2013

ARSHIA GUPTA PGP/17/014

BHAVNEET KAUR PGP/17/016

DIPTI JHA PGP/17/017

SHIPRA AGARWAL PGP/17/048

U SATYA NAGA VINEELI PGP/17/056

USHA BHAKUNI PGP/17/057

YASHASVI KANSOTIA PGP/17/062

Indian Institute of Management

Kozhikode

Chill Out Cafe

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Acknowledgement

We would like to express our sincere gratitude and indebtedness to the owner of Chill Out

Caf Mr. Donald for his enormous help and support right from the inception of the project

till the end by virtue of giving us the required information and allowing us to study the

operations of the cafe and personally explaining a few operations, in spite of his busy

schedule and huge workload.

We would also like to take this opportunity to express our sincere gratitude to professor,

Mr. Sanjay Jharkaria for his constant guidance, valuable suggestions and moral support.

The methods and techniques, taught in class, have been very useful in doing the required

analysis.

Section A Group 5

ARSHIA GUPTA

BHAVNEET KAUR

DIPTI JHA

SHIPRA AGARWAL

U SATYA NAGA VINEELI

USHA BHAKUNI

YASHASVI KANSOTIA

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Executive Summary

We as a group have chosen the recently opened caf right outside the institute gate,

called Chill Out Caf, which has become very popular among IIMK students in a

short span of time. We thought it would be very interesting to study as to how the

cafe has aligned itself to serve the requirements of students and also, since the caf

is new, there is lot of scope for improvement.

Chill Out Cafe is a facility based service where customers can dine and enjoy

ambience. Chill Out Cafe offers services at competitive prices and give value for

money. It is affordable for college-goers and reachable from IIM Kozhikode and NIT

Calicut. It is appreciated for good food and music but the service is perceived as

slow. Our team as well is a customer of the same. Having experienced the service,

we were with a view that with little improvements in the operations the restaurant

could do wonders. Due to these reasons, we have chosen Chill Out Cafe as our

Operations Management Project.

This report explains the operation strategy of the cafe, e.g. layout, procurement,

quality management, inventory, location, process flow, etc. The report also focuses

on the issues concerning the eating joints in Kunnamangalam and the steps that

have been taken towards the same. The report ends with a few recommendations to

improve operations of the cafe and how to improve the service during high demand

times.

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Table of Contents

1. Scope 5

2. Introduction & Location 6

3. Layout of Restaurant 7

4. Service Process, Strategy and Design 9

5. Service Process Matrix 11

6. Service System Design Matrix 11

7. Service Process flow 13

8. Service Blueprint 14

9. Process Flows 15

10. Inventory Management 18

11. Quality Management 18

12. Capacity Utilization 20

13. Resource Utilization 20

14. Hierarchy of Issues 21

15. Recommendations 23

16. Exhibits

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Scope

In this project we have done the operations analysis of Chill Out Cafe, which happen

to be a fast food restaurant in Kunnamaglam. We have analysed how in his limited

resources and equipments, the restaurant is making profits by capitalizing on its

location advantage by targeting the student community from the nearby areas. The

restaurant is in its infancy years and has a tremendous scope to enhance its

operations to make greater profits. By giving a detailed account of the current status

of the inventories, process flows, resources, space and layout of the restaurant we

have given our recommendations which can make the functioning more efficient. We

have also focused on the aspect to overcome the competition which he faces from

the other restaurants in this area. Our analysis and suggestions are based on the

process flows of the most commonly sold items.

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Introduction

Started in January 2013, Chill Out Caf is a one of its kind music themed caf located in

Kunnamagalam, Kozhikode. Situated right opposite to the IIM Kozhikode gate, the caf

caters mainly to students from IIMK and other youngsters in the nearby areas. Donald R

Stanley, the owner of the caf is a native of Calicut who came up with the idea of setting up

a caf so as to attract youngsters who enjoyed good coffee, food and music. The caf

serves also serves fast food and has an unique advantage as the only caf in

Kunnamagalam. Its location surely adds to the lucrativeness as it is a famous hangout spot

for the students of IIMK who take out time to chill here. Inspired by the Jamaican

musician, Bob Marley the interiors are done by using bright colours, posters and

photographs of various musicians, and lamps. The music played is soothing to the ears and

people generally are seen reading books and magazines, chatting or watching movies on

their laptops while enjoying meals. The caf also has an outdoor area where people can

smoke and enjoy the view of the town.

