Organization Study of Pizza Hut
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Published: Thu, 18 May 2017
Pizza Hut (known as Pizza Hut, Inc.) is an American restaurant chain and international franchise that offers different styles of pizza with other side dishes including pasta, buffalo wings, breadsticks, and garlic bread. Pizza Hut is a subsidiary of Yum! Brands, Inc.( A parent body which has headquarter in Dubai. They provide raw materials and standard for Pizza Hut (Peshawar) to follow and they have a right to seal the business if Pizza Hut doesn’t follow their standard). Pizza Hut Pakistan has 40 outlets all over Pakistan and its headquarters are in Lahore and Karachi respectively.
Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita, Kansas. When a friend suggested opening a pizza parlor, they agreed that the idea could prove successful, and they borrowed $600 from their mother to start a business with partner John Bender. Renting a small building and purchasing secondhand equipment to make pizzas, the Carneys and Bender opened the first “Pizza Hut” restaurant; on opening night, they gave pizza away to encourage community interest. They chose the name “Pizza Hut” since the sign they purchased only had enough space for nine characters and spaces. Additional restaurants were opened, with the first franchise unit opening in 1959 in Topeka, Kansas. The original Pizza Hut building was later relocated to the Wichita State University campus.
Chicken Wings — Rs. 120 for 6 Pieces, Rs 225 for 12 Pieces
Flaming Wings — Rs. 135 for 6 Pieces, Rs. 255 for 12 Pieces.
Pizza Hut Platter 2 — 365 Rs.
Bruschetta – 195 Rs.
Kebab Stuffers – 195 Rs. 4 Pieces
Pizza Hut Platter 1 – 365 Rs.
BBQ Chicken Spin Rolls – 195 Rs
Behari Chicken Spin Rolls – 195 Rs.
P1: Give a proper definition of Operations Management and discuss the salient features of the definition
“Operations Management is concerned with the production of goods and services. It deals with the management of resources (inputs: machines, raw materials, human skills, etc), and the distribution of finished goods and services (outputs) to the customers”.
There are two types of business Operations:
If a” company has the potential to produce tangible goods, it is referred to as manufacturing business companies” Manufacturing operations deal with goods/tangible products. Example industries: Agriculture, forestry and fishing, Mining, Construction, etc.
“The companies who do not produce tangible products are referred to as service business companies”. Some service operations deal with tangible outputs even though they do not manufacture a product: examples are distributors, mail service, library, etc. Other service operations deal with intangible products. These are pure service operations: examples are financial advice, counseling, etc
Operation manager is the integral part of the organization. He deals with employees directly; he shows the way work should be done in different departments of the organization. He supervises the progress and make sure that each task is completed on time. Operation managers every where are given the largest budget of the organization so that he can utilize them and produce results. He is responsible to arrange supplies of equipments, raw materials, labors etc needed to convert input in to outputs (products). Therefore, operations function plays a significant role in success of businesses
Key salient features of this definition are:
Products or services must be developed,
Materials must be purchased,
Facilities must be maintained,
Products or services must be distributed, and so on
Inputs Operations Function
Output Customers (Fig 1.0)
M1: In the context of selected business apply the operation management definition given in P1. Explain the salient feature you find in the business being studied?
During the interview the regional (Peshawar) manager of Pizza hut, told us that their headquarters are in Lahore and Karachi respectively, where their head operations department is situated. He said that they call their operation manager as a coaching master. According to him as Pizza Hut is a multinational company so it is bound to follow the international standard in Pakistan. The body that provides basic Pizza raw materials, policies and standard is Yum incorporation which is situated in Dubai.
According to him, their Coaching master is responsible to follow the Yum standard policies. He receives raw material through ship from Yum, Dubai and then he supplies them to their warehouse in Lahore. This Coaching master has very good relationship with his other branch managers. He make sure that the raw materials required to make pizza are delivered to Pizza hut regional branches in time because the basic rule of Yum is that daily some materials required should be utilized within 12 hours. The remaining materials should be disposed off. He has good relationship with K&N and Pepsi because they are needed for daily use and needed to be delivered to each branches. He has created a team culture for each branches of Pizza Hut and assigned a role of team leader to the respective manager of each branches. Then it’s the manager’s responsibility that how well he trains his supporting staff in order to achieve the operations objectives.
