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Transcript of OPERATIONS IN HOTEL AND RESTAURANT
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TERM PAPER ON
“OPERATIONS IN HOTEL AND
RESTAURANT”
Submitted To: Submitted By:Respected Sir,
MR. HARENDRA SINGH SAMUJJAL BHATTACHARJEE
RS1902A49
10907393
MBA
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ACKNOWLEDGEMENT
The project is an illuminating journey to the world of business
environment. Co-operation and co-ordination of various people is
involved in the creation of a project. It is impossible to thank each
of them individually, but I am making a humble effort thank some
of them.
First of all I want to thank my lecturer Mr. HARENDRA SINGH
for assigning me such a great project. He not only assigned me a
responsible role in the project but also showed confidence in methroughout the project.
With my immense reverence I express my sincere thanks to Mrs.
Rashmi Mittal, Dean Executive of Lovely Professional University
for giving all of us the best possible support.
SAMUJJAL BHATTACHARJEE
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TABLE OF CONTENT
1- INTRODUCTION(OPERATIONS IN PIZZA HUT)
2- Mahanand Milk Industries
3- Uttara FoodsPvt.LTD
4- Frozen chicken manufacturer and Suppliers
5- Godavari Food land
6- Madhavi Food
7- The outsourcing process in India of PIZZA HUT:
8- Managing Operations at PIZZA HUT
9-References :
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INTRODUCTION
PIZZA HUT India Supply Chain
PEPSICO PIZZA HUT India Supply Chain
PIZZA HUT India Supply Chain:
Supply Chain is one of the critical factors for the smooth functioning of any
business. It is this unmatched Supply Chain Structure, which not just ensures
on time delivery of raw materials and supplies to PIZZA HUT but also
enables it to cut down on its cost and maximize profitability along with
maintaining highest quality standards of its products. The level of
commitment of PIZZA HUT can be gauged from the fact that even before it
set up its first restaurant in the country it infused Rs 400 Crore to set up its
delivery mechanism. PIZZA HUT initiative to set up an efficient supply
chain and deploy state-of-art technology changed the entire Indian fast
moving food industry, and raised the standards of performance to
international levels.
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OPERATIONS IN PIZZA HUT
As already mentioned, PIZZA HUT had been working on its supply chain
even before it opened its first joint in the country. PIZZA HUT, an
international brand which was trying to make inroads into the country,
developed its Indian partners in such a manner that they stayed with the
company from the beginning. The success of PIZZA HUT India was
achieved by sourcing all its required products from within the country. To
ensure this, PIZZA HUT developed local businesses, which can supply it
highest quality products. Today, PIZZA HUT India works with 38 different
suppliers on a long term basis and several other stand alone restaurants for
its various other requirements. PIZZA HUT distribution centres in India
came in the following order: Noida and Kalamboli (Mumbai) in 1996,
Bangalore in 2004, and the latest one in Kolkata (2007). PIZZA HUT
entered its first distribution partnership agreement with Godavari Foodland,
a part of the Godavari Group engaged in food-related service businesses.
The association goes back to July 1993, when it studied the nuances of
PIZZA HUT operations and requirements for the Indian market. As
distribution centres, the company was responsible for procurement, the
quality inspection programme, storage, inventory management, deliveries to
the restaurants and data collection, recording and reporting. Value-added
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services like shredding of lettuce, re-packing of promotional items continued
since then at the centres playing a vital role in maintaining the integrity of
the products throughout the entire 'cold chain'.
Cold Chain was one of the unique concepts of PIZZA HUT supply chain in
India, on which it had spent more than six years to get the entire system into
place. This system brought about a veritable revolution, immensely
benefiting the farmers at one end and enabling customers at retail counters
get the highest quality food products, absolutely fresh and at great value.
Through its unique cold chain, PIZZA HUT has been able to both cut down
on its operational wastage, as well as maintain the freshness and nutritional
value of raw and processed food products. This has involved procurement,
warehousing, transportation and retailing of perishable food products, all
under controlled temperatures. The following list of suppliers, who build up
the major supply chain of PIZZA HUT, reveal how this ‘Cold Chain’ works
and contributes towards the efficiency of PIZZA HUT.
