Future Shock Therapy: A World With No McJobs, Part II
In 2013, McDonald's had total revenue of 28.1 billion dollars and a net profit of 5.5 billion dollars. (source) Per store sales average 2.5 million dollars. Worldwide, McDonald's operates more than 33,000 stores and employs more than 1.7 million people. (You may have seen news stories about how Subway had passed McDonald's as the largest fast food place. Subway has around 41,000 locations- but the average location only pulls in around 480,000 dollars annually. Subway and McDonald's aren't even in the same category.) According to Eric Schlosser, author of Fast Food Nation, McDonald's is the largest consumer in the United States of beef, potatoes and apples, in addition to being the largest operator of playgrounds in the United States. Subway doesn't even have their own hard-hitting attack piece bestseller. Amateurs. One in eight Americans has at some point been employed by McDonald's. (That's important to later discussion. Remember that.) Its estimated that half of the burgers sold in the United States are sold by McDonald's.
In short, McDonald's is huge and ubiquitous to an extent that many companies today simply aren't. Its no coincidence then that McDonald's has gone on to occupy a symbolic place in society's consciousness. Sociologist George Ritzer in his book The McDonaldization of Society argued that McDonald's (or more correctly, a generic fast food place) had replaced government bureaucracies as a model of inhuman, rationalized socialization in modern society. Not many companies go on to become sociological phenomena.
Nor are all that many companies used as economic metrics. The Economist famously uses Big Mac prices to determine the undervaluation or undervaluation of world currencies. You can view it here, although details require a subscription to The Economist.
There's a reason that McJob- a term coined by a sociologist in a single Washington Post article- would attain and maintain cultural relevance. Described by Merriam-Webster in 2003 as "a low-paying job that requires little skill and provides little opportunity for advancement" and described by Douglas Copeland, author of Generation X in 1991, as "a low-pay, low-prestige, low-dignity, low benefit, no-future job in the service sector. Frequently considered a satisfying career choice by people who have never held one." A McJob was a concept and a condition simply looking for a word adequate to describe it. Not many companies spawn a whole new word, especially not one that is non-proprietary,
When José Bové and his followers worked to dismantle a McDonald's in France in 1994, they weren't just trying to dismantle a place that would in the future sell industrially prepared meat products, they were trying to dismantle a system of globalization and homogenization and standardization. They were trying to fight the tide of history that is McDonald's. And well, to be honest, they lost.
But, you might say, McDonald's is losing. Other fast food companies are on the up. The entire system is being torn down by fast casual restaurants and artisanal food trucks. Ten years from now, McDonald's will be deader than Microsoft. And you're right in that sales have stalled. But you're wrong in that almost every competitor is still little more than a speck of dust to the Golden Arches. Even the so-called Breakfast Wars have done nothing to McDonald's earnings. And you're wrong in that McDonald's as a system, as the crystallization of everything fast food, is behind McDonald's the company's own stymied efforts, as even an industry analyst magazine like QSR will tell you. McDonald's has been losing footing to companies that have learned to act more like McDonald's.
So that is where we are today. Stay tuned to A World With No McJobs, Part III where we discuss the elimination of the McJob and the possibility of companies that don't act like McDonald's. Its interesting to note that of the four primary components of McDonaldization identified by Ritzer one is control- the replacement of humans by non-human technologies.
Friday, May 16, 2014
Future Shock Therapy: A World With No McJobs
hello world.
I'm new to blogging, but not to ranting, raving and constructing essays for fun. Figure I'll see if there's an online audience for the things I pester my circle of friends with.
My credentials? I don't have any. But I have a keen interest in technology and speculative fiction. I'm also an avid reader and writer so, taken with a grain of salt, maybe this will be worthy of a read.
This is going to be a series of essays ('blogs') entitled 'Future Shock Therapy' and will deal with the possible effects of "disruptive technologies", automation and crowd-sourcing on a few sectors of the economy. This first essay series will deal with fast food- quite relevant considering the recent strikes and protests and quite important for reasons that will be detailed below. Part I deals with some of the history behind fast food. Part II will detail the current landscape of the fast food industry and Part III will delve into the hypothetical namesake of this series. Hope you enjoy.
