A Comprehensive Analysis of 
     Azia Restaurant




      Prepared by: Taem Nowlan
          December 7, 2008

         ...
Patrick Cattoor
  Tom Haag 
Christine Hoene 
 Kayla Nowlan
Evan Schawartz




                   2
Table of Contents-
  Executive Summary.......................................................................................
Method for Assessing Employee Performance.............................................................28
  B) How a Choice...
Gantt Chart..................................................................................................................
Executive Summary

       Azia, a restaurant that is frequently described as chic, has grown and expanded in
its short exi...
7
Part I- Examine the Organization from a Strategic Perspective


A.) An overview of Azia's: Strategies and Planning Activit...
atmosphere and made the restaurant extremely diversified and able to cater to a much
larger crowd.


       This plan of d...
Industry Key Success Factors

          The biggest success factor according to Mr. Pham is Azia's ability to attract such...
Overall Corporate & Business-Level Objectives

        The current short term goals of Azia are to begin to research the p...
Operational Planning Process

       Azia uses a mixture of both formal and flexible operational methods. For instance,
a ...
at his restaurant every night until 2am. While he is there he is constantly observing his
employees and will always point ...
B.) Porter's 5-Forces model: applied to Azia Restaurant


                Porters 5-Forces Model


                       ...
Potential Entrants

        The barriers that arise in entering into the restaurant industry are extremely high.
Very few ...
Bargaining Power of Suppliers

          If a supplier were unhappy with Azia and threatened to cut off service to them or...
restaurant even more, as long as the upper level is at the same level of quality as the rest of
the restaurant. The upper ...
products, such as the fish for sushi, must always be the freshest available. Sushi grade fish
needs to be extremely fresh,...
D.) S.W.O.T. Analysis


                                 Strengths              Weakness
                           Resear...
Opportunity-
   Expanding into upper level
   Growth of the neighborhood
   Possible sister restaurants opening in the fut...
lounge etc.)




E.) Contrast Azia's Strategies with its Closest Competitors' Strategies

       Azia has few competitors ...
reputation. I believe expansion in to the upper level will only create more of a buzz for
veterans of the restaurant as lo...
Decision Making Process
         Thom is the head decision maker. He makes the final decisions and is responsible
for just...
They try to establish this fair work environment through their weekly manager’s
meetings. During the meetings, the manager...
Focus on Learning, Creativity, and Innovation
       Azia is very open-minded regarding creativity and innovation. It also...
Internal and External Recruitment Programs

        Most of Azia’s employees come from an external search process. Thom sa...
Training and Development Programs

        Azia has training and development programs for its employees. For servers, ther...
Approach to Job Design

        Jobs at Azia are designed with an entrepreneurial mindset. Thom stated that it is
importan...
encourages his managers to have one-on-one meetings with all the employees below them
as well.


           Instead of hav...
D) Areas for Improvement Regarding Structural and Organizational
Behaviors/Programs

       Marketing is an area that need...
Part III- Examine Azia's Operations


A.) An overview of Azia's Operations


Location

       Azia Restaurant is located i...
Layout




         32
DJ booth



                                                                         Lounge Bar
                          ...
Azia's layout has become that of 3 different areas. Upon entering guests are greeted
by a host and either sit in the bar a...
his vendors and maintains good relationships with each and would use the same vendors in
any other restaurant he were to o...
Azia's level of standardization can be seen more on a day to day basis. Customer
service and a high quality level of food ...
Azia know that word of mouth is so hugely important to the restaurant so they try to treate
every guest as a food critique...
Azia's Quality quot;Gurusquot;



                              Crosby                   Deming                        Jur...
C.) Degree of Fit between Current Situations/Strategies and Process Choices

        Azia is currently experiencing a soli...
D.) Azia's QFD Matrix


                      Each category of the QFD matrix was decided upon because they are critical t...
E.) How Azia's Operations Could Be Improved


        Azia is always looking for ways to improve its operations and allow ...
Part IV- Systems’ Analysis


A.) Flow of Information

Sales/Marketing:


       In the restaurant business, sales and mark...
marketing, he feels that he always “wants to be something he is not right now” and is never

complacent, this is what fuel...
- Easy access to Metro-Area Hotels
       - Enticing Happy Hour Features 3pm-6pm & 10pm-2am
       - Valet Service Thursda...
important data is collected including check size, amount of drinks ordered, size of groups

by hour, and new vs. repeat cu...
appropriate amount of staff for a given night to avoid too much staff, an unnecessary cost,

or too little staff, resultin...
For food supply, Azia primarily goes through Asian Foods. They will order mass

inventory to cover broad parts of the menu...
restaurant industry employs a first in first out system of inventory purchase, to protect

against wasted inventory. Anoth...
Marketing and forecasting/inventory are also correlated in that strategy is based off

of accurate sales predictions. This...
D.) Strategic Perspective/Competitive Advantage

       These systems are effectively incorporated with one another. Forec...
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
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Management Organizations / Process Final Paper
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Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
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Management Organizations / Process Final Paper
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Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
Management Organizations / Process Final Paper
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This paper is the culmination of a whole semester of work with a great group. Our mission was to take a local company and work with them trying to find ways to enhance the company.

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Management Organizations / Process Final Paper

