TERM PAPER

ON
“OPERATIONS IN HOTEL AND
RESTAURANT”

Submitted To: Submitted By:

Respected Sir,
MR. HARENDRA SINGH SAMUJJAL BHATTACHARJEE
RS1902A49
10907393
MBA
 ACKNOWLEDGEMENT
The project is an illuminating journey to the world of business
environment. Co-operation and co-ordination of various people is
involved in the creation of a project. It is impossible to thank each
of them individually, but I am making a humble effort thank some
of them.

First of all I want to thank my lecturer Mr. HARENDRA SINGH

for assigning me such a great project. He not only assigned me a
responsible role in the project but also showed confidence in me
throughout the project.

With my immense reverence I express my sincere thanks to Mrs.

Rashmi Mittal, Dean Executive of Lovely Professional University
for giving all of us the best possible support.

SAMUJJAL BHATTACHARJEE
TABLE OF CONTENT

1- INTRODUCTION(OPERATIONS IN PIZZA HUT)

2- Mahanand Milk Industries

3- Uttara FoodsPvt.LTD

4- Frozen chicken manufacturer and Suppliers

5- Godavari Food land

6- Madhavi Food

7- The outsourcing process in India of PIZZA HUT:

8- Managing Operations at PIZZA HUT

9-References :
INTRODUCTION

PIZZA HUT India Supply Chain

PEPSICO PIZZA HUT India Supply Chain

PIZZA HUT India Supply Chain:

Supply Chain is one of the critical factors for the smooth functioning of any

business. It is this unmatched Supply Chain Structure, which not just ensures

on time delivery of raw materials and supplies to PIZZA HUT but also

enables it to cut down on its cost and maximize profitability along with

maintaining highest quality standards of its products. The level of

commitment of PIZZA HUT can be gauged from the fact that even before it

set up its first restaurant in the country it infused Rs 400 Crore to set up its

delivery mechanism. PIZZA HUT initiative to set up an efficient supply

chain and deploy state-of-art technology changed the entire Indian fast

moving food industry, and raised the standards of performance to

international levels.
OPERATIONS IN PIZZA HUT

As already mentioned, PIZZA HUT had been working on its supply chain

even before it opened its first joint in the country. PIZZA HUT, an

international brand which was trying to make inroads into the country,

developed its Indian partners in such a manner that they stayed with the

company from the beginning. The success of PIZZA HUT India was

achieved by sourcing all its required products from within the country. To

ensure this, PIZZA HUT developed local businesses, which can supply it

highest quality products. Today, PIZZA HUT India works with 38 different

suppliers on a long term basis and several other stand alone restaurants for

its various other requirements. PIZZA HUT distribution centres in India

came in the following order: Noida and Kalamboli (Mumbai) in 1996,

Bangalore in 2004, and the latest one in Kolkata (2007). PIZZA HUT

entered its first distribution partnership agreement with Godavari Foodland,

a part of the Godavari Group engaged in food-related service businesses.

The association goes back to July 1993, when it studied the nuances of

PIZZA HUT operations and requirements for the Indian market. As

distribution centres, the company was responsible for procurement, the

quality inspection programme, storage, inventory management, deliveries to

the restaurants and data collection, recording and reporting. Value-added

services like shredding of lettuce, re-packing of promotional items continued

since then at the centres playing a vital role in maintaining the integrity of

the products throughout the entire 'cold chain'.

Cold Chain was one of the unique concepts of PIZZA HUT supply chain in

India, on which it had spent more than six years to get the entire system into

place. This system brought about a veritable revolution, immensely

benefiting the farmers at one end and enabling customers at retail counters

get the highest quality food products, absolutely fresh and at great value.

Through its unique cold chain, PIZZA HUT has been able to both cut down

on its operational wastage, as well as maintain the freshness and nutritional

value of raw and processed food products. This has involved procurement,

warehousing, transportation and retailing of perishable food products, all

under controlled temperatures. The following list of suppliers, who build up

the major supply chain of PIZZA HUT, reveal how this ‘Cold Chain’ works

and contributes towards the efficiency of PIZZA HUT.

