A franchise upscale frozen dessert restaurant HARVARD EXTENSION SCHOOL MGMT – E5060 Operations Management Spring 2013 TAT @ Pinkberry, Inc. A franchise upscale frozen dessert restaurant Hathi Nguyen Jordan Drake Kaodi Ugoji Pratima Puttagunta Ram Turaga Claire Helene Orsini Team Kaizen:

What is ? Handcraft Yogurt Bar Located in Harvard Square Sell Frozen Yogurts “FroYo” Seating capacity: 16 customers Staff: 1shift leader, 5 servers Gross Sales/year: $1.26M (2012) Average check: $6.07 Average daily check count : 576

The Menu: 1, 2, 3 Steps! Pick your flavor Add your topping(s) Get your FroYo! Original Frozen Yogurt Greek Yogurt Seasonal Frozen Yogurt Key Lime Chocolate Hazelnut Coconut Grapefruit Lychee Mango Peach Pumpkin Passion-fruit Strawberry Pomegranate Gingerbread

The “FroYo” Process 8 min 40s/ peak period 10 min / 3 buckets Buffer Kitchen Table Front Counter Topping Bar Finish Order Low-Fat Milk Inventory (Freezer Storage) Mix the ingredients together in a measuring bucket using a mixer Pour pre-mixed solution in the yogurt machine Taking Order + Order Assembly Low-Fat Yogurt Flavor powder Fruits cut and Prepare Dry Toppings Adding Toppings --------------------------------- 10 min / 3 buckets 5 min / bucket Delivery and Payment Total Time is 23 min 40s

The “FroYo” Process 8 min 40s/ peak period 10 min / 3 buckets Buffer Kitchen Table Front Counter Topping Bar Finish Order Low-Fat Milk Inventory (Freezer Storage) Mix the ingredients together in a measuring bucket using a mixer Pour pre-mixed solution in the yogurt machine Taking Order + Order Assembly Low-Fat Yogurt Flavor powder Fruits cut and Prepare Dry Toppings Adding Toppings --------------------------------- 10 min / 3 buckets 5 min / bucket Delivery and Payment Total Time is 23 min 40s

Customer Experience Assembly and Payment Choice of Toppings Customers enter the store Immediately prompt to enter queue Server offers sample and takes order Choice of Toppings Assembly and Payment Customer Experience

So what’s the problem? T.A.T!

Turn Around Time x3 x2 Over 7 people, TAT = 8min40s PEAK DEMAND Customers enter the store Immediately prompt to enter queue Server offers sample and takes order Choice of Toppings Assembly and Payment x2 4 – 6 people, TAT = 5min AVERAGE DEMAND 1 – 3 people, TAT = 3min LOW DEMAND

Customer Experience at Peak Period Seating Area Entrance Tasting Cashier 4 Servers 3 2 1 Menu Yogurt Machines Counter space for Smoothie Topping Serving Counter Register 1 Register 2 One Main Queue 1 Minutes 10 Seconds 3 Minutes 30 Seconds 4 Minutes Total TAT: 8 Min 40 Sec

Voice of Customer *Samples based on survey from 28 customers

So How to Improve T.A.T AND Keep Customer Experience?

The Bottlenecks at Peak Period Identified bottlenecks: Choosing/tasting FroYo Choosing toppings Payment Process Store Response: Increase servers to 4 Add 1 extra cashier occasionally

Recommendations: Option A Topping Serving Counter Express Line Register 1 Register 2 The Main Queue Seating Area Entrance Tasting Cashier 3 Servers Server and Cashier 3 2 1 Menu Yogurt Machines Counter space for Smoothie 35 Seconds 3 Minutes 30 Seconds 2 Minutes Total TAT: 3 Min 55 Sec Total TAT: 6 Min 5 Sec

Recommendations: Option B 1 2 3 Counter space for Smoothie Menu Yogurt Machines Cashier 3 Servers Sampling Staff Topping Serving Counter Register 1 Register 2 The Main Queue 2 Minutes 10 Seconds Tasting Area 35 Seconds 2 Minutes 25 s Total TAT: 5 Min 10 Sec Seating Area Entrance

Other Value-Add Recommendations du jour Introduction of Daily Recommendations: “Special FroYo du Jour” “Healthy FroYo du Jour” Separate Free and Premium Toppings

Estimated Impact on C-Q-D and Gross Sales Option-A Option-B Delivery at Peak Period (TAT Reduction) Quality (Customer Experience) Cost Gross Sales* 48% 40% 34% 28% Assumption: 70% of the Gross Sales are generated at peak period

TEAM KAIZEN THANKS YOU! Hope you had fun… we did! Q&A?

ADDITIONAL SLIDES

Customer Experience PEAK DEMAND Payment Choice of toppings and assembly Server offers sample and takes order Immediately prompt to enter queue 8m40s! Customers enter the store 4 min 2m10s 1m20s 1m10s

The Pinkberry Team Chart 1 District Manager 1 Store Manager 5 Fruit Cutters 5 Shift Leaders 17 Part-Time Members (Servers)

Recommendations: Option A INTRODUCE AN “EXPRESS QUEUE” AND ADD EXTRA CASHIER Express Queue Normal Queue Enter Queue : 2m Choice of FroYo & Toppings: 20s Order Assembly: 1m Payment: 35s TAT = 3min55 Time gain = 4min45s Enter Queue: 2m FroYo Tasting & Selection: 1m30 Choice of Toppings: 1m Assembly 1m Payment 35s TAT = 6min5s Time gain = 2m35

Recommendations: Option B INTRODUCING A TASTING AREA, ADD PAYMENT CASHIER Normal Queue TAS TING AREA Enter Queue: 2m25s FroYo Selection: 10s Choice of Toppings: 1m Assembly 1m Payment 35s TAT = 5min10s Time gain = 3min30s

How is competition different? Customer prompt to enter queue Sample tasting Choice of FroYo based flavor Choice of topping --------------------------- Order Assembly Payment Customer prompt to enter queue Sample tasting Choice of FroYo base flavor Payment & Assembly Choice of topping > TAT : 3min / 5 min / 8min40s TAT : 1min / 3min40s / 3min40s

Competition: The Berryline Experience 1 2 Menu Yogurt Machines 2 Servers Cashier Local brand Harvard Square Max TaT 3min40 Less demand (never more than 6 customers at a time) Tasting Topping Serving Counter Register 1 One Main Queue Total TAT: 3 Min 40 Sec Seating Area Entrance

Detailed Impact of TAT on Gross Sales   Today Option-A Option-B Express Normal Avg. TAT* TAT 8m 40s 3m 55s 6m 5s 4m 30s 5m 10s TAT in seconds 520 235 365 270 310 % increase in TAT 55% 30% 48% 40% % increase in Gross Sales for Peak Period Million Dollar increase in Gross Sales for Peak Period ** 0.43 0.36 Gross Sales for 2012 (dollar million) 1.276 1.70 1.63 % increase in Gross Sales 33.59 27.99 Assumptions * Incoming customers are divided between the two lanes equally ** 70% of the gross sales ($0.893 million) are generated at peak period