AMERICAN DEVELOPMENT CORPORATION

Proposal to Reorganize XXXXXXX Sports Bar and Grill

Developing a Zero-defect Organization

Dany Kaiser

3/19/2016

Through reorganization, the introduction of new management methods, technology, and understanding the importance of people to processes, this plan lays out the means to achieve the full sales potential of the enterprise, and to sustain it once it is reached.

1 | P a g e

Objective ................................................................................................................................................... 3

Preface ...................................................................................................................................................... 3

Background ............................................................................................................................................... 4

Proposed remediation plan ...................................................................................................................... 5

HR Reorganization Plan ............................................................................................................................. 5

Phase One – Setting the Expectation .................................................................................................... 7

Phase Two – Employee Training ........................................................................................................... 7

Phase Three – Assessing Performance ................................................................................................. 7

Phase Four – Developing Corporate Best Practices .............................................................................. 8

Phase Five – Employee Retention ......................................................................................................... 9

Technology Plan ...................................................................................................................................... 10

Profit Engineering ............................................................................................................................... 11

Loss Control ......................................................................................................................................... 11

Inventory Management ...................................................................................................................... 11

Accounting .......................................................................................................................................... 11

Guest Experience ................................................................................................................................ 12

BOH Technology .................................................................................................................................. 12

HRMS ................................................................................................................................................... 13

Lean Six Sigma ......................................................................................................................................... 13

Introduction ...................................................................................................................... 13

Transportation ...................................................................................................... 13

Inventory ............................................................................................................... 14

Motion................................................................................................................... 14

Waiting .................................................................................................................. 14

Over-processing .................................................................................................... 14

Over-production ................................................................................................... 14

Defects .................................................................................................................. 15

Six Sigma ........................................................................................................................... 15

Application of Lean Six Sigma Methods to Reorganization .............................................. 15

Key People ......................................................................................................................... 16

Owners .................................................................................................................. 16

2 | P a g e

General Manager .................................................................................................. 16

Assistant Manager ................................................................................................ 17

Kitchen Manager ................................................................................................... 18

Salary and Future Plans ........................................................................................................................... 19

Summary ................................................................................................................................................. 20

End Notes ................................................................................................................................................ 21

3 | P a g e

Objective

The aim of this reorganization proposal is to suggest an effective means of restructuring

operations in order to:

1) Maximize profit potential;

2) Improve on-the-job performance;

3) Resolve customer service issues;

4) Improve quality control;

5) Offer an excellent guest experience; and,

6) Restructure cash flow to assure the integrity of year-round operations.

To accomplish this, our proposal will suggest ways to introduce new efficiencies,

automate complex tasks, and reduce waste as discussed below under the sections,

Technology Plan, Lean Six Sigma, and Key People.

Preface

The overarching goal of management is to be the best in everything it does. Food,

customer service, and customer experience are at the top of this list. However, to do so

there must be a realization that, without rehabilitation, the team that led the

organization into its current predicament cannot lead the way out of it. Thus, to

accomplish this, a transitional HR plan to reset employee work habits, and rethink

organizational roles for others, must become an integral part of any reorganization. The

reasons for this will become clear in the following section, HR Reorganization Plan.

Assuming we’ve achieved the first goal, being the best in all we do, the second is very

simple to say, but much harder to do. What is it? To repeat all the steps used to

accomplish the first goal each time, every time without errors or exceptions.

Repeatability in service and products is realistically the only way to achieve a zero-

defect organization, and to maximize profit potential. However, to do this requires

skilled leadership not in floor management, which as we’ll see in “Key People” and

illustrated in Figure 2, the Organizational Chart, is better-suited to assistant managers,

but in General Management.

It is the job of the General Manager to manage the many complex tasks, which go into

producing a zero-defect organization. General Managers are like the captain of the ship.

If the captain is not in the control room steering the ship, and is instead wandering the

deck minding employees and handling customers, the ship will go astray and eventually

run ashore. Likewise, with 10 departments to head up (as shown in Figure 2), if the GM

is not in control, the organization will run astray. Thus, assigning the right people with

4 | P a g e

the right talents to the right position is essential to the success of any high-performance

organization, and is an integral part of our reorganization plan.

Lastly, new management methods are introduced to achieve the business objectives of

owners. Based upon “Lean Six Sigma (or LS6),” reorganization of human resources,

technology, and processes are discussed as a way to create an organization with the

required skills and expertise necessary to achieve $5-6M in annual sales, the estimated

limit of what is possible given the capacities of the venue.

