> Isn't McD's fed up with the cost and loss of reputation? They could build their own - high efficiency, high quality, high reliability, low maintenance cost - line of ice cream machines and distribute them to the... over 40.000 McD's franchises worldwide.
That's exactly what this machine is.
The issue is that it's doing something novel--sterilizing the machine while full of liquid--in order to be able to be run by unskilled (read as: super cheap) labor.
The fundamental issue is not that the machine breaks down--that's to be expected in a novel industrial machine.
The problem is that there is no incentive to fix the design of the machine. Taylor gets no extra profit for doing more R&D and fixing the machine--precisely the opposite, in fact, as they get less repair revenue. McDonald's, itself, gets no extra profit for doing more R&D and fixing the machine, either, and would have to spend money on training if they went back to traditional machines.
The total market for these machines is effectively the number of new McDonald's. Call these a $20K machine and McDonalds opens 500 stores per year in the US. That's $10,000,000 in new sales revenue in a year, max. That puts net profit at about $1,000,000 per year (call it 10% of gross revenue--probably optimistic for this kind of machinery)
And now we hit why Taylor certainly isn't jumping to fix this and no competitor really wants into the space. Net profit of $1,000,000 per year gets dwarfed by the service revenue really quickly.
That's exactly what this machine is.
The issue is that it's doing something novel--sterilizing the machine while full of liquid--in order to be able to be run by unskilled (read as: super cheap) labor.
The fundamental issue is not that the machine breaks down--that's to be expected in a novel industrial machine.
The problem is that there is no incentive to fix the design of the machine. Taylor gets no extra profit for doing more R&D and fixing the machine--precisely the opposite, in fact, as they get less repair revenue. McDonald's, itself, gets no extra profit for doing more R&D and fixing the machine, either, and would have to spend money on training if they went back to traditional machines.
The total market for these machines is effectively the number of new McDonald's. Call these a $20K machine and McDonalds opens 500 stores per year in the US. That's $10,000,000 in new sales revenue in a year, max. That puts net profit at about $1,000,000 per year (call it 10% of gross revenue--probably optimistic for this kind of machinery)
And now we hit why Taylor certainly isn't jumping to fix this and no competitor really wants into the space. Net profit of $1,000,000 per year gets dwarfed by the service revenue really quickly.