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You are encouraged to think beyond just the information in the case, drawing on information from classes, articles you have read, your own experience, etc. Be thoughtful and critical as you craft your responses and be sure to cite any additional sources used in your report using APA style, both in text and at the end of your report.
Questions to be answered:
Planning, as a function of management, is important in the development of a new business entity. Identify and discuss necessary pre-planning details that should be known prior to opening.
Discussing restaurants in general, predict risks that are present when management is under-qualified and risks when over-qualified. What risks are present at Zen Blenderz?
Zen Blenderz has been open for 6 weeks. Discuss a minimum of four strategic options that are available to Kirk for the future of Zen Blenderz. Select what you believe to be the best option and discuss why it is better than the other options.28 Volume 5, Number 4
By Matthew VanSchenkhof
If You Build It They Will Come—
Zen Blenderz doors had been open for six weeks beginning with
an opening for breakfasts Monday through Friday. Four weeks ago,
under the direction of Kirk, Zen Blenderz opened for lunch and dinners.
Soon after, Zen Blenderz opened for lunches and dinner seven
days each week.
Kirk was perplexed. Zen Blenderz had been open for six weeks
and details were not falling into order. He was the owner of a unique
vegan restaurant in a town of 20,000 less than an hour east of Kansas
City. He forecasted sales to increase and expenses to decrease to the
point the operation would hit a break-even. He believed that he’d
done everything right, but the numbers are just not hitting what he
expected. It was decision time. What needs to happen now, today, to
keep the operation running? He simply could not afford to continue to
put more and more cash into Zen Blenderz.
Kirk’s road to the opening of Zen Blenderz started two years
ago. A yearly check-up had found him overweight, with high blood
pressure, high (bad) cholesterol, and living a sedentary lifestyle.
When choosing options for how to improve his health, he decided to
attempt a holistic, non-medicinal route. Positive results were felt immediately.
So much so that Kirk felt compelled that he had a duty to
share the benefits of his change not only through speaking with others,
but by possibly opening a restaurant. By doing so, members of the
local community would have the opportunity to be more healthful.
Kirk’s lifestyle changed because how he thought of food changed,
as did his diet. He eliminated beef, pork, chicken, and dairy. He began to
eat a macrobiotic diet: whole grains, unprocessed foods, fish, fresh fruits,
and vegetables whenever possible. The education about his diet led to
the concept of a vegan restaurant utilizing all he had learned and experienced.
Kirk had several friends in the local area including raw vegans (who
eat unprocessed and uncooked foods) and others on macrobiotic diets.
Concept to Operation
Zen Blenderz was born of a desire to offer a vegan menu
consisting of freshly prepared items that were wholesome and as
unprocessed as possible. No meats, dairy, eggs, or animal products (including
honey) would be used. Additionally, because the community
lacked options for those with food allergies, Zen Blenderz menu was
designed to be made with gluten free options and equipment was
kept specifically for tree nut allergy customers.
Once the decision to move forward was made, a name was created.
Kirk wanted to use the term “Zen” in part because of the holistic
thinking and feeling created by a vegan diet. Featured items would
include vegan smoothies, so the term “Blenderz” completed the name.
The name and symbol for Zen Blenderz were trademarked.
A business plan was developed that outlined start-up costs and
expenses of less than $400,000. The operation was to be located in
Warrensburg, Missouri, a town of approximately 20,000 residents that
included a university with an enrollment of 10,000, an Air Force Base
of 2,500 nearby, a medical center, and several medium size employers
(more than 50 employees).
The chosen Zen Blenderz location was previously an unsuccessful
independent casual hamburger restaurant (not a franchise or chain). The
building was on the east side of town, away from the main road, and away
from most population centers. It was located next to a Dairy Queen, in a
parking lot containing an L-shaped strip mall. According to traffic studies
completed for DQ, the location is alongside the second highest traffic
road within Warrensburg. Within one mile of Zen Blenderz were Western
Missouri Medical Center, multiple medically based offices, and three
smaller hotels (less than 100 rooms). Downtown and the university were
1.5 miles away. The Air Force Base and next town was 11 miles away.
Matthew VanSchenkhof is affiliated with University of Central Missouri.
Zen Blenderz Logo
Journal of Hospitality & Tourism Cases 29
Kirk chose this location because of the traffic information, an
adaptable building was available for lease on the site, and operational
start-up was possible within six months. Other sites were considered
but a cost analysis found this location to be the easiest and most reasonable
Zen Blenderz is located in a rural portion of Missouri, a state
known for its cattle production and farming. As such, smaller portions
of the population understand the macrobiotic, vegetarian, or vegan
lifestyles. Few surrounding restaurants offer vegetarian options and
none are vegan. It is unknown how many vegetarian/vegan residents
reside within 50 miles of Zen Blenderz.
None of the surrounding communities have a restaurant that provides
the type of menu that Zen Blenderz offers. This included the Air
Force base 15 minutes away. Zen Blenderz is seeking to capture market
share from these areas. The Air Force base provides a population
that is believed to be more interested in healthier lifestyles and Zen
Blenderz would be a great option for them.
