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
