SVKM’s Narsee Monjee Institute of Management Studies

Mukesh Patel School of Technology Management and Engineering

Final Report On

Analysis of a Restaurant based on

McDonald’s Queuing Model

By

Meesum Ali Chunawala M011

Neil Patani M052
Saket Sayankar M054
Parth Sheth M055
Jeet Bhanushali M203

Faculty Mentor
Dr. Shagun Srivastava
 Table of Contents

Sr. No Topic Page No

1 Acknowledgement 3

2 Abstract 4

3 Introduction 5

4 Queuing Theory 7

5 Queuing Model 8

6 Methodology 11

7 Analysis 14

8 Result and Discussion 15

9 Conclusion 16
Acknowledgement

Behind every successful project and experience there are a lot of people who gave time,
heart and soul to make it one. We would sincerely like to take this opportunity to
appreciate and thank all those who gave us their precious time, shared their in-depth
knowledge and experience and became our mentor providing their guiding and helpful
hands in completing this project as a fulfilment for this Report and Analysis and
sincerely thanking our Associate Dean Dr. Anuja Agarwal for designing our curriculum
in such a way that we are exposed to both theoretical and practical aspects of
management through this Report and Analysis.

Also, We would like to thank our Mentor Dr. Shagun Srivastava for helping us
understand the right approach to work, to gain knowledge and to be systematic about
the project to be accomplished. A right guidance and to the point explanation for the
outcome expected helped me follow a correct path towards successful completion.

Finally, We would like to thank our institute Mukesh Patel School of Technology and
Management Engineering for providing me this opportunity which helped us a lot in
enhancing our professional skills and knowledge. Also, We would like to extend our
gratitude to all those people who were directly or indirectly associated with the
preparation of this report.
Abstract

In India, rising disposable income has increased the frequency with which people dine out.
According to research conducted by AIIMS, Bangalore, major fast-food chains such as
McDonald's arrived in India in 1996, and shortly after, other major outlets such as Domino's,
Pizza Hut, KFC, and others followed suit. Due to changing customer behaviour and
demography, the Indian fast-food market is predicted to develop at a compound annual growth
rate (CAGR) of 18% by 2020.

When it comes to fast food consumption, India appears to be in the same situation as the United
States. The most recent findings should be used as a guideline, and we should aim to reduce
our reliance on fast food in order to live a healthy lifestyle.
This report examines McDonald's success story and the challenges they experienced in
establishing a significant fast-food chain in India. The Queueing Problem is one such challenge
that each fast-food restaurant encounters.

In today's fast-paced society, line-ups are more evident in real-world situations. As a result,
queuing or waiting line theory predicts a system's behaviour in terms of performance
measurement. Management needs data on this behaviour in order to establish or decide on the
appropriate level of service based on customer satisfaction.
Introduction

The Fast Food Industry

The Fast Food Market started in the 1920s and has been rapidly growing and evolving with big
name fast food chains such as McDonalds, Taco Bell, Wendy’s, Burger King, KFC, Jack in the
Box, White Castle, etc. In recent years, more health conscious fast food companies such as
Chipotle, Pita Pit, and BurgerFi emerged offering meals that include ingredients with less
pesticides, are hormone and antibiotic-free, and served in biodegradable or recyclable take-out
containers.

With over 230,000 fast food establishments and yearly revenue over $190 billion in America
alone, the fast food market has proven to be a highly lucrative industry.

The demand of fast food supply is on the increasing trend especially in a society where
consumers are busy working. Past research has shown that most of the working populations
are having too little time at home. Therefore, they are
demanding a suitable product such as fast food that suits their lifestyle. People
have become a popular choice with fast food especially during the lunch break period.
It will make the fast food restaurant crowded with people in the area of the waiting line at the
ordering-service counter.

Origins
Ray Kroc found a small but successful restaurant run in California by brothers Dick and Mac
McDonald, and was stunned by the effectiveness of their operation. The McDonald’s brothers
produced a limited menu, concentrating on just a few items – burgers, fries and beverages –
which allowed them to focus on quality and quick service.

