PART B Case Study Questions (75 marks)
You will receive three (3) randomised case study questions from the below pool of eight (8).
Question 1 (25 marks)
Executive Chef Sarah Bronston soon realised that taking this new position might have seemed an exciting opportunity at the time, but it seemed that the stock control of the premises she was hired to manage was so unorganised that it was certainly one of the main reasons customer numbers were failing.
During her very first audit Sarah discovered that her team would order foods on an ad hoc basis without keeping any clear stock records. When deliveries arrived at the premises staff appeared too busy to count the items or even check for quality and would simply sign the delivery note without double-checking the products. She was horrified to identify a number of products in the stores that were out of date, and prepared goods stored were not labelled so there was no way of knowing what was safe to use and what was not. There were no monthly stocktakes and the wine was stored in cellars that would often reach 20°C.
An EPOS system that was recently installed was not linked to any stocktaking system so that no stock reports seemed to exist. Sarah realised that she had a lot of work to do if this restaurant was going to keep its licence, let alone attract a healthy number of customers.
Consider the implications of the situation described above in terms of:
• Health and Safety
• Production Control Quality of Product
If you were Sarah, what steps would you undertake to ensure the quality of the product is not jeopardised? (25 marks)
Question 2 (25 marks)
The ‘Duck and Drake’ is a successful, privately owned ‘free house’ pub with an annual turnover of $400,000; 60% of the turnover is wet sales (beverage), 30% is food (using rather ad hoc menus) and the remaining 10% is from gaming (pool and slot machines). As owner-operators they view the turnover at the end of their second year as successful and have lived well off the business, including most of their own food and beverage requirements. They are unaware of exactly how the sales revenue is made up by each component and what margins they make. They have also not seen the need to introduce any systems for controlling stock or purchases, relying instead on their own experience, an annual chat with their accountant where they look at the purchases against revenues and a family environment of honesty.
cost of sales
cost of sales
(including for own use)
50-50 share scheme
Although successful in the eyes of the owners, this business is not performing as well as it could. A new member of the restaurant staff has given the following feedback to the owners for the past couple of weeks gained from talking to the customers whilst serving them.
∗ We don’t come here as often as we would like because it is hard to know what’s still going to be available on the menu when we arrive, and it’s embarrassing when one has guests!
∗ I like to have a steak when I am out, but I don’t have them here anymore, they are so unreliable.
∗ I hope the wine I have ordered is not that supermarket wine I had last time, it had their brand on the label and was four times the price!
∗ Well I haven’t been here since Christmas; I wasn’t very well after that turkey dinner.
Advise the owners on what systematic procedures they should adopt in terms of purchasing and storage that would mitigate these customer comments and generally improve the performance of the business. (25 marks)
Question 3 (25 marks)
The hospitality industry is one of a number that attract large numbers of part-time, seasonal and casual employees, particularly at lower grades, and this tends to exacerbate the high level of staff turnover. This can add to pressure on management in terms of recruitment and training, maintaining product and service quality standards and keeping employment costs at an acceptable level.
With that in mind, and using the information and formulae found in Davis et al (2018) Food and Beverage Management Ch 10, address the following case study:
The ‘Rat and Toad’ is a large pub situated on the outskirts of a busy suburb. Revenues are down on the previous year despite longer trading hours and overall profitability has reduced even more dramatically. The pub manager believes that the decline is the result of excessive staff turnover, which has slowly worsened since the brewery failed to increase basic pay rates or to address issues of late night working since new licensing allowed the pub to trade later into the night. The manager had previously worked in a hotel bar which also had staff turnover problems estimated at 25% per year, but this had not unduly affected the hotel bar revenue or profits. The ‘Rat and Toad’ has a total annual workforce of 22 people. They work as follows: 12 part-time staff working an average of 12 hours per week, six full-time staff working 40 hours per week, and four seasonal staff working 40 hours per week for 10 weeks of the year. During the past year ten staff have left, eight part-time and two fulltime.
a) Calculate the average staff turnover. (6 marks)
b) Estimate the cost of recruitment. (6 marks)
c) Discuss the issues concerning the less obvious costs identified. (6 marks)
d) Make a case to bring about change. (7 marks)
Question 4 (25 marks)
Mary Smith fell in love with the little bistro in the corner of Worple Ave and Stiple Street the first time she laid eyes on the place. It was a small operation, no more than 40 covers at any one time, but it had something special about it. Its owner, Mr Franco was almost 65 and he would soon retire, so when he put up an advertisement to sell the business Mary was the first to show interest. She was determined to buy that place no matter what, and although she did not have much experience in running a restaurant business, she had years of experience in investment banks as an accountant so she had a good network of friends and she was a quick learner.
The business seemed just about to break even and Mr Franco never lied about the fact that the business had been steadily declining over the years. Mary did not think about conducting a feasibility study or checking any historical data of the business. She simply launched in with the enthusiasm of a five-year-old seeing her first bicycle.
Within the first months Mary realised that Mr Franco was hiring far too many employees but she was reluctant to let go any of the people as that all seemed to have worked for years for Mr Franco. Mary’s initial funds were running low and the restaurant head chef did not seem to wish to steer away from the traditional French cuisine or try any alternative recipes.
