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Porcini Case Study

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Nova Southeastern University
Wayne Huizenga Graduate School of Business & Entrepreneurship

Assignment for Course: OPS 5095 Submitted to: Dr. Albert Yin

Submitted by: Paloma Bores Lorenzo N1670844 15901 Collins Ave. apt. 1104 Sunny Isles beach, FL. 33160 786 314 2223 Date of Submission: 10/13/2015 Title of Assignment: Individual Case - Porcini’s Pronto CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledge and disclosed in the paper. I have also cited any sources from which I used data, ideas of words, whether quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.

Student Signature: _________PBL__________________ ******************************************* Instructor’s Grade on Assignment:
Instructor’s Comments:

Executive Summary
This paper analyzes the situation of Porcini Inc. a family-owned Italian restaurant founded by the Ventola family in Boston. Since its foundation in 1969, Porcini’s success relies on the uniformity of great quality food and superior service in all their locations.
Porcini’s reached a point where growing the business and increasing brand awareness is stuck due to market saturation. The challenge for Porcini is to find an alternate operational system that allows them to expand their market share without compromising their values of great quality food, excellent service and uniformity. After analyzing the possible alternatives presented to the Senior Management, it is concluded that the best option for Porcini’s is to launch the Pronto program, which targets travelers by strategically placing restaurants in interstate highway exits. It also has a faster turnover of tables while being consistent with Porcini’s values. Using syndication as their entry-strategy, Porcini’s would be able to construct and furnish more locations in shorter time while receiving 4 percent revenue, therefore increasing market share and brand awareness.
Background
The Ventolas family founded Porcini Inc. in the city of Boston. This Italian-American restaurant has been known for providing high quality food and superior service since its beginnings in 1969. After two decades Porcini expanded by opening restaurants in several cities around the United States, including Providence, Newport and Rhode Island. In 1989, the Ventolas sold controlling interests to a group of investors who decided to expand by opening locations in malls and downtown areas in northeastern United States. Porcini was Financially stable “except during the recession of 2008-2009, Porcini’s had increased revenues and earnings every year” ( && Luecke, 2011 p.2). By 2010, they generated $94.3 million in revenues, operated 23 locations, employed over 900 people and had a rise of 4 percent in profit margin.
The senior executives of Porcini believed that the success of the restaurant relied mainly on the uniformity of food and service quality in all their locations. They achieved this quality by hiring experienced managers and supervisors in addition to the recipes of their James Beard award winner chef, Mariana Molise. Since she joined the company in 2006, Molise applied her extensive knowledge in food and developed a “flash cooking” technique. Molise was responsible for creating fast quality meals at moderate prices and of training all the chefs to maintain the uniformity in food quality throughout their locations (Kesket & Luecke, 2011). Additionally, Porcini paid special attention to first, creating a family-owned restaurant ambience in all their locations, which created a powerful brand in the region and second, to provide an excellent table service since they believed that the quality of the table service is as important as the quality of the food. In 2010, New England restaurant guide, gave Porcini the “Best Chain Service” award for the fourth time.
The company was good financially and it had a strong brand image that differentiated them from competition through providing excellent food quality and superior service. However, the company reached a stage where future growth was not possible if they continued using the same operations strategy. In order to grow the business they needed to find alternative operational practices. They faced the challenge of expanding and increasing their market share without jeopardizing their brand image.
Problem Statement
Porcini, a family-owned Italian food restaurant, is stuck with market saturation and low growth rate. Their challenge is to maintain the high quality in food and superior service while expanding to grow its market share while competing with major well-known brands.