Background

As gathered from feedback on several forums, management is suffering from

identifiable problems in customer service and product defects. In addition, seasonal

fluctuations in business lead to recurring cash flow problems at the beginning and end

of the calendar year, which result in the inability to meet financial obligations during

these lean periods.

Other identifiable problem areas include:

High BOH employee turnover;

a lack of quality control, quality assurance, and consistency in the kitchen;

no inventory controls;

no loss control;

no reconciliation reports;

no audits;

no per item P&L analysis and monitoring program;

no weekly/daily P&L reports;

no departmental accounting;

no actionable sales information;

failed employee rehabilitation;

employee resistance to the authority of management;

no comprehensive employee training programs;

no written work rules clearly setting out the expectations of employees;

poor (but improving) waste control;

poor sanitation practices;

lack of well-defined employee policies;

no accountability;

poor employee morale; and, perhaps more importantly,

open disregard of ad hoc work rules by employees.

5 | P a g e

Proposed remediation plan

To remedy the situation it is recommended that the finance and operations of the

organization be restructured, and new management methods be introduced. The

primary focus of these efforts will be in the areas of:

operations management;

accounting;

reporting and account reconciliation;

re-engineering of cash flow to address vendor payments and seasonal fluctuations in

revenue;

loss prevention;

inventory management;

customer service improvement;

quality control and assurance;

HACCP food handling and sanitation procedures;

HR training and management, including recruitment and employee retention;

purchasing and vendor management.

HR Reorganization Plan

When forming a HR reorganization plan, one consideration must be the realization that

doing the same thing over will not result in a different outcome. Current employees who

have been through several changes of ownership and management have become callus

and resistant to change. While questionable if hardened employees with poor work

habits and resistant to change can become model employees, a program to do this will

take on the effort. This program will incorporate a 5 –pronged approach to HR

management, which includes:

1. Setting employee expectations

2. Employee training

3. Assessing performance

4. Developing corporate Best Practices; and,

5. Employee retention

In this HR reorganization plan, we will rely upon Lean Six Sigma management methods

to create a culture of ‘experts’. Experts are employees who have gained expertise within

their departments and assigned roles, and have mastered the processes that go into

delivering a zero defect product or service. Key to the reorganization of the enterprise, it

6 | P a g e

is necessary to elaborate upon a few concepts first to understand how employee

training is the critical means by which organizational change is developed.

To explain, in Lean Six Sigma, the organization is comprised of internal customers and

internal vendors. Just as an external customer would order an item produced by the

restaurant, internal customers also order products and services from internal vendors.

For example, a server may order a meal from the chef, and the chef provides that

product by performing a service. In turn, the server presents the product to their

customer, and in doing so, provides a service.

In Lean Six Sigma employee (or experts, as I prefer to call them) training programs, we

rely upon a concept called Voice of the Customer, or VoC. The objective of this is to

understand the expectations and preferences of the customer with the goal of

delivering a good or service with zero defects and as expected. In doing so, waste of the

company’s time and resources is avoided (the ‘zero defect’ objective), customer

satisfaction was achieved (the goal), and the anticipated profit margin of the company is

preserved (the desired result).

As seen in the example above, delivering a product involved not one, but several

processes along the way. Therefore, becoming an expert in hearing the VoC, learning to

effectively advocate on their behalf with your own internal vendor, and performing to

your own customer’s expectations, is as critical to delivering a zero defect process as is

becoming an expert in the process itself.

A process then consists of the objective (zero defects), the goal (customer satisfaction),

and the result (the preservation of anticipated profit margins). Lean Six Sigma then is a

management method that works to identify all the processes that go into producing a

product or service, improves upon them by eliminating waste, and developing a team of

internal experts in each one with the goal of producing a zero defect product or service.

Therefore, it is the management method of choice in reorganizing a company chronically

failing to deliver upon the processes necessary to produce a zero-defect product or

service.

Lean, developed by Toyota, and Six Sigma, developed at Motorola and first adopted as

the de facto management system at GE by legendary former chairman and CEO, Jack

Welch, is used today all over the world by top-performing organizations. Named

“Manager of the Century” by Forbes in 1999, when he retired from GE he took

a severance payment of $417 million, the largest such payment in history. I provide this

information only to lend perspective on the value of the concepts offered in this

proposal, and to set the stage for the HR portion of the reorganization plan.

7 | P a g e

Phase One – Setting the Expectation

Phase One of the HR plan will include rewriting employee manuals to set out the work

rules for each position. By communicating the expectations of management, it sets the

stage in the employee’s mind for what changes to expect, and informs them of any on-

the-job requirements going forward.

