1. Charley’s family steak house

2. Class Announcements Service Learning Assignment:
Progress Report should be completed one week after initial meeting with the client – those submitted will be returned next class
Final presentations should include Danika LeBlanc or I
Service Learning Final Report (group) due March 31st (flexible)
Final Exam 7:00pm April 11, 2014 in SCHW
Assignment #5 due April 3rd; available on-line

3. Class Objectives Considering the components of performance measurement
Understanding performance measurement effectiveness
Linking performance measurement to compensation

4. Charley’s Family Steak House
Company Context:
Charley Turner’s four steak restaurants
Located in a rapidly growing mid-size city in Texas
Restaurant goal – best steak house in the city
Characterized by:
Pleasant atmosphere
Fast and courteous service
High quality food
Freshly prepared good
Reasonable prices
Innovative express lunch option

5. Charley’s Family Steak House
Company Context: Unit 2
Alex Pearson is the manager of Charley’s Steakhouse Unit 2 (since one year)
Seating for 150 customers
Employs people
Menu featured 4-6 items in each of four categories ranging in price from $1.99 (Small salad) to $ (Lobster dinner)
Feature an express service for frequent lunch time customers

6. Charley’s Family Steak House
Company Context: Customer Segments
Community
Located next to a shopping mall
Business community
Offices are nearby
No eating establishment within one mile radius
Hotel
100 room budget motel with no restaurant within walking distance

7. Charley’s Family Steak House
Company Context: Evaluation
Plans to implement a new bonus plan
25% of salary in bonuses
Specific performance measures not yet determined
Suggestions from managers not solicited
Comparison between budget and actual
Original budget prepared was aggressive and optimistic
Profit is $46,490 less than planned
Severity of the recent recession

8. Charley’s Family Steak House
Issues:
How did actual sales compare with planned sales?
Profit is $46,490 less than planned
Actual sales vs planned sales – variance analysis
Sales mix analysis
Customer use of coupons
How well were costs and expenses controlled?
Actual expenses vs planned expenses – variance analysis
Performance Evaluation
Comparison of planned vs actual
New bonus plan

9. Charley’s Family Steak House

10. Charley’s Family Steak House

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19. Charley’s Family Steak House
Conclusions: Budget vs Actual
Actual operating profit for Unit 2 is $47,490 less than anticipated
Actual profit for Unit 2 is $62,180 less than the flexible budget
Customer mix change from 40/60 to 50/50 which changed weighted contribution margin from $1.84 to $1.63 per customer
Customers made use of coupons in greater number than anticipated perhaps because of the recession ($105,213 more than anticipated).

20. Charley’s Family Steak House
Conclusions: Evaluation System
Participatory – no consultation
Inventive and risk – none communicated
Goal congruence – not linked to overall except generally (e.g. best steak house in town)
Fair and objective – unknown measures
Attainable – Optimistic and aggressive, high expectations.

21. Charley’s Family Steak House
Conclusions: Evaluation System - Controllability
Prices - are set (over 10%) by Charley
Ordering - of food done centrally
Coupons (discount) - good at all four locations
Recent economic recession -was not forcastable
Advertising - is managed by Charley
Management charge - is assessed by Charley

22. Class Objectives - Revisited
Considering the components of performance measurement
Understanding performance measurement effectiveness
Linking performance measurement to compensation