Case Studies

Burger King Uses Simulation to Improve Operations

Swart, W. and Luca Donno. "Simulation Modeling Improves Operations, Planning, and Productivity of Fast Food Restaurants." Interfaces, 11:6 (1981), 35-47.

The first Burger King fast-food restaurant was opened in 1954 by James McLamore. By 1980, the date of the referenced paper, sales were two billion dollars per year with the annual average sales per store $700,000. In fiscal year 2000, the Burger King system had system-wide sales of $11.4 billion with approximately 53% of its business drive-thru. On average almost 1400 customers were served per restaurant, per day, or approximately 15 million customers daily. Franchisees operated more than 11,340 restaurants in all 50 states and 58 countries and international territories around the world. More than 92% of Burger King restaurants are owned and operated by independent franchisees. However, the small percent of company owned-stores play a critical role. These stores are used to test out new concepts under controlled conditions. Once the concepts have been refined and proven, they are then demonstrated for the franchisees that are encouraged to follow suit. The simulation modeling effort described here was the key mechanism for planning out new concepts to be tested in company owned stores.

From its very beginning, the fast-food concept spread so rapidly that the company sought the help of operations researchers. The operations researchers created a computer model simulating fast food routines to analyze productivity and profit at Burger King. This computer-generated model incorporates many ever-changing facets of customer service, production and delivery at Burger King. One of the earliest applications of the simulation model were a studies of drive-thru service that ultimately revolutionized the fast-food experience. One study led to the separation of drive-thru work into a series of distinct tasks divided amongst three workers. The system-wide potential annual impact was $52 million. Another study increased the distance between the order station and pick-up window to accommodate more vehicles; the potential annual impact was $15 million.

The operations research group moved beyond individual studies to develop a general-purpose simulation model that became the foundation for the Productivity for Planning for Profit Kit. This kit enables restaurant operators to project achievable sales growth for their market by instituting different types of productivity improvement actions. The model was also critical in defining the size and configuration of new restaurants for different markets. Lastly, the simulation explored the labor component of operations with a special focus on the kitchen area. The estimated impact was a 1.5% reduction in labor costs. This translates into a system-wide impact in excess of $32 million in 1980.

Local franchisees have come to appreciate the value of the simulation model. Wally Crawford of Des Moines, Iowa said, "For the first time we have a tool that can evaluate new concepts as well as or better than even the most experienced operators." Mike Simmons of Omaha, Nebraska, stated that prior to development of the simulation model, all they had was "sophisticated guesswork." In summary, the flexibility of a simulation model has enabled Burger King to adapt their stores to changing conditions while continuously improving individual store productivity and customer service.

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