Future Shock Therapy: A World With No McJobs, Part I
Fast food workers all over the United States have risen up to demand $15 an hour. Obviously, most industry analysis is opposed to this (for patently ridiculous reasons), including the fact that in order to pay their workers $15 an hour they might have to change the Dollar Menu into the Dollar Twenty Five Menu (shock! horror! Here you can find one journalist decrying a 24% cost increase as a reason to not support this wage increase. That 25% price increase is orders of magnitude worse than the 17% predicted by Forbes here, so much so as to deserve a retraction.) A major argument used by these industry shills is that this higher wage would not result in price-raises or other cost-cutting measures (such as reducing waste or slowing down the cycle of generous share buybacks and dividends or maybe not spending so much money opposing a higher minimum wage) but would instead result in higher automation and therefore, less jobs. Even Slate got in on this argument, despite Seattle's minimum wage increase being remarkably less drastic than the immediate $15 called for by fast food workers. For the record, I do not believe that is the case. McDonald's, like its brother in low wages and even lower treatment of employees, Wal-Mart, is a business catering to the poor. Anything that results in more spending power on the part of the poor will result in higher profits for McDonald's and other companies like it. That's why Wal-Mart derives so much profit from programs like food stamps (a point for a later blog post). Obviously, McDonald's can't benefit from food stamps as it provides prepared food but it would nonetheless benefit from an increase in spending among the poor. The reduced spending power of the poor and the subsequent diminishing returns from that market is why McDonald's has recently tried to expand into slightly more upscale markets- with middling success.
But all of these arguments did get me thinking- what would the world look like if the fast food industry went for the highest level of automation possible? What would it be like in a world without McJobs? First, we need to look at how we got to the fast food industry today and for that, we need to look back at the founder of McDonald's. Ronald McDonald himself.
Well, no, actually. McDonald's was founded by two brothers, Richard and Maurice McDonald. Their "Speedee Service System", introduced in 1948, introduced assembly line methods and thinking to what had before been a relatively disorganized industry. But they weren't the first, even if the company they founded would grow to be the largest fast food company in the world (long after they were gone from it, of course). That distinction belongs to a much smaller fast food company - White Castle- and two people with decidedly more obscure names- Walt A. Anderson and Edgar Waldo Ingram. White Castle today has around 400 sites, all centrally owned. McDonald's has upwards of 32,000. Despite this, White Castle is what originated the fast food industry and what gave birth to the market juggernaut that is McDonald's today.
What exactly did Anderson and Ingram do, then? What did they do in 1921 and after, nearly 27 years before the McDonald's brothers started their venture?
They built all of the infrastructure we take for granted in a fast food company- even founding subsidiary companies to meet their unique needs, such as a company to make the paper hats their employees were known for and a construction company to specialize in coating the outside of their buildings in porcelain. They built and managed meat processing plants, bakeries, warehouses- every part of the supply chain necessary for any modern fast food company. At the time, that was a novel idea and they were doing it all without any real model to follow, at least not in their native industry. Their nascent hamburger chain in many ways resembled heavy industry.
They pioneered modern fast food advertising, even down to misleading health claims. They made their restaurants stark and clean-looking, their employees garbed in clinically white outfits. They advertised White Castle in newspaper's and through women's groups as family fare, distributed coupons to get people to make a visit to White Castle a habit. They even held pseudo-scientific experiments to show the health benefits of beef. (Upton Sinclair's The Jungle, a turn of the century equivalent of Supersize Me!, was still on the public's radar, so perhaps they can be forgiven some.)
But most importantly, they standardized food portions and mechanized as much of the food preparation process as possible. Fresh ground beef was formed into balls by a machine, 18 balls to a pound. These balls were placed on the grill and covered with a precise quantity of freshly chopped onions. They were then flipped and flattened into a patty shape, with a specified time for cooking. One half of the bun was placed on top of the cooking patty and the other was placed directly on the grill. A dill pickle was inserted before assembly and delivery to the customer. Condiments such as ketchup and mustard were left to the customer to apply as they saw fit. In 1951, they added the trademark five holes in the patties after observing that it sped up the cooking process. This whole process remained mostly unchanged until the advent of frozen patties but what was most important was the idea and it is the idea that has lived on. You could apply assembly line techniques and scientific management even to something as squishy as a hamburger. You could make a grill cook nothing more than a technician. You could ensure that there would be nothing personal or human in your product- it would be the same burger everywhere you sold it. It follows from that line of thinking then that you could remove as many human hands as possible from the process and make a burger from nothing more than an intricate series of movements by a machine. But more on that later.