Location of the Restaurant

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Layout of Restaurant

Service Area The restaurant has a rectangular layout. The area has been divided into the following 4

areas:

1. Seating Area It has 4 tables and each has a capacity of 4 people. The capacity of

this area is 4 x 4 = 16 people. The area occupied by each table is 4 x 6 feet.

2. Reception Area The reception or the billing area gives a look and feel of an open

kitchen. This area has drawers under the table where the owner can store inventory

and it is also used to keep the water filter, oven and the coffee machine. The billing

is done manually in Chill Out cafe. Tissues and glasses are kept which can be used

for self-service. The owner keeps one chair for himself in this area.

3. Seating at the reception The reception area has 6 cushioned seats and has a

capacity of 6 people. But this area is seldom used. When the seating area is full, the

people who are waiting can sit here and place the order till the seating area becomes

available.

4. Open Area The open area has 2 tables and each table has 2 seats. So, it has a

total capacity of 4 people. The open area is usually not used by customers for

seating purposes. It is rather used as a smoking area.

5. Kitchen Area The kitchen area has a fridge, the gas-stove and 2 slabs (horizontal

and vertical) on two sides of the walls. It also has a window and an exhaust window

that is used for adequate ventilation and flow of air. He also stores griller, blender

and fryer in the kitchen area.

The below table gives a snapshot of the area division in the cafe, the capacity of each area

and the area in feet.

Region Tables Type of table

Capacity Area in Feet

Seating Area 4 4-seater 16 16 x 6 256

Reception Area NA NA NA 16 x 24 384

Seating at the reception

6 1-seater 6 2 x 2 4

Kitchen Area NA NA NA 8 x 10 80

Open Area 2 2-seater 4 4 x 30 120

Total 12 26 844

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Service Area Layout - The above image describes the layout of Chill Out Cafe. The door

on the right side marks the entrance to the Cafe. As calculated and observed in the figure,

the total area is 844 in feet and the total capacity is 26.

Strategies for competitive advantage:

Differentiation: Unique ambiance, Varieties of Coffee, Good music

Cost Leadership: Aptly prices food items to suit students

Quick Response: Service quality is good although the timeliness can be improved

upon

Order Winning Criteria For Chill Out Caf :

Aptly priced food items

Variety of items on the menu

Locational advantage

Outdoor Smoking Zone

Availability of charging points for laptops

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Service Process, Strategy and Design

Elements in the design of service organisation There are four components that are involved in the design of any service organization:

Target Market Service Concept Service Strategy Service Delivery System

Concepts involved in the Design of a Service Organization

Target Market for this restaurant is people who want to have light snacks and spend some time with their friends. It provides them with the perfect ambience and good quality fast food. There are continuously growing and attracting a wide range of customers due to their unique value but IIMK students have been their major customers due to their location. As it is just in front of the IIM Kozhikode gate, the proximity of the cafe makes it a hub for the students of IIM Kozhikode. The closure of High Octane and IRCTC have increased in the footfall of Chill Out Cafe. Since the opening of the cafe, it has gained popularity due to many reasons such as:

Non-existence of cafes in Kunnamanagalam area Easy accessibility The only fast food restaurant Taste and quality of food Popularity of the food items served burgers, cold coffee and sandwiches Affordability Ambience of the place Music and lighting

Service Concept and Service Strategy of Chill Out is to offers light snacks like

burgers, sandwiches, French fries, cold coffee and other fast food items that people

can enjoy with their friends; also they provide these in the least time possible and

maintain good quality standards. Further, they provide their customers with a calm

yet youthful ambience through the use of dim lights, interesting seating

arrangement, attractive posters and a funky interior dcor. This allows its customers

to move into a different world with mouth-watering food where they can relax for a

while. Hence people like to come to this place more often for the experience and this

is why Chill Out continues to be one of the most sought after place for youngsters in

the locality.

