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Homework answers / question archive / Your start in the pizza businesscame in the eighth grade, when your father opened the Village Pizza restaurant

Your start in the pizza businesscame in the eighth grade, when your father opened the Village Pizza restaurant

Management

Your start in the pizza businesscame in the eighth grade, when your father opened the Village Pizza restaurant.After graduation, you entered the construction business, building homes formore than a decade. But, then, something drew you back. So, you took the familyrecipes and started your own restaurant, Nick’s Pizza & Pub (far enoughaway to avoid competing with Dad).

Your goal wassimple: to build a fun, family restaurant. Nick’s Pizza & Pubs—there are now two—have 26-foothigh, floor-to-ceiling stone fireplaces, stuffed bears and moose, “antlerchandeliers,” huge aquariums separating the bar and the restaurant, and woodeverywhere—oak floors and huge beams recycled from century-old barns. Andthey’re huge, each seating 320 guests. On a Friday night, 1,500 customers willeat at Nick’s, most waiting an hour for their tables, while having a drink andeating free peanuts at the bar. Those 1,500 customers will eat 600 pizzas, andcarryout 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. Nick’sis really affordable, especially for a sit-down restaurant.

With things goingso well, you decided to open three more restaurants in the next five years.Unfortunately, the recession changed your plans. Guest counts dropped by 20percent, or 100,000 people per year, decreasing revenues by nearly $1 million.On top of that, your managers were having difficulty controlling costs. Eachweek, they conducted a physical count, comparing food inventories (tomatosauce, flour, cheese, beef, liquor, etc.) to the previous week, and thenadjusted for this week’s sales. But beverage and food costs were still abovegoal, 22 percent of revenues for beverages and 20 percent of revenues for food.The problem, as you discovered, was your management, all hired externallybecause of their extensive experience at established well-known restaurantchains. Their idea of leadership, learned in the “command and control” culturesof other restaurants, was telling people what to do. So, they had someone elseput in the inventory numbers, and when the numbers came out wrong, they didn’tdig deeper or ask questions to discover why.

In the end, withcosts up, revenues down, and lending standards tightening, the bank didn’tapprove the new construction loans. So rather than expanding, your immediatechallenge is to fix and grow the two Nick’s restaurants that you’ve got.Frustrated with your managers, you gave responsibility for reducing costs to a24-year-old who had worked for you since she was 16. She fixed the problem infour weeks by discussing the problem with the kitchen, wait, and bar staffs,who suggested immediate solutions to reduce costs.

Sensing that shewas onto something, you pulled together the staffs in both restaurants to makea financial presentation that showed in detail how and where Nick’s was earningrevenue and incurring expenses. After answering their questions, you asked fortheir help on three key issuespay, hiring, and training.Of course, everyone wants to be paid more, but with costs being an issue, arethere ways to pay people more but link those increases to the company’sprofitability and workers doing their jobs better and staying with the companylonger? If so, how? Next, because hiring talented workers is key in therestaurant business, how should Nick’s redesign its interview and selectionprocess to do a better job of finding and keeping the best kitchen, wait, andbar staff? What is it about interviews that doesn’t work and should beabandoned? If so, what should be done instead, and why? Finally, at mostrestaurants, training is simply shadowing experienced workers to see what theydo. So, what could be done at Nick’s to improve training that would help themdo their jobs better and to continue learning and improving over time?

Prepare a caseanalysis covering the following points:

1. Purpose-briefly state the purpose of thepaper, what will be covered and how.

2. Abstract

3. Introduction-give a briefintroduction of the case, stating the background and the key issues currentlyfacing the company.

4. Strategy-what strategy would you select forthe business? Cost leadership, differentiation, focus or a combination, and explainwhy?

5. Success Factors-Identify themost important factors for the success of this business and explain why eachone is important.

6. Business Goals-What would beyour most important goals for the business? Explain why these goals areimportant. Use the Balanced Scorecard to develop appropriate goals, measures,and actions in each of the four areas.

7. Leadership-What type ofleadership would you use in the business and explain why you feel that type ofleadership is appropriate for this type of business, the workforce, and thecurrent business situation.

8. Employee Selection-How would you findand select new employees for each of the key jobs? Explain why and theselection criteria you would use.

9. Employee Training-How would youtrain new employees and why?

10.Employee Compensation and Motivation-Given the competitive nature of the business, how would you compensateemployees and yet maintain the profitability of the business? Be specific andexplain what the costs would be? What additional things would you do tomotivate the employees to meet the business goals? Explain why you feel theywould be effective?

11.Business Controls- What type of business controls would you use to assure that the goalsof the business are being met? Explain why you would use each one. What type offeedback would you use and what corrective actions would you take if goals arenot being met? This should be based on the Key success factors and the BalancedScorecard.

12.Additional Actions-other actions you need to take to assure success?

13. OverallAssessment-based on the above plan, evaluate your odds of being successfulin meeting your goals and state why you are confident.

14.Summary and Conclusions-summarize the key points of the paper.

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