Case study done on the changes to be done to a fastfood chain restaurant outlet

1. REFURBISHING AND
REMODELING THE
OUTLETS IN WESTERN
PROVINCES
07th
July 2019
PREPARED FOR :
Mr. R.B. Ramakrishna
(Managing Director)
PREPARED BY :
Mr. I.S. Angunawela
(Regional Manager, Colombo West)

2. TABLE OF CONTENTS
EXECUTIVE SUMMARY...................................................................................................................... 3
INTRODUCTION.................................................................................................................................... 4
LITERATURE REVIEW......................................................................................................................... 5
METHODOLOGY................................................................................................................................... 9
DATA COLLECTION......................................................................................................................... 9
FINDINGS AND DISCUSSIONS ..................................................................................................... 10
Location and the Aimed Crowd...................................................................................................... 10
Decision 01 : Possibility of giving free Wi-Fi and having a play area........................................... 10
Decision 02 : Decision of refurbishing drive-through and parking facility along with the project 10
Decision 03 : whether remodeling of the kitchen is needed, obtaining ideas from staff about it... 11
Decision 04: Mode of getting the ideas for renovation from.......................................................... 11
Decision 05: Remodeling the seating (indoor or outdoor, group/ couple/ single).......................... 11
Decision 06 : Retro Design or Applied Geometry.......................................................................... 11
Risks associated with the project .................................................................................................... 11
CALCULATIONS.............................................................................................................................. 13
CONCLUSIONS.................................................................................................................................... 15
REFERENCES....................................................................................................................................... 16
APPENDICES........................................................................................................................................ 17

3. EXECUTIVE SUMMARY
The following report is submitted to the Managing Director of Tanduri Fast foods PLC to create
awareness and to propose a plan on improving our sales on the region.
Tanduri Fast foods PLC has five restaurants in total located in the Colombo West region and has been
the most profitable venues of our chain. However, in the recent past it has been noticed that there has
been a significant reduction in our income from a select few restaurants and an assessment was carried
out to identify the matter.
The stores in the region have been in operation for almost 6 years from its inception and our figures have
been significantly improving over the years. The region experienced an annual growth of 30% since its
inception and has been able to expand itself by adding one store each year to broaden our market base.
The management of the region noticed that three stores that have been there since its inception aren’t
contributing to the overall performance of the sales figures of the region and decided to investigate to
address the matter.
It was understood based on a survey done on the customers who visited the store, that they were not
satisfied with the overall experience of the store, however they rated our store high on the overall quality
of the food supplied. It was brought into light that these stores have not gone through any changes since
its inception and based on our survey done by us we realized that it is vital we focus on enhancing our
brand image to attract and improve return visits of our customers and therefore it is essential that we
consider a refurbishment and a remodeling project in our stores to serve better to our clients and in
improving the overall satisfaction of our clients.

4. INTRODUCTION
As the regional manager of Colombo West region, I have come to noticed that the sales in two of five
outlets in my area has shown significant decreased in sales over past three years. These were the first
two restaurants that we have initiated our business in the western region with and have performed well
with in the first few years and had started to show a reduction in sales. In further examination we could
see customers remarking about the low seating capacity, and the loss of ambience in restaurant outlets,
and issues in Drive through services in the said outlets.
In order to address this issue, we have analyzed the sales figures of the overall performance of the region,
store wise for the past six years to identify the problems (Table 01 and Graph 01). We conducted a store
wise survey on customer reviews to identify areas of improvement. We have searched the similar
incidents and to understand the above matter we have conducted a broader search.
The purpose of the following report is to seek advice and approval from the higher management to
continue further studies to embark on restaurant redesign and refurbishment project to enhance the brand
value of Tanduri foods PLC in Colombo West region.
The following goals are expected to be achieved through executing the following proposal.
• An increase of 7% - 20% of sales after refurbishment
• Setting new standards and improving the brand image
• To broaden the scope of our clientele
• Remodeling and reforming the drive-through service
• Identifying places of improvement to help existing business
• Improving the sales of the respective stores to its potential.

