Operations Management Assignment

Assessing/Auditing Operational Capability:

The Gatsby

Berkhamsted England

December 2014

Rachael O’Bryan, Full-Time MBA Student 2014-2015

Operations Module, Anthony Mitchell

2,404 words

Rachael M. O’Bryan MBA 2014-2015 Operations 1 | P a g e

Executive Summary

This report presents the context for and outcomes of research and analysis undertaken to identify key stages, skills, performances measures, and factors during a recent experience with the service delivery of the Gatsby restaurant, which is located in Berkhamsted, England.

The recent experience of the service delivery at the Gatsby will show the reader the different factors throughout the evening, which indeed changed some of the perceived expectations of the service delivery. It will also give the reader insight into how the owner of the Gatsby, Nick Pembroke, focuses on running his restaurant.


Table of Contents

1. Introduction Page 4 2. Literature review Page 53. Analysis Page 63.1 Service Dimensions (RATER) Page 7

3.1.1 Approach3.1.2 Results3.1.3 Outcome

3.2 Service-Profit Chain Page 83.2.1 Approach3.2.2 Results3.2.3 Outcome

3.3 Customer Processing Operation Page 93.3.1 Approach3.3.2 Results3.3.3 Outcome

4. Conclusion Page 105. Recommendations Page 106. References Page 11Appendix 1- RATER Page 12Appendix 2- Q&A with Nick Pembroke, Owner of The Gatsby Page 13Appendix 3-Customer Processing Operation Page 18


1. Introduction

The Gatsby is a restaurant in England, and is specifically located in the Berkhamsted area. Residents of Berkhamsted are educated, and typically work in middle to upper management professional careers. The age market for the restaurant is relatively complex. There is a younger 20’s-40s crowd in the bar area, and mid 30’s and older in the restaurant area. The Gatsby is located in a competitive market, and competes with other high-end restaurants, like ZaZa’s in Berkhamsted. The following paragraphs come directly from The Gatsby’s website, and gives the reader a more thorough understanding of the operational goals, as well as the history of The Gatsby.

According to The Gatsby website, The Gatsby opened its doors in November 2005. Since then, the Gatsby has become the premier destination for fine food and drink in Hertfordshire and the surrounding area. According to TripAdvisor, The Gatsby is ranked #3 out of #51 restaurants in Berkhamsted. Their reputation is founded upon attentive service and a well-balanced menu, using the finest ingredients. The bar offers an extensive wine, cocktail and champagne menu in a relaxed and refined environment (Penny, 2005).

The Gatsby operates a strictly over 21's door policy after 6pm unless eating with adults in the restaurant. Children under the age of 18 are not allowed in the bar area. The Gatsby requires smart dress at all times including no sportswear, or outdoor work clothes /shoes, and smart appropriate evening footwear must be worn. The Gatsby has tailored itself to be more focused on high-end quality ingredients/food, which in turn, offers customers more of a special high-end, fine dining tailored service for the evening (Penny, 2005.).

The Head-Chef of the Gatsby, Matthew Salt, has created a French / European menu ranging from the classic to modern. All dishes are freshly prepared, using only the finest seasonal produce. Meat is provided by Aubrey Allen, the industry's premier butchers, and fish comes fresh daily from Billingsgate market. The Gatsby also offers an extensive cocktail list and comprises recipes both classic and modern, all using fresh ingredients (Penny, 2005).

This report documents the author’s work to identify the complete service process from start to finish; all the way from booking the reservation, to paying the check at the end of the evening. It will show what went well, and what needs to be improved. It will show this compared to three different models, which are the Service Dimensions-RATER, Service-Profit Chain, and Customer Processing Operation.


2. Literature Review

According to Tony Cram, author of The Finishing Touch, “The key to a successful service operation is to make an excellent first impression, manage customer expectations, build trusting relationships with your customers, handle queues and bad news, make every customer feel valued, generate long-term interest through innovation, recover from mistakes, and finally, leave your customers wanting more so they come back time and time again (Cram, 2010).

The output from most types of operations are a mixture of goods and services. Its outputs are a mixture of the tangible and intangible, a restaurant is a mixture of not only a service, but also a product (Slack, Chambers, & Johnston 2010).