Phase Two – Employee Training

As discussed, developing internal teams of process experts, and understanding who the

internal customers and vendors are, is essential to the success of the HR reorganization

plan. After first indentifying all the internal processes of each department and the

product or service they provide, team leaders for each department will be recruited

from within, which may not necessarily be the manager of the department. The reason

for this is simple. We recruit rather than appoint team leaders because we want them to

own the process and be personally invested in its success. If we appoint a person as

team leader, they may be detached from the process we are looking to improve, and a

lack of commitment to success sets the organization as a whole up for failure.

Therefore, to avoid this, we recruit rather than appoint.

Having identified the team leader for each process, the next step is to define the

process, and then identify in detail the ideal way it should work. To this, we write the

procedure to produce that process, and develop a training program to perfect it.

Phase Three – Assessing Performance

Having set the stage, Phase Three of the HR plan will include two behavioral

modification tools; an employee scorecard and a professional mentorship program. The

employee scorecard serves to let employees know where their own personal

weaknesses lie. The intent is not to criticize employees, but to help them recognize and

improve upon their own performance.

The employee scorecard is used in tandem with a mentorship program comprising

counseling and supportive advice. The format requires no less than two managers are

present when meeting with employees to discuss shortcomings in work performance.

With the goal of resetting employee expectations in mind, management will draft an

action plan together with the employee laying out the suggested remedy. The employee

will then sign it to affirm their commitment. Again, the focus is not to criticize, but to

inform the employee of where their performance is falling short of expectations, and to

work with them to correct it.

8 | P a g e

The other critical component of assessment is a statistical process tool that we use

referred to as DMAIC, which goes hand in hand with the employee scorecard. DMAIC is

an acronym for its five phases – Define, Measure, Analyze, Improve and Control. DMAIC

is a Six Sigma methodology which helps in achieving process improvements by reducing

variation. Each phase has its own significance and we will understand how DMAIC

process reduces many root causes to only a few vital root causes, which can then be

controlled for variance. Below is a chart representing the DMAIC process.

Figure 1

As we see above, the Define phase looks at all the X’s (process inputs). In the Measure

phase, we get the first “Hit List” where the root causes (X’s) are reduced to just 10 – 15.

In Analyze phase, we screen the available list and reduce the root causes to 8 – 10. In

the Improve phase, we identify just 4 – 8 critical X’s, and in Control phase we are

controlling only 3 – 6 root causes (X’s). Thus, by controlling just 3 – 6 root causes we are

able to positively impact the project Y.

Phase Four – Developing Corporate Best Practices

Phase Four of the HR plan is to boost morale by recognizing performance. For this, we

use the well-known principle that employees invested in the outcome of the company

do well on the job. This does not mean they have a financial interest in the company

other than their regular salary or pay. But, by encouraging emotional investment of

employees in the outcome of their work, it provides an effective means of gaining their

buy-in to change outcomes.

9 | P a g e

One behavioral tool at our disposal to gain emotional investment is pride. To explain, in

mechanical physics, we know that for every action there’s an equal but opposite

reaction to kinetic force. Likewise, in psychology there’s an equal but opposite

perception for each emotion. For pride, the resulting perception is status. Recognized as

being the best, or being the top performer, and being acknowledged by an authority in

this (e.g., the employer in this case), is a powerful tool used in applied behavioral and

cognitive psychology. By exploiting pride, we can gain the emotional buy-in of

employees to improve on-the-job performance.

In Phase Four of our HR plan, principles of applied behavioral and cognitive psychology

are used to develop a corporate culture of ‘best practices’. Used with our other

cognitive tool addressing poor performance, i.e. the employee scorecard, we now have

a method of demerits and rewards that confer status upon individuals in return for

performance. Just as poor behavior is contagious in an organization, we now have a HR

management method that provides a powerful contagion capable of spreading good

behavior. It is these principles that will form the basis of our HR management plan, the

expected result of which will be a corporate culture of ‘best practices’.

Phase Five – Employee Retention

Phase Five of the HR program concerns employee retention. The cost of employee

turnover in terms of lost productivity and the time necessary to train new employees is

high. One study, from the Center for American Progress, places the cost of replacing an

employee making $50,000 a year or less at 19.7 percent of wages or salary. Doing the

math, this means replacing a server earning $35,000 a year costs $6,895. For employees

earning less than $30,000 a year, costs decline to 16.1 percent of wages. So, doing the

math, a busser earning $10 per hour and working 40 hours a week costs $3,489 to

replace. Considering that the employee turnover rate in 2014 for the hospitality industry

was 66.3 percent according to the U.S. Bureau of Labor Statistics’ Job Openings and

Labor Turnover (JOLTS) program, and using sales figures for 2015, eliminating employee

churn will increase net profit of the company by at least 150 percent!!

