Describe The hotpot culture which was founded by Mr Zhang Zhou in 1994 (See, 2017). Mr Zhang Zhou first came up with the idea to open his very own hot pot restaurant when he became frustrated with the attitude of the staff in another hot pot restaurant. He pioneered the way for extraordinary customer service in Hai Di Lao and empowered his staff using benefits that allow them to help expand the Hai Di Lao chain, eventually lead to his success. (See, 2017)
Haidilao is a steamboat restaurant whereby each of a table may cook their own food by shimmering its food inside the soup base. When the foods are fully cooked, ones may have dipped it inside the sauce or may not and you may start to enjoyed your food. (Tse, 2014 ) In addition, they offer variety kind of food for instance meat slice, vegetables, seafood, noodles, dessert and etc. As such, it is popular for the different sensation plus they provide outstanding services unlike those usual restaurants. They offer free manicure, snacks and drinks during waiting time, instead, they provide children playground which exceptionally suitable for family which bring along with their children (Choo, 2013).
In this case, we are going to discuss Haidilao hotpot service delivery system and we will send our group member to visit and complete the mystery shop to examine their service delivered to customer and the customer experience through the services. Our member will also do a survey based on his actual experience.
Background on the Service Organization
The report highlights the service delivery system which is being used by the Haidilao hotpot restaurant chains. The report not only discusses the existing service delivery system used by the restaurant chains in the nation of China but at the same time recommends the kind of changes that the restaurant chains need to make for the launch of their business in the Singapore.
Davis et al. (2018) are of the viewpoint that although the nations of Singapore and China both belong to the continent of Asia yet the culture and business style followed by the people of the two nations are drastically different from one another. Thus, it becomes all the more important for the concerned restaurant chain to analyze the existing service delivery that they are using and also to make improvements in the same so as to have a better chance of gaining success in Singapore.
The report begins by introducing the Haidilao hotpot restaurant chains and the nature of services that if offers to the customers. This section of the report will also discuss the competitive positioning strategies which are being used by the concerned restaurant and also their targeted customer base.
The report next sheds light on the service delivery elements offered by the concerned restaurant like core elements of the service, service distribution and others. In addition to this, the report also offers a servicescape imagery of the services which are being offered by the restaurant. The report next takes the help of Mystery Shop Survey to understand the nature of changes that the concerned restaurant needs to make. On the basis of the results obtained from this survey, the current service delivery blueprint used is being critiqued and a new one is proposed. Lastly, the report concludes by recommending some changes that the concerned restaurant needs to make within the framework of their organisation so as to improve the prospects of the business in the nation of Singapore.
As opined by Lee, Verma and Roth (2015), the business style or for that matter the service delivery style which is being followed by an organization within a particular nation depends to a great extent on the national culture of the nation in which it is operational. Haywood and Pickworth (2015) are of the viewpoint that the organizations which are operational in more than one nation needs to modify their business style or service delivery style on the basis of the cultural traditions of that particular nation.
In this regard, mention needs to be made of organizations like Starbucks, PepsiCo and others which offer different kinds of products or services and also different service delivery styles in diverse nations of the world (Davis et al., 2018). Thus, Haidilao hotpot restaurant chains which is planning to open its restaurants in Singapore needs to take into effective consideration the culture traditions of the nation and also the lifestyle of the people for the service delivery style that are likely to follow within the framework of the concerned nation.
Background on the Service Organization
Competitive Positioning Strategies
Haidilao hotpot restaurant chains had banked on the concept of hotpot, which was initially articulated by Mr Zhang Zhou in the year 1994 (Xie-lin & Xiao-dan, 2014). The restaurant under discussion here is a steamboat restaurant wherein the people get the opportunity to cook their own food at the tables which they have opted depending on their taste and convenience (Nothhaft, 2018). The customers are thus offered with various kinds of soups which they can use for the preparation of food that they want to eat. In this regard, it needs to be said that the restaurant offers a wide variety of food products to the customers like meat slice, vegetables, seafood, noodles, desserts and others (Zhang & Xu, 2016).
More importantly, the restaurant is not only known for the tasty foods that it offers to the customers but also for various other perks like manicure services, playground for children of customers and others (Ambler, 2018). It is pertinent to note that the restaurant although initially established in the nation of China is currently operational in different international locations like London and others (Cnbc.com, 2018). According to BBC News (2018), one of the major factors which attract customers is the unique customer experience that they get at these restaurants along with the above mentioned perks.
