Quality Management at Kentucky Fried Chicken Upay M. ApPTE Cox School of Business Southern Methodist University Dallas, Texas 75275-0333 CHARLES C. REYNOLDS KFC National Management Company 5605 North MacArthur Boulevard, No. 650 Irving, Texas 75038 Kentucky Fried Chicken (KFC) Corporation, a member of the quick-service restaurant industry, uses a sophisticated program to manage the quality of service it offers to its customers. In the last quarter of 1989, the south central division of KFC launched a test program in four Oklahoma City restaurants to improve the speed of service at its drive-through-window operation. It proved extremely successful. The restaurants cut service time by more than half while improving labor productivity. They also dramatically outperformed other restaurants in the division in profits, sales growth, and growth in customer transactions. The improved processes in the test restaurants have served as benchmarks for other KFC restaurants aiming for continuous process improvement, while the reduced service time now serves as the revised specification in KFC’s quality measure- ment and management program. Kee Fried Chicken (KFC) Corpo- ration, USA, is a member of the Pep- sico family of quick-service restaurants, Es- tablished in 1952, the KFC system consists of 2,000 company-owned and over 3,000 franchised restaurants, In 1992, KFC gen- erated sales of over $3 billion while serv- ing over 600 million customers. KFC has several basic types of restaurants; the most common type being a dine-in restaurant with a customer seating area that includes a condiment bar and a drive-through- ‘Copret #1995, Inshtate for Operations Research and the Management Sevences (091-2102/95/2503,/0006801 25 ‘This paper was vefereed INDUSTRIES—AGRICULTURE/FOOD PRODUCTION /SCHEDULING—WORK STUDIES INTERFACES 25: 3 May-June 1995 (pp. 6-21) Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN, window (DTW) designed for drive- through customers. The quick-service restaurant industry is one of the most competitive and saturated industries in the United States. Growth in. market share for one company generally comes only at the expense of some other company’s market share. The competitive pressure that restaurants in this industry face also means that to simply hold on to its current customer base, a quick-service restaurant must offer consistent, high- quality service. Moreover, improving ser- vice quality can also mean improved pro- ductivity, leading to lower costs and higher profitability. Recognizing the importance of managing service quality, KFC became, in late 1970s, an early adopter of a quality management program. KFC’s Quality Management Program Managing quali company revolves around understanding, customer expectations, defining product specifications based on these expectations, in a manufacturing, and subsequently ensuring that the prod- ucts being manufactured (that is, the out- come of the manufacturing process) con- form to the design specifications. In this context, the detailed specifications of a manufacturing process, although of great relevance to the success of the internal op- erations of the company, are of no direct interest to the customer. In contrast, man- aging quality in service businesses, al- though similar in spirit, is somewhat dif- ferent and is more challenging because of certain characteristics inherent to service operations. These include the intangibility of service outcome in some cases and the presence and participation of customers in May-June 1995 the creation of most services. Service cus- tomers generally care about the service outcome and about the way a service pro- cess is executed. Consequently, quality management in services revolves around managing both of these factors (Apte, Karmarkar, and Pitbladdo [1994] discuss the measurement and management of ser- vice quality in detail). For example, KFC’s management needs to control not only the taste, temperature, and appearance of the fried chicken, but also the courtesy and the speed of service it offers to its customers Quality management at KFC recognizes this fundamental dichotomy by using two complementary programs for measuring quality: (1) The quality, service, and clean- liness (QSC) program for judging the qual- ity of service outcomes from the perspec- tive of a customer, and (2) the operations facility review (OFR) program for measur- ing a restaurant's process implementation performance against KFC’s process specifi- cations, The results of these two quality measurement programs are incorporated into “Today's KFC restaurant quality pe- riod report,” a quarterly report prepared for senior management at KFC. To understand customer expectations and to measure the company’s perfor- mance against that of its competitors, KFC regularly uses the following customer- and market-oriented surveys to manage its ser- vice quality The results of these surveys are also incorporated in the quarterly qual- ity report. KFC hires a professional interviewing service to survey customers on their impressions of product and service quality. It also periodically hires a consulting firm to identify important service attributes and Copyright © 2001 All Rights ReservedAPTE, REYNOLDS their relative importance to the customers of a quick-service restaurant. It uses the understanding, of customer expectations it gains in designing and continually revising its quality measurement schemes. KFC receives customer complaints via complaint cards available at all KFC res- taurants and through letters and phone calls from customers. A KFC representative responds to each customer complaint by letter or phone. KFC also monitors and tracks the number and the types of com- plaints different restaurants receive KFC regularly uses market tracker sur- veys to measure its performance on