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Mellow Mushroom Organizational Change Project

Cody, Thanh, Yuchao, Tiffani, LoganSpring 2016

HMGT 2610.002Elliot Dubin

April 21, 2016

Table of Contents

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Executive Summary…………………………………………………… pg.3

Section 1 (Part A) Firm and Business…………………………………… pg.4

(Part B) External Changes……………………………………. pg.7

(Part C) Internal Changes……………………………………...pg.8

Section 2 (Part A) Internal forces – Organizational changes……………. pg.8

(Part B) Roles in the change process…………………………. pg.9

Section 3 (Part A) Planning for change…………………………………. pg.9

Gap analysis Chart………………………………………………………... pg. 10

Action Plan Chart……………………………………………………….... pg. 12

(Part B) Implementing the change……………………………pg. 13

(Part C) Monitoring the change………………………………pg.14

(part D) Continuous Improvement……………………………pg. 15

Conclusion and Recommendations………………………………………. pg. 16

Section 4 Appendix, References and Bibliography………………………pg. 20

Minutes of meeting………………………………………………………pg. 21

SWOT Analysis Chart…………………………………………………...pg.23

Cooperate Structure………………………………………………………..pg.24

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Executive Summary:Mellow Mushroom is a restaurant full of life and great food. This location has strong

social, environmental, and cultural aspects involved in it. A big step it has done dealing with the

environment is recycling, and a big step it has done culturally is recognizing UNT in many ways.

Mellow Mushroom has recognized the many changes that are around it internally, and externally.

Adapting to these changes have taken place in order for this company to become more

successful. This location recognized a need for a more diverse menu. Many steps will be taken

for this menu changing process to take place, such as training, communicating, observing, and

dedication by the staff and upper-management. A step-by-step GAP analysis shows where the

company wants to be in the future, including steps on how to reach those goals. In order to unify

the organization, the vision statement is needed to be reengineered to better reflect the goals of

the Mellow Mushroom in Denton. Additionally, an action plan details the specifics necessary to

implement the change. Our group will then provide conclusions and recommendations on

dealing with the best way to complete specific objectives. The conclusion will identify what

Mellow Mushroom did, and then recommendations will be provided that will give ideas on how

to do those specific objectives more efficiently. Resources and sources will be acknowledged for

helping our group get the information that we collected. A series of charts and graphs will also

be provided to show were certain information was collected form.

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Section I; Part A; Firm & Business

Contact Information:

Front of House Manager at Denton: Star Flores

Server that provided interview: Megan Couture

CEO: Richard Brasch

CFO: Jeff Wiggins

COO: Paul Baldasaro

Franchisee (Denton location owner): Monte Jensen

Director of Operations: David Danowitz

Director of Construction: Michael Shepard

Vice President of Brand Development: Annica Greider

Mission Statement:

“To provide delicious food in a fun and creative environment.”

History of Mellow Mushroom:

-Mellow Mushroom was established by three college students after graduation in 1974. The first

store was located in Atlanta, Georgia. The company expanded into a franchise in the late 80’s.

Mellow Mushroom now has one hundred and seventy stores spread over twenty-one states.

There are nine more states with twenty new Mellow Mushrooms under construction. By the end

of the 2016, there are expected to be one hundred and ninety stores throughout the United States.

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Mellow Mushroom of Denton:

217 E. Hickory Street

Denton, TX 76201

(940) 323-1100

Hours: Sunday-Thursday 11am-10pm, Friday-Saturday 11am-11pm

Local General Manager:

Local Assistant General Manager:

Corporate Structure:

This location: Franchise

Number of Employees:

This location has fifty-five employees, three of which are managers.

Day-to-day company goals:

“To bring creativity to the customer through food and drinks, also to satisfy the guest.”

Management Style and Type Acceptable:

Management Style: Bureaucratic/Democratic

Type of manager preferred: Strict but caring

Skills recommended for management: Able to multi-task, Able to handle stress, Great social and

human relation skills.

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Strengths and Weaknesses:

Strengths: Diverse menu. Burgers and a full bar are included on the menu.

Weaknesses: The competition of the other restaurants on the square.

Neutral ground: Technology can be helpful or hindering. The company relies on ALOHA, the

running Point of Sale function, to operate.

Cooperate Responsibility Model:

Mellow Mushroom has a strong role in recycling. Actually, the Mellow Mushroom

location in Denton has been chosen to be a test pilot for a glass recycling program by Green

Mountain Glass. This makes the company able to participate more in helping our environment.

