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Executive Summary
In 1992, The Little Bean Café opened its first store in Orlando, Florida, which became its flagship store. Due to the high demand of coffee and the café’s appealing environment, the café experienced an increase in yearly sales turning it into one of the fastest growing coffee shops in America. Thanks to the steady growth, The Little Bean Café opened its 100th store in 2011. In 2011 the expected sales did not meet the anticipated forecast. The Little Bean Café had seen an increase in the amount of ingredients and supplies purchased in 2011, but the Orlando location had seen a decrease of 26% from their 2010 sales figures. Management was concerned about the increase of supplies purchased and decreasing sales. Beginning on March 1, 2011 and ending on July 15, 2011, a needs assessment was conducted to determine the root causes and to recommend interventions to assuage performance issues.
This report outlines whether the decrease in sales and increase in supplies was due to product deficiency, inadequate inventory control, sub-par service levels, lack of loss prevention management or other micro-environmental factors.
Scope of Analysis
This report consists of data collected through procurement and analysis of historical and current financial statements, purchase orders, inventory records and other extant data. Data was taken from corporate archives as well as local cafe records. Local records were available through management of the Orlando flagship location. Workplace analysis, staff observations and customer feedback were collected to determine workflow and procedural flaws. Both internal and external interviews were conducted with customers, vendors, and employees.
Tools and techniques for gathering information included extant data analysis, surveys/ questionnaires, formal and informal interviews and observations.
Results Summary
Needs assessment procedures indicated several areas of concern. The flagship store had missed its optimal supply purchase levels by an excess of 3%. Corporate protocols allow for any single store to come within 3% of its approved budget. Stores are assessed on a quarterly basis.
Reasons for a loss in store accountability have been identified as inventory control issues, poor measurement and waste management procedures, and general unawareness from management. There had previously been a lack of motivation to identify, address and correct issues.
Table of Contents
Executive Summary 2
Table of Contents 4
1.0 Introduction 5
1.1 Context 5
1.2 Problem Statement and Purpose 5
1.3 Rationale 5
2.0 Methods 6 - 12
2.1 Information Sources 10
2.2 Data Gathering Tools and Techniques 11
2.3 Schedule and Procedure 11-12
2.4 Constraints 12
3.0 Results 13
3.1 Optimal Performance 13
3.2 Actual Performance 13
3.3 Causes for Identified Discrepancies 14
3.4 Proposed Solutions 14
4.0 Recommendations 15
4.1 Description of Solutions 15
4.2 Justification for Solutions 15
Appendix A – Customer Questionnaire Results 16-17
Appendix B – Barista Questionnaire Results 18-20
Appendix C– Manager Questionnaire Results 21-23
Appendix D– Vendor Questionnaire Results 24
Appendix E– Competitor Questionnaire Results 25
Appendix F – Barista Interview Results 26
Appendix G – Manager Interview Results 27
Appendix H – Vendor Interview Results 28
Appendix I – Observation Results 29
1.0 Introduction
1.1 Context
Coffee shops have become a way of life for most Americans. Millions of people have always relied upon their daily “caffeine fix”. The specialty coffee business has grown by leaps and bounds despite recessions and personal financial cutbacks. Thanks to corporations such as Starbucks, Tim Horton’s, Caribou Coffee and Dunkin Donuts, specialty coffee drinks have become a staple and expectation for consumers.
The Little Bean Café offers an appealing environment where patrons can enjoy a quality beverage and a relaxing atmosphere. It has become a place to get a quick caffeine jolt on your way to work, relax with a book, or catch up with friends and family. Their menu consists of the standard coffeehouse fare such as brewed coffee, lattes and such. They offer specialty flavors for seasons and holidays as well as a few gourmet snacks.
With a chain of 100 stores, and having been in business for almost 20 years, The Little Bean Cafe is no stranger to the coffee business and has generally seen increased profit in the past with exception of 2011. In 2011, the amount of money being spent on supplies, food products and ingredients has drastically risen without a comparable increase in revenue.