key customer service attributes compared to that of its competitors (such as Me- Donald’s and Wendy's). The customer ser- vice attributes it tracks include speed of service, mispacks, courtesy, product qual- ity, and value for money spent The quarterly quality report plays an im- portant role in KFC’s quality management program. Providing data on customer ex- pectations and KFC’s performance allows management to take immediate corrective actions. KFC’s quality management pro- gram also emphasizes continuous improve- ment of processes, employee empower- ment, and training of employees in the use of quality management tools and techniques. Quality, Service, Cleanliness (QSC) Program KFC implemented the QSC program in 1977. This program is designed to measure and evaluate quality at each KFC restau- rant, company owned or franchised, from the viewpoint of a customer. “Mystery shoppers,” independent individuals con- tracted by KFC, evaluate the quality, ser- INTERFACES 25:3 vice, and cleanliness of each restaurant. Mystery shoppers are well trained to use the standard QSC form (Figure 1) so that they perform each evaluation in an objec- tive, accurate, and consistent manner, KFC revises and updates the form frequently to ensure that it reflects the ever-changing customer expectations, as revealed in the surveys. Mystery shoppers conduct a QSC evalu- ation of each restaurant twice a month. However, restaurant general managers use a shortened version of the same form, the “QSC alert form,” to conduct daily self- evaluations of their restaurants. It helps managers to take immediate improvement actions, such as instructing and helping employees to perform their jobs in the right way. It also helps managers to incul- cate an awareness of customer expectations among restaurant employees Operations Facility Review Customers expect consistent and high quality products and services in all KFC restaurants. Hence, operational excellence is critical to KFC’s success. The objective of the operations facility review (OFR) is to help KFC to ensure nationally consistent, high operating standards and performance in all its restaurants through the use of a standardized evaluation program. The OFR evaluation program measures a restau- rant’s performance against KFC’s operating standards (Figure 1) The OFR program parallels the QSC program except that the OFR evaluators are KFC employees. KFC trains the OFR evaluators rigorously to ensure that they perform all evaluations in an objective, ac- curate, and consistent manner. Restaurant general managers are required to complete Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN, QSC Evaluation Form Service Quality (50 Points) © Service time (total and window time) © Attentive, energetic, warm, and courteous service © Professional appearance, including wearing a uniform © Accuracy of order taking and filing (no missing or extra items) © Helpful, suggestive selling Product Quality (30 Points) The following criteria are measured for all products—chicken products (original recipe, crispy, hot wings, etc.), cold and hot side items (such as cole slaw, potato salad, French fries, biscuits, etc.) and beverages: © Standard temperature © Absence of visible shortening and proper breading of chicken © Color, texture, overall appearance © Proper filing and closing of containers Cleaniiness (20 Points) © Clean entrance doors and windows © Clean and well-supplied rest rooms © Clean and neat service counter and surrounding area © Clean and neat customer seating area © Neat exterior, well-maintained landscaping Operations Facility Review Form Product/Process Quality (44 Points) Evaluate each product using the following criteria: © Quality standards for ingredients used © Storage and handling of ingredients © Cooking procedures; time, temperatures, cleanliness, etc. © Hold time Facilities (16 Points) Clean, neat, and well-maintained facilities (interior and exterior) and fixtures Customer Viewpoint—Service and Product Quality (15 Points) Selected items from QSC form: service time, courtesy, order taking and filling accuracy, product temperature, and appearance Sanitation/Operations (15 Points) © Procedures used and frequency of cleaning processes for kitchen, service counters, seating areas, and rest rooms © Equipment clean, well maintained, and in good working order Critical Issues © Presence of rodents, cockroaches, other insects © Cross contamination potential due to faulty procedures or equipment © Spoiled, reprocessed, or unapproved products being sold Employee(s) with communicable disease ° Figure 1: Kentucky Fried Chicken uses two quality management instruments, the QSC evaluation form and the operational facility review form. May-June 1995 9 Copyright © 2001 All Rights ReservedAPTE, REYNOLDS OFR evaluations for their own restaurants at least once a week. Managers must also run training programs for restaurant em- ployees and maintain facilities, equipment, and premises in accordance with KFC’s operating standards. Drive-through-Window Test As a part of its major responsibilities, the senior management of KFC's South Cen- tral division (roughly the Texas and Okla- homa area) routinely evaluates the divi- sion’s financial and operating performance compared to that of other divisions and its competitors. In the fourth quarter of 1989, it became apparent that KFC restaurants in the division were experiencing serious problems. The profit margin had eroded from 16 to eight percent. KFC’s perfor- mance on key customer attributes, as re- vealed by the QSC, OFR, and market tracker surveys, was also suffering. For ex- ample, KFC was being ranked in the bot- tom half of the quick-service restaurant in- dustry in the categories of (1) speed of ser- vice and (2) value for money spent. From historical sales data, KFC knew that roughly 