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Ineffective operational management a case of papa garden

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Bui Chau Sang

INEFFECTIVE OPERATIONAL
MANAGEMENT: A CASE OF PAPA
GARDEN

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2018


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Bui Chau Sang


INEFFECTIVE OPERATIONAL
MANAGEMENT: A CASE OF PAPA
GARDEN

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2018


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EXECUTIVE SUMMARY
Due to high quality of life and increase in free time and income, enjoyment of cuisines has
been given considerable attention – leading to a significant growth of fast-food restaurants,
especially in the central area of Ho Chi Minh City such as District 1, which has turned it
into a key factor of most young people’s cuisine desires. In business development of
restaurants like McDonald’s BT, Burger King, Double B Spagetti, Con Ga Trong, Papa
Garden has been facing with fall in sales volume and low level of customer satisfaction in
period of 2016 to 2017 since its first launch in 2016. In food industry, operational
management is playing a vital role of a successful business performance of any service
organizations. The aim of this study is to investigate the main cause and the main problem
leading to these above symptoms and then provide potential suggestions for attainable
improvement. The findings of this study identified that ineffective operational management
is the key factor that results in low sales performance and low evaluation of customers on
their experience at Papa Garden in comparison with others. Based on discussion and
theories informed, this study also offered potential solutions and action plans to improve
poor service operations management and overcome difficulties in low business
performance and customer dissatisfaction. The two potential solutions that restauranteurs
and many researchers have suggested include holding seminars, counseling sessions and
team building activities; and applying recruitment and selection programs. Through insights
of Board of Management and related theories informed, it is obvious to take consideration to
execute the alternative solution of holding seminars, counseling sessions and team building
activities at this time for improvement.


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ACKNOWLEDGEMENTS


This study was conducted as my thesis under the level of Master at the Master of Business
Administration Program in 2018. I would like to express my sincere thanks and gratitudes
to Professor Nguyen Thi Mai Trang for all her supervision, encouragement, valuable
suggestions and precious advices throughout the period of this study.
I would also like to take this opportunity to show my gratitudes to my colleagues at work
and classmates at ISB for their continuous support. I must also send my sincere
thankfulness to my parents and friends for their continuos support and encouragement.

Bui Chau Sang.


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TABLE OF CONTENTS
EXECUTIVE SUMMARY ..................................................................................................... 1
ACKNOWLEDGEMENTS .................................................................................................... 2
LIST OF FIGURES ................................................................................................................. 4
LIST OF TABLES ................................................................................................................... 4
1.

INTRODUCTION......................................................................................................... 5
1.1 The restaurant background .............................................................................................. 5
1.2 The restaurant’s vision and mission................................................................................ 5

2.

PROBLEM CONTEXT ............................................................................................... 7
2.1 Global fast-food restaurants industry .............................................................................. 7
2.2 Vietnam fast-food restaurants market ............................................................................. 9
2.2.1

3.

Current situation of Papa Garden in comparison with key competitors .................. 13

PROBLEM IDENTIFICATION ............................................................................... 16
3.1 Potential problems ........................................................................................................ 18
3.1.1 Ineffective operational management ....................................................................... 18
3.1.2 Inadequate inventory management and personal hygiene issue .............................. 20
3.1.3 Weak human resource management ........................................................................ 23
3.2 Problem validation ........................................................................................................ 24
3.3 Cause –and –effect diagram .......................................................................................... 27

4.

POTENTIAL CAUSES .............................................................................................. 29
4.1 Poor supervision from managers .................................................................................. 29
4.2 Insufficient adequate staff for efficient operations ....................................................... 31
4.3 Lacking of strong interaction between departments ..................................................... 31
4.4 Cause validation ............................................................................................................ 32

5.

ALTERNATIVE SOLUTIONS ................................................................................. 34
5.1 The first alternative solution: Applying recruitment and selection programs .............. 34
5.2 The second alternative solution: Implementing seminars, counseling sessions and team
building activities .......................................................................................................... 36

6.

ORGANIZATION OF ACTIONS ............................................................................ 41
6.1 Action plan from Papa Garden ..................................................................................... 41


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6.2 Effectiveness measurement through taking actions ...................................................... 44
7.

CONCLUSION ........................................................................................................... 45

8.

