Question

Sunshine Enterprises Case Study

“I think the waiter wrote in an extra $25 tip on my Sunshine Café bill after I received and signed my credit card receipt,” Mr. Mark Otter said to the restaurant manager, Brad Gladiolus. “Mr. Otter, mail me a copy of the restaurant receipt and I’ll investigate,” responded Mr. Gladiolus. “I don’t have the receipt—I lost it—but I have my monthly credit card statement,” replied Mr. Otter. Mr. Gladiolus hesitated, then said, “Mr. Otter, I don’t see any way to investigate your claim, so there’s nothing I can do.”

Mr. Gladiolus sat down at his desk and sketched out possible causes of this service upset as follows:

The customer is responsible for adding the bill and tipping properly, writing legibly, retaining the second receipt, and drinking alcohol responsibly.

The employee is responsible for typing the bill in the register/computer correctly, going back to the customer if the tip is unreadable and verifying the correct amount, and being honest.

The restaurant manager is responsible for investigating the store’s receipt history and finding this transaction; auditing the source of the error if possible, such as a mistyped decimal or extra zero; and contacting the credit card company and customer to resolve the issue.

The credit card company, a third-party provider in this value chain, is responsible for providing records of the electronic transaction, helping resolve the issue, and issuing a debit or credit to the customer and/or restaurant if needed.

Company Background

Abby Martin’s parents came to Florida from Chicago in the 1960s. Her parents bought land in the Cape Coral area. Later they opened a hotel on Fort Myers Beach, and Abby was part of the housekeeping staff, her first job. By 17, she was running the hotel on her own. Today, she owns and operates six restaurants and a by-the-sea hotel. The restaurants are located in shopping centers next to high-traffic facilities such as movie theaters, groups of retail stores, and other clusters of restaurants. Abby uses four different restaurant concepts (i.e., facility décor, size, and layout; prices, menus; music and bands; wine list, lounge areas, etc.) for these six restaurants, depending on the location and local market demographics.

Abby has other investments but loves the challenge of managing restaurants. “I have a great passion for finding a need and meeting it,” she said. “The secret to our restaurant success is customizing the business to local needs and being very consistent. Offer good food and service at the most reasonable price you can afford. And know that even if you offer all those things you can still fail. The hospitality business is the hardest business, period. You can never sit back and coast.”

In her spare time, she is a prominent community figure involved in activities such as helping build the Ronald McDonald House, fund-raising for the hospital cancer foundation, and serving as chairperson of the local board for the Salvation Army. She likes the Salvation Army because it runs a lean operation, with only six cents spent on management for every one dollar in donations.

Day-to-Day Service Management

Sunshine restaurants are normally open seven days a week from 11 a.m. to 10 p.m. Lunch prices are in the $10 to $20 range and include such entrees as a wood-grilled hamburger, seafood salad croissant, and sesame-crusted yellow fin tuna. Dinner prices range from $20 to $30 per person and include dishes such as shrimp and scallop scampi, red snapper picatta, and wood-grilled filet mignon. Each restaurant keeps about 20 to 30 popular wines in stock, such as a Cakebread Chardonnay. Wine, liquor, and some food items are ordered in bulk to take advantage of volume-price discounts and shipped directly from the suppliers to individual restaurants. All other items are ordered by the restaurant chef and general manager for each unique restaurant.

Abby, like most entrepreneurs, has her own approach to quality control. She notes that “I visit my restaurants every few days, and as I walk in I immediately begin to watch customer faces and behaviors. I try to see if they are happy, talking, smiling, and enjoying the food and surroundings. I look at their posture and facial expressions. I often talk with customers and ask if everything was to their liking. I ask my employees—waiters, bartenders, kitchen help, managers, and chef—if they have encountered any problems or service breakdowns. I look for untidy floors, tables, and restrooms. I try to learn from negative customer comments or complaints. My employees know that I will try to help them solve any problem—they trust me. I take the pulse of the restaurant in a short visit. I meet weekly with the restaurant chefs. I manage quality by observation and close contact with all of the people in the restaurant. At night I go over the financials and sales data.”

A typical Sunshine restaurant has a core staff of about 12 employees, consisting of a manager, an assistant manager, chef, assistant chef, four waiters, two bartenders, and two helpers in the kitchen. During peak season each restaurant hires about six to eight additional employees. Peak demand is when the “snow-birds” arrive in southwest Florida from November to April. During peak demand, the populations of Lee and Collier counties double to almost 2 million people.