50 percent of its sales volume was contributed by the drive-through- window (DTW) operation. Slow service, as perceived by customers, was a particularly critical problem for DTW, since speed of service is unquestionably the most impor- tant dimension of service quality for a quick-service restaurant. The division was also experiencing a high level of competi- tive pressure from new double drive- through hamburger operators, such as Ral- ly’s and Checkers. This competitive pres- sure combined with the slowness of service spelled trouble. KFC had no marketable competitive ad- INTERFACES 25:3 vantage over the double drive-through or other major quick service restaurants that used drive-through as a major portion of their business. KFC could lose market share. Slow service could also have a ruinous impact on product innovation activity. KFC might introduce new products, but if cus- tomers had to wait too long to get these products, they were not likely to come back to KFC to try these products again. The real dilemma here was that the com- pany might think that customers were turned off by the new products, when in fact it was the slow service that turned them off. KFC, therefore, set a dramatic improve- ment in DTW speed of service as its pri- mary goal for restaurants in the division. ‘The critical question was, could this really be done? The perceived wisdom in the company was that the DTW operation had been fine-tuned over many years, and hence, cutting down on service time was nearly impossible. However, Chuck Reynolds, then regional manager, sought a way to reduce service time by conducting a test at a few restaurants. Organizing the Test at Oklahoma City After some analysis and discussion, Reynolds chose four KFC-owned restau rants in Oklahoma City as sites for the DTW test. These restaurants were known for their good operations, motivated man- agers, and for low turnover among man- agement. Oklahoma City was an isolated market in the region in the sense that these restaurants did not participate in any mar- keting cooperative. This factor combined with KFC’s ownership meant that KFC had total control over the marketing (advertis- 10 Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN ing and promotion) activities at the restau- rants, This ensured that any improvements in financial and market performance real- ized during the test would emanate solely from improving speed of service and other operational changes, and not from adver- tising and promotion programs. Before starting the test, Reynolds secured permis- sion from the president of domestic opera- tions and the vice-president of operations at the regional level to insure that no inte! nal obstacles (such as the marketing de partment introducing a new promotion program in the region or the industrial en- gineering department insisting on intro- ducing new procedures and equipment in the midst of the test) would prevent the test from being successful After choosing the test restaurants, Reynolds formed the DTW test team, This team, led by Reynolds, included the mar- ket manager, four restaurant general man- agers, the training manager, a maintenance coordinator, and an operations specialist from operation services. As a result of their participation in the “quality foundation workshop,” all team members were well versed in quality management concepts, such as the nature of variability and Deming's “plan-do-check-act” methodol- ogy. They were also knowledgeable in data-collection techniques and problem- solving tools and techniques, such as Pareto charts, fishbone diagrams, flow charts, and statistical process-control charts. Through self-guided quality man- agement training programs that relied on videos and books, the team members were also exposed to the teachings of Shigeo Shingo [1987, 1988a, 1988b], a noted Jap- anese quality management guru. Although May-June 1995 Shingo, formerly a manufacturing engineer at Toyota, is primarily known for dramatic reduction in machine setup time through waste reduction, for zero quality control through poka-yoke (or mistake-proof methods), and for process improvement techniques in manufacturing, his methods have been found to be equally useful in the service arena. Their knowledge of quality-management concepts, tools, and techniques proved very useful to the team members during the test as they systemati- cally analyzed data, generated ideas for improvements, and implemented them in their individual restaurants. Test Team in Action The first meeting of the team in Okla- homa City was chaired by Reynolds. It was devoted mainly to a discussion of the problems facing KFC, the importance of improving drive-through operation, the need for the test, and the test's potential benefit to their individual restaurants and to the company. The discussion helped raise the team members’ commitment to the fundamental goal of improving the speed of service at DTW. During the meet- ing, Reynolds charged the team members with responsibility for finding and imple- menting ways to continuously improve DTW speed of service, and in return, he promised to fully back them up in their ac- tions. Based on the benchmark data for com- petitors’ service times gathered through market tracker surveys, Reynolds and the team decided to reduce service time at drive-through windows from over two minutes to 60 seconds at all the test restau- rants. Everyone in the division considered this goal unrealistic, but Reynolds believed 11 Copyright © 2001 All Rights ReservedAPTE, REYNOLDS that only by setting a somewhat unrealistic goal with a shared vision could people rise to the occasion and meet or even beat the goal. In addition to setting the ultimate project goal of dramatically improving window service time, the team also speci- fied several subgoals: —To acknowledge