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Mahanand Milk Industries (Supplier of Cheese):
Mahanand has brought immense benefits to farmers in Baramati,
Maharashtra by setting up a network of milk collection centers equipped
with bulk coolers. Easy accessibility has enabled farmers augment their
income by finding a new market for surplus milk. The factory has:
• Fully automatic international standard processing facility.
Capability to convert milk into cheese, butter/ghee, skimmed milk
powder, lactose, casein & whey protein and humanized baby food.
Stringent quality control measures and continuous Research &
Development
From farm two degrees Celsius in 90 minutes is the first step to quality. For
example, the Rs 262-crore Mahanand Dairy Industries, located in Baramati
in Pune district of Maharashtra, manufactures cheese slices for PIZZA HUT
at 10 metric tons per month. Mahanand has helped set up 15 bulk cooling
centres throughout the district from which it purchases milk. Each cooling
centre, which is equipped with modern measuring and testing equipment and
a large cooling tank, is not more than a few kilometers away from local dairy
farms. A farmer can deliver milk even twice a day on his bicycle and get a
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printed receipt on the spot, which also lists the quality of the milk supplied
by him as per fat content, colour and solids content. If the milk is sub-
standard or adulterated, it is rejected on the spot. A batch of milk can vary
from one litre to 10 litres, or more. Each batch is mixed in one large stainless
steel cooler and chilled immediately to two degrees Celsius to stop bacterial
growth and preserve freshness. From this point onwards, until just before the
burger is actually served in a PIZZA HUT restaurant hundreds of kilometers
away, the temperature is never allowed to increase. When the refrigerated
milk arrives at the Mahanand plant at Baramati, the milk in every single
tanker is thoroughly tested and rejected if found sub-standard, adulterated or
contaminated. The sophisticated testing lab can check fat content with an
accuracy of 0.1 per cent. It can even detect minute traces of pesticides or
antibiotics administered to cows. This instant feedback and the rejection of
the entire tanker-load forces farmers to follow the best practices in terms of
animal husbandry, use proper feeds, cut down on the indiscriminate use of
pesticides and animal medicines and completely stop even the slightest
attempts at adulteration.
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Uttara FoodsPvt.LTD. Agriculture (Supplier of Iceberg Lettuce):
Implementation of advanced agricultural practices has enabled Uttara to
successfully grow specialty crops like iceberg lettuce, special herbs and
many oriental vegetables. Farm infrastructure features:
• A specialized nursery with a team of agricultural experts.
Drip and sprinkler irrigation in raised farm beds with fertilizer mixing
plant.
• Pre-cooling room and a large cold room for post harvest handling.
• Refrigerated truck for transportation.
Uttara Agriculture, a major supplier of iceberg lettuce to PIZZA HUT India,
is one such enterprise that is an intrinsic part of the cold chain. Exposure to
better agricultural management practices and sharing of advanced
agricultural technology by PIZZA HUT has made Uttara Agriculture
extremely conscious of delivering its products with utmost care and quality.
Initially lettuce could only be grown during the winter months but with
PIZZA HUT expertise in the area of agriculture, Uttara Farms in Talegaon,
Maharashtra, is now able to grow this crop all the year round. PIZZA HUT
has provided assistance in the selection of high quality seeds, exposed the
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farms to advanced drip-irrigation technology, and helped develop a
refrigerated transportation system allowing a small agri-business in
Maharashtra to provide fresh, high-quality lettuce to PIZZA HUT urban
restaurant locations thousands of kilometers away. Post harvest facilities at
Uttara include a cold chain consisting of a pre-cooling room to remove field
heat, a large cold room and a refrigerated van for transportation where the
temperature and the relative humidity of the crop is maintained between 1º C
and 4º C and 95% respectively. Vegetables are moved into the pre-cooling
room within half an hour of harvesting. The pre-cooling room ensures rapid
vacuum cooling to 2º C within 90 minutes. The pack house, pre-cooling and
cold room are located at the farms itself, ensuring no delay between
harvesting, pre-cooling, packaging and cold storage. With this cold chain
infrastructure in place, Uttara Agriculture has also a plan to export this high
value product to other international markets, especially to PIZZA HUT
Middle East and Asia Pacific operations. PIZZA HUT expertise in
packaging, handling and long-distance transportation has helped Uttara to do
trial shipments to the Gulf successfully. In addition to export, PIZZA HUT
assistance has enabled Uttara Agriculture to supply this crop to a number of
star-rated hotels, clubs, flight kitchens and offshore catering companies all
over India.