The Service Gaps Model and SERVQUAL, first proposed in 1985, is a technique that can be used for performing a gap analysis of an organization’s service quality performance against customer service quality needs (Parasuraman, 1985). Five corporation gaps are normally found between users' expectations and perceptions (Federoff, 2014). They are the following:

1 - Not acknowledging what users expect to receive

2 - Not selecting the correct service project and standards

3 - Not providing the standard service

4 - Not matching performance and promises

5 - Established according to the four previous gaps

There are five dimensions of service quality. If providers get these dimensions right, customers will hand over the keys to their loyalty, because they’ll have received service excellence (Arlen, 2008).

The five SERVQUAL dimensions are:

TANGIBLES- Appearance of physical facilities, equipment, personnel, and communication materials

RELIABILITY- Ability to perform the promised service dependably and accurately

RESPONSIVENESS- Willingness to help customers and provide prompt service

ASSURANCE- Knowledge and courtesy of employees and their ability to convey trust and confidence

EMPATHY- Caring, individualized attention the firm provides its customers

In the analysis section, Service Gaps Model was not focused on because a data survey was not complied from The Gatsby. Therefore, the focus was on the individual experience in relation to the five service quality dimensions, known as RATER. This has been produced to show the reader where The Gatsby stands in terms of these five service dimensions of what my personal experience was for that evening. A full analysis is located in appendix 1.


The Service-Profit Chain is a theory and business model evolved by a group of researchers from Harvard University in the nineties. The Service-Profit Chain was developed to establish relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers (Heskett, Jones, Loveman, Sasser, & Schlesinger, 2008). The Service-Profit Chain has been utilized for analysis on the Gatsby’s servicing process, as described in the following sections. The Gatsby’s owner, Nick Pembroke, contributed to this model.

Another model used in this report is the Johnston variation, known as the “Customer Processing Operation” or CPO, which is not shown as a cycle or a map, but rather as a framework or checklist. The elements are useful in clarifying the stages of selection, point of entry, response time, point of impact, delivery, point of departure, and follow up (Bicheno, & Catherwood, 2005). Selection occurs when the customer decides between competing services. Point of entry is the initial assessment. Response time is the time taken to respond. Point of impact is the first point of contact and initial impressions. Delivery is the actual event of the service itself. Point of Departure focuses on any opportunities when the customer leaves. Finally, follow-up is the obtaining of feedback on satisfaction (Bicheno, & Catherwood, 2005). The Johnston “Customer Processing Operation” has been utilized for analysis on the Gatsby restaurant, as described in the following sections.

From the start of Universal Service Management, dating back to the 1960s focusing on ‘The Case for Redefining Services’, service organizations have changed their way of thinking. Top-level executives of outstanding service organizations spend little time setting profit goals or focusing on market share, the mantra of the 1970s and 1980s. Instead, they understand that in the new economics of service, frontline workers and customers need to be the center of management concern. Successful service operations pay attention to the factors that drive profitability in the new service paradigm: Investment in people, technology that supports frontline workers, revamped recruiting and training practices, and compensation linked to performance for employees at every level (Heskett, Jones, Loveman, Sasser, & Schlesinger, 2008). This method will be discussed in the analysis in terms of how The Gatsby is focusing on many of these aspects in their business.

3. Analysis

The following sections summarize the analyses undertaken. Each analysis is an original piece of work undertaken by the author for this study. Nick Pembroke, owner of The Gatsby restaurant, was interviewed, and contributed to the Service-Profit Chain analysis section.


3.1 Service Dimensions-RATER Analysis

3.1.1 Approach

In order to fully understand the service experience at The Gatsby restaurant, notes were taken throughout the duration of the service experience on November 14th, 2014, and the aspects of the

complete service experience have been identified and mapped against the five SERVQUAL dimensions.

3.1.2 Results The results of the analysis are summarized in table 3.1.2 below. A full analysis is located in Appendix 1.

Reliability

Assurance

Tangibiles Empathy

Responsiveness

0

5

RATER rating of The Gatsby-Figure 3.1.2

Personal Service Experience#REF!