Chen, Shen and Fan (2015) have stated that one of the major reasons which had enabled the restaurant under discussion here to attain competitive advantage within the nation of China is the fact that unlike other restaurants of the nation this restaurant banks on the national culture of China. The net result of this is the fact that the majority of the food products and also the hotpot business idea that the restaurant is currently using have been a part of Chinese tradition since the 20th century (Gu, 2016).
In addition to the effective usage of the cost leadership strategy which is being used by the concerned restaurant to offer the best quality food products and that too at very affordable prices is another factor which has helped the organisation to attain competitive advantage. For example, it is seen that an average customer can get VIP treatment after spending just $20-$30 for the entire meal (Ambler, 2018). Furthermore, the unique perks that the restaurant offers to the customers like manicure services, playground for the children of customers and others have helped the restaurant to position itself as one of the best restaurants of the nation (Liang, Wang & Xu, 2016).
Moreover, the restaurant over the years have developed its own management style, supply chain system, delivery system and others to gain competitive advantage over its competitors (Nothhaft, 2018). In addition to this, the online services offered by the restaurant and also the use of various signature styles like the “noodle dance” and others have not only been much appreciated by the customers but also helped it to gain competitive advantage as well (Xie-lin & Xiao-dan, 2014).
The focus of the restaurant in the nation is on the customers belonging to individuals belonging to the age bracket of 18-54 years of age who likely to try out the Chinese cuisine (Zhang & Xu, 2016). In addition to this, the restaurant also focuses on the customers who belong to the working class and food items or menu used during the peak hours (8AM -10AM and 6PM- 8PM) are specifically designed keeping in view the preferences of these individuals (Chen, Shen & Fan, 2015). However, in the recent times, it is seen that the concerned restaurant is trying to embrace the western model and is offering various western cuisines as well. In addition to this, it is seen that the restaurant is also using the courier or home delivery system to enhance their existing customer base.
Targeted Customer Base
Service Delivery Elements
The plethora of services offered by the Haidilao hotpot restaurant chains can be broadly divided into two categories, namely, core and supplementary services. The core services offered by the restaurant under discussion here include the steamboat and the food offered by the restaurant. On the other hand, the supplementary services are related to the various kinds of hospitality services that it offers to the customers to improve the quality that they had at the restaurant. For example, the customers are offered ipads on which they can log-in to their account of the restaurant and order food from there as per their preference (Gu, 2016).
In addition to this, they are also offered with a serial key and the number of the waiter so that they can call them if help is required. In addition to this, they are also offered with ziplock bag for mobile phone and aprons so that their cloth is not spoiled (Xie-lin & Xiao-dan, 2014). Moreover, assistance is also offered to the customers regarding the cooking of the food. More importantly, if the customers had visited the restaurant alone then company is provided by the waiters and also teddy bears while they eat. In addition to these, there are various kinds of additional perks for the customers who are in the waiting line.
For example, there is separate waiting room for the customers wherein they are treated with snacks, complimentary drinks and even ice-creams, free WiFi and others (Ambler, 2018). Furthermore, the customers can even get manicure and there is playground for children wherein they can pass their time while their family members of parents are in the waiting line. There are blankets also for the customers who feel cold within the restaurant in addition to the shopping options that are available to them.
Davis et al. (2018) are of the viewpoint that the business prospects of an organisation depends to a great extent on the job satisfaction level of their employees since the services offered by them is directly dependent on this. Thus, the primary focus of the restaurant under discussion here is to keep the employee satisfaction level and thereby reduce the attrition rate. It is pertinent to note that the employees of the restaurant are provided with various kinds of training programs like skills to manage customers in an effective manner and others in order to serve the customers in an effective manner (Nothhaft, 2018). Furthermore, the employees apart from the people management skills are also offered culinary trainings so that they can help the customers to cook their food in an effective manner (Zhang & Xu, 2016). Moreover, they are also offered with various kinds of customer scripts so that they are able to deal with various kinds of customers in an effective manner.
The service delivery system of the restaurant starts from the moment the customers step in the restaurants and ends at the time of the exit of the customers. For example, after the entry of the customers they are taken to the tables if the tables are available or taken to the waiting rooms where they spend their time before the tables get vacant (Liang, Wang & Xu, 2016). During this time they are offering various kinds of snacks, manicure and other services so that they do not feel bored and also pass their time if an effective manner. Moreover, once the customers have ordered their food through the ipads they are also offered assistance for the cooking of the meal as well. Furthermore, recommendations are also been made regarding the kind of sauce that the customers can try out and also the food. In addition to this, for the single customers company is being offered by teddy bears and waiters.
