Question

As a manager of a fast food franchise, Franklin Hinton was concerned about the media reports he had been listening to about worker demands for wage increases that might soon become an economic reality. Even though Franklin’s store was considered to be successful on every financial measure, doubling wages, without a doubt, would create a significant increase on menu prices which would result in financial disaster. Fast food employees in many parts of the country were picketing and getting lots of press to get their hourly wages significantly raised.

If Franklin was faced to raise menu prices to compensate for the increase in employee wages, he wondered how much customers would be willing to pay and whether his competition would follow with similar price increases. Franklin prided himself on hiring high school and college students from the local area and giving them a chance to learn valuable job skills. In recent years he had hired employees with developmental disabilities and some senior citizens who were having a hard time finding work. Some of these workers had stayed with him for years, and some had moved up into supervisory positions. If he was forced to pay more, would it still make sense to hire workers who had no previous experience or those who may take longer to train? His entry-level workers were currently making at least a dollar an hour above the federal minimum wage and any significant increase above that, if menu prices were not raised, would have to be made up through reduced hours or reduction in the number of employees.

More troubling was the thought of being forced to pay a higher minimum wage, which would also have an impact on supervisory salaries. Then there was the potential of increases in health care costs. Although Franklin was sure that his employees trusted him, some of the fast food restaurants in the area had been upset with their employees wanting to join a union. There was also the potential for losing business and getting unwanted negative publicity as many students at the local university seemed to always be willing to join in any type of social or political protest.

Franklin knew that he needed to plan and organize for the future as his current business model provided a comfortable living at a 9 percent profit margin for the owner, but all of that could change. He knew that outside groups would promise his employees more money, better benefits, and better working conditions, even though they often could not deliver on that promise. Franklin needed to plan and organize for the future success of his business and employees.

(This critical incident developed by Roy Cook and Ed Leonard for this edition of Supervision.)

Questions

1. What external forces could impact the future of Franklin Hinton’s fast food business?
2. Franklin needs a plan for future success. Define planning as it relates to his business. How will an effective plan help him, and his employees be more effective in providing quality service to customers?
3. Regardless of the situation, employees must understand fully the mission and vision of the company. What do you suggest that Franklin might do to help his employees be the best they can be?
4. In your opinion, if the minimum wage in your state is increased to $10, $12, or $15 an hour, what impact will it have on the fast food industry? Will an increase in the minimum wage have an impact on customer service or quality of product? Discuss.
5. What should Franklin do to prepare for the possibility of a union attempt to organize his employees?
6. If you were Franklin, how would you deal with the uncertainties that could impact the future success of his business and employees?

Answer 1

1) External forces that could effect Franklin Hinton's fast food industry:

Introduction:

External forces are the forces which we cannot control but should have proper plan to face them. External forces can be environmental changes, political , social , consumer changing behaviours, competitors etc.

• Political factor: If in future, if the Government wants to increase the minimum wages drastically , we should comply with those orders and have to increase the pay which will eventually leads to the increase in fast food prices.
• Consumer behaviour: If the prices gets increased, customers may not show interest in buying fast food which will decrease the demand.
• Competitors: If the competitors offers more pay than Franklin, people will join in other companies and to retain the staff and to recruit the new employee, have to pay more than the competitors.

2) Planning: To achieve any goal or fulfill future objectives, planning is required. Hence Planning is the first and foremost thing in achieving goals. It is a systematic steps to be followed in a sequential order to achieve something in future.

Planning in fast food business refers to gain a competitive advantage over other restaurants and makes it best in class in customer service and in order to make it happen, what and all the steps we need to follow starting from resource planning to marketing.

Effective plan in providing quality service to the customers:

1. Communicate with the employees what you really want:

It is always important to have open communication with all the employees and convey your thoughts to them. It is always advisable to provide them the clear standards of the restaurant. If something goes wrong they should have the back up plan without getting panic. Conduct regular sessions with them on how the things are going on, take their suggestions and provide guidance on how to improve, which makes them involved and helps them serve the customers better.

2. Treat the customers with utmost care: At the end what it matters is customer satisfaction. All the staff must be trained in a way that the customers likes and in a professional way. Be organised in such a way that there will not be any sudden unavailability of food. Take feedback from each and every customer personally regardless of how much less they ordered.

3. Providing reward points to customers: By providing free reward points for every order, giving discounts for special occasions makes the customers happy and they wish to visit the restaurant again and again.

4. By implementing the feedback taken from customers: Whenever the customer provides valid feedback or any improvement plan, it should be acknowledged and implemented and when that customer visits the restaurant next time, he/ she feels like more valued and that ultimately results in quality service and customer satisfaction.

5. Trying out new varieties in food and environment: A good and pleasant environment creates nice ambience. When the customers wait for a long time, they often gets so bored and frustrated. So during this time entertain the customers with different activities like food puzzles and offering new varieties of food from across the world and explaining them the origin of food and nutrition values. This is also one of the ways to increase the customer retention.

• 3) The beat way to make the employees understand the vision and mission of the restaurant is to communicate with them clearly.
• Though the other restaurants may pay them well , they need experience in that particular field. But Franklin giving employment to the unskilled people. This should be conveyed to the employees.
• Always the monetary benefits should not be considered. The other benefits which the employees are getting like acquiring new skills which are helpful for self development should be emphasized.
• Also the drawbacks should be explained to the staff. For example if the wages are to be increased then the prices should be increased and if the prices increases, demand decreases which results in lay offs.

4) Impact of increased minimum wage on customer service and quality of food:

• Increased in wages leads to increase in price of food. For example if the customer used to pay $10 for some dish, if the price has been increased to $ 15, they would expect more quality and more tasty food. But if they get the same they will be unsatisfied which leads to failed customer service.
• Increased in wages also leads to lay offs. So for example to prepare a particular dish it takes 2 people previously, now one person have to prepare at the same time, the quality may get compromised. If one person takes more time to prepare the dish perfectly, the wait time increases and customer service will be hampered.