3.1.3 Outcomes

According to my personal analysis from the experience that evening, The Gatsby positively stood out in many areas. From the start of booking the reservation, the restaurant was very reliable, and had given a reservation time as requested and when arriving to the restaurant, there was no queue for the table. The staff seems very knowledgeable and skillful when it comes to delivering the service. The physical appearance of The Gatsby is visually very appealing. Everything seems to be kept in an orderly fashion, and clean. The upkeep of the restrooms were great as well. When the cocktails took a while to receive, the staff was very responsive to turning that problem

around. The staff was empathetic, apologized, and understood it was a slip on their part. The staff wanted to fix the situation immediately. Overall, The Gatsby scores very well on their service dimensions.


3.2 Links in the Service-Profit Chain

3.2.1 Approach

To provide the reader insight as to what The Gatsby Restaurant focuses on in terms of its workplace design, employee satisfaction, loyalty, and productivity. This also focuses on the external service value The Gatsby works on to gain customer loyalty. The complete full analysis of the interview with The Gatsby’s owner, Nick Pembroke, is located in appendix 2.

3.2.2 ResultsThe results of the analysis are summarized in the table 3.2.2 below

-Satisfied, non-alienated staff, treated like family.-Sufficient, small personnel support

-Wide range of customer ages (bar vs. sit down restaurant)

-Employees most satisfied from the way The Gatsby handles tips, great earning potential

-Owner rewards employees solely by word of mouth, no cash incentive.

-Restaurant has an excellent retention, head chef was made a partner

-Right amount of retention= employees feel mattered, & paid well

-Employee productivity isn’t measured how it should be. It’s just a small, 1 owner run business

-The owner looks at how waitstaff is producing to how much he is paying them

-Doesn’t focus on measuring gaps in his restaurant because he believes there aren’t gaps, unless the customer tells him.

-He reviews TripAdvisors, all letters, & comment card

-Defines loyal customers by the repeat business he has, which is 75% of the business.

-No money spent on advertising, and relies only on word of mouth.

3.2.3 Outcomes

This analysis has shown that it is clear from the Service-Profit Chain table, as well as the interview with the owner of The Gatsby, that he relies on hiring the right staff, trusting his staff to have the upmost customer care and service; which in turn allows him to receive a constant flow of repeat customers, who makes his business a success and what it is today. Nick Pembroke’s restaurant is continually increasing in profits. In just 2 years alone, profits have rose 20%. He believes this is due to the staff he hires, because of his strict hiring guidelines. For the staff that are hired by Nick, there are strong retention rates, averaging from those working 2 years all the way to the existence of The Gatsby, which is over 9 years. Nick gives them a great tip structure, and a healthy working environment; where the staff are able to voice their opinions and concerns, which ultimately can lead to the further success of the restaurant.

3.3 Customer Processing Operation


Internal Service Quality

Employee Satisfaction

Employee Loyalty

Employee Productivity

External Customer Value

External Customer Value

3.3.1 Approach

To provide the reader insight into the complete service experience from start to finish. To show the reader the expectations I had before the start, to the reflections at the end of the service experience. This experience took place on November 15th, 2014. The completed full analysis is presented in Appendix 3.

3.3.2 ResultsThe results of the analysis are summarized in table 3.3.2 below

Selection Point of Access

Point of Entry

Response Time

Point of Impact

Delivery Point of Departure

Follow-up

Creation of Reshaping of Development of Reflections of expectations expectations perceptions perceptions/expectations

-The Gatsby understood the reservation time, where I wanted to sit & accommodated.

-Ease of entry into the restaurant.

-No waiting time conditions for a table & was sat immediately

-Staff was helpful for service, but not so knowledgeable on menu.

-Slow delivery times to receive the drinks that were requested.

-Staff saw the concern and apologized for the slow delivery time.

-Great measure of the quality of service provided for the evening from the staff.