  1. 1. A Comprehensive Analysis of  Azia Restaurant Prepared by: Taem Nowlan December 7, 2008 Joseph Agriesti
  2. 2. Patrick Cattoor Tom Haag  Christine Hoene  Kayla Nowlan Evan Schawartz 2
  3. 3. Table of Contents- Executive Summary.............................................................................................................6 Introduction..........................................................................................................................6 A.) An overview of Azia's: Strategies and Planning Activities..........................................8 Mission Statement............................................................................................................8 Degree of Diversification.................................................................................................8 Level of Vertical Integration............................................................................................9 Industry Key Success Factors........................................................................................10 Distinctive Competencies..............................................................................................10 Overall Corporate & Business-Level Objectives..........................................................11 Basic Competitive Posture.............................................................................................11 Implementation Tactics..................................................................................................11 Operational Planning Process........................................................................................12 Evaluation Methods.......................................................................................................12 B.) Porter's 5-Forces model: applied to Azia Restaurant..................................................14 Porters 5-Forces Model..................................................................................................14 Potential Entrants...........................................................................................................15 Bargaining Power of Buyers..........................................................................................15 Threat of Substitute Products or Services......................................................................15 Bargaining Power of Suppliers......................................................................................16 Industry Competitors......................................................................................................16 C.) A Description of Azia's Marketing Strategy................................................................16 Key Products and Services.............................................................................................17 Products/Service life cycle Velocity..............................................................................17 Promotion Mix...............................................................................................................18 D.) S.W.O.T. Analysis ......................................................................................................19 T.O.W.S. Analysis..............................................................................................................20 E.) Contrast Azia's Strategies with its Closest Competitors' Strategies............................21 F.) Define Any Problems That You Foresee Regarding the Strategic Direction/Planning Efforts of Azia's Restaurant...............................................................................................21 Part II – Azia’s Structural and Behavioral Characteristics....................................................22 A) Observed and Learned Behaviors On-Site...................................................................22 Structure.........................................................................................................................22 Decision Making Process...............................................................................................23 Leadership Style/Tendencies.........................................................................................23 Culture/Ethics.................................................................................................................23 Level of Diversity..........................................................................................................24 Focus on Learning, Creativity, and Innovation.............................................................25 Internal and External Recruitment Programs................................................................26 Criteria for Hiring..........................................................................................................26 Training and Development Programs............................................................................27 Criteria for Promotion into Management Positions......................................................27 Motivation Techniques – Compensation ......................................................................27 Approach to Job Design.................................................................................................28 Use of Teams..................................................................................................................28 3
  4. 4. Method for Assessing Employee Performance.............................................................28 B) How a Choice in HR Affects the Rest of the Organization..........................................29 C) The Strategic Perspective: How Azia’s Choices Help/Hinder its Competitive Advantage...........................................................................................................................29 D) Areas for Improvement Regarding Structural and Organizational Behaviors/Programs ............................................................................................................................................30 Part III- Examine Azia's Operations......................................................................................31 A.) An overview of Azia's Operations...............................................................................31 Location..........................................................................................................................31 Layout.............................................................................................................................32 Supply & Distribution Chains........................................................................................34 B.) Azia's Process Choices.................................................................................................35 Capacity & Productivity Levels.....................................................................................35 Level of Standardization vs. Customization..................................................................35 Quality Program.............................................................................................................36 C.) Degree of Fit between Current Situations/Strategies and Process Choices................39 D.) Azia's QFD Matrix.......................................................................................................40 Part IV- Systems’ Analysis....................................................................................................42 A.) Flow of Information.....................................................................................................42 Sales/Marketing:............................................................................................................42 Forecasting:....................................................................................................................44 Purchasing Inventory:....................................................................................................46 B.) Integration of systems..................................................................................................48 C.) Big Picture ...................................................................................................................49 D.) Strategic Perspective/Competitive Advantage............................................................50 E.) Areas for Improvement................................................................................................51 A.) Income statement.........................................................................................................53 B.) The Balance Sheet........................................................................................................54 C.) Basic Ratio Assessment...............................................................................................55 D.) Azia’s Financials versus its “competition”.................................................................57 E.) Areas for improvement regarding Azia’s financials....................................................58 Part VI- Recommendations for Azia......................................................................................59 A.) Problem Areas..............................................................................................................59 Part VII- Appendix.................................................................................................................61 Facilities Tour.....................................................................................................................61 Azia 2008 Projected Income Statement.............................................................................64 Azia Balance Sheet 2005...................................................................................................65 Azia Balance Sheet 2006...................................................................................................66 Azia Balance Sheet 2007...................................................................................................67 Correspondence with Client...............................................................................................68 Group Responsibilities ............................................................................................................................................75 Gantt Chart Overview and Critique of Overall Group Project Effort ..............................76 Individual Statements.........................................................................................................77 Thank you letters to Thom Pham.......................................................................................83 Azia’s Menu (everything included)...................................................................................89 4
