Pret A Manger as a Chain of Private Fast Food Restaurants - Coursework Example

Operations Management Assignment Introduction 0 PRET A MANGER Pret A Manger is a chain of private fast food restaurants consisting of about 335 Pret shops worldwide; most of them situated in the United Kingdom and between them a turnover of roughly 450million pounds a year is generated. It occupies a large market share of the urban population in the United Kingdom its first branch was opened in London Victoria in 1986. It was founded by Julian Metcalfe and Sinclair Beecham who though had very little experience in business decided to create the type of food they all craved but wasn’t available or offered in the existing restaurants (Ritzer, 2013). Pret A Manger targets urban dwelling consumers most of whom come from office towers and businesses. This paper will consider the case of Pret A Manger in an effort to illustrate the operation issues and strategic issues that face operations managers. Key strategic issues The customers are usually interested in high quality and interesting food options but fast food constraints hence the idealness of Pret A Manger’s food (Cummings & Groom 2008). The urban areas offer Pret A Manger with huge demands for a variety of its products that include sandwiches, filled baguettes, soups, salads, fresh fruits, tea, coffee among others (Cummings & Groom 2008). In addition to offering these products over the counter, Pret A Manger offers service delivery at the door steps of its customers who aren’t able to get to Pret shops and make orders over £30 minimum. The on door delivery systems services suits a variety of consumers needs. The demand of Pret A Manger fast food items exceed its capacity to supply. Due to its limited capacity and excess demand, Pret A Manger concentrates most of its efforts in serving the urban areas although it has later plans to join the suburb areas. The Pret shops are well branded both on the inside and outside distinguishing between the shops and also its competitors (Cummings & Groom 2008). 1.0 Sale revenue profit returns on investments Pret A Manger has consistently posted positive returns on its investments with the key performance indices indicating the business has potential of posting better returns. The third quarter revenues in 2014 grew by 22 million GDP from the recorded in the second quarter (Earnings reports, 2014). Gross profit increased by 9 million GDP and the net income by 5 million GDP (Earnings reports, 2014). The diluted normalised EPS for the company has also been on the increase providing the investors with a high return on their investment. The diluted normalised EPS increased in the third quarter to 0.60 from the 0.53 the company had in the second quarter of financial year 2014/2015 (Earnings reports, 2014). 1.1 Competition faced by Pret A Manger in the U.K Pret A Manger is faced with competition from firms emerging as new entrants in the fast food industry and existing firms that provide fierce for the control of the market shares. Its major competitor in the UK is a Subway restaurant. Other firms such as McDonalds, Eat, Quiznos and many others also compete for the same market share with Pret A Manger. The competing firms deploy different competitive strategies such as competition in prices, quality and at times in innovations and technologies (Brown, 2003). Price wars in the industry has made some firms quit the industry while others find ways which ensures that they survive the intense competition. 1.2 Segmentation of the fast food industry by Pret A Manger. Pret A Manger has segmented its markets in various ways enabling it to target each specific segment. Segmentation targets customers who have various characteristics in terms of tastes and preferences, income levels and frequencies of purchasing products of a firm (McDonald & Dunbar, 2004). Customers targeted are those concerned with their health. This particular consumer segment values their physical wellbeing and takes pride in what they eat and will refuse to compromise or lower their standards. Pret also targets customer segments that prefer value of the fast foods products. The particular segment is value driven and prefers quality to cheap or quantity. Other restaurants for fast foods value quantity of the foods by ensuring it is provided in plenty while in valuing quantity, Pret packages its foods accordingly in order to protect food, this brand is also concern about fresh products and even if their products were not sold during the whole day then all unsold items will be utilize (Ritzer, 2013). The urban professions who lack time in the hands are also segmented and targeted. Products such as the £1.70 orange juice bottle are tailored to meet this customer need, it also targets customers who need services at a faster speed. Customers spend just 90 seconds from the time they get in lines to order the needed services and the time they get served and leave the lines. 