Business Report
Kelly Family Restaurants
North Ryde, Gordon & Gladesville
Patrick Holmes 11BS3
12/08/2020
Table of Contents
1. Acknowledgments
2. Executive Summary
3. Background Information
4. Findings - Operations
-Location and floorplan/layout
-Logistics
-Quality Management
-Technology
-Rostering
-Inventory Control
-Environmental awareness
5. Findings - Marketing
-Target Market
-Demographics and market segmentation
-SWOT analysis
-Marketing objectives
-Marketing mix
6. Findings - Finance
-Cash flow
-Balance sheet
-Income statement
-Budgets/forecasts/sales predictions
-Financing for future growth
7. Findings - Human Resources
-Acquisition
-Development and Training
-Maintenance
-Separation
-Policies
8. Conclusion
9. Appendices
10. Bibliography
Acknowledgements
I would like to acknowledge Bernard Kelly for allowing his business ‘Kelly Family
Restaurants’ to be used as a case study for the Year 11 Business Studies Research
Task. I would like to thank him for kindly allowing observations of the business, sparing
time to be interviewed and access to reports of his business.
Executive Summary
This report will investigate Kelly Family Restaurants in order to deliver insight into its
operations, marketing, finance and human resources. With the provided information
from the business, the report will suggest potential strategies to guarantee success in
the future through analysis of the aforementioned findings. Over the research period,
current and historical data was collected to provide the most accurate analysis for the
report.
Background Information
Kelly Family Restaurants is a franchise of McDonald’s Australia Limited. It is a sole
trader structure owned and operated by Bernard Kelly (licensee). The business
operates three McDonald’s stores - North Ryde, Gordon and Gladesville. The business
has annual turnover of $11.8 million (2019). Mr. Kelly decided to purchase a franchise
from McDonald’s Australia after working for 8 years as a business consultant for
McOpCo (appendix 1). The prime function of the business is to provide customers with
a convenient, fast service of their McDonald’s favourites, via Eat In, Take Away, Drive
Thru (Gladesville only) and McDelivery.
Operations
Operations is responsible for the transformation of inputs into outputs and managing of
business processes and practices to ensure efficiency and profit maximisation. Kelly
Family Restaurants produces its products in accordance with McDonald’s procedures to
ensure compliance with Brand Standards.
Location and Floorplan
For this report, we will be focusing on the Gladesville restaurant, which is located as a
standalone restaurant with Drive Thru at 385 Victoria Road, Gladesville NSW. Mr Kelly
purchased this restaurant from McOpCo as an existing restaurant and it became part of
his franchise in 2018, prior to his acquisition, it was company owned (mcopco). Mr Kelly
had no control over the location of the business as it was an existing location. The
position by Victoria Road allows for maximum customer exposure with a Drive Thru and
standalone restaurant with a carpark. It is a rectangular layout with a dining room,
playland and back of house areas fitting in the same building. The front counter space is
limited and the restaurant does not have a beverage cell. It has a full cafe at the far end
of the counter, which slows down service in Drive Thru in the morning. The restaurant
has a significant number of kiosks and large digital menu boards above the counter
which showcase products to customers. The Drive Thru has Digital Menu Boards which
suggestive sell/upsell to customers based on what they order to maximise sales and
allow the customer to check their order which increases accuracy and customer
satisfaction. The kitchen has an old setup with its prep lines, using a 2 side prep line
rather than a hub and spoke (appendix 1.2). The kitchen has 2 sides for the prep line,
which allow for increased production capacity over peak periods. The front counter has
a drinks tower while the Drive Thru has an Automated Beverage System (ABS)
(appendix 1.3).
Logistics
Martin Brower is the Logistics provider for McDonald’s Australia, and Gadesville orders
its stock through Martin Brower’s online portal, integrated with McDonald’s stocktake
system. The restaurant has a loading dock beside the Drive Thru where the truck parks
to allow delivery to occur. Before delivery of goods, the delivery driver uses a bluetooth
probe to temp a random box from the refrigerated pallet and one box from the frozen
pallet and provides a printout on a receipt to the shift manager who confirms the product
meets quality and safety standards before accepting the delivery. Deliveries occur on
Monday, Wednesday and Friday nights, which allow for utilisation of labour at the times
where it is least expensive (school nights where students are available and no penalty
rates payable as opposed to if delivery occurred on a weekend). When taking a
delivery, product in all stock areas is rotated (First in, First out, and stacked to ensure
airflow in stock areas is maintained). Product is rejected if the box seal is damaged or
the product does not meet temperature requirements (for chilled and frozen only.)