  5. 5. Gantt Chart.......................................................................................................................103 5
  6. 6. Executive Summary Azia, a restaurant that is frequently described as chic, has grown and expanded in its short existence. This has both helped and hindered the company. It has helped in the sense that Azia has posted positive profits and serviced many customers leaving them happy and satisfied, but it has not allowed Azia the time to develop certain parts of the restaurant devoting the necessary time to every detail. While exploring the intricacies of this company and its management we came up with some recommendations that may improve their restaurant and future success. Introduction Located in between uptown and midtown on the corners of Nicollet and 26th, Azia has carved out a niche in the market for providing “A unique dining experience” as their mission statement says. They do not focus on any specific demographic but relish the fact that they are able to provide a great dining evening or afternoon to just about any person. They have the unique ability to be able to serve many different foods and eating styles. The restaurant has three main areas that they break the restaurant down into: the main dining area, which includes the main bar, the Anemoni sushi bar, and the Caterpillar lounge. Each area is unique in its own way and offers different menus, even though you are able to order from any menu from any area. Azia has attempted to stay on top of the restaurant game by innovating with their menus and keeping their food fresh with the best possible suppliers. The owner Thom Pham believes hard work combined with smart business decisions will always be an important factor in the future of this company, and that Azia’s success is because of this. He also believes that by his example his employees will recognize this and follow his lead. In its short history Azia has already proven that it can compete with high end restaurants while maintaining affordability. This is one reason why Azia is considered by many to be on top. 6
  7. 7. 7
  8. 8. Part I- Examine the Organization from a Strategic Perspective A.) An overview of Azia's: Strategies and Planning Activities Mission Statement Azia Restaurant's Owner and Executive Chef, Thom Pham, explains Azia's Mission Statement as quot;To create an environment were People of all ages can enjoy themselves in through the diverse menu or in one of the three different environments of Aziaquot;. This mission was created by Mr. Pham himself, however he does give recognition to his staff for there effort in pursing his mission and making Azia what it is today. *Owner Thom Pham Degree of Diversification In the beginning Azia started simply as a one section restaurant that offered many classic Asian dishes and did not yet have the funds to expand or renovate. The restaurant's location and cuisine was an instant hit. With the increasing number of customers and a growing fan base Azia believed this would be a great reason to grow the restaurant and diversify. Conveniently the location next door to Azia became available, as well as the location behind them. Azia decided to combine all 3 locations and diversify the restaurant into three different, yet connect areas. Keeping the original dining area, the back area became a bar and lounge area known as quot;The Caterpillar Loungequot;, and the area to the side of them became known as quot;Anomone Oyster & Sushi Barquot; offering a whole different 8
  9. 9. atmosphere and made the restaurant extremely diversified and able to cater to a much larger crowd. This plan of diversification worked extremely well and Azia is still looking for ways to expand. Recently Azia during the summer months has used its outdoor boulevard to it's advantage by creating seasonal outdoor seating areas around the building. This not only created more space and allowed more business at one time, but also created an atmosphere for those who want to eat while enjoying the warmer summer weather. They also succeeded at this by continuing to create a unique enjoyable atmosphere and décor, even though the seating area was on the side walk. Mr. Pham, Owner and Executive Chef, is considering the possibility of taking another opportunity to diversify. The upper level of the building they are located in recently became available. Azia is still in the planning process, but is trying to figure out how they could use this space to expand and diversify the restaurant even more. Mr. Pham states, quot;We are always trying to find the most unique ways to expand and diversifyquot;. Level of Vertical Integration Due to certain key factors Azia has a low degree of vertical integration. The 2 major key factors Azia is lacking are 1. Not owning the property at which they operate business and 2. Receiving all food and beverages from different suppliers. Mr. Pham says that the greatest thing he regrets is not owning the property his business is located on. He says that he could do so much more if the building belonged to him, and would fix some of the buildings structural elements as well as redo the basement to have a more productive and neat business office area, but until he actually owns the location there is no reason for Azia to invest money into fixing up the basement of the property. However the lower level of vertical integration works well for Azia for now because they are able to rely on many different vendors' products to offer what they do to customers, and if Mr. Pham had chosen a different location for Azia, one that he could have purchased, Azia may not be as popular and may not have had the ability to grow as much as it has, which could have lead to its downfall. 9
  10. 10. Industry Key Success Factors The biggest success factor according to Mr. Pham is Azia's ability to attract such a diverse demographic of people. He believes that every person can find something on the menu that caters exactly to their liking. He gave the example of a person who comes in and orders completely off the happy hour menu and another person who comes in and wants a thousand dollar bottle of wine and best stake or seafood dishes, both leave satisfied with there meals and the experience. Another example would be a group of friends who meet to catch up and chat over a quite dinner and a group of friends who want the bar atmosphere with live dj and fun bar and lounge area, both groups of friends can have a great time although each wanted totally different things out of the night out. He believes that many other restaurants fail to cater to a large diverse demographic and instead cater to smaller target markets of either higher class buyers or lower class buyers, where as Azia has found a way to succeed in the restaurant industry and cater to all classes of people. Distinctive Competencies Azia's has five main strengths that distinguish them from their competitors. The first is the layout, Azia offers three different areas to dine in as well as an outdoor eating area in the summer. The second is their locations, they are located conveniently on the corner of Nicollet Ave. and 26th street right in-between Uptown and Downtown. The third is their diverse cuisine, they offer everything from ceaser salad to Omokase (a large Japanese dish). The fourth is their pricing strategy, they offer an all night happy hour as well as a $2000 shot of liquor both appealing to different types of people. The fifth is the décor, Azia has a completely unique décor that is unlike another potential competition. Because Azia is so different in these ways Mr. Pham truly believes that they do not have any close competitors. 10
  11. 11. Overall Corporate & Business-Level Objectives The current short term goals of Azia are to begin to research the possibly of expanding into the upper level of the building. Azia needs to figure out how the upstairs is going to be different without taking away business from the lounge or sushi bar yet still attract new people to the upstairs location. Another issue that lucky has not effected Azia is the current economic recession. Mr. Pham believes that because their restaurant has so much to offer so many they have been lucky enough to not yet feel any effects of the recession. A long term goal is to expand and create other sister restaurants to Azia whether throughout the state or country, Mr. Pham is always ready for something new and want to grow his restaurants and have multiple locations. Basic Competitive Posture Azia prides itself on its superior quality of food, atmosphere, décor, and customer service. Because so many consumers are loyal to Azia they have an achievement of such a high level of customer satisfaction shown through its fan base of repeat customers. Although they are not the lowest or highest cost provider, they provide so many unique items and an experience that there is really no substitute for. Implementation Tactics Azia is open until 2am every night of the week. This means that they must have an eager and efficient staff. Each staff member must have had previous restaurant experience and therefore know that a restaurant as busy as Azia is can be hard to come by these days. Therefore, motivating staff is not a problem for Azia. The servers and bartenders have to potential to make good money in tips and money as Mr. Pham says seems to be the best motivator to keep them wanting to work later and longer shifts. 11
  12. 12. Operational Planning Process Azia uses a mixture of both formal and flexible operational methods. For instance, a manager may need to be more formal in making sure the duties for the day are completed in order to accurately run the restaurant. On the other hand, a server or bar tender may need to be more flexible depend on what section they are working in and in effort to keep guests happy. If a guest requests a change to a particular item on the menu it is the servers job to put the order into the kitchen (formal) but needs to relay the special change in the order to the cooks themselves (flexible) in order to keep the customer service at a high level. By having a mixture of both formal and flexible Azia is able to maintain a well structured business while meeting individual customers needs. Evaluation Methods In terms of forecasting, evaluating the future for Azia is always changing. There forecasting is based on past data and sales patterns that help indicate what level of performance the restaurants future should be performing at. Evaluating performance of the restaurant is done on a regular basis. The restaurant orders its food and drinks from vendors at specific times. However it is the responsibility of certain employees at Azia to monitor levels of food and re-order items that may be low. For example, if it has been an extremely busy weekend for sushi and Azia is down to its last few pounds of salmon, it would be the head sushi chef's responsibility to order the correct amount the restaurant needs for about two or three days of operation based on how many items on the menu contain that salmon. He would need to order it direct and have it flown into the U.S. by next day air, in order to keep the fish as fresh as possible and to keep customer service high. It is easy for Azia to evaluate if an employee is performing well because of examples like the one above. If the restaurant was completely out of salmon and had to disappoint each customer that wanted salmon it would be the sushi chef's fault for not ordering more because now they will be out for two days due to the wait of over night for a shipment to get in. Another way Mr. Pham evaluates his employee's performance is found in his dedication to the restaurant. Mr. Pham is workaholic and can be found working or dinning 12
