Measures of Operational Performance of the Food and Beverage Outlet in Clifton Hotel Bristol - Case Study Example

Module Operation Analysis International Hospitality Management Hoi Yu Lee Assignment Measures of Operational Performance of the Food and Beverage Outlet in Clifton Hotel Bristol Word count: 1,441 Date: 30/3/2015 Declaration of originality: I declared that this work is my own original work Table of Contents Table of Contents 1 Executive Summary 1 Cash Flow 2 Employee Satisfaction Score 4 Conclusion 6 Bibliography 7 Executive Summary This paper advises the operation’s management team at Racks Bar & Restaurant of Clifton Hotel Bristol on the key measures of operational performance that they should use to help control their business. Cash flow and employee satisfaction score are the two measures that have been described in the paper, which are recommended for effective management. It has also been highlighted as a significant measure that indicates the financial capabilities necessary to maintain efficiency of operations at Racks. The importance of financial cash flow ratios such as liquidity and solvency has been emphasized. The paper underscores employee satisfaction score as an important tool indicating performance of human resource operations. The relationship between employee satisfaction score and customer satisfaction has been highlighted. Cash Flow Cash forms the lifeline of the food and beverage operations at Racks Bar & Restaurant of Clifton Hotel Bristol as the company must maintain a constant supply of food materials needed in the production process by paying the suppliers on time. On the other hand, products sold must be paid for promptly to enable the company to meet its bills for essential services. The cash flow margin is a significant measure of operational efficiency as it indicates the proportion of cash flows from operation action per dollar of income (Harris & Brown, 2008). The management can easily determine Racks’ capacity to transform sales in to cash. The restaurant’s day’s sales outstanding indicate the usual period that the firm takes to gather the account receivables or the unpaid amounts (Jagels & Coltman, 2004). Conversely, the day’s payable outstanding indicates the typical period that Racks Bar & Restaurant takes to settle amounts owed to creditors or suppliers. These are two aspects of cash flow that offer an important insight for Racks’ management to understand the inefficiencies that may arise based on their trends (Jang & Yu, 2002). Cash flow is an essential measure that sends warning signals to the management on emerging inefficiencies such as settlement of amounts payable at a rate higher than Racks Bar & Restaurant is collecting the amounts receivable (Harris & Brown, 2008). This might help to prevent an embarrassing situation whereby Racks will not be in a position to settle outstanding bills. An unusual increase in the day’s sales outstanding may reflect an internal inefficiency leading to a break in the order to cash system. Such inefficiency might be related to earned revenues that have not been invoiced, which might sound simple but could significantly affect operations (Zeller & Stanko, 2012). Cash flow ratios will help the hotel management to effectively measure the fiscal performance of operations at Racks Bar & Restaurant (Bowie & Buttle, 2004). Through these ratios, the managers will be in a position to attain data that is of greater value from the financial statements than what can be acquired from basic examination of absolute data contained in the documents. Financial cash flow ratios such as liquidity and solvency indicate the cash that Racks can access with regards to operations and investment (Ryu and Jang, 2004). In other words, these ratios indicate the cash generated after settling the obligatory overheads of Racks’ operations and invests in prospective growth. They are important cash flow metrics that reflect an accurate degree with regards to the amount of cash that Racks Bar & Restaurant has in point of fact to pay debt and enable further growth. If the management realizes that Racks has a high financial cash flow, the surplus cash can be set out for the capital outlays that are essential for business growth (Reid & Botanic, 2006). Increasing intensities of financial cash flows are commonly an exceptional pointer to prospective improvement in earnings. It is also a dependable indicator of the management’s capacity to increase expenditure at Racks Bar & Restaurant. Focus on cash flow is important in ensuring that the management does not engage in worthless investments (Zainal & Radzi, 2012). Employee Satisfaction Score Employee satisfaction score is one of the important measures of operational performance. Staff attrition adversely affects service delivery and organizational productivity (Berezan et al. 2014). Employee satisfaction surveys offer an important measure of the attitude of staff towards the daily activities. It helps the management to ascertain the contentment, enthusiasm and reliability of employees thereby offering a foundation for setting strategies to improve operations. It also measures the level of employee engagement that indicates their emotional obligation to the firm. This takes in to consideration the extent of unrestricted or non-mandatory effort that a worker lays out on behalf of Racks Bar & Restaurant. Employee satisfaction score is a measure that offers the management direction on the most appropriate way to enhance performance by concentrating on the areas that matter significantly for the employees (Clark & Chen, 2007). The primary objective of an organization is to make profits. Profitability at Racks Bar & Restaurant can be adversely affected if employees engaged in the operations lack motivation