OPS 802

Assessment 4

Poonam Singh
6585450

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EXECUTIVE SUMMARY

Fast food industry consists of food outlets serving meals and snacks to go or for
immediate consumption. This industry has unique characteristics which is why operational
challenges in this industry regarding production and service delivery are dealt with
differently. The success in this industry is highly dependent on creating value to
customers, service quality and customer satisfaction. In this report, we study the
established and emerging value propositions along with study of using blockchain
technology to revolutionise supply chain. We also provide a flowchart showing order
fulfilment process of Mc Donalds to understand the flow of operations in the restaurant.
Part 4 describes relationship between service quality and profitability in the fast food
industry followed by potential operational challenges that restaurants might face. In the
end we provide recommendations for managers to improve service operations.

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TABLE OF CONTENTS

Title Page Number

1 Established and Emerging Value 4

Propositions in the Fast Food Industry

2 Process Map of Order-Fulfilment Process 6

at Mc Donalds

3 Application of Block Chain in the Fast 7

Food Industry

4 Relationship between Service Quality and 8

Profitability

5 Potential Operational Challenges 9

Implementing Blockchain

6 Recommendations 10
7 Conclusion 11
8 List of References 12

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1. Established and Emerging Value Propositions in the fast food industry

Consumer value proposition has a critical role in communicating how a company aims to
provide value to its customer, ultimately increasing the number of customers and by doing
so, adding value to the business as a whole (Payne, Frow & Eggert 2017)
Consumer value proposition is not only limited to a particular industry, new strategies are
being formed so as to attract the potential customer in anyway which is necessary.

1.1 Established Value proposition in the fast food industry.

There are many already known and established propositions which are in place, as we
have seen with most of the fast food established brands. The following are the few major
points, which a consumer is on the lookout for:
1) Consistency in the quality of the food
2) Estimated wait time to place the order
3) Wait time to receive the order
4) Value for money
5) Cleanliness
6) Locations

(Lee & Ulgado Francis 1997)

1.2 Emerging Value proposition

The fast food industry has revolutionised itself in the past decade or so. Since the
customers have various demands and would not settle for just any service, they want
better, quicker, healthier and easier food to eat. This is the competitive market the fast
food industry is in (Kearney 2010).
The market is constantly changing. It started with the religious sentiments of customers,
like halal chicken. The next came the use of technology, which is to say app-based food
ordering. There you have home delivered and pick up food. Providing healthier ingredients
and having health and energy generating foods (Creel 2008). The new trend of vegan food
has also successfully integrated in the fast food sector. This has lead to introduction of
plant based meat. The multi-national fast food chains also have to take into account the
menu based on the consumers in a particular country. In current times, where people are
quarantined due to COVID-19, pandemic, the latest emerging value proposition is fast food
restaurants giving out grocery. Mc Donalds is giving out grocery essentials like milk, eggs
and bread to their customers in ACT and NSW in Australia (Belling 2020). This is how they
change and alter their market offering in times like these and try to create superior value
for its customers by helping the community.

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2. Process map of Order-Fulfillments process at Mc Donalds

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3. Application of Blockchain in the fast food industry

Blockchain technology is a way of sharing and storing information with a network of users.
It provides real time information on the transactions happening between the users. In a
fast food industry context, a blockchain allows all the vendors within the network to view a
product’s record from start to finish, till the customer is served. Blockchain helps in
simplifying the supply chain through easy and real time tracking of information related to
goods, their quality, shipment and delivery information.
One of the most expected part of doing business in the fast food industry is expired,
unsafe and tainted food products arriving in the restaurants. To avoid arrival or even usage
of unsafe food products by tracing their origin and safety certifications, blockchain
technology can help fast food industry players in ensuring transparency of such
information (Edmund 2018). Where more and more consumers are now having food safety
concerns and demanding to know where the food comes from, blockchain in this scenario
can include farmers, processors, distributors to track its path. It can also make a difference
for consumers as well as this technology ensures transparency and information like
livestock harvesting location, vaccination, transportation, etc can be easily conveyed to the
consumer (Edmund 2018).

The quality of food supplied by any fast food restaurant depends on quality of raw food
material used in delivering a good and consistent quality meal. Adopting blockchain
technology will help companies monitor the source of raw material for quality management
purpose (Chen et al 2020). With increased competition in the fast food industry and
tightened food safety regulations, blockchain can help in regaining and reenforcing trust by
giving a virtually fraud-free tracing of transactions (Scott 2018). Chen et al. (2020) points
out that “The emerging blockchain technologies, which improve transparency, security,
and durability of supply chains, show promise for addressing the current limitations of food
supply chain management”.

