Dukes Restaurant
Consulting Report
DMR Consulting Group
Todd Lyons, Katy Lee, Steve Widdows, Iris Zhu
Prepared For:
Ivan Surjanovic
December 3rd, 2010
Dukes Restaurant Consulting Report
2010
TABLE OF CONTENTS
Thank You Letter...................................................................................................................................................... 3
Executive Summary.............................................................................................................................................. 4
Introduction ............................................................................................................................................................ 5
Situation Analysis ................................................................................................................................................. 5
Competition ........................................................................................................................................................ 6
Perceptual Map ................................................................................................................................................. 8
External Factors ................................................................................................................................................ 9
Internal Factors.............................................................................................................................................. 10
SWOT Analysis ............................................................................................................................................... 12
Problem Description ......................................................................................................................................... 12
Management .................................................................................................................................................... 12
Marketing ......................................................................................................................................................... 13
Recommendations ............................................................................................................................................. 13
Recommendation # 1: Motivate Employees ....................................................................................... 13
Recommendation # 2: Increase Local Marketing Efforts .............................................................. 15
Recommendation # 3: Increase Customer Satisfaction.................................................................. 16
Recommendation # 4: Mimic Successful Business Practices ....................................................... 16
Action Plan ............................................................................................................................................................ 17
Enhance Social Media Advertising.......................................................................................................... 17
Create Novel Dining Experiences ............................................................................................................ 17
Reduce Excess Wine Stock ......................................................................................................................... 18
Increase Customer Retention ................................................................................................................... 18
Improving HR Practices .............................................................................................................................. 19
Evaluation Metrics ............................................................................................................................................. 20
Simple Ranking .............................................................................................................................................. 20
Recurring Assessment ................................................................................................................................. 21
Conclusion............................................................................................................................................................. 22
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DMR Consultants
1245 W. Broadway, Vancouver BC
T: 778.888.8712 E: general@dmrconsultants.com
Ivan Surjanovic
General Manager
Dukes Restaurant
5698 Marine Drive
West Vancouver, BC
Dear Mr. Surjanovic,
On behalf of everyone at DMR Consultants we would like to thank you for choosing our
services in addressing your business concerns. Based on the results of our October 8, 2010
meeting we have created an action plan suited to your needs. The enclosed report is our
full analysis of your business’ current situation; we have identified your local competitors
as well as the internal and external factors affecting your restaurant; as well as an action
plan to address the all concerns with applicable recommendations. We hope you find this
report useful in tackling your goal of increasing sales and stabilizing profit margins.
Should you have any comments of concerns with our findings or recommendations, feel
free to contact us. Once again we would like to thank you for this opportunity and look
forward to the opportunity of working with you again.
Sincerely,
Katy Lee
Todd Lyons
Steve Widdows
Iris Zhu
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EXECUTIVE SUMMARY
The purpose of this report is to create a successful plan for Dukes’ management team to use
in order to address the various issues currently hindering their business. We at DMR have
assessed the following main issues to be of greatest concern to Dukes management:
▪
▪
An unmotivated team of employees, due to a recent shift in management which is
negatively affecting the quality of the restaurant resulting in lost sales and profits.
How to attract customers with limited marketing resources and control.
In an attempt to gain further knowledge about Dukes’ current situation, DMR conducted an
analysis of Dukes’ major competitors as well as both the external and internal forces
affecting their business. The main conclusion from this study was that Cactus Club is Dukes’
main competition in terms of target audience and business philosophy. In terms of the
external forces affecting Dukes’ operations, DMR has concluded that Dukes’ reputation
within the area is a major opportunity while the amount of competitors stands as Dukes’
greatest threat. However it was the internal forces which were more apt to address Dukes’
needs. The top internal strengths the restaurant possess remain the same which propelled
Dukes into the restaurant chain is has become. Conversely, it is the employees lacking
motivation which is hurting their livelihood.
DMR has created the following recommendations to provide guidance to Dukes’
management as to how they can turn their current situation around:
1.
