Gerhard Schroeder, manager of Hot Shoppes, a group of cafeteria-style restaurants in the suburbs of Cleveland, Ohio, was experiencing increasing competitive pressure from national fast food chains that were expanding in the local area. He wanted to determine how his restaurants could serve customers more efficiently so that he could lower costs. He performed an analysis of the food service operation by first determining the steps in the process and the time required for each task. (See Exhibit 1.)

Each task on the line was assigned to a separate employee. Each customer’s meal was a separate process that followed the sequence below. Each customer stopped at every station and gathered utensils, selected food and drinks, and paid for their meals. Food and utensils were replenished as soon as customers took them while serving themselves. Gerhard examined the process and decided that the cafeteria line should be prepared to serve the maximum demand of 120 customers per hour.

Hot Shoppes Cafeteria Line Process Times Step

Average Time to Perform (in seconds)

         15         30         60         40         20         30

Replenish silverware, plates, and bowls
Replenish salads and appetizers
Serve main dish and vegetables; clean up spills
Serve other hot foods; replenish main dishes and vegetables Replenish drinks and desserts
Cash out customer

EXHIBIT 1

Gerhard observed that the work was unevenly divided among the employees. The employee responsible for serving customers the main dish and vegetables and cleaning up any spills that might occur in the process of serving tended to shortcut her task to keep the line of customers moving. This was due to the stress that built up from the long lines during the maximum demand periods.

Gerhard also saw that tasks 1, 2, 3, and 4 were handled by entry-level employees who were each paid $3.00 per hour. Task 5 was done by a more experienced employee who was paid $4.00 per hour. Task 6, cashing out customers, was done by an assistant manager. Gerhard did not want other employees to perform that task since it involved handling money. Assistant managers were paid $4.50 per hour and they could perform any job. Each restaurant was charged $5.00 per hour for rental of the soda machine since the Hot Shoppes didn’t own its own.

A review of the tasks indicated that task 1 - replenishing silverware, plates, and bowls - had to be performed before any other step could be taken. Similarly, task 6, cashing out the customer, could not be performed until all the other steps were completed.

1

Gerhard Schroeder was under tremendous pressure to increase productivity and reduce costs but he was also concerned about maintaining a high level of customer service. With all the fast food chains setting up restaurants in the area, the Hot Shoppes were facing more and more competition. Gerhard felt that the best strategy was to differentiate his restaurants with a higher level of service. But he first had to figure out how to accommodate the maximum demand of 120 customers per hour.

QUESTIONS:

5. Assuming the addition of one more employee, what is the maximum number of customers the process can handle? At which task would you place this employee?

6. How much does it cost to process one customer with two employees added to the original configuration?

7. What happens to the cost per customer as you add more employees to reach the desired capacity? Why?

8. How could you modify the process in order to accommodate 120 customers per hour? Suggest alternative approaches, some using newer technology and others using the technology at the time of the case, and discuss the pros and cons of each alternative.