SandwichQueen

CASEPREPARATION

Background
Situation

SandwichQueen(SQ)isoneofthelargestfastfoodrestaurantsintheUS.
$15.4Binsales(lastyear 2010)
Holdsnearly40%oftheUSfastfoodmarket
50%ofsalesoccurduringlunchhours
Marquisbrand
CompetitorsincludeotherfastservicechainsintheUS,andcompeteon:
Fastservice,cleanliness,andqualityfood

Complication

Whilerevenuehasbeengrowing,profitshaverecentlydeclined.

Question

SQistryingtofigureoutwhythistrendisoccurring.

18

16

0.9

14

0.8
0.7

12

0.6

10

0.5
8

0.4

0.3

0.2

0.1

0
2002

2003

2004

2005

2006

YEAR

2007

2008

2009

2010

PROFITPERSTORE($M)

REVENUE($B)

Revenue&ProfitperStore

Revenue
Profit

RevenueGrowthonSameStoreBasis
5.1
5

REVENUE($M)

4.9
4.8
4.7

Revenue

4.6
4.5
4.4
2006

2007

2008

YEAR

2009

2010

AverageUSStoreFinancials
2006

2007

2008

2009

2010

Revenue

5,000,000

5,000,000

4,600,000

4,800,000

5,000,000

COGS

2,500,000

2,500,000

2,300,000

2,400,000

2,500,000

Labour

700,000

700,000

700,000

850,000

1,000,000

Occupancy

150,000

150,000

150,000

150,000

150,000

Miscellaneous

700,000

700,000

700,000

700,000

700,000

PROFIT

950,000

950,000

750,000

700,000

650,000

OTHERCOSTS

NewSQInitiative
InJanuary,2008,SQimplementedtheasyoulikeitprogramindomesticrestaurants,where
employeesmakethesandwichafterthecustomersorderit
Thisreplacesthepriorsysteminwhichsandwichesweremassproducedandkeptwarmin
bins
Managementfeelsthattheprogramprovidesafresher,morecustomizedproductthatwill
pleasecustomers,andreducematerialwaste
SQlaunchedamajoradcampaignaroundtheasyoulikeitprogramwhichhighlightedthe
increasedvariety,customizedservice,andfresherfood.

RegisterSpeedData
Cust.WaitTime

2006

2007

2008

2009

2010

Breakfast(69)

1.5min

1.4min

1.6min

1.6min

1.6min

Lunch(112)

2.2min

2.1min

3.2min

2.8min

2.3min

Dinner(58)

1.4min

1.3min

1.5min

1.5min

1.5min

Other

1.3min

1.3min

1.4min

1.4min

1.4min

%Sales

2006

2007

2008

2009

2010

Breakfast(69)

25%

25%

31%

28%

25%

Lunch(112)

50%

50%

40%

45%

50%

Dinner(58)

15%

15%

17%

16%

15%

Other

10%

10%

12%

11%

10%

CustomerSatisfactionSurvey
Criterion

Importance

2006

2007

2008

2009

2010

Service

Speed

10

Price

Cleanliness

Consistency

Freshness

Quality

Customization

InferencestoNotice
Afterdeterminingthatthedropinunitssoldisnotaresultofprice,customerpreferences,or
externalfactorstheintervieweeshouldrecognizethatSQmodifiedtheirbusinessmodel.
Thecaseisaboutoperationsasopposedtoprofitability
Candidateshouldconstructaneatstorylineshowing:thenewinitiativereducedorder
processingspeed.Thiscausesservicetoslowdown,andrevenuetodropduringthevital
peaklunchtimehours.
In2009and2010,SQmanagedtodecreasewaittimebyaddingmorelabour.Byincreasingthe
staff,theywereabletoservetheordersquicklybut
Theprofitabilityisstillnotatthe20062007level
FreshnessandproductcustomizationislessimportanttoSQscustomersthanspeed,food
qualityandprice.

Solutions
WaitTime

Cust/Hr/Reg

Rev/Cust*

Rev/Hr

LunchRev/Reg

Reg*

Rev/Store

2minutes

30

150

450

2,250

3minutes

20

100

300

1,500

/day

750

* assumeorask

OnecouldimplementAsyoulikeitduringperiodsoflowandnonpeakvolume.Duringheavy
periods,SQshouldusethestandardproductionstrategytoensurethatcustomersareserved
quickly.
Also,SQmightprovideacounterthatacceptsindividualizedorders.Therefore,thecustomers
selfselectandchoosetostandinanotherlineiftheywishtohaveanordercustomized.This
ensuresthatbothcustomertypesarehappy.