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Frozen chicken manufacturer and Suppliers. (Supplier of Chicken and
Vegetable range of products including Fruit Pies)
A joint venture with OSI Industries Inc., USA, PIZZA HUT India Pvt. Ltd.
and Frozen chicken manufacturer and Suppliers ., produces a range of frozen
chicken and vegetable foods. A world class infrastructure at their plant at
Taloja, Maharashtra, has:
•
Separate processing lines for chicken and vegetable foods.
• Capability to produce frozen foods at temperature as low as -35
Degree Cel. To retain total freshness.
• International standards, procedures and support services.
Frozen chicken manufacturer and Suppliers. PIZZA HUT suppliers for the
chicken and vegetable range of products, is another important player in this
cold chain. Technical and financial support extended by OSI Industries Inc.,
USA and PIZZA HUT India Private Limited have enabled Uttara to set up
world-class infrastructure and support services. This includes hi-tech
refrigeration plants for manufacture of frozen food at temperatures as low as
- 35° C. This is vital to ensure that the frozen food retains it freshness for a
long time and the 'cold chain' is maintained. The frozen product is
immediately moved to cold storage rooms. With continued assistance from
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its international partners, Uttara has installed hi-tech equipment for both the
chicken and vegetable processing lines, which reflect the latest food
processing technology (de-boning, blending, forming, coating, frying and
freezing). For the vegetable range, the latest vegetable mixers and blenders
are in operation. Also, keeping cultural sensitivities in mind, both processing
lines are absolutely segregated and utmost care is taken to ensure that the
vegetable products do not mix with the non-vegetarian products. Now, at
Uttara, a very wide range of frozen and nutritious chicken and vegetable
products is available. Ongoing R&D, both locally and in the parent
companies, work towards innovation in taste, nutritional value and
convenience. These products, besides being supplied to PIZZA HUT, are
also offered to institutions like star-rated hotels, hospitals, project sites,
caterers, corporate canteens, schools and colleges, restaurants, food service
establishments and coffee shops. Today, production of better quality frozen
food that is both nutritious and fresh has made frozen chicken manufacturer
and Suppliers. a name to reckon within the industry.
Godavari Food land (Distribution Centres for Delhi and Mumbai)
An integral part of the Godavari Group, Foodland specializes in handling
large volumes, providing the entire range of services including procurement,
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quality inspection, storage, inventory management, deliveries, data
collection, recording and reporting. Salient strengths are :
• A one-stop shop for all distribution management services.
• Dry and cold storage facility to store and transport perishable products
at temperatures upto -22 Degree Cel.
• Effective process control for minimum distribution cost.
PIZZA HUT local supply networks through Godavari Foodland, which
operates distribution centres (DCs) for PIZZA HUT restaurants in Mumbai
and Delhi. The DCs have focused all their resources to meet PIZZA HUT
expectation of 'Cold, Clean, and On-Time Delivery' and plays a very vital
role in maintaining the integrity of the products throughout the entire 'cold
chain'. Ranging from liquid products coming from Punjab to lettuce from
Pune, the DC receives items from different parts of the country. These items
are stored in rooms with different temperature zones and are finally
dispatched to the PIZZA HUT restaurants on the basis of their requirements.
The company has both cold and dry storage facilities with capability to store
products up to -22º C as well as delivery trucks to transport products at
temperatures ranging from room temperature to frozen state.
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Madhavi Food (Supplier of long life UHT Milk and Milk Products for
Frozen Desserts)
Madhavi Food, an ISO 9000 company, manufactures widely popular brands
–Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh.