SUPPORTING INFORMATION ............................................................................. 46

REFERENCES ...................................................................................................................... 69
LIST OF FIGURES
Figure 1: Papa Garden’s Menu
Figure 2: Global fast-food market's revenue share in 2017
Figure 3: Brand value of the 10 most valuable fast-food brands worldwide in 2017
Figure 4: Fast-food revenue in Vietnam from 2014 to 2017 (in million U.S. dollars)
Figure 5: Top best-selling fast-food restaurants in HCMC from 2016-2017
Figure 6: Customer’s evaluation on service quality of Papa Garden and surrounding
fast food restaurants
Figure 7: Reasons for why customers do not intend to re-visit Papa Garden
Figure 8: Cause –and –effect diagram
LIST OF TABLES
Table 1: Top 10 best-selling fast-food restaurants in HCMC from 2016-2017
Table 2: Customer satisfaction scores of Papa Garden and of restaurants around
District 1 Ho Chi Minh from 2016-2017
Table 3: Sales volume of Papa Garden and other restaurants around District 1 Ho Chi
Minh City in 2016, 2017 and first 6 months in 2018
Table 4: Explored factors of restaurateurs and customer’s evaluation on management
issues
Table 5: Estimating cost for recruitment and selection process
Table 6: Estimating cost for group meetings and team building activities
Table 7: Action plan
Table 8: Board of Management’s expectations in improvement of current situation of
Papa Garden


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1. INTRODUCTION
1.1

The restaurant background

The restaurant industry is the sphere of business which is rapidly growing nowadays. In
Vietnam market, entrepreneurs pay considerable attention to this field as it is becoming
more in demand and widespread. There is a strong competitiveness on the market in this
area, thus it is essential to frequently improve the quality of service to satisfy customer’s
needs and desires. The better the service is provided, the more profitable the company is.
In view of life is getting more intense, the fast-food concept restaurants are gaining more
and more popularity among full-service restaurants due to its time efficiency and cost
saving. In customer’s viewpoints, fast-food used to be associated with something unhealthy
and calorics, however, those thoughts have considerably changed recently. Increasing
restaurants are offering healthy and delicious food which can fit people with gainful diets. In
Vietnam, there are many vegetarians, hence lots of restaurants tend to offer as many choices
as possible to satisfy customer’s specific needs.
Papa Garden restaurant is one of the fast-food concept restaurants in Vietnam which offers
healthy and beneficial food. As the high level of competitiveness on the market, it is more
important to overtake the quality of service, to make customer satisfied and be able to
establish a loyal customer base and then boost revenue respectively. Based on that, customer
satisfaction and service quality research were conducted to enhance the restaurant’s
effectiveness of operations and to atttract more customers for higher profitability.
1.2

The restaurant’s vision and mission

As Vietnam has been taking more and more steps advanced to become a developmental
country in 2020s, the restaurant industry sector is more considered as one of the most
important sectors in Vietnam.
In facts, the number of well-known fast-food chains in Vietnam is continually increasing.
KFC, Pizza Hut, Lotteria, Carl’s Jr., especially McDonald’s and Burger King – the two
biggest name in the world of fast-food chains have been currently presented in Vietnam.
Most restaurants are located in busy areas like large supermarkets, main streets and tourism
destinations. This truly attracts plenty of customers. In other sides, it indicates that there is a
strong competition among these big brands in this area today; thus it it more necessary to
make differences, continous innovations or to enhance the quality of services provided to
meet customer needs and desires.
Papa Garden is a two-year-old restaurant with fast-food concept famous for its healthy and


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delicious food. The restaurant offers a variety of vegetarian options, meals containing meat.
The main products are Papa’s bread, fried chicken fingers, fried rice with chicken, fried rice
with minced meat and spaghetti. Moreover, Papa Garden also offers various types of special
beverages such as Green tea ice blended, Choco chip ice blended, Peach tea, Mint tea,
Caramel frappuchino and many others fresh smoothies and juices. Customers have a
considerable possibility to choose from various ingredients with precise origins to
experience. Besides, Papa Garden offers catering for various occasions for a party or event
of ten people. Reservation can be made no later than four days before the event and they are
processed during the weekdays only. There is an official web page of Papa Garden on
Facebook where customers can access and leave messages or make reservations for the
catering specifically indicating the meal plans and number of attendances. The menu is
provided both in Vietnamese and English and it is shown as belows:


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Figure 1: Papa Garden’s Menu
(Source: Operation Department of Papa Garden)
2. PROBLEM CONTEXT
2.1 Global fast-food restaurants industry
According to Transparency Market Research(1) – a global market research, analysis, and
intelligence firms with offices in India and the U.S, the global fast-food market was valued at


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approximately 495 billion USD in 2014 and is expected to reach 645 billion USD by 2020,
growing at a CAGR of 4.5% between 2015 and 2020. The global fast-food market observed
significant expansion in North America in its early years. 44.2% of global revenue share is
estimated in North America, with 40% of global revenue concentrated in the United States. It
indicates that North America is really a large market for the fast-food concept. Other
developed regions also have a high concentration of industry revenue, including Europe at
17%, with a particularly high concentration in Germany (and France to a lesser extent) the
powerhouse economy of the EU. In the coming years, however, the non-traditional fast-food
markets are expected to generate a significant chunk of the global revenue – these include
Asia Pacific and Rest of the World. Asia Pacific also makes up 4.2% of global revenue, and
includes Australia and partly Vietnam, which has a strong affinity for fast-food(2). In
addition, peer pressure among consumers to switch to Western eating habits is also a key
factor influencing the growth of this market. Georgraphically, North America stood as the
largest market for the fast-food concept followed by Eroupe and Asia Pacific. In North
America, the busy lifestyle of individuals that does not leave adequate time for fresh cooking
on a regular basis and dependence on convenient restaurants are driving the market. It is
obvious that the development of fast-food market is turning to Asia, especially developing
country like Vietnam. As shown in Figure 2, the sector of global fast-food restaurants
market is categorized into the four segments by geography in 2017.

