Analysis of a Mexican Restaurant in Dubai - Case Study Example

Case study analysis Student’s name Course Tutor’s name Date Executive summary This report starts by identifying the key issues and potential problems facing Sombrero Restaurant. The report notes that the restaurant does not have the right system to control its stock. Additionally, the restaurant finds it hard to track what is sold by the food, beverage and outdoor catering components of its operations. The report identifies cost-related errors, stock wastage and theft as possible problems that the restaurant could face. The report defines the procurement process as the activities that a restaurant goes through when purchasing products that it uses to satisfy the needs and preferences of its customers. It links this process with the control system by indicating the five considerations that are made in the purchasing process. These include product testing, yield testing, product description, methods of buying and responsibilities of the person in charge of purchasing products. The report further describes the application of the control system, and notes that the system should be used whenever new products enter the restaurant and for the entire duration they are within the facility until such a time when they are sold to customers or considered as waste. The report then uses a food and beverage service model to illustrate how a food and beverage control system can be used to illustrate wastage of products at Sombrero Restaurant. The report then recommends that the manager/owner needs to first understand the food service model as used in the restaurant before devising the necessary food and beverage system. The report concludes by reiterating the importance of a food and beverage control system towards ensuring that there are no wastages in the food and beverage production chain, and that the restaurant is able to optimise whatever products it gets from suppliers. Key issues or potential problems facing Sombrero Restaurant A critical look at Sombrero reveals that the restaurant does not have the right system of controls in order to protect the assets that the business has. Additionally, it reveals that the restaurant is not very good at record keeping and this therefore means that it is unable to track what is purchased, received and sold. Possible problems that could arise from the absence of controls in the restaurant include high possibility of cost-related errors and high theft prospects especially by dishonest employees (Dopson & Hayes 2010, p. 470). The absence of controls makes it hard for the management to identify or stem such dishonesty. In the end, the absence of systems makes it harder for the restaurant to optimise its costs. In other words, the restaurant is not able to make the most out of its purchases, and this affects its profitability negatively. Additionally, the absence of a control system makes it hard to analyse the income that the restaurant gets against its expenditure. As Davis et al. (2012, p. 233) indicate, the lack of control systems also makes it hard for a restaurant to establish and maintain standards and price its menu. Moreover, managers find it hard to get accurate and up-to-date information about the restaurant’s performance. Procurement process and control systems The restaurant industry requires knowledgeable buyers, willing sellers who are able to deliver specific products in the right quality, quantity and time, and detailed inventory and audit processes (Kasavana 2004, p. 130). In the case study, Sombrero Restaurant is the buyer, who ideally, should be knowledgeable. Through a proper procurement process, the restaurant should also be able to control its purchasing practices in order to improve its productivity and contain its costs. The absence of a procurement process can lead to inflated costs of inputs, which in turn would lead low profits or none at all. The procurement process relates to activities that a restaurant goes through when purchasing products that it uses to satisfy the needs and preferences of its customers (Wisner et al. 2011). According to Davis et al. (2012, p. 237), the procurement process contains five points to be considered. First, the restaurant needs to test and identify the products for use in its food production. Second, the restaurant needs to test the yields of the products it uses. In other words, this means that the restaurant gets to identify how much of a particular purchase goes into making a specific food item (for instance the amount of litres of milk required to make 10 cups of coffee). The third component in the procurement process involves a concise description of a product (i.e. in terms of weight, size and quality). The fourth component of the procurement process involves identifying the method of buying – i.e. whether stocks can be purchased by cash, contract, or check. Finally, the procurement process should be carried out by a person who is authorised to do the clerical work, and who should be charged with the responsibility of placing and sanctioning orders and documenting whatever is delivered (Brown 2007). The application of quality control systems Quality control systems are arguably indispensable in the food and beverage industry since they ensure that the products delivered by suppliers, and which are eventually used to prepare food and beverages for the consumer, are safe and made of quality products (Filipovic et al. 2008, p. 465). The application of quality control systems should begin the moment food supplies enter the restaurant (Rahm 2012). Specifically, all supplies delivered by vendors should be checked for spoilage and whether they meet set quality standards. Rahm (2012) argues that only the best supplies should enter the restaurant. To verify quality, a restaurant needs to have defined product specifications (Dopson & Hayes 2010, p. 96). However, specifications alone cannot guarantee the quality of products; consequently therefore, the restaurant needs to have a verification procedure through which the delivered items are gauged against set specifications (Dopson & Hayes 2010, p. 96). This means that all delivered products must conform to specifications. Dopson and Hayes (2010, p. 96) argue that quality conformance should be judged by a clerk who has developed a ‘keen eye for quality’ through continuous training. Once the products are verified as conforming to defined specifications, they are received into a restaurant’s store and as Rahm (2012) indicates, the storage process begins. Notably, the supplies need to be stored in a manner that maintains the products’ quality and enhances their shelf life. The different storage methods include dry storage, refrigeration or freezing. A food and beverage control system to ensure the problems at Sombrero Restaurant are solved/eliminated The food service system model (seen in figure 1 below) represents the possible processes that foods and beverages pass through in order to get to the final consumer. Figure 1 Food service system model Source: University of Mississippi (2002) An effective food and beverage control system will therefore need to consider all the above processes and link them in order to ensure that wastage is minimised. Gregoire (2012, p. 2) defines a system as “a collection of interrelated parts or subsystems unified by design to obtain one or more objectives”. Sombrero Restaurant has a critical need to link its different subsystems in order