  13. 13. at his restaurant every night until 2am. While he is there he is constantly observing his employees and will always point out to them in private when they have made mistakes and gives them helpful critiques because he wants them to be topnotch and professional. Mr. Pham also has an all staff meeting every other Sunday morning which is mandatory. At this meeting he discusses new items on the menu and is often giving employees flash cards and pamphlets to help them memorize the elements of Azia's large menu. Memorization is not required, but he wants them to have amicable knowledge of the menu and what ingrediance make up each dish. 13
  14. 14. B.) Porter's 5-Forces model: applied to Azia Restaurant Porters 5-Forces Model Porters 5-Force *Barriers to entry - Azia is such a large unique restaurant that it is difficult to Model compete with its variety and quality of food as well as the unique décor and experience . * They offer a outstanding quality *Developing neighborhood . Much of service Potential entrants room for renovation in neighboring *They have the ability to diversify buildings . within the same building Threat of new entrants *They motivate their employees through a profit sharing program Industry Competitors *High volume, frequent Bargaining power purchasing and close of suppliers relations with suppliers Buyers Suppliers allows them to negotiate prices . *Not many upscale restaurants offering high Bargaining power Rivalry among * Relationship with of buyers price items and low affordable priced items on existing firms direct supplier for its the same menu . seafood allows Azia to have delivery’s flown in *Azia’s happy hour menu . within 2 days of Threat of substitute ordering . products or services *Customer comes first at Azia. The owner is *Other restaurants on site ready to solve problems to ensure customer leaves satisfied with their offering a similar menu Subsitutes experience at Azia . orders seafood from *Buyer Propensity to secondary suppliers . Substitute- Other dining choices in neighborhood , however Azia is open till 2 am every night. *Diversity of food types. Azia offers predominately seafood. 14
  15. 15. Potential Entrants The barriers that arise in entering into the restaurant industry are extremely high. Very few restaurants have the ability to be successful unless they have been around a long period of time and have a huge fan base, or if they are in a high traffic location and have a good enough product to be an instant success. Mr. Pham believes with the market the way it is we will sadly see more restaurant going under verses starting up. Over the past seven years the neighborhood around Azia has grown and there now are many restaurants on this one block chain. Mr. Pham says that he loves the fact that other restaurants have come into the neighborhood because even if the customers are not eating at his location, he believes that they will see how updated the area has become, see his restaurant, maybe look it up online, and next time they are in that area they will want to eat at his restaurant and hopefully will keep coming back. Bargaining Power of Buyers Price is not something that a customer can come in and bargain about. There are many other lower priced alternatives they could be eating at. And if the lower priced item of Azia does not interest them they can simply travel to a different type of restaurant. Threat of Substitute Products or Services There are few substitutes to the services, cuisine, and dinning experience Azia offers all in one convenient location. Very rarely could a large work party be held at a restaurant and have each member of that staff be able to find something they want and have an enjoyable night out. No many other restaurants have such a popular bar and lounge area while offering a fine dining experience and also having a very low key, casual sushi bar. Other sushi bars do not offer the same fine dining experience and other fine dining restaurants do not offer lower cost alternatives or a popular bar and lounge area with a live dj until 2am every night. 15
  16. 16. Bargaining Power of Suppliers If a supplier were unhappy with Azia and threatened to cut off service to them or demand more money for their products, Azia would have no problem finding an alternative. However, because Azia is so busy while so many other restaurants are going under a supplier would be in rough water if they are going to challenge one of their biggest customers and possibly lose Azia's business. Many other suppliers would be more than happy to have the amount of business Azia would be giving them. Industry Competitors Azia's biggest competition is most likely its neighboring restaurants. However Azia is open until 2am every night, meaning that even if others choose to eat dinner at a neighboring restaurant there is still the chance that they may come to Azia for a drink or to experience the lounge and bar atmosphere if they are not ready to go home. And upon entering in Azia that customer may decide to dine at Azia instead the next time they are in that area. Mr. Pham believes they truly have no competitors because no other restaurant has all of the same elements that Azia does and can not please such a wide variety of guests. C.) A Description of Azia's Marketing Strategy At this time the suggestions that we are going to make for Azia are minor but beneficial. We have decided this because Azia has a large fan base of repeat customers, changing the way they run their business could effect their W.O.M. reputation. We believe that the best short term business strategy Azia should invest in is the expansion into the upper level. Expanding into the upper level will create a buzz and something new for veterans of the restaurant as well as get the W.O.M. about the restaurant up again. It will get the W.O.M. for the restaurant up because once it is completed people will be talking about the 16
  17. 17. restaurant even more, as long as the upper level is at the same level of quality as the rest of the restaurant. The upper level should not be taking away from another part of the restaurant, and Azia should take the time to figure out what the restaurant is missing and what addition would be most successful to the 2 bars, lounge, 1 private dinning area and 2 other dinning areas. A long term business strategy Azia could succeed at would be expanding to other locations. Being located between uptown and downtown has been successful so far, but there are big markets of people in the northern and southern suburbs that Azia could tap into. Azia restaurant could spend some time researching which areas could be successful to expand into. The best idea would be to look for a place where they could also purchase the place they were going to be located at and not have to worry about paying rent or making necessary updates abiding around a lease and alternate ownership. Each of these business strategies would make Azia successful in the short and long run. Key Products and Services Azia offers 3 different areas of the restaurant to dine, drink, and dance. They offer an large yet affordable happy hour as well as a classy assortment of fine foods, wines, and liquors. The restaurant constantly maintains a high level of customer service and quality level of food. Without quality cuisine or quality service, Azia would not be as popular as it is today. Products/Service life cycle Velocity Azia's product and service life cycle is accelerated in order to meet customer needs in a timely manner and at a high level of quality. In the restaurant industry, quick service is expected, it is the servers responsibility to get the orders in promptly, is the chef's responsibility to create a high level of cuisine, and is then the serves level to get the completed dish out to the customer quickly upon it being made. The life cycle of the 17
  18. 18. products, such as the fish for sushi, must always be the freshest available. Sushi grade fish needs to be extremely fresh, and because of Azia's great direct communication line with its overseas vendor, the fish can be ordered and in the restaurant over night, so there is no excuse to offer a lackluster grade of fish to any customer. Promotion Mix Azia does not use any forms of marketing besides its website. Azia does receive free marketing from websites like citypages.com and other sites or magazines where food critics have reviewed Azia's atmosphere and cuisine, and up until this point in time Azia has received nothing but raving reviews. Because the restaurant is so constantly busy, and attracts so many repeat customers, they see not reason to focus any time or money into public advertising and rely more on W.O.M. 18
  19. 19. D.) S.W.O.T. Analysis Strengths Weakness Researching cost and effectiveness of Thom efforts to expanding into the expand and open new Opportunities upstairs level locations Thom is at Azia until 2am every night to insure every guest is Azia is open until satisfied and can talk 2am and serves food to him personally if Threats until 2am otherwise Strengths- High level of customer satisfaction Decor Quality of Food Quality of service Diversity in price Different Atmospheres of the Restaurant Open until 2am every night Motivated employees Weaknesses Most employees do not have college degrees Lack of marketing Only one location Do not own building location 19