1.3 Pret A Manger advantage over its competitors Pret A Manger’s market-order winners is the provision of healthy foods which are natural and lack obscure chemicals, additives and preservatives present in many other fast foods and or the prepared foods. The market-order winner ensures that it maintains its market niche and makes it able to triumph competition from the other firms(Ritzer,2013). Competition is very high in the fast foods industry and it is also changes quite often. Many customers are getting conscious about what they eat thus ensuring healthy aspects are included in the foods. This makes Pret shops better than their competitors ensuring that it attract and maintain large numbers of customers especially those customers who value their health and seek nutritional foods (Ritzer, 2013). Its market-order qualifier is that it has to constantly advertise its products in order to keep up with the tough competition it experiences in the fast food industries from firms market such as Eat, Macdonalds, Subway, Quizonos and many others. Operations issues The operations function is concerned with bringing together raw materials and the various production processes with an aim of making products needed by the customers (Slack& Chambers,2010). With shifting market conditions coupled with intensifying competitive pressures, Pret A Manger is compelled to adopt new operations strategies in order to wade through the tough challenges provided by both the internal and external conditions. The company operations greatly focus on the people as the operations section of the company acknowledges that the people are the key ingredients for its continual survival and profitability (international digest, 2002). Prêt a manger key operation issues rotate around 3 key components that the managers always strive to take into consideration: inputs, process and outputs (Slack & Chambers, 2010). The organisation takes the issues above seriously in order to prosper in the typical market faced with competition. It ensures that the correct levels of inputs of the greatest quality are passed through a lean and efficient transformation process so that its final output that is people centred is of high quality, customized and reaches its consumers at the correct speed and affordable prices. With the above issues satisfied the prêt shops are able to produce effectively and efficiently are thus able to survive the stiff competition (Slack & Chambers, 2010). The output issue cannot be understated since it is essential that prêt a manger ioperations managers take up new models of business operations in the quest to accommodate the new demand of consumers so that no underproduction is witnessed. With over three billion consumers joining the international middle class over the next couple of decades, the conventional models of operations are bound to experience immense strain. (Lockyer,2007). Within a perfect world Pret would manage its daily operations to espouse peak performance by maximizing profits while at the same time minimizing the risks, losses and costs that it encounters. In the real world, however, Pret’s management is obligated to ensure that constant trade-offs are attained within the risk-loss-cost equation if the company is to ensure that its operational infrastructure agree with its incumbent strategy. In order to strike the appropriate balance, the organization’s management strives to be very clear on the operational goals it develops and lays out essential performance metrics that will ensure that it manages its operations within tolerances that are well defined. 1.0 Key operations issues that need to be considered Prêt a manger operations managers are tasked with creating long term, sustainable customer and employee’s strategies. The above resonates well with Williamson (2004) argued that an organization should design systems capable of producing quality services and goods in demanded quantities and in acceptable time frames.. A close look at prêt a manger to operational issues establishes that there is a link between operation issues that influence performance and market determined competitive factors. There is therefore a need to reconcile the need between requirements of the markets and operation resources (Williamson, 2004).The key operations issues that need to be considered are represented in the diagram shown below and its linkage to the consumers also established. Williamson (2004) Customer loyalty and attraction of other new customers will be based on how well a firm takes into consideration the above issues. Satisfied customers also enable firms to cut on operation costs by ensuring that the firm cuts on advertisement and other publicity costs as the customers will act as agents of the firm and thus help sell the firms product through their word of mouth. Pret A Manger operations issues are all focused in ensuring both customer and employee satisfaction. A focus on its employees ensures that their staffs are friendly to customers and that the staffs warmly welcome customers needing services at Pret A Manger shops, greetings are exchanged between them in civility and that the customers conduct themselves in a manner exhibiting enthusiasm and approachability. This at the end makes the customers feel appreciated and welcomed in Pret shops. Cury et al (1986) noted that companies used different delivery strategies in order to compete in the markets with costs and quality helping to determine where and how a business actually competes. Pret A Manger always strives to improve the quality of its food. Its internal operation processes are tailored towards improving the quality of the products while at the same time minimizing the costs incurred in the operations. However, its greater quality compared to other fast food stores, Pret A Manger charges its consumers a slightly higher price. The company gives customers greater focus with the stores having a consumer led approach to their operations where the customers dictate each and every action taken by Pret A Manger. 