions for persistent problems, sometimes -engineer parts.
Cola identified a problem in the ABS conveyor the manufacturer worked together to get the About 15-20 days after the installation, techni- t to restaurants. As a result, the number of ABS
Senior Technical
ABS Lift Assembly – Restaurants
The CCC database captures repair an analyze to identify trends that need specia and operations managers work on bett engaging the equipment manufacturers to
In 2004, as a result of this process, Co and motor. Then McDonald’s, Coca-Cola, new part made and installed in restauran cians provided training and service at no service calls in 2004 dropped significantly.
2004 Stewardship Report
Promotion
12
13
CELEBRATING 50 YEARS ON A HANDSHAKE
Stepping Into the Health
and Wellness Spotlight
Go Active!TM Happy Meal Promotion Makes McDonald’s a Destination for Healthy Choices
Menu-Board Toppers Contribute to Sales Growth
Great Southern Region sees increases in new combo meals during summer months
When McDonald’s Great Southern Region Marketing Director Bob Kim noticed an increase in dessert sales in drive-thrus a couple of years ago, he knew that the success was a result of more than the warm weather. They came up with
an innovative idea that put a new twist on a
tried and true bundling strategy. It was an FP43
menu-board topper for the drive-thru that could
be used to introduce new Extra Value Meal
combinations on a rotating basis.
Supporting your marketing efforts to connect with consumer lifestyles and values.
All-American Teamwork
McDonald’s and Coca-Cola Celebrate Young Basketball Talent and Raise Funds for RMHC
When East meets West at the McDonald’s All American High School Basketball Game, it’s always a thrilling contest that showcases young talent on a court of fame. Each boy and girl athlete has hopes of rising to stardom just like All-American alumni Magic Johnson, LeBron James, Dwight Howard, and Candace Parker.
This event, along with the POWERADE Jam Fest, sponsored by Coca-Cola, is a great gift to the cities where it’s held and to the communities across the nation that are home to the young stars. It’s also a gift to Ronald McDonald House Charities, which has been the recipient of over $3 million from event proceeds since the game began in 1978.
For 28 years, McDonald’s and Coca-Cola have teamed up to bring the games to life in local markets with commemorative cups and POP that ignite the excitement of the game and promote the brands. ●
In the spring of 2004, all acros print media broadcast news of the d Happy Meal for adults. This big splas promotions and advertising. It thru with DASANI into the national spotlig commitment to offer the healthy want.
With this promotion, McDonal meal bundle into an endorsement o including a StepometerTM and advic sonal trainer, Bob Greene.
“The development of the Go Stepometer is a great example of th Cola beverages play a supportive and said Tom Lynch, Vice President of N Coca-Cola.
“When McDonald’s was looking activity into the meal concept, Coca- to use our Stepometer, a trademar middle-school education program. this contribution.”
In addition to positioning McDon and wellness choices on the menu promotion played a role in suppor premium salads and bottled water. S
In McDonald’s healthy new menu, DASANI® plays a supporting role.
untry, TV, radio, and cDonald’s Go Active! gave a great lift to the remium salad paired ublicized McDonald’s ices that consumers
ed a contemporary ed, active lifestyles by Oprah Winfrey’s per-
promotion with the y created when Coca- t role for McDonald’s,” ustomer Relations at
y to infuse action and anged for McDonald’s n and are using in a very happy to make
a place to find health Active! Happy Meal reased sales of new ASANI increased 59%
rketing
Kings Island
The team reviewed their seasonal market data and realized that consumers – especially young men – are more physically active and out later at night in the summer. The first promotion last summer, “Go Big!,” specifically targeted this audience with two Big Macs and POWERADE. Its success showed the team that their market- ing strategy worked, and everyone was pleased as weekly unit sales of both EVMs and bever- ages increased with the temperature.
The momentum from “Go Big!” propelled the promotions into other consumer demo- graphics: the team has paired premium sal- ads with Diet Coke or DASANI, and now the menu-board toppers are featuring the new Fruit ‘n Walnut Salad. The toppers give Owner/ Operators the opportunity to market soft drinks and bottled water as part of their EVMs and meal bundles.
Leading sales of EVMs and Big Macs
Overall, the sales results were outstanding: the region not only led the Central Division’s sales of EVMs, but its sales of Big Macs were the highest in the nation.
McDonald’s collaborated with Coca-Cola to launch the new menu-board topper program in the Great Southern Region with the “Go Big!” EVM, which successfully targeted young males.
The drive-thru menu-board topper increases awareness and sales of healthier combo meals, like Fruit ‘n Walnut Salad and a low-calorie CSD or bottled water.
For the 2004 All American High School Basketball Game in Oklahoma City, McDonald’s and Coca-Cola collaborated on high-impact POP, like this life-sized cutout of LeBron James, to create excitement in the stores, raise money for RMHC, and promote their brands.
Promotions Around the U.S.
POP atop registers in Oklahoma City promoted six, 32-oz. collectible McDonald’s All American cups in the months prior to the game.
®
Happy Meal Choices
Moms and kids love the new choices, includingMinuteMaid® AppleJuice co-branded with Ronald McDonald.