So, if White Castle did it first, then why is McDonald's the company everyone talks about? Well, that comes down to one man- Ray Kroc, a businessman so enterpreneurial he once said of his competitors “If they were drowning I'd put a hose in their mouth.” Charming. A milk-shake machine salesman who took interest in the McDonald's brothers' hamburger stand, he took the industrial system of food service (a McDonald's hamburger weighs 1.6 ounces (45.4 grams) and spans 3 and 5/8 inches (9.2cm); it is garnished with a quarter of an ounce of chopped onion, a teaspoon of mustard, a tablespoon of ketchup and a pickle slice one inch in diameter.) and paired it with a ruthless business acumen and a rather devious way of franchising while still maintaining corporate control. After ousting the actual McDonald's brothers out of the business (for a cool $2.7 million dollars) he set about franchising rapidly, something the brothers, with a decidedly White Castle mindset, were opposed to. His chief financial officer, Harry Sonneborn, was put in charge of buying up restaurant locations for franchisees to lease- with a substantial mark up based on sales. Sonneborn even liked to boast that McDonald's was more of a property business than a hamburger business and in some ways, this is true. Kroc just liked to say “Now we will have a club over [franchise managers], and by God there will be no more pampering or fiddling with them”. McDonald's bucked the trend of territory franchising used by other fast food companies, such as Dairy Queen, where a franchise would buy the rights to a specific area of the world and would then buy materials from the parent company. This meant less licensing losses due to franchisees licensing sub-franchises in the "territories" and, because McDonald's took their cut from sales, not from procurement, it gave their franchises greater incentive to succeed.
But what about all the other things we think about when we think of fast food? McDonald's has to have invented some of it, right? Not really. Cheeseburger? Technically a point of contention, although McDonald's isn't even one of the contenders. Drive-thrus? Invented by In-n-Out Burger, another place like White Castle that pioneered fast food methods only to become a small chain as a result. Later popularized by Wendy's and begrudgingly picked up by McDonald's. Really, all of McDonald's innovations were in the realm of business- the McDonald's model of franchising, aggressive real estate procurement, their breakthrough national advertising efforts, et cetera. It certainly wasn't in how to make and serve a burger. (Alright, they made the order by number thing found almost everywhere now, so there's that.)
Alright, so that's a quick and dirty overview of how we got here- but where is here? See A World With No McJobs, Part II for more.
I'm new to blogging, but not to ranting, raving and constructing essays for fun. Figure I'll see if there's an online audience for the things I pester my circle of friends with.
My credentials? I don't have any. But I have a keen interest in technology and speculative fiction. I'm also an avid reader and writer so, taken with a grain of salt, maybe this will be worthy of a read.
This is going to be a series of essays ('blogs') entitled 'Future Shock Therapy' and will deal with the possible effects of "disruptive technologies", automation and crowd-sourcing on a few sectors of the economy. This first essay series will deal with fast food- quite relevant considering the recent strikes and protests and quite important for reasons that will be detailed below. Part I deals with some of the history behind fast food. Part II will detail the current landscape of the fast food industry and Part III will delve into the hypothetical namesake of this series. Hope you enjoy.
Future Shock Therapy: A World With No McJobs, Part I
Fast food workers all over the United States have risen up to demand $15 an hour. Obviously, most industry analysis is opposed to this (for patently ridiculous reasons), including the fact that in order to pay their workers $15 an hour they might have to change the Dollar Menu into the Dollar Twenty Five Menu (shock! horror! Here you can find one journalist decrying a 24% cost increase as a reason to not support this wage increase. That 25% price increase is orders of magnitude worse than the 17% predicted by Forbes here, so much so as to deserve a retraction.) A major argument used by these industry shills is that this higher wage would not result in price-raises or other cost-cutting measures (such as reducing waste or slowing down the cycle of generous share buybacks and dividends or maybe not spending so much money opposing a higher minimum wage) but would instead result in higher automation and therefore, less jobs. Even Slate got in on this argument, despite Seattle's minimum wage increase being remarkably less drastic than the immediate $15 called for by fast food workers. For the record, I do not believe that is the case. McDonald's, like its brother in low wages and even lower treatment of employees, Wal-Mart, is a business catering to the poor. Anything that results in more spending power on the part of the poor will result in higher profits for McDonald's and other companies like it. That's why Wal-Mart derives so much profit from programs like food stamps (a point for a later blog post). Obviously, McDonald's can't benefit from food stamps as it provides prepared food but it would nonetheless benefit from an increase in spending among the poor. The reduced spending power of the poor and the subsequent diminishing returns from that market is why McDonald's has recently tried to expand into slightly more upscale markets- with middling success.
But all of these arguments did get me thinking- what would the world look like if the fast food industry went for the highest level of automation possible? What would it be like in a world without McJobs? First, we need to look at how we got to the fast food industry today and for that, we need to look back at the founder of McDonald's. Ronald McDonald himself.
Well, no, actually. McDonald's was founded by two brothers, Richard and Maurice McDonald. Their "Speedee Service System", introduced in 1948, introduced assembly line methods and thinking to what had before been a relatively disorganized industry. But they weren't the first, even if the company they founded would grow to be the largest fast food company in the world (long after they were gone from it, of course). That distinction belongs to a much smaller fast food company - White Castle- and two people with decidedly more obscure names- Walt A. Anderson and Edgar Waldo Ingram. White Castle today has around 400 sites, all centrally owned. McDonald's has upwards of 32,000. Despite this, White Castle is what originated the fast food industry and what gave birth to the market juggernaut that is McDonald's today.
