AN OVERVIEW - Part 16

Ray Kroc, the founder of the McDonald's chain, would explode in anger if he found a McDonald's parking lot littered. His franchisees were expected to keep not only their own premises free of litter, but also to see that there was no McDonald's litter on the streets within a radius of two blocks of their restaurants.

When speaking of quality in this context, what matters is the kind of quality that is relevant to the particular clientele being served. Hamburgers and fried chicken may not be regarded by others as either gourmet food or health food, nor can a nationwide chain mass-producing such meals reach quality levels achievable by more distinctive, fancier, and pricier restaurants. What the chain can do is assure quality within the limits expected by their particular customers. Those quality standards, however, often exceed those imposed or used by the government. As USA Today reported:

The U.S. Department of Agriculture says the meat it buys for the National School Lunch Program “meets or exceeds standards in commercial products.”

That isn't always the case. McDonald's, Burger King and Costco, for instance, are far more rigorous in checking for bacteria and dangerous pathogens. They test the ground beef they buy five to 10 times more often than the USDA tests beef made for schools during a typical production day.

And the limits Jack in the Box and other big retailers set for certain bacteria in their burgers are up to 10 times more stringent than what the USDA sets for school beef.

For chicken, the USDA has supplied schools with thousands of tons of meat from old birds that might otherwise go to compost or pet food. Called “spent hens” because they're past their egg-laying prime, the chickens don't pass muster with Colonel Sanders — KFC won't buy them — and they don't pass the soup test, either. The Campbell Soup Company says it stopped using them a decade ago based on “quality considerations.”

While a market economy is essentially an impersonal mechanism for allocating resources, some of the most successful businesses have prospered by their attention to the personal element. One of the reasons for the success of the F. W. Woolworth retail chain was Woolworth's insistence on the importance of courtesy to the customers. This came from his own painful memories of store clerks treating him like dirt when he was a poverty-stricken farm boy who went into stores to buy or look. Ray Kroc's zealous insistence on maintaining McDonald's reputation for cleanliness paid off at a crucial juncture when he desperately needed a loan to stay in business, for the financier who toured McDonald's restaurants said later: “If the parking lots had been dirty, if the help had grease stains on their aprons, and if the food wasn't good, McDonald's never would have gotten the loan.” Similarly, Kroc's good relations with his suppliers — people who sold paper cups, milk, napkins, etc., to McDonald's — had saved him before when these suppliers agreed to lend him money to bail him out of an earlier financial crisis.

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