Bala Bay Inn Case Analyst: William Périco Neto
Process Owner: Ken and Tiffany Bol
Start Date: 06/17/2013
Purpose of Analysis: to increase pro,it margins and customer satisfaction by better matching capacity and demand on July and August Tuesday evenings, with the minimum investment possible. Current Conditions:
Seating Capacity: The restaurant has seats for 300 people. Buffet on Tuesdays reduces number os seats to 270 Ski Show: Every Tuesday in July and August, at 7:30 p.m. Attracts 95% of Tuesday’s customers Tuesday’s Prices Operation time: 5 p.m. to 9 p.m. Restaurant full between 5:30 p.m. and 7:30 p.m. Source Price ($) Quality of Pizza is a major concern of Mr. Bol, reason why only 20 pizzas are precooked on Tuesdays Adults Pizza Buffet 10.95 Current Pizza Production Capacity: 43 Large Pizzas/Hour Children Pizza Buffet 5.95 Current average table turnover time: 80 minutes Adults Menu 17.95 Current turnover on family pizza night between 5:30 p.m. and 7:30 p.m.: 1.51 Children Menu 10.57 Average waiting time for table on family pizza night: 30 to 40 minutes Estimated potential customer loss because of waiting time: 50 customers Maximum Tuesday’s pizza consumption: 100 pizzas for 540 customers, or 1/5 of a pizza per person
Target Conditions: Increase turnover between 5:30 p.m. and 7:30 p.m. to at least 2; Increase pizza production capacity to 60 pizzas/hr; Reduce average Table Turnover time to less than 60 minutes Root Case Analysis:
Current Nightly Pizza Revenues, Costs and Profit Analysis
50 potential customers lost every Family Pizza Nights
2. Why? 5 Why Analysis:
Because 95% of the customers plan to attend the Ski Show after dinner, which starts at 7:30 p.m.
3. Why? Most arrivals occur between 5:30 p.m. and 6:30 p.m., resulting in waiting time for tables of 30-40 min
Current Pizza Produc5on Capacity Type of Pizza
Dura5on (min)
Output (pizzas)
Time (PM)
Precooked 1
2
2
5:32
Fresh 1
10
6
5:42
Fresh 2
10
6
5:52
Fresh 3
10
6
6:02
Precooked 2
2
6
6:04
Fresh 4
10
Fresh 5
10
Fresh 6
10
Precooked 3
2
6 6 6 6
6:14
4. Why?
6:34
Kitchen
Server Flow
6:36
Fresh 7
10
6
6:46
Fresh 8
10
6
6:56
Precooked 4
2
6
6:58
Fresh 9
10
6
7:08
Fresh 10
10
6
7:18
Fresh 11
10
6
7:28
Total Capacity
118
86
Total Hourly Pizza Produc5on Capacity
Bar Side
Dining Room Side
Customer Pizza Wait to 15:
Buffet
Children Creating Havoc
Front Desk
Dining Room (65) Customer Pay Bill Wait to 10:
Pool Table
Bar (48) 15
Customer Table Wait to 30:
Bar Women Stairs
Server Drink Wait to 10:
Men
Inside Patio (78)
43
Pool Table
Foyer
Inside Patio (78) Front Entrance
Provide space for 30 extra-seats; Improve access and mobility of customers and staff members; Reduce transit in the Lobby; Extra space allows customers to get pizzas from both sides of the buffet
$0
Add 30 seats to the Dinning Room, expanding seating capacity to 300
Increase capacity to accommodate excessive demand; Increase customer satisfaction; Reduce waiting line and prevent potential customers from leaving; $ 337 nightly Profit Increase (12% profit growth)
$0
Increase amount of precooked pizzas to 30
Increase pizza production capacity to 61 pizzas per hour (42% capacity increase); Eliminates waitingtime for pizza at the Buffet; Reduces maximum waiting-time for Menu orders to 10 minutes
$0
Start making precooked pizzas 1:30 hr to 2 hrs before opening the restaurant
Assure pizza freshness and quality; Avoid losing quality due to excessive time prior to
$0
Hire 2 more servers
Improve service quality; Increase customers satisfaction; Preserve ratio of 5 tables per server (adjusted to new seating capacity)
Acquisition of 2 Electronic Payment Terminals
Reduce time for paying the bill by half; Reduce turnover time; Increase customer satisfaction; Same effect as opening the Second Bar, at an annual cost $148 lower
Operations
Capacity
Pizzas Needed
Original
540
100
Modified
600
120
New Produc5on Capacity Type of Pizza
Time (min)
Output (pizzas)
Time (PM)
Precooked 1
2
7.64
5:32
Fresh 1
10
7.64
5:42 5:44
Adults Pizza Buffet
244
10.95
2,671.8
Fresh 2
10
7.64
5:54
Children Pizza Buffet
244
5.95
1,451.8
Precooked 3
2
7.64
5:56
Fresh 3
10
7.64
6:06
Precooked 4
2
7.64
6:08
Fresh 4
10
7.64
6:18
Precooked 5
2
7.64
6:20
26
17.95
466.7
Children Menu
26
10.57
326.69
Total Revenues
4,916.99 30%
of Revenue
1,475.1 620 2,821.89
Current Turnover Time Task
Unit
Fresh 5
10
7.64
6:30
Fresh 6
10
7.64
6:40
Fresh 7
10
7.64
6:50
Fresh 8
10
7.64
7:00
Fresh 9
10
7.64
7:10
Best Case
Worse Case
WaiHng for table
30
40
Fresh 10
10
7.64
7:20
Drink order
2
10
Fresh 11
10
7.64
7:30
Menu order
15
20
Total Capacity
120
122
Buffet order
0
15
Eat pizza/entrée
20
30
Pay Bill
2
10
Menu Dinner 5me at Peak
69
110
Buffet Dinner 5me at Peak
54
105
Total Hourly Pizza Produc5on Capacity
minutes
Menu Dinner Average
89.5
Buffet Dinner Average
79.5
Each turnover takes
66%
of 2 Hours
Turnover in 2 hours
1.51
5:30 to 7:30 pm.
