Quality Management at Kentucky FriedChicken

U D A Y M . A P T E COX School of Business

Southern Methodist UniversitifDallas. Texas 75275-0333

CHARLES C. REYNOLDS KFC National Management Company5605 North MacArthur Boulevard. No. 650Irving. Texas 75038

Kentucky Fried Chicken (KFC) Corporation, a member of thequick-service restaurant industry, uses a sophisticated programto manage the quality of service it offers to its customers. In thelast quarter of 1989, the south central division of KFC launcheda test program in four Oklahoma City restaurants to improvethe speed of service at its drive-through-window operation. Itproved extremely successful. The restaurants cut service timeby more than half while improving labor productivity. Theyalso dramatically outperformed other restaurants in the divisionin profits, sales growth, and growth in customer transactions.The improved processes in the test restaurants have served asbenchmarks for other KFC restaurants aiming for continuousprocess improvement, while the reduced service time nowserves as the revised specification in KFC's quality measure-ment and management program.

K entucky Fried Chicken (KFC) Corpo- erated sales of over $3 billion while serv-

ration, USA, is a member of the Pep- ing over 600 million customers. KFC bas

sico family of quick-service restaurants. Es- several basic types of restaurants; the most

tablished in 1952, the KFC system consists common type being a dine-in restaurant

of 2,000 company-owned and over 3,000 with a customer seating area that includes

franchised restaurants. In 1992, KFC gen- a condiment bar and a drive-through-CopynfiKt fc 199S, Inslitute for Operations Ki'sodrth [NDUSTRrtS—AGRICULTURE/FOODand the ManaHfmcnt Sciences PRODUCTION/SCHEDULING-WORK STUDIES(KI91-2l;l2/'»S/:503/UlU)f.$UI.2.SThis pjper ivjh rfffrptd.

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KENTUCKY FRIED CHICKEN

window (DTW) designed for drive-through customers.

Tlie quick-service restaurant industry isone of the most competitive and saturatedindustries in the United States. Growth inmarket share for one company generallycomes only at the expense of some othercompany's market share. The competitivepressure that restaurants in this industryface also means that to simply hold on toits current customer base, a quick-servicerestaurant must offer consistent, high-quality service. Moreover, Improving ser-vice quality can also mean improved pro-ductivity, leading to lower costs and higherprofitability.

Recognizing the importance of managingservice quality, KFC became, in late 1970s,an early adopter of a quality managementprogram.KFC's Quality Managemeni Program

Managing quality in a manufacturingcompany revolves around understandingcustomer expectations, defining productspecifications based on these expectations,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 thiscontext, the detailed specifications of amanufacturing process, although of greatrelevance to the success of the internal op-erations of the company, are of no directinterest 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 ofcertain characteristics inherent to serviceoperations. These include the intangibilityof service outcome in some cases and thepresence and participation of customers in

the creation of most services. Service cus-tomers generally care about the serviceoutcome and about the way a service pro-cess is executed. Consequently, qualitymanagement in services revolves aroundmanaging both of these factors (Apte,Karmarkar, and Pitbladdo [1994] discussthe measurement and management of ser-vice quality in detail). For example, KFC'smanagement needs to control not only thetaste, temperature, and appearance of thefried chicken, but also the courtesy and thespeed of service it offers to its customers.

Quality management at KFC recognizesthis fundamental dichotomy by using twocomplementary programs for measuringquality: (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 operationsfacility review (OFR) program for measur-ing a restaurant's process implementationperformance against KFC's process specifi-cations. The results of these two qualitymeasurement programs are incorporatedinto "Today's KFC restaurant quality pe-riod report," a quarterly report preparedfor senior management at KFC.

To understand customer expectationsand to measure the company's perfor-mance against that of its competitors, KFCregularly uses the following customer- andmarket-oriented surveys to manage its ser-vice quality. The results of these surveysare also incorporated in the quarterly qual-ity report.

KFC hires a professional interviewingservice to survey customers on theirimpressions of product and service quality.It also periodically hires a consulting firmto identify important service attributes and

May-June 1995

APTE, REYNOLDS

their relative Importance to the customersof a quick-service restaurant. It uses theunderstanding of customer expectations itgains in designing and continually revisingits quality measurement schemes.