So, while the costs of employee turnover is plain, the broader repercussions of

diminished employee morale, damages to the customer experience we are trying to

create, and lost productivity incurred in training replacements, are compelling reasons

that an employee retention program MUST be part of any effective HR plan.

The organizational chart below shows the proposed hierarchy of an overhauled HR plan.

The hierarchy of the chart is laid out such that the person responsible for the

department (shown in blue) is listed below it followed by their subordinates. Hourly

10 | P a g e

employees are grouped into brigades, shown in red, while salaried employees are

shown in white.

Organizational Chart

Figure 2

Technology Plan

Technology will play a key role in achieving the objectives of improved financial

performance, enhanced quality control, and provide excellent customer service and

experience.

The 7 pillars of our IT plan include:

1. Installing a new POS system;

2. Implementing an accounting system that provides current, actionable information;

3. Implementing inventory management systems to control costs and shrinkage;

4. Implementing a loss prevention system;

5. Implementing customer-facing technology to improve the XXXXXXX guest experience;

6. Implementing BOH technology to improve server efficiency, quality control and

assurance;

7. Implementing an HR management system including hiring and on boarding.

Following are some of the critical functions an effective IT management plan will solve.

Owner

FOH

Owner

2-4 Asst. Mgrs

Server Brigade

GM

BOH

Owner

Kitchen Mgr

2 - Asst. Kitch Mgrs

(Sous)

Kitchen Brigade

IT

GM

Operations Management

GM

Accounting

GM

Book Keeper

Accountant

Loss Prevention & Inventory

GM

Asst Mgrs

LP&I Brigade

Events Coordinator

Owner

GM

AsstMgrs

Security

HR

GM

Owner

Asst. Mgrs.

Marketing & Advertising

Owner

GM

Purchasing

GM

Kitchen Mgr

Key: Employees Departments Brigades Vendors

11 | P a g e

Profit Engineering

In F&B operations, profit engineering is the ongoing process of creating a top

performing menu. Aside from analyzing per item profit for each menu item, the goal of

profit engineering is to monitor the impact of inflation and costs over time, and to test

the potential of new items to improve bottom-line performance. Another benefit of

profit engineering is that, through advertising, the firm’s marketing executives can also

exploit the well-known power of the word ‘New.’ (See Dooley, Roger, et al., The Power

of “New”, Neuroscience Marketing, 2008.).

Loss Control

Various loss control systems offer mixed results. Depending upon the skill level of the

programmer and business analyst handling the data, useful information of varying

degrees may be derived through reports.

Use and portion-reporting systems such as Bar Vision, the system currently in use, can

form the basis of a good inventory control system. But, without the skilled help of good

programmers or analysts, they offer little more information other than beverage costs

and use. Reconciliation reports still have to be written by an analyst to supply useful

shrinkage information, and to identify the source of any discrepancies.

Having tested and experimented with Bar Vision, I can confirm that beside use and cost

data, reconciliation reports can be developed to detect shrinkage due to theft or fraud.

Responsibility for reporting this information would fall to the GM under this proposal.

Used with Bar Vision, exception reports from Remote Eyes, the other proposed loss

control system I recommend, my opinion is that it would be about 85 percent effective

in detecting losses through theft and fraud. The remaining 15 percent exposure to risk

can be controlled through good management practices, enforced work rules, and

effective analysis.

Inventory Management

Inventory control is the central nervous system of effective loss control, and is the

principal means of optimizing OpEx. Through good inventory control, cash flow is

enhanced, ROI tends to increase, and working capital is freed up enhancing the firm’s

credit profile as a result, an important issue going forward to take on any new projects.

Accounting

Accounting is the function of reporting the financial results of an organization’s sales. By

nature, it is an account of transactions that occurred in the past.

12 | P a g e

Under this proposal, the accounting system I recommend will provide up-to-the-minute

results of what is currently going on in the business, and allow management an

immediate opportunity to act on the information. Errors, shrinkage, portion and quality

control, waste, labor, and expense exceptions are addressed nearly as they occur rather

than long after damages have been done. The difference between historical and near

real-time records will result in improved financial performance.

