Project Background
The company is a fast food chain company that runs more than 100 fast food chain restaurants, spread across the country. Customer dissatisfaction is rising rapidly because of the quality of customer service given to employees. The company is concerned that this rising customer dissatisfaction will have an adverse impact on its profitability and sales. Surveys done have indicated that the main source of this dissatisfaction is the interaction between staff and customers.
The project is for improving customer service in the restaurants of a major fast food chain company. This project is being done because complaints against customer service of the company have risen drastically in the past one year. Therefore, immediate steps require to be taken so that customer service in the more than 100 fast food restaurants of the company improves. This project will mainly involve making a training plan for employees working in the fast food restaurants of the chain. This training plan will be implemented so that employees in the restaurants become more efficient and effective in customer service.
The aim of the project is to improve customer service in the restaurants of the fast food chain so that customer satisfaction level is improved considerably. The project will achieve this aim by achieving the following objectives:
1. Identify the training needs of employees and managers working in the restaurants of the chain, in the area of customer service.
2. Make a training plan on the basis of the training needs of the employees.
3. Implement the training plan.
4. Assess the outcome of the training plan, 6 months after the implementation of the plan.
The project aims to solve a major problem that the restaurants of the fast food chain company are currently facing. This problem is of deteriorating quality of service given to customers. This has resulted in a sharp increase in customer complaints and customer dissatisfaction. This has started having a deteriorating impact on the sales of the restaurants of the company. If this problem is not solved immediately then it can have very adverse impact on the long term performance of the company (Kotler & Armstrong, 2016).
One of the main assumptions behind this project is that customer service can be improved by giving suitable training to employees of the restaurants of the chain. This assumption is based on past experiences where suitable training given to employees results in better performance in various areas, including customer service (Kotler & Keller, 2018).
Another assumption is that all the resources required for implementing the training are easily and readily available. This assumption is a realistic one. The training that will be given to employees will not be some very complicated training that requires resources that are not easily available. An effective solution is one that can be implemented within the resource constraints that are there. Many times, solutions that are recommended prove to be ineffective because they cannot be implemented within the resource constraints that are there.
The main constraints before the project are financial and time constraints. The project has to be completed within the budget approved for the project. Training sessions will have to be completed over employees from more than 100 restaurants of the chain. The project will have to be completed within limited time. Training will have to be provided to restaurant employees and restaurant managers in such a way that daily operations do not get disrupted.
The options for solving the problem of declining customer service are not many. One option is to terminate current employees working in the restaurants and replace them with more competent employees. But terminating such large number of employees and replacing them with new employees will be a very difficult exercise to do in reality. Even if it is implemented, it will cause massive disruptions in the operations of the company.There are more than 3000 employees deployed across the 100 restaurants of the chain. Terminating all these 3000 employees and then replacing them with new employees will cause major disruption in the operations of the company. Many of the restaurants of the company will have to be shut down for months if this exercise is done.
Also it will not be fair to the existing employees. Many of the employees have been working with the company for many years. Many of the employees are actually very competent too. So the only viable option is to provide more training to employees in the area of customer service, so that they become more effective in giving customer service. That is why this project option is being recommended. It will result in improvement in customer service in the restaurants of the chain with minimal disruption to the operations of the company.
The project will initially require a project management team. This project management team will consist of Human Resource Vice-President of the organization; Operations Vice President of the company; Marketing - Vice President of the company; Quality Control - Vice President of the company; a Project Manager; and two external training consultants who have experience and expertise in implementing such a project in the hospitality or restaurant industry.
This project management team will make a detailed project plan. This project plan will give out each stage of the project and how that stage will be implemented. The project plan will also identify the resources required for implementing the project and the time schedule of the project. The project plan will also identify the various risks before the project. Once the project plan has been made and approved, implementation of the project can begin.
The project will essentially involve identifying the training needs of the employees in the area of customer service. The project team will visit some of the restaurants of the company. It will identify the training needs of the employees through direct observation and by taking feedback from some customers. Taking the project team to some of the restaurants of the company spread across different geographical locations will require some amount of transport and logistics in the initial stages of the project.
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Activity
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Estimated cost
|
| |
|
|
Identifying the training needs of store level employees in the area of customer service
|
100000
|
|
Identifying the training programs that can give the required customer service skills to restaurant level employees and managers
|
30000
|
|
Implementing the training program in all the restaurants of the company
|
1000000
|
|
Post training appraisal of customer service
|
100000
|
|
Other miscellaneous expenses
|
10000
|
| |
|
|
Total estimated budget
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$1,240,000
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Financial Investment analysis showing Net present value
The Weighted Average Cost of Capital of the restaurant chain company is currently 10%. We will use the same WACC as the discount rate for calculating Net Present Value (NPV) of this project. It is being assumed that the implementation of this project will result in significant increase in customer service of the company. This in turn will result in more customer satisfaction from each restaurant of the company. This will result in increase in sales in every restaurant of the chain. Higher sales mean higher cash flows for the organization (Vishwanath, 2014). It is being assumed that annual incremental cash flows because of better customer service due to this project will be $1,000,000 at the level of the company. This is a very conservative and actual increase in cash flows is likely to be much more.
