Operational innovations at QSR's rival those at any factory

Go into the kitchen of a Taco Bell today, and you'll find a strong counterargument to any notion that the U.S. has lost its manufacturing edge.

Every Taco Bell, McDonald's, Wendy's and Burger King is a little factory, with a manager who oversees three dozen workers, devises schedules and shifts, keeps track of inventory and the supply chain, supervises an assembly line churning out a quality-controlled, high-volume product, and takes in revenue of $1 million to $3 million a year, all with customers who show up at the front end of the factory at all hours of the day to buy the product.

Taco Bell Chief Executive Officer Greg Creed, a veteran of the detergents and personal products division of Unilever (UL), puts it this way: "I think at Unilever, we had five factories. Well, at Taco Bell today I've got 6,000 factories, many of them running 24 hours a day."

It's as if the great advances of human civilization, in everything from animal husbandry to mathematics to architecture to manufacturing to information technology, have all crescendoed with the Crunchwrap Supreme, delivered via the pick-up window.

"The most advanced operational thinking in the world is going on in the back of a QSR,"says Mike Watson, a former senior vice-president for operations at Wendy's and currently executive director of operations engineering at WD Partners, a consulting firm that works with QSR brands. "If you have it laid out where it doesn't flow right, that means less order flow, less product, lower sales."

The big brands spend hundreds of millions and devote as much time to finding ways to shave seconds in the kitchen and drive-thru as they do coming up with new menu items. "The majority of the business now happens around the back of the building,"says Blair Chancey, editor of QSR magazine. "So much money and R&D go into perfecting the production system because there is so much money to be had."