Service Quality and Branding Strategies at McDonalds (Case Study Sample)
PART A: HOT COFFEE!!! 10 marks.
Stella Liebeck (79 yrs old) was in the passenger seat of her grandson's car when she was severely burned by McDonalds' coffee in February 1992. Liebeck ordered coffee that was served in a Styrofoam cup at the drive-through window of a local McDonalds.
After receiving the order, the grandson pulled his car forward and stopped momentarily so that Liebeck could add cream and sugar to her coffee. Liebeck placed the cup between her knees and attempted to remove the plastic lid from the cup. As she removed the lid, the entire contents of the cup spilled into her lap.
(Two things to note: In 1992 most cars did not have cupholders, and in 1992 it was uncommon for restaurants to add the cream/sugar to coffee for you.)
A surgeon determined that Liebeck suffered third-degree burns to over 6% of her body, including her inner thighs, buttocks, and genital areas. She was hospitalized for 8 days, during which time she underwent skin grafting, and other medical treatments.
Liebeck initially offered to settle her claim for $20,000 (based only on the medical costs from the accident), but McDonalds refused.
During pre-trial discoveries, McDonalds produced documents showing that more than 700 people claimed they had been burned by McDonalds coffee. Some claims involved third-degree burns similar to Liebeck’s. These documents indicated McDonalds' knowledge about the dangers of hot coffee.
McDonalds also said that, based on a consultant’s advice, McDonalds kept its coffee temperature between 180 and 190 degrees Fahrenheit (82-88 degrees Celsius). McDonalds says this temperature gives their coffee “optimum taste”. McDonalds admitted that they had not evaluated the danger of coffee at this temperature. Other restaurants sell coffee at substantially lower temperatures, and coffee served at home is generally 135 to 140 °F (57-60 °C).
Furthermore, McDonalds' quality assurance manager testified that the company actively enforces a requirement that coffee be kept at 180 to 190 °F. He also testified that a burn hazard exists with any food substance served at 140 °F or above, and that McDonalds coffee is dangerous to drink because it would burn the mouth and throat. The quality assurance manager admitted that burns would occur, but testified that McDonalds had no intention of reducing the temperature of its coffee.
An expert in thermodynamics applied to human skin burns testified that liquids at 180°F will cause 3rd degree burns within 7 seconds. Other testimony showed that with a temperature around 155°F, the extent of the burn significantly decreases. Thus, if Liebeck's spill had involved coffee at 155°F, the liquid would have cooled quicker, and given her time to avoid a serious burn.
McDonalds argued that consumers know coffee is hot and that customers want it that way. But, the company admitted that customers were unaware they could suffer 3rd degree burns from the coffee. They also said that a statement on the side of the cup was not a "warning" but a "reminder" (since the location of the writing would not warn customers of the hazard).
The jury awarded Liebeck $200,000 in compensatory damages. This amount was reduced to $160,000 because the jury found Liebeck 20% at fault in the spill. The jury also awarded Liebeck $2.7 million in punitive damages.
McDonalds appealed (of course). They won the appeal and the punitive damages were reduced to $480,000 even though the judge called McDonalds' conduct “reckless, callous and willful”.
(By the way: An investigation done after the trial found that the temperature of coffee at the McDonalds where Stella spilled her drink had dropped to 158 °F.)
The parties eventually agreed to an out of court settlement which has never been revealed to the public, despite the fact that this was a public case, litigated in public and subjected to extensive media reporting.
Must answer the following questions. Use simple words
1. Do you agree that Stella Lieback was 20% responsible for her injury? Should she be held more/less responsible? Why or why not? 3 marks.
2. The judge called McDonalds conduct “reckless, callous and willful.” Do you agree with this criticism? Why or why not? 2 marks.
Yes, I agree that Stella Lieback was 20 percent responsible for the injury. This is because she could have handled the cup of coffee carefully as she knew that she was being given hot coffee. We know that McDonald’s provides its customers with hot coffee according to their preferences. It was good for Stella Liebeck to tell them how much temperature of the coffee she was needing. In addition, her act of trying to open the cup of coffee while her car was in motion was out of context. According to the law of inertia, an object or a body remains at rest or continues moving at a constant speed in a straight line, until an external force is applied on it to disturb the balance (Aitalieva & Panasyuk, 2016). Sh
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