Executive Summary

The operations standards are the key path defining elements in any business.
Withoutset procedures optimal results can not be obtained.The operations
standards at pizza hut have multifaceted challenges and opportunities.The
standards and procedures for doing business are well defined but some of
the possible factors can cause to the deviations and variances. Those possible
factors can be eradicated through extra efforts into the process. However
the small chances of variance will remain the same because the real
business scenarios may vary sometimes than the forecasted one.This report is
an attempt to investigate the operational standards and the possiblecauses
of variance in standards and how does it affect customer satisfaction.

Methodology
1 .Th e s t u d y o f P i z z a Hu t ( 5 1 2 ) i s c a r r i e d o u t .2 . Ge o g r a p h i c a l
l o c a t i o n i s t h e Wo o d f o r d G r e e n 3 . P r o c e s s
Mapping Tools4.Primary Data Collection
•
Interviews5 . S e c o n d a r y D a t a c o l l e c t i o n
•
Journals
•
Articles
•
Online sources available; websites
•

Limitations
1 . T i m e w a s m a j o r c o n s t r a i n t . 2 .L i mi t e d i n f o r ma t i o n wa s
a v a i l a b l e .3 . Th e l i mi t e d a c c e s s o n t h e d a t a w a s a v a i l a b l e .

Aims and Objectives

To find out the prevailing operations standards at pizza hut.Investigate the variance
or deviations in overall productivity due to non compliance of the operations
standards.Investigate the customer experience with pizza hut.Investigate the cause
and effects of variances in operations standards and its impactson customer
experience.Investigate the factors responsible for product success.Investigate
impacts of the training and development of each unit on over all
business productivity.I n v e s t i g a t e t h e p o s s i b l e e x t e r n a l f a c t o r s t h a t c a n
h a v e i mp a c t s o n t h e b u s i n e s s productivity.
Company Profile
Pizza hut started on 1958. The dream of Frank and Dan Carney turned into the
realitywhen he opened the first Hut in Wichita, Kansas.The website of pizza hut
states that in very beginning the restaurant was as too small.It had just 25 seats
available for customers. The inspirations for the name as ‘Hut’came into
thoughts through the design of the building. It looked like a hut. Thereforeit geared
the idea to carry on with name as ‘Pizza Hut’.Th e P i z z a h a s
s u p e r i o r p l a c e i n t h e ma r k e t , p a r t i c u l a r l y f o r t h e P i z z a b u s i n e s s . T
hrough the time it has scattered in to the markets of the world. The
numbers of thegrowth depicts that it Pizza hut has more than 600 outlets in the
UK only.The Pizza hut is a part of Yum, which is another big company. The Yum
own several big companies like KFC, Long John Silver's, A & W Taco BellThe
Pizza hut was formerly owned by Whitbread and Yum as a joint venture.
But inthe year 2006 Whitbread sold out their shares to Yum. Presently
the Pizza Hut UK Ltd is now 100% owned by Yum!

IntroductionOperations management
Traditionally it is believed that the operations management is as a
transformation process that takes set of inputs and transforms them into
the out put. The output can be the goods or services. This includes the effective
planning, scheduling and controlof the activities that produce the required
outcomes. (Cecil C. Bozarth, Robert B.Handfield, 2008)Operations
management plays a key role in determining the success or failure of
anorganization. To carry forwards the inputs of each unit all together and getting
turnedit into the outputs is the real synergy, which helps organization to
set the directionstowards climbing the heights of success.According to the
William J. Stevenson as he state in his operations management
book ‘ Op e r a t i o n s ma n a g e me n t i s t h e ma n a g e me n t o f t h e s ys t e m o r
p r o c e s s t h a t c r e a t e goods and/or provide services’ this involves various
inputs, he add, ‘ the creation of goods or services involves the transformation
or conversion of inputs into outputs.Such as capital, labour and information
are used to create goods or services using oneor more transformation processes’.

Although the goods and services go hand in hand, there ar

e s o m e v e r y b a s i c di f f er e n c es be t w ee n t h e tw o . T hi s c a n b e
d e te r m i n e d t hr o u g h i ts na tu r e o f t h e business. Some organizations
can have higher degree of tangibility or
intangibility.T h i s c a n b e d e t e r m i n e d t h r o u g h i t s n a t u r e o
f b u s i n e s s . F o r i n s t a n c e , i f t h e o r g a n i z a ti o n i s s el l i ng g o o ds
, i t ca n be d et er m i ne d hi g h l ev e l o f ta ng i b i l i t y a nd otherwise if its
selling services then level of intangibility will be high.

