The Business Scorecard and Strategy Map for Chiquito Division, the Restaurant Group - Case Study Example

THE BUSINESS SCORECARD AND STRATEGY MAP FOR CHIQUITO DIVISION, THE RESTAURANT GROUP PLC (TRG) Executive summary The current position of Chiquito division, which is under The Restaurant Group plc (TRG) shows that it has the best strategic approaches to its business frontiers as evidenced by the previous growth in its brands and branches. As far as financial measures are concerned, Chiquito division has strong cash flow and shareholder base that is crucial for its future investment and development. Perhaps the best strategy would involve effective utilisation of these aspects to increase its areas of operation. Increase in branches is likely, because previously years have seen it growing steadily based on the expansion through the introduction of branches and brands, which recorded growth. Such measure would increase its service delivery, financial power, and market share hence development and growth. However, realisation of these strategies means that Chiquito division needs to invest in upgrading its existing facilities as well as purchase of additional ones to increase the service delivery. Additional strategic measures in facility and service delivery reduce the current duration taken for the customers to receive their ordered foods. These measures would also increase the sales of its foods and dishes across the branches. However, adoption of business score cards and strategic maps by the managers through appropriate technologies in reaching out to new and returning customers would make it vision become a reality. Vision and strategy Chiquito division (The Restaurant Group plc - TRG) The Restaurant Group plc (TRG) consists of several chains of restaurant with unique names and service delivery. The group has over 400 units of restaurants in the United Kingdom alone (TRG, 2015). Chiquito division is one of the many divisions under TRG. Chiquito has several branches across the UK. Besides, it has a unique strategic measure that unites all the brands to propel its mission and vision. For instance, it pays specific attention to issues related to sustainability and long-term profitability that is evidenced by its rapid development in terms of new brands, operational area, and branches that emerge every year. These measures have made it possible for all restaurants under the umbrella of Restaurant Group plc to maintain its leadership in the industry across the UK. Although its leadership is sustainable and has prospects of improving, there are emerging financial challenges that may jeopardise its future development strategic plans. For that reason, analysis of its financial strategies may help in devising and formulating strategies to facilitate TRG. However, using the business scorecard is the most appropriate initial strategy to identify goals, key performance indicators, the targets, and actions related to financial perspectives, internal processes, customer, and innovative perspectives. The Business Scorecard gives firsthand information to the managers on areas that need review by specifying the action needed. Besides, the strategic map is pivotal in adopting appropriate strategies and actions. The restaurant group plc, Chiquito Division Financial Perspective Goal and objectives Key Performance Indicators (The Restaurant Group plc, 2015) Target Initiative or ACTION 1. Cash Flow Ensuring a steady, progressive increase in the Operating cash flow from the sale of dishes and foods on the annual basis (The Restaurant Group plc, 2015) Operating cash flow ratio Increase the current operating cash flow from 13% to 15% in the following year Managers to review the and manage the cost control to ensure adoption of strategies that scale up the cash flow 2. Shareholders Delivering values for the shareholders while focussing on the investment strategies that gives high value for dividend per share, as well as return on investment (The Restaurant Group plc, 2015) Return on investment (ROI) Increase the current Return on investment from 19% to 22.5% in the next year Management to assess the existing investment strategies and carry out a selection of Superior investment strategies with high return that would result in 3-4% increase 3. Profitability Maintain a steady increase of gross profit margins for all the restaurants (The Restaurant Group plc, 2015) Gross profit margins (GPM) Increase the current Gross profit margins from 13% to 15% in the following year Adopt strategies like marketing to increase the volume of sales or increase the number of new customers while targeting to increase the net income 4. Asset utilisation Delivering values for the assets through effective utilisation of the available assets to increase its (The Restaurant Group plc, 2015)revenues Return on asset (ROA) Increase the current Return on asset from 9% to 12.5% in the following year Increasing the rate of utilising the available assets by improving competitiveness The restaurant group plc, Chiquito Division Customer perspective Goals and objective Key Performance Indicator Target Initiatives or Actions 1. Product leadership Develop new brands of foods and dishes and open new branches of businesses (The Restaurant Group plc, 2015) New brands and branches Increase the branches from the current 73 to 80 in the next year and replicate existing brands to the new locations while adding traditional dishes that are specific to the area Carry out market analysis in potential areas with the possibilities of opening new brands and provision of several choices for customer selection 2. Selling price of trusted brands Offering competitive prices to the superior brands of dishes and foods (The Restaurant Group plc, 2015) Average selling price Review the average selling price of trusted brand by 2.5% each year To increase the profitability and the sales of the identified brands by retaining the customer