1.2 Problem Statement and Purpose
Statement
The Little Bean Café has seen an increase in the amount of ingredients and supplies purchased in 2011, but they have seen a decrease of 26% in their 2011 sales figures.
Purpose
The purpose of this needs assessment is to determine the cause for the large amount of wasted products and ingredients, to discover ways to decrease wasted ingredients and supplies, and to determine the causes for why additional supplies haven’t yielded additional profits.
1.3 Rationale
In 2011, in order to counteract the very steep waste of products/ingredients, a supplies inventory control system was implemented to provide the management greater control of the amount of supplies used. The ultimate goal was to align the increase of ingredients and supplies with an equal increase of profit and return on investment. The management as well as the staff both recognized that it was optimal to get a handle on this problem.
2.0 Methods
2.1 Information Sources
This section lists the information sources used to complete the needs assessment. Detailed results can be found in the appendices found at the end of the report.
Industry Study
A study was conducted on the history, growth, and popularity of gourmet coffee shops. This study provided optimal data about the gourmet coffee industry including historic, seasonal and industrial trends. This study established a description of a typical organization in the gourmet coffee business and helped The Little Bean Café measure its success in the industry as well as against competitors.
Accounting Process
The accounting process was documented and analyzed with the local management. Loss prevention data was also studied and analyzed to determine if the current situation is being caused by company policy negligence or theft taking place at the cafe. The accounting process was found to be adequate, but with some weaknesses. The weaknesses were found to be in the following areas:
• Inventory Control
• Receipts and Purchase Orders
• Supply Budgeting History
Materials Purchasing History
A purchasing history was compiled from the company records to determine the processes and the factors that lead to purchasing decisions. It was found that baristas and managers often made orders and purchases of unnecessarily excessive amounts of products, supplies, and inventory. As a general practice, purchasing needs were estimated rather than calculated by usage trends. As a result, the amounts purchased were in excess of usage amounts.
Questionnaire: Baristas
An online questionnaire, for the purpose of anonymity, was given to all baristas and support employees. The questions were structured with the purpose of determining their work attitudes, their satisfaction at work, and adherence to company rules, policies and procedures.
Interview: Baristas
The baristas were interviewed with the purpose of determining their performance and attitude on the job.
Questionnaire: Managers
A questionnaire was administered to the management staff to determine their attitudes, contentment, and satisfaction. The questionnaire also helped determine management, leadership, and mentoring abilities.
Interview: Managers
The managers were interviewed to determine if their managerial performance influenced the situation in any way. It was determined that management was generally unaware of the factors contributing to the situation and demonstrated a lack of motivation to identify, address and correct the issues.
Questionnaire: Vendor
The vendors were administered a questionnaire. The questionnaire asked questions regarding the products and service they provided to The Little Bean Café. The questionnaire provided good extant data, but none that would offer solutions to Little Bean’s situation.
Interview: Vendor
The vendors were interviewed to determine if they were a contributing factor to the situation. Conversations with the vendors indicated exemplary service, on-time and accurate deliveries. From the interviews, it was determined their service in no way contributed to the situation at The Little Bean Café.
Questionnaire: Customers
Customers were invited to participate in an online questionnaire with incentives such as free products, discounts, and prize drawings. The information to log in to the questionnaire’s website was included on the receipt. Of 3500 customers invited to participate, 2100 (60%) of customers participated. As a result, it was determined that 91% of respondents expressed overall satisfaction with The Little Bean Café’s products and services.
Questionnaire: Customers of Competitors
Bulk mailings were sent to local residents inviting them to participate in an online questionnaire website. The website offered incentives such as free products, discounts, and prize drawings for participation. The questionnaire provided a list of various cafés/coffee shops in the area and asked consumers about frequency of visits, purchasing habits, quality of service, and products of their favorite locations. 1,500 mailers that were sent and only 27% (405) responded. Results indicated The Little Bean Café had neither an advantage nor disadvantage against competitors.