Operation standards at Pizza HutFunctional Units

The activities of business organizations are mostly divided
a c c o r d i n g t o t h e functionality, the management of the personnel and
the responsibilities. (Joseph S.Martinich, 1997)The operations at Pizza hut
can not be highlighted for any of the single functionalunit. Rather it is the
collection of several set of the activities that take place with in theunit and make
things possible by turning customer expectations into the reality.T h e s u c c e s s o r
t h e f a i l u r e o f t h e p r o d u c t d e p e n d s o n t h e p e r f o r ma n c e o f
s e v e r a l functional units. Those functional units operate separately but
connected with eachother through the job activities. The unit’s
operation standards are discussed further down.
Main Work Stations
PreparationsThe preparations is the process of getting things ready, that will help
to carry the outthe operations in store. This involves activities
like defrosting of dough, starters andcheese. So that can be used for the next
day operations.If preparations for the following day operations is not up to
the mark then that willcause difficulty or shortages of items that are
necessary for the conversion
process.T h e p r e p a r a t i o n i s d o n e o n t h e b a s i s o f t h e n e x t b u s i
n e s s d a y f o r e c a s t . I f t h e f o r e c a st e d g o o d s wi l l n o t b e ma d e
r e a d y f o r t h e n e x t d a y o p e r a t i o n s t h a t wi l l b e virtually difficult for the
next day shift manager to carry out the business operations.(Source: Source: Pizza
hut/ Manual /Business Dates 14/04/2008/location: Hut 512)

Make tableTh e jo b o f t h e ma k e t a b l e i s t o ma k e o r d e r s t h a t a r e
r e c e i v e d f r o m c u s t o me r s a n d a p p e a r s o n t h e mi c r o s s ys t e m. Or d e r
w o r k o n F I F O s ys t e m, u n l e s s t h e r e i s a n y collection customer. It is
because the collection time is 10 to 15 minutes as compareto the delivery
which is 30 to 35 minutes.The preparation of make table is a critical part of the
operations at pizza hut. The
rightl e v e l o f p r o d u c t s , i n g r e d i e n t s c o n d i m e n t s a n d s a u c
e s a r e p r e p a r e d t o t h e specifications. That is to be considered
vitally that the make table items character,aroma, freshness, and taste are
appropriate and kept at right make table temperature between 2 and 5
degree centigrade.( See Appendix 1 & 1a)According to the set bench marks
for the topping rules it should be implemented inthe same manors as
mentioned in the pizza hut manual guide.

Make Table Standards:

There are set rules for the pizza saucing and cheesing, if not
f o l l o we d t h e n i t c a n result in soggy or salty pizza. This will cause
dissatisfaction of the customer.

Cut TableThe job of cut table is to receive the pizza and cut them according to the
order guestcheck, and pouch them accordingly. The special consideration is to be
paid when pouching that the right order should go with right guest check. If it goes
with wrongorder then it breaks down the flow of the cut table and can cause the
mess up of thecustomer.
DispatchingThe dispatching is tricky and critical work specially when
there are more orderson the shelves and less drivers. The geographical
are is divided in to the zonesaccording to the post codes. The Guest
checks print with address and the postcode. So the shift manager’s
sharpness is to dispatch the deliveries that can betake two at a time. This
effort saves time and effort.Usually it take less than 30 minute to deliver the order
to the customer on his/her door, but the timing standards may vary according to the
availability of work forceand the level of peak that business receive in particular
moment of time.

Product Standards
The aim of the business unit is to achieve the complete ope
r a t i o n a l s t a n d a r d s p r a c t i c e s . Th e i n t e r v i e w wi t h R e s t a u r a n t G e n
e r a l M a n a g e r ( R G M ) o f h u t 5 1 2 , revealed the fact that optimal
strength is always utilized into the process to get themaximum results and
maintain 100% product quality standards. The manager added,‘All dough should
be identified with an accurate timing system, as it is very critical togood dough
management, good quality and wastage management’. (See Appendix 2),he adds,
‘the wastage control is very important to save overall cost of doing business.He
believes that the wastage at the end of the day gives a big off set to the profits.’

