Day 137 - 19 Jun 95 - Page 51


     
     1        stores, the potential is that there are more efficiencies
     2        in the higher volume stores in the labour per cent.
     3
     4   Q.   When you say "volume" you mean in money taken at the till?
     5        A.  That is correct.
     6
     7   Q.   Not in numbers of items sold?
     8        A.  No.
     9
    10   Q.   Because it might be that our price at the counter were a
    11        bit higher?
    12        A.  That is possible too.  Yes, that is possible too.
    13
    14   Q.   You say yours are 17 to 18 per cent at the moment?
    15        A.  Yes, and maybe even trending a little higher than that.
    16
    17   Q.   Is there any central committee, body or person at Oak Brook
    18        who sets annually a rigid standard or limit for labour
    19        costs?
    20        A.  No, not at all.  That would be very frankly a dumb way
    21        of doing business.  It is a bottoms-up approach.
    22
    23   Q.   Explain that, please?
    24        A.  The way our planning process works is that each store
    25        does its plan -- pardon me.  I often times call our
    26        restaurants "stores".
    27
    28   Q.   That is all right.  We understand it.
    29        A.  I use it interchangeably.  They do their plan based
    30        upon their local conditions, if you will, what they can
    31        anticipate for sales, what it will take to satisfy
    32        customers as far as labour.  That plan then moves up and is
    33        finely deposited in Oak Brook.  I can tell you in my 21
    34        years at McDonald's we have never altered that labour per
    35        cent down.
    36
    37   Q.   So, if somebody estimates that his labour cost in the
    38        coming year might be as high as 19 or 20 per cent for
    39        particular reasons, you do not send the firing squad down
    40        to him and give him a rocket for over-spending?
    41        A.  We would not call them up on the telephone and tell
    42        them they are crazy.  We would what they are doing is
    43        satisfying other customers.  We would ask them what their
    44        initiatives are for continuous improvement and what we can
    45        anticipate for sales and profits, but we would not focus on
    46        labour per cent.  Focusing on labour per cent is very
    47        self-defeating.
    48
    49   Q.   In what way may it be self-defeating, Mr. Stein?
    50        A.  Because if you have the right amount of labour and the 
    51        correct amount of labour as to what our managers plan and 
    52        they are using it the right way, we will continue to grow 
    53        sales directly proportionate.  The thing that is meaningful
    54        within our organisation is satisfying our customers which
    55        in turn increases our sales.  You need to have the right
    56        labour in the store.  You need to have satisfied employees
    57        in order to deliver that customer satisfaction that
    58        ultimately increases your sales.
    59
    60   Q.   In your experience then of 21 years at McDonald's, which is

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