to enhance the effective flow of resources. As indicated in figure 1 above, purchases need to be based on menu planning. Additionally, everything that is purchased needs to be received (and recorded), and stored appropriately. The system in Sombrero Restaurant must be able to link the food that is prepared to what has been stored. Additionally, whatever is prepared must be cooked and must be accounted for in the holding areas or through foods or beverages that have been served. The objective of the system should be to make the most use of purchases, because as Gregoire (2010, p.2) indicates, “a system is designed to accomplish an objective”. In the purchasing phase, the food and beverage system at Sombrero Restaurant will involve product testing (to ensure that quality standards are complied with), yield testing, and purchase specifications. Additionally, the system will use a specified method of buying (e.g. through cash). The clerical procedures at this phase will be carried out by qualified personnel who have been appropriately trained. The receiving phase will involve quantity and quality inspections, and as suggested by Davis et al. (2012, p. 237), the person charged with receiving purchased products must be well trained. His or her roles include acknowledging the receipt of a specific quantity of goods, which should be in the right quality. The person should also have the mandate to return goods that fail the quality test. The storage phase will involve recording new arriving stock and ensuring that products move up the food production chain in order of how they arrived with earlier orders being used first in order to minimise spoilage (Davis et al. 2012, p. 237). The store clerk should ensure that everything that comes in and goes out is recorded, and any discrepancies should be resolved. In this phase, the store clerk should identify the fast or slow moving products and communicate the same to the manager in charge of ordering supplies. The preparing phase will involve forecasting the number of customers who will attend the restaurant each day (perhaps based on past sales), controlling the food and beverages to be prepared using standard recipes and measuring equipments such as scales and ladles (Davis et al. 2012, p.238). The products used during the preparation phase should translate into the food that is cooked, which then should be accounted for through sales or unsold food. The selling phase will include a system that records all sales and the time they were made (e.g. through a cash register machine that prints and issues sale receipts). The cash will be controlled through a system that will be developed to record all sales and help the sales managers (and the accounting department) in conducting a sales analysis. The final phase of food and beverage control at Sombrero Restaurant will follow the three stages suggested by Davis et al. (2012). They include cost reporting, assessment of the restaurant performance, and correction of problems that may have been identified during assessment. This report recommends that cost reporting at Sombrero should be done on a daily basis since the production cycles of most restaurants are very short and the products involved are perishable. The assessment should also be done for purposes of comparing the cost report with the revenues generated at a specific period. During assessment, managers can also compare the sales that the restaurant registered in different days. The final stage involves correction, and here, the management may identify areas where products do not add up. For example, purchases may exceed what is prepared for cooking, thus leading to losses since the restaurant still has to pay suppliers. In such a case, the managers can adopt the just-in-time inventory management approach, which eliminates waste while enhancing productivity (Adams 2008; Hansen et al. 2007 p. 766; Longenecker et al. 2011, p. 620). Recommendations Sombrero Restaurant has a problem with its stock control and this can easily be resolved through the above suggested food and beverage control system. The most important thing that managers (or the restaurant owner) need to understand is the food system model. The hotel may have a slight variation of what is indicated in figure 1, but despite the differences, the manager/restaurant owner needs to understand how the supplies are converted into sales through the different processes. If there is theft at Sombrero, it can be detected through proper management and the use of the right food and beverage control system. By understanding what goes into each component in the restaurant, the managers will be able to track the products against what is in the storage records and what has been sold. This will make tracking mistakes or theft by employees much easier. The store will be a critical point in Sombrero since every stock taken from there will have to be accounted for by the different departments that take (and sign for) it. This will make it easier to track the stock used by different departments (i.e. food sales, beverage sales and outdoor catering) against their registered sales. Conclusion The absence of a food and beverage control system can compromise the profitability of a restaurant, not only because there would be a lot of wastage, but also because it would be hard to ascertain the quality and quantity of products supplied to the restaurant. With the correct control system in place however, the restaurant can monitor the quality and quantity of supplies in order to ensure they measure up to the quality and quantity standards. Additionally, the managers can monitor any loopholes in the system and correct them in order to avoid wastage and hence optimise how the purchases are used in order to deliver maximum profits to the business owner. References Adams, AA 2008, The restaurant manager’s success chronicles: insider secrets and techniques food service managers use every day to make millions, Atlantic Publishing Group, Ocala, FL. Brown, DR 2007, The restaurant manager’s handbook: how to set up, operate and manage a financially successful food service operation, Atlantic publishing, Ocala, FL. Davis, B, Lockwood, A, Alcott, P & Pantelidis, I 2012, Food and beverage management, 5th edition, Routledge, Oxon. Dopson, LR & Hayes, DK 2010, Food and beverage cost control, Wiley & Sons, Hoboken, New Jersey. Filipovic, I, Njari, B, Kozacinski, L, Fleck, C, Miokovic, B, Zdolec, N & Dobranic, V 2008, ‘Quality management systems in the food industry’, MESO Conference Paper, pp. 465-467. Gregoire, MB 2010, Foodservice organisations: a managerial and systems approach, 7th edition, Prentice Hall, Upper Saddle River, NJ. Hansen, D, Mowen, M & Guan, L 2007, Cost management: accounting and control, South-Western Cengage Learning, Mason, OH. Kasavana, N 2004, ‘E-Procurement: strategic sourcing for restaurants’, Hospitality Upgrade, Spring, pp. 132-134. Longenecker, J, Petty, J, Palich, L & Hoy, F 2011, Small business management: launching and growing entrepreneurial ventures, Cengage Brain, Toebben Drive Independence, KY Rahm, J 2012, ‘Food quality control tips for restaurants’, Food Service Warehouse, viewed 16 September 2014, . The University of Mississippi 2002, ‘Guide to centralised foodservice systems lesson plans’, viewed 16 September 2014, Wisner, J, Tan, KC & Leong, G 2011, Principles of supply chain management: a balanced approach, Cengage Brain, Toebben Drive Independence, KY. Read More