Service delivery systems in the food service industry

02784319188 $3.00 i 0.00 @ Pergamon Press plc

ht. J. Hospitality Management Vol. 7 No. 1, pp. 43-62,1988 Prtnted in Great Britain

Service delivery systems in the food service industry J. R. Pickworth School of Hotel and Food Administrarion, University of Guelph, Canada

One ofthe reasons for the rapid growth offast food chains has been their adherence to the service deliver? system concept. Ufl~ort~n~tel~~ their s~~ccesshas left the impression that this concept is only appropriate for chains. The premise of this article is that the service delivery system concept apphes to any food service operation. it is argued that the thinkittg behitld this concept w~ii become er’en more significant in the future. A model is used to examine the basic design crtterta of serwce delivery systems. Ti7is framework illustrates the dynamics behind some of the more sophisticated service delrverx systems that are to be found in the food service industry. productkit) Key words: delivery systems

service

operations

food service

Service delivery systems in the food service industry Alost observers would agree that the growth of fast food chains has had a major impact on the food service industry. Such chains have been very effective in exploiting market opportunities. But knowing what the customer wants is one thing, being able to deliver it u ell is another. Although every well-managed food service operation seeks to produce and serve a standard product, a chain has to go one step further-it has to ensure that its product/service is consistent across many units. Fast food chains have been very successful in consistently reproducing a product/service of a specified quality. 5luch of their success in this regard may be attributed to various operational innovations that have resulted less from inspiration than from adopting a systematic approach to design. By examining fast food chains. food service managers can obtain some insights into the thinking that is involved in the design of such operations. The notion of reproducing a standard service is obviously not unique to the hospitalit) industry. The last decade has seen the emergence ofservice management as a distinct area of study lvith its own literature. Nevett (1985) has summarized the major conceptual frameworks and reviewed their relevance to the hospitality industry. One of the earlier researchers in this field. Sasser er al. (1978) introduced the concept of a service deliver! system to describe the process F\hereby products/services are created and delivered almost simultaneously to the customer. In the food service industry. this concept has become almost exclusively associated Cth fast food operations. Unfortunately, the thinking implicit in this concept is not viewed as being particularly applicable to other types of

1-I

J R. Pi&worth

operation. This perception is partiy due to the lack of clarity surrounding the concept - in a sense, practice is ahead of theory. The purpose of this article is to outline a possible theoretical framework that xviii facilitate the use of the service delivery system concept. Initially, the article will consider what is meant by a service delivery system and suggest some terminology. Nest, the growing significance of this concept will be discussed briefly. A model will then be used to examine the factors that ha1.e to be considered when designing service delivery systems.

The service delivery system concept To some practitioners, the concept of a service delivery system may sound unduiy pretentious and academic. After all, there is nothing new in having a system to prepare and serve meals-every restaurant has such a system. just as every operation has its o\vn procedures for processing or handling its customers. However, it is a fact that some systems \vork much better than others. Why is this? In order to address this question, it is first necessary to consider jvhat constitutes a service delivery system. Essentially. any such system is concerned with the processes involved in the production and service of food and/or beverages to customers. This delivery system may be considered as havin g ‘hardLyare’ and ‘software’ components. ‘Hardware’ components relate to physical features, such as the equipment, the layout. the decor, etc. Many operations have to contend with ‘hardwxe’ inefficiencies thar \sere built-in through poor initial design. Sometimes changes in the menu. service methods. etc.. can mitigate these constraints. However. in the case of a fast food chain, all these problems have to be resolved before management finalizes the exact specifications of the operation it wants to replicate. It is no coincidence that fast food operations prefer custom built, free-standing buildings-this practice facilitates the ‘cookie-cutter approach to groivth. ‘Software’ components refer to organizational practices. such as forecasting procedures. scheduling. supervising. etc. For instance. a catering manager may well say. ‘Banquets for lOOO? We’ve got it down pat! We wrote the book!’ In essence. tvhat is meant is that. through trial and error, all the operational snags have been Lvorkrd out and the service delivery system has been perfected. In such situations, management would argue. quite legitimately. that you need experience to perfect such a system. Holsever. in other situations the time spent in trial and error, can be shortened by using a conceptual framework during the design stage to pinpoint likely problem areas. The value of the service delivery concept lies primarily in its ability to provide a structured way of analyzing the relationship between the various activities within an operation. Since a service delivery system does not exist in isolation. its success is contextual or situational in that the system has to be assessed in terms of hoby rffectix,ely it satisfies customer needs. All the various ‘hardware’ and ‘soft\vare’ components have to be logically and flexibly organized into a service delivery system that will reflect basic marketing objectives. In order to further clarify the serllce dell\ery concept. Table 1 attempts to synthesize and define some of its major characteristics. The competitive nature of the fast food market with its ‘cooliie-crctfer’ approach to expansion. has encouraged chains to become quite sophisticated in their application of the service delivery concept. Indeed, the significance of this concept is perhaps most readily apparent by examining some recent developments in the fast food sector.

Serwce deliver): sbstrms

Table 1. Service delivery

in the food Industq

45

system terminology

0 A Service Delivery System (SDS)is an operation in which products/services are created and delivered to the customer almost simultaneously. A SDS seeks to achieve balance, and consistency in its customer interactions over time. 0 The SDS concept provides a structured way of analyzing the relationship between the various ‘hardware’ and ‘software’ components of a service delivery system so that they are logically and flexibly organized to reflect basic marketing objectives. 0 ‘Hardware’ componenfs refer to the physical features of the SDS such as equipment, layout, decor, etc. 0 ‘Soffware’componenrs refer to organizational practices such as forecasting, scheduling, selling, supervising, etc.