Quality Management/Assurance
McDonald’s Australia works closely with its suppliers and franchisees to ensure that
quality standards are upheld throughout the supply chain. Kelly Family Restaurants
plays its part in the supply chain as a restaurant operator to ensure it is complying with
brand standards by following McDonald’s procedures. McDonald’s Australia conducts a
Brand Standards Visit (BSV) every year for every restaurant to ensure that franchisees
are compliant with all relevant standards, regulations and policies. This visit is
comprehensive and lasts 12 hours, checking everything from crew procedures to air
filters behind fridges to timers and storage of product to the lubrication on the sliding
doors at the entrance of the restaurant. The Product Quality Manager is a full time
department manager at McDonald’s Gladesville who is responsible for ensuring that
crew procedures are followed, stock is used in rotation (FIFO) and a stocktake is
completed prior to every delivery to track product waste and potential theft. McDonald’s
requires that product must be wasted if it does not comply with quality standards,
including overheld product or over/undercooked product.
Technology
McDonald’s Gladesville uses various technologies to operate the business efficiently
and provides maximum insight into operations. These technologies are developed and
supplied by McDonald’s Australia. The most important are basic such as the fryers,
platen grills (for faster cooking, appendix 1.4) fridges, freezers, Drive Thru timers
(appendix 1.5), ABS (appendix 1.3), Kitchen Video System (KVS) (appendix 1.6), and
back office systems including eBOS (electronic back office system, used for ordering
stock and counting the safe and cash drawers) and myRestaurant, a cloud based back
office system used for rostering, sales tracking and labour compliance, and eOps, a
cloud based reporting system responsible for restaurant operations targets, including
drive thru timer and ranking, (appedix 1.7), front counter and Made For You kitchen
times, and insight into station training (appendix 1.8). The roster is prepared on
myRestaurant and published for employees to access through their own accounts. Drive
Thru times are collated nationally every 15 minutes and ranked to create the Drive Thru
scoreboard, which is on display in the kitchen and the front counter of the restaurant, to
show crew how they are performing relative to other stores in the area and country. This
encourages competitiveness and drives capacity and sales in restaurant.
Rostering and scheduling
The Customer Experience Manager is a full time department manager at McDonald’s
Gladesville and is responsible for sales predictions and crew scheduling. This manager
uses the functions of myRestaurant to view historical sales data for previous week
month year etc. and event search on myRestaurant for restaurants on main roads or
event precincts to predict sales for football games, concerts etc. The roster is prepared
automatically to meet restaurant targets by inputting in software the predicted sales and
labour target and pre-filling shifts with crew who have shown available in their
availabilities, and using the data from the station training app to ensure crew and
verified and competent in the rostered areas. The roster is then manually edited to add
training shifts for new hires or last minute changes for miscellaneous reasons and then
published for employees to view with their own logins.
Inventory Control System
McDonald’s Gladesville uses myRestaurant to perform the stocktake every day prior to
delivery being ordered which is three times a week. myRestaurant stores sales data and
specific products sold versus products taken in delivery (from order data) to keep track
of inventory and when the stocktake is submitted, generates a report which shows
wasted product (known as variance, because it is a variance between expected vs
actual). eBOS is an old system which is nearing the end of its lifespan, and McDonald’s
Australia is working on migrating the stock order function from ebos to myrestaurant in
the near future to ensure these critical aspects of the business can continue functioning
in the future.
Environmental Awareness and Policies
McDonald’s Australia is a major sponsor of Clean Up Australia Day, and Kelly Family
Restaurants hosts two clean up events, one at Gladesville and the other at North Ryde.
Every year, the North Ryde team cleans the bushland behind the Macquarie Park area
and the Gladesville team cleans the meadowbank park/parramatta river path.
McDonald’s policies prohibit disposal of oil into the wastewater/sewerage system, as
such, McDonald’s Gladesville pays an oil recycling company to pick up waste oil from
fryers and animal fats from the grills once a week.
Marketing
Marketing is the process of dealing with product, price, promotion and place of products
to customers through a system of media channels and branding solutions. McDonald’s
Australia and its Licensees strive to further the McDonald’s brand and continue to be a
leader in the Quick Service Restaurant industry.
Target Market
The products at McDonald’s Gladesville are targeted at a wide range of age groups, for
western tastes, with the main items containing beef, chicken or fish. The population of
Gladesville has increasingly become central to the business’ growth, with the launch of
McDelivery.