They were looking for a new franchising agent and Kroc saw an opportunity. In 1955, he
founded McDonald’s System, Inc., a predecessor of the McDonald’s Corporation, and six years
later bought the exclusive rights to the McDonald’s name and operating system. By 1958,
McDonald’s had sold its 100 millionth hamburger.
The Vision Statement of Ray Kroc

Ray Kroc wanted to provide food that was of high quality as well as a uniform method of
preparation.He promoted the slogan, “In business for yourself, but not by yourself.” His
philosophy was based on the simple principle of a 3-legged stool: one leg was McDonald’s
franchisees; the second, McDonald’s suppliers; and the third, McDonald’s employees. The
stool was only as strong as the three legs that formed its foundation.

The Queueing Problem

Most waiting line problems are centered on the question of finding the ideal level of services
that a firm should provide. Long waiting lines of customers will give negative emotions or
responses while customers are queuing and waiting to
buy food through the service counter. The management of McDonald’s Queuing Model
can institute operational techniques such as providing more equipment and using
simulation models to reduce customer’s waiting time in line. This phenomena occurs on the
peak hour which is when the customers are having their lunch at 12pm until 2pm. When a new
customer arrives at the service lane, the customer waits until the preceding customer’s order is
complete and then drives for service.
Queuing Theory

As society grows and becomes increasingly interdependent for various purposes, the number
of queues or waiting lines grows. We encounter waiting lines whether we are at a doctor's
office, a gas station, a regular store, a phone booth, or a post office. Waiting lines do not have
to be for human beings; they can be for non-humans as well, such as machinery waiting for
maintenance or planes waiting for permission to land at airports. Because customer pleasure is
so crucial, service patterns are getting increasingly convoluted, and controlling waiting lines is
becoming more difficult. The dynamics of life, i.e., a rapidly changing environment due to a
variety of factors, including changes brought about by the information technology revolution.

As it is, there are enough uncertainties in the behaviour pattern of customers (and hence arrival
patterns are highly uncertain and probabilistic), the system is becoming further difficult due to
the type of service requirements and expected level of satisfaction being so variable. Designing
the service facility for any expected pattern is thus highly complicated.

If we want to improve service, we'll have to either increase the client wait time or increase the
number of service facilities. Thus, waiting lines can be decreased by increasing capital
investment in improving facilities, or we should be prepared to bear sales losses owing to
clients who have changed their minds (those not ready to wait). In today's fast-paced society,
lineups are particularly noticeable in real-life circumstances. Thus, queuing or waiting line
theory is the prediction of a system's behavior in terms of performance measurement. The data
on this behavior is needed by management in order to build or decide on the right degree of
service based on the level of client satisfaction.

The Cost of Waiting Customers

It is not always simple to calculate the cost of waiting when people are waiting for a service,
unless the waiting consumers queue can be accurately calculated. Waiting for tools to be
supplied can be costly in some cases, such as for mechanics.
Peons waiting at a photocopier or a counter worker waiting for a customer can also be costly.
In the case of external clients, the best that can be cost is 'goodwill' in the case of a low waiting
system or 'ill-will' when consumers have to wait longer owing to insufficiency of service
facilities or system downtime (such as computers not working) and so on.
When a customer becomes impatient and departs, it results in a loss of money as well as the
possibility of future business owing to the customer's discontent. This can lead to additional or
increased losses as word spreads about inefficient or poor service, such as patients waiting in
hospitals. In addition to the amount of time spent waiting, the quality of service provided
reflects customer happiness or discontent, perhaps resulting in a loss of business or, in severe
situations, a loss of life.
Queuing Model

A useful queuing model should (a) represent a real-life system with sufficient accuracy and (b)
be analytically tractable. A queuing model based on the Poisson process and its companion
exponential probability distribution often meets these two requirements. A Poisson process
models random events such as customer arrival, as emanating from a memory-less process.
That is, the length of the time interval from the current time to the occurrence of the next event
does not depend upon the time of occurrence of the last event. In the Poisson probability
distribution, the observer records the number of events that occur in a time interval of fixed
length. In the negative exponential probability distribution, the observer records the length of
the time interval between consecutive events. In both cases, the underlying physical process is
memory-less.