Mahanand Milk Industries (Supplier of Cheese):

Mahanand has brought immense benefits to farmers in Baramati,

Maharashtra by setting up a network of milk collection centers equipped

with bulk coolers. Easy accessibility has enabled farmers augment their

income by finding a new market for surplus milk. The factory has:

• Fully automatic international standard processing facility.

Capability to convert milk into cheese, butter/ghee, skimmed milk

powder, lactose, casein & whey protein and humanized baby food.

Stringent quality control measures and continuous Research &

Development

From farm two degrees Celsius in 90 minutes is the first step to quality. For

example, the Rs 262-crore Mahanand Dairy Industries, located in Baramati

in Pune district of Maharashtra, manufactures cheese slices for PIZZA HUT

at 10 metric tons per month. Mahanand has helped set up 15 bulk cooling

centres throughout the district from which it purchases milk. Each cooling

centre, which is equipped with modern measuring and testing equipment and

a large cooling tank, is not more than a few kilometers away from local dairy

farms. A farmer can deliver milk even twice a day on his bicycle and get a
printed receipt on the spot, which also lists the quality of the milk supplied

by him as per fat content, colour and solids content. If the milk is sub-

standard or adulterated, it is rejected on the spot. A batch of milk can vary

from one litre to 10 litres, or more. Each batch is mixed in one large stainless

steel cooler and chilled immediately to two degrees Celsius to stop bacterial

growth and preserve freshness. From this point onwards, until just before the

burger is actually served in a PIZZA HUT restaurant hundreds of kilometers

away, the temperature is never allowed to increase. When the refrigerated

milk arrives at the Mahanand plant at Baramati, the milk in every single

tanker is thoroughly tested and rejected if found sub-standard, adulterated or

contaminated. The sophisticated testing lab can check fat content with an

accuracy of 0.1 per cent. It can even detect minute traces of pesticides or

antibiotics administered to cows. This instant feedback and the rejection of

the entire tanker-load forces farmers to follow the best practices in terms of

animal husbandry, use proper feeds, cut down on the indiscriminate use of

pesticides and animal medicines and completely stop even the slightest

attempts at adulteration.
Uttara FoodsPvt.LTD. Agriculture (Supplier of Iceberg Lettuce):

Implementation of advanced agricultural practices has enabled Uttara to

successfully grow specialty crops like iceberg lettuce, special herbs and

many oriental vegetables. Farm infrastructure features:

• A specialized nursery with a team of agricultural experts.

Drip and sprinkler irrigation in raised farm beds with fertilizer mixing

plant.

• Pre-cooling room and a large cold room for post harvest handling.

• Refrigerated truck for transportation.

Uttara Agriculture, a major supplier of iceberg lettuce to PIZZA HUT India,

is one such enterprise that is an intrinsic part of the cold chain. Exposure to

better agricultural management practices and sharing of advanced

agricultural technology by PIZZA HUT has made Uttara Agriculture

extremely conscious of delivering its products with utmost care and quality.

Initially lettuce could only be grown during the winter months but with

PIZZA HUT expertise in the area of agriculture, Uttara Farms in Talegaon,

Maharashtra, is now able to grow this crop all the year round. PIZZA HUT

has provided assistance in the selection of high quality seeds, exposed the
farms to advanced drip-irrigation technology, and helped develop a