2.
3.
4.
Motivate Employees
Increase Local Marketing Efforts
Increase Customer Satisfaction
Mimic Successful Business Practices
DMR has recommended an action plan which will further discuss the method and intent of
implementing the key recommendations proposed throughout this report. In addition,
proposed evaluation metrics are outlined which provide a simple metric to determine the
priority of pursuing the proposed solutions based on their benefit and associated costs, and
a recommendation for how to review past qualitative traits for subsequent analysis of
trends in the weaknesses outlined and the implementation of their solutions.
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INTRODUCTION
Dukes is a casual-fine dining restaurant that has been an icon on Vancouver’s North Shore
since it was first established in 1982 by the Duke family. The West Vancouver location is
one of the first Dukes Restaurant locations and since that time Dukes has expanded to 65
locations throughout Canada and the United States. Although Dukes is now a multinational
company, the Duke family remains in direct control with Michael Duke as CEO. Dukes head
office is located in North Vancouver, less than a mile away from the flagship location. In the
past 28 years Dukes has constantly kept up to pace with changing tastes and style which
has allowed Dukes to remain an industry leader. Dukes believes the kitchen is the soul and
their philosophy is to be inspired by food.
Recently many of Dukes locations have seen decreased sales due to the financial crisis, new
government regulations and increased competition. The West Vancouver flagship location
is a prime example of this; in addition to a decrease in sales this location is also suffering
from a lack of profits, a problematic combination if not addressed. The internal explanation
behind this trend is largely based on a disconnect among the staff due, in part, to past
management practices; the second factor affecting this location is their limited marketing
flexibility.
At DMR consulting group we believe no challenge is too tough and by using our expertise
and Dukes exceptional branding we will help their North Shore location recapture their
sales and regain their former restaurant quality in order to stabilize and increase their
profits.
SITUATION ANALYSIS
Dukes West Vancouver location is in a highly competitive geographical area with major
competitors less than a kilometre away. In addition to this, market trends due to the
financial crisis has resulted in fewer customers able to justify a luxury such as dining out.
Although the recession hasn’t hit Canada quite as hard, the summer months, which are
typically filled with American tourists, had record low sales. As if the restaurant industry
needed more barriers for sales; recently two government regulations have been enacted
which heavily effects sales. First HST; by increasing the tax on meals out many people are
choosing to eat out less frequently. Secondly stricter drinking and driving laws; these new
laws have resulted in people having fewer, often no, drinks when eating out. That extra $5
or $6 lost has left many in the restaurant industry with much more sensitive costs.
Due to certain internal factors, Dukes is currently having difficulty maintaining a positive
profit margin. Figure 1 shows Dukes’ profits over the past year. There root cause of this
downward trend is due to unmotivated staff. Quality has severely decreased in response to
the employee indifference which means that Dukes is spending money to take care of
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unsatisfied customers’ meals and retraining staff. Let us consider Dukes’ situation analysis
in order to identify any areas which can be improved.
Fig. 1
Competition
The West Vancouver Dukes location has four main competitors within a fairly small radius.
Each of these main competitors is an established brand with the resources to actively
compete; however they too are limited by corporate marketing strategies and are therefore
not at a marketing competitive advantage. Dukes main competitor is Cactus Club; there are
two Cactus Clubs near this Dukes location additionally there is a Cactus Club subsidiary
called The Taphouse. The fourth competitor in the immediate area is Milestones; however
established, Milestones and Dukes have a different clientele and Dukes has been able to
position themselves favourably against this chain. There are two other potential
competitors within the area: The Keg and Boston Pizza. These, like Milestones, too cater to
a different target are therefore considered secondary competition.
Cactus Club
Cactus Club is Dukes’ main competitor; however this fact is considerably more true
for the West Vancouver location as there are two Cactus Clubs within less than a five
minute drive. Both Dukes and Cactus Club focus on the same target market, families
for their dining rooms and singles and couples in their lounges. The Pemberton
location of Cactus Club is considerably small; also, as it is the first Cactus Club
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location the decor is out-dated. Within the last five years Cactus Club has opened a
new and improved location in the trendy Park Royal Village. This location is
considerably larger than the Pemberton restaurant and has a new visually appealing
decor. The Park Royal Cactus Club is by far Dukes’ main competitor.
