Note to the reader: This case is organized into four stages: 1) preparation for your first brick-and-mortar restaurant, 2) expansion into a second city, 3) the addition of outside investors and, 4) the announced plans for significant future expansion. As you read the case, think about how the restaurants organizational structure needs change in each stage.

Stage 1

Two years ago, at the urging of friends, you left your job as a corporate chef and opened up a Taco food truck in a high-traffic area of town. After a shaky start, favorable word-of-mouth spread about your food truck and it became very popular. As sales increased, you hired several employees to take orders and process payments, but you were still the solo chef and remained heavily involved in the day-to-day operations. You are now at the point of realizing your dream of opening a brick-and-mortar restaurant, while still keeping your thriving food truck location. You have selected a location with seating for roughly 40 guests and plan to open the restaurant in three months.

Stage 2

Two years have passed, and your brick-and-mortar location has been a rousing success. You have added three additional locations in town and, based on customer demand, are preparing to add your first location in another city within the state. While you are very pleased with your success to date, a few important questions are keeping you up at night. How do you maintain consistency now that the operation is dispersed geographically? Should the out-of-town location be operated just like the others? How should you manage running multiple locations?

Stage 3

It has now been ten years since you opened up your original food truck and you have experienced tremendous growth and success. You now have 46 locations in three states. Last year, the company generated $33 million in sales and current average store sales are nearly $1 million per year. Most of your locations are roughly 3,500 square feet with seating for 160 guests. In an effort to fuel this tremendous growth, you began looking for investors last year. Recently, you announced a significant minority investment from a private equity firm to provide the capital necessary to enter new markets and expand operations. As a result of the investment, the private equity firm gets three new board seats, joining the existing five shareholders, for a total of eight seats. This practice is very common and allows the private equity firm to bring in experienced directors with the capabilities and expertise needed to help the company grow and reach its full potential.

Stage 4

At a recent investment conference, your CEO announced plans to more than double the number of restaurants to around 160 locations across 15 states over the next four years. Youve come a long way from that initial food truck. As you look toward the future, you wonder how this continued expansion will affect your organizational structure. Are there other issues you should consider to ensure the continued quality, consistency, and popularity of your brand?

This case is broken up into four distinct stages: 1) preparation for your first brick-and-mortar restaurant, 2) expansion into a second city, 3) the addition of outside investors and, 4) the announced plans for significant future expansion. At each stage, thoughtful consideration should be given to your organizational structure, including the jobs that need to be covered, the tasks that need to be done, and any additional services that need to be offered. As you expand, you also have to consider critical issues such as maintaining consistency and potential geographic differences that could impact your offerings or services. The six key elements of organizational design provide a framework to address these important questions.

For each stage, answer the following questions:

How should work activities be subdivided into separate jobs (i.e., what tasks need to be done and what jobs need to be covered) (work specialization)?

How should these jobs be grouped together (departmentalization)?

Who reports to whom (chain of command)?

How many employees should report to any one manager (span of control)?

Who has the authority to make decisions (centralization/decentralization)?

How do formal rules and regulations direct employees and managers actions (formalization)?