Operational Issues In Starbucks At Tivoli Arcade, Melbourne

Background

In this report, operation management of one of the outlets of Starbucks at Tivoli Arcade in Melbourne will be explained. In this report, the current operational issue in this café will be highlighted.

Background: The Starbucks Australia is a famous name in the café business and headquarter of this business has been facing the issues when complaints are pouring from consumers in several parts of the Australian outlets. In the Australia, Starbucks has opened more than 83 Frappuccino-singling outlets; however, almost 60 had to close because of customers’ disinterests (Munchies.vice.com 2017). The management of Starbucks has decided to review the operation management in Tivoli Arcade, Melbourne outlet as the customers are not satisfied with behaviour of the staffs and the ambience of the outlet.  

Problem or purpose: In the particular Tivoli Arcade outlet of Starbucks, the customers complain that the behaviour of the staffs is very poor and the outlet does not give quality ambience. The quality of the coffee and snacks do not justify the name of the Starbuck. The coffee culture in the Australia is famous and there are more than 10,000 cafes that are present already in the Australia. Therefore, the competition is high in the business and customers’ satisfaction is a necessary part of the business.  

Significance: In Tivoli Arcade, one of the outlets of Starbucks has been facing the issues when one of the consumers uploaded an image of poor coffee and snacks with a video where the staff ill-treated with the customers. The recent news Tivoli Arcade came into news and the image of the flavoured coffee went viral on social media (Bahmani-Firouzi and Azizizpanah 2014). Of late, Starbucks has been facing the losses in business too and management of Starbucks wants to take a stance to fight back against the poor operation.

Scope: In this report, Starbucks operation management issues will be explained in the outlet of Tivoli Arcade, Melbourne. This report will highlight the service, cleanliness and quality of food items in this outlet. A 360-degree survey of the hotel in operation related will be discussed in this report.  

Sources and methods: This report has been explained with first-hand observation. I visited two times at the Tivoli Arcade outlet at Starbucks and saw the operation process. Most of the information has been gathered through primary data collection method. I took interviews with the outlet managers and the staffs in order to collect the data about operation management.

Organisation: In this report, my experience in the Tivoli Arcade outlet has been explained. I have discussed the customers’ experiences and employees’ promises in the outlet. However, the operation process, cleanliness and system of management have been illustrated. Moreover, issues have been identified and possible solutions have been given.

Tivoli Arcade outlet of Starbucks is in Melbourne and it is situated in pose area. I visited twice in the outlet for the observation purposes. The first time, I visited on Wednesday and second time, I visited on Saturday afternoon. On Wednesday, I visited one afternoon and that time there were 15 customers were there. Most of the customers were young aged and they came with their partners. Young professionals also came there for the informal business meetings. On the other side, on a Saturday evening, the cafe was almost full and no such seat was empty and I had to wait for 20 minutes on the lunge to take a seat at the cafe. On both the occasions, I found that customers had to wait for at least 20 minutes after they ordered their food items. Waiting time of the organisation should be less in the cafe and restaurant (Heizer 2016). Most of the customers ordered coffees and snacks and they asked several times to the staffs about their orders. Staffs were indifferent about the customers’ remarks. When the cafe was not full the waiting time of the customers was same as the peak hours. The staffs are reluctant to do their job roles and the manager of the outlet did not take any action. There was all equipment present what they need to run the cafe, however, they did not utilise the equipment. In addition, the staff did not greet the customers courteously when they entered the cafe. The staffs were busy with their working and the customers themselves had to go the counter and put their orders. The counter-staff gave the coupon and asked the customers to sit over there. The customer satisfaction issue was there as the customers were not treated courteously. I found 8 staffs were working over there to serve the customers and three more staffs were preparing coffee and snacks. 2 supervisors were there who manage the staff and did the billing.