  20. 20. Opportunity- Expanding into upper level Growth of the neighborhood Possible sister restaurants opening in the future Location near uptown & downtown Threats Economy could become worse and drastically effect business Location owner could decide not to renew lease A competitor could enter the neighborhood T.O.W.S. Analysis Strengths Weakness As Azia does not want The diversification of to spend in marketing Azia’s offerings to and focuses on customers and the W.O.M. instead, it possibility of more could possibly benefit Opportunities growth. from its use. Threats A large threat Azia Largest external has is the current threat is a major economic situation of downturn in clientele the U.S. but Azia spending due to the combats this with its economy. diverse offering to many different options. (main dining, sushi, caterpillar 20
  21. 21. lounge etc.) E.) Contrast Azia's Strategies with its Closest Competitors' Strategies Azia has few competitors that employ similar strategies. A big difference is that Azia has been successful on W.O.M. advertising where as many other restaurants need to put big bucks into advertising and marketing of their restaurant and could not be busy until 2am every night simply on W.O.M. and repeat loyal customers. Another strategy that sets Azia apart from its competitors is its different areas of the restaurant. The Caterpillar lounge area is a revenue center on its own. The Oyster & Sushi bar is also very self supporting. When Azia is going to sponsor a local charity event they refer to the recorded sales from each different area and decide based on that information if the event should be hosted by The Caterpillar Lounge or Anomone Oyster & sushi bar, this being their only true marketing of either area of the restaurant. Because Azia has a different strategy from any possible competitors has proven to be very successful for the type of business they are offering customers. F.) Define Any Problems That You Foresee Regarding the Strategic Direction/Planning Efforts of Azia's Restaurant At this time I would suggest that if it isn't broke don't fix it. Azia has a huge fan base of customers and changing the way they run their business could effect their W.O.M. 21
  22. 22. reputation. I believe expansion in to the upper level will only create more of a buzz for veterans of the restaurant as long as it does not take away from any of the other 3 areas of the restaurant. By establishing these 3 different areas of the restaurant, Azia has a larger line of revenue and has the opportunity to put money into making a beautiful decor and quality cuisine with out have to cut funds or costs and lack quality. Part II – Azia’s Structural and Behavioral Characteristics A) Observed and Learned Behaviors On-Site Structure Azia has a flat organizational structure. Thom Pham is the controller and is also at the top of organization. He has an Office Manager who reports directly to him from Azia. Below him are the other managers, and under the managers are the employees. The organization’s structure creates a comfortable environment where all employees are able to talk with Thom. Thom Pham Office Manager Restaurant Managers Servers Hosts Cooks Bartenders 22
  23. 23. Decision Making Process Thom is the head decision maker. He makes the final decisions and is responsible for just about everything at Azia. There are a few occasions where others may be used to help make a hiring decision, but that is normally after the candidates have been narrowed down and usually only for important positions such as a new floor manager. Thom holds weekly meetings with all of his staff. He invites the staff to these meetings, and often attends their meetings as well. It is during these weekly meetings that problems are discussed and resolved. Leadership Style/Tendencies The leadership style at Azia is a mix between authoritative and participative. He is very honest when talking to employees about the good and bad things they are doing. It is because of this, that he is seen as authoritative. Thom, however, has been very successful at Azia by using his authoritative approach. He has an extreme passion for his work, and it shows. It is also participative because Thom and the other managers play an active role in decision making. Even though most of the decisions are made by Thom, the other managers usually have a good deal of input. Culture/Ethics Although Azia does not have a Code of Ethics, the culture and ethics of the company are strongly based on the values of Thom and his upper management. He believes that one should, “define the company by your own example.” As time has passed, he has learned many things by trial and error, but most of all, “We pride ourselves on being fair,” he says. 23
  24. 24. They try to establish this fair work environment through their weekly manager’s meetings. During the meetings, the managers discuss what is “fair.” For example, no one is just fired at Azia. There are three warnings and a review of the employee by two managers who are not involved in the situation before the employee is suspended without pay. Thom says that this helps keep their ethics in check and the culture of the workplace comfortable. Level of Diversity Azia has a significant level of diversity and is an equal opportunity employer. Thom explains that since the restaurant industry is diverse, Azia is able to work without a diversity program because it inevitably attracts a diverse workforce. Working with people from different cultural backgrounds is one of Thom’s favorite parts about working in hospitality and that shows as the staff at Azia is made up of many racial and ethnic groups of people. Gender is not an issue at Azia. The wait staff and hosts are pretty evenly split between male and female. The cooks and managers have more males than females but there aren’t any glaring examples of having too many males or females. When I asked Thom about employees with disabilities he said, “We work with the State and Federal guidelines for ADA. We are obligated to create a work space and environment for anyone with a disability.” He was unaware of any employee with a disability and said that employees know how physically demanding jobs at Azia can be. Consequently, Azia has not received applications from disabled candidates to date. Employees at Azia are not given time off for religious holidays. Thom said that employees are welcome to use their paid vacation, or if they choose, unpaid time off for such holidays. 24
  25. 25. Focus on Learning, Creativity, and Innovation Azia is very open-minded regarding creativity and innovation. It also understands the value of employees who can learn new skills. Thom has his managers become learned about wines and all the different aspects about them since wine sales are a key factor in Azia’s revenue. Thom and some of his upper level mangers take an annual trip together as well. The trips are social but also allow them to “go out to a lot of restaurants and try to see what people are doing,” he explained. This helps with learning, creativity, and innovation. Managers have quarterly reviews which allow them to assess their creativity and innovation, as well as, areas that need improvement. Thom says that training and education are put into the manager’s quarterly performance to ensure that, at the bare minimum, they are thinking about learning, creativity, and innovation on a quarterly basis. 25
  26. 26. Internal and External Recruitment Programs Most of Azia’s employees come from an external search process. Thom said that they will look internally first, but a lot of times there is not a second in command who can easily take over an open position. For example, a line cook is most likely not going to become an executive chef since the executive chef is Thom himself. It is common for a veteran at Azia to become part of management, but Thom said that it is, “really nice to have some fresh ideas, too.” To get those fresh ideas, Azia goes through an external recruitment process. The process is different depending on the position. To search for managers, Azia begins by putting advertisements in the newspaper and online at monster.com. Thom will then personally interview the potential managers and use his own judgment in whether or not they will be fit for Azia. For wait staff, an advertisement is also put in the newspaper, and the candidate must come to the restaurant to fill out an application, and often, the interview is done on the spot. Thom doesn’t necessarily do all of these, as many times he is out overseeing his other restaurants and business endeavors. If he doesn’t do the interview, then it is performed by the manager on duty. Criteria for Hiring Azia is always looking for employees with an entrepreneurial spirit, especially in management positions. They need people who are creative and artistic, because the food industry flourishes with creative and artistic people. It is not essential to have a college degree to work at Azia, in fact, most employees do not. On the spot interviews of potential wait staff employees allow managers and/or Thom to see if the candidate is a good fit. If they seem competent they are likely to be hired. 26
  27. 27. Training and Development Programs Azia has training and development programs for its employees. For servers, there is a minimum three day period in which a new server shadows a current server. If the manager does not feel the new hire is ready yet, that time period can be extended to five or seven days. It is also likely that new servers will get a smaller section of the restaurant before taking on a full load of tables. New managers normally come in experienced and ready to work, so they receive minimal training. Typically, they need to be trained in on the systems that Azia uses until they feel they can do their job competently as Azia is definitely a different restaurant than most traditional ones. Criteria for Promotion into Management Positions Employees many times are promoted to management positions despite the fact that Azia also dabbles in external recruitment endeavors. There is no objective way to get promoted. If the position opens up, Thom definitely takes a look at his current employees before going external. It’s up to him to decide if any employees are fit to become managers. Motivation Techniques – Compensation Both compensation and non-compensation based motivation techniques are used at Azia. Managers who perform well are offered the option to participate in profit sharing. Obviously wait staff are motivated on their own as they are working for tips, which makes up most of their salary. Wages are either at or above a competitive level and given the affluent clientele that visit Azia, the tips are usually very generous. 27