Analysis
With the objective of growing the business, in 2010, Porcini’s management started looking for options to leverage its brand and operating system. Their first option was to have carry out stores. However, this option was not developed because of high competition (Appendix 1: Segmentation of restaurants in the U.S, 2010 ), inability to sell liquor and potential damage to the brand. Other option considered was catering, “but no one at Porcini’s stepped forward as its champion” (Kesket & Luecke, 2011 p3). Marketing vice-president, Tom Alessio, who had been analyzing the competition and customer trends for a while, developed a different alternative: Porcini’s Pronto.
The Porcini’s Pronto Concept consisted in first, targeting travelers by locating restaurants in interstate highway exits. Second, having faster turnover of tables but being consistent with the Porcini’s quality food and superior service and third, offering a limited selection of beers and wine. Chef Mariana Molise was responsible for creating an exceptional menu with fewer items, lower cost and same food quality of regular Porcini’s. The team designated to the project, conformed of the operations vice president and the HR director, proposed to test the project before they launched it by purchasing two restaurants located close to busy interstate highway exits, near gas stations where travelers refuel, or near economy level lodging; any location that fell into their real estate consultant’s description of “ideal location”. If the first test turned out to be successful then they would launch the project nationwide.
Each Porcini Pronto restaurant would seat 85 customers and would staff 12-15 full and part time employees; one full time manager who would be salaried, an assistant manager, waiters clean-up people and kitchen crew, who would be paid hourly. Since absenteeism is a big issue in this industry a quarterly bonus was offered based on perfect attendance. For every month of perfect attendance the employee would earn an additional half-day of paid vacation each month. Porcini’s new focus on rapid and quality service needed people with great communication skills and attitude. In order to get the right people for the job applicants had to go through several filters, including an initial interview with HR, continuing with an interview with Pathfinder, a personality assessment test and a final interview with the manager. Porcini was looking for people who were naturally customer-oriented Alessio said, “we can teach them skills, but we can’t teach them the right attitude” (Kesket & Luecke, 2011 p5).
Since quality and fast service were the two main focus of Porcini’s Pronto, the management needed to come up with a plan to measure both of them. In order to monitor quality, every booth on the restaurant would count with a flat screen that continuously displayed eye-catching images, with the purpose of inviting customers to answer a survey that would capture their experience during their visit to Porcini’s Pronto. After the waiterperson handled the bill to the customer he/she would touch the screen that would ask the question: How are we doing? and invite the customer to provide feedback. Additionally, operations vice president Jensen considered important to “develop and enforce own metrics” to capture information like how long it takes to seat a customer, or to take their order.
In order to reduce risk, Senior Management wanted to explore alternative options for site acquisition and development. Their first option was “Company owned-and-operated”, which consists on buying the locations with the company’s money available and borrow the rest of the capital to equip and remodel the locations. It allows Porcini’s to have complete control of the operations, management and customer satisfaction. The financial risk is low, according to the case, the total cost per unit would be of $2.1 million and the profit margin would be of 6 percent pre taxes. Although this option shows many advantages it does not allow for fast growth, which is one of the main objectives.

The second option was franchising. By franchising, “you sell the rights to use your business name, methods and system of doing business to franchisees” (Lesonsky, 2014 p1). Also, the cost of leasing, purchasing well-situated sites and construction would be responsibility of the franchisee. However, Porcini’s has to provide training, marketing elements and menu development among other activities. Even though the franchisee has to manage and operate the business accordingly to Porcini’s operations manual the risk of bad image perception increases since the company lacks control on administrative decisions. Additionally, Franchising allows for fast growth, which would be beneficial for brand awareness. The cost of developing an agreement is estimated to be $1 million and Porcini’s would receive 2% net revenue. This option would allow Porcini’s to grow in a faster pace, however the risk of getting a bad reputation is very high and the annual revenue is very low.
The third option was Syndication that consists on the company building and equipping the facilities and then selling them to investors; that way the capital is recycled and could be used to invest in other syndication deal. The main advantage of syndication is that Porcini’s has the full control over operations, hiring, training and management. Also, syndication tends to decrease turnovers because “operational control would create opportunities for career advancement”(Kesket & Luecke, 2011 p9). Additionally, by using syndication Porcini’s could find better locations since “prime undeveloped locations are mostly owned by investors” (Kesket & Luecke, 2011 p9). The cost for each transaction would be of $2.5 million and Porcini’s would receive revenue of 4 percent annually. Porcini’s CFO stated that an additional 6 percent of the property should be added to the initial investment for expenses such as investment bankers, lawyers and closing costs.

Conclusion and Recommendations
Based on the previous facts, research and analysis the company can achieve a sustainable competitive advantage by launching Prontos. There is no other Italian full-service restaurant designed to serve on the travel-customers which gives Porcini’s a new way for growth in the restaurant market, while establishing a better brand recognition based on great food quality and superior service. As of the entry-strategy, by investing approximately $50 million in syndication, Porcini’s would have 20 sites by 2018 and would receive annual revenue of 4 percent Also, syndication would allow Porcini’s to build a stronger presence since they can construct and equip more sites in better locations in less time without risking the uniformity, quality food and superior service that has characterized Porcini since its beginnings. Therefore achieving their goals of increasing revenue and leverage brand.

Appendices
Appendix 1: Segmentation of restaurants in the U.S, 2010 | Description | Outlets | Profit | Revenuein 2010 | Others | Fast Food | -Customers pay before eating. -Purchase consumed on-site, taken or delivered- No liquor sold | 300,000 | Profit margin3.5% | $184 billion | | Single location, Full Service | -Variety of ambiences and cuisines-Customers pay after eating | 200,000 | $ 5.8 billion | $89 billion | 2.8% growth forecast 2011-2015 | Full-service chain restaurants | -Customer order, are served and pay after eating | 33,400 | $3.4 billion | $53 billion | |
(Kesket & Luecke, 2011).