Cactus Club and Dukes share similar values; both Dukes and Cactus Club emphasize
food ingenuity and a focus on overall restaurant quality. In response to this
philosophy Cactus Club has enlisted celebrity chef Rob Feenie to create their
seasonal menu options.
The online search trend analysis below demonstrates how Dukes and Cactus Club
compare to one another. The two chains are very similar with regards to search
volume which means neither restaurant has a competitive advantage by sheer
searches on the web. On the other hand Dukes news reference volume is quite a bit
more active than that of Cactus Club. This means that Dukes is getting the attention
where it matters, in the news. By constantly innovating, creating something new and
giving back to the community Dukes has been able to remain at top of mind
awareness in their demographic. We can use the media to our advantage, we have
strong ties to the local community and we believe we can strengthen them even
further with our localized marketing plan.
The Taphouse
The Taphouse is an independently run subsidiary of Cactus Club. Also located in the
Park Royal Village, The Taphouse targets a younger crowd. The Taphouse is in line
with a sports bar, they have many TVs and promote their 20 bottled and 20 draught
beers. In terms of Dukes family market, The Taphouse is no competition; however
since opening a few years ago Dukes has seen a decrease in their lounge patrons.
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Milestones
Another locally created chain, Milestones caters to the family and older market.
They’re lounge is small and doesn’t compare to Dukes, Cactus Club or The Taphouse
in popularity. However the size of their location is similar to Dukes and as a result
they too can facilitate large parties. Milestones is slightly more expensive than
Dukes, however their menu options as well as their service quality cannot compete.
The Keg
The Keg is hardly Dukes direct competitor; a mid-range steakhouse, the two do not
cater to the same target audience. True The Keg has a large lounge, it is rarely full
and they do not promote live sports. The Keg is priced considerably higher than
Dukes and their service standards are much lower.
Boston Pizza
Dukes’ final local competitor is Boston Pizza. Boston Pizza is a chain of family
targeted restaurants. This particular location is quite large and is therefore able to
compete with Dukes in terms of seating. However, Boston Pizza’s menu and food
quality is considerably lower than Dukes, as is their service quality. The two chains
barely target the same market segment. In fact Boston Pizza’s only competitive
advantage over Dukes is their late night service.
Perceptual Map
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We have placed Dukes along with their top local competitors on our perceptual map. When
compared to the other chains Dukes restaurant has the highest quality. We believe that
they are constantly dedicated to upgrading and changing their menu and well as using the
best ingredients possible. This has allowed Dukes to surpass its competition in quality.
Price is our other factor on the perceptual map, we have placed Dukes roughly in the
middle ground as they are priced competitively with its biggest competition Cactus Club.
External Factors
Opportunities
Strong Local Community Ties:
As Dukes has been operating for roughly 28 years in this same location, there is a
sense of nostalgia within the community. Many customers have been frequenting
the location since they were children. The location is a staple on the North Shore.
Resilient Economic Demographic:
As Dukes is located on the border of North and West Vancouver, many of its patrons
are fairly wealthy. West Vancouver is home to some of Canada’s most wealthy
citizens. Through customer relationship management Dukes can capitalize on this in
order to ensure they continue to patron the location.
Threats
Many Diverse Local Competitors:
As stated above, Dukes location is highly competitive. It is in response to this threat
that Dukes must assert themselves as the leader in quality and overall value in order
to recapture sales which have been taken by the increased competitors.
Economic Downturn:
The current financial crisis has not be kind to many businesses and Dukes is no
exception. However Dukes competitors are face with the same challenges of less
people going out to eat; as a result Dukes must be increasingly efficient with their
business practices while competing in a highly competitive market.
