Management of Service Operations

University Degree Business and Administrative studies

The Company “Roti” (the Indian restaurant)

“Roti” (means Bread in Hindi) was started by two fiends (partners) on July 15th 2007. “Roti” started its operations with 5 employees, including 1 head cook, 1 junior cook, 1 receptionist, 1 waiter and 1 dishwasher. The restaurant is meant for dining in, home delivery and also take away. Restaurant is serving high quality food cooked with best ingredients. As most of the advertisement of the restaurant is through word of mouth, Roti did sufficient promotion by distributing leaflets, fliers and even advertise through local newspapers, posters and banner ads.

The restaurant is located at Smithfield court’s shopping plaza in Kennedy Town, which is mainly the residential area and is away for commercial area. The owner told me that they are not getting a good response from the local residents as there are not many customers enjoying the environment and food at “Roti” even though they are focusing on local residents and office employees in Kennedy Town, as there are not many Indian restaurants in this area. He told me that there are only few customers attending the restaurant in lunch hour’s and they are mainly office employees, people who are working in some commercial offices in the area. I have seen that “Roti” has everything that a good restaurant should have. Roti have high standard dining area with enough seating. The food served at the restaurant is of high quality and the employees at Roti are trying their best to make every customer experience unique by being alert during the service operation. The service quality and is good and quick.

According to my research on the restaurant there is a high fluctuation in its sales pattern and this is due to the change in number of customers attending the restaurant. There wasn’t any big change in customers attending the restaurant for first few weeks, but the numbers start going up and down after 4th week.

As I have been employed the service operations consultant for “Roti”, after analyzing all the main “Management of Service Operations” factors such as service quality, service process, service layout, service speed and the service location and after doing a survey with local people and some customers, I have found that they are satisfied with the quality of food, standard of service, customer service, staff behavior, dining environment, but they are not happy with the restaurants location, they told me that there is not enough parking space near the restaurant and most of the times they have to park their cars far away from restaurant. As many of the customers are local office employees, they have told me that they prefer office delivery for the food because they do not want to travel to the restaurant as it as at far away from their offices.

So after analyzing the main “MSO” factors and surveying the local public, I have come to a conclusion that the most fatal problem is with the location of the business. We can see that there are not many local residents enjoying the services at the restaurant and people who comes there are mainly the employees working in that area and there are not many office buildings in that area. Now after the research and knowing the fact management is thinking about to relocate the business.

The location theory

It was once thought “If you build, they will come”. We know ...

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The location theory

It was once thought “If you build, they will come”. We know that the physical location of business facilities can have a significant impact on the success of an organization. A mistake in a location is not easily overcome. Business success often is being “in the right place at the right time.” For service operations such as a restaurant, hotel or retail store, being in the right place usually means in a location that is convenient and easily accessible to customers.

Before selecting a location “Roti” should consider the important factors below which will affect their business:

Know your customers
Trade area
Structure of the market
Demographic data
Accessibility
Competition
Visibility & Exposure
Labor Force
Cost of Land
Political and economic stability
Taxes

Know your customers: - Every business should know who your customers are, do you know them, most of the organizations think that they know, but often they are wrong. It is very important to understand who your customers are. It is very important to know your regular and frequent customers and if the organization knows who their frequent customers are, it will help to identify other areas that may have demographics with similar characteristic. Before selecting a new location for the business, Roti’s management should consider on this factor.

Trade area: - Trade areas come in many shapes and sizes, so the organization should know what area they intend to serve. Trade areas are not actually round, square, or rectangular, instead they usually reflect irregular shaped pattern. It correspond to road or street pattern, it is altered by competition, physical and psychological barriers, and the demographic of the local residents and employees of the certain area. So Roti’s management needs to consider which is the realistic area and can attract more customers.

Structure of the market: - Every city, town, neighborhood, building, house has a structure and it is determined by physical and psychological barriers. Socio-economic characteristic, street and motorway patterns, industrial and commercial concentrations, type of employment, income, age, topography, and other factors, and by identifying these most important benefits of the structure, “Roti” can substantially improve the opportunity for success.