According to the manager of Pizza Hut Peshawar he has 60 supporting workers who work in two shifts. First shift from 9am to 5pm and second shift from 7pm to 3am. He weekly receives raw materials from their warehouse and from K&N. Then he monitors the kitchen work where the raw materials are converted in Pizzas and other dishes. Then he make sure his waiters politely receive the customers and with their orders and try to deliver them as soon as possible. They have also given the facility of take away where customers come and take item with them. And the manager is also responsible for the marketing strategy of the Pizza Hut marketing department to provide free delivery services till 20 km.
The points discussed above is relating to the salient features of operation management that is of Products or services must be developed, Materials must be purchased, Facilities must be maintained, Products or services must be distributed, and so on. In Pizza Hut operation manager provides materials and labors services, receive supplies from Yum and supply them to each branches, he is responsible to provide good environment for the customers and his workers and facilities to his customers. The products are then provided to the customers. So in general, in pizza hut operations department in Karachi is responsible for the success of Pizza Hut (Pakistan).
P2: How operation management interlinks with other function of given organization. (Finance, Marketing, Administration, Inventory Management etc)
Operations management needs to be well integrated with other parts of business. Operations management is one of 3 prime functions of Pizza Hut
Works of 3 primary functions above overlaps each other and all 3 department work together to reach the overall objectives of Pizza Hut. As I said above that operations manager of Pizza Hut is responsible for the following:
He is responsible to receive the supplies of raw materials from Yum Dubai so he needs to have good relations with account department (Finance) because for importing Raw material from Yum. Inc he needs money which he can get from the finance departments of Pizza Hut in Karachi.
He is responsible to make sure that they keep following the standard policies of Yum Inc. In this situation he needs the help of the administration and the employees if the administration provides incentives to the employees they will be motivated and they will work for the success of Pizza Hut by following the roles of Yum.
One of the functions of operation manager is to train his current employees, compensate them. For compensating the employees he needs the help of the Finance department. For this purpose he has promoted team culture every one works together for the success.
For supply raw material to the regional branches from their warehouse the operation manager need the help of the stock management of the warehouse to supply the raw material through fast means of transport.
For attracting customers for dishes, the operations manager requires a good advertisement of the meals packages from Pizza Hut Marketing Department.
As we discussed above that operation management is the integral part of the organization and they are responsible for the success of the every organization but they can not achieve their objectives without the help of Marketing, Finance, Stock management departments of the organization. Therefore the operations management of Pizza Hut needs to have good relationship with their marketing, finance, stock departments and the employees of Pizza Hut in order to implement their practices effectively.
P3: Analyze the value chain and five performance objective on the given organization.
You should give a general description of the value chain and fiver performance objectives in your answer
Value Chain of Pizza Hut
Primary Activities are related to raw materials, weekly stock process, production by orders, and delivery/services and sales.
Raw Material: According to the manager of Pizza Hut Peshawar, he said that they receives their raw materials on weekly basis from their warehouse (Lahore). Firstly the raw materials of Pizzas comes to Karachi through ship from Yum incorporation (Dubai) then Karachi branch is responsible for delivering raw materials to Lahore warehouse and finally they send it to Peshawar branch while for soft drinks and chickens they have a contract with fresh vegetables suppliers, Pepsi and K&N respectively for delivering them fresh vegetables, soft drinks and chickens on daily basis.
Weekly Stock Process: Pizza Hut has got freezers for keeping the stock on weekly basis because their warehouses are at Lahore and Karachi so it’s hard for them to order raw materials on daily basis while other things like fresh vegetables, Pepsi and chickens are being ordered on daily basis because they want to utilize fresh chickens, vegetables and so on. And they are buying Masala for a week, because Masala is something which can’t get ruin so that’s why they buy it for a week.
Cooking/Operation: According to the manager of Pizza Hut Peshawar, currently he has got 60 supporting workers who work in two shifts. First shift from 9am to 5pm and second shift from 7pm to 3am so for running pizza hut, they have divided their staff in different categories like there are some waiters who gets an order at hall and some of the waiters are responsible to take orders at take away and receptionist takes an order through telephone calls, so they gives order to operation department through Computer Network and the order passes to Order Filler then he pass the order to Order Checker and he is passing it to the Cook. When the given ordered gets ready then Cook gives the given ordered Pizzas and etc to Order Filler and he is gives it to Waiter for serving the customer and this whole process takes only 15 minutes.
