A McDonalds Sustainability Project Vin Sathyamoorthy Mitch Daar - - PowerPoint PPT Presentation

Gr Gree een Mov

• vem

emen ent A McDonald’s Sustainability Project

Vin Sathyamoorthy Mitch Daar Yousef Shaban Sahand Sepehrnia November 14, 2012

Kellogg Design Challenge | Green Movement | November 14, 2012

Ch Challenge allenge Contents

Clien ient and d Context ext Methodology

Step 1: Initial Observations Step 2: Customer Segmentation Step 3: Detailed Observations & Key Insights Step 4: Concept

Business Case Analysis

Kellogg Design Challenge | Green Movement | November 14, 2012

Pr Probl

• blem

em Statement

Kellogg Design Challenge | Green Movement | November 14, 2012

• People want to get in and get out

quickly (“T

• go”)
• Fast & easy  lots of prepackaged

goods (creates excess waste)

• Customers are accustomed to a certain

way of disposing waste – single dump into trash, no sorting

Ch Challenges allenges wi with th Sustainability

It appears as if there is a fundamental disconnect between what McDonald’s can do well and what they can do sustainably.

Kellogg Design Challenge | Green Movement | November 14, 2012

Ch Challenge allenge Contents

Client and Context Methodol dology

• gy

Step 1: Initial Observations Step 2: Customer Segmentation Step 3: Detailed Observations & Key Insights Step 4: Concept

Business Case Analysis

Kellogg Design Challenge | Green Movement | November 14, 2012

Met ethodology

• dology

Step 1 Our team followed a four-step process in deriving a solution. Step 2 Step 3 Step 4

Visit McDonald’s and observe patrons Identify & define customer segments Target a segment and

• bserve them

further Develop a solution to address target’s needs

Kellogg Design Challenge | Green Movement | November 14, 2012

Ch Challenge allenge Contents

Client and Context Methodology

Step 1: Initial Observations Step 2: Customer Segmentation Step 3: Detailed Observations & Key Insights Step 4: Concept

Business Case Analysis

Our team visited several McDonald’s locations to observe customers.

From these initial observations and interviews, we identified key customer segments who dine in at McDonald’s regularly, and studied their habits.

From these initial observations and interviews, we identified key customer segments who dine in at McDonald’s regularly, and studied their habits.

Hourly Workers

Wi-Fi Users Families

Retirees

Teenagers

Teenagers Hourly Workers Families Wi-Fi Users Retirees Description

Teenagers on their way to/from school Workers (typically hourly) on their lunch break Parents and kids sitting down for a family meal, typically after an activity (e.g. soccer game) Customers who come to McD’s to use free Wi-Fi service 60 and older males who are retired from work

Core Attitude

Need inexpensive consistent food Need to escape the office to relax and eat an affordable meal Need an easy place to get a meal and sit down between activities Need a substitute for Starbucks; customers come alone to do work Need a spot to socialize with friends, as well as to casually read the newspaper

Order Type

Value menu Full meal (burger, fries, soft drink) Meal for parents; happy meal for kids McCafe McCafe, sometimes accompanied with salad

Time at Restaurant

30-45 minutes 30-40 minutes 30-40 minutes 45 – 60 minutes 60+ minutes

What do these customers want out of McDonald’s?

Kellogg Design Challenge | Green Movement | November 14, 2012

Key ey T akeaways

Waste Produced

• Waste common amongst all patrons –

cups (McCafes, Smoothies, Soft Drinks)

• Customers throw away their soda cups

with the liquid & ice (contaminates trash bag)

• Everybody wants to throw away trash

quickly – even people who have spent a large amount of time at McDonald’s (applies to retirees, kids, etc.)

10-15%

% of total restaurant waste made up of plastic products (polystyrene, polypropylene)

45-60%

% of total restaurant waste made up of paper products – translates to about 2.5 tons/month

Cups are a major source of waste across all customer segments. Children are more willing to try new activities that promote sustainability.

Kellogg Design Challenge | Green Movement | November 14, 2012

Ch Challenge allenge Contents

Client and Context Methodology

Step 1: Initial Observations Step 2: Customer Segmentation Step p 3: Deta taile led d Obse servati vations

• ns & Key Insigh

sights ts Step 4: Concept

Business Case Analysis

Kellogg Design Challenge | Green Movement | November 14, 2012

Ob Obse servation vation Subjects

Anu Uzma Ayana

Age 7

Yuvan

Age 5

Armaan

Age 3

“Can I play with

your iPhone?”

“I want to show

you my new toys!”

“I want to do a

puzzle!”

“Use your

imagination … pretend we have it!”

“George needs his shots … you can be the doctor giving it to him.” “I like to play

tennis … and with my golf club.”