New entrants:
The threat of new entrant is a threat in any business, should an additional successful
chain open in Dukes area sales levels may drop further.
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Government Regulation:
Recent government regulation such as HST and the new drinking and driving
policies have led to decreased sales for Dukes.
Internal Factors
Strengths
Strong Brand Name Awareness:
Having been a staple on the North Shore for nearly 30 years, Dukes brand is highly
recognized and related to quality. Although this particular location is having
difficulties, having a strong trusted brand behind them will allow success to return
more easily.
Willingness to Change:
Dukes management’s recognition of the problem and willingness to solve this
problem is incredibly beneficial to the restaurant as a whole. By being willing to
make the necessary changes needed for improvement, Dukes has a high chance of
success.
Fantastic Seasonal Menu:
Dukes’ philosophy “kitchen is soul” means that they are constantly trying to bring
the freshest, authentic and original menu options to their customers. The corporate
office invests heavily in product development which can be seen through their food
and drink menus.
Wide Appeal:
Dukes menu and atmosphere are in no way inclusive to one taste. A variety of menu
options are offered, meaning Dukes truly has something for everyone.
Great Location:
Dukes is large location with ample parking, which is a major competitive advantage
over some of their competition. In addition to the location’s size it is located on a
major road which is often congested. This congestion regularly leads to patrons
stopping in while waiting for traffic to pass.
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Weaknesses
Poor Staff Motivation:
Due to recent changes within this location, overall employee motivation is low. The
result of this is a negative effect to the customer through poor service quality and
food quality.
High Employee Turnover:
The kitchen operations at this location suffer from high turnover rates. High stress
environments such as kitchens are hard to work in; therefore serious consideration
must be taken when hiring new staff. Also current staff must be recognized in order
to retain them. Hiring and training staff is incredibly costly.
High Operating Margins:
With uncertain sales, high employee turnover and past management’s practices still
in a transitional phase, operating margins are quite high. Strict control of costs must
be implemented in order to contain and resolve this.
Non-specific Marketing Strategies:
As the majority of marketing strategies are in-acted by corporate head office for
Dukes as a whole, it is difficult for this location to encourage customers to their
particular location. Although the location is allowed a marketing budget, it is small;
as is the marketing abilities.
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SWOT Analysis
Strengths
• Strong brand name
awareness
• Willingness to change
• Fantastic seasonal menu
• Wide appeal
• Great location
Opportunities
• Strong local community
ties
• Resilient economic
demographic
Weaknesses
• High employee turnover
• Poor staff motivation
• High operating margins
• Non-specific marketing
strategies
Threats
• Many diverse local
competitors
• Economic downtuwn
• New entrants
• Government Regulation
PROBLEM DESCRIPTION
Dukes’ restaurant has a very successful formula for creating a restaurant “that just works.”
Unfortunately even the most successful restaurants can suffer from internal and external
factors. Although sales are declining, Duke’s profit margin has decreased by a larger
percent which has led us to believe there are internal factors involved which are affecting
profits and must therefore be addressed.
Our qualified professionals at DMR Consulting have discovered many attributes that have
led Dukes into its current market position. We have targeting two core areas that need to
be focused on in order for Dukes to see an increase in their profit margins. The internal
factors affecting Dukes profits are: unmotivated staff and limited marketing abilities.
Management
Due to a recent shift within the location’s management staff; the fundamental day to day
activities of the restaurant have been somewhat forgotten. The prime area affected by this
factor is employee relations. Both the front of house (servers, hostesses, bartenders etc.)
and the kitchen staff have been affected which has resulted in unmotivated staff with no
concern for quality or the well-being of the restaurant.
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The area we believe needs immediate attention is within the kitchen as they have dealt
with the most change and currently have the highest turnover rate. The lack of leadership
from the kitchen management has created a negative mentality at Dukes and without
immediate change Dukes will continue to suffer from unmotivated staff. Hiring and training
staff is a very costly venture and will affect Dukes bottom line.