Within the first year Mary’s ‘Little Paradise’ was turning into ‘Little Hell”. The restaurant did not seem to have a positive cash flow, customer numbers had deteriorated and some equipment needed replacing. In the first year of operations the restaurant made a loss of $35,000. If Mary didn’t act soon, she would lose both the restaurant and her self-esteem. She needed to turn the restaurant into a success, but she had no idea what to do next.
a) Identify and discuss the impacts arising from the major mistakes Mary made when deciding to go into the restaurant business. (15 marks)
b) What would you advise Mary to do next to make the business a profitable one? (10 marks)
Question 5 (25 marks)
Pamela Luoto has been successful in obtaining an interview for an operations management position in a large catering organisation. Her pre-interview research on the company reveals that it operates using a systems approach to the management of its food and beverage operations. As such, she prepares answers to possible questions regarding the food service systems model.
a) Discuss the difference between an open and closed system. (2 marks)
b) Explain the inputs and outputs of the foodservice system. (2 marks)
c) Describe what occurs in the transformation process in the foodservice system. (5 marks)
d) Compare and contrast a foodservice operation using a cost strategy with one using a differentiation strategy (6 marks)
e) Using the foodservice systems model, evaluate how the following events might impact a foodservice operation: (10 marks)
∗ Loss of the lettuce crop in Queensland because of excessive rain
∗ Delivery of 88-size oranges instead of the specified 113-size
∗ Addition of too much salt to the vegetable soup
∗ Absenteeism of the cook and dishwasher for the evening meal
∗ Low final rinse temperature in the dish machine
Derek always daydreamed about opening his own little restaurant but he had no idea about how to run one let alone where to begin. When he won the lottery he decided that this was the time for him to start his little dream and he decided to go back to the village that his parents lived. The village has about 5,000 inhabitants and is only 20 minutes by car from a large city. It already has two takeaways and three small restaurants that are doing ok. All three restaurants are mid ranged. A fine dining restaurant opened 3 years ago but it closed after 1 year. There is also a pub in the village that offers a limited menu during lunch period. Derek is unsure as to what type of restaurant he should open. Start-up money is not an issue, but he does not want to invest in an enterprise that is going to lose money.
a) What steps would you advise Derek to take next? (10 marks)
b) If you were Derek, what type of operation would you most likely attempt to open? Explain your decision. (15 marks)
The Crown Jewel Hotel is undergoing major renovations. After 20 years of operations the hotel owner of this 4-star hotel has decided that it is time to revamp the hotel. Rooms revenue has never been a problematic area but in the past decade the existing restaurant trade slowed down to a point that for the last 5 years the hotel restaurant has been making an annual loss in the range of $100,000.
The restaurant was situated in the west side of the ground floor. This meant that customers had to go past the reception and lobby areas to reach the hotel. There is an opportunity to relocate the restaurant area in order to have a high street entrance but this would add an extra $250,000 renovation cost to the already increasing renovation bill and the hotel owner is reluctant to invest such an amount of money considering the restaurant performance in the past few years.
The current Food and Beverage Manager teamed with the hotel Chef to come up with an exciting new menu and an international brand for the restaurant. They are keen to see the restaurant have its own high street entrance. Their 5-year business plan shows a profit of approximately $100,000 per year. At the same time the hotel owner has an offer from a local celebrity chef who wishes to lease the new restaurant if the restaurant has its own high street entrance. He is willing to offer a rent of $80,000 per year for a 10-year short lease. The celebrity chef’s previous restaurants were all about fish and the hotel owner feels that his hotel guests need to have a restaurant that offers an international cuisine that does not solely focus on fish.
a) Give specific recommendations as to whether or not the hotel owner should invest the additional $250k for a high street restaurant entrance. (12 marks)
b) Should the hotel owner outsource the restaurant or keep the business in house? What are the reasons for your answer? (13 marks)
The ‘Coconut Duck’ restaurant was originally a 40 cover Thai restaurant in Sydney, Australia. In the first few years of operation, business was doing well and the restaurant was featuring in major tourist guides and newspapers as a ‘must visit’ restaurant not only for the great cuisine but also for the fantastic décor. As business picked up the restaurant owner decided to expand so when the opportunity appeared to acquire the lease for the property next door he did so and expanded the restaurant to a 120 seater. Things seemed to be going well and the owner was certain that he would get a good return on his investment.
However, the original small team could not cope with the business and the new chefs and servers did not have the rapport that a small team had. Soon the restaurant was faced with problems of stock control especially in the bar area. Stock would go amiss quite often and wastage levels both in food and beverages had hit an all-time high. Worst of all the management could not identify if the problem was at the bar or the cellars and had no idea as to how to resolve the issue. Some suspected theft whilst others felt it was merely bad management. The owner decides to hire a consultant to come up with an effective food and beverage control system that helps alleviate the problem. In his briefing to you he has suggested that money is not a problem.
a) In terms of food and beverage control, what do you think are the key issues or potential problem areas with the restaurant? (10 marks)
b) Design a food and beverage control system that ensures that the problems you identified are limited or eliminated. (15 marks)
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