Reference no: EM13915881

Yardstick Report: Parking Problem at Caputi's Italian Restaurant

You have always enjoyed the great food at Caputi's Italian Restaurant, owned by your Uncle Guido. Caputi's is a formal, upscale dining Italian food restaurant in downtown Tempe, Arizona, near the campus of a major university where you are a student. Because of its steadily increasing business, Caputi's has outgrown its small parking lot, which has only 20 parking spaces.

Frustrated over their inability to park in the restaurant's lot, some potential customers give up and go elsewhere to eat. Some of the regulars have also disappeared. Caputi's cannot add parking spaces because adjacent land is unavailable. However, according to Guido, "The problem is not a lack of parking spaces; it's a lack of willingness on the part of customers to walk from where they parked to the restaurant." To pay its debts, the restaurant needs to continue to grow. Uncle Guido says, "Relocation is out of the question-this spot is too good!"

Guido wants you to evaluate options to ease the parking problem, using criteria that he and you develop. The options are to (a) use a valet service, attendants who park and later retrieve cars for patrons, (b) run a free shuttle service between the restaurant and a nearby parking garage, and (c) advertise the availability of nearby parking garages and bus routes on the restaurant's Web site and in the restaurant. The crite- ria are (a) the cost to the restaurant to implement the solution, (b) the cost to the customer to use the solution, (c) the ease of implementa- tion for the restaurant, and (d) convenience to the customer.

Besides talking to Guido, you interview a valet parking company about its services and fees, and you interview the managers of the nearby parking garages about availability and prices. You survey 40 of the restaurant's customers about their willingness to use a valet service and the price they would be willing to pay for the service.

Decision Matrix

You explain what a decision matrix is to Guido, and together you decide on the weights of the criteria. The net profit (or loss) to the restaurant to implement the solution receives a weight of 10. The cost to the customer to use the solution receives a weight of 6. The ease of implementation for the restaurant receives a weight of 4. The conve- nience to the customer receives a weight of 8.

Cost to the Restaurant to Implement a Solution

The least expensive valet service in town sent you a quotation that pegs a patron's charge at $7 per car, an amount that includes a $2 flat fee for parking at a nearby parking garage. The valet parking company has offered its service free of charge to the restaurant.

The major costs of operating a shuttle service are about $1,500 to buy a van and $200 per week to pay an employee to drive the van between the garage and the restaurant during dinner hours. Costs to advertise available parking options on the restaurant's Web site and at the restaurant are about $200.

Cost to the Customer

The per-vehicle charge of $7 plus a customer tips for valet service of about $3 makes the valet service the costliest option. The shuttle
service is free to customers. Similarly, learning about the availability of nearby parking garages and bus routes on the restaurant's Web site and at the restaurant is free to customers.

Ease of Implementation

Advertising parking options is the most convenient option for the restaurant because it takes the least amount of time and effort. Offering a valet service is the second most convenient option for the restaurant. Although the valet service does most of the work, this option requires more weekly administrative work for the restaurant than advertising requires. Caputi's may also need to provide food and beverages for valets. Operating a shuttle service is the least convenient option for the restaurant because it requires the restaurant to buy a van; pay a driver; and provide fuel, maintenance, and insurance.

Convenience to the Customer

A valet service is the most convenient option for customers because this option results in the fastest entry into the restaurant. Your survey shows that 90 percent of the customers are willing to use the service. A shuttle service is the second most convenient option for customers. It is not as convenient as driving to the restaurant entrance and leaving a car with a valet. Advertising offers information to customers but not any significant convenience, making it the least convenient option.

Your Task. Uncle Guido is relying on you to analyze the data and help him make a decision. Write a memo report of three or fewer pages to him. Prepare a decision matrix with the weights provided. For each criterion in the decision matrix, give the option that ranks highest a ranking of 3, the option that ranks second highest a ranking of 2, and the option that ranks lowest a ranking of 1. Multiply each weight by the ranking, repeat for the other criteria, and then sum up the results to compute a total. From your decision matrix, draw conclusions and then make recommendations. Overall, which option is best? Should you still recommend advertising the parking options?