In spite of the management shift, the front of house employees are not turning over quite as
quickly as the kitchen. Additionally the majority of these staff members continue to be
satisfied with their employment at Dukes. Unfortunately many of these staff members have
been improperly trained by past management which is negatively affecting the overall
restaurant cohesion. In response to this fact as well as to the kitchen’s current situation we
at DMR would like to make some recommendations in order to increase employee
retention, quality and satisfaction.
Marketing
As Dukes is a chain location, they’re main marketing efforts are governed by their
corporate head office. These strategies can work well on a country wide basis and do
provide each restaurant with promotional campaigns. Unfortunately this does not take into
account each restaurants’ current situation and demographic to the most appropriate
degree. In an effort to address this each location is allowed a small localized marketing
budget which can be implemented at their will provided head office does not oppose.
Promotional campaigns such as events can be governed by the location as can any beverage
or food specials for that particular day. This location already takes advantage of this with
multiple successful parties year round including New Years Eve, Cinco de Mayo and
Summer Kick Off parties. It is this localized budget that we at DMR would like to maximize
in order to increase this locations awareness and sales.
RECOMMENDATIONS
Now that we have identified the two core issues affecting Dukes location we would like to
create some viable recommendations for this particular location. In creating these
recommendations we have focused on both Dukes staff situation and marketing limitations,
as well as included some additional recommendations aimed at increasing sales.
Recommendation # 1: Motivate Employees
Create an Employee Mantra
In order to motivate employees, a simple mantra should be created which can be
seen as somewhat of a philosophy within the location. This recommendation
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requires serious attention as a mantra which is not met with staff approval can
result in a major flop by management. As this location is incredibly social, with
many staff members socializing outside of work, management should pick
something close to the group’s social culture. A famous quote from a movie or band
is one option that could be considered. This recommendation will take some time as
the quote should ideally come from the employees themselves. Once the mantra has
been chosen, be sure not to over-do it or else it will become a passing fad.
Re-train Certain Staff
One of the problems facing Dukes management team is that a wealth of their
employees are under-performing due to a lack of initial training. Theses members
must be addressed as they are currently driving away customers due to their poor
job performance. The main point to stress in conducting a re- training session is that
the management team knows their short comings are not entirely their fault and
that this is their opportunity to increase their job performance. True not all staff
members will successfully complete the training session to Dukes standards, some
people were not meant to work in the service industry; however in doing this Dukes
management is proving they care about their employee’s improvement. In addition
to increasing overall employee performance, Dukes management will be aiding the
overall employee satisfaction levels as all staff members will now be competent and
able to work together as a team.
Employee Parties & Appreciation Programs
As a result of the recent changes at this location it is important to identify not only
the employees who need attention, but also those who have been performing
through the chaos. By having a staff party in celebration of the recent changes, the
management can thank the employees for their patience and flexibility over the
recent months. By showing your gratitude employee motivation can significantly
increase. Considering Dukes is a service based company, it should come as no
surprise that the employees enjoy pleasing people and can be motivated with this
approval. In addition to staff parties appreciation plans should be created. These
plans can be as simple as the top selling server or most efficient team of cooks. Not
only will these programs benefit the individual employees, they will benefit the
location as well. Take for example the top selling server program, if the reward is of
value to the servers they will compete with one another to up sell to their customers
in order to increase their sales. The result? Increased restaurant sales as well as the
added benefit of each server spending more time with their customers, which will
create loyal customers and therefore increased sales.
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Consistency from Management
Each of these recommendations to increase employee motivation are simple and
easy to implement; however without consistency from management they will fail
and may possibly decrease employee motivation due to broken promises. Therefore
Dukes management team must work together closely to ensure they are all on the
same page in regards to employee relations. Ensuring communication between
management is important to employ consistent policies.
Recommendation # 2: Increase Local Marketing Efforts
Social media
Social media is a great way to promote your business at little to no cost. The
implementation of this recommendation is incredibly simple. An employee,
preferably a manger or supervisor, should be assigned the role of keeping the sites
relevant. In doing this, Dukes can keep their customers informed about in-store
promotions and parties as well as any company wide promotions. Facebook and
Twitter are the two top social media sites serving a wide range of demographics.