Outsourcing and globalisation has made supply chains more complex than before. Due to
this, there is an information asymmetry, chances of dishonesty and hidden information
between supply chain partners. This creates a lack of trust between the members and
becomes the reason for poor performance of supply chain. Blockchain technology in this
scenario, plays the role of “one trusted ledger” for automated and verifiable information
sharing (Wan, Huang & Holtskog 2020).

Further benefits to adoption of blockchain technology in fast food industry would be the
enhanced efficiency of supply chain through standardisation of transactional data,
improved inventory management and lead times. Adoption of blockchain is beneficial to all
stakeholders involved. It eliminates the need for intermediaries, eases payments, improves
customer relationship management and can also help in government supervision (Chen et
al. 2020).

4. Relationship between Service Quality and Profitability

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The fast food industry is highly customer oriented as it is based on direct interaction with
the customers. Therefore enhancing customer satisfaction runs in the forefront of any fast
food restaurant manager’s mind by delivering quality service and in turn generate profits
by leveraging on the benefits of satisfied customers. Therefore there exists a strong
interrelationship between customer satisfaction that brings customer loyalty and ultimately
leads to incentives for the business such as profit, growth and competitive advantage (Liu,
Lee & Hung 2017). Rust et al. (1995 cited in Zeithaml 2000) provides a Return on Quality
(ROQ) approach that measures impact of enhancements in service quality on the profits of
an organisation. Once the quality perception of a product matches a customers standards
continually, only then, a customer becomes a loyal and he will start to spread the word
(Parast & Fini 2010). This in-turn leads to, more customers which want to try out the
service quality which is being offered (Ghobadian, Speller & Jones 1994).
Once you have customers who generate more customers, and once you have got your
logistics right, you can expand and that’s how multi-national chains like Subway,
McDonalds, KFC, came to be. They are all profitable businesses. Thus, you can say that
service quality and profitability is interrelated (Cho & Pucik 2005).
The current trend of consumers are always after more. Thus the quality of the food has to
constantly increase, for example, there are vegan consumers, halal meet consumer,
gluten-free and dairy-free consumers etc. This is where the Blockchain in supply chain
integration has become revolutionary. Everything is micromanaged using Blockchain and it
provides a form of transparency which wasn’t there before in the service industry. It helps
consumer know what they are buying and feel confident in what they are buying. Be it a
bottle of water. Once the consumers trust the service quality, the interrelation between
service quality and profitability naturally comes into effect.

5. Potential Operational Challenges Implementing Blockchain

• Collaboration issues

Supply chain networks are highly competitive, members may be unwilling to share
information as it is highly visible to inappropriate members as well. This is why
implementing blockchain in the network might create some conflict of interest between the
members and result in slowing down the operations (Wan, Huang & Holtskog 2020). It is
also difficult to change people’s mindsets about operational protocols as many
stakeholders are involved and data ownership is difficult to define.

• Technological issues

There is an issue of blockchain performing alongside with currently implemented supply

chain networks of each stakeholder within the chain. There is also a chance of blockchain
overcomplicating the existing supply chain system.

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• Privacy and Security issues

With increasing numbers of members in the supply chain network within the fast food
industry, blockchain can potentially cause some privacy and security issues. This is a
costly technology to implement and due to high level of transparency there might be
resistance among supply chain actors as they would want to protect commercially
sensitive information from their end. Although it ensures trust, supply chain could be
damaged if such systems are hacked and data manipulation can still occur if it is entered
manually (Wang et al. 2019).

• Immature Application

It is not necessary that all the members of the supply chain are familiar with the technology
and this creates room for misunderstanding. Users’ acceptance and supportive business
processes and technology is crucial to its implementation (Chen et al. 2020).

6. Recommendations

In the fast food industry, it is very important to constantly leverage customer satisfaction
aspects by delivering superior service. Fast food restaurants can improve their service
operations by improving in different areas of operations management. Some
recommendations for managers to improve service quality are as follows:
• Quality Function Development: This refers to identifying factors that influence customer
satisfaction and translating those factors into target design. Making changes to improve
the layout of the restaurant, hiring more staff and efficient inventory control and
management and constantly improving food quality and transparency of operations
using technologies like blockchain.
• Supply chain management practices: According to Kanyana, Ngana & Voonc (2016),
“Supply chain management (SCM) is the management of different types of physical,
information and financial flows from the raw materials to final outcomes in which
materials, suppliers, manufacturers, distributors and customers are working
together.” In order to improve supply chain management practices, it is recommended
to create strategic supplier partnerships as each member contributes to the overall
performance of the supply chain. Adoption of blockchain can really revolutionise this
aspect of operations by creating transparency and increased trust among supply chain
partners.
• Ethics and Sustainability: Ethics and sustainability are a vital part of every industry due
to its growing awareness in the public. Therefore it is recommended that fast food
restaurants ensure that their operations are ethical and they employ sustainable
solutions with effective waste management, reduced energy consumption, using
renewable energy wherever possible. Managers are also recommended to create a
code of conduct in order to ensure ethical practices in food preparation process
(Kanyana, Ngana & Voonc 2016)

