“My Compliments to the Chef, er, Buyer“ Operations Management Prof. Ying Jiun Hsieh Papaya Milk: Jason, Jimmy, Nick, Rachel, Richard, Sandy

Outline Case Introduction Question Discussion Conclusion Questions and Answers

Case Introduction How they are able to serve everything on that menu quickly Flash-frozen and vacuum-packed Top- quality restaurants like Fuddruckers and Perkins are going the outsourcing route Taglines such as “Hours versus ours” and “Just heat and serve”

What can be outsourced? Delivery of ingredients Preparation of the food Food arrangement Others: Accounting and payroll services Kitchen cleaning Laundry Advertisement and marketing IT (website maintenance)

Question Discussion Question 1 Explain the meaning of the phrase “Hours versus ours.“

“Hours versus ours“ Consumer-goods companies such as Sara Lee, Land O´Lakes used slogans as advertisement “Hours versus ours“, “Just heat and serve“ Stimulate B2B-relationships with restaurants timely serving capability of restaurant businesses can be increased Encourage restaurants to outsource business operations

Outsourcing vs. In-House Capacity planning to identify requirements “Hours“: Outsourcing to save time, increase profit “Ours“: In-House solution to control quality

Example Outsourcing vs In-House Fast casual restaurant - Fuddruckers In-House Burger Preparation meat, bread, toppings, sauces Toast bread, grill meat/cheese Assembly Burger (bread, meat cheese, toppings) Service Outsourced Burger Receive meat, bread, toppings, sauces Toast bread, grill meat/cheese Assembly Burger (meat, bread), toppings choosen by cutstomer Self- Service Time Fast casual restaurant is a type of restaurant that does not offer full table service, but promises a higher quality of food and atmosphere than a fast food restaurant

Question Discussion Question 2 What advantages are there when restaurants outsource?

Advantages of outsourcing in restaurant Improve efficiency Save time to prepare or manufacture materials Cost saving Labor cost Operating cost Improve productivity Expertise Avoid time consuming of training employee Demand Wide fluctuation in demand

Question Discussion Question 3 What are some important disadvantages or limitations of outsourcing for restaurants?

Disadvantages of outsourcing in restaurant Quality consideration How to monitor the quality of the food material Risks Loss direct control of operation Delay in delivery Quality defects Taste (loss of freshness) Damage to the organization’s reputation Losses customer’s reliability

Question Discussion Question 4 Do you consider restaurant outsourcing to be dishonest? Unethical? Explain.

In our opinion We focus on restaurant -can provided food faster -capability-price-ratio -feature -health * If the restaurant can suit our demand we consider it is ethical

Restaurant outsourcing 1. Advantage -reduce product cost (low price) -increase business efficiency (faster) -focus on core product (feature) 2. Heath (safety of the food )

Question Discussion Question 5 Does restaurant outsourcing increase capacity? Explain.

Measures of capacity 1.Restaurant capacity = inputs / outputs -Inputs = number of tables , seating capacity -Outputs = number of meals served per hour 2.Outsourced part of cooking process can increase output measures Shorter lead time Increased number of meals served per hour

Take macro view It’s important to consider how parts of system related. - if the restaurant have high productivity because of outsourcing,but don’t have enough inputs to serve customers is not good. ex: to add more tables and seats

Conclusion Control 100% of your core, outsource everything else. Don’t open a restaurant if no one can cook! Customer review: “Unfortunately everything we ordered was from a frozen box and then deep fried. At least it was all served hot (from the deep fryer) except the burger which was the Costco style claw burger on a stale bun. Everything unimaginatively warmed up, ...just heat and serve. Even the burger condiments seemed tired!”

Questions and Answers

References Operations Management by William J. Stevenson (11th Edition). http://www.tripadvisor.ca/ShowUserReviews-g2086961-d3846663-r152832353-Sandy_s_Family_Restaurant-Mildmay_Bruce_County_Ontario.html http://www.makingthingsoutofnothing.com/post/42502126421/control-100-of-your-core-outsource-everything-else