Mellow Mushroom is involved with providing healthier options. This location has a separate

menu brochure called “The Skinny Shroom.” With The Skinny Shroom, people can replace

certain items in soups and hoagies with another healthier item. Doing this can make your entire

meal under 600 calories. They also have an option for gluten free pizza dough. Mellow

Mushroom has a social loyalty program called “Beer Club.” You get a point for every new beer

that you try and eventually the points add up to get something such as a shirt or glass mug. This

Mellow Mushroom also recognizes that it is located by a college campus, UNT. They support

UNT by putting up school spirit flags in their windows and the school’s football schedule on the

wall the restaurant.

Section I; Part B: External changes

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Work force:

Today, the work force is diverse in males and females. The life style of Americans in general are

constantly changing. The work force, as we know it, will continue to change.

How does this relate to Mellow Mushroom?

- Mellow Mushroom has gone from 2 male managers and 1 female manager, to 1 male

manager and 2 female managers. With this happening, management styles have changed

to a more democratic style than a bureaucratic style as before. The urban population

growth increased 12.2% from 2000 – 2010, and it’s continuing to do so. Due to this,

Mellow Mushroom has started moving locations to urban areas to attract more customers.

A few locations would be Denton, Little Rock, San Antonio, and Miami. Also, by 2020,

millennials will take up 75% of Americas work force. This will also be another reason

management styles are changing at this location specifically.

Market:

The market in today’s world is constantly changing. New trends are arising causing new business and

products to thrive. The market as a whole is increasing due to an increase in consumers/ population.

How does this relate to Mellow Mushroom?

- Customers as a whole are changing. Customers now are looking for a good product AND

good service. This has caused Mellow Mushroom to have to become a more family-

friendly environment. Also, Customers want diversity. This has casued Mellow

Mushroom

to start wanting to change up the menu a little more from just pizzas and a small variety

of appetizers.

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Section 1; Part C; Internal changes

Internal change method: Reengineering

An organizational change that involves the complete redesign of a process within the

organization, the goal of which is to achieve a dramatic improvement.

Improvements that Mellow Mushroom is doing:

Mellow Mushroom noticed that customers wanted diversity in their food options. This

made the company change up their menu choices.

“This is considered “reengineering” because it’s redesigning the process of the menu itself. This

has caused a dramatic improvement in sales. More customers get to come into the restaurant

excited to know now they have a very diverse amount of options to choose from!” – Logan

Section 2; Part A; Internal forces- Organizational change

Reengineering- Mellow Mushroom noticed that customers wanted more than just

pizza and a small variety of appetizers. So they had to think of a way to fix this. A

more diverse menu was the solution. Right now Mellow Mushroom is in the

middle of their “menu changing process.” More options will need to be added to

the menu in order to please customers.

Section 2; Part B; Roles in the change process

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Change Sponsor: Richard Brasch (President and CEO) and Monte Jensen (Location owner).

Change Agent: Levon Juarez (General Manager at Denton Location) and all employees (mostly front of

the house).

Change Targets: Star Flores (Front of the House Manager), Kyle Richardson (Back of the House

Manager), and serving staff and cooks.

Section 3; Part A; Planning for Change

Recognize the need for change:

The reason for why the change of a more diverse menu needed to take place was

because customers were wanting more options to choose from. Mellow

Mushroom had an extremely limited menu, a more diverse menu should attract

more customers

Create a vision statement:

“We will intend to create a more diverse menu for our customer so that many

choices will be thought of before ordering. This will be done by creating an

informative, well-designed menu that attracts the attention of the customer. This

will completely redesign the “social view” of Mellow Mushroom.”

GAP Analysis:

*This is based off statistical charts between (12/25/15-2/22/16) from guest surveys of 121

people *

-Mellow Mushroom, on average, currently is making $ 5404.11 daily

-The goal is to make $ 7,565 daily (40% increase.)

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-Mellow Mushroom has an average food sale of $4505.82 daily

- The new goal is to make an average of $5,000 daily

-Between 1-100, customers will recommend Mellow Mushroom to someone on

average a 91/

-Thee new goal is to change this average to 98.9.

-The current quality of Mellow Mushroom beverages rated 1-100 is 89.18

-The new goal is to change the average to 95

-Rated between 1-100, the atmosphere, or “vibe” of the restaurant was rated an

average of 87.63

-The new goal is to increase this to 95

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-Rated between 1-100, Mellow Mushroom was rated a cleanliness average of 89.7

-The new goal is to increase this up to 95%

Develop a plan for change (Action Plan)

With each decision being made in order to develop the change process, it must relate

back to the vision statement and a step closer to the new goals in the GAP analysis.

