Can you scale your business like McDonald’s did? Here are three steps to take during the journey.
Our recent article, “Pop Quiz: Is Your Business Scalable?” spurred a number of questions from readers. Our main point was that if you don’t build a business that is scalable, your growth will eventually peter out as you reach the limitations of your current model. One of our readers asked a very interesting question:
Can it be applied to a fast food restaurant? What are the mechanisms in such a case? Would you consider McDonald’s scalable? I would think of it as economies of scale and not as scalable per se. How do you see it?
We do consider McDonald’s to be a scalable business model, and many other national or regional fast-food chains have followed McDonald’s approach. The interesting part is that when McDonald’s was founded in the 1940s and experienced dramatic growth in the 1950s and 1960s, fast food was not recognized as a “scalable business.” Ray Kroc, who was responsible for franchising McDonalds’ throughout the U.S., changed all that.
Even more interesting is that McDonald’s didn’t build its business based on a notion of “economies of scale” or the ability to create more value because of its size. Now, obviously, the company generates economies of scale with vendors and in its marketing and advertising, but it initially “scaled” its business by providing franchisees with a winning formula to build their own local businesses.
…to read this article in full, visit leading US small business resource, Inc.