1.1 Service delivery systems used by Pret A Manger Pret A Manger cafe shops employ both the online services delivery systems where customers can easily log into their websites make orders and the services are delivered at their doors steps with a minimum requirement that services that need online delivery should be above £30. However, Pret shops focus more on the customers who physically visit their shops. These customers are given high-class services with personal touch with each employee making use of the high training they undergo (Brown, 2003). Serving the consumers with elements of persons touch makes the customers feel appreciated and thus customer loyalty is enhanced. The use of online service delivery ensures product customization to meet the customer’s requirements and also provision of after sale services to the customers Pret A Manger has adopted technological infrastructure to manage it service delivery systems. The use of technology in managing delivery systems results with various advantages to the Pret shops worldwide. With the increased computerization of its services maximum consumer satisfaction is ensured and also complaints raised about the delivery systems are easily identified and the necessary corrective measures taken. The Pret shops have a policy of ensuring that each issue raised by the consumers are taken into consideration (International digest, 2002). Further the necessary steps to correct these issues are fast tracked and the customer who had initially raised the issue is contacted and notified that his issue has been resolved. 1.2 Importance of service delivery system, operation functions and infrastructure to manage the delivery system The key operation functions, service delivery systems and the infrastructure to manage these systems ensure that Pret A Manger is able to maintain its market share despite the high competition in fast food industry. This support Pret shops quest to maintain its grasp of its entire market niche. It’s able to achieve consumer loyalty in all its market segments and thus ensuring that potential new entrants and existing competitors find a hard time in conducting their operations in those particular markets (Brown, 2003). The happy and satisfied customers make the Pret shops their only hopes whenever they want fast foods. The adoption and maintenance of information technological infrastructure as a tool to manage its delivery systems also ensure that Pret is at the forefront of new innovations. With new innovations, the company is able to have a strategic position to benefit from the emerging new markets and previously unexplored markets. The restaurant is also able to try the provision of other foodstuffs it includes sushi in some of its pioneer markets in which it seeks to venture Cummings & Groom, 2008). . 1.3 Future business prospects and survival strategies for Pret A Manger in the in the ever changing fast food industry in the U.K The fast food industry is ever changing with new inventions, new products offering and emergency of new market frontiers. The industry also has new market entrants who continually try to challenge the existing firms for the market shares (Barrows& Powers, 2012). Pret A Manger will thus need to adopt strategic survival strategies and venture into other markets. The company should transform the same concepts applied in the United Kingdom to these new market frontiers to ensure it stays ahead of its competitors. With the globalization of the world, venturing in new markets proves to be a key strategy that ensures companies increase their competitive advantage and increase profitability. To further enhance its market reputation as the leading fast food restaurants, prêt manger has also adopted the strategy of acquiring and merging with other fast food restaurants especially in the fast emerging African markets. With this strategy, the company seeks to ride on the already established goodwill and the position of location advantage of those merged and acquired shops. This is a key strategy because the saturation of the European markets meant that the big players in the in the industry shift the focus to these other markets. Its major competitors such as the Subways and the MacDonald’s have also shifted their attention to the emerging African frontier markets. Large shopping malls in African countries are at high demand and are often competed for by European fast food restaurants seeking to establish presence in the African continent (Brody, 2009). In Kenya for example, space in the many upcoming large shopping malls are competed for by prêt a manger and the MacDonald(Brody, 2009). Research methodology The paper adopted a descriptive research design. Primary data was collected from the customers, managers and employees of Pret A Manger. The data was obtained through the use of questionnaires as data collection tools. This ensured that the respondents gave required data for the paper. Questionnaires as a method of data collection is important as it helps solve some of the disadvantages associated with other methods such as observations and interviews that require physical presence of the researcher (Matt & Matt, 2007). 1.0 Analysis of collected data The questionnaire focused on the key operations issues namely quality, dependability, costs and product customization. The data obtained was then analysed for easier presentation. The analysis sought to make sense on the raw data that the respondents gave while they were interviewed. 