  28. 28. Approach to Job Design Jobs at Azia are designed with an entrepreneurial mindset. Thom stated that it is important to find people who think outside the box. Thinking outside of the box is supported by profit sharing. The jobs at Azia allow employees to think creatively. For example, Thom does not want to tell the Bar Manager how to increase bar sales, instead he wants the Bar Manager to think, “How can I increase the bar sales?” Use of Teams Management rarely uses teams at Azia. Hiring is not done in teams, rather hiring is done by individual managers. All managers have a group of employees that are below them, so that could be considered a team. For example, the restaurant manager is in charge of the waiters and waitresses, and the executive chef (Thom) is in charge of other cooks. In some instances, Azia uses partners when reviewing an employee if they are suspended without pay, but other than that teams are not widely used. Method for Assessing Employee Performance At Azia, Thom has one-on-one reviews with all of his managers on a quarterly basis. During these meetings, the managers set their quarterly goals. He then reviews these goals with the managers on a monthly basis. Goals can range from having a certain number of “excellent” ratings on customer comment cards each month to increasing bar sales. A manager’s performance at reaching the quarterly goals helps determine if they will be entered into the profit sharing plan or not. If the manager misses their goals for severely quarters in a row, it is likely that they will not be part of the profit sharing plan. This is a big deal because managers can nearly double their salary sometimes by participating in the profit sharing program. If Thom sees that the manger is not meeting a goal due to lack of effort, he is likely to exercise some form of discipline. He also 28
  29. 29. encourages his managers to have one-on-one meetings with all the employees below them as well. Instead of having a policies and procedures manual for its employees, Azia has an employee handbook. Thom explained that if they had a policies and procedures manual they would legally have to stand by it; the handbook simply offers guidelines that the organization is not legally obligated to follow. He said this is important because it allows them to fire an employee without having to give three warnings, however, he does not allow managers to terminate in anger. This means that employees are normally suspended without pay, and then reviewed by two other managers. If the other two managers agree that the employee should be terminated, the decision is made final. B) How a Choice in HR Affects the Rest of the Organization All hiring is done by managers. This directly affects the rest of the organization. For example, Thom is known to be more authoritative which might cause him to hire candidates who react better to that type of management. This, in turn, could affect client relations. Additionally, if another manager hired an employee who did not respond well to authoritative management, it might affect employee-employer relations. It is important that Thom and all other managers carefully select their employees to ensure that both client and employee relations continue to be positive, thus continuing to make Azia successful. C) The Strategic Perspective: How Azia’s Choices Help/Hinder its Competitive Advantage Thom has had a lot of experience in the restaurant business and seems to have a sixth sense when it comes down to hiring good, quality people to work at Azia. This alone has given him quite the competitive advantage over other restaurants. All his employees, from the managers to the wait staff are quite competent and only have helped Azia meet its revenue goals. Also, with Thom being the executive chef, his instincts and feel for what people what have definitely helped Azia. 29
  30. 30. D) Areas for Improvement Regarding Structural and Organizational Behaviors/Programs Marketing is an area that needs to be better looked at according to Thom. While there are a few ads and publicity through the media has helped, there isn’t much in terms of advertising or marketing. Word of mouth has really helped spur business as well as repeat customers. Thom thinks that through effective marketing he can gain even more customers. 30
  31. 31. Part III- Examine Azia's Operations A.) An overview of Azia's Operations Location Azia Restaurant is located in Minneapolis, Minnesota on the corner of 26th and Nicollet Ave. in-between uptown and downtown. This location is near many businesses and gets its business from the busy uptown and downtown areas. Being in this location is an advantage because it offers lots of space to expand operations, local cabs nearby, parking lot and street parking as well as lunch traffic, and business until 2am. 31
  32. 32. Layout 32
  33. 33. DJ booth Lounge Bar Parking Bathroom Private dining backdoor 36.0 in. x 36.0 in. x 36.0 in. x 24.0 in. 24.0 in. 24.0 in. storage 36.0 in. x 24.0 in. Up 36.0 in. x 24.0 in. 36.0 in. x 24.0 in. Main dinning 2nd sushi area bar 36.0 in. x 24.0 in. Kitchen 36.0 in. x 24.0 in. 36.0 in. x 24.0 in. 36.0 in. x 24.0 in. 36.0 in. x 24.0 in. Main Bar Sushi Bar 36.0 in. x 36.0 in. x 36.0 in. x 24.0 in. 24.0 in . 24.0 in. 36.0 in. x 36.0 in. x 36.0 in. x 24.0 36.0 in. x 24.0 in. 24.0 in. 24.0 in. in. x 24.0 in. 24.0 Main door in. 33
  34. 34. Azia's layout has become that of 3 different areas. Upon entering guests are greeted by a host and either sit in the bar area while waiting for a table, request to eat there, or may continue to the room behind the bar which leads to the Sushi bar. In the Anenome Sushi bar guests may enter or exit through the revolving doorway from the outside and are offered the full restaurant menu. If the guests are not choosing to dine they may walk through the dining room and into the back lounge area where local djs play until 2am. This back lounge area is known as the Caterpillar Lounge and also has an entrance from the outside directly into its private area. Between the Caterpillar Lounge and the main Azia dining area is a private dining area and an upscale bathroom. The Anenome Sushi Bar and main dining part offer both booths and tables that are fairly close together but never to the point of crowding. Seasonally, outdoor seating is available along the boulevard; however Azia is still able to create a quite, clean, romantic atmosphere even for this outdoor seating. Supply & Distribution Chains Azia has different products delivered multiple times per week depending on the demand for certain items. For example, Azia receives weekly deliveries of liquor and food but if necessary can re-order more of a certain item (primarily seafood or sushi fish) multiple times as needed. Deliveries primary come between lunch and dinner hours as to not stop any of the restaurant processes. Azia does have a large storage area and two bar areas so they are able to store large quantities of liquor and other items on shelves as well as in the basement and kitchen area. They also have many freezers and refrigerators for storage of meats, fish, and other perishable items. It is the responsibility of the head chef and sushi chef to place orders and to throw out any expired or risky food. Azia gets most of its ingredients from Asian Foods, who is the major distributor to the Midwest. Over the years Azia has found its vendors in many different ways. Whether from referral and meetings or offers from the suppliers themselves, Azia has been able to meet all the restaurant needs in an orderly and timely fashion. Mr. Pham says that he is satisfied with 34
  35. 35. his vendors and maintains good relationships with each and would use the same vendors in any other restaurant he were to open. B.) Azia's Process Choices Capacity & Productivity Levels Azia offers plenty of different options for its guests all in one location. They offer a full separate menu of wine, beer, champagne, sake, and cocktails. They offer a full all night happy hour menu of discounted food, half priced sake bottles, wine bottles, champagne bottles, discounted cocktails, and discounted pints of beer. They offer a huge menu of appetizers, salad, seafood, meat dishes, sushi, and other Asian classic items. With these high level of menus Azia must always focus on keeping there productivity levels just as high. Azia has a large capacity for guests as each dining area can seat over 100. This includes the lounge area and seasonal outdoor area. Azia has a very high level of capacity meaning that even during very busy hours Azia does not need to rely on a pager system or waitlist in order to seat guests and are able to get them seated in a timely manner. On the occasion where a large number of reserved guests will be attending, Azia will often seat them in the separate private area near the Caterpillar Lounge or may close down the Caterpillar Lounge for private parties. Because most of these private parties will not last until 2am and there is another bar area, guests will not be differed from the Caterpillar Lounge for long when that is where they are wanting to go. Azia has many large reservation parties every night and does not always seat them in the private area. Other times the large parties can be found in the main dining area and in the sushi bar. For reserved parties, Azia will assign there best servers to the section and will make sure they receive just as adequate service as if they were a smaller more intimate party of guests. Level of Standardization vs. Customization 35
  36. 36. Azia's level of standardization can be seen more on a day to day basis. Customer service and a high quality level of food are standards which Azia tries to meet each day. The process of serving guests itself is a standard process of greeting, seating, giving out menus, informing customers about specials, taking beverages orders, taking appetizer orders, taking meal orders, and bringing each to the guest in a timely manner and continuing to serve the guest while they are eating. This standard process is ideal for any successful restaurant and can be an element of accreditation to the success of Azia. However Azia's level of Customization is what making it unique and a success of W.O.M. advertising. Mr. Pham is the executive chef of the restaurant and has formed the menu to what it is today. He has used input of guests, employees, and experiences from others throughout the process, but claims its success to the consistency of its unique menu. He gave the example of restaurants that serve seasonal specials or only have certain deals at certain times of the year (Red Lobster all you can eat shrimp Tuesdays) and says that you are targeting a type of person who just wants a deal and has to go to your restaurant on certain days to get it. That type of person does not want to enjoy food and the atmosphere because they have already been told what to order and what day they have to get it. Azia's customization comes from the large diverse menu, the ability to get any dish any day or time of year, the ability for customers to mold the order to their liking and the multiple atmospheres located in one location. Quality Program Azia focuses largely on the quality of service and experience it is providing to customers each day. Because they are not a highly marketed restaurant they need to keep up the W.O.M. and repeat guests coming to the restaurant. The best way to insure quality service is through Azia's employees. Azia hires managers who pay attention to detail and will help out the wait staff and customers in whatever ways they see necessary to speed up the service process or create a better atmosphere for that customer. Mr. Pham picks managers based on people who want the restaurant to succeed and sees a lot of potential in their ability to do so. Mr. Pham often walks around the restaurant and greets guests himself and makes sure that everyone is as satisfied with the outcome of the full Azia experience. 36