Guest Experience

While guest experience is a combination of food, service, and ambiance, technology can

play a key role in enhancing the experience itself. To provide an analogy, imagine for a

moment that each table had a single server assigned to it. Like a butler who serves at

your beck and call, your personal server anticipates your every need and answers your

every desire. Due to high labor costs, while this scenario is not possible in practice, cost-

effective technology does exist to do just this.

If there were a way to answer every customer’s wish the moment it occurs, one result

might be an increase in the per person average (PPA) check. In fact, using technology

that does this, a rise in PPA has been documented in case studies that have emerged in

recent years. Adopters of the technology include Applebee’s, which serves over one

million customers daily, and Chili’s, a casual dining concept of Brinker International.

After several years of testing, Applebee’s will install 100,000 table-top devices in more

than 1,800 locations nationwide. Likewise, Chili’s has announced that it will install

similar devices in approximately 800 locations.

While my proposal uses different and lower cost technology than Applebee’s and Chili’s,

it addresses the same basic issues: People don’t want to wait, and responsiveness to

customer desires is a proven means of increasing the PPA. Used along with other

technology that exploits the notion that people eat with their eyes, case studies show

it’s possible to place more and higher value transactions through the system while

improving upon guest experience.

BOH Technology

In BOH operations, aside from the food, time is the most critical element when it comes

to guest experience and the impact it makes on bottom-line profits. To address this

there are two low-cost technology solutions I recommend. The first is a server paging

system, and the other is a KDS, a kitchen display system, to automate the cook line and

reduce the time it takes to prepare an order.

13 | P a g e

HRMS

HRMS, or the Human Resource Management System, is a key part of our restructuring

plan. In F&B operations, food, service, and guest experience are the products we

provide. Therefore, people who control these processes are the most valuable asset

any company has, and it only makes sense to invest in their success.

As discussed in the HR Reorganization Plan, while many elements of HRM come into

play, it’s the HRMS that ties them all together into a single and cohesive management

system. Inconsistency in the application of work rules, benefits, scheduling, and record

keeping can lead to chaos in HR administration, and a breakdown of processes key to

success. To avoid this, an effective HRMS should be an integral part of any technology

plan.

Lean Six Sigma

Introduction

People are the key to the success of any organization. This is a universally accepted

truth regardless of which school of management you subscribe. However, for our

purposes, we will employ the Lean Six Sigma management methodology, which is a

combination of Lean and Six Sigma management methods, to reorganize operations and

finance. The reason why is that it is not only the most effective in terms of resolving

customer service and quality control issues, but it is the most effective means of

achieving the goals of management.

To explain, the core idea of Lean is to maximize customer value while minimizing waste.

It is a byproduct of the Toyota Manufacturing Process (TMP), a philosophy developed to

streamline operations, add customer value, and maximize profits. Lean deals with seven

types of “muda,”which is a Japanese word meaning useless, futile, or waste:

Transportation, Inventory, Motion, Waiting, Over-production, Over Processing, and

Defects. An illustration of this follows:

Transportation

Each time a product is moved it stands the risk of being damaged, lost, delayed, etc. as well as

becoming a cost for no added value. Transportation does not make any transformation to the

product that the consumer is willing to pay for. Thus, moving products about should be kept to

a minimum. How this applies to XXXXXXX is evident by something I myself have said concerning

reorganizing the kitchen, “A place for everything, and everything in its place.” By practicing this,

waste and spoilage is kept to a minimum, and labor costs are reduced. This will become more

evident as we begin taking inventories.

14 | P a g e

Inventory

Inventory, be it in the form of raw materials, work-in-progress (WIP), or finished goods,

represents a capital outlay that has not yet produced an income. Any of these three items not

being actively processed to add value is waste. The application of this principle is also

something I have discussed, which is mismanagement of inventory and delays in service.

Motion

In contrast to transportation, which refers to damage to products and transaction costs

associated with moving them, motion refers to the damage that the a process inflicts on the

entity that creates the product, either over time (wear and tear for equipment and repetitive

strain injuries for workers) or during discrete events (accidents that damage equipment and/or

injure workers). Reducing motion is therefore an area of great interest for many restaurants,

and Chili’s provides us a good case study in that they have undertaken a kitchen program to

reduce motion (and service times) by using advanced equipment. It is something that applies to

all F&B operations across the board.

Waiting

Whenever goods are not in transport or being processed, they are waiting. In traditional

processes, a large part of an individual product's life is spent waiting to be worked on. This

principle likely needs no further explanation, as we all understand that a guest who is waiting is

not buying anything that s/he hasn’t yet received. If time is money and money is time, waiting

produces no additional revenue for the organization, but adds to its costs. Additionally,

perishable inventory in waiting increases the risk of waste through spoilage, and therefore must

be kept to the minimum necessary to assure operations.

