What Would You Do? Case Assignment

Nicks Pizza & PubCrystal Lake, Illinois

Your start in the pizza business came in the eighth grade, when your father opened the Village Pizza restaurant. After graduation, you entered the construction business, building homes for more than a decade. But, then, something drew you back. So, you took the family recipes and started your own restaurant, Nicks Pizza & Pub (far enough away to avoid competing with Dad).

Your goal was simple: to build a fun, family restaurant. Nicks Pizza & Pubsthere are now twohave 26-foot high, floor-to-ceiling stone fireplaces, stuffed bears and moose, antler chandeliers, huge aquariums separating the bar and the restaurant, and wood everywhereoak floors and huge beams recycled from century-old barns. And theyre huge, each seating 320 guests. On a Friday night, 1,500 customers will eat at Nicks, most waiting an hour for their tables, while having a drink and eating free peanuts at the bar. Those 1,500 customers will eat 600 pizzas, and carryout customers order another 200. Why do they come? Beyond the great pizza, they come for the value. A medium cheese pizza is $11; soft drinks are $1.75, with free refills; and the popular Italian beef sandwich is under $6.00. Nicks is really affordable, especially for a sit-down restaurant.

With things going so well, you decided to open three more restaurants in the next five years. Unfortunately, the recession changed your plans. Guest counts dropped by 20 percent, or 100,000 people per year, decreasing revenues by nearly $1 million. On top of that, your managers were having difficulty controlling costs. Each week, they conducted a physical count, comparing food inventories (tomato sauce, flour, cheese, beef, liquor, etc.) to the previous week, and then adjusted for this weeks sales. But beverage and food costs were still above goal, 22 percent of revenues for beverages and 20 percent of revenues for food. The problem, as you discovered, was your management, all hired externally because of their extensive experience at established well-known restaurant chains. Their idea of leadership, learned in the command and control cultures of other restaurants, was telling people what to do. So, they had someone else put in the inventory numbers, and when the numbers came out wrong, they didnt dig deeper or ask questions to discover why.

In the end, with costs up, revenues down, and lending standards tightening, the bank didnt approve the new construction loans. So rather than expanding, your immediate challenge is to fix and grow the two Nicks restaurants that youve got. Frustrated with your managers, you gave responsibility for reducing costs to a 24-year-old who had worked for you since she was 16. She fixed the problem in four weeks by discussing the problem with the kitchen, wait, and bar staffs, who suggested immediate solutions to reduce costs.

Sensing that she was onto something, you pulled together the staffs in both restaurants to make a financial presentation that showed in detail how and where Nicks was earning revenue and incurring expenses. After answering their questions, you asked for their help on three key issues: pay, hiring, and training. Of course, everyone wants to be paid more, but with costs being an issue, are there ways to pay people more but link those increases to the companys profitability and workers doing their jobs better and staying with the company longer? If so, how? Next, because hiring talented workers is key in the restaurant business, how should Nicks redesign its interview and selection process to do a better job of finding and keeping the best kitchen, wait, and bar staff? What is it about interviews that doesnt work and should be abandoned? If so, what should be done instead, and why? Finally, at most restaurants, training is simply shadowing experienced workers to see what they do. So, what could be done at Nicks to improve training that would help them do their jobs better and to continue learning and improving over time?

If you were in charge at Nicks, what would you do?

I need the answer about 1-1.5 pages long.