Sparkles Restaurant in Melbourne - Operations - Case Study Example

Sparkles Restaurant: Operations Report Executive Summary The operations report for Sparkles Restaurant in Melbourne is based on three key areas: current and future trends in the industry, products and services offered and the operations plan for the new restaurant. In order for the feasibility of the new restaurant to be determined, detailed information about the three key areas is evaluated in terms of costs and availability of resources. This information is summarised as follows. For the trends in the industry, it is seen that the issue of general shortage in the supply of skilled labour will continue to affect the hospitality industry in Australia. However, with predictions indicating a general rise in the demand for services offered by restaurants, cafes and other service providers, the hospitality industry in the country is set to experience significant growth over the next few years. About products and services, Sparkles Restaurant will provide a variety of dishes to its clients. In addition to this, different kinds of beverages and alcoholic drinks will be offered to clients. This wide range of products will represent the business model of the restaurant which is a combination of the attributes of a traditional sit-in restaurant and those of a quick-service one. The operations plan for Sparkles Restaurant covers a number of issues. Concerning the physical presence, it is seen that the restaurant will operate from a rented premise located in downtown Melbourne. This will take advantage of the high level of human traffic in Melbourne while minimising start-up costs. The layout of the restaurant will be done to allow operational ease and maximum utilisation of resources. For processes and supplies, the restaurant will model its business operating hours, service process and material planning on the benchmarks already established in the industry. The same standards will be applied when managing the human resources of the restaurant. Care will be taken to ensure that the employees are subjected to proper working conditions and are remunerated in accordance with industry standards. Finally, the feasibility of Sparkles Restaurant is determined by the ease with which all regulatory requirements can be complied with. It is seen that all the licences and permits necessary to run the business can be easily obtained from both regional and national authorities. In conclusion, Sparkles Restaurant is seen as a viable idea since the proposed products and services can be offered to clients at a relatively lower cost. Table of Contents Introduction This is an operations report for Sparkles Restaurant, a new business set to open in downtown Melbourne, Australia. In the report, information about the general trends in the industry and the products and services to be offered by the new restaurant is presented. The report also contains comprehensive information on the operations plan for the new restaurant. This is followed by a technical feasibility of the idea to determine its viability. Business and Industry In general, the hospitality industry in Australia is characterised by leading restaurants and other service providers who have made a mark in the world in terms of the quality of food and the level of services offered to clients. It is because of this that the hospitality industry in the country has served as one of the major attractions for foreign and local tourists to the country over a long period of time. The vibrant tourism sector has therefore developed hand-in-hand with the cafes, restaurants and other take-away food service providers (Service Skills Australia, 2012, p. 3). There are several current and future trends which define both present and future challenges for players in the industry. One of them regards the issue of labour relations in the industry. Although the global tourism industry has been facing a general crisis with regard to labour supply, the situation in Australia is made severe by a shortage of matching skills to serve the industry (OECD, 2012, p. 122). This is witnessed in terms of the number of employees that restaurants and catering services employ in the country and the corresponding high rate of turnover. This is as a result of a shortage of skills which has been a perennial problem in the industry (Richardson, 2010, p. 131). On the positive side, there is a generally positive outlook for the industry. This is shown by the average annual turnover for players in the industry which has been rising over the last several years (Service Skills Australia, 2013, p. 5). This is important in shaping the profitability estimates for the proposed business, thus determining the time taken to break even. There are several reasons that make the proposed restaurant a feasible and potentially successful venture. These factors form the external forces that define and shape the industry in which the restaurant is set to operate. To begin with, increased pressures of professional lives are making it necessary for many individuals to seek the services of restaurants and general cafes for food. As such, the proposed restaurant will fill this void by providing both sit-in and take-away services to clients. The second one is that there is a rising trend in the percentage of Australians who are having their meals in places other than their homes (Brindal, 2010, p. 14). Since people have less time to prepare their own meals at home, Sparkles Restaurant will capitalise on this market trend by providing a host of different and appropriate services to the clients. The third one regards the factors that define and differentiate the country’s restaurants and other food service providers from the others. Excellence in different areas such as food preparation, overall management and drink services has been a necessary component of the success of restaurants and food service outlets in the country. The proposed restaurant is set to take these factors into consideration. Products and Services Sparkles Restaurant will combine the aspects of a traditional restaurant with those of a fast-food or take-away cafe. Because of this model, the restaurant will offer different products and services to clients. These are described as follows. To