DefrostingThe quality without waste is the driving force behind dough

shelf lives and timingsystem in pizza hut. If not followed, leads to the variance
of operations that ultimatelytake to the bad quality and dissatisfied customers as a
result and can likely to decreasethe customer base.
Topping
StandardsOverlapping:O v e r l a p p i n g o f t h e t o p p i n g s , g i v e a b a
d t a s t e o f t h e p i z z a a n d d a m a g e s t h e expectations of the
customer. There is the 2 finger rule that is applied for topping.

Dating standardsThe dating standards are set for every ingredient used in
the business. The itemsare labelled with correct MRD (Made, ready,
discard) label. These labels musthave either date made, date ready, date
discard and time details or colour datingsystem.

Product Shelf lifeIn order to maintain the product quality up to the

standard, that is very important tofollow the set rules for the product
shelf life. Different ingredients used in the pizzamaking process, carry
different shelf life.

The taste and the quality highly determine on the freshness of the ingredients,
and theresultant the happiness of the customers. According to
the Deputy Manager of Pizzah u t , ‘ I f , t h er e i s v a r i a n ce o bs er v e d i n
t h e pr o du c t qu a l i ty th a t w i l l o v er a l l a f f e ct productivity and finally the
customer satisfaction level. This is not acceptable at
all’.H e a d d e d , ‘ i f c o m p a n y i s s p e n d i n g a h u g e a m o u n t o f m o
n e y o n t h e p r o d u c t p r o mo t i o ns a n d m a r ke ti ng a c t i v i t i es t ha t i s
f o r t he b us i ne s s . A nd a l s o co m p a n y provides the training to the
employee to how to maintain the product quality. So everysingle person should
have to ensure the quality of the product and happy customer makes
more return in the future’.

In this regard, company has got set procedures and guideline to maintain the
standardsfor the specified interactions between the employees and customers.If the
deviations occur that will likely to lead to the unhappy customers.Food
temperaturesTo keep products safe storage the temperature of freezers should be in
between -18 to+ or – 5 degree centigrade. The seals must be intact so that
the temperature can bemaintained.
Quality Assurance
The quality throughout the supply chain rests with the overall team. This
is done
bys e t t i n g r i g o r o us s t a n d a r d s d u r i n g p r o d u c t d e v e l o p me n t . I n o r d e r
 t o e n s u r e t h e standards, there is regular auditing and monitoring system
in place. The one of theregular system to check quality is CHAMPS Excellence
Review.Quality assurance is achieved through the complaints monitoring
system and their corrections through available remedial methods.

Core Competence
Organizational strength or abilities, developed over a long period, that customers
findvaluable and competitors find difficult or even impossible to copy. (Cecil C.
Bozarth,Robert B. Handfield, 2008)The pizza hut has got high degree of core
competence in the basic product. The pizzah u t ’s d o u g h i s t r e a t e d a s c o r e
c o mp e t e n c e o f t he b u s i n e s s . Th i s ma k e s p i z z a h u t different then the
competitors.
Cost & variance
The cost of sales and the sales revenue are the actual things that support the
managersto run the business on track. If the numbers seems going out of the track
they need behighlighted and called as variance. The variance is the difference
between the Actualcost and Theoretical Cost.Head office set forecast and provide
targets to the business stores. The targets are setwith the help of previous year
business performance and the expected events. That iscalled as theoretical cost. On
the other hand the cost occurred in the business dates isthe actual cost. So if there
is any difference occurs that will be treate as variance.The cost of sales of the store
for the current period shows the variance of
36.38• T h e t h e o r e t i c a l c o s t s e t b y
m a n a g e m e n t w a s £ 2 2 0 3 . 2 2 a n d i n p e r c e n t a g e 2 2 .4 6 %
w h e r e a s t h e a c t u a l c o s t f o r t h e p e r i o d o c c u r r e d wa s £ 2 2 3 9 .6 0
i n percentage 22.83%. The results indicate the variance remained £36.38.

University of East LondonTh e v a r i a n c e i n c o s t i n g i s t h e a c t u a l

i n d i c a t o r o f t h e p e r f o r ma n c e . Hi g h e r t h e variance depicts higher the
concerns persist with in the business unit. In presentcase in hand, the
above depicted variance treated to be normal. The businessoperations can
not work on the absolute set tracks because the forecasted thingscan not
happen on the absolute behaviours as predicted. (See appendix 5)
Reasons of variances

