Restaurant operations at the Rose Capital
Inn: a case study exercise
Venugopal Gopalakrishna-Remani, John James Cater III and Jerry James Massey
Venugopal
Gopalakrishna-Remani is
based at the Department of
Management and Marketing,
The University of Texas,
Tyler, Texas, USA.
John James Cater III is
Associate Professor at the
Department of Management
and Marketing,
The University of Texas,
Tyler, Texas, USA.
Jerry James Massey is based
at the Department of
Management and Marketing,
The University of Texas,
Tyler, Texas, USA.
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision making. The
author/s may have disguised
names; financial and other
recognizable information to protect
confidentiality.
PAGE 104 j THE CASE JOURNAL
Introduction
Late on a Friday evening after a long day’s work, Michael McPherson, New Assistant
Food Manager at the Rose Capital Inn, sat in his cubicle beside the hotel’s restaurant with
his head held in his hands. The Inn’s Manager, Albert Warren, had just given him a new
project. Warren wanted McPherson to compare pricing among two competitive food
suppliers and to determine how the next food order should be structured. Pages of assorted
price lists and tables of food products lay in piles around the cubicle, and McPherson
knew that this was a complicated and time-consuming task. Warren had set high
standards for customer satisfaction, and the Rose Capital Inn was known for its
excellent restaurant.
McPherson had been very happy just a few short months earlier when Warren had hired him
to be the assistant food manager. McPherson believed that this was the start of a promising
career in the hospitality industry. Now, he had to begin that journey and it meant a long weekend
of studying and analyzing the food suppliers price lists to determine which supplier to buy
from and how much to order. Warren wanted the next food order on his desk bright and early
Monday morning.
Background information
The Rose Capital Inn, located five miles south of downtown Tyler, Texas, was situated
in a prime area for business growth, just off Broadway (Highway 69), the central
business thoroughfare in the city and adjacent to the thriving south end of Tyler. The south
end was experiencing much of the population growth in Tyler. Over the past four years,
the population had increased from 96,900 in 2010 to an estimated 107,000 in 2014
(City of Tyler, 2014).
Note: The names of the company and all individuals involved have been disguised in this case
study exercise.
Established by the Texas legislature in 1846, the city was named for President John Tyler
and designated as the county seat of Smith County, which was formed at the same time
(1846) (Tyler, Texas, 2014). Located about half-way between Dallas, Texas and
Shreveport, Louisiana near Interstate 20, Tyler was perhaps best known for the large
quantity of rose bushes produced there and its annual Rose Festival, earning it the nickname
“Rose Capital of the World.” The city also was a commercial and financial center drawing
commuting workers and retail and restaurant consumers from the small towns surrounding
it in east Texas. It was common to have 300,000 people working and shopping in Tyler on any
given business day.
j VOL. 12 NO. 1 2016, pp. 104-121, © Emerald Group Publishing Limited, ISSN 1544-9106 DOI 10.1108/TCJ-11-2014-0063
The Rose Capital Inn was a thriving establishment that had attracted more and more guests
each year since it first opened in 2009 and the Inn had begun to develop a repeat clientele. Just a
short drive from downtown Tyler, Tyler Junior College, and the University of Texas at Tyler, the Inn
welcomed guests visiting the area for business, educational, and vacationing purposes.

Hotel restaurant operations

Albert Warren, the Inn Manager, believed in his work force and trusted his team to provide the
best customer experience possible. Warren had faith in employee empowerment and allowed his
staff to make decisions on day-to-day matters at the departmental level. Warren also encouraged
his employees to develop decision-making systems and processes and held them accountable
for their decisions.
The restaurant inside the establishment had become a well-known favorite not only with hotel
guests, but also with members of the local community. The Inn’s restaurant produced a high
volume of revenue due to its daily operations of both a breakfast buffet and a dinner buffet.
However, Warren had noticed some problems in the restaurant in terms of cost and the utilization
of products. Therefore, he had decided to hire an assistant food director to better manage the
restaurant’s food supplies and to reduce spoilage[1].

Suppliers
Originally, the Inn had used a company called Horton’s Food Service as its food provider, and had
experienced a great level of satisfaction with Horton’s over the past few years. A multibillion dollar
company with more than 350,000 customers, Horton’s operated from more than 150 distribution
locations in the USA with around 40,000 employees to support its daily operations. However, due
to rising food costs, Albert Warren had begun to look at alternative solutions to using Horton’s as
their sole provider. Warren had decided to use Fresh Delight, a food service provider based in
Tennessee as a second provider in addition to Horton’s. Fresh Delight was one of the top ten
independent foodservice distributors with over 30 locations in the country. Warren believed that
this would allow the hotel to compare prices from both companies and to reduce costs.