Service Delivery Elements
The servicescape model which is being used by the restaurant under discussion here is indicated
The focus of the restaurant is offering the right kind of ambience to the customers and it is seen that the restaurant takes the help of music and scents and also air conditioners to create the right kind of ambience within the restaurants (Ambler, 2018). In addition to this, the entire space of the restaurant is divided into various sections like eating sections, waiting section, cooking section and others (Gu, 2016). The major signs used by the restaurants are written in the Chinese language to highlight the Chinese connection (Nothhaft, 2018). In addition to this, various artifacts like teddy bears and others are being used to create the right kind of environment within the restaurants (Chen, Shen & Fan, 2015).
The restaurant follows a decentralized policy and thus there are no bottle-necks within its framework. Information is being readily passed on to the different employees so that they are being able to work in an effective manner (Chen, Shen & Fan, 2015). However, in the recent times the restaurant has faced various customer management issues and had even being fined S$800 because of the inadequate food and hygiene standards used by the restaurant (Zhang & Xu, 2016). More importantly, these issues or situations serve as moments of truth for the restaurant and thus they need to work on these issues in an effective manner to continue their growth.
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Mystery Shop survey analysis
The mystery survey has been conducted on the Haidilao hotpot restaurant chains to examine the quality of the appearances, food and services they offer. The mystery shop survey has been conducted to examine the elements that are being executed properly and elements that has the scope of improvement. This has been conducted to develop a reference point for starting up a new organization in the same industry and checking one of the best in the market provides ample amounts of knowledge regarding the do’s and don’ts of the industry.
The survey shows that the outside appeal of the restaurant is excellent and depicts the image the image they want to portray in the minds of the consumers. The outside appearance is excellent and its makes it more appealing to the consumers. The cleanliness of the restaurants is excellent and the restaurant provides clean aprons and protective bags. The interior of the restaurant is also clean and they have highly focused on the cleanliness of the overall restaurant.
The hosting area of the restaurant is magnificent and they employees greet every consumer cordially and professionally. The hosting area covers one third of the restaurant and provides excess amenities like free Wi-Fi, complementary snacks, manicure, board games, hand messages and beverages. This makes the waiting time worthwhile and as they are huge crowds gathered up all the time, the consumers are provided with better experience. The customer engagement in the restaurant is very high and the service providers are always eager to address the concerns and queries of the consumers. The main attractiveness of the restaurant is the fact that the consumers cook their own meal and the waiter’s entertain them using their signature noodle dance.
In the terms of the quality of the workforce in the food chain, it can be seen that there professional and have immense expertise what they do. They are highly effective in providing the consumers with products and experience which easily surpasses the quality of a normal average diner. However, it has been seen that due to the immense number of consumers waiting for their turn, some of the consumers may not be addressed due to the limited number of the employees to look into the consumers issues. The food is of highest quality and provides a very positive experience to the consumers. Moreover, the overall prices of the meals are quite less when compared to the quality of service offered by the company.
Critique of the Service Elements and Service Delivery Blueprint
This part of the report critically evaluates the service elements, the mystery survey and the service delivery blueprint to examine the strengths and weakness of the organization, Haidilao hotpot restaurant chains. The evaluation of the core and supplementary service offerings shows that the organization has been strong in both developing their core and supplementary elements. The core element of the service is the hotpot services, the supplementary services consist of the hospitality services provided by the organization to keep their consumers occupied and interested during their waiting time (Bitner& Wang, 2014).
The next element is the consumer and employee script, where the employees have been kept motivated at all times and provided with training on regular basis to improve their quality of services. According to the customer service theory, the main aim of the business is to attract more and more consumers to increase the business volumes (Lovelock & Patterson, 2015). Haidilao has developed a reputed brand image among the consumers due to the reliable food services, flexibility in their services, trust in minds of the consumers and aesthetics of the company. Bowen,(2016) states that aesthetics draws the primary impression in the minds of the consumers and is a crucial factor in invoking positivity.