The factory has:
• State-of-the-art fully automatic machinery requiring no human contact
with product, for total hygiene.
Installed capacity of 6000 ltrs/hr for producing homogenized UHT
(Ultra High Temperature) processed milk and milk products.
Strict quality control supported by a fully equipped quality control
laboratory.
All suppliers adhere to Indian government regulations on food, health and
hygiene while continuously maintaining PIZZA HUT recognized standards.
As the ingredients move from farms to processing plants to the restaurant,
PIZZA HUT Quality Inspection Programmes (QIP) carries out quality
checks at over 20 different points in the Cold Chain system. Setting up of
the Cold Chain has also enabled it to cut down on operational wastage
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Hazard Analysis Critical Control Point (HACCP) is a systematic approach to
food safety that emphasizes prevention within its suppliers' facility and
restaurants rather than detection through inspection of illness or presence of
microbiological data. Based on HACCP guidelines, control points and
critical control points for all PIZZA HUT major food processing plants and
restaurants in India have been identified. The limits have been established
for those followed by monitoring, recording and correcting any deviations.
The HACCP verification is done at least twice in a year and certified.
The relationship between PIZZA HUT and its Indian suppliers is mutually
beneficial. As PIZZA HUT expands in India, the supplier gets the
opportunity to expand his business, have access to the latest in food
technology, exposure to advanced agricultural practices and the ability to
grow or to export. There are many cases of local suppliers operating out of
small towns who have benefited from their association with PIZZA HUT
India.
The outsourcing process in India of PIZZA HUT:
The PIZZA HUT sourced ingredients from all the parts of India. The iceberg
lettuce was specially developed for India using a new culture farming
technique. This variety of lettuce was similar to the lettuce PIZZA HUT
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used elsewhere in the world. To meet the demand consistently, PIZZA HUT
helped Uttara Agriculture grow the lettuce throughout the year and even in
rain-shadow areas. The crop was harvested between 45 days, depending on
the climate. The crop was harvested early in the morning and immediately
stored in vacuum pre-coolers installed at the farm. The pre-cooler brought
down the temperature of the lettuce from 26º to 3º.
PIZZA HUT was able to bring technology to its suppliers too. Uttara and
Madhavi Foods was formed through a joint venture between Uttara and OSI
Industries, US, for chicken products; and between Kitran and Kitchen Range
Foods, UK, for vegetable patties. Uttara and Kitran's Taloja plant was
commissioned in December 1996.
"We have developed a supplier chain to get fresh
vegetables and chicken. We test everything that comes into our plant," said
Jose Azavedo, CEO, Vista & Kitran. The plant had a Hazard Analysis
Critical Control Point (HACCP) system to ensure quality. The ready-to-cook
patties, manufactured at the plant, were stored in rooms at -26º c. PIZZA
HUT had also applied supply chain technology when setting up Mahanand
Dairy Industries Limited. The Mahanand Dairy plant, with technological
collaboration from various international firms, including Schreiber
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International Inc, US, went in for backward integration, by tying up with
cooperative organizations at the district level.
The joint venture with Baramati Cooperative Milk
Marketing Federation resulted in facilities across Baramati to collect milk. A
survey of Baramati was made and they set up 35 bulk stations with 60 tanks
where milk could be collected, checked and stored. The main aim was to
ensure was to ensure that the milk producer does not travel more than 2.5 km
to deliver the product. That ensured the longer life for milk. Once collected,
the milk was transferred to the main departments in insulated tankers. The
department procured 4 lakh litres of milk everyday, which was used to make
processed cheese exclusively for PIZZA HUT. The product was made
according to the multinational’s specification.
TABLE I
OUTSOURCING THE INGREDIENTS
Cheese Mahanand Dairy Industries Ltd., Pune
Dehydrated onions Jain Foods, JalgaonIceberg lettuce Uttara Agriculture, Pune
Chicken patty
Frozen chicken manufacturer and
Suppliers , Taloja
Veg. Patty, Veg. nuggets, Kitran Foods, Taloja
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Pineapple/Apple pie
Chicken (dressed) Riverdale, Talegaon
Buns Cremica Industries, Phillaur
Eggless mayonnaise Quaker Cremica Pvt. Ltd., Phillaur
Sesame seeds Ghaziabad
Iceberg lettuce Meena Agritech, Delhi
Fish fillet patties Amalgam Foods Ltd., Kochi.