Updating these sites weekly is one way Dukes can promote their location apart from
corporate marketing efforts. Additionally due to the features of these sites,
communication between customers is possible in response to ‘tweets’ or through
‘wall posts.’ The main concern with this recommendation, however is that the site
does not become annoying to its followers. The person in charge of these sites
should ensure they are not flooding their follower’s inboxes with updates.
In-store Promotions
There are a variety of in-store promotions which can be employed despite the
location’s limited marketing power. Working together with liquor and beer
representatives contests can be created for major sporting events, such as the Super
Bowl or even a Canucks game. These contests could include giveaways, such as tshirts or gift certificates, or draw prizes. A draw prize can be done over a period of
time. Say for example every time a customer comes to this Dukes location to watch a
Canucks game for a certain month they are entered into a draw. If the prize is
something of interest, say Canucks tickets, sales can be increased as people will
choose Dukes to watch the games that month. In addition to contests promotional
material such as signs and takeaways are a great way to pique interest. Creating
billfold or menu inserts promoting something, could be sporting events or even a
weekly drink special, is a viable option. As customers wait for their food or drinks
they are likely to read this promotional material. Another way to capitalize on this
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investment is by printing these materials as a coupon of sorts; however due to the
corporate marketing plan this may not be an option.
Recommendation # 3: Increase Customer Satisfaction
Loyalty Programs
As is the case with any business, creating customer relationships is important. By
identifying regular customers and rewarding their patronage Dukes can ensure they
continue to frequent their location. Giving regular customers a gift certificate if they spend
over a certain amount on a given visit is likely to get them coming back. Another way to
draw repeat customers is to get their contact information. With this monthly emails can be
sent out informing them of any upcoming promotions or events; sending holiday cards
through mail or email is another way Dukes can show their appreciation.
Monthly Parties & Events
Holding monthly events or even bi-monthly events can be successful in attracting
customers, current and new. Celebrating sporting events with themed menus and beer
specials can increase sales on specific days. Hosting a Super Bowl party is not only easy if
promoted correctly but can draw large numbers. The elements to a successful Super Bowl
party could be as follows: creating a football themed menu with items such as chilli and
subs; providing bowls of bar nuts, chips or popcorn to every table in the lounge; having a
door prize, maybe BC Lions home opener tickets; beer specials; and/or offering a football
pool. In addition to the main components of the day, communicate with the management
team to approach groups of men dining at Dukes in the weeks preceding the event to invite
them to join in the festivities. In order to show appreciation to loyal customers, Dukes can
host a by invitation wine tasting events. Bringing in the corporate sommelier and creating
hors d’oeurves, which compliment the wine, will not only impress the customers but can
increase sales as they may choose to purchase one of the wines tasted on their next visit.
These are merely two examples of how Dukes can increase their sales through showing
their appreciation for their customers.
Recommendation # 4: Mimic Successful Business Practices
Browse the web and business magazines to get ideas how other businesses are
succeeding and see if these tactics can be applied in Dukes. Note that successful
tactics need not simply come from the service industry, a manufacturing company
may have a practice that can be tweaked to fit your needs. Additionally, frequent
local competition to see if anything can be mimicked from their practices; or learned
from their mistakes.
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ACTION PLAN
Enhance Social Media Advertising
Out of restaurant advertising is handled through corporate headquarters and forbidden by
individual locations, however due to the highly competitive restaurant niche occupied by
Duke's in the region additional advertising is required to successfully compete with nearby
Cactus Club locations and Village Taphouse. Since social advertising is not regulated it is a
strong opportunity to increase the competitive capability of Duke's. While some social
awareness through Facebook is already in effect, making this a full-time position of a given
employee combined with a slight pay increase will enhance this opportunity.