KFC receives customer complaints viacomplaint cards available at ali KFC res-taurants and through letters and phonecalls from customers, A KFC representativeresponds to each customer complaint byletter or phone. KFC also monitors andtracks the number and the types of com-plaints different restaurants receive.

KFC regularly uses market tracker sur-veys to measure its performance on keycustomer service attributes compared tothat of its competitors (such as Mc-Donald's and Wendy's). The customer ser-vice attributes it tracks include speed ofservice, mispacks, courtesy, product qual-ity, and value for money spent.

The quarterly quality report plays an im-portant role in KFC's quality managementprogram. Providing data on customer ex-pectations and KFC's performance allowsmanagement to take immediate correctiveactions. KFC's quality management pro-gram also emphasizes continuous improve-ment of processes, employee empower-ment, and training of employees in the useof quality management tools andtechniques.Quality, Service, Cleanliness (QSC)Program

KFC implemented the QSC program in1977, This program is designed to measureand evaluate quality at each KFC restau-rant, company owned or franchised, fromthe viewpoint of a customer, "Mysteryshoppers," independent individuals con-tracted by KFC, evaluate the quality, ser-

vice, and cleanliness of each restaurant.Mystery shoppers are well trained to usethe standard QSC form (Figure 1) so thatthey perform each evaluation in an objec-tive, accurate, and consistent manner. KFCrevises and updates the form frequently toensure that it reflects the ever-changingcustomer expectations, as revealed in thesurveys.

Mystery shoppers conduct a QSC evalu-ation of each restaurant twice a month.However, restaurant general managers usea shortened version of the same form, the"QSC alert form," to conduct daily self-evaluations of their restaurants. It helpsmanagers to take immediate improvementactions, such as instructing and helpingemployees to perform their jobs in theright way. It also helps managers to incul-cate an awareness of customer expectationsamong restaurant employees.Operations Facility Review

Customers expect consistent and highquality products and services in all KFCrestaurants. Hence, operarional excellenceis critical to KFC's success. The objective ofthe operations facility review (OFR) is tohelp KFC to ensure nationally consistent,high operating standards and performancein all its restaurants through the use of astandardized evaluation program. The OFRevaluation program measures a restau-rant's performance against KFC's operatingstandards {Figure 1).

The OFR program parallels the QSCprogram except that the OFR evaluatorsare KFC employees, KFC trains the OFRevaluators rigorously to ensure that theyperform all evaluations in an objective, ac-curate, and consistent manner. Restaurantgeneral managers are required to complete

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QSC Evaluation Form

Service Quality (50 Points)

o Service time (total and window time)O Attentive, energetic, warm, and courteous serviceo Professional appearance, including wearing a uniformo Accuracy of order taking and filling (no missing or extra items)o Helpful, suggestive selling

Product Quality (30 Points)

The following criteria are measured for all products—chicken products (original recipe, crispy, hotwings, etc.), cold and hot side items (such as cole slaw, potato salad, French fries, biscuits, etc.)and beverages:o Standard temperatureo Absence of visible shortening and proper breading of chickeno Color, texture, overall appearanceo Proper filling and closing of containers

Cleanliness (20 Points)

o Clean entrance doors and windowso Clean and well-supplied rest roomso Clean and neat service counter and surrounding areao Clean and neat customer seating areao Neat exterior, well-maintained landscaping

Operations Facility Review Form

Product/Process Quality (44 Points)

Evaluate each product using the following criteria:o Quality standards for ingredients usedo Storage and handling of ingredientso Cooking procedures; time, temperatures, cleanliness, etc.o 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, producttemperature, and appearance

Sanitation/Operations (15 Points)

o Procedures used and frequency of cleaning processes for kitchen, service counters, seatingareas, and rest rooms

o Equipment clean, well maintained, and in good working order

Critical Issues

o Presence of rodents, cockroaches, other insectso Cross contamination potential due to faulty procedures or equipmento Spoiled, reprocessed, or unapproved products being soldo Employee(s) with communicable disease

Figure 1: Kentucky Fried Chicken uses two quality management instruments, the QSCevaluation form and the operational facility review form.