5. LITERATURE REVIEW
The studies done on customer satisfaction and service quality of a restaurant identifies three main
dimensions of service quality, namely Food quality, Physical environment (ambience), and Employee
service. The physical environment includes, Appearance of physical facilities, Appearance of personnel,
Seating availability, and Parking availability. The tangible resources in a restaurant holds the second
most importance for customer retention after food quality according to a research done in University of
Amman, Jorden.(A. Al-Tit, 2015)
In certain case study done for refurbishment of a McDonald fast food outlet, the importance of aiming
the customers in different age limits has been discussed extensively. Providing free WIFI, building play
areas for outlets where children crowd is expected are some of the example measures taken by the
manager of the relevant outlet. Building Children play area generally added approximately extra 1
million (2014) to the remodeling cost. (Macy, Walker and Terry, no date)
One of the risks that the restaurant regional chain has to face is, the loss of sales during the time of
renovation. A part of the restaurant can be kept open if it’s a light remodeling where the hard
constructions are not done. But it is advised to close the whole restaurant, because the negative
experience the customers have to go through in time of renovation can affect the customer’s interest
towards the restaurant. (Macy, Walker and Terry, no date)
In a tropical country, in urban areas, dust could contaminate food in drive through sections. If the drive
through road needs renovation, it is advice to do it during the time the restaurant is closed for renovation.
(Macy, Walker and Terry, no date)
A restaurant renovation could generally cost from 100,000$ to 1 million dollars (2018). In the case of a
renovation of fast food outlet, it is always advised to go for the classic appearance instead of the trend,
because the trend could change from time to time. Before renovation it is very important to plan the
project. When making the plan, it is important take the ideas of the regular customers and consider the
reviews from the internet. If the kitchen is altered, taking the ideas from the staff is vital. From the day
an outlet is opened, there is a set of regular customers, who visits the outlet more often. It is important
to consider their ideas than considering a global or local view on recent trends. After focusing on the
ideas of regular customers, the requests and the ideas of the rarely visiting customers can be taken into
thought. According to famous five-star system of rating, it has been found in research that if customer
rates one star more for food than the overall experience, the probability of him visiting again drops by
20%, Two stars more, means the probability dropping below 38%. (Why Restaurant Renovations are
Important for Growth | BFS Capital, no date)
The correct research method should be chosen based on the availability of resources. In the research the
data collection technique should be chosen based on what we want to know and the technique with the
least amount of bias in collecting information. Archival records allow you to control biases more. Proper

6. sampling is needed to be done to get more unbiased results from a broader scope. (Lambert and Watson,
1984)
In questioning different kinds of question can be asked to get different perspectives from the customers.
Such as demographic questions, attitude or preference question, client’s reasons questions, rating
questions and etc. In general, there are two types of questions in surveys, open ended and structured.
The type and the kind of the question should be chosen appropriately to get the best outcomes. (Lambert
and Watson, 1984)
Behavioral observations give and objective picture about what customers really do while survey tells us
what they think they are doing. Human behaviors are observed most frequently through behavior
mapping and photographic recording. And through these, behavioral patterns can be built and used
appropriately in the analyzing part. (Lambert and Watson, 1984)
Archival data is the easiest to collect but frequently overlooked.(e.g. Sales records and etc.) by using
these both the design process and other factors effecting the restaurant can be analyzed.(Lambert and
Watson, 1984)
In a remodeling, the way seating has to change is very crucial. The seating could be private, two people,
group, indoor or outdoor. In order to determine the way, the seats must be altered, the customer behavior
has to be observed. For example, near a college, groups and couple seating arrangements are suitable. In
area with a fine weather, less road commotion, decent natural view, outdoor seating can be improved.
But it is always important to keep all the types of seats, even though in different quantities. (Why
Restaurant Renovations are Important for Growth | BFS Capital, no date)
Interior of a restaurant affects customers behavior. The interior designing process should be done
according to the purpose of the restaurant (Fast food, Dining in and etc.) and an environmental design
research should be done before it’s being designed. If a restaurant is a fast food chain, it should not have
an interior design that welcomes people to linger long after they’ve had their meal. Burger King had
such an inviting atmosphere in their restaurants once which turned out to be unsuccessful. (Lambert and
Watson, 1984)