Task Responsibility Obstacles Deadline

1. Store managers noticed customers wanted

diversity

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2. Notified upper management

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3. Have a planning session

Held by: Richard Brasch-CEO

People having ideas against new menu change

5/1/16

4. Gather needed data from employees and

online surveys

All general managers at each Mellow Mushroom location

Limited data resources

5/5/16

5. Create menu outline Ideas from General managers

Determining which outline is the best

5/11/16

6. Approve menu Richard Brasch A lot of changes can occur before being approved

5/14/16

7. Gather materials to create new menu

Top Managers Which materials would be best to use?

5/16/16

8. Introduce changed menu to all “Sample restaurants.” (Denton

Location)

Richard Brasch Determine what the best “sample locations” would be.

5/20/16

9. Monitor progress Levon Juarez / Monte Jensen

Must find a consistent way to do so.

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10. Make any adjustments needed

Monte Jensen Moe adjustments could happen during the “adjusting” stage.

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11. Introduce to all Mellow Mushroom

Locations

Top managers Location may have a hard time adapting to the new change.

7/1/16

12. Review vison statement in relation to

the new change

Richard and all store managers

The new change and the vision may not be exactly followed.

7/5/16

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Section 3; Part B; Implementing the Change

To implement the change, we will need to communicate the vision to the employees. We

will do this by planning a front-of-house staff meeting and then have a back-of-house meeting

the same week. This way it will be able to address the changes separately, as they are affected

very differently. We will discuss how training will happen and how to better promote to new

menu items. Some people learn visually so printing out the new menu items with pictures and

ingredients on them would be a good idea, as well as a procedure to how they are made. There

will be communication from the managers letting them know to study the new chart they have

been given, but at the same time being as encouraging as possible to not make the employees

scared. However, there will be some employees that fear change. The managers will encourage

employees to prompt the guest to fill out surveys regarding burgers if they purchase one. The

managers will also foster change through power by evaluating each employee for one day during

the following month, then give them feedback on how they are doing and what they could

improve on, this will help the employee grow in all aspects of this new change.

Mellow Mushroom Denton will measure their change progress through looking at the

number of new items sold at the end of the month, burger surveys and manager evaluations of

each employee. They will compare their amount sold to other stores with the new menu as well.

The goal of Mellow Mushroom is to increase gross operating profit and create a higher amount

of return customers.

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To reward success management, we will give a $50 gift card to the two people who sell

the most burgers in the next month. This will prompt the employees to want to do well for

themselves if not for the company. We also want to celebrate as a whole for success so, if a

certain amount of burgers is sold that month altogether, then Mellow Mushroom Denton will

have an employee pizza party that includes free drinks and raffle prizes!

Section 3; Part C; Monitoring the Change

Mellow Mushroom will reevaluate the vision first by revisiting the primary need to

change, which is to create a diverse menu to attract customers. Next, daily discussions and

meetings about the new menu items will be enforced to throughout the branch. This way, the

staff and managers will have knowledge about the vision. The authors of Leadership and

Management in the Hospitality Management industry noted, “If the organization has followed

the change process well at this point, everyone should understand the vision. This can be easily

verified through discussion with people at various levels in the organization.” (Woods, and King

33) Then, data gathered from surveys will allow Mellow mushroom employees to track if the

steps taken are going in a positive direction. Upper managements should be supportive to

employees to accept change.

Mellow mushroom will assess plan for change by setting certain deadlines for employees

to learn menu. Managers will give employees necessary tools for success. Posters about new

items will be posted on break rooms for waiters to learn while on break. Handouts will also be

provided from managers. Managers will lastly provide quizzes to determine if waiters are ready

for the change. However, both the managers and employees must be ready for adjustment

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because there will be miscommunication and hiccups in the journey for change, such as

overestimating and underestimating employees, setting unrealistic deadlines and unable to

provide resources. Woods and King stated, “These are just a few potential problems that may be

encountered. None of them are easy to solve, but must be dealt with, which means the change

plan may have to be adjusted.” (Woods, and King 34) The most important part of assessing the

plan is being flexible and versatile to any mistakes.

The company will evaluate the change by making frequent measurements of change.

Managers must be careful to choose what to measure in the process. The book explains, “But the

success of the training program can be tied to reduction in employee turnover, reductions in

service errors, or increased compliments on guest comment cards.” (Woods and King 34)

Measuring employees turnover rate is a great start. Employees are very important to the

company and not only keeping them around is healthy for the company but cooperating with

them will show improvement. Measurements on the errors made are counted. This will allow

managers to track down the mistakes and prevents new errors occurring. Lastly feedback from

guests should keep motivate and keep employees up to date with change.

