Sunshine Enterprises Case Study -I think the waiter wrote in an extra $25 tip on my Sun- shine Caf bill after I received and signed my credit card receipt," Mark Otter said to the restaurant manager, Brad Gladiolus, "Mr. Otter, mail me a copy of the restaurant receipt and I'll investigate, responded Mr. Gladiolus. "I don't have the receipt-I lost it-but I have my monthly credit card statement," replied Mr. Otter. Mr. Gladiolus hesitated, then said, "Mr. Otter, I don't see any way to investigate your claim, so there's nothing I can do." Mr. Gladiolus sat down at his desk and sketched out possible causes of this service upset as follows: The customer is responsible for adding the bill and tipping properly, writing legibly, retaining the second receipt, and drinking alcohol responsibly. The employee is responsible for typing the bill in the register/computer correctly, going back to the customer if the tip is unreadable and verifying the correct amount, and being honest. CHAPTER 15: Quality Management 333 Jochen Sand/Photodisc/Getty Images Sunshine restaurants average about one negative customer complaint per 100 customer comments. The restaurant manager is responsible for investigating the store's receipt history and finding this transaction; auditing the source of the error if possible, such as a mistyped decimal or extra zero; and contacting the credit card company and customer to resolve the issue. The credit card company, a third-party provider in this value chain, is responsible for providing records of the electronic transaction, helping resolve the issue, and issuing a debit or credit to the customer and/or restaurant if needed. Company Background Abby Martin's parents came to Florida from Chicago in the 1960s. Her parents bought land in the Cape Coral area. Later they opened a hotel on Fort Myers Beach, and Abby was part of the housekeeping staff, her first job. By 17, she was running the hotel on her own. Today, she owns and operates six restaurants and a by-the-sea hotel. The restaurants are located in shopping centers next to high-traffic facilities such as movie theaters groups of retail stores, and other clusters of restaurants Abby uses four different restaurant concepts (facility de- cor, size, and layout: prices, menus; music and bands: wine list, lounge areas, etc.) for these six restaurants, depending on the location and local market demographics. Abby has other investments but loves the challenge of managing restaurants. "I have a great passion for find- ing a need and meeting it, she said. "The secret to our restaurant success is customizing the business to local needs and being very consistent. Offer good food and service at the most reasonable price you can afford know that even if you offer all those things y fail. The hospitality business is the hardest bus riod. You can never sit back and coast." In her spare time, she is a figure involved in activities e involved in activities such as helping build a Ronald McDonald House, fund-raising 334 PART THREE. Managing Operations and Supplu if you offer all those things you can still siness is the hardest business, pe- spare time, she is a prominent community House, fund-raising for the hospital ations and Supply Chains chairperson of the cancer foundation, and serving as chairpers al board for the Salvation Army. She likes the Army because it runs a lean operation, with on spent on management for every one dollar in likes the Salvation with only six cents Dollar in donations ment Sunshine tes week from 11am 10 to $20 range and Wed hamburger, seafood d yellow fin tuna. Din pi, red snapper Day-to-Day Service Management Sum taurants are normally open seven days a week fm to 10 p.m. Lunch prices are in the $10 to $20 include such entrees as a wood-grilled hamburpe salad croissant, and sesame-crusted yellow fin tur ner prices range from $20 to $30 per person and inclou dishes such as shrimp and scallop scampi, red sna picatta, and wood-grilled filet mignon. Each restaur keeps about 20 to 30 popular wines in stock, such as Cakebread Chardonnay Wine, liquor, and some food items are ordered in bulk to take advantage of volume price discounts and shipped directly from the suppliers to individual restaurants. All other items are ordered by the restaurant chef and general manager for each unique restaurant Abby, like most entrepreneurs, has her own approach to quality control. She notes that "I visit my restaurants every few days, and as I walk in I immediately begin to watch customer faces and behaviors. I try to see if they are happy, talking, smiling, and enjoying the food and sur roundings. I look at their posture and facial expressions. I often talk with customers and ask if everything was to their liking, I ask my employees-waiters, bartenders, kitchen help, managers, and chef-if they have encountered any problems or service breakdowns. I look for untidy floors, tables, and restrooms. I try to learn from negative cus tomer comments or complaints. My employees know that I will try to help them solve any problem--they trust me I take the pulse of the restaurant in a short visit. Ime weekly with the restaurant chefs. I manage quality by om servation and close contact with all of the people in the restaurant. At night I go over the financials and sales dati A typical Sunshine restaurant has a core staff of about 12 employees, consisting of a manager, an assistan ager, chef, assistant chef, four waiters, two bartenders. two helpers in the kitchen. During peak season each rant hires six to eight additional employees. Peak der when the "snow-birds" arrive in southwest Florida vember to April. During peak demand, the populati Lee and Collier counties double to almost 2 million Abby's entrepreneurial approach to managing business results in about one negative custom plaint per 100 customer comments. The com are nearly equal in focusing on food or service oyees, Peak demandis t Florida from No- ne populations of ost 2 million people Managing the e customer com The complaints service quality er restaurants ges one visite en nate is in the Contribution to profit and overhead per rest 35 percent. The typical customer averages one two months, and the customer defection rate 5 to 10 percent range, but is difficult to estimate given the seasonal nature of the business. Long-Term Strategic Issues Abby Martin has es tablished a reputation in southwest Florida for superior service and food quality in her restaurants. She was consid- ering expanding her restaurants to the Tampa and Orlando areas to leverage her expertise and grow the business for the family. She wondered whether she could maintain the proper financial and quality controls with more restaurants and whether to franchise or not. Due to the 2007-2009 credit crunch and high foreclosure rates, there were plenty of commercial properties in good locations for restaurants, and prices were at all time lows. Abby thought it was now or never in terms of expanding up and down the west coast of Florida. She envisioned as many as 20 Sunshine restaurants in the next five years. Decisions Abby wondered when she would ever get the time to analyze these issues. It was not easy keeping up with her businesses. She knew that superior, day-to-day food and service quality determines repeat business, so she had to successfully resolve this customer complaint about the waiter adding a $25 tip while trying to plan for the future. She happened to be at her hotel, so she sat down in a beach chair and watched the brilliant colors of a sunset over the Gulf of Mexico. She began to write down a number of questions she had to answer soon. Case Questions for Discussion 1. Draw a cause-and-effect diagram for the possible causes of the $25 tip service upset. Select one possible root cause from your diagram, and explain how you would investigate and fix it. 2. What is the average value of a loyal customer (VLC). at Abby's restaurants (see Chapter 2, Section 2-2b) What is the best way to increase revenue given your VLC analysis? 3. Critique the current informal" quality control system. What changes and improvements do you recommend if Sunshine expands to 20 restaurants? 4. What are your short- and long-term recommendations? Explain your rationale for these recommendations