MiscountTh e c h a n c e o f mi s c o u n t i n g a l w a ys p r e v a i l s d u r i n g t h e
o p e r a t i o n s . I n t h e c a s e o f miscount the chances of wrong order increase and
finally will increase the variance.
WastageThe several reasons for wastage may occur during the operations. However
if forecastma d e i s n o t e f f e c t i v e t h e n t h e c h a n c e s o f u n e x p e c t e d
r e s u l t s ma y i n c r e a s e . Th a t applies with the product forecast as well. If
product is defrosted without realizing thedemand for the product then this may
cause to one of potential wastage.In other case the wastage can increase if no
proper product forecast is being made andor staff make mistakes while
making orders or at the time of dispatching orders. Inany case if wrong
delivered to customer the customer will complaint against it and inorder to make
customer happy the order is to be resent. This will certainly increase thecost.
Higher the number of complaints more is the cost. These two factors are
directly proportional.

Shrink The shrink may occur if inventory reduced without record.

The variance shows the real picture of the business operations. Happy
customersreturn back to business and become repeat customers and cause
to increases in thesales revenue of the business. However, If sales revenue is
running on the
increasingt r e n d o r a b o v e o f t h e f o r e c a s t e d t r a c k t h e n i t c l e a r l
y i n d i c a t e s t h e s u c c e s s f u l operations of the business activities. And this
will likely to decrease the percentage of variance as overall.
Forecasting
Forecasting the estimated demand is the real start of every single operational
activityin the business unit. This involves every thing from human
resource planning to the product planning. In this every single factor get into
the touch of planning, organizing,a n d l e a d i n g a n d c o n t r o l o f t h e
o p e r a t i o n a l a c t i vi t i e s . Th i s u l t i ma t e l y l e a d s t o t h e overall productivity
of the unit.Forecasting product and customers demand is the most
important activity for the b business organizations. (Derek L Waller
2003)Forecasting is very important element to carry forwards the business
on the set linesuccessfully up to the mark in efficient manners. (Joseph S.
Martinich, 1997)The same goes true for the pizza hut business. According to the
RGM ‘forecasting at pizza hut plays critical part for the success of the
business’.(appendix 6)The manager, prior to develop any plans for HR
deployment or the food ordering,they observes the forecast of sales and
expected upcoming events in the calendar.As per say, the usual shift requires two
to three drivers and plus kitchen staff and theshift manager. Where as the number
of drivers can increase on weekends, as high as 7to 10 and 4 to 5 in store staff plus
shift manager and support manager. This works finewhen every thing works
according to plans. However, if any of the external factorscome into play
then that can potentially affect the service delivery and the speed.This
happens when for example the whether conditions. The road hazards in shape
of blockades, accidents. All of these factors can slow down the serviceability.

The unexpected orders can cause more demand of the produ

c t w h e r e a s t h e a v a i l a b i l i t y o f t h e r e a d y t o u s e p r o d u c t ma y b e
l i mi t e d a c c o r d i ng t o t h e e x p e c t e d demand for the shift. Therefore the
variance in expected demand and actual demandcan cause the shortage of the
products and ultimately this can play around the one of t h e p o s s i b l e f a c t o r s
o f t h e u n h a p p y c u s t o me r a n d c a n c a u s e t h e v a r i a n c e i n
t h e productivity of the unit as over all.The demand can also increase because
of the good weather, special occasions likesports, rituals, festivals, and
purchasing power. According to the RGM of the unit, thedemand for the food
is high in the start of the month but that usually slow down in theend of the month
due to the less availability of the funds with customers.
Employee performance/training
The training data base available at store and the views gathered from
managementteam reveals the fact that the importance of the training in store is
directly linked withthe operations standards and productivity. The team member
working on make tableshould have to be trained according to the specified
requirements of the make table.The lack of training will cause the
variances in operations activities. This directlyresults the variances in the
customer satisfaction. (See Appendix 7)Source: Pizza hut/ Training database
/Business Dates 14/04/2008/location: Hut 512
Importance of Customer Experience
Customer care is the core point of concentration behind the business. The
businesstreats customers as king. The most important fact is to find
out the ways through thecustomer want can be fulfilled effectively.
Therefore there are some procedures andstandards set by top management in
order to interact with customer.
Customers don't really want relationships. At least not in the same way
the branddoes. They want to be treated well, respected, understood and to get
what they want, w he n t hey w a n t i t. I n o t h er w o r ds , th e y s i mp l y
w a n t a g o o d ex pe r i en c e a n d t he reassurance of knowing that they will
have the same good experience every time theycome into contact with the
brand. So, if we the team get to the experience right,
theopportunity to build meaningful relationships should follow.
Pizza hut is selling pizzas but this is what other competitors have been doing. So
whatmakes it really special about it? Who recognise that product alone? The
product aloneis nothing but the service is also important. That is the factor which
make customersas ‘repeat customers’The attitudes, values make key
differentiations. The operational standards, the qualityof food all of them are key
factors.