Service Delivery Systems exist in numerous operational contexts, and the below terms may be used to describe these contexts. A SDS which is one of a kind, e.g. a restaurant managed by an Single-unit SDS independent operator. The replication of a basic SDS concept, e.g. fast food chains. Multi-unit SDS Two or more SDS which are interrelated in that they share the SDS in network same production area, or the same administrative structure, e.g. food service outlets in a hotel, a commissary with satellite service

Ancillary

Dedicated

outlets. A SDS which is in an integral part of a larger SDS, e.g. a bar in a restaurant, a 'drive-thru' facility in a fast food operation, a self-ser-

SDS

SDS

Multi-faceted

SDS

vice buffet in a restaurant, a reception prior to a banquet. A SDS that is designed to produce and serve a specific range of menu items, e.g. one product fast food chains such as Kentucky Fried Chicken, ice cream parlors. It is designed to maximize equipment and personnel usage. A SDS which is able to produce and serve a broad range of menu items, e.g. a family-style restaurant. It is the opposite of a dedicated SDS.

The significance of the service delivery system concept In order for a fast food chain to increase its profitability, it needs to maximize the revenue generated while minimizing its operating costs. A chain may expand by either opening up new restaurants or by generating more sales out of existing units. As long as the market place is not saturated and the cost of land is not prohibitive, a chain may well decide to expand by opening new units. Besides increasing sales. this strategy may enable overhead costs to be spread over more units. However. as competition increases, it becomes more risky for a chain or its prospective franchisees. to invest the necessary capital for expansion. At this point in time. greater emphasis may be put on maximizing revenue from existing units. The menu may be revamped to attract a greater market share and/or to obtain a higher average check. But

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J. R. P~ckworth

sound menu development accompanied by effective sales promotion can only generate so much extra revenue. The continual need to maintain growth has now led some chains to expand internationally and/or to enter smaller domestic markets. In the latter case, many chains have pared down their service delivery systems. Burger King. for example, has developed custom-built trucks so that it can take its product to tvherever there are customers-a service delivery system on four wheels. More recently, the Resruurunt Business magazine reported the emergence of ‘burger babies’, a term coined to describe finely tuned, ‘drive-thru* only operations. Perhaps the most innovative of these ‘burger babies’ is a two storey, ‘drive-thru’ outlet that can be built on any plaza parking Iot. Its unique feature is its size-just 12 ft by 12 ft. It has a service \vindow on each side and can process about 100 cars per hour. One might well ask how 133 square feet can generate over $600,000 in annual revenue. The answer lies partly in the recognition of market opportunities, and partly in the innovation of new methods For producing and serving food, i.e. in the design of the service delivery system. Also. ‘burger babies’ can price their menu items below competitors, because of their lower capital investment. The integration of marketing and production strategies, which is evident in ‘burger baby’ operations, illustrates the significance of the service delivery system concept in formulating overall business strategies. Other trends in the market place also underline the significance of service delivery systems. For instance, the growth in take-out sales in Korth America presents opportunities for independent as well as chain operators. Consider the following statistics compiled for the GRDlCrest Enterprises, a market research company based in Rosemount, Illinois: -In 1985.27% of restaurant meals in the U.S. were carried out. ---‘Drive-thru’windowsserved 11% of the meals in 1985. up656 from thepreviousyear. -Although ‘home delivered’ meals only accounted for 2% of restaurant meals, this represented a 60/‘b increase over the previous year. (Maybe these statistics are indicative of the customer’s desire for ultimate convenience-ready-to-eat meals delivered at home.) hlarket opportunities are not the only reason ~.hy the concept of service deliver? systems may become more significant in the future. The quest to minimize operating costs is never-ending. For instance, during the 1970s considerable attention was directed towards energy conservation. In the 1980s. many chains have focused on improving quality and giving vaiue for money. More recently, the industry is beginning to experience recruitment difficulties due to the aging of the population. In the United States, the National Restaurant Association has estimated that by 1995 there nil1 be a one miliion shortfall in food service employees. These demographic pressures are now spurring fast food chains to re-think the labour requirements of their service delivery systems. Since fast food chains have invariblv adopted a systems perspective, any proposed changes are vie\ved with regard to their impact on the entire system. By thinking in terms of a service delivery system. fast food chains are continually seeking ways to enhance their productivity and quafit)-. It is a process that begins with the initial design of their service delivery system.

Service delivery

systems

in the food mdustry

47

Designing a service delivery system At the outset, it must be stressed again that service delivery systems exist in every type of food service operation. Fast food operations are not unique in this regard. However, the integration of marketing and production issues is most highly developed and thus, easiest to discern, in fast food operations. Consequently, the examples used in this section of the article will be drawn mainly from fast food chains. In order to provide for a structured way to examine the various components of a service delivery system, the model shown in Table 2 will be used. The design of a service delivery system begins with the development of an appropriate marketing strategy and a compatible production strategy. These strategies will determine the basic operating characteristics of the service delivery system. Once the overall structure of the system has been decided, the design requirements for each component can be determined. Since these various components are closely interrelated, they have to be designed in tandem. Consequently, the design process tends to add increasing layers of detail as the service delivery system finally takes shape. Each component of the model will now be discussed in detail. (i) Marketing strategy The starting point in designing any food service operation is the menu. The menu obviously has to reflect customer needs that have been well researched. However, the menu also has to satisfy the needs of the operator. From an operator’s perspective, the menu has to be both practical and capable of ensuring an acceptable return on investment. In essence, a menu is a statement of how customer and operator needs are going to be reconciled. Resolving the marketing and production issues involved in a menu can be deceptively complex. For example, nothing could be simpler than producing and serving hamburgers. Yet, none of the fast food chains prepares hamburgers the same way. The same observation can be made about pizza chains, fried chicken chains, etc. Why do they each have different service delivery systems ? The principal reason is that each has a clear marketing focus and uses its service delivery system as a means of differentiating its ‘product’. An example will clarify the importance of product differentiation. Domino’s is a rapidly growing pizza chain with revenue in excess of $1 billion. Their primary marketing goal is to provide the shortest delivery time and this is the focus for their service delivery system. In 198-l. their 3000 units served in excess of 200 million pizzas with an average delivery time of 23.12 min. Domino’s has established a widely recognized reputation for speedy service. In fact, the company spends over $2 million on mystery shoppers who monitor service times. In order to build some competitive advantage into a service delivery system, there are two marketing considerations that are particularly important, namely, the level of service and the degree of customization. Service levels refer to the quality and quantity of output that will satisfy customer expectations. These service standards are translated into operational performance by establishing appropriate specifications with respect to menu variety, degree of *freshness’, service waiting times, skill of employees, opening hours, decor. etc. In the case of Domino’s, speed of service has been stressed. The degree of customization refers to the extent to which the service delivery system should be designed to meet individual customer needs. Since it becomes prohibitively

