Fat Angelos is an American style Italian re
Only answer for g and h. add example and citation to support the points
g) Recommendation on Groupon for address problem
h) Recommendation to Douglas for increase customer waiting experience
Dallas Baptist University
MANA 6333: Operations/Quality Management
By: Samuel, Sirisha, Summer, Veronica
February 28,2022
Fat Angelo’s Italian Restaurants: Managing the Customer Waiting Experience
1. Summary of the problem identified from case study:
Fat Angelo’s is an American style Italian restaurant chain established in Hong Kong, by Andrew Chwowowsky and two colleagues in 1998. It then added additional locations within Hong Kong, including one in Taipei. Since its inception it has had a steady, very diverse, customer base, despite economic challenges and uncertainties. Fat Angelo’s ran into a couple of challenges they were focused on resolving. In the process they identified some key challenges,as listed below:
1. Hong Kong had the highest concentration of restaurants in the world; below are some steps they took to highlight the restaurant and make it appealing to the customers:
a. To combat some of this they focused on space utilization
b. Moving as many customers through the dining experience as possible
c. Created a unique dining experience with their decor and relaxing ambiance
d. Regular and family style dishes for friends and family to share
2. Variable costs were at 25% and fixed costs were at 75%. This resulted in a drive to generate revenue to simply break even. There were several considerations in how this could be done such as:
a. Improving operational efficiency
b. Utilization of key metrics to evaluate efficiency gaps such as cycle time which consisted of seat time to table reset
c. Evaluation of wait time, order time and food delivery time
3. Unused seating capacity during down times. Creatively they decided on customer initiatives to help mitigate congestion during peak dining hours. These initiatives consisted of:
a. Incentives for customers to dine early and off -peak diner hours
i. Early-Bird Discount
b. Groupon Campaigns
i. Groupon opportunity and challenge which offered a 15% discount to dine earlier
4. Managing wait times was cumbersome. So although they had incentives in place to help enticing customers with the incentives, this remained an area of opportunity for them due to customer patterns/behaviors. So they focused on:
a. Properly managing queues
b. Minimizing wait times
c. And ensuring shortest cycle times
d. Identifying opportunities to enhance the wait times such as bar areas where customers could have a drink while they waited
5. Balking and reneging customers
As outlined in the case study, the two top operational opportunities were the long wait times during busy hours and being below capacity during off peak hours. In improving those Douglas was potentially able to improve balking and reneging customers as the result of other operational improvements, evident through the success of the restaurant.
2. Analysis of the data that provided in case study
a) Quantifying lost revenue due to customer balking Table 1: Waiting Time
Calculation:
Table 2 has measured waiting time and the time periods when customers need to wait. Based on this table it can be said that the waiting period ranged from 8 pm to 9:30 pm. It can be assumed that number parties can arrive at 10 per period. Customers who do not want to wait and leave the restaurant are measured by subtracting waiting customers from customers or 30 people per period. 70% of them fall into the balking bucket and the remaining are reneging.
and revenue from per parties that hotel can be earned 700 AUD or (200 AUD *3.5 people).
|
Parties waiting at end of period (a) |
Number of Arriving parties (b) |
Parties who do not want to wait c=(b-a) |
Balking (c*70%) (f) |
Revenue from per parties (200*3.5) (d) |
Loss of revenue (d*f) |
|
3 |
15 |
12 |
8 |
$ 700.00 |
$ 5,880.00 |
|
13 |
15 |
2 |
1 |
$ 700.00 |
$ 980.00 |
|
14 |
15 |
1 |
1 |
$ 700.00 |
$ 490.00 |
|
5 |
15 |
10 |
7 |
$ 700.00 |
$ 4,900.00 |
|
2 |
15 |
13 |
9 |
$ 700.00 |
$ 6,370.00 |
|
1 |
15 |
14 |
10 |
$ 700.00 |
$ 6,860.00 |
|
Total Revenue Lost |
$ 25,480.00 |
Table 1: Loss of Revenue
It has been measured that the restaurant has lost 25480 AUD per day for balking. Reducing the number of people arriving can help to reduce the risk.
b) Identify potential bottleneck to turning table
Average time of serving and eating or total servicing time of food is 90 minutes. Due to this reason, companies cannot turn tables rapidly. It can lead to customer dissatisfaction because low servicing time or dinnertime cannot give them comfort as a result the number of customers arriving can decrease in restaurants. In addition, customers want to spend some time with their family and friends because of this reason they want to spend a certain period or time in a hotel. On the other hand, decreasing customer and customer satisfaction can have a negative impact on revenue.
