Final Report

Production and Operations Management

Team:

Diego Canova

Pedro Duque

Viktoriia Korytska

Zhengyu Wu

Xinyu Zhu
 INDEX

1. Background ………………………………………………….………………………….. 2
2. Problem Identification ………………………………………………………………….2
2.1. Ordering Process ……………………………………………………………… 3
3. Ornella …………………………………………………………………………………….3
3.1. Ornella’s Inefficient Ordering Process ……………………………………..4
4. Recommendations ……………………………………………………………………...4
4.1. Microphone and Speaker ……………………………………………………..5
4.2. QR Code ………………………………………………………………………….5
5. Conclusion ……………………………………………………………………………….6
6. Appendix …………………………………………………………………………………8
7. References ………………………………………………………………………………11

1
1. BACKGROUND

Many people are dreaming about starting a restaurant business. However, their first
disappointment comes in a few months, when the owners are not able to sustain the
business and the restaurant’s revenues are not enough to cover all the expenses. Difficulties
and problems of this type of business gradually accumulate and a​ccording to an ​Ohio State
University study about failed restaurants, about 60% close or change ownership in the first
year of business, with 80% closing within the first five years1.

Generation of Millenials, acting as the main solvent segment of guests, place higher
demands on the restaurants. For such guests, every detail is important and even a regular
visit to the restaurant during the lunch break for them turns into a special ritual. In order to
meet their high expectations, the restaurants are obliged to pay attention to such details as
the quality of the ingredients, innovations introduced (e.g. new recipes, new payment
methods, providing feedback online and offline, among others), and the quality of the
service. Accordingly, it is becoming increasingly difficult to survive in such a rival industry,
where serious players start earning less, and the weak ones go into a deep minus or are
forced to close up at all.

2. PROBLEM IDENTIFICATION

Inefficiencies are extremely dangerous for service providers, especially in an industry where
customer satisfaction is not only a priority but the main source of continuous revenue
generation. Any restaurant owner would state that there is always a room for improvement in
their processes. The most important thing in this business, along with the quality of food, is
providing a high quality of service. Providing a high quality of service, the perception of
which in many cases is reduced by inefficiency in an Ordering Process. Imagine a situation:
the client carefully studied the menu for 10 minutes and finally made a choice. The waiter
accepted the order, approached the guest after a few minutes, apologized and said that this
dish, unfortunately, cannot be prepared. Excellent, the guest did not feel any better. A
reasonable question: why not to immediately let the client know about this issue when he
was making an order?

It would seem that it is the waiter’s fault, but this is not entirely true. This is true that the
guest sees in front of him only a waiter who looks away and tries to smooth the situation. He
has no one else to blame. But this is a clear problem of the organization: perhaps there was
no “five-minute” meeting during which they should discuss what is now in the stop list. Or,
perhaps, the chefs did not inform on time about this dish on the stop list. In this case, it is
already necessary to understand that the restaurant has to improve its Ordering Process
making it more efficient for both - customers and employees.

1
Mealey L., (2019), ​10 Reasons Restaurants Fail to Survive, ​retrieved from
https://www.thebalancesmb.com/ten-reasons-restaurants-fail-2888628

2
2.1. ORDERING PROCESS

In the restaurant business, the act of taking orders is paramount for the generation of income
for the owners. If this process would not exist in their operations, the whole production flow
would crumble; since there will be a gap between the customer and the business. Thus, the
ordering process can be summarized as the following:

1. The waiter comes to the table and asks for the order.
2. Customers start telling the order.
3. The waiter can either:
a. Remember the whole order.
b. Write it on a note.
4. On some occasions, the waiter performs a Quality Check and repeats the order to
confirm everything is correct.
5. The waiter leaves and can either:
a. Go to the kitchen and delivers the order.
b. Enter the order in the system that will directly send it to the kitchen.

For the sake of this report, this will be the predetermined Ordering Process. Additionally, in
Step 5, we will focus on option (a). This decision is aligned with the fact that this report will
concentrate on traditional restaurants, such as Ornella, that have this conventional ordering
process. Furthermore, we will not take into account any kind of restaurant that has the
waiters entering the order on an iPad or tablet.

