Decision Making for Restaurant - Case Study

Introduction

The main aim of this essay is to identify the issue of low employee retention rate in the local Asian restaurant named Spice Temple opened in Blight Street, New South Wales, Australia. This essay will mainly outline the issue of employee turnover while outlining various solutions and solving the problem by application of different decision making tools. Spice Temple is a Chinese restaurant where regional Chinese dishes are served in an intimated atmosphere however the restaurant is finding it difficult in retaining the chefs and waiters that know Chinese language. Due to high turnover rate, the restaurant is currently facing low customer satisfaction level. 

Problem Background 

The higher level of turnover of full-time employees is associated with lower customer satisfaction rates, speed of service and friendliness. Employee turnover creates the extra costs including recruitment costs and disruption in the operations and other negative consequences to the restaurants’ performance (Tapola, 2016). It is to be noted that the employees play a vital role when it comes to the overall quality of the service. However, Spice Temple is facing the problem of high turnover from past 8 months. The employees (especially chefs) are leaving the restaurant after every 2 months after getting trained on how to cook various authentic Chinese dishes. According to Liu (2014), higher employee turnover rates decrease the productivity; increase the costs and leads to loss in profits and revenue. Kacmar et al. (2006) also found out that higher rates of employee turnover in restaurants can lead to increased waiting time of order and food wastage. Moreover, it was also found that it takes twice the employee’s salary of finding and training the new employee after one employee leaves. In the case of Spice Temple, the manager is responsible for taking effective steps for solving the problem. 

Problem Definition

Employee turnover is the rate at which employees leave the company either voluntarily or involuntarily by the company. Turnover rate is calculated by dividing the total number of employees leaving the company by the average number of employees recruited in the company in previous year or month. There is an ample evidence of lower levels of customer satisfaction caused by higher levels of employee turnover (Hurley, 2015). According to Lashley (2001), the turnover costs can be either direct or indirect. The direct costs include replacement of the former employees and the indirect costs are associated with lost customers and forgone revenue. Training cots can also be considered as both direct and indirect as it requires the restaurant to pay for the courses and material included in training the employees. 

High employee turnover rate is a structured problem that is faced by the organizations all around the world (Lashley, 2001). It is considered to be a straight forward problem that can be determined and solved by testing and implementation of solutions. The structured problems in the restaurant industry involve the service speed and customer ratings (Liu, 2014). The higher employee turnover might result in lower speed of service i.e. time taken for a customer to get their food after placing their order. This might result in lower customer satisfaction rate and higher customer complaint rates.