The 10 decisions in Operations Management

1) Design of Goods and Services: Customers at Hard Rock Cafe don’t just want meals; ever more they want an experience. This experience concept is to provide not only a custom meal from the menu, but a dining event that includes a unique visual and sound experience not replicated anywhere else. Its strategy is led by differentiation.

In short, the design of goods and services is meant to provide that kind of experience, from its food and drinks, music, memorabilia, rock concerts, retails, etc. While it adapt with every location; social norms and preferences often suggests some modification of menus for local taste. (For instance, in its British cafes less focus has been made on hamburgers and beef but more on fish and lobsters since British still have some fear on the mad cow disease)

2) Managing Quality: Quality Management is an important factor in regard to the success of Hard Rock Cafe which comes from a variety of perspective:

a) Food quality must top the charts and several factors are taken to do just that: good food ingredients, good suppliers, operations personnel constantly review menus, food research is ongoing and quality surveys are done regularly (if food scores is not a seven from a range of one to seven in quality, it’s a failure).

b) The employees have engaging personalities; have extensive and passionate knowledge in music or the rock-n-roll industry. This allows courteous service because customers need something to relate to instead of just ordering the food.

c) Cafe staff is scheduled down to 15-minute intervals to meet seasonal and daily demand changes; which mean a waitress or a staff member will check on the customer within that time period.

d) Aesthetics: inside and outside are related to the layout design.

3) Process and Capacity Design: Hard Rock Cafe works to create products in an efficient manner, analyzing them for cost, quality and labor requirements. Its whole production process; from receiving ingredients, storage, grilling, baking and frying is meant to create a quality meal for the customer. Eventually, the process and capacity design at Hard Rock has developed according to the development of its activity. Initially, it started as a London cafe serving classic American food, and then it became a “theme” chain with memorabilia in tourist destinations.

After that, it added stores with live music and rock concerts. When it became an established name already, it began to open hotels and casinos. Its menu was also been upgraded from classic American – burgers and chicken wings to include high-end meals like stuffed veal chops and lobster tails, where its kitchen process changed. Its last improvement was moving into cities that are not typical tourist destinations.

4) Location Selection: Location is a major long-time decision that can make or break a business strategy. When Oliver Mundey, its Senior Director for Worldwide Cafe Development, is looking where to place the next Hard Rock Cafe, he takes into consideration many key factors from a global perspective; such as: political risk, currency risk, social norms, brand fit, social cost and business practices. A breakeven analysis helps choose the most convenient location among several candidate locations. The process of determining the fixed and variable cost of each location, plot the cost of each location, and select the location with lowest total cost for expected production volume.

This is how the company systematically narrows down the search from country to city, to the precise street corner. Its location strategy of searching the world-widely for the best tourist sites is what its business depended on since 70% of its customers are tourists. While this is only good as far as the best tourist regions are traditionally good market. But, this variable (tourism) makes it susceptible to economic fluctuations when tourism business takes a hit. The reason why Hard Rock is signing on a long-term lease for new locations in Nottingham, England to join recently opened cafes in Manchester and Birmingham; cities that are not standard tourist destinations.

5) Layout Strategy: After choosing the right location for its new facility, Hard Rock faces two important decisions; whether to remodel an existing site or purchase a land and construct a new site. Whatever application from both situations it will take, the layout design is the next critical element. For maximum revenue, it will consider its restaurant and bar layout, while it will take into account the kitchen flows for food preparation. Every piece of the experience strategy, including the memorabilia, music and visuals takes on a big significance. This mean that lighting, sound, screens, contemporary music and circulation paths are designed to show-off the memorabilia, thus expose the customers to the merchandise for sale. Since the retail shops generate close to half of company’s profit, the reason why it is carefully integrated into the restaurant layout, flow and work stations.