3.3.3 Outcomes

This analysis has shown that through using the Order Processing Operation, it was an overall great service for the evening. However, there were issues in the delivery of the service. The point of impact, in terms of menu knowledge, had an issue as well. For the delivery of service, there seemed to be a disadvantage when it came to ordering a drink from the bar. The reason was because the bar seemed to be kept quite separate from the restaurant. When drinks were ordered, the staff had to wait long amounts of time to pick up the drink for the customers in the restaurant, due to the overflow of customers in the bar area, who were just there for drinks. The staff are well aware of this happening frequently, because the staff had voiced their opinions to me at the dinner table, when apologizing for how long it took to be served. Also, when asking the server about what type of food was served on the menu, she was a little hesitant on responding to the question. There was insufficient knowledge to answer the question. Therefore, one can assume, that the staff may not be as knowledgeable about the menu as they need to be. The highlight of the service experience was how friendly and accommodating the staff were, the intimacy of the venue, as well as the food presentation.

4. Conclusion


This study helps in enunciating a number of implications related to the service quality and the emphasis placed on employee and customer satisfaction, which leads to repeat business and higher profits. Based on the evidence shown from the analysis of my own experience in the service organization on November 14th, and the interview Q&A session with the owner of The Gatsby, the restaurant is a very successfully run business. According to the results of figure 3.2.2, the service-profit chain shows the owner has high employee loyalty because the employees have a sense of self-worth in the business, tips are great; therefore retention rates are excellent. Because there is employee satisfaction, the results of the Customer Processing operation in figure 3.3.2 shows the response time and point of impact for customer contact are connected. The staff is customer focused because of the tip structure the owner lays out, which is why retention rates are also high.

The importance level of reliability, assurance, tangibles, empathy, and responsiveness have a grave impact on customer loyalty. Because of this evidence found from both models, the customers keep coming back for more. This owner has had 20% increased profits 20% in the past 2 years. According to the analysis shown in figure 3.2.2 in the Service Profit Chain, it is clear that the priority starts with hiring good staff, giving them a good earning potential, and the ability to voice their concerns in the organization. All of this equates to happy workers, which in turn supply great service, making the owner very happy with the increase in profits he is seeing each year.

5. Recommendations

The following recommendations are made to The Gatsby owner and management team:

1. Look at how to brief staff on menu knowledge

2. Look into using American Express credit card as a method of payment

3. Look at how to incorporate the bar area and restaurant area better

4. Look into decreasing waiting times for receiving the drinks ordered

5. Look into how to get the pianist’s volume correct for the dinner and bar guests

6. Look into rewarding employee productivity

7. Look into advertising in order to gain new market share in other neighborhoods, other than Berkhamsted


6. References

Arlen, C. (2008). The 5 service dimensions all customers care about. Retrieved 11/25, 2014, from

http://www.serviceperformance.com/the-5-service-dimensions-all-customers-care-about/

Bicheno, J., & Catherwood, P. (January 2005). Six sigma and the quality toolbox. Buckingham, MK:

PICSIE Books.

Cram, T. (2010). The finishing touch: How to build world-class customer service. Great Britain: Pearson

Education Limited.

Federoff, P. (2014). The SERVQUAL model: Knowledge center. Retrieved 11/25, 2015, from

http://www.12manage.com/methods_zeithaml_servqual.html

Heskett, J., Jones, T., Loveman, G., Sasser, E. & Schlesinger, L. (July 2008). Putting the service profit

chain to work

Retrieved 11/25, 2014, from https://hbr.org/2008/07/putting-the-service-profit-chain-to-work

Parasurama, A., Zeithaml, V.A., & Berry, L.L. (1985). A conceptual model of service quality and its

implications for future research. Journal of Marketing, 49 (4), 41-50

Penny, H. Welcome to the Gatsby. Retrieved 11/25, 2014, from http://www.thegatsby.net/about.html

Slack, N., Chambers, S., & Johnston, R. (2010). Operations management (6th Ed.) Pearson Education

Limited.


Appendix 1- The Service Quality Dimensions (RATER)

Reliability

Assurance

Tangibiles Empathy

Responsiveness

0

5

RATER rating of The Gatsby-Figure 3.1.2

Personal Ser-vice Experience

Reliability: Dependable staff, and very accurate on terms of booking the reservation time when I wanted it. I wanted a reservation time that wasn’t available. I was called the following day by the host, notifying me of a cancellation, and letting me book the time I had requested. Upon arriving to the restaurant, I was seated immediately.