Key Demographics and Market Segmentation
Key Demographics of McDonald’s Gladesville include families with children, high school
students, local employees and seniors. McDonald’s Gladesville targets all ages from 5
to 85, both low and middle income earners and men and women. The location of the
business makes it accessible by bus along Sydney’s 2nd busiest bus corridor, and by
car on a major road. The launch of GMA (Global Mobile App) is designed for customer
acquisition through targeted deals and by offering a loyalty card for mccafe. The mccafe
brand has been central to attracting more customers through our drive thru in the
morning, and more seniors in our dining room.
SWOT analysis
Strengths
- Business is located on high traffic corridor (Victoria Road)
- Business has a Dual Lane Drive Thru for maximum customer acquisition and
capacity
- Business has formed strong relationships with suppliers by being incorporated
into the McDonald’s supply chain
- Has a large workforce, and adequately trained staff
- Business is in a very stable financial position with a strong growth in the past two
years and significant promise for the future
- Equipment within business is mostly in good condition and maintained well.
Weaknesses
- Shift managers only utilising one side in the kitchen (appendix 1.9)
- Some equipment needs to be maintained according to PM (planned
maintenance) tasks in the schedule to ensure reliability of the equipment is
maintained.
- Some crew procedures need to be reinforced as a lot of bad habits have been
developed.
Opportunities
- The business has a significant opportunity to improve its Drive Thru capacity for
the theoretical capacity of a Dual Lane DT, according to eOps, the restaurant is
operating at 56% capacity between 4-8pm, with the strongest being lunch at 94%
between 12-2pm.
-
McCafe is located at the far end from the drive thru window, resulting in frequent
parking of cars and slowing down service on open, a dedicated DT cafe machine
located next to the window which can be crewed only in the morning would
significantly increase capacity and lower DT time.
Threats
- Close proximity to competitors KFC and a growing fast casual restaurant industry
emerging in the gentrification of Gladesville and Ryde may decrease Guest
Counts.
Market Objectives
McDonald’s Australia and it’s licensees aim to be the number one player in the Quick
Service Restaurant Industry, and the number one in the emerging takeaway coffee
industry. McDonald’s houses a significant advantage with its Drive Thru’s and populated
mccafe locations and established supply chain with its own coffee blend has launched
McDonald’s way ahead of its competitors Hungry Jacks in the cafe sector. McDonald’s
short term plan are to draw on the financial strength of its licensees to fund mobile order
and pay deals for customer acquisition through GMA, for the short term sales benefit
and long term customers who use the app will spend on average 35% more each year.
Marketing Mix (4P’s)
Product
McDonald’s Gladesville sells the full McDonald’s menu including a full kitchen menu, full
mccafe menu and desserts and drinks offered. Products are assembled in the Test
Kitchen at Thornleigh to be photographed and McDonald’s and its licensees use these
on their marketing. The enormously successful Happy Meal concept has allowed for the
capturing and acquisition of families with children, complemented with the playplace.
The mccafe uses a glass display cabinet for customers to see available product, the
app and the kiosks in restaurant allow customers to browse the full menu, using their
eyes to decide what they want, which increases sales enormously as people often order
more than when they decide what they want in their head.
Price
McDonald’s Gladesville has Store Level Pricing on the McDonald’s menu to reflect local
rent and cost of labour. McDonald’s Gladesville offers competitive prices for its products
to target the full range of income earners and families.
Promotion
McDonald’s has frequent promotions throughout the year which drive guest counts to
restaurants and increase sales short term. The largest of these is Monopoly which is
conducted yearly, and the November digital calendar which was designed recently to
encourage customers to embrace the mymaccas app. Promotions are advertised
through a variety of media from McDonald’s Australia, who works with its licensees in
the implementation of these promotions to ensure consistency across the brand.
Human Resources
Acquisition
McDonald’s Gladesville acquires staff through the McDonald’s Australia restaurant jobs
website. McDonald’s established reputation as an employer helps them attract
applications.
Development and Training
McDonald’s Gladesville maintains a team of 20 Crew Trainers to develop and coach
crew on procedures and safety standards. McDonald’s Australia provides the Station
Training App to all restaurants for recording training and helping crew trainers on the
floor. The STA syncs data with myRestaurant and helps with the rostering process.
McDonald’s Australia is a registered training organisation, and as an RTO it administers
the Certificate III in retail operations, available to all crew who wish to become part of
the management team. The course is provided at no cost to the trainee and is a
nationally recognised qualification. McDonald’s also administers its own food safety
supervisor course to ensure restaurants are legally compliant. McDonald’s owns and
operates the Charlie Bell School of Management at Thornleigh. This training centre is
used for Barista courses, and management training, everything from effective shift
management to effective department management to fire training and first aid.