Service Delivery System It has no provision for home delivery but the average

time taken for an order (order time) is around 10 to 15 minutes, whereas it goes up

to around 1hr in peak hours. It is thus an indicator of how long the customer must

sit idle before his/ her order gets ready, hence this is one of their drawbacks and

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they need to improve upon the same by either increasing their efficiency or by

inducing more number of employees.

Restaurants in Kozhikode

There are about 330+ restaurants in Kozhikode which includes the Five Star Deluxe Taj

Residency, Hotel sea Queen, etc. but considering our topic we would limit the scope of our

discussion to the Kunnamangalam town only. The competitors to Chill Out Caf are

ultimately other food outlets operating in the town since most of the crowd gets diverted

over their due to numerous reasons : like people usually want to have a complete meal

rather than just snacks, they provide home delivery and apart from that most of the

competitors have a bigger serving area with a much better and well developed operations

system which increases their efficiency multi-fold. Therefore they should focus on

developing their logistics so that they can get the maximum profits out of the business. Our

report highlights all the essential features involved in their daily process and after a detailed

analysis we were able to spot some flaws and general drawbacks that they could mend to

get better returns out of the business.

Direct Competition Faced in Kunnamangalam

Chill out cafe faces a direct competition with the restaurants of Kunnamaglam. A list of these

restaurants is- Pizza corner, Sangmam, Broast, Chicken Chicago etc. All these restaurants

have a larger work force than chill out cafe. Some of them like Pizza corner even have a

system of home delivery. The services in other restaurants is much more faster than chill

out cafe. Though Chill Out Cafe has a competitive advantage over others in terms of cost

and ambience, it needs to improve its service time so that at least it does not lose on the

competition with the restaurants in the nearby areas.

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Service Process Matrix

The service process matrix for Chill Out Cafe is shown below. It has a high number of

customer interactions but the level of labour intensity is comparably low as compared to

other fast food joints. Hence, we have placed it in the category of Service Shop. The owners

and the stakeholders should emphasise on the needs of the customers on an individual basis

and serve them separately.

Service System Design Matrix

The service system design matrix gives emphasis on the quality and consistency of the cafe

services and its engagement with customers. In this design matrix, we have placed it in the

Face to Face (tight) category. In such a category, there should be high emphasis on

customer engagement and customer satisfaction. The interaction with customers has also

been a key differentiator factor with the competing restaurants in Kunnamangalam.

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Stakeholders : The stakeholders of the cafe are depicted in the following diagram

The aim of the current policy of the cafe is to have high level of commitment to customers

and care to customer needs. It believes that customer satisfaction is the way to success.

The owners try to provide good environment and ambience to make customers feel

comfortable.

Customers

Owners

Suppliers

Creditors

Community

Government

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Service process flow

1. Customer enters and occupies a table.

2. Menu is given to the customer.

3. Customer decides on the order.

4. Customer places order.

5. The order is noted down and passed to the kitchen.

6. If there are multiple orders, priority is given to the dishes that take less time to

make. Also, it is ensured that every table gets something served to it. Therefore, the

processing of orders is not on a First Come, First Serve (FCFS) basis, rather it is

based on the ideology that every customer must be provided with something to eat

with minimum waiting time.

7. Ordered food is prepared in the kitchen. Once the food is ready, it is given to the

waiter to serve.

8. The waiter then serves the food to the customers.

9. Once the customer is finished eating, the table is cleared.

10. Bill is prepared for each of the customer, and a copy is retained

11. The customer pays the bill.

Activities Time taken (min)

Customer deciding the order 5

Customer placing order 1

Preparing food 25-30

Clearing the table 2

Getting the bill prepared 3

Customer paying the bill 2

Total 38-43 min

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Service Blueprint

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Detailed Process Flows

1) Cold Coffee-

When the order for cold coffee is received, frozen milk is taken out from the refrigerator and

is beaten to break into smaller chunks. After this, the chunks of the milk and coffee powder,

sugar and chocolate is put into the blender. The entire mixture is blended for about 3-4 min.

