Background explanation for expansion operation
Customers are increasingly becoming conscious about their health and are careful with the foods they consume. Certainly, health-conscious customers will not eat what is otherwise referred to as junk food every day. Most of them pay attention to the portion and ingredients of the food they consume. In this regard, Gallery restaurant has decided to expand its business to attract not only customers who want sandwiches, but even those, who may need other types of fast foods for breakfast. In addition, Gallery restaurant is keen on tapping the potential of high demand for other fast foods in the United States. According to Wilson (2006), this will help it to increase the market share and, therefore, increase its profits.
Description of basic operations management principles
Gallery Restaurant is not only conscious of the customers’ health but is keen on increasing its market share, while maximizing on the high demand for fast food in the US. The main goal of the restaurant is to provide customers with the best quality foods at reasonable prices and with friendly customer care facilities. In fact, this is the reason why Gallery Restaurant has numerous loyal customers across the country. There are two main sections to be looked at when addressing Gallery’s operations management principles: firstly, Gallery has its own bakery and, therefore, does not subcontract other bakeries to supply bread. Therefore, the bakery forms a crucial part of the restaurant’s operations and logistics. Secondly, the restaurant has subcontracted suppliers for other products other than bread. Instead of buying other ingredients from the market, Gallery gets them directly from suppliers and, therefore, it has created a strong bond between the suppliers and the restaurant. Ultimately, the management ensures that customers are fully satisfied and don’t feel cheated when they buy sandwiches. To achieve this, only highly qualified employees are recruited, and they undergo further training on best practices of running a restaurant.
Operations and Supply Strategy for Expansion
Gallery Restaurant is a privately owned company. The ownership is made up of the finance and administration director, who owns 40% of the share; the director for sales and marketing, who has 30% share; and the operations director, who owns the remaining 30% of shares. Currently, the restaurant mainly deals with sandwiches for take-away customers. The business has continued to maximize on the revenue. This has led to growth in profits every year (West, Ford & Essam, 2010). This is why the management is focused on an extensive expansion strategy to further penetrate the markets.
The company has several brunches across the US. This approach has ensured that the company maximizes of the high demand for fast foods in the country (Wilson, 2006). Although, this approach increases the cost implications of regional supervision, it enables the company to cushion the stores where sales might not be low. This has also helped in increasing the visibility of the company, because customers can find stores in different states whenever they travel or migrate.
However, the company has realized that in order to attract more customers it has to include additional fast foods for breakfast. In addition, it recognizes that most customers are keen on living healthy lifestyles and, therefore, there is need to introduce health foods.
Project Management Strategy
Basically, the business operates as a partnership. According to Gerald (2004), this is a business model, where two or more people come together to form a business and contribute management skills or capital to ensure that the business is successful. Therefore, the three partners of Gallery Restaurant share various responsibilities, profit and losses incurred by the company. However, the company operates with a flat organizational structure, where every member is allowed to share his or her ideas that may contribute to the overall success of the restaurant. Smooth information flow supported by open communication amongst the members has eased the process of decision making. It is for this reason that all members agreed that Gallery Restaurant need to expand. However, this calls for expansions of the organizational structure to accommodate the changes. Therefore, some staff will be promoted and the missing members will be recruited when necessary.
The strategies are the tools, which are used for achieving the goals (Gerald, 2004). Gallery will evaluate the suitability of the company’s sales through the two strategies: the replacement strategy, which would determine if the products are suitable for direct sale; the complementary strategy, which could help to determine if the products are unsuitable for direct sale. This would lead to the need of the business to analyze its market target through market segmentation, where the restaurant has identified the groups of middle and high income women as a target group. Therefore, the business will able to provide different foods according to the needs of all the groups in order to enhance customer satisfaction and to increase the direct sales of the company.
New Product line and rationale for selection
Some of the foods that are given priority include doughnuts and indigenous foods such as sweet potatoes and yams. The suggested foods are based on the findings from the regular surveys conducted on the customers. Since the restaurant seeks to align itself with proper health for the customers, indigenous foods and other fast foods that do not have so much fat should be introduced. Product selection is the key success, because introduction of the foods that may not be appealing to the loyal customers may disappoint them and make them look for alternative restaurants (Kelvin & Kotler, 2006).Nonetheless, the expansion process should meet the company’s demographic requirements. It would also be of the great benefit if the restaurant focuses on making use of customers who like shopping in the morning or evening. Most of them prefer buying fast foods either for evening tea or breakfast.
Strategic Capacity Management
One thing that has contributed to the success of the company is employment of highly trained personnel. Experience is very important, especially in the hospitality industry (Kelvin & Kotler, 2006).Therefore, for any new employee to be recruited, he/she must have at least three years’ experience. Moreover, employees undergo trainings regularly in order to ensure that they remain up-to-date with skills needed to run the restaurant.
Moreover, an experienced management team is also critical. Lucky enough, all the three managers of Gallery Restaurant are well trained and have passion for their business. The management constitutes of three very skilled and talented men who make a strong team. They have an ability to offer a sense of direction to the employees and form a collaborative environment for all stakeholders (Harvard Business School, 2007). They are also decisive in dealing with issues that arise on daily basis and come up with better strategies that ensure proper completion of work. Nonetheless, organizational learning is encouraged because people are free to interact with each other.
The company bakes its products by itself. This has enabled it to save a lot of money that would otherwise have been used to outsource for these services. The production process is well controlled to ensure that every product is of a high quality. It is because of these high quality products that the company has loyal customers. Colander (2004) asserts that high qulaity products play a crutial role in attracting and retaining customers.