Table 2. Model of a service delivery Model

Marketing

strategy

I I Production

-

-

I Menu:

I Equipment:

I Layout:

-

-

-

Capacity management:

-

Production process:

-

Service process:

-

customer

some major design considerations

Some major design considerations

-

strategy

system showing

-

Customization standardization Determination Use of product

as opposed

to speed and

of service levels differentiation

Finish-to-order ratherthan ready-to-serve Degree of on-site vs off-site production Attaining afundamentalsystem balance Degreeofmenuflexibility Identification of dayparts Differentiating menu items Degreeof built-in quality control Laboursaving potential Technological flexibility Allocation of space between service and production areas Appropriateseating configuration Provisionforancillaryservicefacilities Number of service stations Capacity analysis to ensure supply matches potential demand Reliable forecasting methods Ability for the system to operate with the fewest possible employees during off-peak periods Built-in provisions to deal with excess demand Extensive use of specifications Centralizedvsdiffused control ofthe production system Accurate and reliable communications system Establishmentofstandardservicetimes Useofself-servicetechniquestomaximize throughput and minimize costs Use of service blueprints to identify potential problem areas Provision of features to shapecustomerexpectations Procedurestominimizetheadverseimpactofqueuing Effectiveemployeescheduling Useofsuggestiveselling Appropriate management culture that engenders commitmentto organizational goals Socio-technical system that facilitatesemployee motivation

Sen~cr delver) sytems m th? food mdustry

49

expensive to cater to each and every customer preference. trade-offs have to be made which can form the basis of product differentiation. For esample. Burger King has an advertising slogan that invites customers ‘to have it your way’. In other words, they are offering some degree of customization by letting customers choose what toppings they want on their hamburgers. This strategy can be contrasted with McDonalds which has always emphasized speed and standardization-‘we do it all for you’. Consequently, a customer at McDonalds who requests a hamburger without pickle will have to wait. Wendy’s* on the other hand, established itself as the provider of quality hamburgers that are fresh, made with toppings chosen by the customer-the old fashioned way’. Wendy’s has traded off the standardization that would have given it speed of customer throughput for a relatively high degree of customization that instead gives it a higher average check. Decisions concerning service levels and the extent of customization are an inherent feature in the design of any service dehvery system. Indeed, it is interesting to note in passing how traditional luxury restaurants have addressed these issues. For example, gueridon cooking reflects a service level that has a high degree of ‘freshness’. Table d’hore menus tend to be emphasized more at lunch time than ri 10carte menus, because of the need for speedier service. At dinner times, the converse applies and the service delivery system is adjusted to differing customer needs. (ii) ~ro~i~cf~offsmregy Although a chain’s production strategy will be largely determined by its marketing objectives, there has to be some exchange of ideas between the two areas. As this process of interaction develops, the basis is laid for evolving strategies in both areas that will be coherent and integrated with each other. A number of issues need to be addressed in outlining a production strategy. The first issue relates to the degree of customization. W’henever there is a significant element of customization, the production system will need to incorporate a ‘finish-to-order’ inventory. For example. Burger King cooks its meat patties and buns, and then holds them in a steamer until the customer specifies how the burger is to be finished. They are then re-heated in a microwave and served. In contrast to this system. McDonald’s, with its emphasis on speed and standardization. cooks its burgers on a ‘ready-to-serve’ basis. The cooked burgers are placed in an inventory or bin near the counter, where they are ready to be served. The luxury restaurant with its&in carte menu, produces its basic sauces and has them en place. A second issue that needs to be considered is the extent to which food should be produced on-site as opposed to off-site. This issue is not an either/or proposition, but rather represents a continuum of possible production systems. In some situations, the focus may be on achieving economies of scale and on standardizing quality. in vvhich case a central kitchen concept might be appropriate. Alternatively, the emphasise may be on freshness in which case management would opt for a higher degree of on-site production. The advent of the microwave and other technological advances have made it possible for management to choose from a variety of production systems. Whichever production con~guration is eventually selected, it will have to fit within the parameters of the chain’s marketing strategy. As the basic structure of the service delivery system begins to take shape. increasing

50

J. R. Pickworth

levels of detail can be added to each component of the system. Before examining each of these components in more depth, a major design principle needs to be discussed, namely, the need to maintain balance in the system. In a perfectly designed food service system. there would always be an equilibrium between supply and demand within each component of the system. For instance, customers would not have to wait to be seated; orders would be taken promptly and no menu items would ever run out; food and drinks would be served without undue delay, etc. Balance would also prevail in the back-of-house. For esample, employees would be kept busy but not be excessively rushed; there would not be any difficulty in obtaining equipment, e.g. coffee spoons; friction in picking up orders from the kitchen Lvould be minimal. etc. In such a perfect system, there would be no bottlenecks. no hassles and the operation xvould always run smoothly. Reality, however, prevails. Problems do arise, especially during peak periods, and any system can be expected to get out of balance. In a Lvell-designed service delivery system various options will have been built in to enable management to take steps to restore the balance. The nature of these options will be discussed more fully later. If some service delivery systems occasionally slip ‘out-of-sync’ during busy periods, there are other systems that never seem to be ‘in-sync’. A closer examination of these systems may reveal that the ‘hard\vare’ components such as the menu and the equipment are out of line lvith each other. Additional imbalance will occur if the ‘software’ components such as forecasting and schedulin, 0 are ineffectual. As long as the issue of balance remains unaddressed, such systems are destined to be perpetually disorganized and crisis-prone. A critical factor in building balance into a service delivery system is the initial allocation of capital resources. During the design stage. decisions have to be made about the allocation of space. For instance. how much space should be given to a reception area. to seating. to production. to a bar, to storage. to parking, etc. The frequent practice of maximizing the seating capacity and minimizing the production area can be self-defeating, because the slo\i,er speed of service due to congestion might have an adverse impact on seat turnover and service levels. In a similar \vay. decisions relating to decor. operatin g equipment, computerization. etc., need to be compatible with the overall marketing strategy. If an operation invests too much in one area. for example, overbuys with regard to computerization, then less money is available for those areas where there may be a potential imbalance, say in freezer capacity needs. Building balance into a service delivery system requires a long term perspective. The system needs to be responsive to changes in marketing strategy. Consequently, ever). opportunity should be taken to ensure that flexibility is built into each component of the service delivery system. (iii) The menu Despite the importance of incorporating flexibility into the menu, many fast food chains have menus that are fised, or at least changed only infrequently. A major advantage of a fixed menu is that the whole production system can be streamlined to ensure all equipment and personnel are fully utilized. The drawback is of course. that once the production system is custom-designed and dedicated to a few specific menu items, major menu changes become much more difficult.