1.1 Quality Both managers and employees gave a positive response when asked whether quality forms the basis of the considerations when producing the foods. The result indicates that 89% of the interviewed customers rated the quality of Pret A Manger foods as excellent in a scale of poor average, satisfactory and excellent. The interviewed customers in the responds they gave were not willing to trade the quality of their foods for anything else the reason why they preferred Pret shops. On the trade-off between quality and quantity, the customers were not ready to sacrifice their quantity and quality at any costs the others rated the food quality as satisfactory. They were ready to have relative smaller package of the foods compared to the quantity offered by other fast food restaurants as long as high quality level were maintained. Consumer behaviour is sophisticated. Some people usually expect a rational consumer to go for cheaper goods yet they go for those that are highly priced influenced by quality (Belk, 2010). Only 11% rated the quality of Pret A Mangers foods, as satisfactory arguing that there was room for further improvement (such as pricing, queuing measures). 1.2 Dependability A majority of the interviewed customers at fifty nine percent rated the dependability of Pret A Manger delivery systems as excellent. The Remaining forty one percent rated the delivery systems as satisfactory. Managers and employees interviewed respondent that the their products and services were dependable. 1.3 Costs Seventy five percent of the interviewed responded that costs of Pret A Manger’s foods relative to that of other fast food provides were relatively high. However, twenty five percent of the responded held the view that the cost was not very high or they had no idea on what other restaurants charge for their products. Table I: respondents view on the costs of Pret A Manger foods (including customers, managers, and employees) Response Number of people Percentage Cumulative frequency The costs are high 75 75% 75 The costs were not very high 25 25% 100 An interesting finding however was that even though the costs of the food stuffs were higher relative to those of other fast food providers, the great quality of the food stuffs in relation to those of other fast food providers allowed for tradeoffs between costs and quality. Even those respondents who viewed the Pret A Manger’s services and products as being high had no intentions of shifting their services to those restaurants they deem to have cheaper prices with the high quality of Pret products. Managers interviewed however, viewed the prices to be comparatively cheaper compared to the high quality as per the inventory best practises. Brag (2011) argued that a firm offering the best quality products in the market should reflect the same in terms of higher cost. This is because increased in quality implies that there is an extra cost that the firm has incurred in which could include raw materials that are highly priced 1.4 Product customization The interviewed people from different segments responded that Pret shops had various products specific tailored to meet their varying wants. More than eighty one percent of the customers were of the opinion that the tailoring of the products to meet various segments was excellent while the remaining nineteen percent rated the tailoring process to be satisfactory. The findings are in agreement with the argument that it is possible to sell less for more, (Anderson, 2006). 1.5 Employee satisfaction The employees interviewed were totally satisfied and happy to work at the Pret shops. With ninety one percent responding that given a choice of looking for work at other restaurants they would prefer to stay at their current work. The employees had no reason whatsoever to make them want to their working places. They argued that the wages offered were competitive and over the prevailing wage level at the market. Only nine percent were dissatisfied with working for the Pret shops without any reason. 1.6 Speed Fifty seven percent of the interviewed customers gave a positive respond on the speed rate at which their services were delivered to them. They were in agreement with the management assertion that it took less than 90 seconds between the time the consumers make enter a queue in the Pret shops and the time in which they get served. This is as shown in the diagram below Fig 1 response on speed of service delivery However the remaining respondents representing forty-three were in disagreement with that assertion. They vowed to have spent more time queuing with some estimating utmost 10 minutes being spent on the queues. This indicate that there is a disparity in the rate of service delivery across the Pret shops in the UK with some offering high speed services as compared to others. Executive summary 1.0 The main findings The report established that quality of the Pret A Manger was very high and that enabled it to grasp its market share and provide opportunities for improvement The report also established that costs of the products and services offered by Pret A Manger were relatively higher as compared to the costs of other fast food restaurants in the United Kingdom. The report established that the Pret A Manger restaurants could be relied upon by its consumers to deliver at a speed faster than other restaurants and those customers could depend on the Pret shops for their services and products anytime they needed. Conclusion The report concludes that much needs to be done to improve the speed of services delivery by Pret shops as some of the customers disagreed with the management’s assertions on the