Taco Bell Inc. (1983-1994)
IT 6683/4683 CASE STUDY
CASE 2-1
TACO BELL INC. (1983-1994)
Cynthia Nunnally
Debbie Rollins
Julius Robinson
Steven Wall
Shashank Trivedi
Lucas Varner
OUTLINE
Introduction
The Case Studied
Case Overview
Strategy
Business Model
Before (Concept, Capability, & Value).
After (Concept, Capability, & Value).
Strategic Planning
Strengths and Weaknesses.
Opportunities and Treats.
Tactical Steps
Steps Taken and Role.
Value.
OUTLINE (CONT.)
Factors
General Technology Factors
K-minus
POS Systems
Non-Technology Factors.
Management Roles.
Incentive Change.
Implementation of Safety Nets.
Information Technology
IT and Support of Business Model and Processes
TACO & TACO II.
Pillars of IT in the Case.
Recommendation
Solution Recommended.
Justification.
Does it Match?
What would you do differently.
Lessons Learned from the Case for Today’s IT Manager
References and Bibliography and Acknowledgements
THE CASE STUDIED
F.A.C.T. Fast.Accurate.Clean.Temperature
Taco Bell Inc.
1983-1994
Location: United States Nationwide Fast-Food Chain
Case 2-1
297-312
Major Sources:
Applegate, L. M., Austin, R.D., & Mcfarlan, F.W. (2003). Corporate Information Strategy and Management: Text and Cases (6 th Edition). New York, NY: McGraw-Hill/Irwin.
Vlessing, E. Taco Bell Corporation. Retrieved from http://www.referenceforbusiness.com/history/St-Th/Taco-Bell-Corporation.html
CASE OVERVIEW
Problem
Current labor was intensive.
The company had no technology; manual plastic boards were used.
Employees were required to create large amounts of operational paperwork as part of their job.
The employee turnover rate was at 220%.
No drive through windows.
Managers and crew members spent a lot of time cleaning and preparing ingredients.
Background
Taco Bell is a fast food restaurant chain that typically served Mexican food but in later years was reengineered to appeal to the American general public. In a period when most other fast food chains experienced flat domestic sales and declining profits, Taco Bell was profitable and increased its market share.
Pivotal points
1983-1988: Modernize the physical units
1988-1991: Transforming the Business
1991-1994: Creating the Learning Organization
BUSINESS MODEL
BEFORE
Concept
A successful Mexican fast food chain trying to find its market identity.
Had a large share of Mexican fast food market (40%) but small percentage of total fast food.
Labor intensive process to provide a fresh product with little use of technology
Capability
District manager, restaurant manager, assistant restaurant manager
Unrewarding and stressful relationships leading to high turnover
Store operations- plastic ordering boards, clean and prep of ingredients
Food prep/cooking take up 70% of space
Manual creation of employee work schedules by managers
Paper intensive data collection
Value
Small market share of fast food industry.
$700 million with 1,489 restaurants
Potential for sizeable stake in the rapidly expanding fast food industry.
Rising brand recognition
BUSINESS MODEL (CONT.)
AFTER
Concept
A rapidly growing fast-food chain aimed at dominating the industry through competitive business practices and changing the scope of the fast food industry
Expansion of brand into retail supermarkets and spread to other countries.
Streamlined operations providing FACT (Fast, Accurate, Clean, Temperature) products to customers
Capability
Taco bell restaurants
Market managers, restaurant general managers, team-managed units
Store operations
Consolidated cook and prep space and procedures
TACO II, voice-mail, information infrastructure
Marketing
Customer service phone-line, questionnaires, surveys. Expansion of Taco Bell brand.
Value
Brand recognition
Expansion into different markets: international, retail supermarkets
Increased customer satisfaction
Total sales ~$4 billion in 1993
Increased fast food market share
STRATEGIC PLANNING
Strengths
Production Speed
Convenience
Technology Advantages
Customer Loyalty
Brand Recognition
Management
Pricing
Advertisement
Weaknesses
Awareness
Franchise Management
Availability of Desserts
Poor nutritional value
Bad Publicity
STRATEGIC PLANNING (CONT.)
Opportunities
Venture into newer markets
New flavors/ recipes
Focus on health Friendly
Ingredients
Extended Hours of
Operations
Threats
Competitors
Awareness of info on food menu items that have harmful impacts
Employee retention, high turnover rate
TACTICAL STEPS
Steps Taken
Expand Market into different countries
Upgrade technology
Modernize physical units
Adding new menu items
Revamping
Operations
Role
Increase sales world wide
To make customer orders more efficient
Remodeling restaurants
Expanding Customers
Replacing parallel food assembly lines with double assembly line
TACTICAL STEPS (CONT.)
Value
Continue to make Taco Bell a worldwide franchise and expand upon consumer base
Decrease expenses required in remaking of orders and improve upon customer loyalty by offering not only speed but accuracy when it comes to completing orders
Increasing seating capacity, adding more convenience with the inclusion of drive through windows, providing the option to dine in.
Providing more options to current customers and attracting newer ones.
Easier to serve drive through window/ improved product flow speed and capacity
GENERAL TECHNOLOGY FACTORS
K-Minus
Referred to the reduction in kitchen size by converting it into primarily a heating and assembly station. Created larger area for customer dining as well as space for drive-through customers
Electronic POS systems
Tracked ordering, sales, and product data.
NON-TECHNOLOGY FACTORS
Management Roles
Instigated FACT (Fast, Accurate, Clean, Temperature) in response to customer preferences .
Management strategy based on high turnover rate.