Service delwery systems in the food industry

51

For example, during the 1960s hamburger chains offered the same one-product menu all day long. However. fluctuations in beef prices which made profits vulnerable, coupled with changing customer preferences, led chains to begin broadening their menus. Whereas managers operating a singfe-unit service delivery system can change their menu overnight and almost change it back again if it is not working out, chains are not that fortunate. Any changes made in a multi-unit service delivery system have to be implemented successfully on the first occasion. Consequently, extensive use has to be made of test marketing, especially if a large number of franchisees have to be convinced the menu changes will be profitable. Since fast food chains were orlginaIly perceived as places to have lunch. one chaltenge has always been to try and establish other market segments. After McDonaId’s so successfully opened up the breakfast market, there has been a trend of breaking the menu down into ‘dayparts’. A daypart divides the day into meal time segments, e.g. breakfast. supper, after theatre, etc. The objective for a chain is to establish itself in a particular daypart niche. For instance, Wendy’s, in designing their service delivery system. deliberately avoided installing booths, and opted for carpets as well as movable tables and chairs so that it had the competitive flexibility to attract dinner business. Some of the intricacies involved in menu planning were demonstrated when the Wendy’s concept was launched against the well-established giants of McDonald’s and Burger King. Their challenge was successful to a large degree because of their carefully conceived menu. Rather than have a round meat patty, Wendy’s decided to have a square patty so that the corners wouId show outside the bun. The intention was to differentiate their hamburger from the competition by emphasizing its size as well as visible freshness. Another decision made by Wendy’s was to offer as many different toppings on their hamburgers as possible-their advertising stresses that it can be made in 256 different ways. Also, since a fresh meat patty cannot be held very long. Wendy’s incorporated chili as a menu item so that discarded meat patties would not be wasted. As an aside, it is interesting to note that when Wendy’s moved into Canada, there was customer resistance to chili. This was eventually overcome through price discounts, thus restoring balance in this component of the service delivery system.

One characteristic which differentiates the service delivery systems of independent operators from those of chains is that the latter tend to be technology-driven. The opportunities for technological innovation are greater in ‘production line’ food service operations (Levitt, 1972) than in more traditional operations that can provide a much wider range of menu items. Also, small technological changes in a single-unit service delivery system may only have an incremental impact. whereas such changes in a multi-unit system have a multiplier effect. For example, an independent operator would probably not have found it cost effective to design a special implement for scooping up french fries. It was left to McDonald’s to innovate this particular piece of technology. Indeed, fast food chains generally have been much more alvare of the leverage which technology can give their multi-unit systems and of the subsequent cost savings. The choice of technology adopted for a service delivery system can have important implications. For instance, Burger King uses a continuous chain broiler which facilitates quality control of its meat patties and buns, and requires fess supervision. In contrast.

52

J R. Pickuorth

hfcDonald‘s uses a flat top grill that constantfy needs to be attended. and has a light and buzzer system to ensure consistent quality. It is interesting to note that McDonaId’s has recentiy introduced a -clam-shell’ grill which cooks meat patties on both sides. This technotogical innovation will avoid the need for ‘flipping’ the meat patties, thus reducing labour costs system-wide and shortening cooking times. However. the adoption of a particular technology has implications beyond this. Consider, why 1lcDonald’s was able to introduce breakfasts so far ahead of its competitors. Its Aat top grill gave it the opportunity to fry an egg, whereas an egg cannot be broiled. Similarly. Burger King was able to broaden its menu by using its microwave oven in a way that McDonald’s was not. For a large chain, retrofitting equipment into a custom-built kitchen can be prohibitively expensive. In short. prior technological decisions regarding the service delivery system have had an impact on future marketing opportunities.

hfuch thinking needs to go into the layout component of a service delivery system. For example, many of the earlier Burger Kin g outlets had an L-shaped layout with the production area on one side. This meant that the counter top was usually shorter than at AlcDonald’s. Like so many other aspects of service delivery systems. this seems like an inconsequential point. However, the result was that McDonald’s tended to have comparatively higher unit sales. X major reason for this was that LlcDonald‘s was able to process more customers during peak periods, because they were able to have more cash registers on their longer counter than Burger King. Another STI of decisions centre on the allocation of seating space within a unit. It is interesting to note how thinking about seating has evolsrd. Back in the 195% lvhen cars nere an important status symbol, A&R’ were well known for their ‘drive-in’ restaurants xvith no searing. Customers parked and ordered through microphones located in all the parking spaces: they \vrre ser\~ed and then ate in their car. During the 1960s. McDonald’s demonstrated the advantages of offering customers standardized products in a clean restaurant \!ith speedy service on a year-round basis. The seating space was designed to ensure an optimum configuration of tables for two. tables for four, etc. In the 1970s. \Vendy’s introduced the ‘dri\.e-thru’ concept for those customers nanting to ‘eat on the run’. This inno\ ation allowed Wendy’s to reduce space requirements. and thus lessen their initial capital investment. IMore recently. as chains have downsized in order to enter smaller domestic markets. esen more attention has been focused on the layout conlponent. Foresample, Burger King has concentrated on irnpro~~in~ its kitchen layout so as to reduce staffing levels and capital requirements. It has done this by generating a data base consisting oftraffic patterns, order configurations. service times. etc. This information has been incorporated into a computer model that can be used to simulate their service delivery system (Donno and S\vart. 1951). In order to test Lvhether the model \vould accurately predict actual unit operations. a mock-up unit \vas built in a lvarehouse. Over several days, this unit was subjected to various customer flowx. order configurations. etc., all of which Lvere video-taped and analyzed. The accuracy and reliability of the model was proven, and now any changes in their service delivery system can first be simulated. For instance. the impact of adding a new menu irsm can be simulated so that any changes in service times, equipment usage, etc.. can be assessed in advance. In this way. management is able to take some of the uncertainty out of makrng svstrm-wide changes.