Global Fast-Food Market's Revenue Share in 2017
North America

Eroupe

35%

4%

Asia-Pacific

Rest of the World

44%

17%

Figure 2: Global fast-food market's revenue share in 2017
(Source: Transparency Market Research in 2017)
In the whole market, some restaurants chain – a group of related ones based in different
locations that are operated either by franchise agreements or under shared corporate


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ownership such as McDonald’s, Starbucks, Subway and KFC dominate the fast-food
market and together value 176,647 million U.S dollars (account for approximately 83%
of 10 most valuable fast-food brands worldwide in 2017). This was illustrated by The
Statistics Portal(3) as belows:

Figure 3: Brand value of the 10 most valuable fast-food brands worldwide in 2017
(in million U.S. dollars)
(Source: The Statistics Portal in 2017)
2.2 Vietnam fast-food restaurants market
Since 1997, Vietnam's fast-food restaurants market has been on the rise with many big
names such as Lotteria with 162 restaurants, KFC with 130 restaurants and Jollibee with 30
restaurants. The Subway restaurant chain announced its expansion plan in late 2012 and
other names that are becoming more familiar are Burger King, Pizza Hut and Popeyes.
Vietnam is a promising market with more 90 million people, of whom over 65% are under
35 years old. Though people have tightened their belts during the economic downturn, the
fast-food market is still growing at the annual rate of 26% while other industries saw a
decline. Vietnam was also ranked 8th in the Asia Pacific region in terms of food and
beverages business environment by Business Monitor International in 2011.
Mr. Nguyen Thanh Tam – Lotteria Vietnam's Business Development Director said that


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We suffered a tough time when we were first established in 1998, and the growth rate only
picked up in 2010 and till now, we are expecting over 50% annual growth rate.

Mr. Hoang Tung – a marketer of Ipsos Company – a top market research company in
Vietnam acknowledged that
Vietnam's fast-food market witnessed the first milestone 10 years ago when KFC arrived
and openned the first fast-food restaurant chain. Until 2014, a second milestone in the
industry occured when McDonald's – the world’s largest fast-food restaurant chain,
openned its first restaurant in Ho Chi Minh City. The appearance of this giant may not
only bring fast-food perception closer to Vietnamese cuisine culture but also change the
market shares again.

Fast-Food Revenue In Vietnam From 2014
to 2017 (million U.S dollars)
1037.7
836.9

747.2

685.5

12%

24%

9%

2014

2015

2016

2017

Figure 4: Fast-food revenue in Vietnam from 2014 to 2017 (in million U.S. dollars)
(Source: Statistical Statement of Euromonitor in 2017)
According to the statement of Euromonitor International, with the appearance of
McDonald’s in Vietnam, the fast-food revenue in 2014 reached 685,5 million U.S dollars
and it was slightly increased by 9% in 2015 with sales targeted of 747,2 million U.S dollars.
The level of growth was continually up to 12% to reach 836,9 million U.S dollars in 2016.
Especially, a robust 24% rise of revenue from 836,9 million U.S dollars in 2016 to 1037,7
million U.S dollars in 2017 was the new milestone that fast-food industry was on the trend
of sustainable development in Vietnam. In facts, rapid economic growth and a rising urban
middle class have enticed the presence of foreign chains in Vietnam recent years. A market
analyst of Euromonitor reported that these significant figures were mostly underpinned by
fashion for eating in branded fast-food outlets was driving the constant rise of fast-food
chains over the years.


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Mr. Adam Sitkoff – Executive Director of American Chamber of Commerce in Hanoi,
indicated that
One reason for continued growth is that Vietnamese people (mainly in millenials –
younger generation) are more aware of international brands, desires to be more modern,
which makes the popularity of international branded fast food chains.

Mr. Nguyen Huy Thinh – General Manager of McDonald’s in Vietnam, told that
Comprehending the taste of customers, which are quickly changing along with the
development of society, is one of the most important challenges not only for the fast-food
restaurants industry but also for any business in Vietnam. This reflects the industry is able
to be responsive to changing consumer taste as well as firms can find niche opportunities
to make profits.