customers within three seconds of their arrival at the speaker; —To fill customer orders within 60 sec- onds of their arrival at the drive-through window; and —To serve customers within a total aver- age service time of less than 1.5 minutes. The test team decided to start the project by developing good baseline information on average service times, as experienced by customers, in all stages of DTW operation (Figure 2). The team needed to measure the time a customer spends at the menu board placing the order, the time a cus- tomer takes to drive from the menu board to the drive-through window, including waiting time in a queue, if any, and finally the time a customer “hangs” (waits) at the window to get the order, make payment, and drive away. The team needed a good timing device. It had to have three fea- tures—a trigger mechanism that could sense the presence of a customer's car at a given point in the driveway; a device to display the current window hang time to DTW employees; and an ability to count cars, to compute various service time aver- ages, and to print these averages. The team located a suitable computerized timer, made by US Computer Systems of Cincin- nati, Ohio. KFC purchased four such tim- ers, at a cost of about $1,500 each, and in- stalled them in the four test restaurants. The team ran the timers in all four restau- INTERFACES 25:3 Percent of Total Service Tine i Drive-Through:- Window Transacton Figure 2: The Pareto chart shows the relative amounts of time a customer spends in three components of total service time in DTW op- eration: menu board time (from a customer's arrival at the menu board until the order has been given); travel time from menu board to window (including waiting in a queue, if any); and window hang time (from a custom- er’s arrival at the window to the customer's departure). The team disregarded the time a customer sometimes spends waiting in a queue leading to the menu board because of the infrequency of the event and measurement problems. rants for two weeks to generate baseline information on various service times. Armed with service-time information, the team met again to prepare and analyze a Pareto chart of the components of total service time (Figure 2). With about 58 per- cent of total service time in the DTW oper- ation accounted for by window hang time, the team’s greatest challenge and opportu- nity to improve speed of service lay in im- proving window hang time Having established the current average window-hang time for each restaurant, the team discussed what the short-term win- dow-hang-time goals should be. Following Reynolds’ suggestion, the team settled on a step-wise reduction in service time with a 10-percent reduction at each step. Thus, if 12 Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN the current window hang time for a res- taurant was 122 seconds, they asked the restaurant to reduce the time by 12 sec- onds, setting a hang-time goal of 110 sec- onds. Reynolds suggested this conservative 10-percent reduction rule because, during some unrelated previous experiments, Reynolds had noticed that when targeted improvement gaps were too large, restau- rant employees became frustrated by their inability to close those gaps quickly. These prior experiments had invariably failed; improvements made, if any, were short- lived; and the restaurant performance sim- ply fell back to its former level. This time, all four restaurant general managers agreed that a 10-percent improvement at each step was not too big a gap, and that their employees could meet this goal. It was important that the DTW employees experienced early success so that they could build their self-confidence to make continuous improvement towards the ulti- mate goal of 60 seconds window hang time. Improving the DTW Processes In the same meeting in which it devel- oped the Pareto chart, the team also brain- stormed to generate ideas for reducing, hang time. Using Shigeo Shingo’s process improvement methods, the team devel- oped several general rules for eliminating, unnecessary motion and thereby reducing window hang time: —Take no more than two steps to get what is needed to fill a customer's order. —Do not bend over to get anything needed to fill a customer's order. —Do not lift anything up that is needed to fill a customer's order. —Reach up and pull things down that are May-June 1995 needed to fill a customer's order. The team members also needed addi- tional specific ideas to implement in their restaurants. From the fundamentals of quality management, they knew that the DTW employees were the best sources of specific improvement ideas. To tap this source, they decided to motivate their em- ployees and make it simple for them to generate and implement innovative ideas for improvement. For that reason the team decided to form in each restaurant a team of experienced DTW employees (called the restaurant team). The restaurant teams, under the leadership of test team mem- bers, were responsible for generating pro- cess improvement ideas and for imple. menting them in individual restaurants. The test team decided to introduce a “blocker log’ in which DTW employees could record “blockers,” underlying causes of delays. The blocker log was a simple $2 spiral binder with a pen attached. When- ever they could not fill a customer order within the target window hang time, a buzzer on the timer would go off signaling DTW employees to identify the blocker and write it down in the blocker log. In many cases, the blocker was obvious, while in others DTW employees held im- promptu discussions to figure out what the blocker was. The team systematically analyzed the reasons recorded in the blocker logs every two weeks. The team used Pareto charts and fishbone diagrams to identify the most frequent and important blockers. They challenged and encouraged the DTW employees to generate solutions for elimi- nating or reducing the frequency of impor- tant blockers. The managers implemented. 