Building and Equipment
The previous operation was a casual dining hamburger restaurant.
The inside of the building was completely renovated, including
new restrooms, layout, kitchen, and equipment. Two-door and threedoor
refrigerators were purchased along with a two-door freezer. A
second set of line preparation equipment was purchased in order to
serve customers with tree nut and gluten allergies. Line equipment
included a grill, six-burner range, double convection ovens, two refrigerated
prep tables, and a coffee brewer.
The dining room held eight 4-top tables and three 2-top tables
for a potential seating of 38 guests. The floor was polished concrete;
walls were soft tan, and the ceiling had new white tiles. Two point of
sale systems (POS), cash registers, a beverage station, and pick-up window
completed the public space. (One more POS system was available
for the drive-through.)
Zen Blenderz menu (figure 2) was created with the help of a local
culinarian who was also vegan. Appetizers, soups, sandwiches, desserts,
entrees, and smoothies were developed. Restaurant production processes
were kept in mind. All menu items were made from scratch with
few ingredients, could be made by people with limited skill, and could
be made consistently. Zen Blenderz had a wide variety of items on the
menu ranging from oatmeal with fresh berries to a jackfruit sandwich.
All menu items had a great balance of flavor, color, and texture.
The food used within the operation was high quality and included
items that were difficult to source and required a premium
to stock. Produce was almost 100% fresh and purchased whole so it
Zen Blenderz Menu Front
needed processing. Of the 116 items in inventory, 38.8% were used
for only one and 18.9% for two recipes. This included baked goods for
breakfast, soups, sauces, and sides. TERRA® chips were used as the side
for most sandwiches.
Menu prices were set by comparing like items to restaurants
within Warrensburg. Sandwich prices compared to other sit-down restaurants,
and smoothies compared to Dairy Queen next door. The raw
cost of high quality ingredients was not weighted heavily in the pricing
decisions. Perishability was a major concern because most food
items were purchased fresh. Actual food cost was higher than 60% for
some menu items. Overall food cost ranged from 57.4% to 91.3% over
the previous six weeks.
30 Volume 5, Number 4
Kirk decided to implement a different labor structure versus what
is typical of restaurants. A no-tipping policy was instituted at Zen Blenderz.
Instead of paying a minimum wage of $3.63 per hour for tipped
employees, wages started at $7.50. Kirk was very conscious of customer
service. During the first three weeks the restaurant was open, staffing
was very heavy. On the job training occurred with double staffing
during the first two weeks. Because of this, and the limited number of
customers, initial labor costs were 107% of sales. Labor is a huge concern,
remaining above 100% of sales for weeks one through six.
Initial marketing was done with the creation of the name and symbol.
A website and Facebook page were created. Advertising could be
found in the lobbies and room books of two local hotels and brochures
were dropped off at local medical offices. Zen Blenderz sponsored the
local university’s music programs, which allowed coupons to be printed
on the back of program tickets. Very little was done beyond this.
Interviews with potential managers began three months prior
to opening. Rebecca was hired after recently leaving a management
position of an IHOP style of operation. She had been with her previous
employer for eight years and acted predominantly as a front-of-house
manager. She had graduated from high school, and had two semesters
of college experience. Rebecca was the best available candidate for
the available salary of $12 to $15 per hour. Rebecca had some financial
and a lot of production and service management experience. Rebecca
was not a vegan and was completely unfamiliar with the term until
interviewing for the position. Although she believes eating a macrobiotic
diet is healthy, she admits that it is not her style.
Scott was hired as the kitchen lead. He had three years cooking
experience, mostly in an elder care home. He had limited contact leading
other people, but was a capable cook and cared about the product
that was being delivered to the customer. Scott had almost no ordering,
inventory, and forecasting knowledge. Scott also had difficulty
grasping the entire workings of the operation. He did not understand
that what worked well in the kitchen did not translate into the front or
sanitation areas. Until Scott could be brought up to speed, Kirk’s friend
and vegan acted as the lead cook.
Emily, a family friend of Kirk’s, was hired as a front-of-house lead.
Emily is a vegan and understands the food, menu, benefits, and overall
concept very well. She has limited management and leadership experience
as well as limited table waiting experience.
Wait, kitchen, and sanitation staff were interviewed and hired
by both Kirk and Rebecca. Starting wages attracted a variety of apFigure
Total Weekly Sales per Meal
Average Weekly Labor Cost Percent
Journal of Hospitality & Tourism Cases 31
plicants. Most were ages 16 to 22 and the front of house staff was
predominantly 16 to 21 years old. Kitchen staff were around 25 years
old. Sanitation was staffed by a mix of front and back staffs.
Front of house staff were trained in restaurant service, drivethrough
service, and in the production of desserts and smoothies.
Kitchen staff focused on production, preparation, sanitation and did
not assist in the front.