7. When running a restaurant, you should be able to cope with the challenge posed by regular new
competitors to the market which is quite common. Unless you think out of the box and come up with
something innovative, novel to stay in contention for the top spot, your restaurant could easily be a
failure. So, as we have discussed earlier renovating or remodeling the restaurant premises is always a
trump card when it comes to staying at the top. Below we have listed down key most factor one should
consider when renovating or remodeling a restaurant. Unless you do a, thorough research and come up
with an estimation of the cost it takes to renovate the restaurant and the amount you can spend to the
process, you could easily end up falling into big trouble. In average restaurant renovation takes up to 6
to 8 weeks depending on the size of the restaurant and the amount of changes you wish to make. Shutting
down the operations completely will make you lose considerable amount of income from that period.
On the other hand, you won’t be able to provide your service as usual if you wish to stay open even
during remodeling, leading to the downgrading of the quality of the service provided. Noise, dust and
It is important that we identify the most frequently used, well-known decoration models especially when
it comes to standardizing our restaurants. The trend used in fast food restaurants are Applied Geometry,
and Retro design. In applied geometry design, all decorations take geometrical shapes. Any design that
is related to the past refers to as Retro designs. In the modern world a new tendency has developed to do
the interior designs like past days. Researches have shown that most customers are more likely to attract
to places which would give a 50 years ago feeling. Rather if the designs go according with a theme like
in 1980s and early 1990s it would be much more attractive. (Martone and Aghazarian, 2019)
In modern restaurants it is very common to use carpets even at high ends. Restaurants mostly go with
hard floor finishes like wood, stone, tile or manufacturing flooring. The main benefit of using hard floors
is it’s easy to clean. But at the same time, we should consider about the noise as well. It’s a vital important
because customers prefer to be in calm restaurants. So if the noise levels are up it is not good for the
restaurant. (Martone and Aghazarian, 2019)
The depth of color and the birth of texture
It is common to see that in fast food restaurants white, black and brown colors had been mostly used. if
it’s a quick-serve concept highly saturated colours are used. But it’s more effective to the customer
attraction if we consider more on the texture on the material more than the colour used. For an instant
smooth floor with etched walls or else for the same material different varieties of textures can be used.
(Martone and Aghazarian, 2019)
The world newest trend is to be eco-friendly. Even fast food restaurant designing can be done in
according with that. We can call this as a cost cutting method as well. Instead of buying new things for
the fast food restaurant if we can reuse them in a creative way or recycle it would be interesting. Bottles
can be used as light fixings, cups and other plastic fillings can be used as wall decorations. This is known
as creative repurposing. (Martone and Aghazarian, 2019)

8. use of heavy construction equipment are no healthy environment for a restaurant. This kind of poor
service does much more to drive away your regular customers. This is where something you should act
wisely thinking of long-term benefits. Shutting down the operations completely, or even partially not
only affects your customers but also your all-important employees. Necessary steps should be followed
to make sure that none of them undergo extreme difficulties during this period. On the hand, you
automatically create a good opportunity to market your business in a different way using this remodeling
as a front. (How to Plan a Restaurant Renovation | Dumpsters.com, no date)

9. METHODOLOGY
DATA COLLECTION
The sales records during last six years from the six outlets in Colombo West region are given in table 01
in appendices. The records were obtained from our finance and accounting division, in which special
permission was not needed to obtain sales figures.
In order to find out the reasons behind this rapid reduction of sales, a research was done under two
categories as to feedbacks from customers and a literature review.
Customer feedbacks were taken at the counter itself, with their consent from 900 customers, throughout
the month of June 2019, 30 customers per day, and 6 from each outlet. The results are attached in Graph
02. The data were collected, rated in score of one to five, one being “not satisfactory at all ” and five
being “very satisfactory”.
Other than the direct customer reviews, the online reviews from maps.google.com and www.zomato.com.
The main facts brought out by the customers regarding the issues they were/are facing, are attached in
appendices for your attention.