13 Copyright © 2001 All Rights ReservedAPTE, REYNOLDS selected solutions, and then the whole pro- cedure was repeated. In one of the early meetings, the team developed a fishbone chart (Figure 3) identifying three key causes of slow ser- vice: problems with headsets, out-of- product condition, and poor equipment layout. With the help of restaurant teams and DTW employees, the team members developed and implemented plans for solving each of these problems in each of the four restaurants. For example, they No headsets and headsets not working* Poor equipment layout” monitors Too many types of packaging boxes ‘Low sales items No best-practice: standards Inadequate staffing No order-display Menu-board clarity solved the headset problem by instituting a procedure for testing all headsets regularly to ensure that they worked properly, and by ordering and stocking adequate supplies of frequently needed batteries and replace- ment belts. The four restaurants repeated this pro- cess for about 10 months until they achieved the major goal of 60 seconds window hang time. The following are some of the major changes they made to operational procedures and facilities, No training No sense of urgency Item pricing/Time spent in counting change Packing errors Figure 3: The DTW test team used the blocker log to construct this fishbone chart during its second brainstorming session when it analyzed the causes of delay at drive-through-window operations of the four test restaurants. It then classified the causes and plotted them. Next it determined the most important causes based on the frequency of their occurrence and the im- pact of each cause. The team identified three major causes (+). The test team and the restaurant teams generated solutions for eliminating these causes and implemented them in the test restaurants. INTERFACES 25:3 14 Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN, categorized under the lessons learned in the test: (1) They rationalized process flow and improved equipment layout to eliminate wasted motion and to reduce service time. The employees of each restaurant totally reorganized their drive-through areas, put- ting products, condiments, bags, boxes, cups, and salads in more convenient loca- tions. They positioned each item along, the pack line according to its demand level High demand products were made easily accessible to the packers and were also placed in the display packing system to be more visible to the cooks and the DTW leaders so that they could replenish those just in time. Changing the orient the display packing system from its origi- nal position parallel to the window to per- pendicular, at an average cost of about $7,000, turned out to be a simple but very powerful idea. It streamlined the move- m of ment of products from the kitchen to the packing area to the window. Moreover, it reduced the number of steps a packer took from about six to two and saved precious time and effort in packing each order. The restaurants also bought some additional equipment. For example, they installed “pack monitors’ that were connected to the order-taking system. These pack moni- tors were instrumental in accurately and quickly informing packers of the specific contents of every order while the order was being taken and entered into the sys- tem by the window person. Finally, the restaurant moved its equipment (coolers, warming cabinets, cup dispensers, and so forth) around to make walking through and servicing the drive-through area much easier. May-June 1995 (2) They changed the product mix and specifications. The restaurants streamlined their menus to eliminate the “out-of- product” blocker. They eliminated a num- ber of slow-moving items, such as French fries, Kentucky nuggets, and sandwiches At one restaurant, this alone reduced aver- age window hang time by as much as 20 seconds. They replaced multiple desserts The profit margin had eroded from 16 to eight percent. with a single dessert item, The team tested “even-dollar pricing” for the big-pack items on the menu board. For example, they priced a 10-piece (chicken) meal at $11.18 so that inclusive of tax it totalled to $12.00. Both the customer and the cashier saved a lot of effort and time counting change. The even-dollar items averaged 15 to 20 seconds less at the window. (3) Many small process improvements ultimately added up to a large improve- ment. The restaurants implemented a number of process improvement ideas Each idea may have had only a tiny im- pact on service time. However, collectively, these ideas had a large impact. For exam- ple, the restaurants eliminated redundant packaging boxes so that packers needed only one or two standard boxes to pack any order. Thus, packers could focus on packing orders in the shortest possible time without worrying about whether they were using the proper box. (4) They used headsets to create cus- tomer focus and to convert serial activities into parallel ones. The use of headsets by all DTW employees allowed them to per- 15 Copyright © 2001 All Rights ReservedAPTE, REYNOLDS form their jobs while simultaneously lis- tening to customer orders. For example, the headset allowed a packer to begin packing as soon as a customer placed an order, instead of waiting for the order taker to relay the completed order. This also helped improve order accuracy. Con- verting serial activities into parallel ones in this manner proved very useful in reduc- ing the window hang time. By listening to customer orders cooks better understood the demand patterns for different products and could more effectively adjust produc- tion quantities and timings. (5) Given the customer's participation in the