Serving Customers: Pizza Hut has different types of waiters which are as follows:
Take Away: They take orders from customers and passing the order to operation department through Order Filler and Order Checker respectively after that when the given order gets ready then Order Filler is responsible to deliver the item to take away, for serving those customers who wants to take Pizzas with themselves.
Waiters: Pizza Hut’s waiters take an order and passes it to order filler for delivering Pizzas to customers
Sales: – There main focus is providing best quality foods within few minutes of given orders to deliver Pizzas in 15 minutes so their fast services along with best quality of Pizzas are generating customer satisfaction which leads towards high profit.
Support Activities provides purchased raw materials, and human resources to support the primary activities.
Manager: He is the responsible person for providing raw materials from their warehouse (Lahore) on weekly basis and soft drinks, chickens and fresh vegetables are being ordered to their contractor on daily basis and he is keep hanging under the roof of Pizza Hut all around in order to generate profits.
Customer Care (Take Away, Waiters, Supplier (Free Home Delivery), Finance Manager and Guards)
They are contributing at different levels for increasing the sales which are the following:
Take Away: They take orders from customers and passing the order to Operation Department for serving that customer who wants to buy Pizzas on the spot due to which their sale increases.
Waiters: – At Pizza Hut there are some waiters which work inside the organization and they are responsible to take orders from the customers.
Supplier (Free Home Delivery): They are only responsible for delivering Pizzas in order to generate revenue from those customers who gives an order of Pizzas delivery.
Finance Manager: In order to keep the record of budget manager himself and a subordinate is holding the responsibility of payment procedures that they have a better financial management.
Operation Department (Cooks and Bakers): They are responsible for the process of cooking best quality Pizzas.
Five Performance Objectives
Quality: Pizza Hut is known by their best of quality pizza in Peshawar. They are buying raw materials from Yum (Dubai), staffs are well-trained and they are using latest equipments which are helping them to serve the customers with best pizzas.
Speed: Pizza Hut is delivering pizzas to their customers within 15 minutes. It shows that how much they are efficient in the process of baking pizza with the help of trained staffs and latest technologies.
Dependability: As earlier we have discussed that their raw materials are coming from Lahore (warehouses) in order to provide best quality of pizzas but ordering raw materials can make them in trouble because sometimes uncertainty can occur now a days in Peshawar and around Pakistan while if we talk about customers they are more depended on them, as they get orders then they have to deliver the pizzas on time and they are really efficient in delivering pizzas because it takes only 15 minutes right after order.
Flexibility: It tends to be effective with the changes of customers taste, design and so on. Pizza Hut’s major specialty is in Pizza but moreover they have introduced different meals along with pizza and they are offering pizzas in different sizes and packages for their customers which show that they are really trying to satisfy their customers.
Cost: Pizza Hut is charging high prizes of their pizzas due to their expensive raw materials, professional staff, monopoly in the market of Pizza at Peshawar, so if they try to have a warehouse here in Peshawar then it will bring changes in their activities like they will not face the problem of raw materials delivery even if any uncertainty happens.
M2: Discuss different environmental auditing techniques and how these techniques affecting operation management of given organization.
Environmental Auditing Techniques
Volume refers to the number of times that an operation has to deliver a service of product. An operation dealing with high volume should be designed to process the demands placed upon it more speedily than the operation meeting lower volume.
(2nd Edition, Operations Management in Context by Frank Rowbotham)
According to the Manager of Pizza Hut Peshawar, He is the responsible person to check each and everything on daily basis. He is providing raw materials for production department (kitchen) and he is always trying to keep an eye over front desk, hall, waiters, suppliers and distributors (those who do free home delivery). All these works are done by the manager on daily basis and regularly with intend of satisfying customers by delivering their meal orders speedily, in order to provide quick service to them.
It describes the patterns of volume demands. If there are many peaks and troughs in demand the situation is said to be one of high variation. The challenge in this case is to design an operation that can provide the correct level of capacity to meet this pattern. Carrying extra capacity in the times of low demand is inherently expensive, involving under-utilization of key resources such as staff, technology and facilities.
(2nd Edition, Operations Management in Context by Frank Rowbotham)
Changing their work processes and work designs according to change in the taste of customers is a big challenge for Pizza Hut. In the world today customers want changes and want to taste different products and food items. Pizza Hut is specialized in Providing quality pizzas but now in Peshawar new restaurants are opening offering new tastes and dishes which are giving tough time to Pizza Hut and their sales have been affected by it tremendously, keeping in view these environmental affecting factors Pizza Hut has now introduced new items in their meals and are committed to introduce new dishes. They have invested a lot on new technological kitchen equipments in order to compete with competitor and maintain their standards.