The consumer feedbacks are considered very seriously and the company has been strictly monitoring the complaints and makes regular checks on the cleanliness and the quality of the services offered by the organization (Wakefield & Blodgett, 2016). The company uses a central distribution system in order to monitor the check the quality of the products throughout the different chains of restaurants. The servicescape of a restaurant is one of the first and foremost element that attracts the consumers or the consumers assess while making their visit in a restaurant. The décor of the diner is a key factor as it develops the ambience and provided added value to the overall experience. In case of the food chain, they have developed a good ambience for the customers that add value to their overall experience. The temperature, lighting, scent and music are above the average level when compared to a normal diner of same price range.
The moment of truth for majority of the consumers are positive as the quality of the experience offered surpasses the expectation of any first time consumer (Grönroos&Gummerus, 2014). There some potential bottlenecks due to the lack of understanding of the needs of the consumers and lack of capital. However, the company has been operating for quite some time but the company is experiencing losses due to the high cost of their operations and less revenue generation. Previously there had been incidents where the consumers have complained about the cleanliness of the food delivered and the employees did not attend effectively to the needs of the consumers. This has impacted the reputation of the food chain in Singapore which is the reason that company has developed strict policies for managing the quality of the food and satisfaction of the consumers in the market.
Mystery Shop Survey
The critique of the restaurant has identified both strengths and weaknesses for the company and further opportunities that should be used to reduce the weaknesses. In case of the food chain, the major strengths of the restaurant is their unique value proposition, their impeccable consumer service they provide and the servicescape they have developed. The organization provides the best quality food and experience to the consumers by providing them the opportunity to cook for themselves with high quality of ingredients and witness an ambience which contributes to the food experience.
The facilities provided in the waiting area are of premium quality which shows the level of satisfaction that the restaurant wants to reach. The repetitive sales of organization are good and they have a huge consumer base in the market that waits for even three hours to get into the diner. In majority of the cases, the consumers have praised the chain for the efforts that have put in to the make the experience of the consumers even more fruitful.
However, the major drawback for the company is their elaborate infrastructure and operations that has been increasing their overall operational. The services of the organization is charged at $20-30 which is quite average for a diner that provides such added premium facilities to the consumers. Moreover, the communication between the staffs at the backend and the frontend needs improvement as they tend to lose track of the consumer needs during heavy rush hours. Therefore, in order to address this, the report will analyze the current service blueprint of the organization and develop a modified blueprint to address the needs of the consumers.
However, there are mainly two ways of improving the service delivery blue print, one is reducing the cost of the overall operation and the other way is increasing the price of the service and product offerings of the food chain. However, the viability of each option will be evaluated in the next of the report and will consist of flowcharts explaining the change in need.
Current service delivery blueprint
Current delivery approach
Proposed delivery approach
10 Am to 2 PM in morning and 6 PM to 12 AM in night. The restaurant is open for 6 days a week and average timing of service delivery is 20 minutes.
It is proposed that weekly timing for them will remain same with existing 6 days a week. However, the daily timing will be increased by removing gap area in noon time. This will help to cater to more number of customers preferring early evening buffet. Peak hours will be 10 to 12 in morning and 6 to 8 at night. This time period will witness the maximum traffic and footfall.
Number of target customers will get increased due to having more service hours and increased footfalls. In addition, it will also provide the restaurant with opportunity of offering of more diverse services and buffets in different day timings. The average revenue will get increased in the long term.
Front stage and backstage
Front stage services include the receptionist and en service delivery employees including the waiter. Effectiveness of the front stage employees determines the satisfaction level of the employees. However, the front stage services are limited to this.
Backstage service includes managing the queue, accounting and managing inventory. In addition, the food preparing process is also included. However, the major weakness identified for them is lack of coordination among the customers and the back stage employees. This is creating gap in the service delivery process.
It is proposed that front stage employees for the restaurant should include the chat and call support. This is due to the reasons that chat and call support is also effective in enhancing the service quality for the customers. Inclusion of the chat and call service in the front stage services will help to meet the query of the customers in the initial stage.
It is recommended that backstage employees should also be provided with the provision of interacting with the end customers. For instance, cooks are having the option for interacting with the customers. This will promote more effective communication between the stakeholders. This will in turn ensure that the entire service delivery process gets enhanced.
The average level of customer satisfaction and retention will get increased with their queries and grievances being met in the initial stage. In addition, inclusion of the support services will increase the effectiveness of the line of interaction between the employees and the customers.