refrigerated transportation system allowing a small agri-business in

Maharashtra to provide fresh, high-quality lettuce to PIZZA HUT urban

restaurant locations thousands of kilometers away. Post harvest facilities at

Uttara include a cold chain consisting of a pre-cooling room to remove field

heat, a large cold room and a refrigerated van for transportation where the

temperature and the relative humidity of the crop is maintained between 1º C

and 4º C and 95% respectively. Vegetables are moved into the pre-cooling

room within half an hour of harvesting. The pre-cooling room ensures rapid

vacuum cooling to 2º C within 90 minutes. The pack house, pre-cooling and

cold room are located at the farms itself, ensuring no delay between

harvesting, pre-cooling, packaging and cold storage. With this cold chain

infrastructure in place, Uttara Agriculture has also a plan to export this high

value product to other international markets, especially to PIZZA HUT

Middle East and Asia Pacific operations. PIZZA HUT expertise in

packaging, handling and long-distance transportation has helped Uttara to do

trial shipments to the Gulf successfully. In addition to export, PIZZA HUT

assistance has enabled Uttara Agriculture to supply this crop to a number of

star-rated hotels, clubs, flight kitchens and offshore catering companies all

over India.
Frozen chicken manufacturer and Suppliers. (Supplier of Chicken and

Vegetable range of products including Fruit Pies)

A joint venture with OSI Industries Inc., USA, PIZZA HUT India Pvt. Ltd.

and Frozen chicken manufacturer and Suppliers ., produces a range of frozen

chicken and vegetable foods. A world class infrastructure at their plant at

Taloja, Maharashtra, has:

• Separate processing lines for chicken and vegetable foods.

• Capability to produce frozen foods at temperature as low as -35

Degree Cel. To retain total freshness.

• International standards, procedures and support services.

Frozen chicken manufacturer and Suppliers. PIZZA HUT suppliers for the

chicken and vegetable range of products, is another important player in this

cold chain. Technical and financial support extended by OSI Industries Inc.,

USA and PIZZA HUT India Private Limited have enabled Uttara to set up

world-class infrastructure and support services. This includes hi-tech

refrigeration plants for manufacture of frozen food at temperatures as low as

- 35° C. This is vital to ensure that the frozen food retains it freshness for a

long time and the 'cold chain' is maintained. The frozen product is

immediately moved to cold storage rooms. With continued assistance from

its international partners, Uttara has installed hi-tech equipment for both the

chicken and vegetable processing lines, which reflect the latest food

processing technology (de-boning, blending, forming, coating, frying and

freezing). For the vegetable range, the latest vegetable mixers and blenders

are in operation. Also, keeping cultural sensitivities in mind, both processing

lines are absolutely segregated and utmost care is taken to ensure that the

vegetable products do not mix with the non-vegetarian products. Now, at

Uttara, a very wide range of frozen and nutritious chicken and vegetable

products is available. Ongoing R&D, both locally and in the parent

companies, work towards innovation in taste, nutritional value and

convenience. These products, besides being supplied to PIZZA HUT, are

also offered to institutions like star-rated hotels, hospitals, project sites,

caterers, corporate canteens, schools and colleges, restaurants, food service

establishments and coffee shops. Today, production of better quality frozen

food that is both nutritious and fresh has made frozen chicken manufacturer

and Suppliers. a name to reckon within the industry.

Godavari Food land (Distribution Centres for Delhi and Mumbai)

An integral part of the Godavari Group, Foodland specializes in handling

large volumes, providing the entire range of services including procurement,

quality inspection, storage, inventory management, deliveries, data

collection, recording and reporting. Salient strengths are :

• A one-stop shop for all distribution management services.

• Dry and cold storage facility to store and transport perishable products

at temperatures upto -22 Degree Cel.

• Effective process control for minimum distribution cost.

PIZZA HUT local supply networks through Godavari Foodland, which

operates distribution centres (DCs) for PIZZA HUT restaurants in Mumbai

and Delhi. The DCs have focused all their resources to meet PIZZA HUT

expectation of 'Cold, Clean, and On-Time Delivery' and plays a very vital

role in maintaining the integrity of the products throughout the entire 'cold

chain'. Ranging from liquid products coming from Punjab to lettuce from

Pune, the DC receives items from different parts of the country. These items

are stored in rooms with different temperature zones and are finally

dispatched to the PIZZA HUT restaurants on the basis of their requirements.

The company has both cold and dry storage facilities with capability to store

products up to -22º C as well as delivery trucks to transport products at

temperatures ranging from room temperature to frozen state.