start with, the restaurant will offer a wide range of meals. The meals will be defined by the need to match menu items with changes in the general demand and current trends in the industry. Basically, the items on the menu will reflect diversity in terms of different cuisines as required by the clientele. In order to offer different kinds of meals, the restaurant will engage in different kinds of activities. This will include purchasing, storing, preparing and serving different food products. These activities will be carried out in such a manner that the highest levels of standards of quality, safety and efficiency are met. The second category of products that will be offered at Sparkles Restaurant is beverages, specifically coffee. Since the restaurant will have its own coffee maker, it will be possible to procure coffee beans of the highest quality and thus offer to customers a variety of coffee drinks of the highest quality and taste. This will cater for the needs of the sophisticated clientele that will be composed of professionals working in the downtown area of Melbourne city. The third category of products and services that will be offered by the proposed restaurant includes traditional alcoholic and other non-alcoholic drinks apart from coffee. By offering a wide range of these products to clients, coupled with a good ambience, it is expected that the restaurant will meet the demands of the modern clients who require a good place to have a drink as they wind up. The products and the location of the restaurant will offer a perfect setting for professionals in the central business district to conduct their business meetings under ideal conditions. Operations Objectives The objectives of Sparkles Restaurant will cover a broad range of issues. They are highlighted as follows. 1. To offer to clients a wide range of dishes which represent the cultural diversity of Melbourne and Australia in general. 2. To offer a relaxed and memorable dining experience to customers looking for such conditions within the city. 3. To develop effective strategies that will enable the restaurant to capitalise on its competitive advantages and achieve both short-term and long-term profitability. It can be seen that the various operational objectives for the proposed business tie with the competitive strategy that will be pursued. In general, by differentiating its services, it is hoped that Sparkles Restaurant will break even in the market in the shortest time possible and achieve sustainability over the long-term. Physical Presence Premises The premises for Sparkles Restaurant will be acquired on the basis of a lease. Although there are several other alternatives including purchase, building the premises and acquiring it through a lease, the last one is a viable option for the proposed restaurant. There are several reasons for this. It has already been stated that the city of Melbourne is experiencing a high rate of growth. With this comes a rise in the prices of properties. For instance, currently, the percentage area of the city covered by restaurants and other food service outlets stands at 40% (City of Melbourne, 2013, p. 53). Therefore, the rising cost of property in the city coupled with the source of financing for the proposed restaurant makes it necessary for the restaurant to operate from a leased premise. Location plan The location of a restaurant business is important since it affects not only the operations but also the pricing strategy pursued and overall performance of the restaurant (Dopson & Hayes, 2010, p. 247; Nankervis, Miyamoto, Taylor & Milton-Smith, 2005, p. 225). The proposed restaurant will be located within the downtown area of Melbourne. There are several advantages that come with locating the restaurant within the central business district of the city. To begin with, the high level of traffic in the area provides a stable and sustained flow of customers. According to the city’s strategic plan, it is estimated that over 800,000 and 500,000 persons visit the city every single weekday and weekend respectively (City of Melbourne, 2013, p. 4). The second advantage is the rapid growth that the city of Melbourne is experiencing in general and the hospitality industry in particular. It is observed that with the rapid growth of the population in the city, the demand for a variety of food service is on the rise (City of Melbourne, 2013, p. 24). This is represented by an increase in the number of establishments in the city from the original 2600 facilities back in 2012 (City of Melbourne, 2013, p. 25). On the hand, one key disadvantage of the locating the proposed restaurant within the CBD of Melbourne is the exposure to high competition from established restaurants already operating in the area. However, with the right unique selling proposition, the restaurant is expected to break even in the market to successfully compete with the other restaurants currently operating within the area. Facilities planning For effective operations of the restaurant, several machines and equipment will be obtained and maintained over a long period of time. The following is a list of the machines and equipment required to begin operations as well as the method of acquisition and estimated costs. The list also takes into account the possibility of expansion of the business within the first five years of operation. 1. A small commercial kitchen with all required fittings and facilities. The technical specifications of the kitchen will be determined by the operational capacity of the kitchen. The size is appropriate in that it will cover the possibility of an expansion in the first five years of operation. 2. Furniture. Ten standard dining tables and 30 chairs will be purchased at the outset of operations. These pieces of furniture will be replaced in the event of breakage and other irreparable damages. 3. Kitchen utensils. These will include crockery, cutlery and linen that will be used in the operations of the restaurant. About 50 identical sets of these pieces will be purchased. Replacements will be done as soon as need arises. The restaurant will also have dispensers for the different types of utensils and other items required for service operations. 