Table 1: Top 10 best-selling fast-food restaurants in HCMC from 2016-2017
TOP 10 BEST-SELLING FAST-FOOD RESTAURANTS IN HCMC FROM 2016- 2017
Restaurants

2016

2017

Growth Rate

Ranking

MCDONALD'S

7,820

8,390

6.79%

1

PIZZA 4P'S

7,536

7,712

2.28%

2

BURGER KING

7,469

7,678

2.72%

3

DOMINO PIZZA

6,975

7,136

2.25%

4

ALFRESCO'S

6,137

6,325

2.97%

5

KFC

5,213

5,298

1.60%

6

LOTTERIA

4,835

4,913

1.59%

7

PAPA'S CHICKEN

4,236

4,410

3.95%

8

JOLLIBEE

3,226

3,275

1.50%

9

POPEYES

2,980

3,014

1.13%

10

Unit: million dong

(Source: Statistical Statement of Euromonitor in 2017)


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9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0

2016
2017

Figure 5: Top 10 best-selling fast-food restaurants in HCMC from 2016-2017
(Source: Statistical Statement of Euromonitor in 2017)
According to provided firgures of Euromonitor, we realise that McDonald’s is still
reinforcing its leading position as the most best-selling fast-food restaurant in Ho Chi Minh
City. No doubt, the presence and continous growth of this giant brand (with growth rate of
6.79% from 2016-2017) in Vietnam in general and Ho Chi Minh City in particular is an
obvious sign of intense competition in the food and beverages field. With an expansion of
operational range in major areas, Pizza 4P’s has rised up 2.28% to the second ranking of
best-selling fast-food brands in Ho Chi Minh City recently. Despite of the last difficulties,
Burger King has changed its business strategies, accepting to sell rice, fried chicken and
fries in addition to burgers together with expanding rapidly its chain in advantageous
positions throughout the city. This helped Burger King get a sustainable development to
reach 7,678 billion dong in 2017 (sales up to 2.72%). Due to abudant investment capital and
improvement in quality of food, Alfresco’s and Papa’s Chicken also represented their
strengths as growth rate of 2.97% and 3.95% respectively in 2017. In spite of being top
brands in fast-food industry in recent years, KFC and Lotteria – the two direct rival of
McDonald’s, had unexpected business performance with growth rate of sales just fluctuated
1.6%.


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2.2.1 Current situation of Papa Garden in comparison with key
competitors
35
30
25
Papa Garden's

20

McDonald's BT
15

Burger King
Double B Spaghetti

10

Con Ga Trong
5
0
Food quality

Food and
beverages
variety

Taste of food

Staff's skills Cleanliness and
and behaviors
layout

Figure 6: Customer’s evaluation on service quality of Papa Garden and
surrounding fast-food restaurants
(Source: Statistical firgures of customers experiences in Papa Garden and its competitors in
HCMC in 2017 )
Table 2: Customer satisfaction scores of Papa Garden and of other restaurants
around District 1 in Ho Chi Minh City from 2016-2017
Restaurants

2016

2017

% Change

McDonald’s BT

87

90

3.4%

Burger King

73

76

4.1%

Double B Spaghetti

81

85

4.9%

Con Ga Trong

77

79

2.6%

Papa Garden

69

65

-5.8%

(Source: Papa Garden’s Operation Department Report)
Regarding the results of the annual report from Papa Garden’s Operation Department, the
survey was conducted depending on interviews with 100 customers who were asked about
the quality of products, services and their satisfaction with Papa Garden and four
surrounding fast-food restaurants within District 1 (including McDonald’s BT, Burger King,
Double B Spaghetti, Con Ga Trong) in Ho Chi Minh City. Scale measurement is designed
from zero to 100 points, both categories scored restaurants on food quality; food and
beverages variety; taste of food; staff’s skills and behaviors; cleanliness and layout. The


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empirical results showed that all of questioned customers did not satisfied with the quality
of food and services that Papa Garden delivered when their scores on items are significantly
low comparing to other restaurants in the same location after two years operation. In
particular, some measured items like food quality, taste of food and staff’s skills and
behaviors are evaluated at very low scores which indicated that customers experienced at
Papa Garden with low quality of services and this led to their overall dissatisfaction. Table 2
also shows that customer satisfaction scores of Papa Garden’s service quality provided
sharply decreased at -5.8% from 2015 to 2016. As Namkung and Jang(4) stated, food quality
and workers’s attitudes, behaviours are fundamental and utmost important elements of the
overall restaurant experience to overcome competitors and make remarkable profits in the
restaurant business. They aslo emphasized that if restaurant’s food and services are prepared
correctly and tastely, customers will be satisfied with their dining experiences.
In the department meeting of board of directors of Papa Garden in January 2018, Mr. Ho
Phuoc An – Owner and CEO of the restaurant shared that
We are upset to look at into the truth that our performance in operations is so disappointed
and low comparing to other restaurants in near area. Most of indicators are all under
expectations and we need to find out existing reasons for immediate improvement unless
we would lag behind competitors and lost loyal customers in the long term.