10. FINDINGS AND DISCUSSIONS
According to the feedbacks and reviews and facts discovered from literature survey, we have
come to following findings with regard to the present situation of the restaurant outlets.
• Guests rate food higher than the overall experience
• Insufficient seating capacity during peak hours
• The restaurants have not been refurbished or remodeled for the past 4 years
• The parking and drive through facilities are not adequate and should be remodeled.
• The customers think food is almost “very satisfactory”.
• Customers think the cleanliness and comfort should improve.
• Need of introducing new technology or an environment in order to retain customers.
Location and the Aimed Crowd
• Store A : Located near Fort Railway Station and attracts people of all ages and living standards.
Frequent customers are mainly office workers.
• Store B : Located near Galle Face Beach, the customers include local and foreign tourist mainly.
• Store C : Located near American National College Colpetty, attracts mainly university students
and office workers.
• Store D : Located near Royal College Colombo 07, attracts mainly school students
• Store E : Located near Viharamadevi park, attracts families and people of all ages.
Decision 01 : Possibility of giving free Wi-Fi and having a play area according the environments
of each outlet
• Wi-Fi facility will be important mostly for those using the Stores C (university
students and store E (people who come to the park). Availability of Wi-Fi will attract
more crowds to these stores.
• Play Area will only be useful in attracting crowd to the Stores B and E since it attracts
families.
Decision 02 : Decision of refurbishing drive-through and parking facility along with the project
• A Drive through will attract more customers to Stores A and D. Parents picking up their
children at school or railway station would prefer the drive through for a quick snack.
• Parking availability will attract more customers to Store B and Store E since it will attract
more people who choose to dine in. Since store B is located in Galle face however and
Galle face already has a parking area its proximity to the food outlet can be considered
before funding for a new parking area.

11. Decision 03 : whether remodeling of the kitchen is needed, obtaining ideas from staff about it
• Kitchen remodeling needed in Stores A,D,C and E due to the inability to handle large
number of customers during rush hours with prevailing kitchen model. Staff in these
stores pointed out this need.
Decision 04: Mode of getting the ideas for renovation from
• Ideas of Frequently visiting customers should be taken via a survey in the form of a
questionnaire (online or physical). There ideas should be given more consideration as
they will contribute to a larger part of the revenue from the store.
• Ideas of rarely visiting customers can be taken from reviews on online platforms such as
social media.
Decision 05: Remodeling the seating (indoor or outdoor, group/ couple/ single)
• Store A : Indoor, couples, singles and groups. Comparatively lower number of
seating required as most people will not expect to dine in.
• Store B : Mainly outdoor, couples and groups
• Store C : Groups, couples and single seating indoors
• Store D : Groups and singles indoor seating. Limited amount of seating since drive
through and take away will be preferred by the potential customers.
• Store E : Outdoor and indoor groups and couples.
Decision 06 : Retro Design or Applied Geometry
In the present modern restaurants have a tendency of choosing retro design. This is because a classic
design has a longer customer retention ability than a trend-oriented design as trends change with time.
Therefore, it could attract more customers to the store rather than an Applied geometry design. However,
it is not advised for any interior design of a fast food chain outlet to be too inviting as customers are not
expected to linger long after they’ve finished their meal.
Risks associated with the project
• Method of funding, Discussions need to be carried out with the finance department to
understand the current financial situation of the group and plan on carrying the
refurbishments of the select stores.
• Decision of fully or partially closing the restaurant during renovation since it will have a
direct impact on the total revenue generated during the period of the renovation , however
it is important to identify that all renovations should be carried out once the respective
store has been completely cut off its operations. This will enable us to complete projects
on expected time allotted further allowing us the leverage to manage the proposed
refurbishing model to work.

12. • Paying wages of the staff during the period, the renovations will place based on priority
we will re-allocate the staff among the remaining outlets during the period of renovation
to commence

13. CALCULATIONS
Figure 1 gives you a breakdown of costs you have to bear when renovating a restaurant. In fact it is a
budget breakdown for a 2,000-square-foot restaurant in New York City by Sweeten contractor Tony,
who offers free service to business owners who looking to renovate a commercial space. For a 2,000-
square-foot restaurant, they estimate that it would cost around $300,000, which includes all aspects of
the costs one will have to bear such as:
So, with this we can come to a rough estimation that one Tanduri Fast Food Joint being 6,000-square-
feet in area it would cost 3 times the above-mentioned amount ($300,000 for 2,000-square-feet) making
up $900,000 per each of the 5 outlets. (A Restaurant Renovation Cost Guide to Opening Your Own
Business, no date)
Now, let’s take Figure 2 into consideration which indicates costs when opening up a new restaurant.
Leaving out the factors related to opening up and only considering the factors that would come into play
when renovating (Signs, Seating, Equipment, Décor and Miscellaneous Fees) the cost for the Panera
Bread outlet which is quite similar to our Tanduri Fast Food Joint is $910,000. This amount being very
much close to our initial calculation of $900,000 indicates the level of accuracy in our calculations. (How
Much Does it Cost to Open a Restaurant?, no date)
• Cleaning/Protection
• Demolition
• Metals
• Carpentry/ Millwork
• Doors/ Windows
• Finishes
• Plumbing
• HVAC
• Electric
• Construction company overhead and fee
• And many more miscellaneous