Observation of Front Line Sales Process
The baristas and store processes were observed during a typical day and their actions were documented. Baristas knew they were being evaluated and may have adhered more rigidly to policies and procedures but observations still produced adequate data. It was found baristas have a good relationship with customers, but their adherences to some company policies and procedures showed some weaknesses. Baristas estimated amounts of ingredients such as milk, rather than following standard recipe amounts which resulted in excessive quantities being wasted after the preparation of the drink. Additionally, excessive fresh products were removed from the freezers and placed on display. As a result, too much product was disposed of everyday when it was not sold.
Human Resource Process
The Human Resource processes and training materials were analyzed and found to be complete, with the exception of lacking a standard policy towards gratis product. Ultimately, this was considered to be a minor factor to the situation at The Little Bean Café.
2.2 Tools and Techniques
The following tools and techniques were employed to collect the data and the information used to prepare this assessment report. A summary of the information sources, tools and techniques is listed in Table 1 below.
Extant Data Analysis
Extant data analysis was performed on sales, budgeting, purchases, expenses, inventory usage, and all accounting processes to determine the strength and accuracy of The Little Bean Café’s data. An extant data analysis of the human resources training manuals, materials, and hiring process was also performed to determine the effectiveness of the human resource policies and procedures and their hiring and training processes.
Interviews and Questionnaires
Interviews and questionnaires were utilized to analyze how baristas, managers, vendor representatives, and customers interact on day to day business activities. The questionnaires were published online to protect the anonymity of the participants. Additionally, online questionnaires were used to perform a comparison of how customers feel about other café businesses with their feelings about The Little Bean Cafe. Interviews and observations were also used to determine the tools, protocols and coffee making process used by the staff.
Subject Matter Analysis
A subject matter analysis was conducted on the gourmet coffee industry as a whole to establish the similarities and differences of The Little Bean Café’s business model.
Observation
The baristas were observed and their efforts and interactions were recorded in order to document and analyze the policies and procedures. This helped determine if any of these processes might have contributed to The Little Bean Café’s current situation.
Table 1 - NA Information Sources, Types, Tools and Techniques
|Information Sources |Information Type |Tools & Techniques |
| |Optimals |Actuals |Causes |Solutions | |
|Accounting Process | |X | | |Extant Data Analysis |
|Inventory Control | | | | | |
|Receipts and Purchase Orders | | | | | |
|Supply Budgeting History | | | | | |
|Materials Purchasing History | |X | | |Extant Data Analysis |
|Questionnaire: Baristas |X | |X |X |Questionnaires |
|Interview: Baristas |X | |X |X |Interviews |
|Questionnaire: Managers |X | |X |X |Questionnaires |
|Interview: Managers |X | |X |X |Interviews |
|Questionnaire: Vendors |X | |X |X |Questionnaires |
|Interview: Vendors |X | |X |X |Interviews |
|Questionnaire: Customers |X | | | |Questionnaires |
|Questionnaire Competitors Customers|X | | | |Questionnaires |
|Observation of Baristas Performance| |X |X |X |Observation |
|HR Process | |X |X |X |Extant |
2.3 Schedule and Procedure
Table 2 shows the tasks and procedures that were performed during the needs assessment, the team member who performed the task, and the date each task was started and completed.