to work towards the accomplishment of Racks’ goals. All the employees need to be focused on contributing to revenue generation by accomplishing their tasks as set out in the organization’s strategy (Haves & Ninemeir, 2012). Employee satisfaction is closely linked to customer satisfaction. Absenteeism, failure to meet deadlines and high employee turnover are the worst indicators of dissatisfaction and low employee commitment. By the time they become evident, customer satisfaction level is usually at its lowest. This may have long-term effects on the operations of Racks Bar & Restaurant as competitors capitalize on such weaknesses. Moreover, competing firms such as the Bristol Marriott Royal Hotel may be the beneficiaries of the high staff turnover at Clifton Hotel Bristol (Lockyer, 2008). The relationship between the employer and staff at Racks Bar & Restaurant of Clifton Hotel Bristol entails the employees supplying skills and effort in exchange for compensation. The employer is expected to offer the necessary tools for employees to accomplish tasks assigned to them. Nevertheless, there are growing expectations among both parties as the employer needs greater input from the employees while they too need more than just conventional remuneration (Sherif & Litteljohn, 2013). The development of strategic human resource practices in the field of food and beverage operations has raised the competitiveness needed to retain a skilled and committed workforce. Racks’ employees are in either direct or indirect contact with the customers and if they feel valued and engaged in the operations, greater experiences are expected among the customers, which in turn have a positive impact on Racks’ financial results. Employee satisfaction score therefore highlights the position of Racks in meeting the financial goals (Luo & Milne, 2014). Customers pay for products based on the perception they have for Racks Bar & Restaurant. This is mainly associated with the marketing efforts to send attractive messages that give a positive impression of Racks and the promise for great experiences that are equal to the amount paid. They expect value for their money and the employees have a responsibility of delivering the organization’s promises. If this responsibility is not fulfilled, customers are unlikely to make repeat purchases, which may adversely affect competitiveness (Nelson, 2008). Employee satisfaction score mirrors the level of accomplishment with regards to the deliverables of Racks Bar & Restaurant. The score exposes failures in the previous strategies applied by the management to motivate staff. It is a measure that evaluates the strengths of such strategies against the backdrop of employees’ needs. In most instances, employee needs do not match what is deemed as motivators by the management. The employee satisfaction score will offer an insight with regards to staff expectations and hence it will be possible for the management to set successful motivation strategies (Sherif & Litteljohn, 2013). Conclusion Cash flow margin will help the management to determine the rate of translation of sales in to cash at Racks Bar & Restaurant. It plays a significant regulatory role as it sends warning signals regarding inefficiencies in operations. Liquidity and solvency ratios are significant measures of financial efficiency. Employee satisfaction score reflects the efficiency of human resource operations. A high score is associated with greater customer satisfaction and hence increased revenue. It is an important indicator of the effectiveness of staff motivation strategies applied. Bibliography Berezan, O., Millar, M. & Raab, C. 2014. “Sustainable Hotel Practices and Guest Satisfaction Levels International”, Journal of Hospitality & Tourism Administration, 15(1), 122-122. Bowie, D. and Buttle, F. 2004. Hospitality Marketing: An Introduction. Oxford: Elsevier Butterworth Heinemann. Clark, A. & Chen, W. 2007. International Hospitality Management: Concepts and Cases, Burlington, MA : Butterworth-Heinemann. Harris, P. J., & Brown, J. B. 2008. “Research and development in hospitality accounting and financial management,” Hospitality Management 1(7), 161-181. Haves, D. K. & Ninemeir, J. D. 2012. Human Resources Management in the Hospitality Industry, New York, NY: Wiley Jagels, M. G., & Coltman, M. M. 2004. Hospitality management accounting, 8th ed. New York: Wiley. Jang, S., & Yu, L. 2002. “Analysis of return on hotel investment: A comparison of commercial hotel companies and Casino Companies,” Journal of Hospitality & Tourism Research 26 (I), 38-52. Lockyer, G. 2008. Global Cases on Hospitality Industry, New York, NY: Routledge Luo, Y. & Milne, S. 2014. “Current Human Resource Management Practices in the New Zealand Hotel Sector”, Journal of Human Resources in Hospitality & Tourism 13(1), 81-100. Nelson, R. 2008. “Developing a Successful Infrastructure for Convention and Event Tourism”. Journal of Convention & Event Tourism 3(2), pp. 122-136. Sherif R. & Litteljohn, D. 2013. “What makes hotel values in the UK? A hedonic valuation model”, International Journal of Contemporary Hospitality Management, Vol. 16, 3, pp.175 - 181 Reid, R. D. and Botanic, D. C. 2006. Hospitality Marketing Management. 4th Ed. New Jersey: John Wiley & Sons Inc. Ryu, K. and Jang, S. 2004. “Performance Measurement Through Cash Flow Ratios and Traditional Ratios: A Comparison of Commercial and Casino Hotel Companies,” Journal of Hospitality Financial Management 12(1), 14-25. Zainal, A. & Radzi, S. 2012. Current Issues in Hospitality and Tourism: Research and Innovations. Florida, FL: CRC Press Zeller, T. L., & Stanko, B. B. 2012. “Operating cash flow ratios measure a retail firms ability to pay,” Journal of Applied Business Research 10 (4), 51-59. Read More