Analysis and Review of French Laundry - Case Study Example

French Laundry (Hospitality) Table of Contents Introduction 3 Balanced Scorecard 3 Problem Statement 5 Challenges/Opportunities 5 Management Solution 6 Lessons Learned 6 Why I care 6 References 7 Bibliography 8 Introduction French Laundry, one of the most renowned restaurants in America, is located at Yountville in California. In spite of having the word ‘French’ in its name, the restaurant is purely American from the core (The French Laundry, n.d.). According to history, the building of the restaurant was actually used as a French laundry in the early 19th century. Sources in the website state that the restaurant was bought in the year 1974 by the then town mayor and a long time resident, Don Schmitt alongside his wife Sally. They renovated it into a fixed- menu, one -seating restaurant. In the year1992, the famous cook Thomas Keller made his first visit to the restaurant and finally in 1994 he decided to purchase it from Don Schmitt (UC Davis, n.d.). Today French Laundry has become one of the most popular restaurants in the country and it is fully owned and controlled by one of the finest chefs, Thomas Keller. This report contains a defined problem statement of French Laundry. It also upholds the present challenges, opportunities and possible management solution. A useful strategic tool, Balanced Scorecard is used to find out the required information so that the above mentioned guideline can be followed. Balanced Scorecard Balanced scorecard is one of the most popular management and strategic planning system. It is widely used in both public and private sector to align the organization’s activities with the strategy and vision of the organization. Both external and internal communications can be improved by the proper application of balanced scorecard. The model was first proposed by David Norton and Robert Kaplan. In balanced scorecard an organization is viewed from four different perspectives, these are financial perspective, internal business process, learning and growth perspective and finally customer’s perspective (Kaplan, Norton, 1996). Each of these four perspectives is discussed in the context of French Laundry in order to find out its present problems, challenges and opportunities so as to provide a possible management solution. Financial Perspective French Laundry restaurant is a high class restaurant in America. In 2004 restaurant’s gross revenue was almost 7.5 million dollar (McCarthy, February 01, 2004). Customers of the restaurant were found to be paying almost 1500 dollar for a dinner (Sutton, January 13, 2009). This attests the financial health of the restaurant. However currently French Laundry is bearing the brunt of the recession which has affected the economic condition of the entire country. Demand has sharply fallen with the reduction in the purchasing power of common people which has resulted in decreased footfall in French Restaurant. Such adverse condition makes it imperative for the restaurant should to give more importance on cost reduction so as to maximize profit and financial growth. Whether the organization is moving towards these goals can be calculated by the comparative analysis of revenue and profits for different years. Internal Business Process Perspective French laundry was able to operate successfully for more than a decade. Without efficient internal business process it is not possible. Balanced scorecard mentions certain goals and objectives that the restaurant should try to achieve in order to gain long term competitive advantages. These goals and objectives are aimed at solving complains of the customers, launching new items and delivering the orders. Whether the implementation of such processes have improved the system or not can be measured by keeping a close eye on the time taken to solve various issues and the number of new services launched in a particular time period. Learning and Growth Perspective In hospitality industry learning is a crucial issue. Employees should be in a continuous learning process in order to improve their performance. Better performance of the employee reflects in better satisfaction level of the customer. The effectiveness of learning can be measured by analyzing the employee turnover rate. Customers Perspective Customer satisfaction is the key to success in restaurant business. By ensuring proper satisfaction, French Laundry has managed to win over a loyal set of customers. Problem Statement Reduced demand and high cost of operation are the two major problems that French Laundry is facing in the current economy. With the advent of recession purchasing power of common people in the country has drastically gone down. As a result people are likely to spend less in a three or four star restaurant. The most effective way in which French Laundry can tackle the situation is by reducing the cost. Challenges/Opportunities Major challenge for French Laundry restaurant is to reduce cost without compromising the quality of the food and other services because if quality is compromised, customer loyalty would definitely be affected. Despite the difficult situation there are some opportunities which if properly utilized will profit the restaurant in the long run. French Laundry has been a financially strong organization therefore it has the opportunity to expand its business by opening branches in major cities in the country. Furthermore the brand French Laundry is already established. So if a new branch is opened, customers are likely to accept it. Management Solution All the major problems and challenges can be overcome with the help of a balanced scorecard. It lays down specific goals that the organizations should target to achieve. French Laundry should also try to achieve all its goals and objectives that are portrayed in the balanced scorecard. Major goals and objectives include reducing cost, making profit on a continuous basis and maintaining quality. Lessons Learned In the process of preparing this report, I learnt about French Laundry, one of most popular restaurants in America, its history, present ownership etc. I also learnt about the balanced scorecard which is one of the most popular management tools. I came to know the importance of the model in the real business environment and its possible implications on French laundry restaurant. Why I care This report is a crucial one for me as I came to know about the theoretical concepts of balanced scorecard and its significance in respect to restaurant industry. I also learnt the process in which a proper secondary research is carried out. References Kaplan, R. S. Norton, D. P. 1996, The balanced scorecard: translating strategy into action, Harvard Business Press McCarthy, T. February 01, 2004. Chefs Surprise, TIME Retrieved February 16, 2010 from http://www.time.com/time/magazine/article/0,9171,586219,00.html?iid=chix-sphere Sutton, R. January 13, 2009. Private $25,000 Parties; $1,500 Meals: U.S.’s Priciest Eateries, Retrieved from http://www.bloomberg.com/apps/news?pid=20601088&refer=muse&sid=agXmm5Rnk9iE The French Laundry, No Date, The French Laundry Retrieved February 16, 2010 from http://www.frenchlaundry.com/ UC Davis, No Date, The French Laundry, Retrieved February 16, 2010 from http://lda.ucdavis.edu/newsevents/jobboard/announcements/french.pdf Bibliography Olve, 2006, Balanced Scorecard, Wiley-India Niven, P. R. 2002, Balanced scorecard step by step: maximizing performance and maintaining results, John Wiley and Sons Read More