Table 2 – Schedule of performed tasks
|Task |Team Member |Start Date |Finish Date |
|Requested and obtained data from the accounting |Rafael |3/1/2012 |3/5/2012 |
|department for extant data analysis including | | | |
|budgets, receipts, orders, sales reports, business| | | |
|plans, vendor receipts, orders | | | |
|Conducted extent data analysis of The Little Bean |Rafael |3/5/2012 |3/20/2012 |
|Café’s complete accounting system | | | |
|Conducted market analysis of the gourmet coffee |Rafael |3/20/2012 |3/27/2012 |
|industry. | | | |
|Requested and obtained complete list of vendors |Ryan |3/1/2012 |3/5/2012 |
|from the store manager | | | |
|Requested, obtained, and performed extent data |Ryan |3/19/2012 |4/9/2012 |
|analysis of data from the HR department including | | | |
|new hire paperwork and training materials | | | |
|Created questionnaires for managers, baristas, |Ingrid |3/1/2012 |3/15/2012 |
|vendors, The Little Bean Café customers and | | | |
|competitors’ customers, and published them on the | | | |
|web. | | | |
|Prepared and sent the mailers inviting local |Ingrid |3/15/2012 |3/30/2012 |
|residents to participate in the web questionnaire.| | | |
|Configured point of sales equipment to provide |Ingrid |4/1/2012 |4/15/2012 |
|questionnaire invitation to customers on the | | | |
|receipts. | | | |
|Obtained staff schedules from management for the |Blanca |4/1/2012 |4/10/2012 |
|purpose of interviews and observations. | | | |
|Created interview forms for managers, baristas, |Blanca |4/10/2012 |4/15/2012 |
|and vendors. | | | |
|Contacted vendors to set up and schedule vendor |Blanca |4/15/2012 |4/20/2012 |
|interviews | | | |
|Set up manager and barista interview and |Blanca |4/20/2012 |4/30/2012 |
|observation schedule | | | |
|Perform barista observations |Todd |5/1/2012 |5/15/2012 |
|Perform interviews of managers, baristas, and |Todd |5/15/2012 |5/30/2012 |
|vendors. | | | |
|Compile data from the questionnaires, interviews, |Rafael |6/1/2012 |6/15/2012 |
|observations, and extent data into analytical | | | |
|format. | | | |
|Analyze all of the collected data. |Debra |6/15/2012 |6/30/2012 |
|Complete final report |Debra |7/1/2012 |7/15/2012 |
2.4 Constraints
Possible constraints were identified in the needs assessment plan. Some of these caused minor issues when collecting the data while others did not pose a problem when completing the needs assessment.
• Lack of access to extant data, budgets, inventory reports, purchase orders and corporate documents was not an issue and did not restrict the ability to gain actuals.
• The store manager and staff were supportive and allowed observers to see the daily coffee making process. People knew they were being evaluated and may have adhered more rigidly to protocols, however important observations were still made.
• There was a small lack of participation for questionnaires from The Little Bean Café customers and an even larger lack of participation for the competitor questionnaires. The response rate for The Little Bean Café customers was 60% and desired response was 70%. The response rate for the competitors’ customers was very low at 27% with the desired response being 70%. For internal questionnaires, a response rate of 100% was achieved while only 90% was required. Even though some results did not receive the desired response rate, the data still gave a clear picture of current store processes and customer and employee attitudes.
3.0 Results
The Little Bean Café flagship store is a large coffee shop located in Orlando, FL. Decreases in sales coupled with increases in the amount of used supplies began to affect revenue. In order to find out why an excess amount of supplies had been used, evaluators employed tools to gather data as outlined in Table 1. Through analysis of extant data, observations, interviews and questionnaires, the evaluating team was able to establish optimal and actual supply usage levels for The Little Bean Cafe.
It was determined that even though attitude and satisfaction was not lacking, there was poor adherence to some rules, policies and procedures.
Conversations with the baristas brought to light difficulties staying true to the recipes and measurements required to create each menu item. They have no convenient access to recipes that would aid in creating the beverages correctly.
It was found that even though the management had good management training, they were weak in leadership and mentoring abilities. Additionally, some apathy towards finding solutions to the situation was detected.