Over-processing

Over-processing occurs any time more work is done on an order than what is required. If a cook

or server forgets something and has to return for it (a rather common occurrence), then the

process is more than was necessary, and costs of the company rise while producing no

additional revenue.

Over-production

Overproduction occurs when more product is produced than is required at the time. This waste

is considered the worst of all because it generates all the rest. Overproduction leads to excess

inventory, which then requires the expenditure of resources on storage space and preservation,

additional motion, and activities that do not benefit the customer or produce additional

revenue.

15 | P a g e

Defects

Whenever defects occur, extra costs are incurred reworking the order. This results in additional

labor costs, and delays "Work-in-progress". Defects cause a chain reaction involving the entire

process chain, which now has to be repeated. Defects can sometimes double the labor costs of

one single product, not to mention the replacement costs of goods that cannot be reworked.

They cannot be passed on to the customer, and must be taken as a loss.

Six Sigma

Six Sigma, on the other hand, is a similar management philosophy that deals more with

processes and the people involved in them. Specifically, it deals with process improvement.

However, to the seven types of wastes in Lean, it adds Skills. The waste of skills, or the

mismanagement of them by assigning people to jobs for which they are not qualified, is the 8th

type of waste addressed in process improvement. To accomplish this, it creates a special

infrastructure of people within the organization who are experts in the methods necessary to

complete a process.

Having said this, it is the reason I recommend using the Lean Six Sigma methods of

management in order to achieve the objectives we’ve discussed. Referring back to Figure 2, our

Organizational Chart illustrates this special infrastructure of people, and the functions assigned

to them.

Application of Lean Six Sigma Methods to Reorganization

Borrowing a concept from Lean Six Sigma, in each organization there are internal and

external customers. Internal customers order from inside vendors, who in turn deliver

the service or product requested. The objective of such a command and control

structure is to eliminate eight types of waste: Time; Inventory; Motion; Waiting; Over

Production; Over Processing; Defects; and Skills.

These principles apply to any organization producing a service or a product, and our

reorganization plan relies upon them to achieve its ultimate goals – the realization of

our full sales potential; the improvement of guest service and experience; zero product

defects; lean inventory; reduction of waste; and improved financial performance.

The organizational chart in Figure 2 above is laid out showing who the internal customer

is, and who the inside vendor is that provides that particular service. From the chart in

Figure 2, it is seen that the owner’s primary internal vendor is the GM, and that the

GM’s primary internal vendors are the assistant managers, and onward down to the

brigades who they command.

16 | P a g e

Again, borrowing a page from Lean Six Sigma, internal structure is essential to the

command and control of the organization. Without it, people tend to push duties to

others when they can, or become confused about what their job is, and important

processes fail creating a product or service defect as a result. This describes the current

situation under the present system of management, and our reorganization plan has

been designed to resolve it. As such, following is a list of key people, their job

descriptions, and the duties with which they are charged.

Key People

Owners

Owners are the primary internal customer of the organization. As illustrated by the

organizational chart in Figure 2, they sit at the head of the company. Owners make

decisions about the general direction of the company based upon advice from their

inside team. A team of trusted advisors is normally led by the GM, or in the case of

larger enterprises, a regional manager or V.P. In our case, we have you, Jeff, Joe, Johni,

and me making up the core of the management team. Together, the management team

works to develop strategies to accomplish the business objectives of the owners, and

the GM is responsible for implementing them.

General Manager

Under the owner is the GM. As seen in Figure 2, the GM is responsible for the entire

operation, and answers directly to the owner. In turn, the GM relies on assistant

managers who work under him to manage the various departments for which they are

responsible. The GM’s responsibilities are many, and he relies upon their assistance in

executing them. A description of the general responsibilities of the GM, which I

borrowed from Monster.com, follows below.

Restaurant General Manager Job Duties:

Establishes restaurant business plan by surveying restaurant demand; conferring with people in the

community; identifying and evaluating competitors; preparing financial, marketing, and sales

projections, analyses, and estimates.

Meets restaurant financial objectives by developing financing; establishing banking relationships;

preparing strategic and annual forecasts and budgets; analyzing variances; initiating corrective

actions; establishing and monitoring financial controls; developing and implementing strategies to

increase average meal checks.

Attracts patrons by developing and implementing marketing, advertising, public and community

relations programs; evaluating program results; identifying and tracking changing demands.