Models based on the Poisson process often respond to inputs from the system in a manner that
mimics the response of the system being modeled to those same inputs. The analytically
tractable model results yield information about the system being modeled and the form of their
solution. Even a queuing model based on the Poisson process that does a moderately good job
of mimicking detailed system performance can be useful. That such model often gives worst-
case scenario evaluations appeals to system designers who prefer to include a safety factor in
their designs. Classic queuing theory is often too mathematically restrictive to be able to model
most real-world situations exactly. This restriction arises because the underlying assumptions
of the theory do not always hold in the real world.

For example, the complexity of industrial production lines with detailed product-specific
characteristics cannot be handled with pure mathematical models alone. In these situations,
special simulation models have to be developed to simulate, analyze, visualize and optimize
time-dynamic queuing line behavior. An important theorem known as the Little’s Law is the
fundamental principle of queuing theory that explains the relationship between three critical
parameters in a queuing system. The parameters are: the average number of customers in a
queue L, the average waiting time W for a customer in the queue and the average arrival rate
O of customers into the queue system. Little's Theorem has become widely used because of its
simple theoretical framework and general practical application. The Little’s Law has been used
in diverse fields including operation management and computer architecture as well as in many
manufacturing and service industries, on which Whitt and Wolff have written extensive
reviews. The classic Little’s Law has been extended to cover additional applications. Under
steady state conditions, the expected number of customers in a queue is equal to the product of
the mean arrival rate and the average time a customer spends in the queue. Letting L = expected
number of customers in queue, O = mean customer arrival rate, W = average waiting time for
a customer,
the Little’s Law states that
L=OW

Satisfaction is a customer-centered personal reaction, which depends on expectation and

perception of the customers towards the service provider. Customer satisfaction is a key
element of business success strategy as satisfied customers are critical to long-term business
success in highly competitive markets, such as the fast food industry. Higher customer
satisfaction will lead to higher customer loyalty and higher future revenue.

As such, customer satisfaction is widely used to explain and measure the products and services
provided by a company that meet their customer’s expectations. Customers’ experience in
waiting in the queue plays a crucial role in customers’ satisfaction. Minimum waiting time to
receive service is one of the important determinants of service quality. Delays in services can
lead to negative impact on service quality and customer satisfactions. Hence, reducing waiting
time and shortening queuing length can enhance service quality and customer satisfaction.

Ordering Model of McDonald’s:

Assumptions of the Model:

One of the most extensively used and simplest queuing models is the single-channel, single-
phase model. It is based on the assumption that seven conditions are met:
1. Arrivals are handled on a first-come, first-served basis.
2. Regardless of the length of the queue, every newcomer waits to be served; there is no delay
or reneging.
3. Arrivals are unrelated to those that came before them, but the average number of arrivals
(the arrival rate) remains constant across time.
4. Arrivals follow a Poisson probability distribution and are drawn from an infinite or very
large population.
5. Service time varies from one passenger to the next and is unrelated to one another, although
it is known what the average rate is.
6. Both the number of things in queue at any given time and the length of time a particular item
spends in line are random variables.
7. The negative exponential probability distribution governs service times.
8. The average rate of service is higher than the average rate of arrival.
9. Customers in line have a limitless amount of waiting space.
Methodology

Characteristics of Queuing System:

We take a look at the three parts of queuing system:
(1) the arrival or inputs to the system(sometimes referred to as the population),
(2) the queue or the waiting line itself, and
(3) the service facility. These three components have certain characteristics that must be
examined before mathematical queuing models can be developed.

It is important to consider the size of the population, the pattern of

arrivals at the queuing system, and the behavior of the arrivals. Hence:

- Size of the Population

Population sizes are considered to be either unlimited (essential infinite) or limited (finite).
When the number of or arrivals on hand at any customer's given moment is just a small portion
of potential arrivals, the population is considered unlimited. For practical purposes, in our
examples the limited customers arriving at the counter to place the order of burger. Most
queuing models assume such an infinite population.

