Case Study: Restaurant downsizing

Sally Smith is a manager at the Butcher Block Restaurant. Due to her extensive background in

the restaurant business, she has great influence on the executive management and often makes

significant recommendations for changes that are supported. The restaurant was closed two

months ago after a news release issued by the regional Health Department claimed that at least

twenty people had become ill apparently with the listeriosis infection after eating at the Butcher

Block the month before. Listeriosis has been isolated in the feces of healthy humans, sheep,

cattle and poultry, and the spread of this disease has been linked to the consumption of

contaminated food production. Five of the sickened people had to be hospitalized. Although a

thorough restaurant health inspection failed to prove the restaurant was responsible, the negative

press intensified low attendance problems.

This downturn in the business has made it necessary to prepare for a reduction in the workforce.

The terminations will be permanent and there are no termination benefits. Executive

management has identified five employees as the first ones to be considered for termination. All

five employees are at the same organizational level, but from different areas of the establishment.

Bridgett is a server; Marc is a bartender; Neil is a cook; Jennifer is an expediter; and Stephen is a

baker. One must be terminated and the rest ranked for future termination. Sally has a friendly

working relationship with all of these employees and regrets having to let any of them go.

If you were Sally, determine who will be the first to go and rank order the remaining employees.

Assume there are no union contracts, company policies, legal requirements or traditional

business practices that constrain your decision making. Base your decision about an employees

position on the termination list purely on your own judgment of fairness to the employees and

benefit for the Butcher Block. Provide justification for your ranking and strategy for covering

with one less position each time someone needs to be terminated.

Sally hopes to use her leadership skills to rejuvenate the restaurant and increase business. She

has always been one to persevere in the face of adversity. Her employees are loyal to her because

of her ethics, skill in running a restaurant and support and consideration in her relationships with

them. At present, the negative press is coupled with a severe economic downturn that is

impacting business even further. The prediction is that economic recovery may not happen for

two years into the future, Sally is thinking about recommending to executive management that

they downgrade the service level in the entire establishment, which would result in a change to

their concept, in order to save labor costs. What ramifications might this idea have on:

- the concept

- marketing

- costs

- customer perception

- customer visitation

and so on?

1. Do you think this is a good idea? Why or why not?

2. Identify the short-range (within two months), mid-range (within six months), and long-

term (within two years) aspects of which Sally must be aware

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