Gary M. Thompson

Restaurant Revenue Management at Chevys: Determining the Best Table Mix

Revenue management has been used in a variety of industries and generally takes the form of managing demand by manipulating length of customer usage and price. Supply mix is rarely considered, although it can have considerable impact on revenue. In this research, we focused on developing an optimal supply mix, specifically on determining the supply mix that would maximize revenue. We used data from a Chevys restaurant, part of a large chain of Mexican restaurants, in conjunction with a simulation model to evaluate and enumerate all possible supply (table) mixes. Compared to the restaurants existing table mix, the optimal mix is capable of handling a 30% increase in customer volume without increasing waiting times beyond their original levels. While our study was in a restaurant context, the results of this research are applicable to other service businesses.

Effective Design of Products/Services: An Approach Based on Integration of Marketing and Operations Management Decisions

This paper presents an integrated framework for designing profit-maximizing products/ services, which can also be produced at reasonable operating difficulty levels. Operating difficulty is represented as a function of product and process attributes, and measures a firms relative ease or difficulty in meeting customer demand patterns under specified operating conditions. Earlier optimum product design procedures have not considered. operational difficulty. We show that optimum profit, market share, cost, and product profiles are dependent on operating difficulty level. Empirical results from the pizza delivery industry demonstrate the value of the proposed Effective Product/Service Design approach.

Labor staffing and scheduling models for controlling service levels

The problems of labor staffing and scheduling have received substantial attention in the literature. We introduce two new models of the labor staffing and scheduling problems that avoid the limitations of existing models. Collectively, the models have five important attributes. First, both models ensure the delivery of a minimally acceptable level of service in all periods. Second, one model can identify the least expensive way of delivering a specified aggregate level of customer service (the labor staffing problem and a form of labor scheduling problem). Third, the other model can identify the highest level of service attainable with a fixed amount of labor (the other form of the labor scheduling problem). Fourth, the models enable managers to identify the pareto relationship between labor costs and customer service. Fifth, the models allow a degree of control over service levels that is unattainable with existing models. Because of these attributes, which existing models largely do not possess, we expect these models to have broad applicability in a wide range of organizations operating in both competitive and noncompetitive environments.

A morphing procedure to supplement a simulated annealing heuristic for cost‐ andcoverage‐correlated set‐covering problems

We report on the use of a morphing procedure in a simulated annealing (SA) heuristicdeveloped for set‐covering problems (SCPs). Morphing enables the replacement of columnsin solution with similar but more effective columns (morphs). We developed this procedureto solve minimum cardinality set‐covering problems (MCSCPs) containing columns whichexhibit high degrees of coverage correlation, and weighted set‐covering problems (WSCPs)that exhibit high degrees of both cost correlation and coverage correlation. Such correlationstructures are contained in a wide variety of real‐world problems including many scheduling,design, and location applications. In a large computational study, we found that the morphingprocedure does not degrade the performance of an SA heuristic for SCPs with low degreesof cost and coverage correlation (given a reasonable amount of computation time), and thatit improves the performance of an SA heuristic for problems with high degrees of suchcorrelations.

Configuring Service Operations in Accordance with Customer Needs and Preferences

This study presents an approach for effective service operations management by integrating market-based objectives and operating decisions of managers. This approach is based on constructs from operations management, econometrics, and marketing and can be used by managers to make better decisions about product/service design and positioning services according to market needs. Empirical data for this study were collected from the pizza delivery industry in a large metropolitan area in the western United States. Pizza delivery profiles were experimentally designed based on seven attributes: promised delivery time, actual delivery time, pizza variety, pizza temperature, money-back guarantee, price, and discount. An econometric procedure known as probabilistic discrete choice analysis was used to identify the customer pizza choice patterns and managers’ perceptions of customer choice patterns. The results show how customers trade off among different attributes when choosing a pizza delivery company. Managers can use this information to position their operations according to customer needs.

A simulated-annealing heuristic for shift scheduling using non-continuously available employees

Abstract This paper presents a simulated-annealing heuristic (SAH) for developing shift schedules. We assume that each employee is available only during an individually-specified portion of the day and has individually-specified limits on the duration of shifts to which he/she can be assigned. We evaluate the effectiveness of the SAH under several “neighborhood” search parameters using a primary set of 144 test problems. These parameters include numerous criteria for adding shifts during schedule construction and for dropping shifts during schedule improvement. Our results allow us to make observations regarding appropriate search “neighborhoods” in labor-scheduling and other applications for simulated-annealing. Using a secondary set of 20 test problems we compare the SAH to an efficient optimal integer-programming model. On average, SAHs schedules are 0.29% more costly than optimal schedules but are obtained in 8.4% of the time required to generate optimal schedules.

Unifying Service Marketing and Operations With Service Experience Management

One of the pioneer firms in the leisure cruise industry embarked on a bold idea in 2000 to offer an unregimented experience unlike most cruises. Despite the appeal of the concept from a marketing perspective, the service innovation posed operational challenges, many of which continue to undermine the firms competitive position. Using a multimethod empirical approach and interdisciplinary views that draw on research from marketing and operations management, the authors analyze this business case to identify challenges that service firms face when services are developed and managed from siloed functional perspectives. Based on their research findings and guided by the literature, the authors derive a service-systems model to aid service planning and management. The authors further highlight a new organizational form and function for services under the domain of service experience management that is positioned as a means to unify service operations and marketing for delivering on service promises. The authors offer direction for further research on service operations systems and service experience management.

Variable employee productivity in workforce scheduling

This paper considers the problem of developing workforce schedules using groups of employees having different productivity. We show that the existing linear representation of this problem is often inaccurate for high-contact service organizations because it ignores the stochastic nature of customer arrivals. Specifically, the existing representation commonly overestimates the number of less productive employees necessary to deliver a specified, waiting time-based customer service level. We present a new, nonlinear representation of this staffing problem that captures its nonlinear nature and demonstrate its superiority via an extensive set of labor tour scheduling problems for the two-group case.

Restaurant Profitability Management The Evolution of Restaurant Revenue Management

While the term restaurant revenue management was defined in this journal in 1998, the history of publications in the Cornell Hospitality Quarterly (CHQ) related to managing restaurant profitability spans nearly fifty years. Of the 160 published articles related to restaurant profitability, more than one-quarter have appeared in the CHQ, which is more than three times that of any other journal. This article presents a new, decision-based framework for restaurant profitability, which expands on the earlier revenue-focused framework. The existing CHQ articles are categorized using the framework, and the gaps are used as the basis for identifying a large number of worthwhile, but as yet unanswered research questions related to restaurant profitability.

Optimizing restaurant-table configurations: specifying combinable tables.

Excerpt] Having the right-size tables in a position to be combined with other tables to serve large parties can yield additional revenue at virtually no added cost. This article focuses on restaurants with walk-in customers (no reservations are taken), where a host or hostess seats the parties and where parties are seated separately. Restaurants of this kind are common in the United States (e.g., TGIF, Chili’s, Applebee’s). Specifically, this article examines the issue of which tables should be combinable with which other tables. “Combinability” is the ability to create a larger table from adjacent smaller tables. For example, combinability would allow two adjacent 4-top tables to be combined to seat parties of up eight people.’ In an earlier investigation I found that, in many cases, having tables dedicated to specific party sizes was preferable to having combinable tables.* The reason for this was that placing tables on hold, while waiting for customers to depart an adjacent table that can then be combined with the empty onhold table, imposes a non-productive idle time for the on-hold tables.