Seruce dch\ery

systems in rhe food mdusrry

53

(si) Capacity manngement

A service delivery system is usually designed to have the capacity to handle a particular volume of business. For esample. an 80 seat restaurant will have difficulty in producing and servfing lunches for over 500 people. In other words. the demand for seating and for meals exceeds the capacity which the restaurant can supply. Capacity management is concerned with the process of planning capacity levels and with ensuring that they remain in balance with demand. Planning a new service delivery system is invariably a difficult process because an accurate assessment has to be made of demand. If the production and/or service capacity of the restaurant is too large, then capital has been tied up unnecessarily and obtaining an adequate return on investment will be more difficult. On the other hand. if the production and/or service capacity is too small. then the sheer volume of business may impair service levels, and the excess in demand may encourage competitors. Chains base a signiticant advantage in planning the capacity of theirservicedelivery system. Unlike the independent operator who has to predict demand quite accurately the first time around. chains have the capital behind them to esperiment. No chain expects to produce a problem-fret service delivery system as their first unit. Yet, this is what the independent operator has to try and achieve. In designing a service delivery system. management should make use of flow charts to blueprint the system (Shostack, 19%). Such a blueprint will identify all the processes that constitute the service so that potential failure points can be isolated and appropriate safeguards built into the system. As management studies the blueprints for its prototype service delivery system. various options may be considered. For example, in order to maximize resenue potential, management can either opt to increase seating capacity or to design a menu that wilI facilitate seat turnover and customer throughput. However, the option of increasing seating capacity has implications with regard to parking capacity, restroom capacity, staffing levels. etc. The various capacities in a service blueprint have to be in balance and compatible with each other. In order to determine whether there is adequate capacity, a supply and demand analysis needs to be undertaken. This analysis entails firstly estimating the supply or throughput that the system can likely attain, e.g. maximum customer transactions per hour. masimum meat patties that can be cooked per hour. etc. Nest, an estimation has to be made of likely masimum demand during the busiest hour. Since demand during this particular hour will peak for a 15-20 min period, estimates of maximum demand conventionally assume a hidden peak of lf times the busiest hour. This is the point of time when demand is literally at its very highest. Ideally, a supply and demand analysis should be done for each menu item so that production will be balanced. Otherwise, customers may base to wait for just one menu item. The supply of any one menu item is basical& a function of its cooking time and the amount of equipment available. These are factors that management needs to take into account during the design stage. An example of capacity analysis is shown in Table 3. In this instance. the management of a fast food operation vvants to obtain an idea of how closely its counter service capacity and eating-in capacity matches the likely demand. It will be noted that the estimated demand for eating-in (135) is fairly close to the capacity for eating-in 1209). Since management at this stage wants to build flexibility into its service delivery system. it may consider a number of options. It could provide stand up counters or even outside seating facilities to handle excess demand. Alternatively, management may decide this capacity

J R. Plckworrh

Table 3. Example

of capacity

analysis

BACKGROUND DATA Seating capacity Effective seating capacity*

116 75%

Average monthly sales Average no. of customerorders Averageno.ofhamburgerssold Hamburgers per customer order Standardcounterservicetime No. of cash register stations * Allows

for partially

SUPPLY AND DEMAND

Friday (18% of sales) 12-1 (15%ofdaily sales) Customer service Eating-in 45% Take-out 20% Drive-thru 35% Average eating time25 min

$105,550 46,710 57,235 1.2 45 s 5 filled tables, e.g. three customers ANALYSIS

DEMAND Aver. monthly sales Aver. weekly sales (~4.3) Busiest day (Friday) Busiest hour (12-1) Hidden Peak(xl.5) Aver. monthlycustomerorders Aver. customer order Aver. customer orders/peak periods No. of take-out No. of eat-in Totalcounterdemand Totaleating-in demand CAPACITY Std counter servicetime Customer orders/hour No. of servers Tota~cou~tercapacity Total seats Effective seating capacity Aver. eating time Seat turnover Total eating in capacity tAssumes no. of hamburgers party.

Busiest day Busiest hour

sitting at a table for four

FOR COUNTER AND EATING-IN

$105,550 $24,547 $4418 $663 $995 46,710 $2.26 440 86 198 286 238

CAPACITY

($24,547 x 0.18) ($4418 x 0.15) ($663 x 1.5) ($105,550 + 46,710) ($995 + $2.26) (440 x 0.20) (440 x 0.45)

0.75 min 80 5 400 716 87 25 min 2.4

(116 x 0.75) (60 i 25)

