“My Compliments to

the Chef, er, Buyer“

Operations Management
Prof. Ying Jiun Hsieh

Papaya Milk: Jason, Jimmy, Nick, Rachel, Richard, Sandy

Outline
1. Case Introduction
2. Question Discussion
3. Conclusion
4. Questions and Answers
Case Introduction
• How they are able to serve everything on that menu
quickly
• Flash-frozen and vacuum-packed
• Top- quality restaurants like Fuddruckers and Perkins are
going the outsourcing route
• Taglines such as “Hours versus ours” and “Just heat and
serve”
What can be outsourced?
• Delivery of ingredients
• Preparation of the food
• Food arrangement
• Others:
– Accounting and payroll services
– Kitchen cleaning
– Laundry
– Advertisement and marketing
– IT (website maintenance)
Question Discussion
Question 1
Explain the meaning of the phrase
“Hours versus ours.“
“Hours versus ours“
• Consumer-goods companies such as Sara Lee,
Land O´Lakes used slogans as advertisement
– “Hours versus ours“, “Just heat and serve“
• Stimulate B2B-relationships with restaurants
– timely serving capability of restaurant businesses
can be increased
• Encourage restaurants to outsource business
operations
Outsourcing vs. In-House
• Capacity planning to identify requirements
“Hours“: Outsourcing to
save time, increase profit

“Ours“: In-House solution

to control quality
 Example Outsourcing vs In-House
• Fast casual restaurant - Fuddruckers
In-House Burger

Toast bread, grill Assembly Burger (bread,

Preparation meat, bread, toppings, sauces Service
meat/cheese meat cheese, toppings)

Outsourced Burger
Receive meat, Toast bread, grill Assembly Burger (meat,
Self-
bread, toppings, bread), toppings choosen by
meat/cheese Service
sauces cutstomer

Time
Question Discussion
Question 2
What advantages are there when
restaurants outsource?
Advantages of outsourcing in restaurant
• Improve efficiency
– Save time to prepare or manufacture materials
• Cost saving
– Labor cost
– Operating cost
• Improve productivity
• Expertise
– Avoid time consuming of training employee
• Demand
– Wide fluctuation in demand
Question Discussion
Question 3
What are some important disadvantages
or limitations of outsourcing for
restaurants?
Disadvantages of outsourcing in restaurant
• Quality consideration
– How to monitor the quality of the food material
• Risks
– Loss direct control of operation
– Delay in delivery
– Quality defects
– Taste (loss of freshness)
 Damage to the organization’s reputation
 Losses customer’s reliability
Question Discussion
Question 4
Do you consider restaurant
outsourcing to be dishonest?
Unethical? Explain.
In our opinion
• We focus on restaurant
-can provided food faster
-capability-price-ratio
-feature
-health
* If the restaurant can suit our demand we consider it is ethical
Restaurant outsourcing
1. Advantage
-reduce product cost (low price)
-increase business efficiency (faster)
-focus on core product (feature)
2. Heath (safety of the food )
Question Discussion
Question 5
Does restaurant outsourcing increase
capacity? Explain.
Measures of capacity
1.Restaurant capacity = inputs / outputs
-Inputs = number of tables , seating capacity
-Outputs = number of meals served per hour
2.Outsourced part of cooking process can increase output
measures
 Shorter lead time
 Increased number of meals served per hour
Take macro view
It’s important to consider how parts of
system related.
- if the restaurant have high productivity because of
outsourcing,but don’t have enough inputs to serve customers
is not good.

ex: to add more tables and seats

Conclusion
Control 100% of your core, outsource
everything else. Don’t open a
restaurant if no one can cook!
Customer review:
“Unfortunately everything we ordered
was from a frozen box and then deep
fried. At least it was all served hot
(from the deep fryer) except the
burger which was the Costco style claw
burger on a stale bun. Everything
unimaginatively warmed up, ...just
heat and serve. Even the burger
condiments seemed tired!”
Questions and Answers
References
• Operations Management by William J. Stevenson (11th
Edition).

• http://www.tripadvisor.ca/ShowUserReviews-g2086961-
d3846663-r152832353-Sandy_s_Family_Restaurant-
Mildmay_Bruce_County_Ontario.html

• http://www.makingthingsoutofnothing.com/post/4250212
6421/control-100-of-your-core-outsource-everything-else