Problem or Purpose

The cafe was clean and it was maintained nicely by the staff. The coffee machine, the toaster, the cooking equipment and the dishes all were neat and clean. The seating area was decorated properly and the staffs who were preparing the food wore apron and gloves. The cafe maintained the cleanliness, however, the hygiene factor in food did not maintain accurately. The Cafe did not put the certificate that they had got from the medical and sanitary inspection service as this would be the first sign that the quality of the food item is safe for the customers. The tables and chairs were clean and the ambience smelt like a refreshing cafe. I did not notice any cockroaches, rats that could be a sign of the unhealthy cafe. However, as the cafe is on the second floor of a shopping mall, I found flies that were present in the outlet. Some of the flies were flying near the food items also. The uniforms of the staffs were not clean and it looked like they did not wash the uniforms on regular basis and have been wearing these for a long time. I found one staff who was sweeping the floor at the present of the customers and it is an unhealthy practice. In addition, the restroom was not clear and it smelt filthy. The management should not overlook the restroom (Zhnag et al. 2013). In the Starbucks outlet, the tap was dripping. The restroom was not tidy and the towel was missing over there. Moreover, the cafe had only one fire extinguisher. I observed the kitchen area, this section was clean and minimum dust was there that could harm the customers.

On Wednesday, I asked the staff to show me the storeroom of the cafe where they stored their raw materials and unnecessary things. At first, they did not like me to show the restroom and after pleading a few times, they allowed me to show the restroom. I was flabbergasted to see that the storeroom had cockroaches and it was unlike the cafe interior. It was not clean and it smelt bad. They did not clean the storeroom and the raw materials were stored for future purposes without taking any measure of this. Food remains and dirt of the cafe was kept here and cleanliness and hygiene factors were missing in the restroom. Cross-contamination of the food products could be harmful to the employees and customers. In addition, the exterior of the cafe was maintained properly and the staffs were lazy enough to clean the exterior also. When a customer left the table, the staff took a few minutes to clean the table, cups and dishes.

I took the sample of espresso beverages and hot chocolates. The quality of the espresso was not up to the standard of Starbucks and it was light in colour. The milk was not condensed properly and the sugar packet contained a little dust sugar. Moreover, the cakes that the Starbucks offered were kept there for a long time. The sandwiches and wraps were good as the staff made them instantly.  

Significance

Managing of inventory

In Tivoli Arcade, the management does not maintain a proper inventory and they need to prepare Point of Sale to track the inventory. The staffs need to enter each ingredient that goes to the kitchen on the sheet to track the account. In the outlet, inventory routine helps the cafe to lower the waste and forecast the expenses on the stock. While managing the inventory, they could check the supply chain and quality of raw materials that could improve the quality of coffee and food items.

Creating open environment

The opening environment gives the better option to the customers to learn the process of preparing their food items and coffee (Idea generated from Parisio et al. 2016). This would help the cafe to increase the transparency and the process of preparing food can give them satisfaction. This open process can be applied to manufacturing operation of food and business operation process as well. The management should train the staffs in a way that could understand their job role.

Cleanliness in restroom and emphasise bottleneck process

The restroom must be cleaned in a proper way and managing inventory could help the cafe in the cleaning of the restroom. The dirt and the waste must be processed in right way that could help the cafe. Bottleneck process is a chain of a process, in the limited capacity that can reduce the capacity in the whole process. Supply overstock can be managed through this and the restroom can be managed this way.

Improve the staffs’ behaviour

The management of the cafe does not motivate the employees so that it could help the staff to work and behave properly. The management can hire people with right values and communicate the staffs with an example. The staffs could be reinforced to behave politely and courteously with the customers.  

In Tivoli Arcade outlet of Starbucks, the issues remain in the restroom, cleanliness of restroom, the staffs’ behaviour with service quality and in managing the inventory. The outlet has been facing the issues of consumers’ complains and my observation of the operation of outlets found out severe issues in cleaning, quality of food items and services of the staffs. The storeroom and restroom must be cleaned on proper time and staffs need to behave in a proper way with the customers with courtesy.  