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APTE, REYNOLDS

OFR evaluations for their own restaurantsat least once a week. Managers must alsorun training programs for restaurant em-ployees and maintain facilities, equipment,and premises in accordance with KFC'soperating standards.Drive-through-Window Test

As a part of its major responsibilities, thesenior management of KFC's South Cen-tral division {roughly the Texas and Okla-homa area) routinely evaluates the divi-sion's financial and operating performancecompared to that of other divisions and itscompetitors. In the fourth quarter of 1989,it became apparent that KFC restaurants inthe division were experiencing seriousproblems. The profit margin had erodedfrom 16 to eight percent. KFC's perfor-mance on key customer attributes, as re-vealed by the QSC, OFR, and markettracker 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 t)f ser-vice and (2) value for money spent.

From historical sales data, KFC knewthat roughly 50 percent of its sales volumewas contributed by the drive-through-window (DTW) operation. Slow service, asperceived by customers, was a particularlycritical problem for DTW, since speed ofservice is unquestionably the most impor-tant dimension of service quality for aquick-service restaurant. The division wasalso 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 servicespelled trouble.

KFC had no marketable competitive ad-

vantage over the double drive-through orother major quick service restaurants thatused drive-through as a major portion oftheir business. KFC could lose marketshare.

Slow service could also have a ruinousimpact on product innovation activity. KFCmight introduce new products, but if cus-tomers had to wait too long to get theseproducts, they were not likely to comeback to KFC to try these products again.The real dilemma here was that the com-pany might think that customers wereturned off by the new products, when infact it was the slow service that turnedthem 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 reallybe done? The perceived wisdom in thecompany was that the DTW operation hadbeen fine-tuned over many years, andhence, cutting down on service time wasnearly impossible. However, ChuckReynolds, then regional manager, sought away to reduce service time by conducting atest 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 theDTW test. These restaurants were knownfor their good operations, motivated man-agers, and for low turnover among man-agement. Oklahoma City was an isolatedmarket in the region in the sense that theserestaurants did not participate in any mar-keting cooperative. This factor combinedwith KFC's ownership meant that KFC hadtotal control over the marketing (advertis-

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KENTUCKY FRIED CHICKEN

ing and promotion) activities at the restau-rants. This ensured that any improvementsin financial and market performance real-ized during the test would emanate solelyfrt)m improving speed of service and otheroperational changes, and not from adver-tising and promotion programs. Beforestarting the test, Reynolds secured permis-sion from the president of domestic opera-tions and the vice-president of operationsat the regional level to insure that no inter-nal obstacles (such as the marketing de-partment introducing a new promotionprogram in the region or the industrial en-gineering department insisting on intro-ducing new procedures and equipment inthe midst of the test) would prevent thetest from being successful.

After choosing the test restaurants,Reynolds formed the DTW test team. Thisteam, led by Reynolds, included the mar-ket manager, four restaurant general man-agers, the training manager, a maintenancecoordinator, and an operations specialistfrom operation services. As a result of theirparticipation in the "quality foundationworkshop," all team members were wellversed in quality management concepts,such as the nature of variability andDeming's "plan-do-check-act" methodol-ogy. They were also knowledgeable indata-collection techniques and problem-solving tools and techniques, such asPareto charts, fishbone diagrams, flowcharts, and statistical process-controlcharts. Through self-guided quality man-agement training programs that relied onvideos and books, the team members werealso exposed to the teachings of ShigeoShingo [1987, 1988a, 1988b], a noted Jap-anese quality management guru. Although

Shingo, formerly a manufacturing engineerat Toyota, is primarily known for dramaticreduction in machine setup time throughwaste reduction, for zero quality controlthrough poka-yoke (or mistake-proofmethods), and for process improvementtechniques in manufacturing, his methodshave been found to be equally useful inthe service arena. Their knowledge ofquality-management concepts, tools, andtechniques proved very useful to the teammembers during the test as they systemati-cally analyzed data, generated ideas forimprovements, and implemented them intheir individual restaurants.Test Team in Action

The first meeting of the team in Okla-homa City was chaired by Reynolds. Itwas devoted mainly to a discussion of theproblems facing KFC, the importance ofimproving drive-through operation, theneed for the test, and the test's potentialbenefit to their individual restaurants andto the company. The discussion helpedraise the team members' commitment tothe fundamental goal of improving thespeed of service at DTW. During the meet-ing, Reynolds charged the team memberswith responsibility for finding and imple-menting ways to continuously improveDTW speed of service, and in return, hepromised to fully back them up in their ac-tions.