What exactly did Anderson and Ingram do, then? What did they do in 1921 and after, nearly 27 years before the McDonald's brothers started their venture?
They built all of the infrastructure we take for granted in a fast food company- even founding subsidiary companies to meet their unique needs, such as a company to make the paper hats their employees were known for and a construction company to specialize in coating the outside of their buildings in porcelain. They built and managed meat processing plants, bakeries, warehouses- every part of the supply chain necessary for any modern fast food company. At the time, that was a novel idea and they were doing it all without any real model to follow, at least not in their native industry. Their nascent hamburger chain in many ways resembled heavy industry.
They pioneered modern fast food advertising, even down to misleading health claims. They made their restaurants stark and clean-looking, their employees garbed in clinically white outfits. They advertised White Castle in newspaper's and through women's groups as family fare, distributed coupons to get people to make a visit to White Castle a habit. They even held pseudo-scientific experiments to show the health benefits of beef. (Upton Sinclair's The Jungle, a turn of the century equivalent of Supersize Me!, was still on the public's radar, so perhaps they can be forgiven some.)
But most importantly, they standardized food portions and mechanized as much of the food preparation process as possible. Fresh ground beef was formed into balls by a machine, 18 balls to a pound. These balls were placed on the grill and covered with a precise quantity of freshly chopped onions. They were then flipped and flattened into a patty shape, with a specified time for cooking. One half of the bun was placed on top of the cooking patty and the other was placed directly on the grill. A dill pickle was inserted before assembly and delivery to the customer. Condiments such as ketchup and mustard were left to the customer to apply as they saw fit. In 1951, they added the trademark five holes in the patties after observing that it sped up the cooking process. This whole process remained mostly unchanged until the advent of frozen patties but what was most important was the idea and it is the idea that has lived on. You could apply assembly line techniques and scientific management even to something as squishy as a hamburger. You could make a grill cook nothing more than a technician. You could ensure that there would be nothing personal or human in your product- it would be the same burger everywhere you sold it. It follows from that line of thinking then that you could remove as many human hands as possible from the process and make a burger from nothing more than an intricate series of movements by a machine. But more on that later.
So, if White Castle did it first, then why is McDonald's the company everyone talks about? Well, that comes down to one man- Ray Kroc, a businessman so enterpreneurial he once said of his competitors “If they were drowning I'd put a hose in their mouth.” Charming. A milk-shake machine salesman who took interest in the McDonald's brothers' hamburger stand, he took the industrial system of food service (a McDonald's hamburger weighs 1.6 ounces (45.4 grams) and spans 3 and 5/8 inches (9.2cm); it is garnished with a quarter of an ounce of chopped onion, a teaspoon of mustard, a tablespoon of ketchup and a pickle slice one inch in diameter.) and paired it with a ruthless business acumen and a rather devious way of franchising while still maintaining corporate control. After ousting the actual McDonald's brothers out of the business (for a cool $2.7 million dollars) he set about franchising rapidly, something the brothers, with a decidedly White Castle mindset, were opposed to. His chief financial officer, Harry Sonneborn, was put in charge of buying up restaurant locations for franchisees to lease- with a substantial mark up based on sales. Sonneborn even liked to boast that McDonald's was more of a property business than a hamburger business and in some ways, this is true. Kroc just liked to say “Now we will have a club over [franchise managers], and by God there will be no more pampering or fiddling with them”. McDonald's bucked the trend of territory franchising used by other fast food companies, such as Dairy Queen, where a franchise would buy the rights to a specific area of the world and would then buy materials from the parent company. This meant less licensing losses due to franchisees licensing sub-franchises in the "territories" and, because McDonald's took their cut from sales, not from procurement, it gave their franchises greater incentive to succeed.
But what about all the other things we think about when we think of fast food? McDonald's has to have invented some of it, right? Not really. Cheeseburger? Technically a point of contention, although McDonald's isn't even one of the contenders. Drive-thrus? Invented by In-n-Out Burger, another place like White Castle that pioneered fast food methods only to become a small chain as a result. Later popularized by Wendy's and begrudgingly picked up by McDonald's. Really, all of McDonald's innovations were in the realm of business- the McDonald's model of franchising, aggressive real estate procurement, their breakthrough national advertising efforts, et cetera. It certainly wasn't in how to make and serve a burger. (Alright, they made the order by number thing found almost everywhere now, so there's that.)
Alright, so that's a quick and dirty overview of how we got here- but where is here? See A World With No McJobs, Part II for more.
Subscribe to:
Posts (Atom)