In facts, effective sales activities are important factors contributing competitive advantages
and outstanding business performance in any service organizations. According to Boenitz
DJ(5), there is a strongly positive relationship between level of customer satisfaction and
sales volume, profits and business performance. Accordingly, customer satisfaction has a
key impact on effectiveness of business performance and determines the long-term
profitability of restaurants due to contribution of competitive advantages. Gegeckaitė L(6)
also agreed that primary expectation and perception of experiences in service quality are
major determinants of long-term business performance of service companies.


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Table 3: Sales volume of Papa Garden and other restaurants around District 1 Ho
Chi Minh City in 2016, 2017 and first 6 months in 2018
Restaurants

Y16

Y17

First 6 months in Y18

McDonald’s BT

550

675

392

Burger King

325

375

212

Double B Spaghetti

257

289

175

Con Ga Trong

312

398

242

Papa Garden

115

97

45

Unit: billion dong

(Source: Papa Garden’s Operation Department)

According to data from Operation Department of Papa Garden, figures indicates that sales
volume of the restaurant has gradually decreased in the last two years comparing to
surrounding restaurants in the same location. The sales of Papa Garden in 2017 decreased
by 15.65% along with sales volume of 97 billion dong, lower than 3rd times compared with
other competitors and sales figures in 6 months of 2018 of the restaurant almost doubled the
losses compared to 2017. Obviously, in addition to the high level of unsatisfactory of Papa
Garden’s customers, the dramatic fall of sales volume through period 2016-2017 is an
extremely serious warning to the quality of services and the whole operations of the
restaurant.
Regarding the current siuation of business performance and service quality of Papa Garden,
Mr. Ho Phuoc An also confirmed that
In facts, sales activities play a very vital role of the success of the restaurant in the long
term, and high quality of services is also an important determinant to raise our customer
satisfaction and further increase sales volume as well as make more profits. Actually, low
sales situation of the restaurant and customer’s unsatisfactory feedbacks on services
delivery show that there is an existence of some problems and deficiencies in management
system and staff supervision. In recent times, we have received a lot of complaints from a
number of customers about low service quality that negatively affected their expectations
and experiences. They mostly unsatisfied with the attitudes and skills of staff as well as the
way of providing services of the restaurant. In addition, some of opinions from customers
showed that we did not attach special importances to personal hygienes.

Mr. Le Nguyen Tri Dung – Operation Manager stated that
According to the current process of services, servers have to work both in dining area and
kitchen area, even in preparation step before shifts. This causes slow service delivery to
customers. During their experiences at the restaurant, customers often actively request
services from staff. Therefore, they feel unsatisfied and supposed that the way of serving


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and providing services were ineffective and unprofessional.

With the limitation of resources, timing and costs of the solving problem project, this thesis
will focus on finding out potential problems of low sales results and customer
dissatisfaction, then validate them to choose the main one and its main causes that directly
affect customer’s sense and the restaurant’s business performance, then propose some
alternative solutions and prove them efficient in applying into Papa Garden’s case.
3. PROBLEM IDENTIFICATION
With two-year-old operations, Papa Garden has made remarkble efforts to provide good
products and services with appropriately reasonable price with final aims of satisfying
customers and increasing sales volume. According to Chow et al(7), it is essential for fastfood restaurants to achieve high level of customer satisfaction through superior customer
service in the food industry. However, from above findings from the current situation, the
restaurant has been facing customer service problems that negatively affected the whole
operation efficiency and they led to unsatisfactory of the restaurant’s customers and
especially obvious decline of sales volume for 2 years. Balachandran S(8) defined “Service”
as intangible, yet provides satisfaction to the customer, and it is performed by people, not
manufactured by machines. In term of service management, management of service quality
is the management of processes involved in service operations control activities, including
organizing, staffing, monitoring and controlling tasks (Appannaiah HR(9)). In term of
services industry, service quality is a core determinant of every sucessful business.
Goldstein(10) affirmed that high standard of service quality attracts more customers and
allows companies to build a significant and loyal customer base that rise up revenue results
to gain more profits. Literally, company’s reputation and profitability can be reached due to
high quality of services provided and effective management of operations (as cited by Tse
and Wilton(11)).
Based on the survey with Papa Garden’s customers conducted by sales department of the
restaurant, there were 48 people among total 70 customers gave their perspectives and ideas
about why they did not choose to re-visit to experience services at the restaurant. The results
obviously showed reasons to get their insights depicted as follows.