Based on the benchmark data for com-petitors' service times gathered throughmarket tracker surveys, Reynolds and theteam decided to reduce service time atdrive-through windows from over twominutes to 60 seconds at all the test restau-rants. Everyone in the division consideredthis goal unrealistic, but Reynolds believed

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that only by setting a somewhat unrealisticgoal with a shared vision could people riseto the occasion and meet or even beat thegoal. In addition to setting the ultimateproject goal of dramatically improvingwindow service time, the team also speci-fied several subgoals;

— T̂o acknowledge customers within threeseconds of their arrival at the speaker;—To fill customer orders within 60 sec-onds of their arrival at the drive-throughwindow; and—To serve customers within a total aver-age service time of less than 1.5 minutes.

The test team decided to start the projectby developing good baseline informationon average service times, as experienced bycustomers, in all stages of DTW operation(Figure 2). The team needed to measurethe time a customer spends at the menuboard placing the order, the time a cus-tomer takes to drive from the menu boardto the drive-through window, includingwaiting time in a queue, if any, and finallythe time a customer "hangs" (waits) at thewindow to get the order, make payment,and drive away. The team needed a goodtiming device. It had to have three fea-tures—a trigger mechanism that couldsense the presence of a customer's car at agiven point in the driveway; a device todisplay the current window hang time toDTW employees; and an ability to countcars, to compute various service time aver-ages, and to print these averages. The teamlocated 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-

1P 60% •

8

* 40% .

•s

OS

11%

S8%

Menu BoaWTime

WWiilovvHang Timf

Drive-Through-Window Transaction

Figure 2: The Pareto chart shows the relativeamounts of time a customer spends in threecomponents of total service time in DTW op-eration: menu board time (from a customer'sarrival at the menu board until the order hasbeen given); travel time from menu board towindow (including waiting in a queue, ifany); and window hang time {from a custom-er's arrival at the window to the customer'sdeparture). The team disregarded the time acustomer sometimes spends waiting in aqueue leading to the menu board because ofthe infrequency of the event andmeasurement problems.

rants for two weeks to generate baselineinformation on various service times.Armed with service-time information, theteam met again to prepare and analyze aPareto chart of the components of totalservice 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 averagewindow-hang time for each restaurant, theteam discussed what the short-term win-dow-hang-time goals should be. FollowingReynolds' suggestion, the team settled on astep-wise reduction in service time with a10-percent reduction at each step. Thus, if

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the current window hang time for a res-taurant was 122 seconds, they asked therestaurant to reduce the time by 12 sec-onds, setting a hang-time goal of UO sec-onds, Reynolds suggested this conservative10-percent reduction rule because, duringsome unrelated previous experiments,Reynolds had noticed that when targetedimprovement gaps were too large, restau-rant employees became frustrated by theirinability to close those gaps quickly. Theseprior 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 managersagreed that a 10-percent improvement ateach step was not too big a gap, and thattheir employees could meet this goal. Itwas important that the DTW employeesexperienced early success so that theycould build their self-confidence to makecontinuous improvement towards the ulti-mate goal of 60 seconds window hangtime.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 reducinghang time. Using Shigeo Shingo's processimprovement methods, the team devel-oped several general rules for eliminatingunnecessary motion and thereby reducingwindow hang time:—Take no more than two steps to getwhat is needed to fill a customer's order.—Do not bend over to get anythingneeded to fill a customer's order.—Do not lift anything up that is needed tofill a customer's order,—Reach up and pull things down that are

needed to fill a customer's order.The team members also needed addi-

tional specific ideas to implement in theirrestaurants. From the fundamentals ofquality management, they knew that theDTW employees were the hest sources ofspecific improvement ideas. To tap thissource, they decided to motivate their em-ployees and make it simple for them togenerate and implement innovative ideasfor improvement. For that reason the teamdecided to form in each restaurant a teamof experienced DTW employees (called therestaurant 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 employeescould record "blockers," underlying causesof delays. The blocker log was a simple $2spiral binder with a pen attached. When-ever they could not fill a customer orderwithin the target window hang time, abuzzer on the timer would go off signalingDTW employees to identify the blockerand write it down in the blocker log. Inmany cases, the blocker was obvious,while in others DTW employees held im-promptu discussions to figure out what theblocker was.

