Case Study: The Leith Bistro Restaurant: Managing Change in Difficult Times
The Leith Bistro is a Scottish, family-owned restaurant located on the ground floor of a shopping mall in the center of Edinburgh which is a major city. It attracts, primarily because of its ease of access, a steady flow of customers and prides itself on offering a no-fuss menu, which includes a good range of affordable yet delicious Italian dishes – from starters and appetizers, through main courses and specials to pastries and desserts.
While the Leith Bistro seats around 100 customers, its layout is fairly basic and has a ‘fast-food’ feel to it. A major concern for management has always been to maximize efficiency and reduce turnaround times: orders must be swiftly relayed to the kitchen and the food brought to the table within 15 minutes, even during ‘peak hours’ – the intended outcomes being consistency in both customer service and daily sales targets.
The Leith Bistro employs 40 people, 50% of whom have permanent contracts, working either day or evening shifts. The other half is split between part-timers and relief workers who are usually the ones to do double shifts over busy weekends. All terms and conditions of employment are negotiated on an individual basis.
Over the past few months staff have found it increasingly hard to maintain the desired levels of customer service. There seems to be a lack of coordination between waiting and kitchen staff. Once seated, customers often have to wait for as long as one and a half hours before being served while a large number of those queuing up outside usually just give up on the long waits and walk away in search of other eating options.
More alarmingly, profit margins have remained ‘thin’ in recent years, and, for the first time in a generation, losses were registered on the restaurant’s balance sheet. Leith Bistro’s current manager attributes this particularly poor performance to the economic crisis and to the fact that the competition has all of a sudden tightened up with the opening of a pub and two new restaurants within the shopping mall and a growing cluster of similar businesses within a mile radius.
Dispirited, the current manager has decided to step down to make way for his son, Angus, who has just completed his Masters in Business Administration. Angus’s remit is to deliver a new business strategy that can effectively reverse Leith Bistro’s misfortunes and ensure its survival and growth in the longer term. Whilst recognizing that these are indeed difficult times, Angus believes that there is a need, more than ever, for businesses to ‘live by their wits’ and demonstrate an ‘entrepreneurial spirit’ if they are to have any chance of success. He has therefore formulated a proactive and quite aggressive change strategy containing the following key components, which are to come on stream almost at the same time:
- The Leith Bistro is to be turned into a chain restaurant. A total of £1.5 million is to be spent on the refurbishment of the existing site and on the set up of two new restaurants in different shopping malls – one located near the harbor and the other 5 miles away in the north of the city.
- The chain restaurant will differentiate its offerings in the form of a revamped menu, a sumptuous décor, and a new bar area, for which a select clientele would be more than willing to pay a premium.
- Around 60 new employees are to be recruited and deployed across the three restaurants. While all members of staff will have to attend induction training to meet the new standards of service, some of the more experienced staff will be transferred to the newly opened restaurants to help out with on-the-job training for new recruits.
- A new information system will be set up to link up The Leith Bistro with its suppliers and standardize ordering, payment, and accounting processes across restaurants. Also, a multimedia website will enable customers to access menus, make reservations, post feedback, download discount vouchers, benefit from promotional events, or simply keep abreast of any development at the Leith Bistro.
- The Leith Bistro will seek opportunities for joint promotional alliances with potential partners especially those operating in the same shopping malls – a cinema complex and various retailers have already signaled their interest.
- Finally, the Leith Bistro will demonstrate social responsibility by sponsoring community projects, which can contribute to the development of a strong brand image and a self-reinforcing cycle of social value, employee engagement, customer loyalty and enhanced return on investment.
All the owners of the Leith Bistro think that Angus’s business strategy is very creative and quite enticing since it holds the promise of bringing profit margins to 15% within 5 years. However, some have expressed their concerns with regards to the considerable capital outlay that Angus’s new strategy will require, which, if unsuccessful, will leave the whole business in tatters. To allay these concerns, Angus’s father has asked him to hire the services of a consultant to help him out with the execution of his new business strategy.
You are required to step into the shoes of the consultant hired by Leith Bistro. Your first task is to write a report addressing the key change issues that can have a significant impact on the implementation of its new business strategy. While practically oriented, your report should draw on appropriate change theories and models and use diagrams where applicable to support the discussion to include the following:
- An analysis of the changing context taking into account both the internal and external drivers for change (220 words). This should include both a PEST and SWOT analysis (please note that the word count contained within these tables will not be included in the overall word count, so please be as detailed as necessary).
- An analysis of the nature of change facing the Leith Bistro (220 words).
- A critical examination of the possible types of employee reactions to the proposed change and proposals on how this change should be managed using the appropriate theory. (560 words).
- Recommendations as to how management should plan and execute the proposed change so as to ensure its successful implementation using a recommended change model (800 words).