After the coffee is made, chocolate syrup is added to the glass before serving. There are

daily around 20-25 orders for cold coffee. The process flow is shown in the following process

flow diagram :-

Process Flow Diagram for making cold coffee

2) Burgers

There are two types of burgers available in the cafe Veg and Non-Veg. The processes for

each of the burgers is as follows

a) Non Veg burgers For non-veg burgers, the mix is prepared at home as the food

processor is available in the home only. About 5 kg of chicken is boiled (this is used

for both the burgers and sandwiches) and then mixed with spices and grinded in the

food processes. This process takes about 2 hours. Then the mixture is made into

patties by taking chunks of it and frying. The patties are made so that they are

sufficient for 25 burgers. These patties are taken to the restaurant kitchen, and

stored in refrigerator. When the order for a non-veg burger is received, the patty is

taken out of the refrigerator and is put to warm in the microwave oven for about 1

min. In the same time, the burger bun is grilled in the griller, this process takes

about 10 min. Then the burger is assembled by putting cheese, patty and chopped

vegetables. This process takes about 5 min. The burger is then served with ketchup.

This entire process from receiving the order to serving the order takes about 15 min

to complete.

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Process Flow Diagram for making Non-Veg Burger

b) Veg Burgers For making Veg burgers, the mixture for the patties is prepared at

home. About 2 2.5 kg of potatoes are put to boil and are mashed and mixed with

peas and other spices. (The same mixture is used for veg sandwiches as well). The

quantity of the mixture prepared is enough for about 10-15 veg burgers. This activity

takes about 1 hour. Then, the mix is brought to the restaurant kitchen and is kept in

the refrigerator. When an order is received for a veg burger, the mixture is taken out

of the fridge and is put to fry to make a patty. It takes about 10 min to make one

patty. Meanwhile, the burger bun is grilled in the griller, this process takes about 10

min. Then the burger is assembled by putting cheese, patty and chopped vegetables.

This process takes about 5 min. The burger is then served with ketchup. This entire

process from receiving the order to serving the order takes about 15 min to

complete.

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Process Flow Diagram for making Veg burger

3) Sandwiches

There are two types of sandwiches available in the restaurant Veg sandwiches and Non-

veg sandwiches. The process for each of the sandwiches is as follows

a) Non-Veg sandwich For non-veg burgers, the mix is prepared at home as the food

processor is available in the home only. About 5 kg of chicken is boiled (this is used for

both the burgers and sandwiches) and then mixed with spices and grinded in the food

processes. This process takes about 2 hours. Then the mixture sufficient for about 15

sandwiches is taken to the restaurant kitchen and stored in refrigerator. When the order

for a non-veg sandwich is received, the mixture is taken out of the refrigerator and is

put to warm in the microwave oven along with mayonnaise for about 45 s. In the same

time, the sandwich bread is grilled in the griller; this process takes about 10 min. Then

the sandwich is assembled by putting cheese, mixture and chopped vegetables. This

process takes about 2 min. The sandwich is then served with ketchup. This entire

process from receiving the order to serving the order takes about 12 min to complete.

Process Flow Diagram for making Non-Veg Sandwich

b) Veg Sandwich For making Veg burgers, the mixture for is prepared beforehand at

home. About 2 2.5 kg of potatoes are put to boil and are mashed and mixed with peas

and other spices. (The same mixture is used for veg burgers as well). The quantity of

the mixture prepared is enough for about 10-15 veg sandwiches. This activity takes

about 1 hour. Then, the mix is brought to the restaurant kitchen and is kept in the

refrigerator. When an order is received for a veg sandwich, the mixture is taken out of

the fridge and is put to for heating in microwave oven for 45 s. Meanwhile, the sandwich

bread is grilled in the griller, this process takes about 10 min. Then the sandwich is

assembled by putting cheese, heated mixture and chopped vegetables. This process

takes about 2 min. The sandwich is then served with ketchup. This entire process from

receiving the order to serving the order takes about 12 min to complete.