Restaurant managers (RM) and assistant restaurant managers (ARM) in charge of daily store operations. RMs reported to the district manager who required very strict audits of the RMs managing abilities creating tension. RM was changed to restaurant general manager (RGM) to encourage independence and the idea of self-sufficiency.
New training programs implemented focusing on leadership and management abilities (5 days of leadership training).
District manager role changed to marketing managers emphasizing coaching and developing RGMs. Taco Bell took dramatic step by looking outside of the fast food industry to find talent.
Later developed team-managed units (TMU) which were designed to manage stores in the absence of the RGM.
NON-TECHNOLOGY FACTORS (CONT.)
Incentive Changes
Implemented raise in salary for RGMs from $28,700 to $32,000 with a potential bonus of $12,000. Later expanded to potential earning power of $60,000.
Market manager salary restructured to appeal to talented individuals.
Increased average salary from $38,000 (with a $5,500 average bonus) to $48,000 with a potential bonus of $1,200 per store supervised.
The new structuring also provided opportunities for career advancement within the company
International marketing manager
Managing more profitable markets
Product Business management
NON-TECHNOLOGY FACTORS (CONT.)
Implementation of Safety Nets
Created a toll-free customer service number as a way for people to comment on the quality of service and food.
Mystery shoppers were introduced to indentify issues, gather information, as well as a way to reward RGMs bonuses.
Marketing surveys were conducted by Taco Bell employees who would go to individual stores and ask customers to fill out questionnaires. This data was used in determining a stores value in its current market as well as a market manager’s bonus.
IT AND SUPPORT OF BUSINESS
MODEL AND PROCESSES
TACO: Total Automation of Company Operations
-
Personal computer in every store that is linked to a local point of sale (POS system)
TACO II: Same as TACO, but designed for crew members
-New and more user friendly computer system that was designed to provide crew members with the information needed to make decisions and take appropriate actions
TACO and TACO II brought a change from “0.5 percent meat variance” to “300 tacos” – information that the crew members can easily interpret and quickly act on.
PILLARS OF IT IN THE CASE
HCI : The use of POS (Point of Sale) system, CAT (Customer Activated
Terminal) and extension of e-mail systems and computer conferencing
Programming : No real information about programming given, but programming was a part of building an Intellectual Network and the
Infrastructure
Networking : Building a network to maintain a sense of community within the organization
Database : Shared databases incorporating “best practices” information on a wide variety of subjects
Web : With the use of web, the company was able to expand the access to critical information
RECOMMENDATION
Solution recommended
Focus on managing the business by using real-time information to ensure the information is useful and focuses on action to help with decision making and strategic planning.
Ensure the information is reliable and accurate to help with sales and marketing.
Focus on growth strategies.
Focus on target customers, cultures, and customer relations.
Focus on innovation.
Justification
Focus of the layout was completely changed to benefit the company’s efficiency and customer base.
The configurations changed to a 30% kitchen and 70% customer service area called K-Minus. This enabled food processing to be handled on a corporate level and delivered to individual stores.
Customers demanding FACT (Fast, Accurate, Clean, Temperature) so changes implemented to maximize on these four points.
Does it match what happened?
Yes because Taco Bell was reengineered from the ground up to provide faster service and better quality of service for future innovations.
RECOMMENDATION (CONT.)
What would we do differently given what we know today
(update the case)
Strive for future innovation which includes a testing site for new ideas such as a kiosk or cups with bar codes that could provide the younger generation with popular music and videos.
Provide for on-campus vendors for college students.
Implement touch screen ordering systems as well as online ordering capabilities ("New technology makes," 05).
Evaluate the importance of the expansion into International markets and how to further expand. $275 million in sales in international markets in 2011 (Novak, 2011).
Look at the impact of rising health concerns about food and its preparation in conjunction with customer surveys and questionnaires
LESSONS LEARNED FROM THE CASE FOR TODAY’S IT
MANAGER
Understand the relationships that exist in your management hierarchy and how people feel about them. Don’t associate harsh rules and policies with the most effective form of management.
Know where you stand in your market and be able to indentify your niche and the best ways to take advantage of it.
Constantly evaluate how your company is using technology and recognize when capabilities need to be expanded.
Don’t assume HCI makes sense to everyone. Sometime systems need to adapted to be more user friendly as evident from experiences with TACO and
TACO II.
REFERENCES AND BIBLIOGRAPHY
Applegate, L. M., Austin, R.D., & Mcfarlan, F.W. (2003). Corporate Information Strategy and
Management: Text and Cases (6 th Edition). New York, NY: McGraw-Hill/Irwin.
Bhasin, H. (2011, November 22). Swot of taco bell. Retrieved from http://www.marketing91.com/swottaco-bell/
New technology makes fast food faster; fgcu graduates hired . (2009). Retrieved from http://www.benseron.com/Blog/tabid/75/EntryId/1/New-technology-makes-fast-food-faster-FGCUgraduates-hired.aspx
Novak, D. (2011).
Annual report . Retrieved from http://www.yum.com/annualreport/
SHVILKA. (2012, March 07). Overall swot analysis of tacobell. Retrieved from http://takoringsabellinhungary.wordpress.com/2012/03/07/overall-swot-analysis-of-tacobell/
Taco bell . (n.d.). Retrieved from http://www.mbaskool.com/brandguide/food-and-beverages/635-tacobell.html
Vlessing, E. Taco Bell Corporation. Retrieved from http://www.referenceforbusiness.com/history/St-
Th/Taco-Bell-Corporation.html
ACKNOWLEDGMENTS
We would like to thank Professor Rich for his help and guidance in completing this case study. His assignments and breakdown of IT management concepts paved the way for our success.
Lastly, we would also like to extend our gratitude to all of our other classmates and team members which provided thought provoking dialogue and insight into the world of IT management.