Iceberg lettuce Ooty Farms & Orchards, Ooty
Vegetables for the patties
Finns Frozen Foods & Jain Foods
(Nasik, Jalgaon)
Mutton and mutton patties Al Kabeer, Hyderabad
PIZZA HUT convinced its suppliers to set up two separate production lines
for chicken and vegetable patties, keeping in the mind the link between
food and religion in India. This was in sharp contrast with its global
practice, where PIZZA HUT suppliers produced all types of patties from
the same line. These two production lines were housed in two different
rooms and the only way a worker could cross over from one line to the
other was by passing through the shower room. This eliminated all chances
of contamination. However, from a supplier's point of view, more lines
meant a reduction in capacity utilization and high cost of production. To
minimize costs, PIZZA HUT helped Uttara & Kitran Foods produce
derivatives of chicken and vegetable nuggets (not based on PIZZA HUT
recipe) for Indian hotels and restaurants and thereby reach new markets.
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Uttara & Kitran's higher margin and higher capacity utilization for non-
PIZZA HUT products helped it remain cost competitive. PIZZA HUT
philosophy had been 'one world, one burger' i.e. the PIZZA HUT burger
should be consistent in terms of cost and quality throughout the world. To
ensure this, all of PIZZA HSUT suppliers followed the internationally
acclaimed HACCP systems wherein both inputs and finished goods were
subjected to chemical and microbiological tests.
This kept food fresh and free from contamination. Apart from this, the entire
production line was automated using sophisticated technology, barring only
the final compilation of the bun, cheese and patty - which was done by hand
Cases.
Managing Operations at PIZZA HUT
.
Define quality characteristics When Ray Kroc purchased the first PIZZA
HUT in 1955, he centered on what people wanted. With this focal point
came the utilization of Kroc’s theory of QSC (quality, service, and
cleanliness), which still serve as the PIZZA HUT key quality characteristics.
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QSC thrillingly got PIZZA HUT off the ground, but as times changed, the
company saw many more market segments and chances.
PIZZA HUT became an expert in marketing toward specific markets
by advancing ideas such as breakfast menus, healthier choices and
alternatives, and adult foods (Lubetkin and Lattin 21-23).
2. Decide how they measure these characteristics The successful pursuit of a
quality program at PIZZA HUT requires the dedication of substantial
organizational resources, and it is vital to understand whether and how the
program generates value for the organization. It is evident that the US,
country where PIZZA HUT originated and which still sets the benchmark to
all PIZZA HUT restaurants across the world, is treating quality not just as an
organizational issue but as a national one. PIZZA HUT supports a position
that all organizations which want to survive and succeed must take quality
seriously.
PIZZA HUT’ U.S. corresponding store sales for all of 2004 showed
reduction in the face of severe competition. For the first four months of
2005, U.S. same store sales grew due in part to promotions. A number of
organizational and quality changes were introduced immediately to
adequately react to this drop in sales. One sign of a modification in PIZZA
HUT strategy was the expected shift in U.S. management, which franchisees
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have said would clip layers between the restaurants and top executives
(Boje, Driver and Cai 14). 3. PIZZA HUT, which has built its business on
the three characteristics of food quality, convenience and price, has clearly
developed a unique approach to the idea of full customer satisfaction.
PIZZA HUT has clearly recognized that customer satisfaction in its case
goes well beyond simply serving the right food at the right time and price.