  37. 37. Azia know that word of mouth is so hugely important to the restaurant so they try to treate every guest as a food critique writing a review themselves. 37
  38. 38. Azia's Quality quot;Gurusquot; Crosby Deming Juran Definition of quality Conformance to A predictable degree of Fitness for use specifications uniformity and dependability at low cost and suited to the market Degree of senior Responsible for Responsible for 85% of Less than 20% of management quality quality problems quality problems are responsibility due to workers Performance Zero defects Quality has many “scales”: Avoid campaigns to do standard/motivation use statistics to measure perfect work performance in all areas; critical of zero defects General approach Prevention, not Reduce variability by General management inspection continuous improvement; approach to quality, cease mass inspection especially human elements Structure 14 steps to quality 14 points of management 10 steps to quality improvement improvement Statistical Process Control Rejects statistically Statistical methods of Recommends SPC but (SPC) acceptable levels of quality control must be warns that it can lead to quality used tool-driven approach Improvement basis A process, not a Continuous to reduce Project-by-project team program; improvement variation; eliminate goals approach; set goals of quality without methods Teamwork Quality improvement Employee participation in Team and quality circle decision making; break approach down barriers between departments Costs of quality Cost of No optimum; continuous Quality is not free; nonconformance; improvement there is an optimum quality is free Purchasing and goods State requirements; Inspection too late; allows Problems are complex; received supplier is extension defects to enter system carry out formal of business; most through AQLs; statistical surveys faults due to evidence and control charts purchasers themselves are required Vender rating Yes and buyers’ No, critical of most Yes, but help supplier quality audits useless systems improve Single sourcing of supply Yes No, can neglect to sharpen competitive edge Key Fully Applies Some Application Does not apply 38
  39. 39. C.) Degree of Fit between Current Situations/Strategies and Process Choices Azia is currently experiencing a solid customer base and continuous business. This points out that the current process choices they are using are working effectively. Azia's focus is always on customer service, and the efficiency of the restaurants process is a major component in a customers dinning experience at Azia. One of the most important current strategies is the process of taking the order to getting the food/drink on the table for the customer. Azia knows customers do not want to wait beyond a reasonable about of time for their food/drinks. Azia has an efficient fast process of the wait staff taking the order from the customer, typing it into the computer, the order prints out in the form of a receipt for the bartender or chef and their are designated people behind the bar making drinks for the house, and designated people in the kitchen to make appetizers vs. entrees and sushi orders go to the sushi chef. Each of these workers get the orders ready as quick as possible and it then is the responsibility of the wait staff to bring the finished product back to the customer. Because Azia has specific duties for each of these employees fewer items are forgotten to be made, nor do they take as long to be made. Orders are brought out as they are ready and Azia only hires wait staff with previous experience, so they are quick to put the orders in and get the food/drinks to their customer. Also the incentive of the tip from the customer and approval from the multiple management out on the floor of the restaurant keep the servers motivated to do their best. 39
  40. 40. D.) Azia's QFD Matrix Each category of the QFD matrix was decided upon because they are critical to a dining experience at any restaurant. We also spoke with management at Azia to determine what they thought customers expected and based our categories off of their answers. From our time visiting Azia and speaking with multiple employees, we were able to understand what Azia provides within each category to create the rating shown below. Azia QFD Matrix Correlation: ** Strong Positive * Positive - Negative Restaurant Characteristics Competitive Evaluation X=Azia Customer Importance M-Sat: 11am- Customer Staffing Employee Food Diversity A=La Belle Vie Uptown 2am, Sun: to B=Cosmos Training quantity Requirements 3pm-2am (5 is best) 1 2 3 4 5 ** - Food quality 12 ABX * ** ** * Time of service 10 AB X ** ** ** Quality of Staff 10 ABX * Wide food selection 9 ABX * * ** * * Ambience 9 BX A Prices 10 A BX * * ** Hours 7 ABX ** ** Location 8 ABX Importance 8 10 9 10 7 7 Weighting Technical Target Values Evaluation stay in top range of grading system, based on feedback surveys (5 is best) 5 A BX ABX A ABX A Relationships: 4 BX A BX B ** Strong = 9 3 # Medium = 3 X 2 / Small = 2 1 40
  41. 41. E.) How Azia's Operations Could Be Improved Azia is always looking for ways to improve its operations and allow its guests to have an even better experience coupled with a higher level of customer service. Through Mr. Pham's daily efforts to critique his wait staff and kitchen staff they are on a positive track. He is always open to suggestions from guests, employees, and other restaurant owners. Azia is improving everyday and is able to keep ahead of the competition because of Mr. Pham's dedication and personal attention to the restaurant. I believe improvements are minimal and are more of a case by case improvement. The one thing I have noticed as a frequent guest of the restaurant is that the ink on some menus has worn and can be very hard to read. Each time I point this out I am given a new menu, but the badly printed menu should from that point be taken out of circulation. This may be an operational error as the printer at Azia is not the best quality itself. My recommendation to Azia would be to invest in a better printer and get the poorly printed menus out of circulation instead of just simply dealing with the problem when a gust presents it to their attention. 41
  42. 42. Part IV- Systems’ Analysis A.) Flow of Information Sales/Marketing: In the restaurant business, sales and marketing are of utmost importance. Getting customers in to the establishment is the lifeblood of the business. Mr. Thom Pham coordinates the majority of the marketing and uses his established connections to do so. Mr. Pham will have brainstorming sessions with all the managers, the thought process being that the more ideas from which to pull from the better. For ideas that get used Mr. Pham has developed incentives. The main goal is to enlarge revenue to all parts of the restaurant. Keep in mind that this establishment is divided into three main parts: - The restaurant itself - Caterpillar Lounge - Anemone Sushi/Oyster Bar These three different parts require separate marketing channels, and although there is some bleed over, they generally reach out to different demographics. For the restaurant, Mr. Pham uses traditional marketing highlighting its traditional elegance and world class dining selections, along with a one of a kind experience. He does this via his web page, twin cities reviews, and half page ads in trendy publications. For the lounge he markets to a younger demographic and highlights the use of local DJ’s and the uptown nightlife, plus a full service bar. For the sushi/oyster bar, the newest addition to the establishment, he highlights that it is the best in the area and completely authentic. Mr. Pham takes a unique approach to 42
  43. 43. marketing, he feels that he always “wants to be something he is not right now” and is never complacent, this is what fuels him and consequently his marketing strategy. Ultimately he understands that the more people through the door the healthier the business will be. He also understands that for certain day parts, this can be improved upon. Mr. Pham doesn’t see flooding the airwaves as an effective way to get the word out on any of the parts of the business. Rather he sees public relations and past experience as vital marketing techniques. PR and charity events are the biggest techniques used, as they get the name out there, which is the primary goal, establishing word of mouth advertising. Thom stresses a “market by need” philosophy. Magazine reviews are also a positive source of PR/Marketing, but he does not like the use of coupons or cut outs, as they project a different image than he likes. The magazines he likes to get the name in are ones that would be read by groups and would bring large amounts of people (examples in the awards below). The website (aziarestaurant.com) offers insight into the restaurant for inquiring minds with specific links for each individual part of the establishment, and several boasts about recent awards/success/offerings: - 2008 Silver Spoon Recipient: Top Three Fusion Restaurant - 2008 AOL City's Best Date Spot Winner - Anemoni Sushi & Oyster Bar - Open Tables Diner's Choice Hot Spot - quot;Minneapolis Hot Spotquot; MPLS ST Paul Magazine 2008 - Bon Appétit Where to Eat 2003 & 2004 - Premier Sake Bar in Minneapolis - City Pages 'Best Late Night Dining' 2005 - Food and Wine Special Mention 2003 - The Twin-Cities' Finest Waitstaff - The Biggest Sake List in Minnesota 43