3.1 Optimal Performance
The Little Bean Cafe’s optimal performance had been defined by the corporation’s standards as no more or less than 3% of the approved quarterly budget designated for supplies. The 3% threshold is determined by the actual supply cost +/- 3%. Supply purchasing typically occurs on a weekly basis. The Little Bean Cafe submits purchase orders through the vendors with 80% of requests fulfilled within 24 hours. The store is required to document and account for all orders upon delivery and to document all usage and waste.
3.2 Actual Performance
The Little Bean Cafe is currently running a weekly gap that averages 6% over the limit of +3% (respectively, a 9% overage) as seen in table 3.1. With supply usage in excess of 200% of the allowance, a need for intervention was established.
Table 3 – Optimal and actual costs for supplies
| |Coffee |Paper Products |Office Supplies |
|Q1 (Optimal Usage) |$12,800 |$8800 |$500 |
|Q1 (Actual Usage) |$13,568 (6% over) |$9328 (6% over) |$500 |
|Difference |$768 |$528 |$0 |
3.3 Causes for Identified Discrepancies
Causes for the 6% overage have been identified. Research has determined that the increase in supplies has not been caused by an increase in sales. After a comprehensive analysis of corporate procedures/documentation and observations of staff and customers, several factors have come to light as being out of alignment with corporate strategy and protocol.
1. Documented protocols (recipes) are not being followed as required causing an excess waste in supplies.
2. Measuring instruments have been determined to be ineffective, resulting in a large amount of waste.
3. Lack of employee incentive for adherence or consequences for deviation from approved processes.
4. Loss prevention controls were not followed, creating a loss to the company from a combination of theft and unauthorized gratis beverages.
3.4 Proposed Solutions
The following proposals have been made for possible solutions to The Little Bean Cafe’s supply loss.
1. Develop and improve job aids that train and guide employees in the process of drink making and measuring ingredients.
2. Procure appropriate tools and measuring devices to better control quantities.
3. Implement an incentive program for employees who follow proper procedure.
4. Develop policies for beverage gratis and loss prevention.
4.0 Recommendations
4.1 Description of Solutions
It is our recommendation that The Little Bean Café implement a collection of improvements referred to internally as the Ingredient Management System (IMS). Based on meetings with employees, and financial calculations of how much of each ingredient should be used per product, the IMS will provide a measurement standard for all employees of The Little Bean Café to use per product made. The IMS begins with managers taking an inventory count at the beginning and end of each business week, calculating the amount of products purchased at the end of the week, and comparing it to the amount of ingredients used to ensure compliance with the ingredient standards.
1. The IMS will also provide a laminated quick reference sheet on product ingredients for all employees to use, which will be located on the counter by the syrups (in the actual work area). This will provide quick and easy access to all employees who might forget the proper amount of ingredients each product needs.
2. Additional measurement tools and standards will be implemented to assist creating each product quickly and accurately. Such tools will include, for example, updated syrup bottles with pumps attached, which will be used for measurement with certain products. Visible measurement markings will be applied to all mixing tools and pitchers.
3. Implementation of an incentive program for employees who successfully follow changes to workflow and policy.
4. The corporate office will begin work on a standardized beverage gratis and inventory loss policy that will be implemented across locations.
4.2 Justification for Solutions
The main concern with The Little Bean Café was that an increase in ingredients did not yield an increase in profits. Therefore, after an ingredient standard has been established within the company that would yield a profit, the IMS will help The Little Bean Café aid employees in ensuring accuracy with production and it will let managers monitor the inventory to ensure that maximum profit is achieved through production. The IMS will help The Little Bean Café ensure compliance with their ingredient standards that will yield the highest profit.
Appendix A – Customer Questionnaire Results
|Age Bracket |Under 20 |20 - 30 |31 – 40 |41 – 50 |51 – 60 |60+ | |
| |20% |26% |23% |17% |9% |5% | |
|Coffee Consumption |3+ day |1-3x daily |1x daily |1-5x week |1x week | ................
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