Creating the next food order

As Michael McPherson sat at his desk in the little cubicle, he realized that he needed to create the
right price mixture between the two suppliers, Horton’s and Fresh Delight, which would maximize
profit by reducing spoilage and lowering the overall cost. See Table I for price comparisons for a
list of comparison prices between Horton’s and Fresh Delight’s products and Table II for product
usage for October, November, and December, for the recent history of product used at the Rose
Capital Inn restaurant.
McPherson recognized that he might have to revamp the entire decision process to ensure
efficiency in terms of cost and utilization of product. Further, McPherson understood that he had
to deal with multiple criteria to choose the supplier to use for each item to place the order. In other
words, he had to remember the following things while making the order. Even though both
companies sold very similar products, McPherson only wanted to order a particular type of
product from a single supplier. This was to ensure that the quality remained the same, and did not
vary within each product. For example, if McPherson ordered 2 percent milk from Horton’s, he
could not order 2 percent milk from Fresh Delights. Additionally, McPherson could only order
whole cases of product from each provider.
McPherson also realized that at the end of each month, any food product that was not used
would be considered spoilage and be thrown out. Therefore, anything ordered in excess of what
was required would be considered waste. McPherson had to keep in mind that he wanted to
reduce costs while analyzing the data. McPherson was required to do extensive consideration
and number crunching to select accurate supplier orders. Even though one supplier might initially
appear to be the least expensive option, the competitors might undermine each other’s price
through crafty crate sizing and packaging.

VOL. 12 NO. 1 2016 j THE CASE JOURNAL j PAGE 105

 Table I Comparison prices
Horton’s Fresh Delights
Category Item Amount per case Price per case Amount per case Price per case

Dairy Butter-Blocks 20 $16.99 55 $41.87

Dairy Cheese-American 3 $11.99 14 $48.87
Dairy Cheese-Bleu Cheese 2 $12.99 7 $37.54
Dairy Cheese-Pepperjack 3 $11.99 10 $37.85
Dairy Crate Eggs 10 $15.45 28 $39.14
Dairy Heavy Cream 5 $8.99 14 $17.74
Dairy Liquid Eggs 10 $25.98 22 $48.87
Dairy Milk-2% 30 $17.65 75 $39.87
Dairy Milk-Whole 30 $17.63 75 $37.45
Dairy Sour Cream 5 $14.99 13 $33.65
Dairy Yogurt-Bag 3 $18.95 10 $52.14
Dairy Yogurt-Individual 12 $7.95 30 $17.85
Dry Baking Soda 6 $8.95 15 $16.52
Dry Brown Sugar 4 $14.54 10 $25.54
Dry Flour 1 $24.50 3 $57.84
Dry Juice-Cranberry 24 $18.99 55 $40.21
Dry Juice-Pineapple 24 $17.95 55 $38.70
Dry Juice-Tomato 24 $22.95 55 $44.85
Dry Malt Vinegar 5 $6.99 13 $16.75
Dry Pasta-Angel Hair 3 $22.54 10 $57.98
Dry Pasta-Tortellini 3 $29.87 10 $84.74
Dry Pepper 12 $9.96 30 $22.14
Dry Sea Salt 12 $11.85 30 $20.14
Dry Sugar 1 $38.75 3 $100.05
Frozen Assorted Bagels 6 $24.95 15 $59.87
Frozen Assorted Muffins 10 $22.95 24 $39.87
Frozen Chicken Tortilla Soup 2 $14.95 5 $32.14
Frozen Dinner Rolls 30 $22.65 70 $47.05
Frozen Hashbrowns 3 $34.56 8 $82.54
Frozen Sourdough Bread 4 $16.54 11 $40.87
Frozen Tomato Bisque Soup 2 $16.97 5 $39.87
Frozen Wheat Bread 6 $11.74 15 $26.18
Frozen White Bread 6 $11.87 15 $25.47
Meats Hamburger Meat 20 $54.65 55 $111.74
Meats NY Strip 14 $177.85 35 $397.75
Meats Ribeye 14 $187.42 35 $408.21
Meats Sausage Patties 40 $38.75 65 $54.21
Meats Sliced Ham 5 $19.87 11 $40.85
Meats Sliced Turkey 5 $22.81 11 $42.58
Poultry Chicken Breasts 3 $45.65 10 $131.57
Poultry Chicken Strips 4 $48.75 15 $170.21
Poultry Chicken Wings 4 $55.41 11 $140.54
Poultry Fajita Chicken 5 $44.87 17 $138.74
Produce Apples 12 $6.99 30 $12.87
Produce Asparagus 12 $35.47 30 $62.54
Produce Avocado 8 $16.87 23 $36.87
Produce Baby Spinach 4 $12.87 15 $38.98
Produce Blueberries 10 $28.99 25 $56.95
Produce Broccoli 6 $18.87 13 $38.95
Produce Carrots 4 $14.42 13 $40.21
Produce Celery 4 $15.65 11 $34.51
Produce Lemons 6 $12.98 15 $28.47
Produce Limes 6 $12.97 15 $28.85
Produce Oranges 12 $14.85 28 $29.87
Produce Shallots 4 $8.98 11 $21.54
Produce Snow Peas 4 $14.58 11 $34.87
Seafood Atlantic Salmon 12 $189.95 27 $355.87
Seafood Beer Battered Cod 10 $112.57 25 $265.84
Seafood Mahi Mahi 12 $179.95 30 $400.24
Seafood Tiger Prawn Shrimp 4 $112.56 13 $345.54
Seafood Yellowfin Tuna 10 $132.98 25 $300.15