References

Heskett, J. L. & Luecke, R. (2011). Porcini’s Pronto: Great Italian cuisine without the wait. Boston, MA: Harvard Business Publishing.

Lesonsky, R. (2014). Expanding Your Restaurant: Building a Chain vs. Franchising. Retrieved October 11, 2015.

CASE GRADING RUBRIC TITLE OF RUBRIC: OPS 5095 Student Case Grading Rubric | Course: OPS 5095 | LEARNING OUTCOME/S: CC1, CC3, CC7 | Date: November 4, 2011 | PURPOSE: Apply OPS Theory to Business Practice | Name of Participant: Student | VALIDITY: Best Practices in OPS Management | Name of Rate: Professor | COMPANION DOCUMENTS: Individual Cases, Assigned Articles and APA Style Manual | |

| Earning maximum points in each box in ‘PROFICIENT’ column and / or points in columns to the right of ‘PROFICIENT’ meets standard. | | <<<<<<<<<< less quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . more quality >>>>>>>>>> | Performance Criteria | Basic (2 pt)* | Developing (3.25 pts)* | Proficient (4.0 pts)* | Accomplished (4.5 pts)* | Exemplary (5 pts)* | Score | Identifies and describes problem/s effectively (CC1) | Does not state problem(s) or identify symptoms, critical factors and current state in Background discussion. | Somewhat states problem(s) in multiple sentences. May identify symptoms, critical factors and current state in Background discussion. | States problem(s) in multiple sentences. Identifies symptoms, critical factors and current state in Background discussion. | States problem(s) clearly in one sentence. Identifies symptoms, critical factors and current state in Background discussion. | States problem(s) clearly and concisely in one sentence. Effectively and completely identifies symptoms, critical factors and current state in Background discussion. | | Applies operational management models (CC3) | Does not apply operational models, course content, and outside research to support position. | Applies some operational models, course content, and outside research to support position. | Applies operational models, course content, and outside research to support position. | Applies most operational models, course content, and outside research to support position. | Completely and effectively applies operational models, course content, and outside research to support position. | | Analyzes case, and recommends actions (CC3) | Does not discuss options and/or implications and tradeoffs. May not support position with research. | Somewhat discusses options, implications and tradeoffs logically. Some research supports position. | Discusses options, implications and tradeoffs logically. Supports position with research. Flows smoothly into Recommendations | Discusses most options, implications and tradeoffs logically. Position well- supported with research. Flows smoothly into Recommendations | Completely and effectively discusses options, implications and tradeoffs logically. Fully supports position with research. Flows smoothly into Recommendations. | | Uses effective writing organization and format (CC7) | Does not communicate in clear, logical, and grammatically correct language. Uses more than 5 pages, excluding charts graphs, appendices, and references. Does not use primary research sources and/or incorrect APA format. | Communicates in ambiguous, and/or and grammatically incorrect language. Uses more than 5 pages, excluding charts graphs, appendices, and references. Uses marginal primary research sources and/or partially correct APA format. | Communicates in clear, logical, and grammatically correct language. Uses 5 pages or less, excluding charts graphs, appendices, and references. Uses adequate primary research sources and correct APA format. | Communicates in exceptionally clear, logical, and grammatically correct language. Uses 5 pages or less, excluding charts graphs, appendices, and references. Uses substantial research sources and correct APA format. | Communicates in exceptionally clear, logical, and grammatically correct language. Uses 5 pages or less, excluding charts graphs, appendices, and references. Uses significant primary research sources and correct APA format. | | OVERALL GRADE (20 total possible points)*: | |…...

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...ASSIGNMENT GUIDANCE – NRSG258 ASSESSMENT 1: CASE STUDY Dear students here are some guidelines to assist you in writing Assessment 1: Case Study. If, after reading through these, you still have questions please post on the relevant forum. If you are still unsure then please contact your campus specific lecturer to arrange to discuss your assignment. We ask that you bring these guidelines to any meeting and highlight the areas about which you are still unsure. In this case study you do not need an introduction or conclusion for this case study of 1500 WORDS ± 10% due by midnight 8th April Turnitin. Just answer the questions. Turnitin is located in your campus specific block. Although we suggest you do your background reading in the current textbooks for basic information, the case study also requires you to find current literature/research/articles to support your discussion throughout the case study. Do NOT use Better Health Channel, WedMed, dictionaries, encyclopaedias etc. These are NOT suitable academic sources. If you use these you will not meet the criteria for this question and you will lose marks. You must follow the APA referencing format as directed by ACU in your case study and in your reference list. The Library website has examples of how to do this referencing and you can find the correct format at the end of your lectures and tutorials as well as in the free Student Study Guide. This essay should have approximately 10 relevant sources.......

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