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7. Conclusion

This report shows that consumer value proposition has become critical in the emerging
marketing strategies for all the major fast food companies and is a crucial component to
consider the emerging needs of the market. It is clear that adoption of blockchain
technology in fast food industry would lead to enhanced efficiency of supply chain through
standardisation of transactional data, improved inventory management and lead times and
building trust between trading partners.
It is established that there exists a strong interrelationship between customer satisfaction
that brings customer loyalty and ultimately leads to incentives for the business such as
profit, growth and competitive advantage (Liu, Lee & Hung 2017). This is the reason why
there is a need for operational managers to improve service quality continuously with new
and innovative strategies.

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8. List of References

Belling, A 2020, ‘Heads up – McDonalds is now stocking milk, bread and other groceries’,
The Brag, 11 April, Viewed 21 April, <https://thebrag.com/heads-up-mcdonalds-is-now-
stocking-milk-bread-and-other-groceries/>

Chen, S, Liu, X, Yan, J, Hu, G & Shi, Y 2020, ‘Processes, benefits, and challenges for
adoption of blockchain technologies in food supply chains: a thematic analysis’,
Information Systems and e-Business Management, pp.1-27.

Cho, HJ & Pucik, V 2005, ‘Relationship between innovativeness, quality, growth,

profitability, and market value’, Strategic management journal, vol. 26, no. 6, pp.555-575.

Creel, JS, Sharkey, JR, Mcintosh, A, Anding, J & Huber, JC 2008, ‘Availability of healthier
options in traditional and nontraditional rural fast-food outlets’, BMC Public Health, vol. 8.

Edmund, M 2018, ‘On the Fast Track?’, Quality Progress, vol. 51, no. 2, pp.10-12.

Ghobadian, A, Speller, S & Jones, M 1994, ‘Service quality’, International journal of quality
& reliability management.

Kanyana, A, Ngana, L & Voonc, BH 2016, ‘Improving the Service Operations of Fast-food
Restaurants’, Procedia-Social and Behavioral Sciences, vol. 224, pp.190-198.

Kearney, J 2010, ‘Food consumption trends and drivers’, Philosophical Transactions of the
Royal Society B: Biological Sciences, vol. 365, pp. 2793-2807.

Lee, M. & Ulgado Francis, M 1997, ‘Consumer evaluations of fast‐food services: a cross‐
national comparison’, Journal of Services Marketing, vol. 11, pp. 39-52.

Liu, WK, Lee, YS & Hung, LM 2017, ‘The interrelationships among service quality,
customer satisfaction, and customer loyalty: Examination of the fast-food industry’, Journal
of Foodservice Business Research, vol. 20, no. 2, pp.146-162.

Namin, A 2017, ‘Revisiting customers' perception of service quality in fast food

restaurants’, Journal of Retailing and Consumer Services, vol. 34, pp.70-81.

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Parast, MM & Fini, EEH 2010, ‘The effect of productivity and quality on profitability in US
airline industry’, Managing service quality: An international Journal.

Payne, A, Frow, P & Eggert, A 2017, ‘The customer value proposition: evolution,
development, and application in marketing’, Journal of the Academy of Marketing Science,
vol. 45, pp. 467-489.

Scott, N 2018, ‘Here's how blockchain can return confidence to Australia’s food industry’,
Business Insider, 8th December, viewed 20th April 2020,
<https://www.businessinsider.com.au/blockchain-may-help-australias-food-industry-2018-
12>

Wan, PK, Huang, L & Holtskog, H 2020, ‘Blockchain-Enabled Information Sharing Within a
Supply Chain: A Systematic Literature Review’, IEEE Access, vol. 8, pp.49645-49656.

Wang, Y, Singgih, M, Wang, J & Rit, M 2019, ‘Making sense of blockchain technology:
How will it transform supply chains?’, International Journal of Production Economics, vol.
211, pp.221-236.

Zeithaml, VA 2000, ‘Service quality, profitability, and the economic worth of customers:
what we know and what we need to learn’, Journal of the academy of marketing science,
vol. 28, no.1, pp.67-85.

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