Zen Blenderz was a full-service restaurant with staff acknowledging
and seating patrons upon entering. Heavy paper napkins and
silverware were provided as well as water for all who are seated. The
menu was printed in black and white on heavy linen-colored 8.5 x
17 papers and was two-sided. Orders were taken on paper and entered
into a touch-screen point of sale system. Service was friendly,
customer oriented, yet chaotic with staff entering incorrect orders
or forgetting sides such as soy milk with coffee. Staff had, at times,
just stood around when sidework could be completed, tables could
be cleaned, or dishes sorted. Typically there were two servers in the
dining area during open hours. Servers acted as hosts, waitstaff, and
cashiers. Servers were also responsible for the drive through and could
be seen with a headset on while in front.
According to the National Restaurant Association (2015), daily
restaurant sales averaged $1.94 billion and 76% of adults eating at restaurants
are trying to eat healthier. There are no definitive studies that
state overall restaurant failure rates. A study of independent restaurants
in the Columbus, Ohio metropolitan area found that restaurants closed
27.51% within one year, 47.13% within two years, and 61.36% within
three years (Parsa, Self, Njite, & King, 2005). The same study found that
the three year failure rate for franchised operations was 57.22%.
Total Weekly Transaction Counts
Zen Blenderz opened with little fanfare on Monday, August 1 after
a week-long soft opening for family and friends. Kirk considered it a solid
first week (figure 3). Customers rated the freshness, appearance, and
flavor of the food very high. Most customers thought Zen Blenderz offered
a lot of value compared to the quality they received and the price
they were charged. 554 transactions occurred averaging $12.13 each.
Several “refinements” were yet to occur and the plan was to work
on them as the operation settled into normal operations. Kirk was aware
of this and had budgeted accordingly. Labor was still high, averaging a
little over 107% for the week (figure 4) and actual food cost was 86.7%.
Specific targets were not created for either food or labor cost, but the
plan was both would add up to 100% within four weeks of operation.
Weeks Two through Four
Increases in sales did not occur. Instead sales (figure 3) remained
consistent, ranging from $6,418 to $6,799. New customers were appearing
in Zen Blenderz and many were steadily returning. The customer
mix ranged from the local college students to people who could easily
be classified members of AARP. Kirk was a very strong ambassador for
the restaurant and took every possible opportunity to visit the operation.
Most customers tended to work in the medical profession or were
affiliated with the university as faculty or staff. Potential customer bases
included university students and the nearby airmen and women.
Food production issues arose during operating hours. Problems
with consistency occurred because kitchen staff was not following the
recipes correctly. Food window times increased due to inadequate
prep being completed. Both problems impacted food cost (figure 6)
and product quality. This was not completely unexpected as the kitchen
staff and operation were maturing.
Dining room issues were not being resolved as quickly as Kirk
had hoped. Waitstaff continued making simple mistakes and standing
Average Weekly Food Cost Percent
32 Volume 5, Number 4
Sales & Transactions for Weeks 1-6
Sales & Transactions Week 1-6 (cont.)
around a lot. Tables remained dirty and sidework undone while staff
chatted in the kitchen or played with their phones.
Food cost remained a problem, averaging 82.1% for weeks two
through four (figure 6). Labor cost increased during the same three
week period from 107.4% in week to an average of 117.1%. Kirk worried
about the perception of service so dining room remained overstaffed.
Weeks Five and Six
Kirk was becoming concerned. Sales (figure 3) and transaction
counts (figure 5) had begun to trend downward after plateauing.
Customers remained intensely loyal to the operation. Glowing reviews
were available on Urban Spoon and Yelp stating the quality and
experience were a great value. But new customers were few and far
between. A few people had chosen to leave after sitting, reviewing the
menu, and commenting on the lack of beef on the menu. It seemed
that Zen Blenderz had hit 90% of the macrobiotic seeking customer,
and no new ones were available.
Seeking new customers, Kirk chose to purchase two billboards
along the main road that passes through Warrensburg. He also sought
partners from neighboring communities, sponsoring special events at
the restaurant. Flyers were left at similar businesses in the surrounding
communities, such as health food stores.
The issues associated with waitstaff were not yet corrected.
The kitchen was working more efficiently and food cost percent was
decreasing but consistency remained a problem. Kirk had hoped he
would not have to spend so much time at Zen Blenderz. Instead he
found he was spending twice as much time and it was not as fun as
when Zen Blenderz first opened.
Kirk’s dilemma remains. Where does he go from here? What is/
are the best options, strategies, decisions, and ways to move forward?
How does Zen Blenderz become a viable business?
Journal of Hospitality & Tourism Cases 33
National Restaurant Association. (2015). 2015 Restaurant industry
pocket factbook. Retrieved September 9, 2015, from restaurant.
Parsa, H. G., Self, J. T., Njite, D., & King, T. (2005). Why restaurants fail.
Cornell Hotel and Restaurant Administration Quarterly, 49(3), 304-322.