- Pattern of arrivals at the system

Customers either arrive at a service facility according to some known schedule of customers or
else they arrive randomly. Arrivals are considered random when they are independent of one
another and their occurrence cannot be predicted exactly. Frequently in queuing problems, the
number of arrivals per unit of time can be estimated by a probability distribution known
as the Poisson distribution., For any given arrival rate, such as two passengers per hour, or four
airplanes per minute, a discrete, Poisson distribution can be established by using the
formula :

Where
P (n;t) = probability of n arrivals
λ = average arrival rate
e = 2.18
n = number of arrivals per unit of time

- Behavior of the Arrival

Most queuing models assume that an arriving passenger is a patient traveler. Patient customer
is people or machines that wait in the queue until they are served and do not switch between
lines. Unfortunately, life and quantitative analysis are complicated by the fact that people have
been known to balk or renege. Balking refers to customers who refuse to join the waiting lines
because it is to suit their needs or interests. Reneging customers are those who
enter the queue but then become impatient and leave the need for queuing theory and waiting
line analysis.
How many times have you seen a shopper with a basket full of groceries, including perishables
such as milk, frozen food, or meats, simply abandon the shopping cart before checking out
because the line was too long? This expensive occurrence for the store
makes managers acutely aware of the importance of service level decisions.

Single Channel-Single Phase Queuing Method

In the single channel-single phase queuing method will calculate:
 the customer arrival rate (λ),
 service level (μ),
 the average queue in the system (Ls),
 the average customer queuing in the queue (La),
 the chance of the customer being in the queue (Pn),
 the average waiting in the system (ws),
 the time expected by the customer waiting in the queue (Wa),
 the busyness of the server, and the server unemployment rate.
Research Methodology

In this research study, a quantitative method is used as the research methodology in order to
achieve a research objective.

The population is made up of the customers of McDonald’s Restaurant who are regularly
having their lunch in fast-food restaurants at lunch peak hour in any period of year.
The population of McDonald’s has some customers in any period of the year for the lunch time
period.

In this research study, a questionnaire is used as the data collection instrument.The

questionnaire is divided into two parts, which are Part A and Part B.
Part A, is the demographic information of respondents. Part B consists of the dominant
factors for a customer to be in the waiting line during the lunch hours.

The data will be analysed by Statistical Package for the Social Sciences.
For the simulation part,the data that is collected are the customers’ inter-
arrival time (uniform distribution) and service time (normal distribution).

Once data is collected, data will be stimulated and calculated by using the formulas of
selected simulation models, which are related to the queuing theory system. All the calculation
is done through Microsoft Excel by using the Excel solver.
Analysis

Assumptions of Analysis

 We are not estimating the individual total time in system, but we are aiming at finding
a variance reduced estimate of the average time in system
 Cutting off the beginning of the simulation from the statistics is a standard procedure
 We will call this period in the simulation the warm up period
 Λ ( Arrival rate ) = 10 / hour
 µ ( Service rate) = 12/ hour

The above image shows how we have calculated the average waiting period.
Total 550 observations have been observed and created.
We have calculated
 The arrival time,
 Time between arrival,
 Starting service time,
 Finishing time,
 Do we need to wait in the line,
 Waiting time in line,
 Total Waiting time
 Average waiting period
Results and Discussions

 To recap, each customer arrival, service and departure time in the restaurant on each
day is recorded.
 Restaurant has 1 service server for ordering food.
 The type of queuing system used by restaurants is the Single Channel-Single Phase
model, where there is a single line to fulfill services.
 The average waiting period is 0.17 hour that is approximately 10 minutes.
 This average period is almost equivalent to the industry standards.
 There is an increase in efficiency to reduce the service time so that there is no long
waiting period.
Conclusion

Based on this research, the suggestion and feedback from customers at McDonald’s Restaurant
are important in providing services to give great satisfaction to the customers.
It is to improve the customer’s frequent purchasing of food in McDonald’s Restaurant and then
the company will achieve high profits and customer loyalty.

The type of queue applied by McDonald's is Single Channel Single Phase with the service
discipline is FIFO (First In First Out).
From the results of the calculation of the characteristics of the queue using a single channel
single phase:
1.) The average queue in the system consisting of three persons.
2.) The average queue in the queue consisting of two persons;
3.) The probability of customers queuing is up to satisfactory.
4.) The average waiting time in the system is sufficient to handle the flow; and
5.) This shows that McDonald's can be said to be good.