Key ey Insights

Kellogg Design Challenge | Green Movement | November 14, 2012

Ch Challenge allenge Contents

Client and Context Methodology

Step 1: Initial Observations Step 2: Customer Segmentation Step 3: Detailed Observation & Key Insights Step p 4: Concep ncept

Business Case Analysis

We have the opportunity to motivate kids to recycle, while playing a game

Happy Meal Box

• Instantly recognizable by kids
• Iconic house shaped box (roof comes

together in point)

• Golden arches on top – “handle”

Our solution is a simple game that is designed to provide high replay value by being easy to learn, but hard to master.

“Wooosh!” Game

• Shaped like a Happy Meal box; kids

immediately drawn to its presence

• Golden arches are actually tubes that carry

cups

Cup gets sucked through pipe, traveling to top Kid inserts cup here; it enters pneumatic tube, similar to those at bank drive-thru windows Sucking motion removes liquid and dries out cup as it travels up Cup bounces around Happy Meal toys, awarding points (like a pinball machine) Cups Only, Please! Dump any remaining liquid here first

Kellogg Design Challenge | Green Movement | November 14, 2012

Ch Challenge allenge Contents

Client and Context Methodology

Step 1: Initial Observations Step 2: Customer Segmentation Step 3: Detailed Observations & Key Insights Step 4: Concept

Busi siness ness Case se Analys ysis is

Kellogg Design Challenge | Green Movement | November 14, 2012

Analysis of “Wooosh

• oosh!”

Considerations Solutions Benefits

Initial R&D and Machine Costs Cross-promote with Hi-C brands and happy meal toy manufacturers Break-even faster with constant revenue stream

Kellogg Design Challenge | Green Movement | November 14, 2012

Analysis of “Wooosh

• oosh!”

Considerations Solutions Benefits

Initial R&D and Machine Costs Cross-promote with Hi-C brands and happy meal toy manufacturers Break-even faster with constant revenue stream Possibility of contamination Target only cups, liquid separation, upward “woosh” to eliminate residue liquid Reliable Recyclable Waste; Limit leakage of trash bags

Kellogg Design Challenge | Green Movement | November 14, 2012

Analysis of “Wooosh

• oosh!”

Considerations Solutions Benefits

Initial R&D and Machine Costs Cross-promote with Hi-C brands and happy meal toy manufacturers Break-even faster with constant revenue stream Possibility of contamination Target only cups, liquid separation, upward “woosh” to eliminate residue liquid Reliable Recyclable Waste; Limit leakage of trash bags Trash Volume Compact cups by up to 8x Smaller trash volume = Fewer trips to empty trash; Reduce waste management pickups

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 In-Store Revenues Revenues from Beverages $21,408 $21,496 $21,584 $21,673 $21,761 $21,850 $21,939 $22,028 $22,117 $22,207 $22,296 $22,386 Revenues from Non-Beverages 43,815 43,833 43,851 43,869 43,887 43,905 43,923 43,941 43,959 43,977 43,995 44,014 Total In-Store Revenues 65,222 65,328 65,435 65,541 65,648 65,755 65,862 65,969 66,077 66,184 66,292 66,399 Incremental Revenue (Total - Original)

• 106

213 319 426 533 640 747 854 962 1,069 1,177 Cross-Promotional Revenue with Coca-Cola 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Money from Recycled Paper 2 4 7 9 11 13 16 18 20 22 25 27 Total Incremental Revenue 1,002 1,111 1,219 1,328 1,437 1,546 1,655 1,765 1,874 1,984 2,094 2,204 Cumulative Incremental Revenue 1,002 2,113 3,332 4,660 6,097 7,644 9,299 11,064 12,938 14,922 17,016 19,220 Cumulative Incremental Revenue Excluding Sales Increase 1,002 2,007 3,013 4,022 5,033 6,047 7,063 8,080 9,100 10,123 11,147 12,174 Costs Machine Costs $3,000

• R&D: Machine

356

• Cleaning Costs

50 50 50 50 50 50 50 50 50 50 50 50 Incremental Utility Cost 24 24 24 24 24 24 24 24 24 24 24 24 Reduction: in Waste Management Fees (19) (19) (19) (19) (19) (19) (19) (19) (19) (19) (19) (19) Reduction: Employee Wages (4) (8) (12) (15) (19) (23) (27) (31) (35) (38) (42) (46) Total Costs 3,408 48 44 40 36 32 28 25 21 17 13 9 Cumulative Costs 3,408 3,455 3,499 3,539 3,575 3,607 3,636 3,660 3,681 3,698 3,711 3,720 Cumulative Gains (Revenues - Costs) (2,406) (1,342) (167) 1,121 2,522 4,036 5,663 7,404 9,257 11,225 13,306 15,501 Cumulative Gains Excluding Sales Increase (2,406) (1,449) (486) 483 1,458 2,440 3,427 4,420 5,420 6,425 7,437 8,454

Kellogg Design Challenge | Green Movement | November 14, 2012

Br Brea eak-Even Even Analysis alysis

Assumes: (1) Beverage Rev. incr. by 3.8%/annum & (2) Non- Beverage Rev incr. 10% of Bev. Break-Even: Assuming No Increased Sales Revenue

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