HK Restaurants

Lecture 11:Topic: Last GAPLack of inventory capacity Capacity constraints

Time (law firms) Labour (Customer service hotline rep) Equipment (FedEx trucks) Facilities (movie theatres) # seats, # workers, kitchen supply Time of customers finishing food Time issues (opening hours)

What affects demand? Demand patterns Predictable cycles (restaurants) Random fluctuations (weather) Market segment (walk-in vs regular customers) Food quality WOM Promoting wages Holiday/ festivals – higher demand Natural climate (Typhoon – less demand) Peak time (lunch/ dinner)

o Solution: Afternoon tea/ happy hour Function: attract customers by creating busy atmosphere as

customers are more likely to go in if restaurants are busy

Four types of Capability & Demand scenarios1. Toyota’s JIT system Not the case in service

a. Excess capacity (waster resources)b. Best scenario in service

i. Having a little excess capacity E.g. having 100 cashiers open but only 80% are utilized

To make sure costumer get better service experience2. How to match Capacity & Demand?

a. E.g. Obamacase website broke down due to too much capacity (launched simultaneously in the xxx region)

Test market Research on potential customers

3. HK Disneylanda. Sold more tickets than what they can accommodate Lost customers

Shift Demand by: Provide cheaper tickets for alternative days Strategic alliance with cinemas, competitor Ocean Park

Adjust Capacity by: Bring your employee’s relatives by providing cheaper tickets Use time to renovate facilities Rent part of facilities for filming movies Create some wedding packages

Shifting Demand when demand is too high:

When demand decreases due to lost customers

Switching service offers

Communicate busy days and times Modify timing and location of service delivery Charge full price for the service – no discounts

Shifting Demand when demand is too low: Advertise peak usage times and benefits of non-peak usage – E.g. “Can enjoy

service more” Vary the service offering Differentiate the price

Adjusting Capacity when demand it too high: Stretch the labor, facilities and equipment Cross-train employees Hire part-time employees BUT Costs – E.g. training cost, employee loyalty

declines if they feel frustrated about fire/dropout

Adjusting Capacity when demand it too low: Schedule downtime during period of low demand Renovations, maintenance Schedule vacations Bring employees’ relatives/ families Boost employee morale

Yield ManagementWhy using price is not wise for adjusting demand?

Price = indication of quality Customer expectation on price

o Wait till price goes down again

Yield =

E.g. Psychologist example:

Airlines Allocate revenue via different classes e.g. business, prestige, economy

Communication Strategies

ExternalInternal

Interactive

E.g. Airlines – 50 sec commercial about best customer service

Convey the value of company – showing the flight attendant customer testimony

E.g. Southwest’s commercialSingapore Commercial – Showing a lady taking care of customers