Service Operations Management: Small Fast Food Restaurant - Coursework Example

Service Operations Management: Small Fast Food Restaurant Target Market and Selected Service Package a. TargetMarket ABC is a small fast-food restaurant located in a city with a high concentration of higher learning institutions. The targeted market for ABC Fast Food Restaurant is students from the surrounding universities, colleges, and high schools. The restaurant lies on a busy street having a high concentration of students during lunch breaks (1200hrs-1400hrs) and evening hours (1600hrs-2000hrs). There are two universities, three colleges, and two high schools located in the area. This group has been targeted for several important reasons. ABC Fast Food aims at becoming a unique fast food place, and this market segment can help ABC achieve this aim. Students represent a market segment with limited resources and will, therefore, be seeking value/price relationship that will not stretch their budgets. ABC will focus on the idea that students intend to visit the place for a quick bite rather than heavy meals. Therefore, the price point for lunch must be made as fair as possible in order to attract this group and remain in competition with other fast food businesses in the area. b. Selected Service Package The ABC Fast Food’s service concept is embodied in four criteria namely service, quality, value, and cleanliness. The four terms may appear as general terms, but ABC ideas behind these terms are vivid. By service, ABC intends to serve its customers with speed. According to Zulch, Jagdev and Stock (2004), in a fast food restaurant, speed is a great determinant of competitiveness. Cleanliness is meant to satisfy and please customers. The output from this service package is the quality which creates value for the customer and makes the customer feel satisfied. This service package is designed to appeal specifically to teen students. This group demands a variety of foods with different flavors. Additionally, this group demands speed in service, entertaining experiences, attractive environment, is composed of different ethnicities, and they enjoy eating out (Euromonitor 2011). 2. Service Strategy and System Design ABC can use various strategies to address the issues of capacity levels and demand. To satisfy its customers, ABC has to offer a high-quality service which is an important factor in customer satisfaction. Therefore, its service strategy has to be appropriate a. Service Supply Chain Operations are a system in which inputs are used to produce outputs (Jones and Robinson 2013). The success of many fast-food restaurants lies in their unique and intricate service supply chain networks (Sharma 2013). ABC service supply chain will be characterised by the number of waiting lines, the number of servers, how the servers are arranged, and the priority rules regarding the service. The chain will have five waiting lines for customers. Three service providers will be allocated for each service outlet. The multiple-line configuration is ideal in ABC’s case because of the high number of customers. However, during the off-peak seasons when the demand is low, ABC will adopt the single-line approach. In both approaches, the number of servers will be adequate. An assumption in ABC’s case is that a serving channel will only manage to serve one customer at a time. ABC’s case will involve multi-server systems. Multi-server systems have parallel service providers offering the same service. The arrangement of servers is a multiphase system where the service of food is expected to be completed in a series of steps including the placement of orders, paying for orders, and picking the orders. ABC will have three service providers in each channel (first person to pick the order, the second person to collect payments, and the third person to provide the customer with his/her order). b. Service Delivery Process According to Johnston and Clark (2005), service delivery process is one of the ways in which organisations create customer’s experience. In a restaurant’s case, this process incorporates the human element and the food production process. In general, it involves all the steps and activities over a period (Bitner, Ostrom and Morgan 2007). A good number of ABC sales will be fast-food through windows. Whatever the service system, customers expect their experience o be positive (Ninemeier and Hayes 2006). Additionally, for restaurants to create value of service for their customers, they have to create high-quality customer experience through their services (Rong and Jun 2012; Sandstrom, Edvardsson, Kristensson and Magnusson 2008). A queuing system is ideal for ABC, and it will be defined by two elements. These elements are the population source of ABC customers who are mainly university, college, and high school students, and the service system. There are several important quality characteristics that are inherent in this service system. The process of flowchart enables the restaurant to view service delivery process between the customers and the service providers (Hirunopaswong 2011). Figure 1 shows the flow chart for ABC Fast-Food Restaurant. Customer comes to order what he/she want Rings the bell Server responds, “May I help you please?” Customer gives money Employee repeats Customer passes which is passed to the order and gives total through and waits cashier Employees process Customer and food Employee Order reach window repeats total Customer gives Employee gives food Customer pulls Money and change away Figure 1: ABC Service Delivery Process The quality of ABC service delivery process has been enhanced by the speaker system, bell, menu sign, cash register, and quality cooking equipment. These equipments will be kept in good working condition to ensure that orders are processed correctly and in time. The employees are also taken through training in order to learn courtesy, friendliness, accuracy, and knowledgeability in their job areas. ABC can optimise its service strategy by increasing the number and type of service facilities. It is expected that with high-quality service, the number of customers is likely to rise because this area is highly concentrated with the targeted audience. Part-time employees can be called in when lines are too long. ABC can also improve the efficiency of its servers through process improvements or dedicating additional resources. This move will improve service speed and customers ill flow through the system more quickly. ABC can also change the number of lines based on the number of customers. For example, the process can be switched from a multi-line model to a single-line model when the number of customers is not too many to ensure fairness. Understanding customers’ service expectations is crucial to a restaurant if it has to deliver greater service (Andronikidis, Georgiou, Gotzamani and Kamvysi 2009; Yen and Soe 2010). Customers expect fair treatment. The targeted group is very sensitive to issues of fairness. A single-line is more appropriate because it ensures that customers do not jockey in an attempt to gain an advantage over the others. 