base and market share 3. Customer Satisfaction Assess customer feedback on all food items sold (The Restaurant Group plc, 2015) Guest satisfaction score Improve and consolidate the top 20 percentage of the brand average Improving the public confidence by seeking areas of concern to the customer on by following up on the first-time quests 4. Responsiveness Devise strategies that meet the customer needs (The Restaurant Group plc, 2015) Customer complaint To initiate measures that seeks to reduce the number of customers complaining by 60% Assess the merits and sources of complaints and institute strategies addressing the issues The restaurant group plc, Chiquito Division Internal Business perspective Goals and objective Key Performance Indicator Target Initiatives or Actions 1. Efficiency and quality Reduce the interval between order request and delivery (The Restaurant Group plc, 2015) Time taken from making an order to having the meal ready Reduce the current duration of orders by 40% Increase the efficiency of food processing by acquiring additional materials for service delivery 2. Logistics and waste reduction Minimise the wastes generated from served dishes Reducing waste of served dishes Minimise or reduce the wastes of foods and dishes by 50% Develop scorecards for the customers to indicate the level of quantities of ordered food before service. This is necessary because some customers may not finish their ordered food items. 3. Process for managing customers Employees to treat all customers with respect, professionalism and decorum Customer’s assessment of staff performance To increase the rate of customer service by 100% during the following year Managers to ensure staff and other employees get required training on how to manage all types of customers professionally 4. Understanding the customer’s need Develop traditional dishes and seeks ways of customizing dishes for the customers (The Restaurant Group plc, 2015) Acceptance of the traditional foods and dishes Increase the customer acceptance of the traditional foods and other costumed request by 50% every year Managers to develop sheets for the customers to rate the level of quality of the traditional foods and other customed foods and give their views to be used as models for further decision strategies The restaurant group plc, Chiquito Division Innovation and learning perspective Goals and objective Key Performance Indicator Target Initiatives or Actions 1. Adopting new technologies in increasing the proportion of new foods Use technology to reach out to customers and advertise foods and dishes (The Restaurant Group plc, 2015) Growth of new products (foods and dishes) To increase sales of new product by at least 10% per quarter Initiate measure that utilises technology like social media in the advertisement of the new products 2. Leadership skills Maximise on the time for training employees (The Restaurant Group plc, 2015) Time taken by staff in work station To increase the staff working time by at least 8% per year Initiate measures that seek to reduce the time taken to train the staff and donate that time for workstation. 3. Service innovation Upgrading of facilities across the 73 branches of the hotels (The Restaurant Group plc, 2015) Service delivery To increase the number of upgraded facilities used in the restaurant by 15% per year Invest in facility upgrade by allocating funds for either repair or purchase of new products 4. Development and staff competencies The restaurant seeks to analyse the annual turnover and review performance of employees (The Restaurant Group plc, 2015) Staff performance appraisal To increase the retention of existing talents while training other staffs to align their talents with the restaurant Identify the talented staffs by analysing their turnover, and introduce an initiative plant for retaining existing employees with excellent records (The Restaurant Group plc, 2015) Strategic map Financial Customer Increase the restaurants operating cash flow Gross profit margin Increase the branches and replicate the existing brands to the new locations while adding traditional dishes that are specific to the area Brands and branches Increase the current Return on investment from 19% to 22.5% in the next year ROI Review the average selling price of trusted brand to retain customer and sustain growth and profitability Unit cost Increase the current Gross profit margins from 13% to 15% in the following year Sales return Improve and consolidate the top percentages of the brand average Consolidation of brands Increase the current Return on asset from 9% to 12.5% in the following year ROA To initiate measures that seek to reduce the number of customers complainting Surveying the customer to assess complaintts Innovation Internal business processes To increase the sales of new product as well as the existing foods and dishes Sales turnover To reduce the current duration taken to receive the orders on food items Ordering time To increase the amount of hours spent by the staff at the working station Training modules Minimise or reduce the wastages of foods and dishes from the customer perspective Costing the wastage To increase the number of upgraded facilities used in the restaurant Service output To increase the rate of customer satisfaction Surveying customer satisfaction To increase the retention of existing talents while training other staffs to align their talents with the restaurant Performance appraisal Increase the customer acceptance of the traditional foods and other costumed dishes Survey customer likeability to traditional foods Figure 1: showing the relationship between finances, customer, internal processes, and learning and innovation perspectives for the restaurant business Critical discussions of the used of Balance Scorecards (BSC) in monitoring performance Kaplan and Norton (1992) came up with a concept that would help companies adopt transformative