Separation
McDonald’s requires different notice periods depending on service length and whether
the separation is voluntary or the employee is being terminated for a serious breach of
employment conditions.
Policies
Kelly Family Restaurants maintains its own People Culture Policy, in addition
McDonald’s Gladesville is required to implement all McDonald’s policies including the
respectful workplace policy, the social media policy, appearance policy (appendix 2)
and the cash handling policy. These policies aim to ensure that standards for
disciplinary action exist in the event of inappropriate conduct, bullying or sexual
harassment occurs, to ensure employees are aware sharing information about
upcoming promotions or sales data via social media is a breach of confidentiality
requirements and to set standards for disciplinary action in the event of theft from
registers or the safe. Certain legislative requirements exist in addition to McDonald’s
policies including Occupational Health and Safety requirements.
Finance
Finance involves the management of cash within the business.
Cash flow statements
Provides information about liquidity in the business through the movement of cash.
McDonald’s Gladesville currently has a positive cash flow, with no issues experienced
as suppliers draw directly from his lease with McDonald’s Australia. Occasionally
maintenance or miscellaneous contractors may need to service the restaurant e.g. to
service or repair air conditioning units, carpark surface, bathroom furnishings or light
repairs etc this can put a strain on cash flow. The cash flow statement has shown
promising sales growth (sales comparable) between the same reporting period. During
January 2019 sales were $402,478, in January 2020 sales were $423,698, representing
a positive sales comp of 5.2%.
Income statements
Shows the movement of income and expenses in the business over a period of time to
show profitability.
Kelly Family Restaurants’ income statements show the business is performing well, with
characteristics of being in the growth stage. The net profit ratio of 33% and gross profit
ratio of 84% show the business is in a strong financial position. The expense ratio of
42% indicates that the business is still paying off loans taken to finance the expansion
of the franchise by purchasing the Gladesville restaurant.
Balance Sheet
Indicated what is owed by the business compared to its assets to evaluate its financial
position
Kelly Family Restaurant’s balance sheet indicates a strong financial position, with
Gordon and North Ryde being owned outright and $600,000 debt remaining on the
Gladesville Restaurant. All equipment is owned outright, and the debt held at
Gladesville is to finance McDonald’s license fee and a costly upgrade to the Drive Thru
at Gladesville. The liquidity ratio of the business currently sits at 6.85:1, indicating that
for every dollar of liability, the business owns $6.85 of assets to pay for them. The
business holds a reasonable amount of debt which was a sensible investment in
expansion of the business.
Budget
McDonald’s Gladesville budgets for every week of trade, and every department
manager is given a budget to meet. This extends to product quality, whose budgets
affect order volume and waste targets, customer experience which affects labour
spending and people performance which affects spending on training resources and
hire of labour i.e uniforms and traineeship/course participation and development.
Sources of finance and future expansion
The business is not currently considering any further expansion until the debt from the
recent acquisition of Gladesville is repaid, however the strong financial position of Kelly
Family Restaurants allows him to potentially add a Drive Thru at North Ryde which
would boost sales enormously.
Conclusion
Kelly Family Restaurants is a sound business as covered in this report through the 4
functions of operations, marketing, finance and human resources. Through analysis and
research the report has concluded that changes to operations remain the largest
opportunity for growth for the business, particularly in purchasing a Drive Thru McCafe
machine and utilising Two sided prep to increase kitchen capacity and efficiency. This
research report has built on my knowledge gained in class as it required research and
real-world experience with business in the community which I had to analyse.
Appendices
Appendix 1
McOpCo stands for McDonalds’s Operated by the Company, it is a shorthand for
differentiating between company stores and franchised stores, but also refers to the
system of operations managers who work for McDonald’s Australia.
Appendix 1.2
Appendix 1.3
Appendix 1.4
Appendix 1.5,1.7
Appendix 1.6
KVS stands for Kitchen Video System, and is the system of registers, kiosks and
screens in the kitchen that display orders and track order assembly time from the time
they are entered to the time they are served off the screen by the crew person.
Appendix 1.8
The Station Training App contains resources for crew trainers and saves training logs
and checklists known as SOC’s or Station Observation Checklists. A crew person must
have a SOC undertaken on them before being verified on a station which allows them to
be rostered on that station. The STA saves this information and syncs it with
myRestaurant which allows the rostering manager to view the data and prepare the
roster with it.
Appendix 1.9
https://tinyurl.com/yxuyslck
Appendix 2 - Appearance Policy on following page