Assurance: The staff is knowledgeable on the way they treat the customers. The staff really seems to place the customer first. The waitress I had, could’ve been a little more knowledgeable on the menu, but the service was excellent.

Tangibles: The physical appearance of The Gatsby is one of the best features. It’s very visually appealing. The upkeep is great, everything seems tidy, and in order. The restrooms were kept very tidy as well.

Empathy: As soon as something went wrong within the service aspect, the waitress apologized because she knew it was a mistake on their end. She understood my needs were not being met at the moment.

Responsiveness: The waitress were very empathetic and wanted to help immediately when a situation within the service did not go so well. She asked if there was anything she could do.


Appendix 2- Interview Questionnaire with the Owner of The Gatsby restaurant, Nick Pembroke

1. What are the challenges in providing quality service, and in general, what are main challenges you face and how do you overcome this?

- 1st challenge is staffing and the problem with retaining good staff is that the earning potential for wait staff isn’t high. Servers don’t make as good of a living as those, say in the U.S. You rarely find people over 28 years old as wait staff because the owner believes that most are too good for it.

- 2nd would be customer satisfaction and this leads from the #1 problem. If you don’t have great wait staff, this can come to lose the restaurant returning customers and profits in the long run

- To overcome staffing issues…wait staff are actually tipped very well at the Gatsby and it’s an advantage over many of the other restaurant and bars in Berkhamsted. There is a good earning potential at The Gatsby. The owner doesn’t hire “any old Jo”, usually only 1 out of 10 applying makes the cut to be wait staff. The owner hires only quality staff (gave an example of the different types of people that work at Tesco compared to those at Waitrose). The owner does not share tips at all. It’s extremely fair, staff gets cash tips, and nothing goes to the owner for that. Staff keeps all tips and splits some with the kitchen staff

2. How do you train your FOH/BOH staff and management?

- There are 30 total staff members. 10-15 wait staff work full time. The majority of those working there, have just got out of University. There are 4 managers (restaurant, bar, events, chef). There will be 2-3 days training where they will serve tables, bar customers, learn the menu inside and out, and learn the history of The Gatsby. It generally takes the wait staff 2-3 weeks to settle in, but they generally all step up to the plate after that. The staff is like a community, so if there is someone night fitting in to the standards The Gatsby has set, they usually will not stay.

- In terms of staff management, they are focused on remembering customers’ names, where they like to generally sit and eat. There is a huge repeat business. Most of the management started out in the restaurant or bar staff. Training for the management is on-going day to day. Management are there just to be the problem solvers. The owner challenges them to sort out the problem themselves, because that is what they’re there for.

3. Does your staff provide you feedback at all, in terms of how everything is going?

- One of the big things at The Gatsby is the staff and customer feedback. The owner is very open to offers, he doesn’t run a dictatorship. He’s open for managers, staff to come up with ideas and solutions. Over half of the place success is due to staff’s ideas and comments.

4. When creating the new menu, because I heard you change it for every season, how do you select it and what is the criteria?


- Selection is actually quite easy. It is all left up to the chef to determine what the new menu will be. The owner plays no part in this. The selection is usually based on what’s in season and what is available. For example, asparagus season is more in April and May and that’s when the chef decides that that will be more focused on the menu. It has to be a balanced menu with meat, fish, veggies, pasta, etc. There are 8 entrees and 8 appetizers on the menu, constantly. The update of a new menu is usually 3-4 times a year.

5. How do you deal with bad news?

- They try to not make excuses, but compensate with the customer if it really is a genuine issue. The complaint on food average is only 1 time a month. An actual written complaint happens usually only 1 time every 10 months. When they receive a complaint by mail or on a comment card, which they issue these out to customers when paying the bill, they will always be address. The Gatsby will phone up or write to the customers that had a complaint. Many times they invite the customer that had a bad experience, back to a dinner.

6. How do you make customers feel important?

- The basis of our customers happen to be regular, repeat clientele. It’s very important to keep their business and keep them coming back for more. Less is more here at The Gatsby. Customers generally feel most appreciated at the restaurant when they are remembered and welcomed by the owner and management. The owner is always around each Friday and Saturday and will make it apparent to greet those he knows and to thank them for returning. Customers enjoy the remembrance, and also how staff remember where they like to sit and what they enjoy to eat.