The restaurant staff should be in a position to ensure that the customers feel comfortable. Some customers might be difficult to handle but the company encourages employees to tolerate them and report any improper conducts to the supervisors. Therefore, employees are encouraged to communicate with customers in a friendly manner. Moreover, there is a suggestion box, where customers can drop their comments. The management is always keen on going through the comments and implementing applicable suggestion where necessary.
Gallery Restaurant insists on high quality food in order to ensure that the customer does not feel cheated. There are strict standards set for every step, starting from sourcing for quality flour until high quality cooking, quality storage and packing of foods at all branches across the country. This has ensured that most customers come back and, therefore, created an expansive group of loyal customers. One policy that has always applied for Gallery Restaurant is that every customer has a say and their needs come first. To ensure customer satisfaction, the restaurant conducts regular surveys to understand the customers’ needs in terms of the quality of services offered at the company.
As stated before, the company has its own bakery. This has reduced the company’s expenses. However, the restaurant has kept close ties with the suppliers of different products like lettuce, cheese and tomatoes. It ensures that their bills are paid on time so that they can remain punctual with their delivery. There are about 10 main suppliers for the company. This does not only involve the food stuff but also equipment, such as cooking stoves among others. Whenever the company needs any new equipment it first contacts the main suppliers. If they do not have the item requested, it can source from other established companies. Another important component that is sourced is training services. In most cases, the management goes out to look for the best companies to conduct trainings for the staff. Bradley (2007) alleges that although this process can be sometimes expensive, it ensures that the employees are trained by the best people in the industry.
The logistics manager is always keen on ensuring that all the right channels of acquiring products are followed. This has ensured that suppliers are paid on time. In addition, there are books of records, where every transaction is recorded. This helps in clarifying any errors in case they occur. It is also a form of maintaining checks and balances so that the company’s resources are well utilized. However, when the company needs some equipment, it starts by inquiring from its main suppliers before looking for quotations from other suppliers. This has ensured that the loyal suppliers are rewarded, but it is always keen on ensuring that quality is not compromised (Bradley, 2007). When asking for quotations, at least three companies are inquired. This process ensures that the best price for the best quality product is acquired.
Enterprise Resource Planning Systems
The business primarily targets more than 5 million of the high and middle income customers, who prefer luxurious and fancy breakfast and who often buy expensive and nutritious foods just for fun, health, and luxury. It is expected that the majority of customers will be high-class women with a high income, because the products will be made for the sophisticated clients, who prefer luxury foods. In other words, the target customers will be high income women, since the products used for the meals will be unique and expensive for the low income persons (Finlay, 2000).
There are three groups of people, who would buy these products from the Gallery Restaurant: women from the high income group, who make the majority of the percentage; women from the middle income group; husbands and family members, who wish to buy breakfast for their girlfriends and wives and the low income group of women, who will be able to afford them.
Sales and operations planning
According to the financial records for the last three years, the company’s sales have been improving steadily. The continuous promotional activities have contributed to increased sales and if the same pattern continues, the next three years will also be successful. This is also an indication of the good job the sales team is doing. Gallery will use the two distribution channels: online (web-site) and offline (distributor, department store in Longview, Texas, with 72% of sales). When the products leave the manufacturer, they are directed to the Galleria office, where personnel gives retail prices for pieces, and then the products will be delivered to the department store (Finlay, 2000). When customer buys product online, the price stays the same as it would be in the store. Consumer can get any information he/she needs. The web-page will be secured and the buyers will be able to pay using credit card (Visa and Master card) without any risk.
Promotion in the Gallery restaurant is one of the key elements in the marketing program of the company, since it is able to communicate all the marketing strategy decisions. These promotions can be done with the use of advertisement on different media sources for creating brand awareness among its customers. The promotion mix elements, which are mainly used by Gallery, include personal selling, publicity and direct marketing, sales promotion and advertising.
The main goals in the selling strategy of the Gallery are to attain full growth potential, to acquire the new customers and to retain the existing ones. Some advertising campaigns will be conducted through the internet and other media channels.
The selling strategy that the Gallery will use includes the following:
Punch Cards: After buying the breakfast for 5 times in the restaurant, the customer will get a 50% bonus on the next 3 products that he/she will purchase. This method of rewarding will show the appreciation for choosing our restaurant. Moreover, it may help to attract the new customers;
Prioritizing Customers experiences: if the customer is not satisfied with the catering experience, no doubt, the customer will not visit such restaurant again. All the employees are well trained in customer service, so as to be able to handle all the problems that may arise. They will try to create the positive impression from shopping. As a result, the customer might want to come back to the restaurant again;
Special Bonus programs: A bonus program will increase the number of customers. This is where a customer, who purchases more than 5 products, will be awarded with a 10% bonus on the total cost of the products bought. This will increase the purchasing power of the customers, since they will be motivated to buy more products from the store.
The company has good book keeping records, where all activities, especially those, which entail the exchange of money, are documented. The logistics department also helps to ensure that the right channels are followed in acquiring any products for the purposes of cash and balances. Aaker (2004) alludes to the fact that good book keeping is the heartbeat of any organizations. If the documentation is poor, there is a high likelihood that the company might not be able to sustain its activities for long.
With the rising competition in the restaurant industry, the companies that want to remain relevant have to think fast. This is why Gallery Restaurant has opted to expand its offer to include additional products. Most importantly, the restaurant is keen on attracting health-conscious customers, whose number is increasing day by day. Since it has its own bakery, the expenditures will not be so high. In addition, the suppliers are sure of getting their pay; thus, willing to supply more products when requested.