3. ORNELLA

Ornella is a restaurant acclimatized as a “mid-light trattoria” with walls covered by portraits of

famous and influential Italian celebrities. In its decoration, this Italian is committed to an
elegant and refined decoration highlighting its importance for high-quality service. The place
has upholstery, vertical gardens, and a New York-inspired bar. The food is focused on a
classical but modern interpretation of the typical Italian menu, in order to create a sense of
connection with their customers, offering the traditional plates of pasta, pizza, and lasagna
that would make you feel as if you were in Italy.

Ornella’s operational strength relies on the core of their business model, which has to do
with the quality of their food, decoration, and service providing, highlighting the key objective
of this business which consists of achieving the highest level of customer satisfaction and an
experience that reflects all of the values of the company. The key to their success, along
with all of the previously listed operational strengths is achieved by providing the customers
with personalized attention. Another factor that clearly proves to be vital to their success is
the business location, situated in one of the most trendy and elegant neighborhoods as
Barrio Salamanca, the neighborhood is famously known for the quality of the cuisine
experience, therefore leaving Ornella with great expectations to fulfill.

We chose the company Ornella since it is a small, privately held, exclusively owned
company rather than a big chain of restaurants or a franchise, this restaurant is also very

3
trendy at the moment in Madrid, and has a high number of customer rotation per day, and
focus on their quality in order to achieve the highest level of customer satisfaction as
possible. This fits exactly with the proposed recommendation as a solution for one of the
processes which should be very important for a restaurant like Ornella.

3.1. ORNELLA’S INEFFICIENT ORDERING PROCESS

Unfortunately, together with other companies within an industry, Ornella is having some
problems with their current Ordering Process. The inefficiency comes from following the
traditional way, as previously stated in Step 3 of the Ordering Process, of taking notes of the
orders from the customers or trying to remember them and log in the system so it reaches
the chefs in the kitchen. After analyzing multiple reviews of Ornella, we noticed that there
were many situations when the waitress quiet often miscommunicate or misinform the dishes
that the customers ordered, forget to add notes regarding excluding some of the ingredients
due to allergies or a desire of the client. This type of problem leaves customers extremely
unsatisfied and increases the chance for them to never come back and try their service
again (Appendix 1).

This particular inefficiency in the process slows the company's growth, costs sufficient
amount of potential revenues, increases risk of losing customers and wastes time that could
be invested in important strategic decisions. None of the businesses protected from
inefficiencies, and that’s why every organization should keep track of their processes very
carefully. A single decimal point of improvement can add significant revenue gains. It is more
than worth considering.

To analyze Ornella’s inefficient Ordering Process, we have sketched a simple Operations

Flow Chart (Appendix 2) to illustrate the inefficiency that the ordering process can have a
significant effect on the overall experience of the customer. Additionally, we have
experimented and timed, on average, how much time does this process takes (Appendix 3).
For this experiment, we hypothesized that every table the waiter serves has, on average, 4
people and that the average time from the table to the kitchen is 30 seconds. Additionally,
we suspect that the kitchen will not have any previous orders, hence the preparation of the
food will be, on average, 30 minutes for the 4 dishes and 10 minutes for a single dish. With
this, we concluded that it will last on average 47 minutes and 45 seconds, in just the ordering
process, which implies a long waiting time.

4. RECOMMENDATIONS

Taking into account all these considerations, there are two viable recommendations for
Ornella to tackle their issues in the Ordering Process.

4
4.1. MICROPHONE AND SPEAKER

This first recommendation is inspired by a restaurant in Medellin, Colombia called Asados

Exquisitos. This restaurant is located outside the International Airport of Medellin;
consequently, it is expected a high customer rotation through their working hours. Hence,
the waiters have to be more efficient in their Ordering Process and reduce as much as
possible any kind of misunderstanding or error. For this reason, the restaurant owners
decided to give the waiters microphones and put a speaker in the kitchen to eliminate all
these inefficiencies.