speed. This conclusion is drawn from the high response drawn from those dissatisfied with the service delivery speed. The reports also concludes that Pret A Manger should increase its capacity and also move to the suburbs areas where the restaurants lack presence in order to increase the volumes of the various products they offer. Increasing presence in the suburb areas will also enable the Pret shops to increase the total revenues and thus increase its market dominance. Another conclusion drawn the research was that the failure of Pret A Manger shops to emphasize on advertisement through the print and electronic media hindered its quest in increasing its market share. Other competitors were benefiting from advertising while Pret avoided the same. Recommendations Improve speed of delivery in some Pret shops where service delivery is slow. Offering services at a standardised fast speed across all Pret shops will make its customers indifferent on which shop to frequent and thus assist in reducing the long queues that were witnessed in some of the Pret shops. Increase presence especially in suburbs where the restaurant lacks presence. The restaurant has majorly concentrated in urban centres even though the demand of its services in the suburbs is unrivalled. This will ensure the firm increase its revenues. Increase advertisement within all available media options. This will increase awareness especially among the potential customers. Information on Pret shop locations, quality and prices of the foods should be communicated with their customers . References Anderson, C. 2006. The long tail: Why the future of business is selling less of more. New York: Hyperion. Barrows, C., & Powers, T. (2012). Introduction to Management in the Hospitality Industry (Tenth ed.). Hoboken, New Jersey: Wiley. Top of Form Bottom of Form Belk, R. 2010. Research in consumer behavior. Bingley: Emerald. Brody, D. (2009). Latest trends in hotel industry (3rd ed., Vol. 1, p. 37). Chandni Chowk, Delhi: Global Media Bragg, S. 2011. Inventory Best Practices (2nd ed.). Hoboken: John Wiley & Sons. Brown, D. (2003). The restaurant managers handbook: How to set up, operate, and manage a financially successful food service operation (3rd rev. ed.). Ocala, FL: Atlantic Pub. Group. Top of Form Bottom of Form Cummings, J., & Groom, R. 2008. Branding inside out: The Pret a Manger story. Mankato, Minn.: Capstone;. Top of Form Bottom of Form Eades, K. 2010. The portable MBA (5th ed.). Hoboken, N.J.: John Wiley & Sons. Earnings reports.(Business)(Financial report). (2014, NOVEMBER 24). Daily Herald. Retrieved December 16, 2014, from http://www.highbeam.com/doc/1G1-190977247.html? Fransoo, J. (2011). Behavioral operations in planning and scheduling. Heidelberg: Springer.. Hooley, G., & Piercy, N. (2012). Marketing strategy & competitive positioning (5.th ed.). Harlow: Financial Times Prentice Hall. Top of Form Bottom of Form Jha, N. 2008. Research methodology. Chandigarh: Abhishek Publications. Top of Form Bottom of Form Lockyer, T. 2007. The international hotel industry: Sustainable management. New York: Haworth Hospitality & Tourism Press. Matt, G., & Matt, G. (2007). Interviews (English ed.). Köln: Walther König ;. McDonald, M., & Dunbar, I. (2004). Market segmentation how to do it, how to profit from it ([3rd ed.). Amsterdam: Elsevier/Butterworth-Heinemann. People: A key ingredient at Pret A Manger. (2002). Human Resource Management International Digest, 6-8. Ritzer, G. (2013). The McDonaldization of society (20th anniversary ed., 7th ed.). Thousand Oaks, Calif.: SAGE. Top of Form Bottom of Form Slack, N., & Chambers, S.( 2010). Operations management (6th ed.). Harlow, England: Financial Times Prentice Hall. Williamson, D. (2004). Strategic management and business analysis (Vol. 1, p. 38,12,52). Amsterdam: Elsevier, Butterworth-Heineman. APPENDICES: Questionnaire for data collection The data collected with this questionnaire will be used exclusively to write a for my assignment. Managers, employees are free to fill their respective sections. Confidentiality shall be maintained SECTION A: General information Age in years……… Sex Male ( ) Female ( ) Others……. Location in the UK………. Occupation…………. SECTION B: To be filled by operations managers 1 PRET A MANGER SHOP Managed……………….. 2 Number of years in the job………………………….. 3 Which of these operations issues do you relate with i. Speed ii. Quality iii. Dependability iv. Costs 4 Which of the four issues do the customers raise frequently? ………. 5 Comment on the price of your products in comparison to others…………………………………………………………………………………………………………………………………………………… 6 Does working under Pret A Manger satisfy you as a manager? YES ( ) NO ( ) SECTION C To be filled by customers of Pret a manger shop 1. Favourite Pret shop……………… 2. Favourite foods from the store…………………………… 3. What are your experience with the Pret food………………………………………………………………………….. 4. Rate Pret A Manger in the table provided below. Tick appropriately Average Good satisfactory excellent Speed Dependability Costs Quality 5. Does Pret A Manger provide customization of your foods when required? YES ( ) NO( ) SOMETIMES ( ) SECTION D: To be filled by the employees I. Under which Pret a shop do you work……………….. II. Number of years (months) in employment………………………. III. Given a chance will you work in any food restaurant other than Pret shop? Yes ( ) No ( ) IV. Comment on the training offered by Pret a manger V. Do customers rely their appreciation after service is given ( ) Yes ( ) No ( ) Sometimes Read More