14. • Total estimated cost for the 5 outlets in US Dollars = 5 ∗ $900,000
= $45,000
• Total estimated cost for the 5 outlets in Sri Lankan Rupees = 45,000 ∗ 𝑅𝑠. 176.14
= 𝑅𝑠. 7,926,300
• Total estimated cost for the 5 outlets in Sri Lankan Rupees = 𝑅𝑠. 5,000,000
(Considering factors that differentiates Western Province
of Sri Lanka with New York)
(Exchange Rates | Central Bank of Sri Lanka, no date)

15. CONCLUSIONS
• The summary of the decisions made on renovation in each restaurant is as follows
• For the remodeling purpose, ideas of frequently visiting customers are suggested to be taken via
a survey in person or online. For the other customers, an online survey can be used, via a survey
company.
• Retro Design is suggested as the decoration design for the restaurant.
• An approximation calculation is shown in order get an idea about the expenditure using online
figures, which is approximately, 𝑅𝑠. 5,000,000.
In order to overcome the main issue of decrease in sales over past years, I strongly believe a
refurbishment project for all the outlets belonging to Colombo west region is needed immediately. I
hope these facts will be taken into your consideration, and the project will be soon in action to address
the matter.

16. REFERENCES
A. Al-Tit, A. (2015) ‘The Effect of Service and Food Quality on Customer Satisfaction and Hence
Customer Retention’, Asian Social Science, 11(23). doi: 10.5539/ass.v11n23p129.
A Restaurant Renovation Cost Guide to Opening Your Own Business (no date). Available at:
https://blog.sweeten.com/commercial-reno/commercial-101/cost-breakdown-restaurant-renovation-
cost/ (Accessed: 9 July 2019).
Google Maps (no date). Available at: https://www.google.com/maps/@6.8038074,79.8859937,15z
(Accessed: 8 July 2019).
How Much Does it Cost to Open a Restaurant? (no date). Available at:
https://aaronallen.com/blog/opening-a-restaurant/cost-of-opening-restaurant (Accessed: 9 July 2019).
How to Plan a Restaurant Renovation | Dumpsters.com (no date). Available at:
https://www.dumpsters.com/blog/restaurant-renovation-tips (Accessed: 9 July 2019).
Lambert, C. U. and Watson, K. M. (1984) ‘Restaurant Design’, Cornell Hotel and Restaurant
Administration Quarterly, 24(4), pp. 68–76. doi: 10.1177/001088048402400415.
Macy, A., Walker, J. and Terry, N. (no date) Financing a remodel: The case of Financing a remodel:
The case of a McDonald’s franchisee. Available at:
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.648.3215&rep=rep1&type=pdf (Accessed: 7
July 2019).
Why Restaurant Renovations are Important for Growth | BFS Capital (no date). Available at:
https://www.bfscapital.com/blog/restaurant-renovations-growth/ (Accessed: 6 July 2019).
Zomato (no date). Available at: https://www.zomato.com/colombo (Accessed: 8 July 2019).

17. APPENDICES
1st
Year 2nd
Year 3rd
Year 4th
Year 5th
Year 6th
Year
Store A 2,372,500 3,084,250 4,009,525 3,728,858 3,648.667 3,488,286
Store B 2,463,750 3,202,875 3,843,450 3,535,974 3,217,736
Store C 2,390,750 3,107,975 3,884,968 4,312,314
Store D 2,427,250 3,155,425 3,786,510
Store E 2,518,500 3,274,050 3,863,369
Total Sale 2,372,500 5,548,000 9,603,150 15,626,033 17,499,084 18,668,225
Table 01 : Sales Records Over Past Six Years (In Rupees)
1 2 3 4 5
The overall satisfactory level score
Satisfaction with food
Dining in facilities
Cleanliness and Comfort
Graph 02 : Customer Satisfaction Survey Results

18. (Google Maps, no date)
(Zomato, no date)
Some Google Reviews on Six Outlets
Some Zomato Reviews on Six Outlets

19. Figure 1
Figure 2