Variety is the term applied to the number of different types of services or products demanded. High variety environments require different services or products on a frequent basis, whereas low variety demands look for the same output most of the time. An operation facing high variety has to be designed to provide appropriate level of flexibility. This flexibility will be usually expensive compared to the costs of operation designed to cope with low variety.
(2nd Edition, Operations Management in Context by Frank Rowbotham)
As we have discussed above that people want change in whatever they do or would like to have and as far as pizza Hut is concern it is specialized in pizza coping with high demand is very difficult task for the operation manager of Pizza Hut in Karachi because previously he was providing raw materials for producing Pizzas in each branches of Pizza Hut now with change in demand they will have to introduce new dishes in their menu for that purpose he needs to arrange raw materials, cooks in each branches for these new dishes. Providing quick service to the customer is very important aspect of operation manager so he needs to train his staff to deliver orders on time effectively. Coping with high variety is a more challenging managerial task than dealing with low variety.
The customer contact dimension is concerned with how much time the personnel of operation have to spend with their customers. Customers are independent of the operation unlike its staff. The more those customers involved, the greater is challenge to the planning and control of operation manager.
(2nd Edition, Operations Management in Context by Frank Rowbotham)
The manager who is responsible to control the operations of the Pizza Hut Peshawar branch deals with customers regularly on daily basis. He makes sure that customers are treated fairly in with a fair environment otherwise, customers can be disappointed and they would not want to visit them again which can affect the business. He is always involve with customers and try to deliver their orders quickly. When customers come and while going the manager says welcome and bye from the front desk. In order to satisfy their customers the manager of Pizza Hut spend a lot of time with his supporting staff making sure that every work has to be done on time in order to satisfy their customers.
D1: Recommend how the studied organization can improve its operation performance on the basis of environmental analysis
Pizza Hut has to bring the changes in pizza size, because Pakistani people always prefer and go with a big pizza
Pizza Hut has to launch the concept of “Eat as much as you can” in specific period of time. Obviously, the volume of their customer will be increase, as result they will earn more profit.
The Peshawar Pizza Hut has to provide the facilities of parking area for the families. The parking area should provide specious
And another problem is in their call centre for order; because their call system is centralized from Karachi. For example if a Peshawar customer call for order ,its call will be connected with Karachi branch and how the Karachi center know about the terrific of Peshawar as result the delivery probably takes much time around 55 minutes and the customer feel unsatisfied. They have to change the centralized call system to local system
And there is No information of local delivery system in their website
The location of Peshawar Pizza Hut is not best from business point of view because it residential area and another point is , as it is far away from Hayatabad and University Town that is their center of attraction as discussed earlier. So the location they are having has both plus and weak points for them as well.
The Peshawar Pizza Hut looks very nice from outside (Facade) but they don’t take care of cleanliness inside of restaurant which will be having direct impact on customer health. They have to be very careful about cleanliness
Overall Pizza Hut should widen their product line by bringing in more items in their menus, e.g. more deserts, which are affordable, and appetizers etc. increasing the serving size especially in the case of salads can become a motivating factor for Pizza Hut. They should delete or omit items which are not in use or not preferred by the consumers such as the thin crust pizza
During Ramadan many people face along lines and are unable to utilize the Ramadan deal. For this Pizza Hut should have one more outlet in a locality.
The Pizza Hut should used the odd number technique i.e. rather than saying a big pizza Rs.900 they should use or say Rs899. This makes the customer think that they are getting a good bargaining
In Peshawar the Pizza Hut should open another outlet in the area of Hayatabad, because the people of Hayatabad are very interested with Pizza Hut’s pizza, but due to their far location, people mostly prefer to go to CHIEF BURGER.
Pizza Hut has re-generated its menu and should keep in mind in doing it again and again. They offered new products and should generate and promote their other items such as pastas and spaghettis. Many consumers have complained that Pizza Hut should become a total restaurant that is they should offer different type of desserts at affordable prices. The dessert offered at the moment are either too expensive or are not worth it.
A small decrease in the prices of products can attract prospect customers. The reduction can be covered by the increase in the prices of Drinks, as consumers do not look at the price of sodas when ordering it.
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