Madhavi Food (Supplier of long life UHT Milk and Milk Products for

Frozen Desserts)

Madhavi Food, an ISO 9000 company, manufactures widely popular brands

–Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh.

The factory has:

• State-of-the-art fully automatic machinery requiring no human contact

with product, for total hygiene.

Installed capacity of 6000 ltrs/hr for producing homogenized UHT

(Ultra High Temperature) processed milk and milk products.

Strict quality control supported by a fully equipped quality control

laboratory.

All suppliers adhere to Indian government regulations on food, health and

hygiene while continuously maintaining PIZZA HUT recognized standards.

As the ingredients move from farms to processing plants to the restaurant,

PIZZA HUT Quality Inspection Programmes (QIP) carries out quality

checks at over 20 different points in the Cold Chain system. Setting up of

the Cold Chain has also enabled it to cut down on operational wastage
Hazard Analysis Critical Control Point (HACCP) is a systematic approach to

food safety that emphasizes prevention within its suppliers' facility and

restaurants rather than detection through inspection of illness or presence of

microbiological data. Based on HACCP guidelines, control points and

critical control points for all PIZZA HUT major food processing plants and

restaurants in India have been identified. The limits have been established

for those followed by monitoring, recording and correcting any deviations.

The HACCP verification is done at least twice in a year and certified.

The relationship between PIZZA HUT and its Indian suppliers is mutually

beneficial. As PIZZA HUT expands in India, the supplier gets the

opportunity to expand his business, have access to the latest in food

technology, exposure to advanced agricultural practices and the ability to

grow or to export. There are many cases of local suppliers operating out of

small towns who have benefited from their association with PIZZA HUT

India.

The outsourcing process in India of PIZZA HUT:

The PIZZA HUT sourced ingredients from all the parts of India. The iceberg

lettuce was specially developed for India using a new culture farming

technique. This variety of lettuce was similar to the lettuce PIZZA HUT
used elsewhere in the world. To meet the demand consistently, PIZZA HUT

helped Uttara Agriculture grow the lettuce throughout the year and even in

rain-shadow areas. The crop was harvested between 45 days, depending on

the climate. The crop was harvested early in the morning and immediately

stored in vacuum pre-coolers installed at the farm. The pre-cooler brought

down the temperature of the lettuce from 26º to 3º.

PIZZA HUT was able to bring technology to its suppliers too. Uttara and

Madhavi Foods was formed through a joint venture between Uttara and OSI

Industries, US, for chicken products; and between Kitran and Kitchen Range

Foods, UK, for vegetable patties. Uttara and Kitran's Taloja plant was

commissioned in December 1996.

"We have developed a supplier chain to get fresh

vegetables and chicken. We test everything that comes into our plant," said

Jose Azavedo, CEO, Vista & Kitran. The plant had a Hazard Analysis

Critical Control Point (HACCP) system to ensure quality. The ready-to-cook

patties, manufactured at the plant, were stored in rooms at -26º c. PIZZA

HUT had also applied supply chain technology when setting up Mahanand

Dairy Industries Limited. The Mahanand Dairy plant, with technological

collaboration from various international firms, including Schreiber

International Inc, US, went in for backward integration, by tying up with

cooperative organizations at the district level.

The joint venture with Baramati Cooperative Milk

Marketing Federation resulted in facilities across Baramati to collect milk. A

survey of Baramati was made and they set up 35 bulk stations with 60 tanks

where milk could be collected, checked and stored. The main aim was to

ensure was to ensure that the milk producer does not travel more than 2.5 km

to deliver the product. That ensured the longer life for milk. Once collected,

the milk was transferred to the main departments in insulated tankers. The

department procured 4 lakh litres of milk everyday, which was used to make

processed cheese exclusively for PIZZA HUT. The product was made

according to the multinational’s specification.