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Table II Product usage for October, November, and December
Actual amount used
Item October November December

Butter-Blocks 154 163 145

Cheese-American 42 53 47
Cheese-Bleu Cheese 32 42 37
Cheese-Pepper jack 33 48 37
Crate Eggs 145 153 128
Heavy Cream 58 63 71
Liquid Eggs 97 107 87
Milk-2% 198 245 225
Milk-Whole 215 205 235
Sour Cream 32 38 43
Yogurt-Bag 48 34 24
Yogurt-Individual 312 265 287
Baking Soda 24 14 31
Brown Sugar 4 8 7
Flour 11 7 13
Juice-Cranberry 215 175 198
Juice-Pineapple 287 238 257
Juice-Tomato 135 148 112
Malt Vinegar 38 31 27
Pasta-Angel Hair 42 57 51
Pasta-Tortellini 67 51 47
Pepper 27 34 31
Sea Salt 29 17 26
Sugar 13 19 17
Assorted Bagels 95 74 81
Assorted Muffins 57 34 47
Chicken Tortilla Soup 11 15 9
Dinner Rolls 178 201 158
Hashbrowns 62 51 67
Sourdough Bread 54 69 48
Tomato Bisque Soup 17 18 15
Wheat Bread 68 61 73
White Bread 57 71 69
Hamburger Meat 315 279 299
NY Strip 112 125 99
Ribeye 187 164 175
Sausage Patties 101 117 105
Sliced Ham 42 48 39
Sliced Turkey 48 51 58
Chicken Breasts 154 131 127
Chicken Strips 65 61 71
Chicken Wings 174 152 167
Fajita Chicken 23 31 25
Apples 75 54 50
Asparagus 53 61 55
Avocado 68 78 51
Baby Spinach 41 33 48
Blueberries 63 51 60
Broccoli 17 28 22
Carrots 44 49 40
Celery 23 22 31
Lemons 37 31 27
Limes 31 43 29
Oranges 43 47 37
Shallots 17 12 19
Snow Peas 29 17 25
Atlantic Salmon 87 101 105
Beer Battered Cod 62 91 78
Mahi Mahi 98 105 95
Tiger Prawn Shrimp 61 72 79
Yellowfin Tuna 53 37 57
Dinner buffets sold 889 914 1,012
Breakfast buffets sold 1,317 1,185 1,222

VOL. 12 NO. 1 2016 j THE CASE JOURNAL j PAGE 107

 After getting a general idea of how to break down order needs and choose between the better
cost-alternative suppliers, McPherson had to use the numbers in such a manner that would
actually show how the department was performing. However, before he began to determine
how much he actually earned vs spent, McPherson needed to consider that one key factor that
would affect the profitability in the end – spoilage. Although McPherson’s main goal was to
reduce the costs, spoilage would cause the costs to go up in the long run with products not being
effectively used and eventually thrown into the garbage. The shelf life of meat, poultry, produce,
and seafood may vary a little, but generally they can be preserved in the freezer for one to two
months. Once opened these items should be used within three to five days, except chicken
which should be used within one to two days. Since The Rose Capital Inn had a freezer with
a huge capacity, the shelf life did not affect the calculation as they were ordering every month at
present (Storage Times for the Refrigerator and Freezer, 2014).
Finally, there was some good news for Michael McPherson! Horton’s had promised him
additional incentives to secure maximum orders. While Fresh Delights would charge a $500
delivery fee if the order did not exceed $20,000, Horton’s deliveries would be free regardless of
the size of the order. Additionally, Horton’s would give a 5 percent discount on an entire purchase
as long as the order amount exceeded $5,000. Fresh Delights did not give any discounts due to
its already discounted pricing. Now, it was up to Michael McPherson to create an order from the
two suppliers to achieve cost and spoilage minimization. What should Michael McPherson order,
from whom should he order it, and how much should he order?

Note
1. Spoilage may be defined as “The beverage or food item that is to be found ‘Out of Date’ and is deemed
unusable by either the Executive Chef or Bar Manager” (Hotelier Forum, Hospitality Management Forum,
Tourism Management Forum, 2014).

References
City of Tyler (2014), “Population”, available at: www.cityoftyler.org/Department/CityDemog (accessed August
21, 2014).
Foodsafety.gov (2014), “Storage times for the refrigerator and freezer”, available at: www.foodsafety.gov/
keep/charts/storagetimes.html (accessed July 13, 2014).

Tyler, Texas (2014), “A short history of Tyler, Texas”, available at: www.tylertexasonline.com/tyler-texas-
history.htm (accessed August 3, 2014).

Corresponding author
John James Cater III can be contacted at: jcater@uttyler.edu

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