Section 3; Part D; Continuous Improvements

Continuous Improvement Design is the process of the employees from qualified

management who are bringing changes into the company. The process speculates gradual and

constant changes that helps improve products and services. However, there is a module used to

improve the system of continuous improvement. The module includes planning, doing, checking,

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and performing action (PDCA). A plan is then enforced to meet goals and improvements in the

business as well as preparing for a change.

Additionally, Star Flores, the front of the house manager, implements the change by

taking necessary steps to check the results of the analyzed data brought by the change

implemented. Next, Flores takes it to the next level by acting on a wider range in continuing

assessing the results. Managers rely on identifying small problems facing the company as well as

finding solutions without blaming any employee. The employees help identify the problems

within the company, thus making Flores rely on every member of the staff of the company.

Taken to effect to the Mellow Mushroom Company, Continuous Improvement Module would

reconsider the changes made in the company for customer satisfaction. All the staff would give

the management information concerning the comments of the customers. Similarly, Flores

should focus on improving the menu on a continuous basis to help in retaining customers.

However, Flores has the responsibility of talking with the staff to identify and help with their

problems they face since the company has shown a way of making the staff happy for a better

customer service. Conclusively, the process of changing relies deeply upon the relationship

between the management and the employees towards satisfying the customers

Section 4; Conclusions and Recommendations

After all the data we have collected, we have found that the problem with Mellow

Mushroom is the lack of diversity in the menu. Mellow Mushroom proceeded to fix this problem

by adding more choices so that they could market to more people. Some of these choices include

burgers, salads, more side items and healthier substitutions. This new change brought additional

responsibilities and tasks for the organization. The new development within the business was

difficult for the staff to adjust to and accept. The first step the company took in this

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organizational change process was the lower management reporting problems with the menu to

upper management. We believe the best way to handle this would be to arrange conference calls

and face-to-face meetings with upper management to begin deciding additional menu items. The

menu was drafted in a meeting by corporate managers and had to be approved before being

released to the selected franchise locations. Certain locations are selected as “test run”

restaurants. Roughly one-third of the franchise was selected for the sample menu. If these new

changes to the menu were to succeed in these locations, the menu change should be successful at

all locations. They had to decide exactly what would be the best things for Mellow Mushroom to

begin selling and what items would be profitable given their customer base, locations and current

menu items. Meetings were also held in-restaurant at the selected locations to get the opinions of

the staff and begin including them in the plans for change. We believe the best way to get

opinions from the staff and inform them is to have the General Manager, Levon Juarez, hold a

store wide meeting. Within this meeting, training and handouts related to the new items were

provided. Handouts provided staff with information about all the new menu items and what they

included. The managers talked through the new changes and went over questions and listened to

the ideas and voices of the staff. Additional encouragement would continue throughout the next

few months by helping staff incorporate the new menu into their table side upselling. They

should set goals for the servers that may include prizes, such a free t-shirts or gift cards in order

to help their be a motivation for the upsell of these items in store. To get the opinions of the

public, providing a survey on the receipt with an incentive attached would be a great first step.

Some ideas for this incentive could be a discount or free food in exchange for their input and

comments. From this point on, it is mandatory for Mellow Mushroom to advertise and promote

the new menu items so that consumers are aware and purchasing them. In doing this, it will be

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important for the store to have posters, table tents, and verbal advertisements of the new options.

The managers will need to continue to monitor the change for quite some time while things get

adjusted and staff and customers continue to get used to the new items. They also have secret

shoppers come into the store randomly to test the staff on how well they are really promoting the

burgers, salads and additional new items. The company as a whole will then have to decide when

to launch the revised menu to all the stores if it is successful.

In relation to our vision statement, this new diverse menu will help attract a variety of people

with differing preferences in food. This well-redesigned menu also completes our goal of having

a new “social view.” Mellow Mushroom is no longer thought of as only a pizza serving

restaurant, it is becoming diverse, which is extremely important in a growing college town full of

many different cultures. People want choices now and that is the goal in this new menu design,

to have options for everyone, whether you do not like pizza or you want to eat healthier or

maybe it is because you are gluten-free. The staff will become well trained with this new change

and be able to answer any of the customer’s questions and give them all the information desired.