Demographic area: - When organizations select or look locations, they have to consider on the local area’s population, because if you are taking help of the leasing agent or a real estate broker, they usually throw away the population numbers, or you may also be given a computer generated data listing the population, households, age, and income of the given area. The organization should develop their own feel for the market, they can also consider how much population growth is expected in certain period of time. The most important element is not how many people reside in the population area, but it is rather who are the people, what are their ages and what is the income. So every organization should clearly analyze these facts.

Accessibility: - Access mainly occurs at three levels, so the organizations have to analyze these three levels. 1 whether there is easy access to the business location, 2 the access to the particular site and (3) lastly whether this access is via adequate curb cuts, traffic signals or others, and if the access is poor it can be overcome by reputation or promotion, especially when competition is at its peak. Roti’s management have to consider whether there is an easy access for their customers and suppliers where they are going to re-locate their restaurant.

Competition: - Most of the organizations in today’s era thinks that they are unique, and some are, and some not. Therefore, competition is a significant factor that an organization should consider before choosing a location. Organization must determine competition and measure its importance. You should know the sales, service level, production level of your competitors, and if the one do not know answer to above all, how can they determine their own success. Roti should know all the main Indian restaurants in the area they are going to choose. They should also observe and research how customers are attending these restaurants and at which hours.

Visibility & Exposure: - Here visibility means ability to see or recognize the location, as its exposure is being seen and recognized over a long period of time. Visibility can create huge success and opportunities for the business. Visibility is the most important factor that a restaurant or any business should consider before selecting a particular location for you business.

Restaurant’s location is as important as the food it serves. Management of “Roti” should consider all the above factors before selecting a new location to relocate their restaurant. I will suggest them that they should try to find the location near the commercial area or office towers. The new location should be easily accessible for the people and the suppliers and it can be easily reached by walk or drive. The new site should avoid facing another restaurant because it may mislead the customers to enter the wrong place when they want to come to your restaurant. The new location they are going to select should be in the convenient zone, the transportation tool and pedestrian can pass it conveniently. The also need to consider the nearby parking lot has enough space for your customer’s vehicles. They should also consider the location in well known dining area, location near the street corner and the street name should be well known, because everybody will know when they pass by it no matter car driver or pedestrian. And when people feel hungry or they think the location is convenient they will come to the restaurant enjoying your place without hesitation. So in the nutshell we can say that the management should say that they the location they are going to select should be convenient, in well known area, easily accessible, in the busy area, and enough parking space.

Methods of evaluating location alternatives

The decision where to locate is based on many different types of information and inputs. There are different models and techniques available which will help organization to organize site information and that can be used as starting point for comparing different locations. For “Roti” I have selected the most popular method “the factor-rating method.” Decisions from this method will not be made based solely on these ratings, but they will provide a good way to organize and rank factors. We con also consider it as a quantitative approach.

The factor-rating method is based on six steps:

Develop a list of relevant factors.
Assign a weight to each factor to reflect its relative importance in the company’s objectives.
Develop a scale for each factor (for example 1 – 10 or 1 – 100 points)
Have a management score each location for each factor using the scale.
Multiply the score by weights for each factor and total the score for each location.
Make a recommendation based on the maximum point score, considering the result of quantitative approach as well.

Factor-Rating for “Roti”

Suggestions for new location for Roti

After the weighting calculation we can see that, Central in the best location to relocate “Roti”, this is because this location is easily accessible to the customers and suppliers. The majority of customers who will visit this location will be employees working in this area, so we can relocate “Roti” in Central as this will mainly attract the local employees. We can also change the points or weight slightly for those factors about which there is some doubt, as we can analyze the sensitivity of the decision, for instance if we change the scores for labor availability it can change the decision. So, finally with the help of factor-rating method we can select the best location for “Roti” operations. I myself and the management of “Roti” think that Lan Kwai Fong, in central will be the most profitable location. Therefore we will relocate “Roti” somewhere near Lan Kwai Fong in Central district.

Conclusion

Studies show that we should never underestimate the location factor. Every organization knows that good location is the heart of the business. A good location will help the organization to achieve their main goals, such as profit maximization, customers and stay above their competitors. Good location will attract more customers. So In a nutshell we can say that no organization can survive and cannot be successful if they do not have good location for their business.

BSc (Hons) in Business & Management studies