7. Do you have any customer service data to share?

- The best customer service data out there that the owner uses is TripAdvisor. He looks daily for The Gatsby’s rankings, and comments from the reviewers. This will generally give him the knowledge on what is going on with his restaurant and key areas he may need to change, or also those key things that are going well.

- The Gatsby also uses customer comment card as feedback. This card is given to the customers when they are paying their bill at the end of the night. It simply asks how the evening went for them, and asks for the name and e-mail address. The Gatsby has already received over 10,000 of these cards throughout the start of the restaurant 9 years ago. Out of every 100, Nick states that 98 are positive. Also, of the complaints he does receive, he stated usually on 10% of those you can actually act on. Some of the complaints he has received aren’t really valid. An example was when a customer had written a complaint saying to change every section of floor in the restaurant to carpet so it can mute out the sound of the piano. That wouldn’t be a valid customer issue to solve and act upon.

8. What are the biggest positives/best things continuously occurring in your restaurant that you see?

- The biggest positives for nick is his staff retention, and how good/productive his staff is. An example was this past week on a Saturday night, happened to be one of the busiest nights of


the year. The restaurant seated over 140 covers for the restaurant and another 200 people in the bar area. The money spent that evening from the customers were excellent and there were 340 satisfied customers, many who wrote out positive comment cards. This all happened with just 20 people on staff for the evening. To Nick, that’s a huge complement for his business.

- Also, in terms of profits, the restaurant is increasing in profits year after year. In the past 2 years there has been a 10% increase in profits, every single year. That means for the year end of 2014, there has been over a 20% increase in profits in just 2 years. That is impressive.

9. How are the aspects of the service and quality standards specified? Do you have a set of rules/standards to “live by” by the Health Association and they check you every so often to see if you are abiding by them?

- There is an EHO, Ethical Health Organization and a local council that comes in now only 1 time a year. You usually never know when they will arrive. There is a scale of marking up to 5 as the highest and best and 1 as the lowest. The day the EHO inspects is the day that the markings will be available for customers to see. The Gatsby is ranked the best, 5/5 for this year, 2014.

10. Finally, it is said that service operations that make an excellent first impression, manage customer expectations, build trusting relationships with your customers, handle queues and bad news, make every customer feel valued, generate long-term interest through innovation, recover from mistakes, and leave your customers wanting more so they come back time and time again…defines a top, successful business. How do you feel about this, and are you doing these things to stay in business? Do you see some of these not mattering so much? Could you give me examples of what your business is doing on some of these?

- Nick believes that the first impression is key. Doing the little things and going the extra mile, such as putting the candle in someone’s cake, having the piano player play happy birthday, is what he wants his restaurant to focus on. To him, that’s what the customers keep coming back for. Nick stated that 75% of his customers are repeat. With this staggering figure, he urges the staff to start to remember these people, and what they like. He focuses on innovation, such as updating and changing the menu, in order to get the repeat business. Nick has been innovative in adopting a catering company for the Gatsby, and has hired a catering manager for this. The Gatsby catering is about 5-10% of the business as of now, but it is growing. Lastly, Nick stated that the bottom line is profits but if you focus first on the key things I described, profits will come.

Links in the Service-Profit Chain

1. Internal Service Quality (ex. workplace design, tools, who are the customers? Tech and personnel support, is it sufficient?):

- The workplace design is overall a place where staff is satisfied, tasks aren’t always repeated and staff doesn’t feel alienated. The staff is treated like family, and as a whole, everyone gets


along with one another. It’s an extremely productive environment, where staff are thanked personally by the owner, for an over the top job well done.

- The customer age segment of The Gatsby is quite varied. There a 2 businesses in 1. The bar area gets a younger crowd around 23-50 years of age. The restaurant gets an older crowd, with average starting age of 32, all the way up to 80 years of age. The owner stated that the personnel support is sufficient for his small business. He has just the right amount of full time staff, as well as 1 accountant which works annually only, and 1 bookkeeper, who works week to week.

