Emory University Case Study: The Nest

An Operational analysis of the local bar, The Nest, ending with the bottom line impact.

Transcript

1. hello world 3 things the nest mustdo to increase profit. Nir Levy. In-Wook Yoo. Min-Gi Ryu. Hong Shik Yoon. Lindsay Goldman. Bryan Fedner. Ihsene Gheyouche. Monday, November 21, 11
2. COLLEGE STUDENTS DRINKS INVENTORY BARTENDERS WAITING SERVICE BARTENDING BUSINESS LOCATION REVENUE HAPPY TIMES a premium sports bar experience for upperclass students I P O COOKING Monday, November 21, 11
3. a premium sports bar experience for upperclass students HANG OUT WITH FRIENDS ENTER BAR WALK UP TO THE BAR MAKE ORDER GET DRINK ENJOY DRINK F F IDENTIFY NEXT CUSTOMER IN LINE V F SERVE DRINK MIX DRINK “TAB OR CHECK?” V PAY PAY V V POS SYSTEM WELCOME CUSTOMER CLEAN BAR REPLENISH ICE & DRINK INVENTORY F Potential Failure Point V Element of High Variability Monday, November 21, 11
4. Monday, November 21, 11
5. Monday, November 21, 11
6. control variability & Introduce Personnel Improvements Cost Benefit Analysis Structure Customer Waiting Process Implement New Routines Agenda: How can The Nest increase capacity? 1 2 3 justification: Monday, November 21, 11
7. key operational challenge #1: Waiting Time Variability Reneging Balking Lost Sales Monday, November 21, 11
8. Reneging How many times have you walked away from a bar because the bartender didn’t notice you? Monday, November 21, 11
9. Queuing or the lack thereof. i want a drink i want a drink i want a drink i want a drink who was first? PROBLEM: lost revenue from reneging and wasted time from customer frustrations at the bar i want a drink i want a drink DRUM: I can’t serve everyone at once. Monday, November 21, 11
10. Queuing or the lack thereof. i want a drink i want a drink i want a drink i want a drink i want a drink who was first? vs everyone wants to be first reasonable order i want a drink Monday, November 21, 11
11. Queuing or the lack thereof. Lights are the rope. They control the pace. green: 0-2m, yellow: 2-5m, red: >5m Monday, November 21, 11
12. Queuing or the lack thereof. Lights are the rope. They control the pace. green: 0-2m, yellow: 2-5m, red: >5m Monday, November 21, 11
13. Peak Time: no line structure A concentrated pool of waiting customers. They are the buffer. Bartenders are the drum. Monday, November 21, 11
14. optimal order process after light system Monday, November 21, 11
15. the effect of the light system: Yield management will align supply and demand more closely to increase revenue. Variability by controlling customer actions: Manage and order customer waiting. Add a method for prioritizing patrons. Monday, November 21, 11
16. demand is not the problem. CAPACITY is the bottleneck. Monday, November 21, 11
17. key operational challenge #2: Capacity Constrained at Peak Hours Reneging Balking Lost Sales Monday, November 21, 11
18. Peak Time is really narrow. Monday, November 21, 11
19. Monday, November 21, 11
20. Peak Time 75 percent of The Nest’s sales come from 10pm to 4am Monday, November 21, 11
21. creating adjustable capacity Flexibility through personnel improvements. - Utilizing demand forecasts: - Schedule work shifts with part time employees - Cross training employees. Monday, November 21, 11
22. Demand Forecast Monday, November 21, 11
23. creating adjustable capacity Flexibility through new routines. - Bar segmentation with additional POS systems. - Table Management. Monday, November 21, 11
24. Peak Time: no line structure Monday, November 21, 11
25. multiple line ordering with flexible bar segmentation Patrons are spread out more evenly. Results: more convenient ordering; lower noise level. Monday, November 21, 11
26. Table Management or the lack thereof. not worth the effort Nir wants a drink but it’s Monday, November 21, 11
27. quality table service The Nest has ~3x more tables than its competitor, Maggies. but the Nest has no continuous table service. Waiters should assess who is not getting drinks and actively offer drinks. “ready to pay?” “what can I get for you next?” Monday, November 21, 11
28. hello world 3 things the nest mustdo to increase profit. Monday, November 21, 11
29. 1. Queuing System 2. Personnel Improvements 3. Routine Changes THE SOLUTIONS: THE PROBLEMS: 1. Variability of Waiting Time 2. Capacity Constraints Monday, November 21, 11
30. Bottom Line Effect cost benefit break even point additional cash register $2000 $185/night 10 days additional bartender $2.50/hr $163/night/bartender 0 days register + bartender $2000+$2.50/hr $411/night 5 days lighting signal system $144 $90/night* 2 days Total $2144+$2.50/hr $501/night 5 days Conservative Approach: * assumes 10% reduction in reneging/balking Monday, November 21, 11
31. added to the bottom line $10,000 after roughly 20 peak days Monday, November 21, 11
32. Q&A Monday, November 21, 11
33. the light system Sourced from Alibaba.com. $9.95 per set of 4. $2.05 for modification cost. Monday, November 21, 11
34. Reservation System “Reserved” signs for the most sought-after tables. Require that customers reserve for a constrained time period. Price discount for off-peak reservations Separate waiting service will reduce demand at the bar. Price and service quality incentives promote off peak demand. Monday, November 21, 11
35. Physical Evidence Customer Actions Bartender Support Processes line of interaction line of visibility Arrive Enter Line Show ID Go to bar Order Drink Pay Enjoy Drink Charge @ Register Get Spirit Grab Glass Pour Mixer Outside Loud Crowd choice from menu cash register Line Security drink Deliver Drink Welcome Customer Deliver Receipt Collect Payment / Change Security Organize Line Check ID Restock Bar Clean Prepare food waiting to get attention potential failure points: walking up to the bar, not wanting any more drinks, bar tender doesn’t see you. Monday, November 21, 11