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Reasons For Why Customers Do Not Intend To Re-visit
Papa Garden
Ineffective supervision activities from managers

81%

Lack of effective communication in departments
Staff 's fail personal hygiene
Poor food preparation
Insufficient staff for timely services

75%
18%
27%

38%

Slow delivery of services to customers
Bad service manners and attitudes

54%
45%

Figure 7: Reasons for why customers do not intend to re-visit Papa Garden
(Source: Papa Garden’s Sales Department)
According to statistical figures of the surveyed interviews, it can be seen that there are some
major reasons that directly impact on customer dissatisfaction and low sales performance of
Papa Garden, including poor food preparation; staff's fail personal hygiene; insufficient staff
for timely services; bad service manners and attitudes; slow delivery of services to
customers; lack of effective communication in departments; ineffective supervision
activities from managers. Most of customers all indicated that Papa Garden had a weak
supervision for employees’s works and the way of serving them (with highest rate of 81%)
and ineffective connection in various departments was also a negative point that lead to their
dissatisfaction.
In order to clarify possible problems and validation them, in addition to literature reviews
and theories informed, in-depth interviews are designed to conduct to gather valuable
opinions and perpestives of respondents within two main groups as follows:
 The first group includes nine respondents who are currently working at Papa
Garden, such as: Mr. Ho Phuoc An – Owner and CEO, Mr. Le Nguyen Tri Dung
– Operation Manager, Mr. Truong Tuan Tai – Staff Manager, Mr. Le Thanh
Nhan – Operation Supervisor, Mr. Do Hoang Hieu – Head Chef, Ms. Truong
Thu Thao – Staff Supervisor, Ms. Le Thi Thu Trang – Server, Mr. Nguyen Huu
Dung – Chicken Staff and Mr. Le Van Hoang – Shift Supervisor.
 The second group includes three customers who regularly visited Papa Garden.
Through conducting necessary interviews and data collection from both customer
perpestives and deep insights of key people of Papa Garden, we realise that low level of
customer satisfaction and sales activities of the restaurant are truly ineffective due to some


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existing problems relating to service quality. There are three potential problems directly
affecting customer dissatisfaction and poor sales results, including: weak human resource
management; inadequate inventory management and personal hygiene issue; ineffective
management of operations.
3.1

Potential problems

3.1.1 Ineffective operational management
Goffin and Szwejczewski(12) stated that management is important in the change process as
their support is crucial to sustain and develop long-term quality improvement drive in the
company. In facts, it is widely supposed that among other things, management is associated
with abilities to set goals, ebtablish plans, lead teamates, control emmotions along with
enough personnel and operational procedures to accomplish. Thus, management is one of
key factors leading to the success of any organizations.
Mr. Ho Phuoc An – Owner and CEO of Papa Garden acknowledged that
Management is always an indispensable mission for us to effectively manage and run the
whole operations. Literally, the role of managers and supervisors is more essential for
handle all aspects of products and services to serve customers. At Papa Garden, managers
do not do their jobs by an efficient way. They still not fully supervise employees, and as a
consequence, workers do their daily tasks without putting right service quality as a
priority. Their role becomes faint when they can not appropriately alternate working
schedules for employees. Thus, there is overlapped between one’s tasks and another’s, and
this makes them confused to effectively complete their jobs.

Mr. Thai Thanh Binh – a frequently experienced customer at Papa Garden stated that
I realise that most of employees who are serving at dining area work independently
without necessary guidances and interaction between each other. Litterally, it is so hard to
provide attraction and high quality of services towards customers due to weak coordination
like that. Sometimes, they unintentional neglected my requests as there are lots of guests
visiting the restaurant at the same time, however one of the key causes is ineffective
supervision from supervisors and managers. In spite of being frequent customers of the
restaurant, this inadequacy makes me unsatisfied and reduces my inspirations to re-visit for
experiences anymore.

Rai AK(13) told that in term of hospitality management, close supervision from managers
plays a vital role to ensure employees to be really satisfied with their tasks and working
shedules as their workloads are allocated equal to the time given. The first point indicated
the facts that managers have a loose supervision of their staff, lack of superior support as


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well as using appropriate rewards and punishment as motivators and thus there will be a
decrease in productivity and business performance respectively. Accordingly, poor
supervision is top impedance to level of customer satisfaction and profitability of a service
company (Indre Maurer(14)).
The second point is that the restaurant is facing limitations of qualified personnel for smooth
and effective operations. In addition to complaints from customers, some of key persons at
Papa Garden also have various opinions about this issue that we need to take considerations.
As a role of Operation Supervisor at Papa Garden, Mr. Le Thanh Nhan aslo shared that
In my opinion, insufficient number of staff is one of the major causes of low quality of
services and bad sales results. In order to serve customers timely, the employees
sometimes have to be rushed to take orders from one table to another. Moreover, at the
kitchen area, I realise that workers are always working extremely hard in their shift to get
orders processed as fast as possible, but it is difficult to effectively manage as there are
only a few workers for implementing. In short, this deficiency of personnel contributes to
slow service and negatively affects to our business performance.

In term of perspective of customers, Mr. Nguyen Tan Tai who is a frequent customer during
last six months, criticised that
Although the food pricing is reasonable, there is not enough staff to capture all I need and
sometimes they even could not see me in the booth seating. When I need to reorder food
and drinks or make some order adjustments but I feel that they seem to neglect my orders
or in some cases, they do not arrange my orders properly. I really like the taste of cooked
food and drinks here but I think that the restaurant needs to retrain some unqualified
people and hire more professional and courteous employees to deliver a greater service.

