New Perspectives 2. Liz is very cautious about using past information for orderi

Question

New Perspectives

2. Liz is very cautious about using past information for ordering food from suppliers. She never has done that and the restaurant seems to be doing well. Discuss your rationale with her relating to a better approach to this activity.

3. What advice would you give to Tyler to help him with the development of the initial website for the new location? What would you suggest to help with the marketing and promotion of the new location (from previous chapters)?

4. Can you use the initial website design to help the restaurant? Or do you think you need to scale up to a larger website solution to gain effectiveness?

Michael knew that the “front house” operations were important for customer service and efficient functioning of the restaurant. However, he knew that the restaurant could not survive on the efficiency of its front-house operations alone. He remembered their accountant’s emphasis on the need to pay more attention to the purchase of food. The profits of a restaurant depend significantly on ordering and forecasting, reducing spoilage by not ordering more product than they need. Michael has learned that there is a careful balance between ordering too much and running out of food. He wondered also if he could manage his sup- pliers better with more accurate data on the restaurant’s needs. Could he reduce his deliveries from a supplier to ask for a larger discount? Negotiate better prices by consol- idating orders to specific suppliers?

Accounting for Success

As he thought about these questions, he wondered how he could collect and access better data. The new point- of-sale system recorded the sales of each menu selection and type, from appetizers, entrees, and desserts to side orders. The management information from the new sys- tem surely could help him to project the number of patrons on any given night and the sales of individual menu items. How could he use that information? Would he need input from Liz and the kitchen operations?

He decided to discuss it with both Tyler and his wife. Michael asked Liz to provide some details on her order- ing process. She said that she gives a standard order to the suppliers for the main components of the menu items. She then used those order quantities as a basis for her next order. “Sometimes I may order more or less based on what I see in the food storage areas, free- zers and refrigerators,” she said. “It’s just a guess, but I think it is working pretty well.” She also said that she is meticulous about marking the delivery dates of perish- able items so that she does not use spoiled materials.

Tyler then asked, “How do we know what is thrown out because of spoilage? Or when we run out of a prod- uct?” Michael also explained that he wants to make sure they are ordering efficiently based on accurate forecasts rather than just by guess. Food costs are a significant

percentage of their total operating costs. He did not want to ask, but he believed that Liz did not ask or negoti- ate prices with the suppliers. He asked Tyler to complete an inventory of the food for a week to gain more under- standing of the situation. Tyler wondered if he could design a simple spreadsheet to develop an order list for the various suppliers in order to simplify the process.

As Michael considered basing their food purchases on a forecast, he also wondered if scheduling their serv- ing, kitchen, and busing personnel could be done in a similar manner. Also, they are currently using a payroll service to pay employees and generate all the necessary regulatory reporting; maybe there is a better way to man- age the labor costs to gain efficiency and reduce costs.

Putting Software to Work

Most of the menu and promotional materials for the res- taurant have been created using a local graphic artist and print shop. This service added costs to their opera- tion as well as increased turnaround time to complete the materials. Tyler wondered if they might be able to purchase some software for their new computer system that would allow them to create and print some of the promotional, marketing, and menu materials on their own color laser printer. For the grand opening, they will need additional materials for the marketing, promo- tion, menus and other administrative functions.

As another important part of the promotional pro- cess, moving to the new location could be a perfect opportunity to upgrade their website. Currently, the website consists of a few simple pages containing a few pictures of the restaurant, their location and direc- tions, and a sample menu; the website had not been changed in the last two years. They want to give it a new “look” and presentation to match the new location, and add some dynamic content for specials and updates to create more interaction with customers. Tyler knows a little about building a website from his college courses, but he has no graphical or web design skills. He wonders if there are any software tools out there that could help him “kick up” their website in order to prepare for the new location and draw new customers.

Explanation / Answer

2. My advice to Liz is that she should use past information while ordering food from suppliers. This is because past information is a very good predictor of the future quantity of food that will be required by the restaurant and the past information can be used to identify the trend and the seasonal factors. Secondly the past information can be used to forecast the future requirements in a better and more rational manner using statistical forecasting methods like weighted average and exponential smoothing. These methods will enable Liz to predict the quantity of food that will most likely be required in future and hence the effort will lead to reduction of situations of over ordering and under ordering.

3. The website for the new location should have a fresh and more appealing look. The website should not only be attractive and dynamic but should also be informative as well so that customers in the new location can see what are the specialties of the restaurant, what kind of food does it offer, what ambience does it have and thus what is the value proposition that the restaurant is offering to them as customers. Thus the website has to be interactive, dynamic, should have a fresh and contemporary look and should be informative.

To market and promote the restaurant in the new location Tyler should run digital ads on various popular social media platforms. The advertisements should be limited to the users based in that location. Besides this Tyler can make use of newspaper inserts, standees, and billboards. All these will help to gain the attention of the target customers.

4. No the initial website design cannot be used for the restaurant, especially when it is moving into a new location. The initial website will have to be upgraded as discussed earlier. To gain effectiveness the need is to scale up to a larger website solution. Tyler should hire IT and software professionals and graphical designers to develop a highly functional and a highly attractive website. The website has to be interactive and will provide information on the menu, deals, and offers for different days and specialties.

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