3. Service Management The service delivery must be managed because service is significant for price justification, brand support, product enrichment, and learning about the customers’ needs and preferences (Zulch, Jagdev and Stock 2004). a. Demand Variation The demand for food in fast food business varies on a daily basis. Demand peaks at lunch; though, in ABC Fast Food, demand will depend on factors such as weather. According to Jones and Robinson (2013), operations managers in service industries do not manage service operations like manufacturing operations. Demand changes at different times as well as seasons. For example, during lunch hours, there may be excess demand. In this case, demand may exceed maximum capacity and, as a result, some customers may be turned away due to long queues. At other times, demand may exceed optimum capacity. In this case, no customer is turned away but the service quality may suffer. ABC may need to consider addressing the latter case to avoid losing customers to its rivals due to poor quality service. Thirdly, there are times when demand may balance with service supply at an optimum level of capacity. In such a case, the ABC staff and facilities will be utilised at an ideal level. Fourthly, there are times when ABC will experience excess capacity. In this case, the demand will be lower than the optimum capacity, productive resources will be underutilised resulting to low output. To tackle troubles arising from the case scenarios, ABC will be required to manage effectively the capacity level and demand. b. Managing Capacity and Demand In some service businesses, capacity is elastic; therefore, it can absorb extra demand. In such a case, the capacity level will remain unaltered, and more customers are served at the same capacity level. In a restaurant, demand changes may be witnessed, and they may overwhelm the capacity of the organisation. In the current case, there is over congestion of learning institutions in the area. This means that ABC will have to deal with extra demand. ABC can build many service areas and employ an adequate number of employees. This strategy will ensure that the restaurant can serve its customers effectively during peak and off-peak seasons. To avoid excess human force during the off-peak season, ABC can introduce part-time employment opportunities. Another strategy that ABC can use is to adjust its capacity to demand patterns. The patterns of demand are expected to change from time to time and season to season. ABC can address this problem by tailoring its capacity level to match demand variations. This strategy is referred to as chasing demand (Kachru 2009). ABC can take several actions to match its capacity to demand. These actions include: i. Scheduling downtime when demand is low ii. Cross-training employees iii. Using part-time employees iv. Inviting customers to perform self-service According to Hwang, Gao and Jang (2010), strategies that balance service quality and cost yields maximum profit. This case adopts a “queueing-based optimization model” (Hwang, Gao and Jang, 2010) to deal with troubles associated with demand and capacity management at ABC Fast Food. Due to a high number of students that may be visiting the restaurant, congestion problems may arise. Most restaurant managers mainly focus on adopting the marketing point of view. As a result, they provide superior services that are unnecessary and ones that are non-recognisable by the customers. They also attempt to cut cost by lowering the service level. However, these strategies are not ideal for ABC Fast Food in its goal of profit maximisation. To avoid the problems associated with inaccuracy in demand estimation; this paper suggests the optimisation of the staffing level/service level while maintaining the current price levels. This strategy is referred to as the fixed price strategy, and it can help ABC Fast Food to achieve its target of the return on sales. ABC can only achieve maximum profits by taking both marketing and operations perspectives jointly. In cases where managers do an appropriate estimation of demand and ABC implements the joint strategy well, it is likely to improve its profits and return on sales significantly. In general, ABC should avoid using the marketing and operations strategies separately. According to Hwang, Gao and Jang (2010), the marketing strategy tends to use excess capacity to attract more customers. Over-capacity requires high service level resulting in total costs being pushed to the highest. In most cases, service managers fail to achieve their targets through pure marketing strategy. Therefore, this study suggests both fixed price and joint strategies for the maximisation of profits. References Andronikidis, A., Georgiou, A., Gotzamani, K., Kamvysi, K. 2009. The Application of Quality Function Deployment in Service Quality Management. The TQM Journal, 21(4), pp. 319-333. Bitner, M., Ostrom, A. and Morgan, F. 2007. Service Blueprint: A Practical Technique for Service Innovation. Center for Service Leadership, Arizona State University. Euromonitor International. 2011. Give ‘Em What They Want: Consumer Segmentation in Packaged Food. Passport. 54 pp. Hirunopaswong, P. 2011. Improving Service Delivery Process in the Restaurant from the Customer Expectation. Dissertation, Silpakorn University. Hwang, J., Gao, L. and Jang, W. 2010. Joint Demand and Capacity Management in a Restaurant System. European Journal of Operational Research, 207, pp. 465-472. Johnston, R. and Clark, G. 2005. Service Operations Management: Improving Service Delivery. New Jersey: Prentice Hall. Jones, P. and Robinson, P. 2013. Operations Management. Oxford: Oxford University Press Kachru, U. 2009. Production & Operations Management. Delhi: Excel Books. Ninemeier, J. and Hayes, D. 2006. Restaurant Operations Management: Principles and Practices. New Jersey: Prentice Hall. Rong, D. and Jun, S. 2012. The Effect of Service Interaction Orientation on Customer Satisfaction and Behavioural Intention: The Moderating Effect of Dining Frequency. Asia Pacific Journal of Marketing Logistics, 24(1), pp. 153-170. Sandstrom, S., Edvardsson, B., Kristensson, P. and Magnusson, P. 2008. Value in Use Through Service Experience. Managing Service Quality, 18(2), pp. 112-126. Sharma, K. 2013. A Case Study on McDonald’s Supply Chain in India. Asia Pacific Journal of Marketing & Management Review, 2(1), pp. 112-121. Yen, H. and Soe, T. 2010. Modelling Service Experience Design Processes with Custome Expectation Management: A System Dynamics Perspective. Kybernetes, 39(7), pp. 1128-1144. Zülch, G., Jagdev, H. and Stock, P. 2004. Integrating Human Aspects in Production Management. New York: Springer Science & Business Media. Read More