Situation

Complication

Question

Answer

Rationale

New Sam Hang restaurant was profitable and also with good reputation because of its food variety and cheap price

However, the situation has changed when one of the shareholder decided to open another restaurant nearby on his own, competing on the similar offerings

How can New Sam Hang restaurant regain the profit and competitiveness within 6 months?

New Sam Hang should cut the unnecessary cost by improving labour efficiency and the ordering method, and improve the sales by offering discount incentive to encourage higher spending per visit, as well as attracting new customer through creation and promotion of new dish and signature dish

Because:1. Be focus is one of the key to reduce the cost and hence improve

profitability2. Cutting the cost can result in better use of resources which will regain

short term profit 3. Discount and product revamp can attract more sales in long run

Storyline

New Sam Hing

Fairwood

Keung Kee Restaurant, Central

20 mins

17 mins

Have potential to increase operation efficiency

Improving labour and ordering efficiency

Customer stay-in time during perk hours (1:00 – 2:00)

30 mins

No.

of c

usto

mer

wai

ting

in

the

queu

e (N

ew S

am H

ing)

du

ring

perk

hou

rs 4

65

4

1:00 1:15 1:30 1:45

Observation data collected from restaurants to study the customer stay in time

Have high demand during perk period

Why?

Observation data collected from New Sam Hing for the no of waiting customers

Improving labour and ordering efficiency

Delivery Time per Order

Dine –in Order Time

12 min 10.4 min

Max delivery distance from 500m -400m

Gather the no. of orders during peak hours from 2 to 3

10.5 sec 85 sec

Change the ordering method by using tick-box sheets

110 sec 80 secTake away Order Time

How?

XX min XX min

Food waiting timePromote the Set Menu (e.g. Set A/ B/ C)

XX min XX minQueue waiting timeRearrange floor plan to provide 1 person dining fast lane

Improving labour and ordering efficiency

70 customer more per day

Additional Revenue of $XXX per month

1 waiter Less

Replace with 6 hours part time in peak hours

Part time workers salary at $30/hr

In each shift

Saving of $8,525 per month

Outcome

44

29

25

5

16

15

8

7

6

4

8

7

0 5 10 15 20 25 30 35 40 45 50

Vegetable

Wonton

Rice Dumpling

Fish Skin

Rice Congee

Chicken Wings

Source: Customer Survey

PopularityGross Margin

Increase sales by creating bundle salesA survey of 100 customers showing their preference of a bundle offer

Vegetables and Rice Dumplings are chosen

“You must not pick those with high gross margin only, but also something people like.”Owner of New Jade Restaurant, Sheung Wan

Why?

Increase sales by creating bundle sales

Key success factor is noticeable promotion with emphasis on the discounts

“A noticeable poster is the key of this type of strategy.”

Owner of Tak Wan Noodles, Wan Chai$10 $5

50% OFF

$12 $925% OFF

ANNIVERSARY PROMOTIONFOR ANY PURCHASE OF MAIN DISH, ADD

X

X

“I don’t realize there are so many people eating vegetable until I implemented this offer, people like discounts.”

Owner of Keung Kee Restaurant, Central

How?

Sales per month, $HKD

$31,025

$15,056

500,000

510,000

520,000

530,000

540,000

550,000

560,000

570,000

580,000

590,000

600,000

Before After

Source: Customer Survey and Restaurant trial statistics

Additional from Rice dumplingAdditional from VegetableOriginal

Increase sales by creating bundle salesFor every purchase of any main dish, add $5 (original price $10) for a plate of vegetable or add $9 (original price $12) for a rice dumpling

Additional Sales of $46,081 per month

204 plates more of vegetable

55 pieces more of dumplings

Outcome

Attract more customers through new offers

0

20

40

60

80

100

Fish Ball PorkDumplings

Curry Squid Shark Fin(HK version)

Potential 1: Survey of 200 customers for preference of "street

food"

Potential 2: Survey of 200 customers: Are you aware of our Signature dish -

Pig Leg?

Yes40%

No60%

Why?

Target here for additional revenues

Promote Signature Dish

Potential 3: Test run for two weeks by delivering Coupons to boost additional sales

Attract more customers through new offers

1. Selling Pork Dumplings:

Add an additional counter near the noodle session to sell Pork Dumplings

2. Promotion on Signature Dish – Pig Legs

Posters promoting “Secret Receipe handed down by generation, Try me!”

How?

3. Deliver 1000 coupons & test run for 2 weeks

Attract more customers through new offersPromote signature dish – Pig legsCreate new dish – Pork dumplingsOffer coupon for re-purchase

Additional Sales of $54,560 per monthSales per month, $HKD

$7,360

$25,600

510,000

520,000

530,000

540,000

550,000

560,000

570,000

580,000

590,000

600,000

Before After

Source: Customer Survey and Restaurant trial statistics

Additional from Signature Dish – Pig LegsAdditional from Coupon re-purchase

Original

$21,600

Additional from Pork Dumplings610,000

Outcome

Conclusion

P&L, in month Previous Improved ChangeSales 548,321 648,962 100,641 COGS

Ingredients 192,157 243,615 51,458 Gross Margin 356,164 405,347 49,183 Other costsUtility

Electricity 34,286 34,286 - Water 8,352 8,352 - Gas 36,362 36,362 -

Rent 60,000 60,000 - Material 4,921 4,921 - Labour 207,000 198,475 (8,525) Misc 3,240 3,240 - Net Margin 2,003 59,711 57,708

Increase by 2881%

Net Margin = 9% of sales

Appendix – Interview scheduleWeek Key events Interviewee Interviewer Purpose

3 23-Sep WED 1 Mr Wan All To request for all financials and some market informationAll To try out the highest orders/signature dishes

24-Sep THU 1 Restaurant owner/sfaff - next shop A All To get the general idea of competitor2 Restaurant owner/sfaff - next shop B All To get the general idea of competitor

25-Sep FRI26-Sep SAT

4 27-Sep SUN28-Sep MON29-Sep TUE30-Sep WED 1 Mr Wan Emma To interview about HR arrangement possibilities and key concerns

Minh To check on the supply cost - choice of suppliers and concerns

JessicaTo check on key concerns in setting the opening hours and the use of energysaving applicances

2 Waiters/Cashiers/Chefs Alan To understand the current way of work and ways to improve efficency3 Waiters for delivery Minh To check on normal delivery process and time

1-Oct THU2-Oct FRI Progress Review3-Oct SAT

5 4-Oct SUN5-Oct MON 1 Mr Wan Minh To check about customer preference

Alan To check about the signature dishes2 Cashiers Jessica To check about the traffic and sales for each time slot3 Chefs Jessica To get Chef's suggestion on special set meals and customer favourites

Emma To check which type of orders are easiest and most effective to makeEmma To check any concerns to move the current layout & change the furnitureAlan To check about the signature dishesAlan To check which dishes need to have better ingredients

6-Oct TUE7-Oct WED 1 Visiting customers Minh To check the effectiveness of revisiting incentives (discounts/stamps)

Jessica To check customers' preferred offers2 Non-visiting customers Jessica To check what offers will make non-visiting customers to visit

8-Oct THU 1 Restaurant sfaff - shop A and B All To test which is the highest orders/signature dishes

9-Oct FRI Cost analysis due 1 Restaurant owner A (non competing) AllTo test which is the highest orders/signature dishes and gain customerinsights

2Restaurant owner B (competing butdistant) All To check out what are their unique offers that make them successful

10-Oct SAT

Appendix – Work plan

Appendix – Work plan

Appendix – Work plan