service process, the customer should be given clear instructions on what he or she is supposed to do. One simple idea was to install clear signs, such as an order- here sign at the drive-through menu board speaker. This reduced customer confusion and thereby the time spent at the menu board. Another idea was to rearrange the menu board to improve its clarity so that customers could place orders faster and more easily. (6) The restaurants used the timer as a focal point for motivating team members. The DTW timer was perhaps the single most important tool in improving the speed of service. The timer served as a constant reminder to the DTW employees that the customers were waiting. Once each customer departed, the timer dis- played both the window hang time for that customer as well as the average win- dow hang time since the beginning of that day. Serving as a scorecard and as a focal point for motivation, the timer helped each restaurant's DTW leader set a pace during rush times. INTERFACES 25:3 (7) They created an environment con- ducive to problem-solving, established simple procedures so that employees could suggest improvements, and acted immedi- ately on suggestions. In addition to making the blocker log available, Reynolds and the team strived to create a nonthreatening en- vironment and to encourage DTW employ- ees to come up with ideas for improving the process. They implemented several of these ideas; some worked, others did not. Converting serial activities into parallel ones proved very useful. But the team made it a point to encourage employees to try anything that seemed reasonable. The team monitored the im- pact of implemented changes closely so that it could discontinue whatever change didn’t seem to work. One of the important rules the team followed was to act immedi- ately on employee suggestions, that is, to decide quickly if it would implement a suggestion and, if so, to implement it im- mediately. This created an unprecedented level of excitement and enthusiasm among DTW employees. (8) Rigorous training and motivating employees through individual or team in- centives were keys to process improve- ment. Prior to the test, employees were simply assigned to DTW without receiving any special training in how to work effec- tively and efficiently in the DTW area. The team made specific DTW training a re- quirement for all employees working in that area, Productivity and camaraderie improved noticeably. The team recognized 16 Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN that several resources, cooks and restau- rant equipment, for example, were shared by both the DTW area and the front coun- ter area serving the dine-in customers. Consequently, actions of the front counter employees influenced the performance of the DTW area. To achieve the test goals, all employees in the restaurant had to con- tribute to its success. Some restaurants used games and awards to get all their em- ployees involved in the DTW test. For ex- ample, if the DTW employees hit the target window hang time, all the restaurant em- ployees, and not just the DTW employees, were rewarded for their performance. These rewards included specially printed T-shirts, gift certificates, and pizza parties. The rewards proved powerful in strength- ening the pride that DTW employees took in improving their speed of service while also improving the morale of the entire restaurant team. (9) The restaurants made process im- provement a way of life for managers. The compensation of restaurant general man- agers is tied to the performance of their in- dividual restaurants. As the test pro- gressed, operational performance began to improve noticeably, and the general man- agers became increasingly committed to the idea of continuous improvement. They assumed ownership of the test, and they started to identify so closely with the goal of reducing service time that it became in- grained in their thinking. Interestingly, the language of restaurant general managers changed. Even during casual conversa- tions, they talked in terms of speed-of- service times. For example, they would say that they had had a 48-second day or a 40-second lunch hour. May-June 1995 (10) The team always kept an eye on the competition. Through the use of mar- ket tracker surveys, the team regularly conducted service-time studies on immedi- ate competitors within the test area. The only way to remain competitive was to set suitably aggressive service-time targets. The restaurant general managers contin- ually sent notes to Reynolds outlining their success stories and sometimes even their failures. They also sent timer tapes from all the restaurants each week. Reynolds en- tered the window-hang-time results for the individual test restaurants into a PC-based software package that generated process control charts, such as X-bar and R-bar charts (Figure 4). The main reason for choosing this software package was that it was easy to use and had attractive graphics that the team could interpret easily. As the restaurants gradually implemented process improvement ideas, the team expected the window hang time to decline steadily. Hence, by definition, the system was not expected to be in a stable state while the DTW test was in progress. Therefore, the Slow service could have a ruinous impact on product innovation activity. team did not use the X-bar chart during the test for statistical process control per se but used it mainly to ensure that the trend line for window hang time was a declining, one. On the other hand, the team used the R-bar chart in the traditional manner to ensure that the range, that is, the variabil- ity, of the system was under control and was not increasing. The charts allowed all 7 Copyright © 2001 All Rights ReservedAPTE, REYNOLDS & ir (scone) a Figure 4: The DTW test team used