TABLE I

OUTSOURCING THE INGREDIENTS

Cheese Mahanand Dairy Industries Ltd., Pune

Dehydrated onions Jain Foods, Jalgaon
Iceberg lettuce Uttara Agriculture, Pune
Frozen chicken manufacturer and
Chicken patty
Suppliers , Taloja
Veg. Patty, Veg. nuggets, Kitran Foods, Taloja
Pineapple/Apple pie
Chicken (dressed)
Buns
Eggless mayonnaise
Sesame seeds
Iceberg lettuce
Fish fillet patties
Iceberg lettuce
Vegetables for the patties
Mutton and mutton patties
Riverdale, Talegaon
Cremica Industries, Phillaur
Quaker Cremica Pvt. Ltd., Phillaur
Ghaziabad
Meena Agritech, Delhi
Amalgam Foods Ltd., Kochi.
Ooty Farms & Orchards, Ooty
Finns Frozen Foods & Jain Foods
(Nasik, Jalgaon)
Al Kabeer, Hyderabad

PIZZA HUT convinced its suppliers to set up two separate production lines

for chicken and vegetable patties, keeping in the mind the link between

food and religion in India. This was in sharp contrast with its global

practice, where PIZZA HUT suppliers produced all types of patties from

the same line. These two production lines were housed in two different

rooms and the only way a worker could cross over from one line to the

other was by passing through the shower room. This eliminated all chances

of contamination. However, from a supplier's point of view, more lines

meant a reduction in capacity utilization and high cost of production. To

minimize costs, PIZZA HUT helped Uttara & Kitran Foods produce

derivatives of chicken and vegetable nuggets (not based on PIZZA HUT

recipe) for Indian hotels and restaurants and thereby reach new markets.
Uttara & Kitran's higher margin and higher capacity utilization for non-

PIZZA HUT products helped it remain cost competitive. PIZZA HUT

philosophy had been 'one world, one burger' i.e. the PIZZA HUT burger

should be consistent in terms of cost and quality throughout the world. To

ensure this, all of PIZZA HSUT suppliers followed the internationally

acclaimed HACCP systems wherein both inputs and finished goods were

subjected to chemical and microbiological tests.

This kept food fresh and free from contamination. Apart from this, the entire

production line was automated using sophisticated technology, barring only

the final compilation of the bun, cheese and patty - which was done by hand

Cases.

Managing Operations at PIZZA HUT

Define quality characteristics When Ray Kroc purchased the first PIZZA

HUT in 1955, he centered on what people wanted. With this focal point

came the utilization of Kroc’s theory of QSC (quality, service, and

cleanliness), which still serve as the PIZZA HUT key quality characteristics.
QSC thrillingly got PIZZA HUT off the ground, but as times changed, the

company saw many more market segments and chances.

PIZZA HUT became an expert in marketing toward specific markets

by advancing ideas such as breakfast menus, healthier choices and

alternatives, and adult foods (Lubetkin and Lattin 21-23).

2. Decide how they measure these characteristics The successful pursuit of a

quality program at PIZZA HUT requires the dedication of substantial

organizational resources, and it is vital to understand whether and how the

program generates value for the organization. It is evident that the US,

country where PIZZA HUT originated and which still sets the benchmark to

all PIZZA HUT restaurants across the world, is treating quality not just as an

organizational issue but as a national one. PIZZA HUT supports a position

that all organizations which want to survive and succeed must take quality

seriously.

PIZZA HUT’ U.S. corresponding store sales for all of 2004 showed

reduction in the face of severe competition. For the first four months of

2005, U.S. same store sales grew due in part to promotions. A number of

organizational and quality changes were introduced immediately to

adequately react to this drop in sales. One sign of a modification in PIZZA

HUT strategy was the expected shift in U.S. management, which franchisees
have said would clip layers between the restaurants and top executives

(Boje, Driver and Cai 14). 3. PIZZA HUT, which has built its business on

the three characteristics of food quality, convenience and price, has clearly

developed a unique approach to the idea of full customer satisfaction.

PIZZA HUT has clearly recognized that customer satisfaction in its case

goes well beyond simply serving the right food at the right time and price.