Abby’s entrepreneurial approach to managing the business results in about one negative customer complaint per 100 customer comments. The complaints are nearly equal in focusing on food or service quality. Contribution to profit and overhead per restaurant is 35 percent. The typical customer averages one visit every two months, and the customer defection rate is in the 5 to 10 percent range, but is difficult to estimate given the seasonal nature of the business.

Long-Term Strategic Issues

Abby Martin has established a reputation in southwest Florida for superior service and food quality in her restaurants. She was considering expanding her restaurants to the Tampa and Orlando areas to leverage her expertise and grow the business for the family. She wondered whether she could maintain the proper financial and quality controls with more restaurants and whether to franchise or not. Due to the 2007–2009 credit crunch and high foreclosure rates, there were plenty of commercial properties in good locations for restaurants, and prices were at all-time lows. Abby thought it was now or never in terms of expanding up and down the west coast of Florida. She envisioned as many as 20 Sunshine restaurants in the next five years.

Decisions

Abby wondered when she would ever get the time to analyze these issues. It was not easy keeping up with her businesses. She knew that superior day-to-day food and service quality determines repeat business, so she had to successfully resolve this customer complaint about the waiter adding a $25 tip, while trying to plan for the future. She happened to be at her hotel, so she sat down in a beach chair and watched the brilliant colors of a sunset over the Gulf of Mexico. She began to write down a number of questions she had to answer soon.

Case Questions for Discussion

1. Critique the current “informal” quality control system. What changes and improvements do you recommend if Sunshine expands to 20 restaurants?

2. What are your short- and long-term recommendations? Explain your rationale for these recommendations.

Answer 1

Please give a positive rating.

1. The sunshine enterprises is dealing with the informal quality control system as the restraunt manager refused to help the customer with his issues regarding the services rendered by the restraunt staff.

I would recommend that even though it was the customer’s fault Mr. Gladiolus i.e. the manager of sunshine should take responsibility of the excess amount ($25) credited by the customer. Mr. Gladiolus should return $25 to the customer in order to create a long-lasting bond which will lure the customer to avail their services again and again.

As the staff should always have a positive attitude towards their customers and if they fail to deal with their grievances then this can affect the goodwill of the enterprise.

The changes and improvements I would recommend if Sunshine expands to 20 restaurants:-

• The managerial pattern of the enterprise needs improvement in terms of customer satisfaction.
• The manager must deal with customers more accurately.
• The staff should be careful while generating the bill of the customers in order to ensure that the customer pays for the accurate amount and doesn’t feel cheated.
• Even though the customer made a mistake by crediting more amount to the restaurant or by tipping the waiter, the restaurant must take responsibility to return the excess amount that he gave to the restaurant or its staff, if the customer asks for it.
• The restaurant owner must hire additional employees in order to survey the restaurant on a regular basis as it would be difficult for Abby Martin i.e. the restaurant owner to visit all 20 restaurants frequently.
• By hiring a team of employees to survey the restraunt i.e. the food quality, hygiene ,behaviour of the staff and for collecting the customers complaints will ensure the longevity of the restraunt operations.
• Ever thought the sunshine enterprise offers great food quality with tempting decorations the challenge is to maintain its standards as it becomes very complex when it comes to managing 20 restaurants altogether.

2. The short-term and long-term recommendations will be to:-

Short-term recommendation.

• The sunshine enterprise must train its staff in order to improve their managerial activities.
• The customer complaint must be resolved at the earliest with an apology e-mail to the customer for the delay.

Long-term recommendation.

• Abby Martin i.e. the owner of the enterprise should plan for a different and more appealing layout of the restaurants to attract the customers.
• Should know the taste and preference of the customers in which the restaurant will be opened.
• Maintain the hygiene and the quality of the food. As many of the restaurants opt for cost-cutting which in terms hampers the quality and standard offered by the company.
• The restaurant must offer great deals to the customers on selected days such as weekends, which lures the customers to visit the restaurant more often.
• Keeping the customer first as they are the one who can make or break a business.
• Keeping an eye over the staff at regular intervals which helps the management to know that if they behaving well with the customers or not and are they delivering as per the restaurant standards or not.
• It is very important for the restraunt owner to keep the staff happy as they are the one who have the deal with customers on a basis. So it is also recommended to Abby Martin reward the staff once a month which ensures harmony and efficiency. As the employees are termed as the asset of the enterprise/restaurant and must be treated in a positive way.

I believe that an enterprise should always keep in mind that the customer is the end-user and should always be treated with a positive attitude.