Porcini’s Pronto: “Great Italian cuisine without the wait!” Harvard Case Solution & Analysis

Introduction

The company has started its operations as a family owned restaurant in the year 1969 in Boston’s north end. It opened new restaurants in many places after its establishment and became recognized for providing high quality services to the customers. Furthermore,Porcini's Inc. has restaurants that operate in 23 different locations, which generated $94.3 Million revenue at the end of the year 2010. The reason of the Porcini's Inc.Success was due to the combination of quality of services as well as the quality of food that it provides in its each location.

Problem Identification               

Porcini’s management has been seeking opportunities to leverage its brand. It was operating its stores at one option however; the management ruled it out due to intense competition. Catering was another possibility, but no one at Porcini’s stepped forward as its successor. Nonetheless,they have decided to expand and have also considered the project known as Pronto. The project team was puzzled over Pronto’s expansion options. They have three options;however, they do not know which option to select.

Operational Management Model

Although the basic purpose of both the manufacturers and service providers is to satisfy customers’ needs, however, there are differences between the operations of both industries . Moreover, organizations succeed only by providing services that satisfy the customers’ need. Pronto produces goods asa manufacturing business so that it can adopt a make-to order or make-to stock approach to serve food according to the customers’ needs(Adan, 1998).

 Customization requires production one at a time rather than in batches there fore,it is expected to follow the Just In time (JIT) approach to serve its customers on time and to facilitate the management to support operations in serving its customers quality food like its competitors(Kootanaee, 2013). Pronto should give personal attention to its customers and must satisfy their needs in a timely manner. This task is complicated because the demand can vary over the course of any given day. Managers are expected to pay particular attention to employees’ work schedules and inventory management on special occasions and weekends.

Case Analysis

Options of Growth

The senior management of Porcini’s is considering three options for expansion. The first option is Company Owned and Operate; the second option is franchising, and the third option is Syndication.

Option 1: Company owned and operate

The company owned and operate is the first option, which the company is considering as with this option, it can get the control of the business operations that will give them the opportunity to enhance its market size. Pronto needs people who are team oriented in order to support its operations. They must also be open in measuring their performance and being rewarded accordingly. Therefore, if the company goes with this option, then Pronto will be controlled and operated by the company. This option requires the purchase of prime real estate locations, borrowing of the capital needed to build new Pronto and then operating.

The real estate consultant estimated that the cost of each site will be 2.1 million. In addition to this,the project team estimated that each site would generate 2.4 million in annual revenues after an initial startup period. The finance department estimates that this strategy and the fast customer turnover rate would produce 6% pretax profit margin for the company.

However,due to the low capital availability, only one or two sites could be opened per year, which is a very slow growth rate as compared to the other two options. The evaluation of the option under the real time value of money clearly shows that the growth through this option will add value to the company and will generate a positive NPV.

Option 2: Franchising

Franchising is another option available for the Porcini'sInc. that is the leading growth strategy used by majority of the chain restaurants(Ojo, 2010).It is the business relationship between franchisee and franch is or, which requires the operations of the business to be run by the franchiseein order to function according to the procedure as set by the franchisor.

The franchis or is bound to provide marketing support, management training, and other services, which are set by both parties mutually in the contract. However, expansion through franchise can be an attractive option for the company’s management. The construction cost and acquisition of the site can be shifted to the franchise that may result in higher and rapid business operations of the outlets.......................

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