The way this works is to illustrate when the customers are telling their orders, the waiter
presses a button and starts repeating the whole order. Meanwhile, the order is being spoken
over the speaker that is located in the kitchen. When the order is confirmed, the chefs will
start preparing the food. Also, if there is a case that any dish is not available on the menu, a
microphone will be located in the kitchen where the Head or Sous Chef can communicate
directly with the waiter, letting him/her know which dishes are not available.

If Ornella implements this direct intercommunication between the waiter and the kitchen, it
can have a significant positive effect on the Ordering Process. The implementation of this
direct communication can reduce Defect, Waiting, and Motion Wastes. Regarding the Defect
Waste, the restaurant will not reduce completely the time they spend making changes to
incorrect orders and mitigate completely sending dishes that the customers did not order.
Then, by implementing the inter-communicators, Waiting Waste is reduced due to the fact
that the chef will not have to wait for the order from the waiter. Last but not least, it would
significantly reduce the Motion Waste for the waiters. Instead of moving from the table to the
kitchen, back and forward, the waiter can simply stay next to the table and the time spent
moving around will be completely reduced (Appendix 4).

The costs of implementing this recommendation are minimal for Ornella, compared to the
benefits that will receive in the long term. One of the most important benefits of the
implementation of this idea is the complete reduction of time and higher customer rotation.
Furthermore, this would lead to an increase in customer satisfaction, which, as previously
mentioned, is a key factor in the service industry. Finally, there are not any kind of major
challenges when implementing this new procedure; just making sure that the connection is
always on and that the waiters use the inter-communicator at all times they are taking an
order.

4.2. QR CODE

The second solution to the issue is to apply the QR code ordering system, which has
become the default way of ordering for many Chinese restaurants for high efficiency and
time-saving.

The following are the necessary steps to make a QR code order:

5
 1. Customers scan the QR code which is unique to each table in the restaurant. This
arrangement allows tracking orders associated with customers seated at specific
location. Immediately upon scanning the QR code, it opens a web page or app with
the menu of the restaurant.
2. Customers can browse through menu items just as they would with the physical
version, read about each item, see the prices and zoom out photos. Customers
continue adding food items to the list until they are ready to place an order.
3. Upon confirming the order, online payment is processed, which can be selected from
multiple methods such as cash,credit card, Paypal, AliPay, ApplePay, etc. At the
same time, the restaurant staff receives the order and, once ready, delivers it to the
right table.

The advantages of QR code method are quite obvious; for instance, a good customer
experience. Scan-to-Order is done online on a mobile phone. This function enables a
restaurant to fully present its menu and culture by both texts and pictures, and allows
customers to help themselves with the order simply by scanning the QR code on the table,
thus making ordering simple, convenient and efficient.

Another expected benefit is that it reduces costs and improves efficiency. For example,
Scan-to-Order can effectively reduce labor costs and improve work efficiency in a restaurant.
Customer self-service ordering will relieve the pressure of waiters and waitress so that they
can concentrate on their service, while customers will not complain about the slow speed of
taking orders and settling their bills. The time is saved considerably, leading to a significant
increase in table turnover rate. Then it can also improve the restaurant’s image. Customers
will be impressed by the state-of-the-art technology, i.e. the scan-to-order system, which
replaces the traditional paper menu. This way, the image of the restaurant will be enhanced.
At present, many catering service providers are applying IT technologies to their services,
aiming to give customers better dining experience.

Additionally, with the scan-to-order function, specialties or best-sellers can be promoted

through background settings in the system. The result will be an increase in sales and an
expansion in market share. Furthermore, it increases the turnover rate and optimizes the
service process, to illustrate; When a customer enters the restaurant, there is no need to
wait in line. Just by scanning the QR code on the dining table with his mobile phone, he will
be ready to order. In the twinkling of an eye, the menu is fully displayed, effectively saving
the time of ordering and improving the customer experience. This service process is, as a
result, optimized and the table turnover rate is increased on the whole, all contributing to
greater customer satisfaction.