Outside Patio (100)
Core Problem Statement: Current Seating and Pizza Production capacities limit Bala Bay Inn’s capability to serve Family Pizza Night demand with the desired food and service efficiency and quality levels. As a result, customers are being turned away, and served customers’ satisfaction is significantly reduced. Development of CPS: Both Seating and Pizza Production capacity constraints can be solved with low investments and simple adjustments. In total, five recommendations will be combined in order to better match capacity and demand, thus resulting in higher productivity and efficiency, profit margins and customer satisfaction.
A new oven would require investments of $12,500. It would increase capacity by 77%, creating excessive capacity of 21%. Although it would solve Tuesday’s problems, it would also create excessive capacity for regular evenings. Considering that the Ski Show only happens 8 times a year, acquiring another oven to satisfy these nights only would represent an uneconomical decision.
Increasing Precooked Pizzas to 30 without losing Quality Precooking 30 pizzas requires 5 oven operations with 6 pizzas each, for 8 minutes each operation. This requires a total of 40 minutes to precook all pizzas. In order to assure minimum time to complete cooking pizzas and preserve freshness, precooked production should start 50 minutes before opening the restaurant. By adopting this strategy, it is possible to increase pizza production capacity by 40%, while still preserving the high-‐quality of precooked pizzas that Ken demands. TOTAL CAPACITY:
300 SEATS
Kitchen
Conditions at Family Pizza Night
Dance Floor - Lounge
Customer Wait 0 min for Pizza
Server Flow Buffet Customer Flow
Bar Side
Dining Room Side
Front Desk
Pool Table
Pool Table
Foyer Dining Room (95) Customer Wait 5 min to Pay Bill
Customer Wait 5 min for table
Bar Women Stairs
Server Drink Wait to 2:
Inside Patio (78) Front Entrance
Source
Customers
Adults Pizza Buffet
270
Children Pizza Buffet Adults Menu Children Menu
Outside Patio (100)
$300
Price ($)
Total ($)
10.95
2,965.5
270
5.95
1,606.5
30
17.95
538.95
30
12.57
376.95
Total Revenues
5,478.45
Total Pizza Costs
30%
of Revenue
Total Staff Costs
1,643.54 676
Total Pizza Profit
3,158.92
New Turnover Time Task
Best Case
Worse Case
WaiHng for table
5
15
Drink order
2
10
Menu order
2
10
Buffet order
0
10
Eat pizza/entrée
20
30
Pay Bill
1
5
Menu Dinner 5me at Peak
30
70
Buffet Dinner 5me at Peak
28
Menu Dinner Average Buffet Dinner Average
Men
Inside Patio (78)
61
Bar (48) 15
$56 / night
Poten5al Nightly Pizza Revenues
The reasons why you don’t need a second oven
7.64
Customer Flow
Dance Floor - Lounge
Move the buffet to the Dance Floor
2
Total Pizza Profit
270 SEATS
Existing Conditions at Family Pizza Night
$0
Precooked 2
5. Why?
6:24
Increase pizza area by 27% - from 1,133 cm2 to 1,444 cm2; Increase each oven cycle capacity from 6 large pizzas to the equivalent of 7.64 large pizzas
Total ($)
Adults Menu
Cost
Change Pizza format to Squares
Price ($)
Because of limited seating and pizza production capacity Total Staff Costs
TOTAL CAPACITY:
Benefit
Customers
Source
Total Pizza Costs
Seating capacity: reduced by 30 to accommodate Buffet Pizza production capacity: because of limited oven production capacity + too few precooked pizzas
Countermeasure
Effect Confirmation:
Goal Statement: Increase seating and pizza production capacity to accommodate 50 more people between 5:30 p.m. and 7:30 p.m., resulting in higher profitability and customers’ satisfaction on Family Pizza Nights
1. Why?
Countermeasures & Benefits
Approval Date: 07/01/2013
Unit
minutes
70 50 49
Each turnover takes
41%
of 2 Hours
Turnover in 2 hours
2.45
5:30 to 7:30 pm.
Implementation Scheme: Since no signi,icant investment is required by the recommendations, all of them should be
implemented immediately: 1) Converting pizza format to squares does not require signi,icant modi,ications, and should be implemented immediately 2) The buffet should be placed on the Dance Floor on Family Pizza Tuesdays only 3) The 2 extra servers should be hired only for Family Pizza Tuesdays in July and August 4) The 40 extra precooked pizzas should only be done on Family Pizza Tuesdays in July and August. Precooked production should be started 1:30 hr to 2 hrs prior to opening the restaurant 5) The acquisition of the 2 electronic payment terminals should also be done immediately, especially because it will last for several years, and accelerate the time for paying the bill every day in the Bala Bay Inn, thus reducing the average table turnover time and improving customers satisfaction
Evaluation and Debrief State: Meet again by the end of August to evaluate each of the recommendations, and how they contributed to solve the Core Problem Statement
Conclusions: Combined, the recommendations can increase 1) nightly pro,its by $337 (12% pro,it growth), 2) pizza
production capacity to 120 pizzas between 5:30 and 7:30; and 3) the turnover between these two hours to 2.45, which represents an average table turnover time of 50 minutes. In short, these ,ive measures not only solve the constraints in both seating and pizza production capacity, but also provide signi,icant safety capacity for potential demand increases.