2. Employee Satisfaction (selection criteria geared to what customers believe to be important, reward employees based upon customer satisfaction, loyalty, etc.):

- Employees are most satisfied at The Gatsby from tips. The tips system is done all in cash. Wait staff receives over half of the tips, and the remaining percentage goes to the kitchen staff. The owner states that the wait staff is here for the tips, because there is great earning potential. The owner recognizes those that are doing well. He will take them aside to the office and thank them. However, he does not offer any sort of incentive, such as bonus, or extra hours for his wait staff. After speaking with the owner, he has decided to look into rewarding his employees more.

3. Employee Loyalty (what is the right level of employee retention? How do we gain commitment with contracted out services, or supplier partnerships?):

- The owner did state that the restaurant has an excellent retention, compared to the industry standard, and he provides a great environment to be in. For example, his head chef, junior sous chef, and restaurant manager have each been at The Gatsby for 9 years, since it has opened. The rest of his main staff, including the sous chef, bar manager, and senior waiter have all been at The Gatsby for over 4 years each. The Head Chef was made director of business and the owner started a pension, private healthcare for his entire family, and a good bonus scheme as well.

- The owner states that the right level of employee retention would be to generally create a great, fun environment to work in, that also supplies the staff with a wonderful opportunity to make a decent amount of money. He also states that the staff need to feel welcomed, and an integral part of the company. He listens to his staff and takes their feedback to heart.

4. Employee Productivity (how is it measured?):

- The owner went on to state that is company is not really a stats figured business. In the grand scheme of things, it’s a relatively small independently run business, and it’s under the ownership of only 1 person. The owner stated that if he were to open another business, which he is looking into at the moment, he would completely have to change the way he is measuring stats in all aspects of his restaurant and measure the productivity of his employees.


Now, the owner looks at how much his staff has produced compared to what he is paying them. Food stock counts are looked at once a month, and liquor stocks only once a year. The staff isn’t focused on “upselling” to the customer. The owner argues that the restaurant doesn’t do this method as much as they should. The main focus the owner places on his restaurant is customer satisfaction.

5. External Service Value (How is it measured? Ex. Results achieved for the customer. Do you measure gaps in service delivery, customer expectations, and company perceptions? How info is shared w/those responsible for designing the service? Do you respond to letters/complaints?):

- The owner states that he isn’t really constantly focused on measuring gaps in the service delivery. He relies on the customer telling him, which he says happens very frequently because he is a local owner and lives in the town. He knows many of his customers that come into the restaurant. He also tries to pick up reviews on TripAdvisor, as well as the comment cards that customers leave at the end of the evening. Every week there will be a staff meeting and the owner will go over last week’s feedback he’s received from customers, including the high’s and the lows if there are any for that particular week. Every complaint is responded to in the form of a phone call, e-mail, or hand written letter.

6. Customer Loyalty (How do you define loyal customers? Do measure of customer profitability include referrals? What proportion of business development and investment is spent on keeping existing customers? Why do customers leave? Is customer satisfaction info gathered objectively, consistently, and regularly?):

- To the owner, this was the easiest question I asked him. He believes that almost every customer he has coming through the door, is a loyal customer. At least 75% of his business are repeat customers. Every night he is there, he knows from 1/3 to ½ of the people in the restaurant. Those loyal customers are the people not only he recognizes, but more importantly the management recognizes. His loyal customers come in on average at least 1 time every 2 weeks. Those loyal customers have referred others to come. Every so often, the owner will also compensate the regular customers, by a free dinner that evening. There is nothing spent on advertising. The only advertisement he considers to count, would be The Gatsby website, promoting the business. The owner simply relies on word of mouth for his business. So, there is no investment being spent on keeping existing customers. He bases the investment being on the service is good enough that people will come back, and they do.

- The only reason he feels that customers may leave or never even try The Gatsby could be from perceptions they may have. Those perceptions could be that people feel like The Gatsby, because of the way the restaurant looks and was set up, to be overpriced, when in fact it’s actually not. Others may feel uncomfortable in a formal environment, or possibly others had a bad experience and didn’t relay this to the restaurant so they could fix the issue.


Operations Management Assignment

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