4. Desktop computers and a point of sale machine. The desktop computers will be purchased at the current market rates. Also, the computers will have all the relevant restaurant management software installed. The software will be used to manage a broad range of operations including the following: inventory, customer database, human resource functions and sales. The point of sale equipment will be maintained while the software will be updated when need arises. This will be linked to the accounting system software used by the restaurant. 5. Cupboards, working benches and sinks. These will be used for storage and other relevant functions in the operations of the restaurant. They will be purchased from the market and replacements will be made whenever need arises. 6. Coffee maker. This will be purchased from the market. It is estimated that the machine will take a considerable length of time before the need for a replacement arises. When purchasing the different machines and equipment, several factors will be considered. This will include the price, quality and availability of spare parts and maintenance services. Operations layout Theoretically, there are several types of layouts that can be adopted. Depending on the type of the business, the adopted layout may focus on the process, the product itself or on the marketing activities of the firm (Pycraft, et al., 2000, p. 254). Additionally, although there are many objectives which are pursued by developing an appropriate layout, one important objective is locating all the different units of a firm in such a manner that the total cost of handling materials during operations is minimised (Panneerselvam, 2012, p. 633). For the proposed restaurant, the layout will incorporate different units on the floor of the restaurant that will be linked to each other physically for ease of operations. Basically, the restaurant will comprise the following units: the kitchen, dining area, storage section, accounts department and the food counter. When designing the layout of the proposed restaurant, several considerations will be taken into account. To begin with, the layout is designed in such a manner that there is adequate space for each separate unit. Adequate space is necessary for mobility, efficient operations and overall attractiveness from the ambience created. Secondly, the layout is based on the need to provide adequate space for operations in the kitchen. Since the proposed restaurant will incorporate café and take away services in addition to the traditional sit-in services, it is projected that there will be a lot of operations in the kitchen as well as in other locations. This calls for adequate and ergonomic spacing. Sketch indicating the layout plan for the proposed restaurant Processes and Supplies Service process The following is a diagrammatic representation of the general flow of operations at Sparkles Restaurant. Flow chart to explain the various stages of service delivery at Sparkles Restaurant It can be seen that this is a basic outline of the process of service operations that will be carried out at the restaurant. In practice, many of these steps will involve complex operations such as reservations, serving of salads, starters and the main menu (Mahadevan, 2009, p. 70). In addition, throughout this operation, the staff will be interacting with the customers. All these factors will be taken into consideration when operations at Sparkles Restaurant begin. Materials planning The supply of materials for the restaurant will take into account several issues. Theoretically, supply of materials is an important aspect in the supply chain process of a firm because it determines the flexibility, efficiency and overall success of the operations of a firm (Cordon, Halt & Seifert, 2013, p. 82). For the case of Sparkles Restaurant, supply arrangements will be made with all potential suppliers who will be selected based on the prices, reliability and quality of supplies offered. Contract arrangements will be made with the selected suppliers who will be required to meet the different supply needs of the company in time and reliably. Business and operation hours Sparkles Restaurant will operate on a seven-days-a-week basis. During the days of operations, the business will open early enough to serve breakfast and close late enough to cater for the needs of clients who may wish to have dinner and other meals late in the night. For the section that sells alcoholic drinks, its hours of operation will be in accordance with specific regulations in force in the country. For the business to operate effectively following the proposed times, there are several factors which should be taken into consideration. One of them is the availability and capacity of the employees to keep the schedule of operations. As it will be seen in the human resource plan, the proposed restaurant will have a number of employees sufficient to cover the hours of operation during which the proposed business will be operating. The second factor regards what is already happening in the industry. Since it is common knowledge that restaurants operating in downtown areas need to be flexible enough to cater for the needs of customers, the proposed restaurant will be obliged to operate as the rest of the competition. Another factor that influences the decisions on the operating hours of the business is the need to take care of the needs of the employees, most important of them being the need to promote the attainment of a work-life balance relationship in their lives. It can be seen that industrial relations in Australia, just like in the other developed countries, is characterised by work-life balance programmes (Wibbeke, 2010, p. 214). It is in consideration of the factors discussed that the proposed restaurant will operate from 7:00 in the morning to 10:00 at night every day of the week. However, the timetable for the workers will be different. Employees will operate in two shifts, each lasting for approximately nine hours: from five in the morning to three in the afternoon and from three in the afternoon to midnight. These operating hours for employees will enable the restaurant to operate within the proposed business hours effectively. Human Resource Planning The human resource of Sparkles Restaurant will be composed of a total of ten