According to Allen and Wilburn(15), staffing is one of important function of management, as
this is a process where relevant people are being chosen and put them on jobs which their
talents and skills can be utilized and retained through their incentives, job training, job
achievement in order to reach both the individual and the organization’s business goal. In
addition, in term of hospitality management, Ghimire AJ(16) told that insufficient personnel
is a dangerous issue that negatively influences on the overall business performance and
leading to unsatisfactory customers and the loss of profit of the restaurant in the long term.
Literally, the problem of insufficient staff will have effects of a decrease in productivity
which create stress, inadequate implementation of some management practises and
functions, increase in workload and less supervision and lead to slow services for customer
needs.
The importance of operation efficiency in the service industry has continued to build with


20

increase of quality service in today’s service. Accordingly, service companies need to
maintain considerably efficient operations to not only retain loyal customers in increasingly
competitive industry, but also to reach outstanding business performance for gaining high
profits. Last but not least, lacking of effective interaction and communication betweem
departments is one of typical causes of reducing operation efficiency and slow services
provision toward customers at Papa Garden.
Having critical thinkings about this issue, Mr. Truong Tuan Tai – Staff Manager also said
that
There is lacking of strong multi-department interaction. From servers, kitchen staff,
inventory staff to supervisors and managers, it seems that they just work within their
private atmostphere without communication, sharing, encouragement. These issues cause a
decrease in productivity, complicating processes and delay the completion of tasks.
Nowadays, coordination between different departments in an organization is really
emerging to be very crucial for the organization’s operation efficiency.

Mr. Ho Phuoc An also stated that
Obviously, poor interaction between departments within Papa Garden is very dangerous.
In facts, internal communication in the restaurant is not enough when employees do not get
shared internally or colloborate effectively with each other and even with their supervisors
and this dispute negatively affects productivity and interrupt the entire workflow indeed.

In term of business management, Roberto CA and Khandpur(17) stated that bad coordination
in multi departments can severely affect on sales process, increase inventory cost due to
unavailability of product. In short, it could product waste of efforts, resources, brand image
and waste of money. Kisang R et al(18) emphasized the importance of effective operational
management in service industry that restaurants should strictly follow every step of
operations to build strong cooperations between staff and managers, supervise and monitor
activities from preparation step to delivery to customers as well as to raise the quality of
food, and get fewer major failures. Literally, if restaurants fail to keep up with effective
operational management, they could end up losing valuable customers for both poor quality
food and slow service and further loss its sales and profits. In facts, based on above negative
feedbacks from customers and insiders of Papa Garden, it is vital for the restaurant to pay
considerable attention to improve its operations efficiency in order to better the quality of
services as well as reach expected financial results in the long term.
3.1.2 Inadequate inventory management and personal hygiene issue
In the highly competitive quick-service-restaurants environment, it is beneficial to have a


21

system for managing the food inventory of a restaurant during various stages of food
production, which may include storage of uncooked food, preparation and processing of
uncooked food, cooking of the food, storing the cooked food, relocating the cooked food to
various locations in the restaurant, and serving the cooked food to customers. As Shuyu Z
et al(19) stated, in inventory management, goods are delivered into the receiving area of a
warehouse in the form of raw materials or components and are put into stock areas or
shelves. In facts, inventory management is a complex process, particularly for service
restaurants, but the basics are essentially the same regardless of the organization’s size or
type. Moreover, Sheryl EK(20) emphasized that a good inventory management can help to
optimize customer’s satisfaction, supplier capability, and production scheduling in the
sector of restaurant operations.
In case of Papa Garden, there are some complaints from both customers and insiders of the
restaurant.
Mr. Do Hoang Hieu – Head Chef at Papa Garden confirmed that
At the restaurant, poor inventory management is one of typical issues that cause slow food
preparation and low service quality. There are many symptoms indicating inventory
management is getting worse, such as high cost of inventory, low rate of inventory
turnover, high cost of storage and lacking of real-time inventory tracking. These ones
cause in sufficient raw materials for daily operations, especially this often happens during
the peak hours where people go out to seek for express lunch and dinner. In short,
improper inventory management not only increases cost of operations, frequent stockouts,
but also negatively affects Papa Garden long-term business growth. Due to short supply of
raw material, it is impossible to to prepare enough ingredients for every dish that
customers order.

Mr. Le Nguyen Tri Dung – Operation Manager at Papa Garden, aslo stated that
I realise that inventory management system of Papa Garden is ineffectively operating due
to some reasons. Firstly, ordering system is used improperly when it is running out of
items before the next scheduled delivery. Secondly, we do not pay much attention to the
process of receiving, rotating and organizing all items to manage inventory every shift.
Thirdly, in food preparation, all items are not checked for quantity and quality for recipe
consistency and proper food handling.