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Process Flow Diagram for making Non-Veg Sandwich

Inventory Management

The level of inventory that is maintained at the restaurant is very small. Many of the

perishable items like milk, vegetables, chicken, etc are purchased on a daily basis. Other non

perishable items like spices, coffee etc are bought once or twice in a month. The materials

are bought by the owner himself as there is no supporting staff member. This takes up most

of the time in the morning, and causes the restaurant to open up late in the afternoon.

There are other miscellaneous items such as disposable glasses, tissues, straws etc that are

purchased twice in a month. The detailed breakup of the inventory purchased and other

expenses in the restaurant are given in the following table on the next page.

Quality management

The quality of the products is maintained by keeping a low inventory. All the perishable

items like milk, vegetable, chicken, etc are bought daily according to the consumption.

There is a minimum wastage of the food materials. All these items are stored in the

refrigerator so that they are not spoilt. All the prepared materials like mixture for the

sandwiches and burgers are kept in the refrigerator so that they remain fresh for long. The

food is prepared fresh and served hot to the customers.

The interiors of the restaurant are daily cleaned with disinfectant to keep it free from any

kind of rodents and pests.

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Inventory Management Table

Monthly expenditure Monthly expenses (Average) (Rs)

Quantity used Frequency of buying

Purchased From

Groceries

Perishable items

1. Vegetables 4500 Daily Local Market

Potatoes 2-2.5 kg/day

Tomatoes 1 kg/day

Onions 1-1.5 kg/day

Peas 1 kg/day

2. Milk 4000 8 l/day Daily

3. Cheese (Cubes and spread) 4000 Once in two days

Wholesaler

4. Chicken 8000 1.5 kg daily Daily Local Market

5. Bread Daily Local Market

Burger Buns for 25-30 burgers

Sandwich breads for 25-30 burgers

6. Eggs 3360 200 eggs per week

Twice a week Wholesaler

Non-perishable items

Spices and other materials Wholesaler

1. Spices Twice a month Wholesaler

2. Coffee Once a month Wholesaler

Instant coffee 600 5 kg/month Once a month

Roasted coffee 2 kg/ month Once a month

3. Ketchup 1000 Twice a month Wholesaler

4. Fries 1500 Once a week Wholesaler

Electricity Bill 6000

Rent 10000

Cooking gas 1500

Misc Expenses (Tissues, glasses, straws)

2000 Twice a month

Total 46460

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Capacity Utilization

Performance measure Cold coffee Burger Sandwich

Veg Non Veg Veg Non Veg

Cycle Time 180 s 300 s 600 s 600 s 600 s

Flow Time 420 s 900 s 960 s 780 s 780 s

Throughput 20/hr 12/hr 6/hr 20/hr 20/hr

Daily Number of orders received (Average)

25 15 25 15 20

Capacity utilization (9 hrs) (%)

32.41 41.67 74.07 36.11 48.14

Resource Utilization

Resource utilization

Measures Order received

Kitchen Griller Blender Oven Fryer

No. of Non veg burgers 25 25 25 0 25 25

Time taken for 1 burger (s)

60 960 600 0 60 60

No. of Veg burgers 15 15 15 0 15 0

Time taken for 1 burger (s)

60 900 600 0 0 0

No. of Non-veg sandwiches

20 20 20 0 20 0

Time taken for 1 sandwich (s)

60 780 600 0 45 0

No. of Veg sandwiches 15 15 15 0 15 0

Time taken for 1 sandwich (s)

