Operations Management: Case Study
INTRODUCTION
What if you were to find out your favorite meal at an upscale restaurant was actually pre-made instead of freshly prepared by a chef? Would you be upset or dissatisfied because you paid a high price for food you thought was made from scratch? Now-a-days customers are demanding more varieties of food because they are dining out much more often due to restraints in schedules. In order to serve this growing demand restaurant owners are faced with the decision to either make or buy their food to save time and money. The decision to buy is also known as outsourcing which means obtaining a better service from an external provider.
Outsourcing saves workers time and restaurants labor costs. This happens because cooks do not have to spend too much time preparing food and companies do not have to hire as many expert chefs that require high wages. Although outsourcing saves time and money, sometimes there is a lack of quality in food that may turn customers away. But most of the time quality does exist in the pre-made foods and customers may be unknowingly consuming these foods trusting that the items are fully prepared by the cooks. For example Richard Hendrie, a senior manager at Daka International Inc., stated that Fuddruckers restaurants use Otis Spunkmeyer’s cookie dough after agreeing that customers did not have to be told they were eating cookies that can be found in many convenience stores. Is this dishonest for restaurants to not tell the consumers that their products have already been made? If the quality is there, does it really matter? It matters to some people in gourmet restaurants like chef Mark Strausman who says he still “peels garlic and carrots” and feels that he has a commitment to cook everything himself because of the prices the restaurant charges. Restaurants have many alternatives in deciding the best way to give customers what they want and need to carefully plan in order to be successful.
PROBLEM
More and more companies today are using the ready-prepared food items on their menus instead of creating their dishes from scratch. The problem we are focusing on is whether restaurants should continue to purchase prefabricated items, hire better chefs, or use some other methods to keep their customers satisfied and their costs down.
ALTERNATIVES
One option would be to use a conventional system where raw foods are purchased, prepared on site, and served soon after preparation. To make this system work successfully, we would need to hire skilled chefs or train the kitchen staff to work more efficiently without losing quality. In this system there is a higher quality that comes from making food from scratch. Higher quality means happier customers who are willing to pay extra for better food. Also another advantage is greater flexibility in menu changes due to seasonal fluctuations. Although quality may be present, this alternative would require higher labor costs, and maybe very time consuming especially when unexpected rushes come in.
Another alternative would be to purchase all of its items from outside companies as long as quality in the product is there. In order for this system to be efficient we would need the proper facilities to store and prepare the purchased items. This system would reduce the prep time needed to prepare meals and gives workers a more reasonable work schedule. Disadvantages would be that additional modifications that would need to be done in order for the food to be served. Also customers may be dissatisfied with prices that are charged for a product that is not made from scratch or they just might not like the taste of a pre-made item.
A third alternative would be to limit pre-made food to certain items on the menu, such as appetizers, breads, and desserts. We then would use authentic food to cook the main course meals. Our concept to this alternative would be to cut costs on smaller entrees while improving quality on the main course meals. An advantage to pre-made appetizers would allow the chefs more time to prepare the authentic meals. Disadvantages would include longer chef work hours, high anxiety, higher stress environment, and higher labor costs for the company.
RECOMMENDATION
We decided the third alternative to be the best choice because the pre-made items would allow the chefs to spend quality time on making the main course meals. Having quality entrees will still allow us to charge premium prices on the entrees.
ACTION PLAN
1) We first need to create a condensed menu to see what areas we want to specialize. When we create the menu, we need to decide which foods would be pre-made and which foods would be authentic.
2) Hire high quality chefs that are from culinary schools and make them familiar with the menu.
3) Shop around to find the lowest cost for pre fabricated and raw foods. This would involve sampling foods from different suppliers to select the best choice.
4) Budgeting our costs for the food, labor and other expenses is a must. Some of the expenses would include an advertising budget to let customers know about our authentic food.
5) Finally we would need to purchase the pre-made food for the appetizers and desserts, and the raw goods for the main course meals.
ANTICIPATED OUTCOME
In conducting our third recommendation we would expect a consistent control and quality of food that will make our customers leave satisfied and come back for more. Even though we expect higher labor costs due to hiring qualified chefs, this will be offset by our sales volume. We know that this top quality can be obtained because chefs will have more time to focus on the main course meals rather than the desserts or the appetizers that will be pre-made. Focusing on the entrees and outsourcing other items from the menu will save the company time and money for other products and developments.
SUMMARY
In deciding to make or buy we decided that a feasible solution to our problem would to use both in order to be most productive and efficient. With more food being consumed outside the home, people want to have good tasting quality food at reasonable prices. By outsourcing items that do not require as much prep as our entrees, cooks can concentrate on the quality of the meal. The chefs’ commitment to customer entrees will allow us to charge premium prices that will lead the company to gain higher profits, lower costs, and customer loyalty.
Contact me at mthong@radford.edu or melanie.thong@gmail.com