The team systematically analyzed thereasons recorded in the blocker logs everytwo weeks. The team used Pareto chartsand fishbone diagrams to identify themost frequent and important blockers.They challenged and encouraged the DTWemployees to generate solutions for elimi-nating or reducing the frequency of impor-tant blockers. The managers implemented

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APTE, REYNOLDS

selected solutions, and then the whole pro-cedure was repeated.

In one of the early meetings, the teamdeveloped a fishbone chart (Figure 3)identifying three key causes of slow ser-vice: problems with headsets, out-of-product condition, and poor equipmentlayout. With the help of restaurant teamsand DTW employees, the team membersdeveloped and implemented plans forsolving each of these problems in each ofthe four restaurants. For example, they

solved the headset problem by instituting aprocedure for testing all headsets regularlyto ensure that they worked properly, andby ordering and stocking adequate suppliesof frequently needed batteries and replace-ment belts.

The four restaurants repeated this pro-cess for about 10 months until theyachieved the major goal of 60 secondswindow hang time. The following aresome of the major changes they made tooperational procedures and facilities.

Equipment

'No headsets andheadsets not working*

Poor equipmentlayout*

Too many types ofpackaging boxes

Low sales items

Inadequate staffing

No order-displaymonitors

Menu-board clarity

No best-practicestandards

Item pricingATime spent incounting change

Packing errors

Methods

Figure 3: The DTW lest team used the blocker log to construct this fishbone chart during itssecond brainstorming session when it analyzed the causes of delay at drive-through-windowoperations of the four test restaurants. It then classified the causes and plotted them. Next itdetermined 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 restaurantteams generated solutions for eliminating these causes and implemented them in the testrestaurants.

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categorized under the lessons learned inthe test:

(1) They rationalized process flow andimproved equipment layout to eliminatewasted motion and to reduce service time.The employees of each restaurant totallyreorganized their drive-through areas, put-ting products, condiments, bags, boxes,cups, and salads in more convenient loca-tions. They positioned each item along thepack line according to its demand level.High demand products were made easilyaccessible to the packers and were alsoplaced in the display packing system to bemore visible to the cooks and the DTWleaders so that they could replenish thosejust in time. Changing the orientation ofthe 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 verypowerful idea. It streamlined the move-ment of products from the kitchen to thepacking area to the window. Moreover, itreduced the number of steps a packer tookfrom about six to two and saved precioustime and effort in packing each order. Therestaurants also bought some additionalequipment. For example, they installed"pack monitors" that were connected tothe order-taking system. These pack moni-tors were instrumental in accurately andquickly informing packers of the specificcontents of every order while the orderwas being taken and entered into the sys-tem by the window person. Finally, therestaurant moved its equipment (coolers,warming cabinets, cup dispensers, and soforth) around to make walking throughand servicing the drive-through area mucheasier.

(2) They changed the product mix andspecifications. The restaurants streamlinedtheir menus to eliminate the "out-of-product" blocker. They eliminated a num-ber of slow-moving items, such as Frenchfries, Kentucky nuggets, and sandwiches.At one restaurant, this alone reduced aver-age window hang time by as much as 20seconds. They replaced multiple desserts

The profit margin had erodedfrom 16 to eight percent.

with a single dessert item. The team tested"even-dollar pricing" for the big-packitems 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 cashiersaved a lot of effort and time countingchange. The even-dollar items averaged 15to 20 seconds less at the window.