Develop An Operational Plan For A New Business

In this study, implementation of operational plan will be explained of a new Cafe that is going to open in Melbourne. The name of the new venture will be Royal Cafe. This cafe will offer the espresso coffee, soft drink, tea, hot coffee, hot chocolate and soft beverages of all types. Moreover, in this cafe, they will also offer sandwiches, burgers, wrap and French fries. This business has scope in the market; however, cafe business in Melbourne is common each street of Melbourne has a cafe. However, the uniqueness of the cafe is that it will be on the rooftop on the 10^th floor and it will be cheap in price wise. The new business will open with 10 staffs including kitchen specialist. There will be two operational managers who will handle the daily course of work.

1. Operation Plan for new café

Scope

2.1 All Resource requirements

Labour: Royal Cafe needs labour in the opening of the business as they are planning to open the cafe with 10 staffs. The cafe will take potential hires with giving fair chances to all candidates. The cafe will need 2 operational managers in order to run the day-to-day activities.

Capital: The cafe will start with the venture of 10 million Australian dollars. In order to acquire the startup money, the owner of the business has already tied up with an Angel Investor with 50:50 investments. The owner himself will invest half of the investment.

Equipment: In order to open a cafe, the owner needs to arrange some basic equipment like washing equipment, ice-machine and refrigerators, preparation tables, coffee and espresso makers, safety equipment like first-aid kit and grills and freezers. As this cafe is going to offer burgers and sandwiches, therefore, they will need to arrange sandwich makers and toasters with microwave.

Rents: The cafe is going to open in the rooftop of a building on 10^th floor. The owner has already talked with the building owner and signed a contract to take a rent of 10^th floor with the roof.  However, the decoration process of the cafe will be starting soon.

Facilities: This Royal Cafe is going to operate each day of the week. Operation hours will be 11 am to 10 pm for each day. This cafe will provide lunch, snacks and dinner facilities as it is cafe-cum-restaurant. It will be a perfect spot to take a bite of snacks, sandwiches and coffees.

Space: This cafe will have 1250 sqft area including both in-house and rooftop. The wall-plan of the cafe will be wooden texture and glass ceiling. The interior will have maximum space and there will be an arrangement of 60 customers at a time. Moreover, outside of the cafe, there will be a waiting room for the customers for waiting.

Finance: In opening of the cafe business, the concept of business must be clear inside the mind. Investment option must be clear also, however, in the opening of Royal cafe, the owner will do self-funding and he will take help of Angel Investor. Restaurant costs involve food costs, overhead costs including, kitchen equipment, rent, license, POS, marketing (Pagani et al. 2014). Therefore, wages of the employees and basic operation in day-to-day basis needs money to run a business. Lastly, in preparation for food and maintaining suppliers and vendors needs money.

2.2 Key performance indicators for the business

Royal Cafe can use KPI software that enables the cafe to manage, create and analyse the data. This software can allow the cafe to design a system that will analyse organisational performance in an accurate and faster way. This KPI software can break the KPI of the business in some spheres like Customer-lifetime value, marketing metrics, financial metrics and social media metrics (Gaiches et al. 2017).

Business Metrics is another measure that an organisation could take in assessing the performance and it would be more accurate as this data provides quantifiable data. Business metrics are related to sales metrics, marketing metrics and financial metrics.  

Sources and Methods

KPIs for staff members

Royal Cafe will use mostly self-appraisal system in measuring the performance of the employees. The staffs will be given a form and they have to fill in the form in order to judge their own performance.

Peer appraisal system is related to the fellow employees will judge the performance of other employees. The forms will be given to the co-workers with 360-degree evaluations of the fellow workers and they need to put the numbers.  

2.3 Monitoring and controlling processes

Cafe inventory: The cafe will maintain the inventory system quite effectively and the operation manager will be there in order to check the inventory effectively. The operation manager will forecast the inventory requirement of the business and the management will provide according to the requirement. The owner of the business has thought of database tracker in managing the inventory of the business.