Nine months into the program, Ebrahim Maghsoud, president of the Mobile, Alabama Co-Op, agrees with Such and Kim that the alignment of the menu-board toppers throughout the region has contributed to the success the Owner/Operators are having. For the past five months, the Mobile Co-Op has led the country in sales, and EVM sales have increased a solid eight percent. Maghsoud and other Owner/Operators are looking forward to new menu options and the likely return of the “Go Big!” promo-
over the previous year.
●
tion this summer.
●
Local Stor
NASCAR®
Putting the power of NASCAR to wor for McDonald’s drives beverage sales in select markets.
A trayliner promoting water park discounts is an example of partnering with locations to bring in new customers.
Youth Soccer Kits
POWERADE® helpedfuelMcDonald’s program for youth soccer leagues with event kits that scored big for players, coaches, and store managers.
Fanta
Promotions for the bold fruit- flavoredFanta® targetethnic teens and young adults.
Holiday Cups
Cups featuring the Coca-Cola Polar BearandSundblomSantahelpdrive increased beverage sales during the Holiday season.
NCAA
The high-profile NCAA sponsorship wins awareness and energizes sales.
® Chicken Selects
Coca-Cola brings opportunities to encourage Chicken Selects purchases and large drink up-sizing with ollectible Olympic cups.
c
dm l at er s re ca- and ts. cos ●
s the co ebut of M h of PR st the p htandp new cho
d’s turn f balanc e from
Active!
e synerg relevan ational C
for a wa Cola arr k we ow We were
ald’s as
, the Go ting inc ales of D
e Ma
k
“Hello, I’m Ray Kroc and I want to buy some Coca-Cola®.” This was how the conversation began one February day in 1955, when Waddy Pratt, North Chicago’s Coca-Cola District Manager, answered the phone. Kroc explained that he had tried all the cold drinks out there and decided Coca-Cola was the best. Then he added, “I’m going to
open up a thousand stores.”
Pratt recalls
“Ray Kroc wanted things to be right, and he wanted to give the customer the very best that he could.”
how crazy the idea of a thousand stores sounded to him in those days. But when he finally met Kroc, the two of them clicked – they were both natural- born salesmen. They struck a deal, shook hands and sealed a partnership that is still based on a hand- shake – 50 years, more than 30,000
restaurants, and 119 countries later.
When reminiscing about his close friend and business counterpart, Pratt describes the fundamental values that have endured with McDonald’s: “Quality was Ray’s big thing. He wanted things to be right, and he wanted to give the customer the very best
Ray Kroc’s first store. In the early days, Coca-Cola was selling for 10 cents.
In 1955, when Ray Kroc called Waddy Pratt
at Coca-Cola, it was the beginning of
that he could.”
a legendary business partnership and friendship destined to unite two of the world’s most powerful brands.
2004
50th ANNIVERSARY EDITION
The Stewardship Report CELEBRATING 50 YEARS ON A HANDSHAKE
The Formula for a 50-Year Partnership:
Created by the Original Owner/Operator and His Soft-Drink Rep
How the partners built the business
Pratt managed the account for almost 30 years and worked closely with Kroc and Fred Turner as they grew McDonald’s to become the world’s leading foodservice retailer. McDonald’s became Coca-Cola’s largest account, and Coca-Cola became McDonald’s largest supplier.
ment with only three leaders over five decades.
Kroc wanted to work on trust
with McDonald’s. We can do what’s needed today and plan together to drive this busi- ness forward.”
Meanwhile, the initial partnership between two businessmen evolved into today’s vast network of day-to-day part- nerships between Owner/Operators and regional Coca-Cola representatives work- ing together to increase beverage sales and profitability.
John Gillin succeeded Pratt in 1983 during a time of rapid international expan- sion when both brands became truly global. In every international market where Coca-Cola already had a presence, they helped McDonald’s set up the infrastructure to start doing business. Then McDonald’s reciprocated by introducing new custom- ers to Coca-Cola beverages. In 2001, Gillin passed the baton to Mark O’Shaughnessy who became Group President and inher- ited the legacy of doing business on a handshake.
Recognizing the handshake as integral to Kroc’s business philosophy from the very start, O’Shaughnessy explains, “When Kroc tried to convince people that they should open a restaurant, he invited them to be a part of the McDonald’s family. He always used the term family... or McFamily, as he would say. He didn’t want to be constrained by a contract. He wanted to work on faith, trust, and performance.
How a great idea helped meet a business goal
While the business has grown dramati- cally, The McDonald’s Group at Coca-Cola has benefited from continuity of manage-
Achieving business goals in a manner that meets the high standards set by both McDonald’s and Coca-Cola hasn’t always been easy. One of the remarkable sto- ries O’Shaughnessy recounts is from 1984 when McDonald’s wanted to expand their
PEOPLE
PRODUCT
PLACE
See Partnership Page 2
PRICE PROMOTION
Success rates and savings from 24/365 technical support increased
Low-cal, non-carb, caffeine-free Minute Maid ® Light Lemonade shows profit potential.
Neon lights up sales in
East Division promotions
Targeted bundling strategies drive transactions
and CSD sales. page 11
Aligned partnership develops healthy choices with Go ActiveTM Happy Meal for adults. page 12
in 2004.
page 7
of extended hours. page 9
page 3
SEE YOUR PERSONALIZED PARTNER BENEFITS SUMMARY ON PAGES 4 & 5 – YOUR BUSINESS
“Working on a handshake keeps our focus where it should be – on our alignment