(3) Many small process improvementsultimately added up to a large improve-ment. The restaurants implemented anumber 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 redundantpackaging boxes so that packers neededonly one or two standard boxes to packany order. Thus, packers could focus onpacking orders in the shortest possible timewithout worrying about whether they wereusing the proper box.

(4) They used headsets to create cus-tomer focus and to convert serial activitiesinto parallel ones. The use of headsets byall DTW employees allowed them to per-

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APTE, REYNOLDS

form their jobs while simultaneously lis-tening to customer orders. For example,the headset allowed a packer to beginpacking as soon as a customer placed anorder, instead of waiting for the ordertaker to relay the completed order. Thisalso helped improve order accuracy. Con-verting serial activities into parallel ones inthis manner proved very useful in reduc-ing the window hang time. By listening tocustomer orders cooks better understoodthe demand patterns for different productsand could more effectively adjust produc-tion quantities and timings,

(5) Given the customer's participationin the service process, the customer shouldbe given clear instructions on what he orshe is supposed to do. One simple ideawas to install clear signs, such as an order-here sign at the drive-through menu boardspeaker. This reduced customer confusionand thereby the time spent at the menuboard. Another idea was to rearrange themenu board to improve its clarity so thatcustomers could place orders faster andmore easily.

(6) The restaurants used the timer as afocal point for motivating team members.The DTW timer was perhaps the singlemost important tool in improving thespeed of service. The timer served as aconstant reminder to the DTW employeesthat the customers were waiting. Onceeach customer departed, the timer dis-played both the window hang time forthat customer as well as the average win-dow hang time since the beginning of thatday. Serving as a scorecard and as a focalpoint for motivation, the timer helped eachrestaurant's DTW leader set a pace duringrush times.

(7) They created an environment con-ducive to problem-solving, establishedsimple procedures so that employees couldsuggest improvements, and acted immedi-ately on suggestions. In addition to makingthe blocker log available, Reynolds and theteam strived to create a nonthreatening en-vironment and to encourage DTW employ-ees to come up with ideas for improvingthe process. They implemented several ofthese ideas; some worked, others did not.

Converting serial activities intoparallel ones proved veryuseful.

But the team made it a point to encourageemployees to try anything that seemedreasonable. The team monitored the im-pact of implemented changes closely sothat it could discontinue whatever changedidn't seem to work. One of the importantrules the team followed was to act immedi-ately on employee suggestions, that is, todecide quickly if it would implement asuggestion and, if so, to implement it im-mediately. This created an unprecedentedlevel of excitement and enthusiasm amongDTW employees.

(8) Rigorous training and motivatingemployees through individual or team in-centives were keys to process improve-ment. Prior to the test, employees weresimply assigned to DTW without receivingany special training in how to work effec-tively and efficiently in the DTW area. Theteam made specific DTW training a re-quirement for all employees working inthat area. Productivity and camaraderieimproved noticeably. The team recognized

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that several resources, cooks and restau-rant equipment, for example, were sharedby both the DTW area and the front coun-ter area serving the dine-in customers.Consequently, actions of the front counteremployees influenced the performance ofthe DTW area. To achieve the test goals,all employees in the restaurant had to con-tribute to its success. Some restaurantsused games and awards to get all their em-ployees involved in the DTW test. For ex-ample, if the DTW employees hit the targetwindow hang time, all the restaurant em-ployees, and not just the DTW employees,were rewarded for their performance.These rewards included specially printedT-shirts, gift certificates, and pizza parties.The rewards proved powerful in strength-ening the pride that DTW employees tookin improving their speed of service whilealso improving the morale of the entirerestaurant team.

(9) The restaurants made process im-provement a way of life for managers. Thecompensation of restaurant general man-agers is tied to the performance of their in-dividual restaurants. As the test pro-gressed, operational performance began toimprove noticeably, and the general man-agers became increasingly committed tothe idea of continuous improvement. Theyassumed ownership of the test, and theystarted to identify so closely with the goalof reducing service time that it became in-grained in their thinking. Interestingly, thelanguage of restaurant general managerschanged. Even during casual conversa-tions, they talked in terms of speed-of-service times. For example, they would saythat they had had a 48-second day or a40-second lunch hour.

