*Disclaimer – This isn’t a commercial blog post.*
 Back in 1940, brothers Richard and Maurice McDonald, founded McDonalds in San Bernardino, California, USA. Flash forward to 2022 and the fast-food giant has one of the most recognizable logos in the world and serves 68 million customers a day across 39,000 restaurants in over 120 countries and territories.
While the franchising model means that each restaurant has different owners, the menu remains almost the same no matter which McDonalds in the world is visited. This is logistically a big task and one that makes the supply chain particularly interesting.
The secret to McDonald’s supply chain success
Maximizing Long-term Supplier Relationships
The key to the success of McDonald’s supply chain was established by Ray Kroc, who is credited for turning the fast-food giant into one of the most successful in the world. His approach, which is still used today, relies on achieving mutual positive outcomes for franchisees, suppliers and employees.
Known as the 3-legged stool, the methodology is simple: When McDonalds succeeds so do its suppliers. The model allows the fast-food giant and its suppliers to help create value for each other rather than simply exchanging value. This therefore leads to more beneficial, long-term partnerships.
For example, one of the company’s largest distributors, The Martin-Brower Company, began by supplying paper napkins to the company’s Des Plaines, Illinois branch in 1956. Today, the supplier delivers supplies to almost all 15,000 McDonald’s locations in North America.
 Effective Vertical Integration
Typically, a restaurant will be the final part of the supply chain and will source ingredients from third-party suppliers. McDonalds, on the other hand, is the source of its products through effective use of vertical integration. McDonalds is integrated in every stage of the supply chain through partnerships with contracted suppliers. This means that the fast-food chain processes the meat themselves, grows its potatoes and transports its own materials.
As a result of McDonald’s taking control of the component and distribution element of the supply chain, it can achieve an overall lower cost for its restaurants. The use of these vertical integration techniques is the primary reason why McDonald’s is one of the cheapest fast-food chains in the world.
The future of McDonald’s supply chain
Environmental Sustainability
With new research showing that 1 in 3 people have said that they would refuse to buy a brand or product due to environmental or ethical concerns, many firms have made having a sustainable supply chain a priority.
McDonald’s is no different with the firm working on many different sustainability initiatives. For example, in 2018, the fast food giant announced that it had formed, alongside Starbucks, the NextGen Cup Consortium, which was formed to help develop both a hot and cold cup that can be completely recycled.
Alongside this McDonalds have pledged that, by 2025, 100% of the fast-food chain’s guest packaging will be sourced from renewable, recycled, or certified sources. In order to achieve this the firm has partnered with several environmental organizations like the Forest Stewardship Council (FSC) and the Program for the Endorsement of Forest Certification (PEFC), to ensure that all raw materials used in its packaging come from well-managed sources.
McDonald’s sustainability focus doesn’t limit itself to making it’s restaurants sustainable. The firm currently has the ambition to achieve net zero emissions across their entire business and supply chain in the UK and Ireland by 2040. Alongside this ambition the fast food giant is working with suppliers to reduce their emissions in line with the 1.5°C climate scenario pathway by 2030.
Reengineering the Drive-thru
McDonald’s plans to use AI technology to help revolutionize the way consumers use the drive-thru. The use of AI technology, according to McDonald’s, will help reduce service times and make the ordering process more efficient thus improving the overall customer experience.
Announcing its acquisition of Israel-based AI, a company focusing on personalization and decision logic, Dynamic Yield, in 2019, McDonald’s stated it is planning to use artificial intelligence (AI) to automate its drive-thru menus. This AI integration is set to take personalization to the next level with automated systems that can make real-time menu recommendations based on consumer trends, ordering habits, and even weather conditions.
In a bid to further automate its drive-thru, McDonald’s also acquired Apprente, a Silicon Valley company founded in 2017. The company will use Apprente’s speech recognition AI to understand drive-thru orders. McDonald’s also plans to use this technology in its self-order kiosks and mobile applications.
Final Thoughts
McDonalds has been and will continue to remain a global player. For such a large supply chain, the fast-food giant proves that tried and tested measures can prove successful. However, what McDonalds also proves by striving to innovate is that no matter how successful your firm is you can’t rest on your laurels, if you want to continue to have success.
What amazing supply chains do you know?
Check out some of our other picks including coca cola, toilet roll and fast fashion.