209 (87 x 2.4) -per customer order equals the no. of customers

in each

Service dehvery

systems

in the food mdustq

55

level does not constitute an unacceptable service standard in which case, management might attempt to alleviate the periodic shortage of seats by trying to reduce eating times, possibly by having an employee offer to clear customers’ tables. After a chain has built its first unit, it no longer has to rely on assumptions as to how the service delivery system will operate in practice. The availability of empirical data can help improve the reliability of capacity analysis. The focus shifts towards remedying imbalances in the system. Production capacities may have to be realigned with seating capacities, nhich, in turn, may entail improving preparation and service times. Also, management will seek opportunities to add flexibility and to build-in quality and productivity. The only way an independent operator can incorporate all these refinements. is either to have learned from the experience of others or to have hired knowledgeable consultants. Capacity management, unlike capacity planning and analysis, is an on-going activity. Whatever the volume of business, management needs to try and match production and service capacities with demand. This process is made easier if management has an effective system of forecasting. The value of forecasting is that it enables management to control its future costs to a greater degree. With reliable forecasting, an operation is less likely to incur the additional labour costs that result from overstaffing during slack periods. Conversely, adequate staffing will be available during busy periods so that customer throughput will be maximized with a minimal deterioration in service levels. Although forecasting is also a major factor in controlling food and beverage costs, it is especially important with respect to labour. This is because labour costs are highly perishable. Once employees report for work, they have to be paid regardless of the volume of business. Thus labour, unlike leftover food, cannot be stored for use the next day. For this reason, a well designed service delivery system will seek to minimize staffing levels during slack periods, because these usually constitute a large proportion of the opening hours. However, despite an effective system of forecasting, there will still be occasions when demand will exceed capacity. When this occurs management needs to be responsive and take actions that will restore the balance between demand and production/service capacity. hlanagement basically has three ways in which it can try and match capacity with demand. It can seek to manipulate demand; or it can manipulate supply: or it can use a combination. IManipulating demand entails such techniques as off-peak pricing discounts to level out demand; creating of new market segments to transfer demand either within the day or within the week; encouraging take-out rather than counter service to spread the demand more evenly; using express lines to facilitate the speed of service; establishing reservation systems to ensure that demand is levelled out. The purpose of these and other techniques is to maintain the balance of the system so that customer throughput can be maximized while maintaining service levels. Manipulating capacity refers to the ability of management to adjust supply according to the pattern of demand. Whenever production or service capacity exceeds demand, management has incurred unnecessary costs. Some examples would include opting for self-service rather than table service; using disposable ware rather than chinaware to eliminate the capital and labour costs involved in dishwashing; contracting out services thereby enabling management to incur costs on a pay-as-you-go basis; using frozen menu items vvhich can be reheated in a microwave oven rather than having highly skilled cooks to prepare what may turn out to be leftovers for the next day; designing multi- rather than

36

J. R. Pxkaorth

single-purpose rooms: investing in cross-training so that employees can be transferred to areas where the demand is greatest; using part-time employees whose hours can be altered according to demand. Although all these examples are not without their drawbacks, they represent features which can be built into a service delivery system so that management has the means to match supply with demand. (vii) The prodrmiotz process The production component encompasses all those activities that are necessary to ensure the appropriate quality and quantity of food is produced on time. As a starting point, this entails the extensive use of specifications in order to standardize purchases and recipes. Such specifications provide the basis for standard costing. As long as menu items are produced according to specification. management is in a position to compare its actual costs against what they should have been. Computerization has greatly simplified this aspect of production control. Minimizing production costs also depends on effective forecasting. The time frame for accurate forecasting varies from one food service operation to another. An operation specializing in catering functions ivill have a reasonable idea of its business volume well in advance. nhereas a fast food operation may have to determine its production requirements every 20 min or so. In designing a service delivery system. careful thought needs to be given as to how the production process Lvill be controlled. For esample. in a fast food chain such as McDonald’s, the control of the service delivery system is exercised solely by the ‘bin’ person, $1ho monitors inventory levels in the counter pick-up chute or bin, and periodicall} orders up additional batches of food items. Based on esperience. charts are prepared to indicate likely hourly demand and production requirements for each menu item. The ‘bin’ person drives the system and his/her judgement is critical. because some food items have to be discarded after a holding time of just 10 min in order to maintain quality. The function of the ‘bin’ person is somewhat analogous to that of the ‘aboyeur’ in traditionally staffed kitchens. In those chains offering a degree of customization, the control of the production process is less concentrated in one specific person. Each counter person may have to communicate a special order to the production area. As the number of order takers increases, the communication process becomes critical. This proved to be the case \vhen the order takers at Burger King had to rely on microphones to input orders. Since the control of the system was diffused, the likelihood of mistakes became an inherent and destabilizing feature of the system. Although Wendy’s also offers customization and uses a microphone. it only has one order-taker and consequently. the control of the production process is relative11 concentrated. Also. the length of the counter is such that only about half a dozen customers can be processed at any one time. Speed of service may be a major goal for a food service operation. as it obviously is for fast food chains. For esample. McDonald’s has established standard times for waiting in line and for being served at the counter. At Burger King. the standard take-out service time. door to door. is in the region of 3 min. In an effort to increase service speeds so as to maximize throughput and to reduce staffing requirements. labour saving techniques are used as much as possible. These include the use of pre-measured dispensing machines

51

Service drltkery ystems in the food industry

which free the server to collect other items. More recently. new Burger King units have opted for the self-service of beverages and have consequently relocated their beverage station in the service rather than in the production area. A computer analysis by Burger King even determined that boxing hamburgers was faster than wrapping them; the positive impact on waiting times made up for the additional costs, (viii) The service process Every food service operation has its own sequence for handling customers and some generalized examples are shown in Fig. 1. In a well-designed service delivery system, the sequence of processing customers is not approached haphazardly. Each step in the service process is carefully developed until a detailed service blueprint emerges. The value of such a blueprint is that it assists management in identifying possible problem areas in the meal experience (Coss and Nightingale, 1986). To illustrate this important point further, the service process for a customer to a new fast food operation is described. If the customer arrives by car. the critical factors in the first stage of the seEice process will be adequate signage, easy access and parking availability. The customer then enters the restaurant and has to ascertain where to place an order. Consequently. the service counter needs to be visible as well as welcoming and accessible. If there are queues, the

CAFETERIA SYSTEtf

FAST FOOD SYSTEN

LUXURY SYSTEM

PAY

CONStME

CLEAR

BANQUET SYSTM

ORDER

QUEUE

SERVICE

HOSPITAL SYSTEM

ORDER

SE3VXCE

QU JE

SE VICE

CONSUME

SEB CCE

SERVICE

CO SUME

CLEAR

CO SUME

i CLEAR

i CLEAR

PAY

ORDER

PY

j

1

Fig. f. Some ge~~~alize~ examples of the service process.