(10) The team always kept an eye onthe competition. Through the use of mar-ket tracker surveys, the team regularlyconducted service-time studies on immedi-ate competitors within the test area. Theonly way to remain competitive was to setsuitably aggressive service-time targets.

The restaurant general managers contin-ually sent notes to Reynolds outlining theirsuccess stories and sometimes even theirfailures. They also sent timer tapes from allthe restaurants each week. Reynolds en-tered the window-hang-time results for theindividual test restaurants into a PC-basedsoftware package that generated processcontrol charts, such as X-bar and R-barcharts (Figure 4). The main reason forchoosing this software package was that itwas easy to use and had attractive graphicsthat the team could interpret easily. As therestaurants gradually implemented processimprovement ideas, the team expected thewindow hang time to decline steadily.Hence, by definition, the system was notexpected to be in a stable state while theDTW test was in progress. Therefore, the

Slow service could have aruinous impact on productinnovation activity.

team did not use the X-bar chart duringthe test for statistical process control per sebut used it mainly to ensure that the trendline for window hang time was a decliningone. On the other hand, the team used theR-bar chart in the traditional manner toensure that the range, that is, the variabil-ity, of the system was under control andwas not increasing. The charts allowed all

May-June 1995 17

APTE, REYNOLDS

20 25 35 40

Figure 4: The DTW lest team used statistical process control charts for monitoring trends inaverage window hang lime and for controlling its variability at the four tesl restaurants. Thesecharts were produced in week 43. They were drawn using window-hang-time data for the 23weeks ending in week 42, the last week of test, for one of the test restaurants. The X-bar chartis essentially a plot of the average window hang time. Of critical importance in this chart arethe upper and lower control limits (UCL and LCL), which are computed on the basis of a 99percent confidence interval for sample data. In using a control chart, one generally considers aprocess to be stable (in control) if most data points fall between the UCL and LCL lines. Givendeclining hang time, that is, instability of the system, we mainly used the X-bar chart duringthe 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 incentivesand games for DTW employees in that restaurant. The R-bar chart plots the average of therange (that is, the difference between the longest and the shortest time) for window hangtimes 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 theprocess 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-

creased and the excitement grew. One res-

taurant team got so excited that they vid-

eotaped 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 tbe 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-

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KENTUCKY FRIED CHICKEN

Figure 5; Drive-through-window-service timeshows a steady improvement. Average win-dow hang time was computed for the fourtest restaurants together during the DTW test.The average window hang time declinedfrom the initial average of 125 seconds to 60seconds 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 ResultsThe team achieved the seemingly impos-

sible goal of 60 seconds window hangtime. The restaurants did not advertise thisspeed-of-service improvement, but thecustomers certainly found out, for businessgrew significantly. Though it was not anexplicit goal of the test, the labor produc-tivity showed substantial improvementwith obvious implications for cost perfor-mance. As a result, the profit margin in-creased from about eight percent beforethe test to about nine percent after the test.The QSC and OFR scores for the test res-taurants went up and their performance onthe key customer attributes in the markettracker survey showed across-the-boardimprovement. As expected, the speed ofservice category showed dramatic im-provement.

Compared to the rest of the district andthe division, the four test restaurants sub-stantially improved their overall perfor-mance during 1991 as compared to theiroverall performance in 1990:

(1) They increased customer transac-tions. The annual DTW customer transac-tions for the test restaurants increased by29.5 percent while the transactions for thedistrict and the division decreased by threepercent 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 salesfor the district and the division declined by0.5 percent and one percent respectively.

(3) They improved productivity. Laborproductivity as measured in DTW transac-tions per team labor hour for the test res-taurants increased by 12.3 percent whilethe productivity for the district and the di-vision declined by 0.4 percent and threepercent in the same time-frame. It is alsointeresting to note that the total DTW la-bor hours, that is, the number of employ-ees in the DTW area, were not reduced inany of the test restaurants.

Looking at these improvements, onemay ask, was this simply a Hawthorne ef-fect? (That is, were these improvements aresult of all the attention the team gave theDTW employees and not a result of var-ious operational improvements?) KFC hasreplicated the operational changes imple-mented in the test at other restaurants andhas seen a similar persisting improvementin speed of service and labor productivity.The answer to that question is no, it is nota Hawthorne effect. The improved perfor-mance has come primarily from the qualitymanagement program, or more specifically.