statistical process control charts for monitoring trends in average window hang time and for controlling its variability at the four test restaurants. These charts were produced in week 43. They were drawn using window-hang-time data for the 23 weeks ending in week 42, the last week of test, for one of the test restaurants. The X-bar chart is essentially a plot of the average window hang time. Of critical importance in this chart are the upper and lower control limits (UCL and LCL), which are computed on the basis of a 99 percent confidence interval for sample data. In using a control chart, one generally considers a process to be stable (in control) if most data points fall between the UCL and LCL lines. Given declining hang time, that is, instability of the system, we mainly used the X-bar chart during the test to ensure that the hang time was declining steadily. Hang time for the given restau- rant has steadily improved starting in week 33, coinciding with the introduction of incentives and games for DTW employees in that restaurant. The R-bar chart plots the average of the range (that is, the difference between the longest and the shortest time) for window hang, times within each sample. In the chart below, the range for window hang times has consis- tently stayed between UCL and LCL, indicating that the range, or the variability, of the process is in “control” with a 99-percent confidence level. restaurant general managers to quickly see the trends in their performance and whether they were improving over time. Every week, Reynolds put the control charts for the previous week for all the res- taurants together and sent them to all the restaurant teams so that everyone could see everyone else’s performance. Reynolds made it a practice to send the team and the restaurant employees immediate positive feedback to ensure a competitive environ- ment and their enthusiasm and excitement. He attached short complimentary notes to the control charts indicating that a given idea had apparently improved service speed in a given restaurant for the pre- vious week. As the test progressed, the window hang time improved steadily. The tempo in INTERFACES 25:3 creased and the excitement grew. One res taurant team got so excited that they vid- cotaped their drive-through window in ac- tion, with a timer running, to demonstrate how fast they were at the drive-through- window service, and they sent that tape to the president of KFC in Louisville, Ken- tucky. Such pride in doing the job right had rarely been exhibited before in the his- tory of KFC. The president of KFC person- ally called the restaurant to congratulate the manager and the restaurant team for their speed-of-service initiatives and ac- complishments. The company subse- quently recognized the manager as the dis- trict’s restaurant manager of the year dur- ing the yearly regional performance recognition seminar. And it honored the restaurant team with a dinner at the res: 18 Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN, Figure 5: Drive-through-window-service time shows a steady improvement. Average win- dow hang time was computed for the four test restaurants together during the DTW test. The average window hang time declined from the initial average of 125 seconds to 60 seconds at the end of the 42-week test period. taurant of its choice. Over a period of 42 weeks, the team was able to reduce average window hang time from the initial 125 seconds to the goal of 60 seconds (Figure 5). With a total im- provement of 65 seconds, the window hang time was cut by more than half! The Results The team achieved the seemingly impos- sible goal of 60 seconds window hang time, The restaurants did not advertise this speed-of-service improvement, but the customers certainly found out, for business, grew significantly. Though it was not an explicit goal of the test, the labor produc- tivity showed substantial improvement with obvious implications for cost perfor- mance. As a result, the profit margin in- creased from about eight percent before the test to about nine percent after the test The QSC and OFR scores for the test res- taurants went up and their performance on the key customer attributes in the market tracker survey showed across-the-board improvement. As expected, the speed of service category showed dramatic im- provement. May-June 1995 Compared to the rest of the district and the division, the four test restaurants sub- stantially improved their overall perfor- mance during 1991 as compared to their overall performance in 1990: (1) They increased customer transac- tions. The annual DTW customer transac- tions for the test restaurants increased by 29.5 percent while the transactions for the district and the division decreased by three percent and one percent respectively. (2) They achieved higher sales growth. The DTW sales volume at the test restau rants grew by 17.5 percent while the sales for the district and the division declined by 0.5 percent and one percent respectively. (3) They improved productivity. Labor productivity as measured in DTW transac- tions per team labor hour for the test res- taurants increased by 12.3 percent while the productivity for the district and the di- vision declined by 0.4 percent and three percent in the same time-frame. It is also interesting to note that the total DTW la- bor hours, that is, the number of employ- ees in the DTW area, were not reduced in. any of the test restaurants. Looking at these improvements, one may ask, was this simply a Hawthorne ef- fect? (That is, were these improvements a result of all the attention the team gave the DTW employees and not a result of var- ious operational improvements?) KFC has replicated the operational changes imple- mented in the test at other restaurants and has seen a similar persisting improvement in