CON

23

J. R. Pi&worth

customer then has to wait before placing his/her order and paying. Since the customer will be unsure of service standards, product quality, etc., ~hotogra~hs may be available to assist in forming customer expectations. After the order has been filled, the customer looks for a clean, appropriately sized table. When the customer has finished eating, he/she looks around to check if customers are expected to clear their own table. If so, the customer disposes of his/her garbage and finally leaves the operation, hopefully satisfied with their meal experience. Much more detail could have been added to this brief description of a service process. However, its purpose was to illustrate how important it is for management to view the service process from the customer’s standpoint. Ideally, the service blueprint should be analyzed from the perspective of each market segment. For instance, if the customer experience described above had included smal1 chifdren, a number ofother critical service points could have been highlighted. Besides identifying potential bottlenecks and lapses in quality or service levels, management needs to study its service blueprint to estabhsh those factors that influence customer expectations. If a customer progresses through the service process with unrealistic espectations, then it is unlikely that he/she will leave satisfied. Even the external appearance of the restaurant provides prospective customers with an indication of service levels, for instance, *that place looks too expensive’. There are many subtleties involved in the service process component of a service delivery system. For example, those chains offering some degree of customization request payment before assembling the order. This practice has the affect of giving the production staff more time to finish the order and reduces the customer’s perceived waiting time. The probiem of waiting or queuing is virtually tutavoidable in an! service process. and how management handles these situations can be quite criticai (Maister, I%>. Uniess thr customer enters the operation expectin g a queue, each successive delay in the service process is likely to have a compounded impact on customer dissatisfaction. Waiting is essentially a passage of time that has no inherent content or purpose-there is nothing else to do but vvait. Since time passes slowly in such situations, management cannot ignore the impact of delays and should bear the below points in mind: - Customers should remain convinced that what they are waiting for is vvorthwhile. Table-service restaurants sometimes provide novel food items for customers to ‘munch on’ while waiting. as a means of reassuring them that their decision to choose this restaurant was a good one. - A well organized reservation system helps to ensure that reservations are not lost and that there is no excessive overbooking. - Queue discipline should be maintained. This means that there should be no preferential customers who sari jump the queue, It is first come, first served unless there is a reservation system. - The length of vvaiting time might be over- rather than under-estimated. An earlier than anticipated entry may nullify an impatient customer. Although over-estimating waiting times may also lead to customers going elsrvvhere. - Distractions can be used to shorten the perceived waiting time. For example. customers can wait for a table in 3 cocktail bar; orders can be taken prior to entering the restaurant so that the next stage in the service process will be accelerated: the decor might include talking points’ to encourage conversation between those

59

Service delivery systems IIIthe food industry waiting; reading material, video games, etc., may be provided. customer is waiting to pick up an order to take home.

particularly

if the

(ix) Employeelcustomer interface Whenever a customer and an employee interact, there is a ‘moment of truth’-will the employee behave in a way that will reflect a concern about customer satisfaction? (Albrecht and Zemke, 1985). ‘Customer-oriented’ employees have the opportunity to enhance customer perceptions of the service delivery system, or the reverse. One wonders how many customers have stopped patronizing a restaurant not because of the food, which may be excellent, but because of a surly food server. The truth is that in a week a surly employee can serve many customers, who may never return. Many articles have recently been written on the quality of employee/customer interactions-Christie Mill (1986)) Coss and Nightingale (1986). Martin (1985) and King (1986). In essence, two fields of research converge when discussing the employee/customer interface. Firstly, there is the pioneering work of Campbell Smith (1967) into marketing the meal experience. His research is reflected in the concept of service blueprints, which was described earlier. Secondly, there is all the research relating to socio-technical systems which examine the impact of the work environment on employee behaviour. To illustrate the significance of socio-technical systems, the following incident has been extracted from the diary of a trade journalist nho worked incognito for a fast food operation. ‘One occurrence took place today that says a lot about what it is like to aork here. Tracy, who usually works as a countergirl, was assigned to the beverage station today. At the peak of the lunch rush, she had fallen somewhat behind in getting out the orders. This is very easy to do since you often get as many as ten orders all at once with no way to retain them except in your head. Soon all five countergirls were huddled around Tracy yelling, ‘Where’s my order?’ and ‘Come on!’ The sad thing to me was that a few of those girls were friends of Tracy. As I have said before, this type of behaviour is commonplace here; if you interrupt anyone’s work flow, they tend to react hostilely, forgetting that you and they are not actually the machines you are expected to be. Well, Tracy flared up (which is a little unusual) and shouted back, ‘If you can do it better. then do it yourself’! Bruce, the manager, rushed over to the scene, and an eight-way argument ensued. He finally told Tracy to go downstairs and get changed. When she came back upstairs, he fired her. She was upset and tried to talk him into changing his mind, but to no avail. JVhat really bothered me in this instance was the conduct of the workers toward each other. It seems that this type of work robs the participants of their humanity and that includes friends. Tracy’s firing brought forth no noticeable reaction from anyone’. This kind of incident would be less likely to occur today because many chains now use a POS system with an order display for each work station in the production area. However, the point being stressed is that the technical aspects of a service delivery system affected the pattern of employee and management behaviour. Indeed, it is a well established fact that inadequately designed service delivery systems frequently create employee friction, particularly on the boundaries between departments, e.g. the kitchen pick-up counter (Whyte, 1918). Even if the service delivery system is perfectly designed, how well the system works will ultimately depend on two major factors-management’s competence in scheduling and its ability to motivate employees. The goal in scheduling is to ensure there are sufficient

60

J. R. Pdsoorth

employees on duty during peak periods to masimize customer throughput. and to staff slack periods with the minimum number of employees, consistent with service levels. Probably one of the most important aspects of a food service manager’s job is to develop and maintain a ‘tram spirit’. A well designed service deliver? system does not necessarily guarantee employee motivation. Many chains go to considerable lengths to indoctrinate their employees. For example, most fast food chains promote the use of suggestive selling to raise their average check. In order to ensure this activity takes place, some chains emphasize extrinsic motivational techniques such as bonuses, Lvhereas others rely on intrinsic motivation resulting from effective training and leadership. The difficulty in depending on extrinsic motivation is that not all service delivery systems are IveIl designed and even those that are, will temporarily slip in and out of balance. There will always be those times when management has to depend on employee goodwill and commitment. In these situations, management relies on extra employee effort to overcome the deficiencies of the system. The extent to which employees will rise to the occasion will be influenced by the prevailing management style. The impact of management culture kvill also be evident in the quality of the employee/customer interaction. How nell management treats its supervisors Lvill affect how well the supervisors in turn. will treat their employees. If employees feel themselves to be mistreated, then this will tend to be reflected in how they relate to customers. In short. good employee relations precedes good customer relations. The employee/customer interaction is one area where the independent operator has an advantage over the chain. Firstly. an independent operator is more likely to recognize customers and can therefore personalize service. Secondly. an independent operator can closely monitor service levels and set standards by personal example. And lastly. whereas a chain has to aork through several layers of management. an independent operator is closer to the situation and thus can make and communicate decisions much sooner.