We are assuming that the benefits of this project will accrue for five years. After five years, the company may have to do another such training project to further upgrade the customer service skills of its store level employees.
Therefore, Net Present Value (NPV) of the project = $1000000 / (1+10%) + $1000000/(1+10%)^2 + $1000000 / (1+10%)^3 + $1000000 / (1+10%)^4+ $1000000 / (1+10%)^5 - $1,240,000 = $2,550,787
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Year
|
Cash outflow (inflow)
|
|
0
|
-1240000
|
|
1
|
1000000
|
|
2
|
1000000
|
|
3
|
1000000
|
|
4
|
1000000
|
|
5
|
1000000
|
| |
|
|
NPV
|
2550787
|
The payback period for this investment will be 1.24 years. Payback period is the number of years in which the initial investment will be recovered.
Estimated NPV of this project comes to $2,550,787. Any project that has an NPV of greater than 0 is a profitable one (Damodaran, 2014). The project can create significant value for the shareholders of the fast food restaurant chain company.
One risk before the project is that quality of training provided may be below what is being envisioned in the project plan. If the quality of training provided is not good, then the project will fail in achieving its objective of improving customer service in the restaurants of the fast food chain company.
Another risk is the cost risk. Cost risk in this case means that actual cost of implementing the project may exceed the budgeted costs (Barnes, 2019). If this happens then actual NPV of the project will be less than the estimated NPV. It needs to be mentioned here that once the implementation begins, the project cannot be stopped until employees in all the restaurants of the company are covered.
Another risk is the project getting delayed beyond the timeline set for it. The timeline for completion of the project is 12 months. Training program will be completed within 6 months. At the end of six months after the completion of the training, random customer surveys will be done over the restaurants of the company. These surveys will give an idea about the level of customer service and customer satisfaction that the employees of the restaurants are delivering. If customer service and customer satisfaction levels have improved significantly then the project will be considered a success.
PESTLE analysis
PESLE is the acronym for political, economic, social, technological, legal and environmental factors.
Political factors: The restaurant chain operates in an environment of political stability.
Economic factors: Demand for the fast food of the company is dependent to some extent on external economic conditions. Currently the economy is in stable growth phase.
Social factors: There is a strong social culture of eating out at restaurants. People expect high quality of service from the restaurants where they eat.
Technological factors: Technological infrastructure that is required for running restaurants is present in the country.
Legal factors: There are clearly defined contract and consumer protection laws in the country.
Environmental factors: Environmental regulation has increased over the years. Businesses like restaurants are expected to operate in a way that minimizes the adverse environmental impact of their operations.
SWOT analysis
Strength - The strength of the business is the quality of food served in its restaurants.
Weakness- The weakness of the business is its deteriorating customer service.
Opportunities - There are significant market penetration opportunities available for the fast food chain.
Threats - Threats to the business come from competition which is intense.
Quality consideration is very important for this project. The project will not achieve its aim and objectives if the training provided to employees is not of very high quality. Therefore, through the entire project implementation stage, quality control will be done by monitoring the training sessions that are being given to employees. The content of the training programs will also be of high quality so that employees get the required customer service skills after going through the training. Many training programs fail in achieving the desired outcomes because they do not give adequate focus to quality.
Quality and success of the training program will be measured by taking feedback of customers in the six month period after implementation of the training program. Customers will be asked to rate the customer service of the restaurants on a scale of 1 to 5; 1 being least satisfied and 5 being most satisfied. Average rating of at least 4 out of 5 is necessary in each restaurant surveyed, in order for the training program to be considered a success. If any restaurant gets average rating of 3 or less then the reasons for this will be analyzed and remedial action will be taken.
References
Barnes, M. (2019). What is project management? Association for Project Management , 86-88, Available at: https://www.apm.org.uk/resources/what-is-project-management/.
Damodaran, A. (2014). Applied corporate finance. NYU ; Available at: https://people.stern.nyu.edu/adamodar/pdfiles/acf4E/acf4Ebook.pdf.
Kotler, P., & Armstrong, G. (2016). Principles of Marketing. Upper Saddle River: , Pearson Education, pp 91 Available at: https://www.academia.edu/36953849/Read_Principles_of_Marketing_15th_Edition.
Kotler, P., & Keller, K. (2018). Marketing Management. New York: Pearson, p 204 Available at: https://www.academia.edu/29763512/Marketing_Management_Kotler_Keller.pdf.
Vishwanath, S. (2014). Corporate finance - Theory & Practice . Sage https://117.211.153.211:8001/jspui/bitstream/123456789/1121/1/CorporateFinance-TheoryandPractice.pdf.