May-June 1995 19

APTE, REYNOLDS

from various operational improvements. Infact, with further operational improve-ments made since the test, KFC has nowreduced the average window hang time toabout 30 seconds.

After successfully concluding the test,KFC managers decided to gradually rollout the speed-of-service program to otherKFC-owned restaurants in the division.They asked some team members to visitother restaurants to explain the actionsthat had led to such dramatic improvementin the speed of service at their own DTWoperations. Not surprisingly, other restau-rant general managers quickly understoodthe program's benefits and some voluntar-ily decided to join the program. With someteam members as coaches, KFC set up atraining session for those that signed on tothe program. KFC bought and installedcomputerized timers and made variousother operational improvements in the res-taurants that signed on to the program. Asthe team members shared the key lessonsfrom the DTW test, this new batch of res-taurants learned quickly. What took theteam 60 to 90 days to learn and under-stand was explained to these restaurantgeneral managers in just a few days. Theymade modest improvements in servicetime almost immediately starting with thefirst week. This next batch of restaurantsreached the goal of 60 seconds in less thanhalf the time taken by the Oklahoma DTWtest team. These findings suggest that athorough benchmarking study of the best-in-class processes could have quickly un-covered many improvement ideas andwould have jump-started the test. But thetest predated the popularization of thebenchmarking concept as we know it to-

day, and hence, for that reason, the teamdid not explicitly undertake benchmarking.

Subsequent to the divisional roll out,KFC implemented the DTW speed-of-service program nationwide. In the pasttwo years, managers and employees at all2,000 KFC-owned restaurants have beentrained to improve speed of service at boththe drive-through window and the frontcounter. Senior managers at KFC monitorthe program through QSC and OFR evalu-ations. Moreover, all restaurant managersare tracking speed-of-service performanceon a "real time" basis, taking corrective ac-tions immediately as necessary. In thistask, the restaurants now use a new, pro-prietary cash register system called MERITthat has a built-in internal timing devicefor 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 windowtimer to track the window hang time.

KFC has also introduced the program ona voluntary basis to over 3,000 franchisedKFC restaurants. Currently, over 1,300franchised restaurants have signed on tothe program, implementing such improve-ment ideas as the use of headsets, chang-

Everyone considered this goalunrealistic.

ing equipment layout, and training DTWemployees. KFC has adopted the 60-second window hang time as the processspecification in its quality measurementprogram throughout the nation.

In summary, quality management at

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KENTUCKY FRIED CHICKEN

KFC rests on the rigorousness of the OFRand QSC programs to continually assessthe quality of both service processes andoutcomes. These measurements are furtherused to improve the underlying processesfor achieving better overall performance.KFC strives to change its detailed specifica-tions as the needs of the marketplaceevolve and industry practices change. Asconfirmed by its experience with the DTWspeed of-service test, the notions of pro-cess focus and continuous improvementthrough empowering its employees are thefoundations of the ongoing quality man-agement program at Kentucky FriedChicken.

ReferencesApte, U- M.; Karmarkar, U. S.; and Pitbladdo,

R. 1994, "Quality management in services:Analysis and applications," working paper94-09-01, Cox School of Business, SouthernMethodist University, Dallas, Texas, forth-coming in Practice of Quality Management.eds. U. Karmarkar and P. Lederer, HarvardBusiness School Press, Cambridge, Massachu-setts.

Shingo, Shigeo 1987, The Sayings of ShigeoShingo: 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, Sbigeo 1988b, The SMED Systew. 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 asthe foundation for the company's current60-second drive-through service time goalestablished in 1992.

"By focusing the OKC team on improv-

ing speed of service at the critical drive-through point of sale, this team was ablenot only improve customer service but alsoto improve the financial position of theunits involved. Transactions increased al-most 30 percent in these stores versusthree percent in the rest of the market andsales outpaced the nontest markets by over17 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 thecompany's current drive-through servicetime standard, this process has also beenadopted in over 1,300 of our franchisedrestaurants as well,"

May-June 1995 21