Bringing

it together

As a means of illustrating how the various components of a service delivery come together. this description does not a typical ‘drive-thru’ operation is outlined below. Although incorporate all the points discussed earlier, it does highlight the value of thinking in terms of a service delivery concept. A ‘drive-thru’ facility enables a customer to purchase food without leaving their car. Such a unit usually consists of an ordering station in the parking lot ivith a tno-\vay speaker system. Since speed is essential. most chains strive to deliver food ivithin 30 s of receiving an order. For this reason, many units require Tao service windo\vs. In blueprinting a ‘drive-thru’ service delivery system, it becomes apparent that delays can occur at various points. Firstly. a delay can arise whilst a customer studies the menu board at the ordering station. This can be remedied in part by providing preview boards with pictures which can be seen from several car lengths a\vay. Another delay may occur before the employee at the pick-up window ackno\vledges the customer’s presence. A trip bvire is usually placed before the ordering station to alert employees. During off-peak periods. the pick-up window lvill not need to be manned continuously. This means that when the tripwire is triggered. an employee has to rush to the ‘drive-thru’ window and take an often garbled order over a speaker system. One recent innovation to

Ssrvice driz\rry systems in the food indusrr)

61

overcome this problem is the use of high quality headsets that are wireless. Each employee assigned to cover the ‘drive-thru‘ area wears a control belt and a lightweight headset with a microphone. This equipment enables an employee to listen to an order clearly from anywhere in the kitchen, repeat it back to the customer and still move around freely. In the meantime, other ‘drive-thru’ employees who have heard the order on the listen-only channel, begin to complete the order. The result is that the speed and quality of service is enhanced, and the ‘drive-thru’ area still only needs to be specifically manned for busy periods.

Conclusion The thinking behind the service delivery concept is applicable to an]; food service operation. Fast food chains are most closely identified with the concept because their service delivery systems have been developed and are dedicated to a very limited menu. The basic structure of a chain’s service delivery system is the result of the careful integration of marketing and production strategies. As the design requirements for each component of the system are determined, considerable care has to be taken to maintain the balance within the system. By analyzing each component of their service delivery system, a food service manager should be able to discern ways to improve quality. productivity. customer satisfaction and ultimately. profitability.

References Albrecht, K. and Zemke, R. ( 1985) Serrlce Amrrrcn: D&g Bitsitzess irl o .Venv Ecottonlg, p. 32. Doi\ Jones Irwin. Illinois. Berlinski, P. R. (1956) A chance to snap up profits. Resraurant Business. 10 August. p, 1%. Campbell-Smith. G. (1967) .Vorketing dze Jleol Experience. University of Surrey. Guildford. Coss. J. andNightingale. M. A (1986)XlarzagingSr~n,2ncrrrisofSer~ice. pp. 36-50. HLISO, London. Christie Mill, R. (1986) hfanaging the service encounter. 7he Conrelf Horel nnd Restartrnrtr .-ldnrinisrmrion Quarterly, November 45. De Luca. M. (1951) Burger Kmg-BK50. Resfarcrmf Hospitality. March. 115-I 1s. improves operations. plannmg. and Donno. L. and Swart. W. (1981) S‘emulation modelling productivity of fast food restaurants. itrierfaces. December, 3547. Giordana, R. (1975) X fast food journal-the vie\\ from inside. Fmf Serlx-e. October, 38. King, C. A. Service-oriented quality control. The Come11 Hotel ntrd Restawmr Adtnutisrmrrot~ Qunrreriy, November 97. Levitt. T. (1972) Production line approach to service. Hurl-m-d Busmess Review. SeptembetOctober. Burger Kirlg, Corporarlotl: Teeacltitlg Note. Maister. D. H. (1981) McDottald’s Corpororlotl, Harvard Busmess School Case Services. Boston. MA. hlaister, D. H. (1985) The psychology of waiting lines. Readin, 0 from The Service Etlcounter. Czeplel, J. A.. Solomon. >I. R. and Surprenant. C. (eds), pp. 113-123. Lesington Books. hlassachusetts. Martin. W. B. (1986) hleasuring what quality service is to you. The Cornell Horei nnd Rrsrmrntrr ~dttzin~s~r~tion Qrrnrrerly. November. 33.

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Nevett, ‘IV. (1985) Operations

management

perspectives and the hospitality. International Journal

of Hospitafity ~~anagement 4,173-l?&

Rikert, D. C. and Sasser, W. E. (1950) McDonald’s Corporarim. Harvard Business School Case Services, Boston, MA. Rickert, D. C. and Sasser, W. E. (19SO). Burger King Corporation. Harvard Business School Case Services, Boston, MA. Sasser, W. E., Olsen, R. P. and Wyckoff, D. D. (1978) Management of Service Operations: Text, Cases and Reading. Allyn & Bacon. Boston, MA. Shostack, L. (19S-t). Designing servrces that deliver. Harvard Business Review, January-February, 33-39. Tougas. J. G. (1956) Domino’s pizza: simple. savvy and successful. Restauraru Hosprmlify, December, 59-70. Warner, R. V. (19%) New headset a boom for drive-thrus. Nat~o~‘s Restatirunt~e~vs. 17 November, 61. White. W. F. (1945) Human Rekztions in the Restatcrant Zndustr_s.McGraw-Hill. New York.

About the Author Jim Pickworth is an associate professor in the School of Hotel and Food Administration at the University of Guelph, Canada. He has previously vvorked for the Hotel. Catering and Institutional Management Association and for Htlton International as an Area Operations Analyst. He teaches in the areas of personnel management. food and beverage control and operations analysis. The focus of his research is on organizational productivity. a field in which he has authored numerous articles. He wouId like to record his thanks to one of his colleagues. ;Ifichael Haywood, for his valuable contribution to this article.