60 780 600 0 45 0

Cold Coffee 25 25 0 25 0 0

Time taken for 1 coffee 60 420 0 240 0 0

French Fries 20 20 0 0 0 20

Time taken for fries 60 400 0 0 0 300

Total time utilized (s) 7200 83300 45000 6000 3075 7500

Total time available per day

32400 32400 32400 32400 32400 32400

Utilization (%) 22.2222 257.0 138.8 18.518 9.490 23.14

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Hierarchy of Issues

Hierarchy of issues for Chill out Caf

Chill out opened a year back. It has a lot of issues to decide on

Short term issue:

1. Scheduling of job: Currently the restaurant opens at 1 pm because some prior

tasks of bringing the inventory and preparation of filling needs to be finished. They

need to schedule the work such that none of the worker is starved by the previous

worker. Like for example the sandwich filling process starts after the inventory of the

day in brought. So the inventory brining should be completed well in advance so that

there is no delay in opening the restaurant.

2. Scheduling of machines: Need to monitor that the work machines perform on

daily basis. To make a proper use of resources to manage the peak hour rush.

Short- to intermediate issues:

1. Inventory Management: The planning of when to buy the inventory should be

done under this stage. For e.g. the perishable items like the vegetables, milk, and

breads should be bought on daily basis and the non perishable items like coffee,

sauce, tissue paper etc can be bought on monthly basis.

2. Quality Control: The quality of the product should be checked from time to time.

In case of restaurants this can be checked by maintaining the quality of the

inventory and keeping hygiene.

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3. Forecasting: The forecast of the customer demand and the levels of inventory

needed are a part of this stage. Currently there are 4-5 eating places in

kunnamaglam, on the basis of this they need to forecast how much will be the

demand of the customers.

Intermediate issues:

1. Personnel needs: Currently only two people are employed in the caf. The

intermediate decision to be taken is whether they should hire more people. For eg- A

person separate person can be appointed for cleaning and taking the orders.

2. Facility Utilization: Currently a balcony in the caf is dedicated as the smoking

zone. So sometimes they tables in the balcony are not occupied for the eating

purpose. They need to take the decision to do away with the smoking area so that

the facility utilization can be improved, without much increase in the cost.

Long term Issues

1. Capacity planning: It involves the decision as to increase or decrease the capacity

by taking a look at the trends of the demand.

2. Facility size and Utilization: The current area in which the restaurant is step up is

rented. In the long term they need to decide whether they should continue in the

same space, or move to a bigger space.

3. Product and Process design: The current procedure involves both machine and

manual steps to complete the dishes. For the future they need to take the decision

to involve more machines and food processors to speed up the work.

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Recommendations As per our study we suggest the following recommendations-

1. Increase the workforce: More people should be employed in the restaurant. It will remove the bottlenecks in the process and make it more efficient.

2. Bottleneck griller: In the process of making both the sandwiches and burger, the bottle neck is the griller, which takes about 10 minutes. At a time jjust one of each sandwich can be grilled. So we suggest to add one more griller.

3. Start home delivery: A major chunk of the customers are the students. They

prefer to get the food delivered in their room itself. Pizza corner capitalizes on this fact to increase their sales. Thus we suggest Chill Out cafe also to start the home delivery service. It will require a onetime investment of 60000-70000 to buy a vehicle with a carrier, and he can keep an employee to make the delivery, whose salary can be made proportional to the number to deliveries he makes.

4. Improve the system of raw material procurement: Currently the owner

himself goes out to buy the inventory. Since he purchases some of the vegetables from the kunnamaglam market itself, we suggest him to make an agreement with a nearby vendor to deliver the vegetables at the restaurant itself on daily basis, this will save his time and he can use this time to make the initial preparation of the fillings.

5. Increase the use of technology: the bills and order taking system is manual. We

suggest that to improve the documentation and speed up the process, he should computerise the system. We also suggest installation of a card swipe machine, because these days the use of plastic money has increased. Computerization requires initial heavy investment, but it pays off in the long run.

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Exhibits The ambience and sitting area of Chill Out Cafe is shown pictures in Exhibit 1

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Menu of Chill Out Cafe in Exhibit 2

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