6) Human Resources and Job Design: With its continued growth, its range of talents needed keep expanding. From cooks of classic American cuisine, and wait staff and bartenders, to merchandisers, to cooks for a wider more expensive menu, to coordinators and performers of live music facilities; its Human Resource plays a very important role in the recruitment, training, maintaining and constant development of its staff members. In choosing its employees, it’s not only competency in job skills that is the criteria. All of its staff members must be passionate about music, love to serve, can tell a story, and convey the experience to its visitors. Their motto “we love to spread the spirit of rock-n- roll” gives a clear image to this idea.

7) Supply Chain Management: Just like in any food service operation, supply chain management is very important. Hard Rock work with qualified suppliers to supply the right amount of good ingredients on time, to ensure it can provide fresh, quality meals. Contracts for meat and poultry for instance are signed 8 months in advance. The same is true with selling retails and merchandise; it also requires working with qualified suppliers. Items like leather jackets have a 9 month lead time as an example.

8) Inventory Management: Like any restaurant business, Hard Rock Cafe has a critical inventory issue that requires food turnover swiftly, and food in its inventory be maintained at the appropriate and often critical temperatures. It is interesting to note about Hard Rock’s inventory, where they maintained US$40 million in memorabilia with all sorts of special care, tracking and storage issues.

It has a core group of people that work on its warehouse in Orlando; bear the responsibility of cataloguing every single item, every single story of that item, and knowing exactly what is on what wall on what cafe. They also choose several cafes every 5 to 7 years, takes all the inventories (memorabilia) out of it, bring it back to Orlando to be refurbished and then replaced it with new gears.

9) Scheduling: Employees of Hard Rock Cafe take into consideration many factors when they prepare work schedules, such as: sales, any events particularly community events in the area, as well as seasonality. To come up with sales forecasts, they usually take a look at trend on their trade for the past couple of weeks. This sales forecast is basically the basis where they write their schedules from. In some of its cafes, linear programming is actually used to schedule the wait staff.

10) Maintenance: Both preventive and corrective maintenance plays a key role in keeping maximum efficiency and providing all products as advertised. At Hard Rock, they look at maintenance as the other face of reliability. Cafe doors must be opened daily for business, and whatever it takes to provide a reliable kitchen with hot food served hot and cold food served cold must be done. Bar equipment as well as point of sales equipment must also work, along with the maintenance of memorabilia at Orlando. 

Determine the productivity of kitchen staff and wait staff at Hard Rock.

  • Productivity of kitchen staff is the output (number of meals) over the input (hours worked). It is calculated on how many meals produced over how many hours spent producing them. Productivity of Kitchen Staff = Number of meals produced / Labor hours
  • Productivity of wait staff is the output (number of served customers) over the input (hours worked). It is calculated on how many customers served in a day over how many hours the wait staff spent serving them. Productivity of Wait Staff = Number of served customers / Working hours

Difference in application of Operations Management 10 decisions between a services operations (Hard Rock Cafe) with that of an automobile company (Ford Motor Company).

  • Design of Goods and Services The car must be designed, tested and cost-out. The talents maybe those of an engineer or operations manager rather than a chef, but the task is the same.
  • Quality Management The form of measuring tolerance or wear of bearings rather than measuring the quality of food, items or services.
  • Process and Capacity Design Likely an assembly line process.
  • Location Both Ford and Hard Rock seek locations that yield low fixed and variable costs, and take into consideration other factors, such as: proximity to suppliers, political risks, exchange rates, currency risks, etc. Locating facilities at tourists’ destinations is an important factor to Hard Rock but not so with Ford.
  • Layout The Ford Motor assembly plant will be organized based on an assembly-line criterion.
  • Human Resource Management An auto assembly-line will focus on hiring factory skilled workers rather than those with passion for music or with personality.
  • Supply Chain Management Due to their contribution in lowering costs and in design, supplies play an important role in any modern auto plant.
  • Inventory Rather than tracking memorabilia at Hard Rock, in any auto plant like a Ford assembly plant, requires tracking a lot of expensive inventory that move fast.
  • Scheduling Scheduling materials is a major concern of an automobile plant rather than people.
  • Maintenance It is even more critical in an auto plant as there is often little alternative in routing, and downtime is very expensive because of high fixed and variable costs.