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Green Movement

A McDonald’s

Sustainability Project

Vin Sathyamoorthy

Mitch Daar

Yousef Shaban

Sahand Sepehrnia

November 14, 2012

Kellogg Design Challenge | Green Movement | November 14, 2012

Challenge 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


Problem Statement


• People want to get in and get out

quickly (“To 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

Challenges with Sustainability

It appears as if there is a

fundamental disconnect

between what McDonald’s can

do well and what they can do sustainably.


Challenge Contents

Client and Context

Methodology




Step 4: Concept



Methodology

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 observe them

further

Develop a solution to

address target’s needs


Challenge Contents

Client and Context

Methodology




Step 4: Concept


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?


Key Takeaways

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.


Challenge Contents

Client and Context

Methodology




Step 4: Concept



Observation 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 Insights


Challenge Contents

Client and Context

Methodology



Step 3: Detailed Observation & Key Insights

Step 4: Concept


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


Challenge Contents

Client and Context

Methodology




Step 4: Concept



Analysis of “Wooosh!”

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







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


Break-Even Analysis

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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