17 | P a g e

Controls purchases and inventory by meeting with account manager; negotiating prices and

contracts; developing preferred supplier lists; reviewing and evaluating usage reports; analyzing

variances; taking corrective actions.

Maintains operations by preparing policies and standard operating procedures; implementing

production, productivity, quality, and patron-service standards; determining and implementing

system improvements.

Maintains patron satisfaction by monitoring, evaluating, and auditing food, beverage, and service

offerings; initiating improvements; and building relationships with preferred patrons.

Accomplishes human resource objectives by recruiting, selecting, orienting, training, assigning,

scheduling, coaching, counseling, and disciplining management staff; communicating job

expectations; planning, monitoring, appraising, and reviewing job contributions; planning and

reviewing compensation actions; enforcing policies and procedures.

Maintains safe, secure, and healthy facility environment by establishing, following, and enforcing

sanitation standards and procedures; complying with health and legal regulations; maintaining

security systems.

Maintains professional and technical knowledge by tracking emerging trends in the restaurant

industry; attending educational workshops; reviewing professional publications; establishing

personal networks; benchmarking state-of-the-art practices; participating in professional societies.

Accomplishes company goals by accepting ownership of them; and explores opportunities to add

value to job accomplishments.

Restaurant General Manager Skills and Qualifications:

Cost Accounting, Developing Budgets, Financial Planning and Strategy, Decision Making, Process

Improvement, Strategic Planning, Verbal Communication, Customer Focus, Management Proficiency,

Managing Profitability, Quality Focus.

In addition to the above skills, I also bring with me an extensive background in IT

systems engineering and information management. Managing and analyzing large

volumes of data to generate actionable information is within my skill set.

Looking at the job description above, the GM serves as the ‘glue’ that binds all

departments together. However, under our former working arrangement, 85-90 percent

of my time was spent managing the floor, and only about 10-15 percent was actually

spent on duties like those described above (i.e the 8th type of waste defined in Six

Sigma, Skills). Under the proposed reorganization plan, I would be fully dedicated to

fulfilling the duties of a GM instead – something critical to the success of any

reorganization plan, and likely a better application of my skills and expertise.

Assistant Manager

Assistant managers are the left and right hand of GMs. In addition to executing

directives of the GM, duties may include:

18 | P a g e

Identify and delegate responsibilities to shift leaders and staff to ensure objectives are met

and excellent service is consistently achieved

Effectively manage the restaurant in the absence of the Restaurant Manager

Manage operations with passion, integrity, and knowledge while promoting the culture and

values of the restaurant.

Implement new company policies and procedures by developing plans and instructing staff.

Provide direction to shift leaders and staff to achieve restaurant goals.

Manage the restaurant to meet or exceed standards in food quality, safety, and cleanliness.

Consistently monitor product and labor costs to remain within goals.

Solicit guest feedback to understand the needs and wants of customers.

Train and coach staff on guest services principles and practices.

Follow restaurant policies and procedures, including those for cash handing and

safety/security.

Monitor POS and notify GM of any issues.

Assist in new menu implementation.

Develop and implement creative solutions to areas of improvement.

Assist in conducting staff and daily pre-shift meetings.

Assist in any areas of the restaurant when staffing constraints require.

Identify employee weaknesses and retrain as necessary.

Kitchen Manager

The Kitchen Manager is responsible for all kitchen functions, including but not limited to food

purchasing, receiving, preparation, and presentation, maintenance of quality standards, safety,

sanitation and cleanliness. In addition, the kitchen manager is expected to perform the

following duties:

Ensure that all food and products are consistently prepared and served according to the

restaurant’s recipes, portioning, cooking and serving standards.

Responsible for ordering food products according to predetermined product specifications

and received in correct unit count and condition and assure deliveries are received in

accordance with the restaurant’s receiving policies and procedures.

Control food cost and usage by following proper requisition of products from storage areas,

product storage procedures, maintaining standards recipes and waste control procedures

including checking and maintaining proper food holding and refrigeration temperature

control points.

Fill in where needed to ensure guest service standards and efficient operations.

Work with restaurant managers to plan and price menu items.

19 | P a g e

Establish portion sizes and prepare standard recipe cards for all new menu items.

Ensure that all equipment is kept clean and kept in excellent working condition through

personal inspection and by following the restaurant’s preventative maintenance programs.

Make employment and termination decisions including interviewing, hiring, evaluating and

disciplining kitchen personnel as appropriate.

Provide orientation of company and department rules, policies and procedures and oversee

training of new kitchen employees.