The first principle demonstrates its commitment to the total PIZZA HUT
experience. The customer should sometimes not mention food but should be
impressed by the quality of overall service and the hygiene standards of the
washrooms. Customer service for PIZZA HUT goes well beyond the
standard products and services offered, to include the broader aspects of the
PIZZA HUT experience and interaction with the community. 4. Control
quality against standards
These are the approaches PIZZA HUT uses to control its quality standards
Step 1 Set quality standards
Step 2 Appraise conformances to standards
Step 3 Act when standards are not met
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Step 4 Plan to make improvements While PIZZA HUT’ executives propose
participation as a means of connecting the contribution of people and
encouraging a sense of belonging,
it remains the case that the approach need not be used in this
participative manner. A further tool is the measurement of what PIZZA
HUT calls operating quality costs. These are divided into four self-
explanatory categories:
■ prevention costs, including quality planning;
■ appraisal costs, including inspection costs;
■Internal failure costs, including costs arising from scrap and rework;
■ external failure costs, including warranty costs and complaints.
1. Definition of supply chain management Supply Chain Management is
often defined as the running of the whole value-added chain, from the
supplier to producer right through to the retailer and the final customer.
SCM covers three main goals: decrease inventory, boost the transaction
speed by swapping data in real-time, and boost sales by implementing
customer requirements more accurately.
2. Key elements in PIZZA HUT supply chain The Bullwhip Effect is a main
reason for higher costs and problems in supply chains. It depicts how small
fluctuations in demand at the client level are augmented as orders pass up
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the supply chain through distributors, manufacturers, and suppliers. In great
variety supply chains, the upstream activities react to forecasts, while
somewhere on the downstream part the chain waits for orders to be made.
Think about these two former fast food mottos: “We Do it all for you”
proposed by PIZZA HUT and “Have it Your Way” by Burger King. PIZZA
HUT makes finished hamburgers “to forecast” – PIZZA HUT doesn’t know
when people would come in for lunch, but they make burgers in anticipation.
Burger King prefers to wait until customers actually place (customizable)
orders before the burgers are made. This is more frequently known as the
“Build-to-Order” (BTO) model, while PIZZA HUT' strategy up to now is
called “Build to Stock” (BTS). Both models have advantages and
disadvantages, and PIZZA HUT considers doing a combination of both. 3.
Benefits PIZZA HUT purchases its potatoes from corporate farmers in
farming states not the commodities market. Consequently it limits its contact
with price fluctuations that might have occurred by using the commodity
exchange to get those goods. The company has even other matters to think
about. Its franchisees have to realize economies of scale to pay the additional
franchise fee, royalties and price for the potatoes that produce the French
Fries. Constructing a brand name is the most significant thing that PIZZA
HUT has today. Therefore by building a complete cycle and depending less
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and less on the market fluctuations, PIZZA HUT enhances its reputation.
Conclusion PIZZA HUT current strategy is to further promote the image of
healthy food that can be found at “New or Re-modeled PIZZA HUT”.
Macdonald’s has been targeted by many health group activists as the
company that contributed to obesity problems in America. The response was
quick if not immediate. PIZZA HUT announced it plans to condition out its
Super Size French fries and soft drinks after it became apparent that public
had adopted different tastes recently. PIZZA HUT new strategy of
presenting its restaurants as the convenient place where healthy food can be
found is in line with its recent attempts to create a healthier image for itself.
The corporation is planning other menu changes, such as switching to a
cinnamon roll and a sausage burrito as its core breakfast offering, while
bagels would become an alternative item. These changes are part of its
strategy to offer a range of choices that support a balanced lifestyle, thus to
attract new clients and retain old ones. After pursuing sensational expansion
in the past, PIZZA HUT must sharpen its focus on product quality and speed
up its decision-making to recover sales and profits in the United States,
industry analysts say. “PIZZA HUT marketing has to be taken up a step
further. They have got to find one or more new products or go back to
advertising the Big Mac on some grounds that the consumer can
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understand,” said Ron Paul, president of Technomic Inc, a Chicago-based
restaurant consulting firm (Boje, Driver and Cai 52).
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Dogma:
An Institutional History of Corporate Environmentalism, San Francisco, A:
The New Lexington Press, 1997. Lee, Hau L., and V. Padmanabhan. "The
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Sloan Management Review 38, no. 3 (Spring 1997): 93-103. Lubetkin,
Julie, and James M. Lattin. PIZZA HUT Corporation: Environmentalism.
Stanford: Stanford University Press, 1991. The PIZZA HUT Corporation
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