employees. The number is informed by the sitting capacity of the restaurant and predictions about the level of activity that will be witnessed during the first several months of operations. All the employees will be employed on a permanent basis and will be recruited based on their possession of appropriate skills. The skill areas desired in the employees include food preparation, customer service, front office operations and general management. Training and general working conditions for the staff will be taken into consideration to ensure that the highest levels of standards are maintained. One most important thing will be ensuring the conduct of the staff meets the regulations regarding food and safety. Such regulations are contained in the following legislations: (1) The Food Act of 2001, (2) Food Regulations 2002 and (3) Food Safety Standards. They cover diverse areas such as food safety programmes, safety practices and general requirements on food handling (FAO, 2002, p. 102). The management of Sparkles Restaurant will ensure that the members of staff are appropriately trained and well equipped to observe the various safety and health standards provided in the legislations above. The issue of employee performance is an important aspect for the success of a firm because it is directly linked to the profitability and productivity of the firm. This is of great importance in the hospitality industry since firms operating in the industry have been characterised by a high rate of employee turnover (Pizam, 2010, p. 345). Because of this, there are several measures which have been developed to evaluate the performance of employees in the industry. One important feature of the measures is that they seek to evaluate the contribution of employees in generating value for the firm (Wober, 2002, p. 31). For Sparkles Restaurant, the performance management of the employees will be done in such a manner that their effort in creating value for the restaurant will be gauged using performance appraisals. The employees will also be offered several benefits at the place of work. This will be in accordance with the current trend in which employees are offered a wide range of benefits under the total reward management approach (Shields, 2007, p. 318). To begin with, their remuneration will be based on competitive market rates and will be influenced by their level of skills and experience. This will average at $50,000, depending on the position held by the employee. This will be done in reference to benchmark standards established in the industry. Apart from this, the management of Sparkles Restaurant will ensure that the members of staff are registered with the Work Cover programme as a means of insuring them against the possibility of an injury or illness while on duty. Other benefits will include a superannuation guarantee and PAYG processing. Regulations Since Sparkles Restaurant will incorporate the services of a traditional restaurant with those of a quick service one, its operations will have to comply with a number of different legislative requirements. These regulations, which take the form of licences and permits, are developed and enforced by different administrative zones including the state and the city. To begin with, since the restaurant will also sell alcoholic drinks, there will be need to obtain a liquor licence from the authorities (Enterprise Melbourne, 2014, n.pag). As per the requirements of the liquor licence and general regulations concerning the sale and consumption of liquor, the management of the restaurant will ensure that the person responsible for the department is well trained and conversant with all the regulations. The second regulatory issue regards the use of the premises. Since the restaurant will be established in a leased property, no special licences will be required. The only requirement will be issues to do with the cost of the lease in terms of the fees for the solicitors, the rent and fees for the real estate agent. However, the need to put up signage a means of advertising will require Advertising Signage Approval from the city authorities (Enterprise Melbourne, 2014, n.pag). Also, since the business will operate as a sole proprietorship, the only licence required for the process of registration is the Australian Business Number. In addition to the aforementioned regulatory conditions, the management of Sparkles Restaurant will be required to obtain the necessary certification from the local authority to be able to sell food and beverages. This will be in the form of a licence to permit the preparation and sale of food and beverages. Lastly, since the restaurant will discharge waste to the public sewerage system, an application for the Approval to Discharge Trade Waste licence will be made to the local authority (Enterprise Melbourne, 2014, n.pag). Conclusion From the information presented, it can be seen that the idea of establishing Sparkles Restaurant in downtown Melbourne is a feasible one. This is because the resources required to provide the desired services to clients at a reasonable cost are available. This assessment is applicable to the following functions: (1) human resource planning, (2) processes and supplies, and (3) the physical presence of the restaurant. As well, it can be seen that it is practical to comply with all the legal requirements governing the hospitality industry in the city of Melbourne. This makes the idea of Sparkles Restaurant a feasible one. References Brindal, E. (2010). Exploring fast food consumption behaviours and social influence. PhD Dissertation. Faculty of Health Sciences, University of Adelaide. Retrieved from http://digital.library.adelaide.edu.au/dspace/bitstream/2440/62481/1/02whole.pdf City of Melbourne (2013). Melbourne retail and hospitality strategy: 2013–2017. Retrieved from https://www.melbourne.vic.gov.au/enterprisemelbourne/industries/retail/Strategy/Documents/Retail_Hospitality_Strategy_2013_17.pdf Cordon, C., Halt, K. S. & Seifert, R. W. (2013). Strategic supply chain management. New York: Routledge. Dopson, L. R. & Hayes, D. K. (2010). Food and beverage cost control. Hoboken: John Wiley & Sons. Enterprise Melbourne (2014). Register a new food business. 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