With the new menu succeeding in the “test run” restaurants, the time came to release the menu

everywhere. The same process needs to be followed to achieve the change throughout the full

franchise. First they must have store meetings, in-depth training, and advertising to promote the

special items. With all of these steps taken, the menu is sure to be a great change for the

company. After all, the company wide mission statement is “to provide delicious food in a fun

and creative environment.” With the mission statement for this specific change being “We will

intend to create a more diverse menu for our customer so that many choices will be thought of

before ordering. This will be done by creating an informative, well-designed menu that attracts

the attention of the customer.” This will completely redesign the “social view” of Mellow

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Mushroom. Continuous improvement to the menu will be required to keep both of these

promises. This can be accomplished by tracking the number of times the certain items are

ordered. This could be tracked in-store or by monitoring the Point of Sale System: Aloha. Aloha

could be checked by the district or individual store. There could be incentives for the highest

sales of the new options. One of these incentives could be new technology, such as iPads for

ordering or customer entertainment. Another incentive could be a bonus or a raise.

With all of these in place, Mellow Mushroom’s new organizational change will be a

success. The new menu items and options will bring Mellow Mushroom up to speed with the

changing tastes of the diverse populations and the market of diverse costumers.

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Appendix:

Bibliography:

-. (2016, January). "Burger Picture". Mellow Mmushroom Menu Change, 1.

Bort, J. (2015). 39 ways the American workforce is dramatically changing in 2015. 39.

Fisher, C. (2016). External Forces that can affect your company. Chron, 1.

Flores, S. (2016, Febuary 22). Company information . (C. a. Logan, Interviewer)

Jensen, M. (2016, April 13). Cooperate structure. (T. a. everyone, Interviewer)

Juarez, L. (2016, March 23). Company probelm. (L. a. everyone, Interviewer)

Mellow Mushroom. (2016, January). Liberations. Retrieved from

http://mellowmushroom.com/libations

Mellow Mushroom. (2016, January). Store information. Retrieved from

http://mellowmushroom.com/store/denton#store-page-lower

Oaks, S. (2014). Why Market Trands Are Affecting Your Small Business. 1.

Ratcliffe, M. (2012). How do we measure urban areas? 4.

Rodgers, A. (2011). What percentage of millennials make up the American workforce. Quora, 1.

Sanchez, L. (2016, March 28). Specifics of change process. (C. a. everyong, Interviewer)

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Time/Minutes/Meetings:

Date Time Duration Place Who What

2-Feb 3:00 12 min Classroom Everyone Exchanged Phone #'s, Decided Business of choosing, Introduce ourselves

9-Feb 3:00 20 min Classroom Everyone Talked about what we were all going to work on this upcoming week

15-Feb 2:00 45 min Willis Library Everyone Arranged interview time, discussed Section 1; part B, Assigned new weekly tasks

22-Feb 2:00 1 hour Mellow

Mushroom

Everyone Conducted our first interview, got multiple business graphs and statistics (Went very well)

3-Mar 3:00 15 min Classroom Tiffani, Logan, Max,

Thahn

Separated Section 1 parts, assigned due dates

7-Mar 1:30 1 hour Willis Library Cody and Tiffani

(group chat)

Separated Section 1 and 2 parts, assigned due dates (Section 1 and 2; completed by March 21)

14-Mar 4:00 30 min Gateway center Everyone Recap section 1 & 2, re-addressed any questions

21-Mar 2:00 1 hour Willis Library Cody, Tiffani, Logan,

Max

Section 1 (Complete) Section parts assigned (Said to be finished in four days)

23-Mar 3:00 45 min Mellow

Mushroom

Everyone Interview w/ Levon Juarez

24-Mar 2:30 30 min Classroom Everyone + Dubin Discussed projects and what we

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have done up to this point

28-Mar 3:15 45 min Willis Library Cody, Max, Tiffani,

Thahn

Revised improvements discussed in last meeting

4-Apr 3:00 35 min Willis Library Cody, Max, Tiffani,

Thahn

Discussed section 3 and changes to be added to it (Section 3 complete)

7-Apr 3:00 50 min Willis Library Everyone Went over section 3; broke up section 4

11-Apr 3:00 2.5 hours Chilton Hall Everyone but Logan w/

Katy

Went over entire project, took notes on improvements

13-Apr 5:00 1 hour Willis Library Everyone but Max Gave everyone last sections for project; Appendix, Executive summary, Bibliography, SWOT analysis

13-Apr 6:00 Willis Library Everyone Continued, Interview Monte Jensen (OWNER)

17-Apr 6:00 1 hour Willis Library Cody, Logan, Tiffani,

Thahn

Put "link" onto blackboard, put together appendix

19-Apr 2:55 2 hours Gateway center Everyone Finished up project / conclusion

Meetings round up to the nearest 5 min marker***

SWOT Analysis:

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Cooperate Structure:

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Legend:

GM – General Manager

FHM – Front of the House Manager

BHM – Back of the House Manager

Company information: (given by managers)

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