  44. 44. - Easy access to Metro-Area Hotels - Enticing Happy Hour Features 3pm-6pm & 10pm-2am - Valet Service Thursday through Saturday - Colorful Nightlife Scene - Ultra-Mod Lounge with DJs seven nights a week - Full Menu & Dining Service 'til 2am - A Gorgeous Summertime Sidewalk Café One aspect the website could improve upon is a list of special events, dj’s, and additional upcoming events. I feel that this could be covered in a short weekly newsletter by Mr. Pham, and could help drive traffic. The site also could do a better job of stressing lunch hours and specials. Metrics the Azia team pay attention to for developing marketing plans are customer frequency, size of groups, check size, and new vs. existing customers. Mr. Pham also understands that his business sees the majority of his customers in the area and downtown so he doesn’t throw away marketing dollars at customers that he can’t get saying, “fish where the fish are biting”. Forecasting: Another important system that Azia incorporates is forecasting. This is an exceptionally important aspect of the business, an integral component in running a profitable and efficient company. Forecasting is used to help the management team understand trends and growth in the business; this also helps predict product trends for the future. Azia uses time series analysis to look at past data and find trends. Operating decisions are guided by customer behaviors. As mentioned in the sales/marketing section, 44
  45. 45. important data is collected including check size, amount of drinks ordered, size of groups by hour, and new vs. repeat customers, in addition to host of other important metrics. Using these metrics is key for the short term because it gives an idea of staffing requirements and product requirements, but it also helps reveal seasonality and hourly production, it also helps for predictions for year to year. This is a useful tool for giving management an idea of where the business is headed, helps them align the business accordingly, and reveals whether or not change needs to be implemented. Forecasting decisions directly impact operating costs and revenues. Over the past two years Mr. Pham has seen sales increase 7%, and he has used the tools at hand to see this and consequently forecast appropriately. He predicts future sales growth. He currently sets 5% as a benchmark for sales growth to maintain business health. Important projects have been developed that result in the increase in sales. The latest project was the addition of the sushi/oyster bar, bringing in a brand new stream of revenue without incurring much cost. They also recently tweaked the kitchen slightly to allow for maximum efficiency. Another project that increased sales was a renewed focus on the lunch crowd and toning the lunch menu. This resulted in a renewed marketing effort to the lunch crowd, which includes business people looking for a classy place to spend their hour off. While past trends are the largest indicator used when forecasting, a more subjective and qualitative approach is used based on opinions/estimates. One example is the use of different events in the caterpillar lounge which changes the amount of inventory needed. They use this method to forecast short periods of time and new events because there is no quantitative data from past years for predicting. Forecasting is necessary to reveal the 45
  46. 46. appropriate amount of staff for a given night to avoid too much staff, an unnecessary cost, or too little staff, resulting in poor service. Management does not want to make a habit of having staff on call or sending staff home early, as this may result in irritated employees in an industry with exceptionally high turnover. Accurate forecasting also plays a major role in inventory purchase (to be discussed later). In these difficult economic times, almost all restaurants feel the squeeze as more people eat at home to conserve dollars; however, although Azia has seen some reduction in traffic, they remain relatively steady due to the demographic they serve. Purchasing Inventory: A restaurant without inventory is not a restaurant at all, so being in stock of the most popular food and drink items is of utmost importance to Mr. Pham, and essential to the health of the business. This is a very important system because it ties into everything that a restaurant is. If inventory is low it results in employee stress and customer dissatisfaction. There is generally a constant inflow/outflow of food inventory since it is a relatively small kitchen with a lack of large amounts of storage space. There is more space with the bars, both sushi and alcohol. Forecasting is used to identify trends for ordering product, and identifies demand for new product. In terms of purchasing alcohol, two companies are used. Azia does not use a local vendor, but rather a food dealer who they order from 4-6 times a week depending on need. Inventory is spiked when special events, outings, or banquets are expected. For these events, JIT delivery cannot work, and similar to the toilet paper example from class, inventory must be ordered when a certain point is hit. 46
  47. 47. For food supply, Azia primarily goes through Asian Foods. They will order mass inventory to cover broad parts of the menu (i.e. mass quantity of chicken for multiple chicken dishes). For sushi, Azia uses small and direct dealers (such as American Fish) on the coasts that can deliver fast/fresh, because as Thom puts it, “experienced sushi people can taste the difference”. For liquor, Azia uses JJ Taylor. Quantitative forecasting is used to determine appropriate levels of food/drink inventory and shows what needs to be purchased on a regular basis and what is more seasonal, certain drinks and sake’s for example. Ordering is done on a weekly basis and can change weekly. The reason is because Mr. Pham places cost/quality of food as paramount. If a certain dealer’s cost or quality is increasing, a different vendor is selected. There is a certain point where Mr. Pham will not sacrifice quality for a low price. He views quality food as a pillar of the organization and also understands that dissatisfied customers will cost the restaurant money. It is important that from top to bottom, everyone at the restaurant is aware of schedules for shipments, including time/day shipments will arrive. First the suppliers are made aware of Azia’s needs, and paid accordingly. Accounting is notified and purchases are recorded. The chef’s are also acutely aware of delivery arrivals, since they are dealing with perishable products. On that note, manager’s are in charge of making sure Azia follows all health and safety ordinances. Thom sees this as an ethical issue, making a promise to his customer’s of a safe environment and top of the line food. He also sees this as a cost effective issue, “In this continuously litigious society, a lawsuit could be around every corner. We label everything and are aware of all codes and ordinances to protect what we have built.” Naturally the 47
  48. 48. restaurant industry employs a first in first out system of inventory purchase, to protect against wasted inventory. Another measure used by Azia to protect the interests of the restaurant, is consistently cross-referencing liquor sales in the register against liquid in bottles, to prevent free drinks being given. Each manager is in charge of ordering necessities for the week because Thom entrusts his people under the belief that he has good capable people in the right positions to make purchasing decisions. Chefs make the call in terms of amount of food/sushi. Manager’s make the call in terms of alcohol and place settings. B.) Integration of systems It is clear that these different systems are all related to each other, and all are focused on the same thing, revenue dollars. Forecasting and purchasing systems are directly related. Forecasting is used to estimate different levels of business for different times of the week/year and inventory is purchased accordingly. Previous data trends show how much alcohol is to be purchased for a given week. The forecasting methods use previous data and determine the trends in the business. Seasonality, special events, and holidays are some of the myriad of circumstances that play a role in forecasting and inventory purchase. The brain trust in charge of forecasting must inform those making purchasing decisions so they are aware of projected volume. There is a fine line with purchasing and forecasting, inventory must e received early enough to meet operational requirements, but late enough to ensure appropriate storage space and product freshness. The environment is constantly changing, so attention to forecasting is imperative and will be shown in the inventory. 48
  49. 49. Marketing and forecasting/inventory are also correlated in that strategy is based off of accurate sales predictions. This allows marketing dollars to be spent bringing in customers when the restaurant needs them and not during already hot traffic days and special events. This is also important to avoid over stretching the staff. Marketing is used to predict customer wants, for example, certain seasonal dishes are planed at suitable times of the year. On the other hand, increases in marketing must be made known to those making forecasts so they can plan for promotions. C.) Big Picture The systems used at Azia are important to all parts of the company in distinct ways. Sales/marketing, forecasting, and inventory purchases are all integral to an efficient restaurant. There is a slim margin for error in this business, estimates and predictions must be as accurate as possible to keep the business healthy. These systems must be working in unison to keep Azia fit as a company. Forecasting predicts volume needed in the immediate future. This allows for appropriate scheduling, inventory purchases, and marketing to keep costs at a minimum. Having an accurate idea of business levels ensures organization and flexibility, hallmarks of a successful business that provide a competitive advantage. Constant deliveries keep costs low and provide inventory freshness which ultimately keeps customers happy and coming back. Overall the best products at the best prices ensure high profit margins. All three of these systems are tied to economic factors, which are beyond Azia’s control, but must be monitored. 49
  50. 50. D.) Strategic Perspective/Competitive Advantage These systems are effectively incorporated with one another. Forecasting provides a competitive advantage by being strongly tied to inventory management. Without proper inventory levels, competitive advantage is hindered. It is crucial to never be out of product or certain liquors, as this would result in the loss of business in the immediate future. The location does not provide a competitive advantage in that there is not a large amount of their key demographic; however there are not a large amount of similar options nearby. The lack of storage space, which on the surface level would appear to be a disadvantage, conversely is a competitive advantage, as it brings product in on time and keeps costs down by reducing lost inventory. Marketing gives an advantage by highlighting the diversity of Azia’s options. Special event marketing and PR are also important to sales/marketing. 50

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