measures in order to remain competitive and use the information in exploiting the intangible assets of the company. The concept did not replace the traditional financial perspective that was common as a tool for monitoring performance; instead, it devised three additional models of significance when assessing business performance (Kaplan and Norton 1992; 2000a). The balance scorecards have invaluable benefits to the managers with the interest in designing feasible and viable strategic approaches to enable them monitoring and evaluating performance of businesses. The four elements of a balanced scorecard namely the learning and innovation, internal business processes, the customer, and financial perspectives covers all the important areas that holds any business together (Davies and Crawford, 2011; Hamal and Prahalad, 1994). Many businesses have many challenges to issues related to the management of physical assets. Appropriate management of physical assets may give a company leverage and increase its output by maximising on the available resources while identifying areas that needs improvement. The model developed by Kaplan and Norton (2000a; b) was not a replacement to the financial perspective but rather a compliment to it while introducing other three elements never reported before yet essential for monitoring performance. The customer perspective of the BSC is a powerful indicator for monitoring whether services offered to the customer are satisfactory. Satisfaction of the customers defines how well the products and services delivered by the company meet the demands of the target population (Porter and Kramer, 2006). A business without scorecards that identify issues related to customer confidence and satisfaction may find it difficult to grow and retain the customers, hence increasing the likelihood to lose market share (Davies and Crawford, 2011). A customed scorecard that seeks to identify the level of customer satisfaction is a receipt for assessing how the company performs because negative feedback from customers may initiate alternative strategies to improve performances. The business score helps managers when identifying customed drivers that are unique to the business because all entrepreneurial activities have different challenges that relates to their areas of operation and the business segment they operate (Porter and Kramer, 2006; Kaplan, 2010). These will play a vital role in influencing the managers to identify areas they need to put more emphasis and resources. Therefore, it enables business strategists to concentrate on measures that improve the turnover of the company. Managers are able to identify central processes that require re-engineering to improve the performance (Porter and Kramer, 2006; Kaplan, 2010). For instance, the financial measures are essential for tracking results from sales turnover and revenues. From the analysis of financial statements, one is able to assess the changes based on quarterly or yearly basis. The four elements of business scorecard give an in-depth analysis of facets that defines a business. Managers are able to use the strategies to identify items and drivers that translate to efficient operation and utilisation of the available resources (Hamal and Prahalad, 1994). The managers and other business strategies would be in a position to identify and devise appropriate action plan that aligns them with the mission and strategy of the company. Using both the scorecard and the strategy map makes it possible to identify performance indicators, monitor them, and devise appropriate strategies relevant to the growth and development of the company. Recommendation Using business scorecards and business strategic maps is the most appropriate way to empower managers and business strategies to make optimal use of their assets and finances. It achieves these by alignment of strategies with appropriate actions. Besides, the linkage of actions to strategies helps in the establishment of tact that could be either short-term or long-term. Increase the sales turnover and gross margin profits through increased advertisement of foods and dishes using technologies like social media Increasing the number of branches and brands Effective utilisation of these brands to increase its areas of operation Increase in branches is likely because previously years have seen it growing steadily based on the expansion through the introduction of branches and brands Increase the investment in upgrading its existing facilities as well as purchase of additional ones to increase the service delivery. Adopt strategies that improve its facilities and service delivery Increase in facility is likely to reduce the current duration taken for the customers to receive their ordered foods. Reference list Davies, T. and Crawford, I. (2011) Business Accounting and Finance. Cambridge, UK: Pearson. Hamal, G. and Prahalad, C.K. (1994) Competing for the Future. New York: Harvard University Press Kaplan, R. and Norton, D. (1992) The Balanced Scorecard - measures that drive performance. New York: Harvard Business Review Kaplan, R. and Norton, D. (2000a) Having trouble with your strategy? Then map it. New York: Harvard Business Review. Kaplan, S.R. and Norton, D. (2000b) The Strategy Focused Organisation. New York: Harvard Business School Press, Kaplan, S. R. (2010) Conceptual Foundations of the Balanced Scorecard. New York: Harvard Business School Press, Porter, M. E., and M. R. Kramer. (2006) Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review 84, no. 12. Pp. 167-80 Restaurant Group Plc. (2015). Vision and strategies. Accessed from http://www.trgplc.com/vision-and-strategy The Restaurant Group plc (2013) TRG Annual Report.[Internet] available from http://www.trgplc.com/sites/default/files/file/TRG_AR13.pdf accessed on 19 February 2015. The Restaurant Group plc (2015) company websites [Internet] available from accessed on 19 February 2015. Read More