In order to achieve desired results the team members at Pizza hut are
provided withset guidelines for the interaction with customers. The guide
line called ‘moment of truth’ or ‘customer mania plus’.
Moment of Truth
The most important key elements to are set in this guidelines. (See Appendix 8)

Order taker The order taker is the key person who works as a bridge between the
companyand the customer. If he/she makes customer happy, the business will
likely torepeat other wise can drain to the competitors. This results not only the
loss of customer but also the loss of several networks of the lost customer.

University of East LondonThere should be every reason for the return of the
customer. Without fulfilment of thee x p e c t a t i o n t h a t wi l l n o t b e
p o s s i b l e . Ho we v e r t h e t e a m a t P i z z a h u t f o l l o ws t h e guidelines and
makes customers happy, but there may be several factors that maycause to
the dissatisfaction. In general, the possible factors may be for instance, rushof
customers and not enough staff available to take orders or to pick up a phone,
badquality, late delivery or the rude attitude. According to the pizza hut
manual almost2/3 of unhappy customers never return because of poor
service.The RGM at store revealed the fact as ‘Customers don’t come
pizza hut just for thefood, they can get food anywhere. What most customers
want when they visit or callus is a good time’. He adds, ‘when they order on
phone they expect order takers totreat them well and make their time
great. How do you do this? By having a serviceattitude and making
customers feel welcome and important’.
Marketing
The Marketing plays very important role for the business. The customers
actuallyreceive message through marketing, thus it become very critical
that the companyshould highlight the customer expectations in the
marketing message. There areseveral set standards that are to be followed for
the marketing purposes.(Francis J. Mulhern, 2004)The company invest
considerable resources to find out the exact wishes of
customers.F o r t h e P i z z a h u t ’s d e l i v e r y b r a n c h e s t h e s e g me n t o f c u s t
o me r s i n c l u d e s f r o mfamilies, to the teens. According to the Pizza hut
database the primary customer areteens and young
adults.Z a h o o r S o o m r o
| P r o j e c t R e p o
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University of East London

Product Development
The pizza hut success is not the matter of isolated activities. But it is the
company’srestless efforts to put innovations into the realities by turning
needs and wants in tot h e s h a p e o f p r o d u c t s .
P r o d u c t d e v e l o p me n t t e a m r u n f o c u s g r o u p t o s t u dy t h e consumer
behaviours towards product choices.Some time products are launched after
having selected study of the chosen sample, b u t i t d o e s n o t s u r v i v e f o r
l o n g t i me . Th i s ma y c a u s e o c c u r r e n c e o f c o s t o r t h e wastages to the
stores. For instance the four for all, cheesy bread, Bombay
wings,I n d i a n p i z z a a r e a l l t h e e x a mp l e s o f f a i l e d p r o d u c t s .
H o w e v e r t h e c o mp a n y h a s launched successful products as well. For instance
cheesy bite pizza, which has causearound 24% increases in pizza sales over
all.Z a h o o r S o o m r o
| P r o j e c t R e p o r
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University of East London

ConclusionT h e o p e r a t i o n s m a n a g e m e n t d e p i c t s t h e p e r f o r
m a n c e o f e a c h a n d individual unit that is participating in over all
acceleration of the engineo f b u s i n e s s . T h e b u s i n e s s m a y h a v e
s o m e t i m e s l o w s p e e d a n d h i g h speeds. It highly depends on the
strategies that the top management setf o r t h e b u s i n e s s a n d t h e w a y
t h e s t r a t e g i e s a r e f o l l o w e d b y t h e k e y components that run the actual
business. The operations at Pizza hut havemu l t i f a c e t e d s i t ua t i o n s . Th e
e a c h c o mp o n e n t w o r k i n g i n t h e
processc y c l e o f b u s i n e s s p l a y s e q u a l l y i m p o r t a n t r o l e t o w i n
t h e c u s t o m e r . Ho we v e r , i f a n y o n e o f t h e u n i t s d e v i a t i n g f r o m
t h e s e t s t a n d a r d s wi l l cause a variance in the performances as overall. Thus it
is concluded thatthe success of the business is possible through collections
of inputs fromall the units participating in the conversion process