Purchasing: In purchasing the raw materials and equipment, the owner will himself give permission to purchase the products. In monitoring of the purchase, the managers of the cafe will take the decision is final.  

Staff roaster: This business will run for all 7 days, however, the staff needs week-off roaster. In each week on Tuesday, the manager will decide the next week’s roaster. However, the staffs can choose their shift also as the business will run for 12 hours a day.

Staff’s pay: Staffs of the Royal Cafe will be paid salary on the 2^nd day of each month. The owner will take the bank details of the employees and he will send the salary to the account of the employees. The incentives will be paid based on the performance of the employees.  

Staff guidelines: There will be some guidelines that the staffs need to follow during the cafe hours.

• The staffs should wear the clean uniforms
• Food holding should be perfect and store of food should be in proper place to avoid cross-contamination
• The environment should be clean and restroom should be cleared daily
• Waiting time should be minimised and all the customers will be treated equally and courteously

Contingency plans: Contingency plan will be there for the organisation if any issue arises. In this scenario, the planning of the roaster and inventory, if managers will not be present for a time, the assistant manager will manage everything. Moreover, the staffs of the organisation will be connected to social media page and group and any kind of news or messages will be forwarded through this. In responsibility handover, in a contingency case, this may reflect on the managers’ opinion.

1. Communicate effectively with relevant stakeholder to explain the plan and supporting information, seek approvals, negotiate variations and engage work teams

Plan and supporting information: Plan and supporting information of the business can be collected from the owner of the business. In approving of sick leave, the staffs can send an email to the manager of the business. Moreover, negotiating in conflict, the managers will take active participants. Moreover, engaging in work team can be facilitated by the managers of the business.

1. Write memo to all staff in regard to weekly operation, roaster, purchasing and maintenance of the cafe

Royal Cafe would like to inform all the employees that in the next weekly operation have been designed. The cafe will open as usual at 11 am and the supply chain process will remain same. Those who will have morning shift needs to clean the cafe and restroom. In addition, 5 staffs will serve the customers, 3 will manage the kitchen and 2 will wash and clean the cafe.

Organization

 In roaster process, all the employees must send an email by mentioning the desired day that they want to have their week off. In purchasing the food items, the supply chain process will be maintained by the afternoon shift employees.  

Please keep up the good work.

Thank you for your assistant and participants.

1. Preparing a Gantt chart to explain the weekly operations

	Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
Supply chain accounting
Purchasing accounts
Staff training
Cutlery
Food trails
Recruiting plan and roaster
Cleaning

Table 1: Gantt chart to explain the weekly operations

Develop and implement strategies to achieve the operational plan within the organisation’s policies, practices and procedures including

6.1 Recruiting, inducting and developing personnel:

  The Royal cafe will recruit the employees from the local young people and they will mainly recruit by giving advertisement on social media. Inducting process will be conducted by the managers for the first week of recruitment. In developing the personnel, the managers will give on-the-job training to the employees on food holding, operation and customer service.

6.2 Acquiring physical resources and services

  The physical resources of Royal Cafe will be chairs, tables, equipment, building property and raw materials of the business. The physical resources will be maintained by the managers and they will instruct the employees to do the work properly.

6.3 Protecting intellectual property

Intellectual property is important for an organisation and it is related to the logo, name of the business venture and marketing. In order to protect the intellectual property, the cafe manager and owner need to educate them in this field. Moreover, the cafe can hire an attorney who has knowledge of intellectual property. Therefore, the names and logo of the business should be registered beforehand.  

6.4 Monitoring and documenting performance

In monitoring the business performance of the cafe, the managers need to document the sales and expense of the cafe of first few months. After that, the cash flow of the cafe needs to check with the balance sheet. The performance of the business will be understood when the cafe will touch the breakeven point.

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