Ultimately, it creates a seamless link to business data, making accounting easier. With a
simple touch on the phone, restaurant managers will be able to check all operating data,
order information, tables and rooms used, returned dishes, returned orders, profits of the
day, sales ranking, sales analysis, department sales, etc. The account management is no
longer a headache.

However, there are also some costs when it comes to QR code ordering. The costs include
installation and commission fees. As installing and implementing an entire QR code

6
ordering system requires professional IT expertise, the restaurant will need to pay the
necessary installation fees. Moreover, it has to pay the commission fees to the payment
service providers for using various online payment methods such as Alipay, Paypal, etc.

It might seem that QR code tend to be a good way of solving the problem, yet we need to
keep in mind the potential challenge that it might bring. For centuries, interaction between
customers and waiters has been playing a crucial role in the food culture in western
countries. By politely asking the consumers and kindly providing them with suggestions, the
waiter gives customers a sense of importance and satisfaction, positively enhancing their
ordering and overall dining experience. In consideration of that, although QR code method
seems to be convenient for both customers and the restaurant, it lacks the basic connection
between the two groups, making it harder to customers to adapt to and will likely result in
customer dissatisfaction.

5. CONCLUSION

Nowadays, we can clearly see that the restaurant industry is highly rival and large amount of
organizations tend to fail due to inefficiencies that are either not noticed at the right time or
not taken sufficient care of. After conducting the research and analysis, we can state that the
ordering process is fundamental for the generation of revenue, satisfaction of clients and
general image of organization. In order to minimize the risks mentioned above and achieve
excellence in the order process activity, the business owners have to keep the inefficiencies
as low as possible. The recommendations provided to Ornella, can reduce the average
Ordering Process time by around 33% (Appendix 4). Additionally to that, big investments are
not required in order to implement either of these recommendations for Ornella.
Nevertheless, if it keeps their high quality service style and wants to scale it up, the best
option is to implement our 1st recommendation - the microphone and speaker. The minimal
sunk costs will be outweighed by the expected benefits, and the quality of the service and
customer satisfaction will stand out compared to the other trattorias in Madrid.

7
6. APPENDIX

Appendix 1. Customer Reviews.

8
Appendix 2. Ornella’s Inefficient Ordering Process Flow Chart.

Appendix 3. Experiment of average time of ordering process (inefficient).

Activity Time (in minutes)

Taking the order 1:30

Move from table to kitchen 0:30

Putting the order into the system 1:00

Order preparation (average) 30:00

Delivery of the order 2:30

9
 Customer is not satisfied, needs the new 0:30
order

Move from table to kitchen 0:30

Putting the new order into the system 0:15

Order preparation (average of a single dish) 10:00

Delivery of the order 1:00

Sum of Times 47:45

Appendix 4. Elimination of Motion Time.

Appendix 5. Experiment with the introduction of either of the two recommendations

(Microphone & Speaker or QR Code).

Activity Time (in minutes)

Taking the order 1:30

Move from table to kitchen 0:30

Order preparation (average) 30:00

Delivery of the order 2:30

Sum of Times 35:30

10
7. REFERENCES

Facebook.com. (2019). Ornella. [online] Available at:

https://www.facebook.com/pg/Ornella-506305849523065/reviews/?referrer=page_recomme
ndations_see_all&ref=page_internal​ [Accessed 30 Nov. 2019].

Ornella Cucina Piu. (2019). Ornella. [online] Available at: ​https://www.ornellamadrid.com/

[Accessed 30 Nov. 2019]
Mealey L., (2019), ​10 Reasons Restaurants Fail to Survive, r​ etrieved from
https://www.thebalancesmb.com/ten-reasons-restaurants-fail-2888628

TripAdvisor. (2019). ​ORNELLA, Madrid - Barrio de Salamanca - Fotos, Número de Teléfono

y Restaurante Opiniones - TripAdvisor.​ [online] Available at:
https://www.tripadvisor.es/Restaurant_Review-g187514-d8855793-Reviews-Ornella-Madrid.
html​ [Accessed 30 Nov. 2019].

11