Prepare all required paperwork, including forms, reports and schedules in an organized and

timely manner.

Oversee and ensure that restaurant policies on employee performance appraisals are

followed and completed on a timely basis.

Schedule labor as required by anticipated business activity while ensuring that all positions

are staffed when and as needed and labor cost objectives are met.

Be knowledgeable of restaurant policies regarding personnel and administer prompt, fair

and consistent corrective action for any and all violations of company policies, rules and

procedures.

Oversee the training of kitchen personnel in safe operation of all kitchen equipment and

utensils.

Responsible for training kitchen personnel in cleanliness and sanitation practices.

Responsible for maintaining appropriate cleaning schedules for kitchen floors, mats, walls,

hoods, other equipment and food storage areas.

Provide safety training in first aid, CPR, lifting and carrying objects and handling hazardous

materials.

Attends all scheduled employee meetings and brings suggestions for improvement.

Together with servers, bussers, and the expos who comprise our frontline Brigades, this then

comprises a complete infrastructure of experts whose skills have been properly allocated to the

best use of resources in order to succeed.

Future Plans

Under this proposal, we discussed jointly opening the carryout as partners. Also, we

discussed sharing expenses for new equipment for this, and that I would provide all

labor and management of the carryout as part of my obligations under any agreement.

To finance this, and create a situation where we can go forward with reorganization

planning in time for the upcoming season, I suggested that I would accept all the

responsibilities of GM (as outlined above), including implementing and managing the IT

initiatives discussed. In return, we discussed a management fee of$xxxx or 10% of net

sales weekly plus a commission on performance (bonus) for achieving net annual sales

20 | P a g e

over $2.5M. However, in order to manage the intermediate term in between the busy

season and getting the carryout up and running, I suggested escrowing $350 per week

of salary to be put toward finance of new equipment for carryout. This escrowed

amount would be paid if for any reason we do not go ahead with the carryout, and we

set a date of about June 1, 2016 to open this.

To summarize, under this arrangement a management fee of $xxxx weekly or 10% of

net sales would then be paid excluding bonuses, and $350 per week of this amount

would be paid into escrow, which is to go toward the purchase of equipment for

carryout . In return, I would hire and place a management staff consisting of myself as

starting GM for 6 to 8 months, two assistant managers, one of whom will take over the

GM’s duties after the initial phase of implememtation, and a kitchen manager on site for

the term of the management contract. For comparative purposes, this is on par with the

pay of similar establishments, such as Chili’s and TGI Fridays, for the same positions.

However, it does not take into account any additional pay for IT engineering and

information management, and we agreed that bonus commissions will offset that to

some degree provided we achieve the required sales target.

As we discussed, a performance bonus of 12 percent of net sales over and above annual

sales of $2.5M would be paid in addition to management fees, and a cap of $150,000 in

annual compensation for the GM would apply. For the purpose of this agreement, net

sales, not to be confused with net income, are defined as gross sales minus the cost of

goods sold. To reach this goal, it effectively means that annual sales would have to

reach about $4.3M. No employee benefits were discussed as part of our negotiations,

and remain the responsibility of American Development Corporation under this

agreement.

Summary

It is the conclusion of this author that, through improvements in HR management, the

application of new technology and management techniques, and retraining of the

workforce or the hiring of new talent, this organization is capable of achieving sales of

$5-6M annually. Provided the right tools, which ownership has in principle agreed to

provide, there is no reason to believe that it cannot be achieved given the seating and

production capacity of the facility.

21 | P a g e

End Notes:

References used in the preparation of this document:

Merhar, Christina. "Employee Retention - The Real Cost Of Losing An Employee". Zane Benefits,

2016.

Boushey, Heather, and Sarah Jane Glynn. "There Are Significant Business Costs To Replacing

Employees". Center for American Progress, 2012.

"Hospitality Employee Turnover Rose In 2014". National Restaurant Association, 2015.

Stelzer, Ryan. "Why I Left Management Consulting To Start A Philosophy Company". Strategy of

Mind, 2016.

Dooley, Roger. "The Power Of "New"". Neuroscience Marketing, 2008.

Konrad, Alex. "Applebee's Will Install 100,000 Intel-Backed Tablets Next Year In Record

Rollout". Forbes.com, 2013.

Kimes, Sheryl E., Ph.D., and Collier, Joel E., Ph.D. , “Ready and Willing: Restaurant Customers’

View of Payment Technology”, Cornell Hospitality Report Vol. 14, No. 5, Cornell University

School of Hotel Administration, 2014.