c) Calculation of customer waiting period
|
Parties arriving during period (Cumulative) |
Parties departing during period (Cumulative) |
Parties either dining or waiting |
Tables used at end of period |
Parties waiting at end of period Z = X – Y |
Maximum waiting time (Minutes) |
|
|
X |
Y=Min(X,26) |
Z * 3.5 |
||||
|
6:30-6:45 |
1 (1) |
0 (0) |
1 |
1 |
0 |
0 |
|
6:45-7:00 |
1 (2) |
0 (0) |
2 |
2 |
0 |
0 |
|
7:00-7:15 |
3 (5) |
0 (0) |
5 |
5 |
0 |
0 |
|
7:15-7:30 |
4 (9) |
0 (0) |
9 |
9 |
0 |
0 |
|
7:30-7:45 |
5 (14) |
0 (0) |
14 |
14 |
0 |
0 |
|
7:45-8:00 |
6 (20) |
0 (0) |
20 |
20 |
0 |
0 |
|
8:00-8:15 |
10 (30) |
1 (1) |
29 |
26 |
3 |
10.5 |
|
8:15-8:30 |
12 (42) |
2 (3) |
39 |
26 |
13 |
45.5 |
|
8:30-8:45 |
11 (53) |
10 (13) |
40 |
26 |
14 |
49 |
|
8:45-9:00 |
6 (59) |
15 (28) |
31 |
26 |
5 |
17.5 |
|
9:00-9:15 |
3 (62) |
6 (34) |
28 |
26 |
2 |
7 |
|
9:15-9:30 |
2 (64) |
3 (37) |
27 |
26 |
1 |
3.5 |
|
9:30-9:45 |
1 (65) |
4 (41) |
24 |
24 |
0 |
0 |
|
9:45-10:00 |
0 (65) |
9 (50) |
15 |
15 |
0 |
0 |
|
10:00-10:15 |
0 (65) |
9 (59) |
6 |
6 |
0 |
0 |
|
10:15-10:30 |
0 (65) |
6 (65) |
0 |
0 |
0 |
0 |
|
10:30-10:45 |
0 (65) |
0 (65) |
0 |
0 |
0 |
0 |
|
10:45-11:00 |
0 (65) |
0 (65) |
0 |
0 |
0 |
0 |
Table 2: Waiting Period
Waiting period of parties refers to how much time parties need to wait before entering the dining area. It has been identified from table 2 that the waiting period for customers starts from 2 pm and after the 9:30 period there is no waiting. Maximum waiting parties are 14 and minimum waiting parties are 1. Maximum waiting time for parties is 45.5 minutes and minimum waiting time for parties is 3.5 minutes. Peak waiting time is between 8;15 to 8:45 pm.
d) Cost of balking customer
Balking customers are identified as the customers who chose not to wait in line/queue after being advised of the wait time; they leave the restaurant immediately. The cost of balking customers is higher than that of reneging customers. Maximum balking customers may be new customers for this reason they do not want to wait in a queue rather than move into another hotel. In addition, it can be said that the company lost the opportunity to create a new customer and they may not return to this hotel in case they like another one. On other hand, reenergizing customers can have interest in the restaurant due to this reason they tackle the decision to wait and they can come back into the restaurant further. Due to this reason cost balking is much higher and large numbers of balking have a negative impact on the company.
e) Impacts of the Groupon and early bird discounts
Groupon and early bird discounts are two promotional tactics that companies offer for their customers. Primary purpose of management behind these two promotions are to increase the number of customers at non peak hours and reduce balking at peak periods. According to case study it can be easily said that promotional methods solve one purpose or number of customers has been increased at non peak period. These two promotional tools failed to reduce bullying at the peak period because the number of waiting and balking was still the same as earlier.
f) Break Even analysis on Groupon option
Break-even analysis is a method of financial calculation which evaluates cost of new business service against sell-off price for determining at which company can reach a breakeven point. Break Even point is a position where companies do not earn profit and loss both. According to the opinion of direction they recover food related costs and some are fixed from 120 AUD. it implies that restaurants do not receive all fixed assets from this price. It implies that restaurants make losses at this price range. Company failed to reach breakeven position by Groupon option because they faced loss. In addition, restaurants need to spend an amount on Groupon options and they may fail to recover that also.
g) Recommendation on Groupon for address problem
· Management of the company can increase the price of the coupon and the price must be set based on breakeven.
· Restaurants can face financial loss for this coupon because the company failed to recover all their money from this coupon for this reason they need to focus on recovery of fixed cost.
· Restaurants can sell this coupon through their own website which can reduce their other cost.
h) Recommendation to Douglas for increase customer waiting experience
· Restaurants can offer complimentary drinks for waiting people.
· Restaurants can arrange online food delivery systems.
· They can also order & pick facilities for customers.
· They can install TV monitors for playing news, sports and so on.
· Management can organize game facilities along with gifts to keep their customers engaged without being bored.
Conclusion
This report has discussed the queue problem faced by Fat Angelo’s restaurant in Hong Kong. Peak dinner time of the hotels is 8 to 9:30 pm and many people come to the restaurant for their dinner. Several people move to another restaurant when they find the restaurant is full and they need to wait. Cost, revenue of balking has been measured and the waiting period of customers has also been calculated. Restaurants develop two new promotional methods for reducing balking and increase customers in non-peak hours and a report discussing that. Based on analysis suggestions have been provided for improvement of queue management service.
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