In term of food and beverages companies, Imeokparia L(21) told that an effective inventory
management is a premise of proper food handling and in facts it plays a direct role in food
quality, freshness and has a great impact on increasing profitability of restaurants.
Mr. Nguyen Tan Tai – a patron who frequently visited Papa Garden for last 6 months,


22

shared that
I strongly dissatisfy that the restaurant do not give effective food handling periodically
compared with other restaurants like McDonald’s, Jollibee and Double B. Athough I have
been an acquaintance of Papa Garden and still like experiencing at there, but I think you
should improve the management efficiency of this process. In my opinion, one of reasons
is ineffective inventory management leading to slow services and food quality.

In addition to inventory management, staff personal hygiene is another important issue at
the restaurant. In term of service industry, neatness, cleanliness and maintaining hygiene of
people and spaces is a manadatory standard in every hospitality establishment (as cited by
Lee HK et al(22)). Staff should be aware of understanding the importance of maintaning
cleanliness and hygiene in the workplace and setting as the first priority.
Ms. Le Thi Thu Trang – Server at Papa Garden stated that
Sometimes, the floor and the tables are oily and watery which makes the customers feel
uncomfortable to dine in. As a consequence, the customers, especially the children, had the
risk of falling down due to this slippery floor. Dirty tables and chairs will result in the
growth of bacteria in the restaurant, which will affect the health of the customers.

As a role of Staff Supervisor, Ms. Truong Thu Thao mentioned that
Staff personal hygiene requirements are not met when working uniform of employees are
not regularly changed to maintain a neat and clean appearance. Sometimes, there are some
employees who consume food in the kitchen and adjacent areas. This not only negatively
affects on our reputation but also reduces efficiency of food production. If this hygiene
issue is not improved, then the customers, especially the regular customers, will seek for a
new restaurant.

In term of customer’s viewpoints, Mr. Vu Hoang Nguyen truly shared that
I think that personal hygiene activities including cleaning, sanitation are not maintained
and sustained effectively to ensure the high standard quality of services. In some cases, the
restaurant do not stick to standard policy on staff using a pressed uniform, nails cut and
maintained, wearing light make-ep and perfume.

As Mr. Ho Phuoc An mentioned about the importance of hygiene standards that
We have to work harder to prove we deserve customer’s money they paid. Cleanliness and
hygiene are essential to make us difference. We need to guarantee every area of an
establishment, especially the toilet, is spotless and in long term, it can help us build
customer confidences and establish relationships meaning that customers are more likely
to return. Investment in sanitation and hygiene is really an investment in business growth.

In term of food production, Nonaka et al(23) stated that personal hygiene in restaurants and


23

implementation of hygiene standards and procedures for staff is the best way to gain the
trust of customers. Due to the importance of maintaining personal hygiene in restaurants for
health standards, each person working with food preparation has to keep a high degree of
cleanliness and a tidy external appearance. In addition, the impact of food quality has
positive relationship between food quality and customer satisfaction as well as their
behavioural intentions and organization’s sales and profits (Ha, Jang(24)).
3.1.3 Weak human resource management
In term of human resource management, “people” are regarded as individuals who poss
technical skills, good interpersonal skills, positive attitude and can work well independently
or together within a team; and service firms need to work closely with their human
resources (HR) departments and devote special care in selecting, training, and motivating
their service employees (Khan MA(25)). According to Voss C(26), behaviours and
competencies of staff play a major role of the success of service operations, and human
resource managers should take considerations to manage workforces with main tasks
including manpower, customer planning, design of job, selection and termination, training
and development, motivation and promotion of workforces.
Mr. Truong Tuan Tai – Staff Manager, told that
In addition to insufficient personnel, the restaurant also faces the issue of incompetent
employees which reduces and costs the whole food service operation. Employees are not
alert of their jobs, sometimes they tend to neglect taking orders from customers who
already chosen food and had been in the restaurant earlier than others, and thus customers
have to wait for them until finalizing their orders or cleanning up the table. They do not
acknowledge customers by smiling, eye contacting with unfeigned interest when taking
orders from customer and this makes them unpleasant and dissatisfied. Futhermore,
negative attitude of employees such as irritation, annoyance, bad temper, impatience and
unwillingness to help also contribute to slow service of the restaurant as these things
reduce customer retention or make them become bored and unengaged with the resraurant.
All of these likely cause reducing customer loyalty and then leading to loss in sales and
profits in the long term.

In the perceptions of customer, Mr. Nguyen Tan Tai – who frequently visited Papa Garden
for last 6 months, criticised that
The restaurant has incompetent staff with bad service manners when some of them tend to
ignore my suggestions or even they are ignorant of menus of the restaurant. After my
straight opinions, they still do not attend to my complaints, therefore these issues remain
unresolved. Sometimes, they appear in bad temper, unhappy and unready to help. I think


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