speed of service and labor productivity. The answer to that question is no, it is not a Hawthorne effect. The improved perfor- mance has come primarily from the quality management program, or more specifically, 19 Copyright © 2001 All Rights ReservedAPTE, REYNOLDS from various operational improvements. In fact, with further operational improve- ments made since the test, KFC has now reduced the average window hang time to about 30 seconds After successfully concluding the test, KFC managers decided to gradually roll out the speed-of-service program to other KFC-owned restaurants in the division. They asked some team members to visit other restaurants to explain the actions that had led to such dramatic improvement in the speed of service at their own DTW operations. Not surprisingly, other restau- rant general managers quickly understood the program's benefits and some voluntar- ily decided to join the program. With some team members as coaches, KFC set up a training session for those that signed on to the program. KFC bought and installed computerized timers and made various other operational improvements in the res- taurants that signed on to the program. As the team members shared the key lessons from the DTW test, this new batch of res- taurants learned quickly. What took the team 60 to 90 days to learn and under- stand was explained to these restaurant general managers in just a few days. They made modest improvements in service time almost immediately starting with the first week. This next batch of restaurants reached the goal of 60 seconds in less than half the time taken by the Oklahoma DTW test team. These findings suggest that a thorough benchmarking study of the best- in-class processes could have quickly un- covered many improvement ideas and would have jump-started the test, But the test predated the popularization of the benchmarking concept as we know it to- INTERFACES 25:3 day, and hence, for that reason, the team did not explicitly undertake benchmarking, Subsequent to the divisional roll out, KFC implemented the DIW speed-of- service program nationwide. In the past two years, managers and employees at all 2,000 KFC-owned restaurants have been trained to improve speed of service at both the drive-through window and the front counter. Senior managers at KFC monitor the program through QSC and OFR evalu- ations. Moreover, all restaurant managers are tracking speed-of-service performance on a “real time” basis, taking corrective ac- tions immediately as necessary. In this task, the restaurants now use a new, pro- prietary cash register system called MERIT that has a built-in internal timing device for measuring service time from the mo- ment an order is entered until it is served. It measures service time for both the drive- through window and the front counter. Restaurants also use a separate window timer to track the window hang time. KFC has also introduced the program on a voluntary basis to over 3,000 franchised KFC restaurants. Currently, over 1,300 franchised restaurants have signed on to the program, implementing such improve- ment ideas as the use of headsets, chang- Everyone considered this goal unrealistic. ing equipment layout, and training DTW employees. KFC has adopted the 60- second window hang time as the process specification in its quality measurement program throughout the nation. In summary, quality management at 20 Copyright © 2001 All Rights ReservedKENTUCKY FRIED CHICKEN of the OFR and QSC programs to continually assess KFC rests on the rigorousn the quality of both service processes and outcomes, These measurements are further used to improve the underlying processes for achieving better overall performance. KFC strives to change its detailed specifica- tions as the needs of the marketplace evolve and industry practices change. As confirmed by its experience with the DTW speed-of-service test, the notions of pro- cess focus and continuous improvement through empowering its employees are the foundations of the ongoing quality man- agement program at Kentucky Fried Chicken References Apte, U. M. Karmarkar, U. S.; and Pitbladdo, R, 1994, “Quality management in services: Analysis and applications,” working paper 94-09-01, Cox School of Business, Southern Methodist University, Dallas, Texas, forth: coming in Practice of Quality Management, ‘eds, U. Karmarkar and P. Lederer, Harvard Business School Press, Cambridge, Massachu- setts, Shingo, Shigeo 1987, The Sayings of Shigeo Shingo: Key Strategies for Plant Improvement, translated by A. P. Dillon, Productivity Press, Cambridge, Massachusetts, Shingo, Shigeo 1988a, Non-Stock Production: The Shingo System for Continuous Improve- ment, Productivity Press, Cambridge, Massa- chusetts. Shingo, Shigeo 1988b, The SMED System, video, translated by A. P. Dillon, Productivity Press, Cambridge, Massachusetts. Starlette Johnson, Finance Director, KFC, writes, “The drive-through-window (DTW) test in Oklahoma City served as the foundation for the company’s current 60-second drive-through service time goal established in 1992, “By focusing the OKC team on improv- May-June 1995 ing speed of service at the critical drive- through point of sale, this team was able not only improve customer service but also to improve the financial position of the units involved. Transactions increased al- most 30 percent in these stores versus three percent in the rest of the market and sales outpaced the nontest markets by over 17 percent all while reducing window ser- vice time from over 120 seconds to 60 sec- onds—clearly a win for both the consum- ers and the company. “In addition to being the model for the company’s current drive-through service time standard, this process has also been adopted in over 1,300 of our franchised restaurants as well.” 21 Copyright © 2001 All Rights Reserved