By developing a Facebook identity for Duke's and fostering a community and customer
network, Duke's will be more able to contact customers for upcoming event nights and
encourage a friendly atmosphere to increase the rate at which customers return to Duke's
for their future dining and event needs. In addition to a Facebook group page with regular
updates and forums, a Twitter feed is another excellent opportunity, providing information
and further improving the social awareness and interconnectivity of Duke's online identity.
By setting up referential material on every major social media site, and linking Duke's
social events on all of these sites - such as Vancouver event and tourism boards - significant
advertising can be done without interfering with the regulations set out by Duke's head
office. These increases in advertising will cause an increase in awareness, which will lead to
increased attendance and sales, which will incur higher profits.
Create Novel Dining Experiences
Duke's already engages a variety of theme nights from costume and location themes, to
major sporting events, but these can be further expanded and improved to better serve the
customer's needs and desires for novel dining experiences. Currently Duke's promotes
sporting event nights where, if your preferred player scores a goal, your table gains a free
appetizer, this is an excellent solution because it provides a good incentive to watch the
event at Duke's over other potential venues or at home. This could be expanded beyond
Hockey to other sports however, especially since hockey is a seasonal sport. During the
Olympics, World Games, or World Cup the same principles could be applied, and since
these fall into seasons where hockey is not on, it will not be in conflict with current
recurring hockey customers.
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Reduce Excess Wine Stock
The West Vancouver location has over $50,000 in excess wine inventory, another
opportunity for event nights exists in wine-tasting nights where many bottles can be
opened and tested at a reduced cost or at the cost of the bottle with no profit - this will
attract many customers who will be able to try an assortment of exotic wines they may not
be accustomed to, at excellent prices. By doing this, the restaurant reduces their aging wine
stock and fills the restaurant at the same time. The wine is currently being stored
improperly, this activity not only attracts customers, but reduces the risk of wasted
inventory due to spoiling. Furthermore, by attracting many separate restaurant
demographics to Duke's on different nights, Duke's increases their target audience which
increases the pool of repeat customers. This can then be further improved through
customer loyalty programs.
Increase Customer Retention
With a highly competitive niche in the North Shore restaurant industry, both
geographically and socio-economically, every effort must be taken to earn and retain
customer loyalty to prevent defections to the nearby Cactus Club. The most direct method
to improve the retention rate is to provide incentives for returning customers, either
through coupons such as "two for the price of one" or a reward points system where for
example, 10% of the bill becomes a discount on the next return, or a coupon for free drinks
or an appetizer if they return within a reasonable timeframe (ie. a couple months).
Systems like these provide both an economic and psychological incentive to return, which
is critical to ensuring that Duke's customers remains Duke's customers, and that new
customers keep coming back, rather than exploring the many competitive alternatives.
While major promotional discounts must be approved by the head office and are unlikely, a
limited budget is already in place for these incentives, but improving awareness of these
benefits will have an equally important effect as the incentives to customer retention
themselves. Customers who are aware that these benefits are offered will recognize the
value placed on their loyalty, and are likely to be more conscious of their loyalty in the
future. Further efforts to improve customer loyalty can be applied via improved Human
Resource practices.
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Improving HR Practices
Current employees lack the social camaraderie and charm that can make all the difference
in distinguishing a restaurant from its peers. Efforts can also be made to improve
server/customer relations and better facilitate overall operation, such as improving
efficiency by cleaning tables or refreshing drink orders while returning entree orders to the
kitchen. This may be possible with the existing employees, but with a high employee
turnover rate and a young hiring pool, this is not as effective as it can be with more veteran
staff. While hiring more veteran and older staff will undoubtedly improve the general floor
operation of the restaurant, it comes as increased costs which there is already a very
limited operating budget to peck into. The probable benefit is therefore high, the effort will
pay itself off in the end, but the costs and the time associated are significant detriments.
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EVALUATION METRICS
Simple Ranking
Key comparative elements used in evaluating these actions include the Estimated Cost ,
Probable Benefit, Time to Implement, Effort to Implement, and Return on Effort, by
comparative analysis they yield a priority sequence for their implementation.
