What the construction industry can learn from the fast-food business

Three success stories worth exploring involve iconic brands McDonald’s, Domino’s and Wendy’s, and their innovative strategies to overcome barriers and gain competitive advantage in the global fast-food market. 

There are valuable insights to glean from the modular construction practices of McDonald's, the digital prowess of Domino's and the transparency practices of Wendy's. Each story is a lesson of resilience and adaptability, which the construction industry can learn from to build a more sustainable future.

Go modular like McDonald’s

In 1990, it cost $1.6 million to invest in a new McDonald's restaurant, which included the building itself, the land and the equipment. By 1994, McDonald's reduced this cost to $1.1 million, a 30 per cent cost reduction. This reduction was achieved through streamlined building design, modular construction, global equipment standardization and negotiations for lower supplier prices. Despite the lower cost, the new restaurants maintained the same sales and profits as their predecessors.

Fast forward to June 2022. McDonald's UK pioneered a net-zero restaurant by combining modular construction with renewable energy. Eighty per cent of construction occurred in a factory, minimizing waste and enhancing quality control and construction speed, as reported by Build Offsite. Just as McDonald's revolutionized its construction approach to achieve greater efficiency and sustainability, the housing sector in Canada is turning to modular construction to address the country’s expanding housing supply gap and changing preferences among homebuyers.

In September 2023, the Canada Mortgage Housing Corporation's (CMHC’s) report considered a “high-population growth” scenario that outlined what would happen to the housing supply gap if current immigration levels were extended until 2023. In this case, the supply gap would increase to 4 million housing units (versus the originally projected 3.5 million base) to meet affordable housing targets. Canadians are expected to embrace compact living, including modular laneway homes. In response, Vancouver and Toronto have announced plans to build more modular homes to accommodate multigenerational living and optimize existing land space. CMHC recently approved, for the first time, insured financing for a multifamily apartment building using modular construction, and we expect this to be the first of many. 

Go digital like Domino’s

The construction industry can also draw valuable lessons from the fast-food sector's innovation. For Domino’s, technological advancements played a pivotal role in allowing the pizza-maker to maintain its competitive edge for over six decades. Domino's PULSE™ point-of-sale system, designed to enhance operational efficiency and provide vital management insights, exemplifies their commitment to innovation. Emphasis on technology innovation helped Domino's achieve approximately two-thirds of all global retail sales in 2022 from digital channels. Notably, in 2023, Domino's introduced Pinpoint Delivery, a groundbreaking technology that enables deliveries to diverse locations like parks, baseball fields and beaches.

In contrast, the construction industry continues to employ methods largely unchanged for the past 60 years. Embracing construction technology is imperative to address the industry’s skilled labour shortage and declining productivity growth. New technologies such as artificial intelligence, machine learning, robotics integration, 3D printing and Internet of Things (IoT) solutions are essential for maintaining efficiency, effectiveness and profitability. A pivotal entry point for digital transformation is through cloud technology and modernizing core business applications with enterprise resource planning systems and construction management 

Be transparent like Wendy’s

Many take-out and delivery food establishments are not obligated to display a Nutrition Facts (NF) label on their products, yet some, like Wendy's, choose to provide this information voluntarily. Wendy's prioritizes transparency, aligning with their commitment to informing customers about the contents and sourcing of their menu items.

As the demand for transparency extends beyond the realm of nutritional information into broader economic and environmental considerations, the call for standardized disclosure practices becomes increasingly urgent.

The analogy linking nutrient disclosure to taxonomy was discussed at the Sustainable Finance Forum 2023, in Ottawa, Canada. In the same way consumers appreciate NF labels on their products, policymakers and investors want to see information for net-zero strategies. Canada lacks a trusted taxonomy for mitigating climate risk, prompting a need for swift action due to growing momentum on disclosures. The International Sustainability Standards Board (ISSB) did introduce general and climate standards in June 2023, though they are not mandatory in Canada. However, the European Union’s compulsory European Sustainability Reporting Standards (ESRS), aligned with ISSB, will affect 1,300 Canadian companies in 2024. 

At this year’s Canadian Apartment Investment Conference in Toronto, Canada, representatives of the Canada Mortgage and Housing Corporation (CMHC) highlighted two funding programs for multiunit residential properties. The first program is MLI Select, which uses a point system to offer mortgage loan insurance incentives focused on affordability, energy efficiency and accessibility. The second program is the Rental Construction Financing Initiative, which requires projects to be a minimum of 15 per cent more efficient in energy consumption. The speakers noted that there are only $40 billion in funds to allocate; however, funding requests were above $50 billion in the quarter, which means hitting the minimum requirements won’t be enough to secure financing. 

Takeaway

In a landscape where innovation is the key to sustainable growth, the construction industry can find inspiration in the unconventional success stories of fast-food giants McDonald's, Domino's and Wendy's. As we witness the shift toward modular construction for affordable housing in Canada, the adoption of construction technology, and the imperative for transparency in financial and environmental practices, the construction industry has a unique opportunity to reshape its future by embracing these transformative principles. 

The final lesson for the construction industry? Efficiency, innovation and transparency will be the driving forces propelling the construction industry into a more adaptive and competitive future.