The first principle demonstrates its commitment to the total PIZZA HUT

experience. The customer should sometimes not mention food but should be

impressed by the quality of overall service and the hygiene standards of the

washrooms. Customer service for PIZZA HUT goes well beyond the

standard products and services offered, to include the broader aspects of the

PIZZA HUT experience and interaction with the community. 4. Control

quality against standards

These are the approaches PIZZA HUT uses to control its quality standards

Step 1 Set quality standards

Step 2 Appraise conformances to standards

Step 3 Act when standards are not met

Step 4 Plan to make improvements While PIZZA HUT’ executives propose

participation as a means of connecting the contribution of people and

encouraging a sense of belonging,

it remains the case that the approach need not be used in this

participative manner. A further tool is the measurement of what PIZZA

HUT calls operating quality costs. These are divided into four self-

explanatory categories:

■ prevention costs, including quality planning;

■ appraisal costs, including inspection costs;

■Internal failure costs, including costs arising from scrap and rework;

■ external failure costs, including warranty costs and complaints.

1. Definition of supply chain management Supply Chain Management is

often defined as the running of the whole value-added chain, from the

supplier to producer right through to the retailer and the final customer.

SCM covers three main goals: decrease inventory, boost the transaction

speed by swapping data in real-time, and boost sales by implementing

customer requirements more accurately.

2. Key elements in PIZZA HUT supply chain The Bullwhip Effect is a main

reason for higher costs and problems in supply chains. It depicts how small

fluctuations in demand at the client level are augmented as orders pass up

the supply chain through distributors, manufacturers, and suppliers. In great

variety supply chains, the upstream activities react to forecasts, while

somewhere on the downstream part the chain waits for orders to be made.

Think about these two former fast food mottos: “We Do it all for you”

proposed by PIZZA HUT and “Have it Your Way” by Burger King. PIZZA

HUT makes finished hamburgers “to forecast” – PIZZA HUT doesn’t know

when people would come in for lunch, but they make burgers in anticipation.

Burger King prefers to wait until customers actually place (customizable)

orders before the burgers are made. This is more frequently known as the

“Build-to-Order” (BTO) model, while PIZZA HUT' strategy up to now is

called “Build to Stock” (BTS). Both models have advantages and

disadvantages, and PIZZA HUT considers doing a combination of both. 3.

Benefits PIZZA HUT purchases its potatoes from corporate farmers in

farming states not the commodities market. Consequently it limits its contact

with price fluctuations that might have occurred by using the commodity

exchange to get those goods. The company has even other matters to think

about. Its franchisees have to realize economies of scale to pay the additional

franchise fee, royalties and price for the potatoes that produce the French

Fries. Constructing a brand name is the most significant thing that PIZZA

HUT has today. Therefore by building a complete cycle and depending less
and less on the market fluctuations, PIZZA HUT enhances its reputation.

Conclusion PIZZA HUT current strategy is to further promote the image of

healthy food that can be found at “New or Re-modeled PIZZA HUT”.

Macdonald’s has been targeted by many health group activists as the

company that contributed to obesity problems in America. The response was

quick if not immediate. PIZZA HUT announced it plans to condition out its

Super Size French fries and soft drinks after it became apparent that public

had adopted different tastes recently. PIZZA HUT new strategy of

presenting its restaurants as the convenient place where healthy food can be

found is in line with its recent attempts to create a healthier image for itself.

The corporation is planning other menu changes, such as switching to a

cinnamon roll and a sausage burrito as its core breakfast offering, while

bagels would become an alternative item. These changes are part of its

strategy to offer a range of choices that support a balanced lifestyle, thus to

attract new clients and retain old ones. After pursuing sensational expansion

in the past, PIZZA HUT must sharpen its focus on product quality and speed

up its decision-making to recover sales and profits in the United States,

industry analysts say. “PIZZA HUT marketing has to be taken up a step

further. They have got to find one or more new products or go back to

advertising the Big Mac on some grounds that the consumer can
understand,” said Ron Paul, president of Technomic Inc, a Chicago-based

restaurant consulting firm (Boje, Driver and Cai 52).

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