Estimated Probable
Time to
Effort to
Cost
Benefit Implement Implement
Return
on
Total
Effort
Enhance
Social
Media
4
5
5
4
4
22
Novel
Dining
3
4
3
2
3
15
Wine
Stock
5
4
5
5
5
24
Customer
Retention
2
4
2
3
3
14
Improve
HR
2
4
1
2
4
13
Based on this matrix, getting rid of the wine stock by holding wine tasting events should
definitely be the top priority, it is quick and easy to implement, has no significant additional
costs, is an excellent new event and has a high likelihood of success. Following closely
behind is the capacity to enhance the virtual social presence of Duke's by improving
customer awareness and interconnectivity, building a community and showing support for
their preferred local restaurant.
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2010
While the other three suggestions are still beneficial, they have recognizable weaknesses
that make them more difficult or costly or time-consuming to implement. Most noticeably,
while improving the HR practices is likely to have a myriad of benefits to customer
retention which may not be fully recognized in the above matrix, the time and cost
associated with hiring new and better employees, or attempting to improve the existing
employee practices is not competitive with the other suggestions. While the probable
benefit and the ultimate return on the effort associated with improving HR practices is
relatively high, it should take last priority amongst the other suggestions based on this
metric. However, some consideration should be made that the metric fails to adequately
recognize the resultant benefits of improved HR, which would likely enhance social media
as a grass roots efforts when employees begin to take pride in their job, and the effect
better HR has on customer retention without the need to implement additional loyalty
programs. If we assign an arbitrary bonus value of just 2 to represent these secondary
benefits which are not present in the other categories, improving the HR becomes the
tertiary priority and should be pursued soon. Tools like this help identify the strengths and
weaknesses, but ultimately they simplify complex problems and sometimes lose the
intangible in the process.
Recurring Assessment
Twice a month Duke's should make efforts to reassess both their niche with their
competition, and their internal challenges with improving the sense of teamwork and spirit
amongst their staff and eliminating the decaying wine stock. By keeping written record of
these assessments Duke's will have a log to reflect on at the end of each quarter to
determine whether the proposed solutions are working or if new answers are required.
While the qualitative traits may be difficult to quantify, by comparing relative to the prior
months performance (did it improve or worsen, by how much?) the pattern can be derived
without quantifying the variables. Appropriately applied this recurring assessment will
aide Duke's similar to prior accounting books aide any business in measuring profit,
revenue and loss. Recurring assessment should not be the sole responsibility of a single
manager, but the collective responsibility of every significant employee from franchise
owners down to bartenders and shift supervisors.
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Dukes Restaurant Consulting Report
2010
CONCLUSION
DMR is sure that if properly implemented, the recommendations found in this report will
prove triumphant in addressing Dukes current situation. The key recommendations and
action plan illustrated in this report are geared toward overall success. Through thorough
competitor and industry analysis, Dukes can take confidence that this report is relevant in
addressing their concerns of increasing sales and balancing costs.
In implementing the recommendations we have created, Dukes will be able to increase
overall quality, which will provide the following tangible and intangible benefits:
Tangible Benefits
▪
▪
Increased Sales
Increased Profit Margin
▪ Fewer Costly mistakes
Intangible Benefits
▪
▪
Satisfied/Motivated Employees
Customer Satisfaction & Loyalty
We believe not only will our recommendations create practicable solutions to Dukes’ main
concerns, but also will result in long term benefits for Dukes overall organization. Through
increased employee satisfaction and motivation resulting in component future leaders
within the company. By increased customer satisfaction giving way to positive customer
relationships for life.
Additionally through focused attention on increasing the overall customer experience, via
increased employee motivation and customer loyalty programs; as well as location specific
social media and in-store marketing efforts, such as events; Dukes can attempt to draw
customers away from their main competitor, Cactus Club. Resulting in increased sales and
with higher sales profit margins can be improved as there is more flexibility.
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