More effective communication process between the backstage employees and the customers will help in avoidance of intermediaries and customers will have more favorable impression. On the other hand, the backstage employees will also have the advantage of having the understanding of the requirement and expectation of the customers.
Currently, physical evidence includes different elements of restaurant ambience. This includes the distinctive and unique design in the restaurant. However, the brand recall among the customers is less due to the reason of lack of physical clues for them.
It is recommended that customer recall value should be enhanced with the help of the physical evidence. Thus, customers should have the options for buying merchandise and souvenirs. This will increase the physical evidence among the customers along with larger brand visibility.
Enhancement of physical evidence will help in increasing the brand awareness of Hai Di Lao restaurant among the target customers. It will be beneficial for them to identify more market opportunities in the long term.
They are having moderate level of customer actions in relation to their current service delivery approach. However, the customers are having the issue with the lack of communicating their issue to the backstage employees. On the other hand, they also tend to have dissatisfaction with the front desk employees due to the lack of support options. Customers are searching for websites and brochures for detailed information and asking for support in case of further information, which is not being met.
It is proposed that customers should be effectively and extensively involved in the service delivery process, which will help in having more favorable customer actions. They should be provided with more alternatives in order to assist in their purchase decision process. Offering of personalized service delivery process will help in meeting the expectation of the customers more effectively.
The proposed changes will help in having more favorable customer actions for Hai Dai Lao restaurant. In addition, the favorable customer action will also ensure the generation of positive word of mouth in the market.
Service personnel actions
Service personnel action determines the service quality standard to the customers. It is identified that front stage employees of Hai Dai Lao restaurant are tasked with meeting the customer queries and enhance their initial impression. However, it is seen that employees are having the lack of proper training due to which they are unable to meet the diverse queries of the customers. In addition, the negative behavior of some employees including not welcoming the guest and not assisting the customers in making their purchase is further creating gap between the desired outcome and the actual.
It is proposed that the front stage employees should have the proper understanding about the company information and they should have positive body language and attitude in dealing with the customers. In addition, it is also being proposed that service personnel actions should also include the checkout process of the customers, which will ensure that the entire service delivery process is effective enough compared to their competitors.
The proposed changes will help in having more effective service delivery process to the customers. This is due to the reason that covering of more elements of customer service process will help in enhancing the level of satisfaction among the customers. In addition, inclusion of diverse service activities will ensure that line of interaction is more wide.
Currently, the support system of the restaurant includes customer acquisition analysis, payment process and delivery services. This includes the mechanism of analysis to determine the rate of inflow of new customers and retention of existing customers.
It is recommended that the support system should also include the feedback generation process of the customers.
This will help in determining the trend in the market and identifying the potential gap areas.
Line of interactions
Line of interactions for them is narrow with having limited access of the front stage employees.
Covering of the back stage employees in interacting with the customers will increase the width of the line of interaction.
This will help in having more effective communication process between the internal and external stakeholders.
Not meeting the expected service level of the customers and wrong service delivery.
Risk of wrong service delivery will always be there due to errors.
Having fewer fail points will help in reducing the dissatisfaction of the customers.
Moments of truth
Situation when the customers are demanding for refund in case of ineffective service delivery process.
Situation when taste and preference pattern of the customers get changed frequently.
Effective management of moment of truth will reduce the probability of customer negative word of mouth.
- According to the theory of human service delivery, it is important for the restaurant to determine the variability and intangibility associated with the human service delivery. The more effective will be the determination of these elements, the more will be beneficial for Hai Dai Lao restaurant to have right employees in right and offering right services. It is suggested that the human elements of the employees should be identified and they should be well aligned with the service approach and objectives. This will ensure that the current weakness of them in lacking of employee expertise to fulfill the diverse requirements of the customers. This theory should be the involved in the regular training facilities for the employees.
- The cultural aspects of Singapore and China are different and it is important for them to have the proper understanding about that. It is recommended that they should follow the Globe cultural concept in identifying the differences between the two countries and design their service approach accordingly. It should be noted that effective management of cultural factors will help in having market adaptive service process in Singapore.
- It is identified that Hai Dai Lao is facing difficulty in recovering their cost. Thus, it is recommended that they should initiate premium pricing strategy due to the reason that the added services they are providing are justifying the premium price tag. In addition, this will increase their profitability along with better and exclusive positioning in the market. The existing services being offered by them should be segregated and can be offered as disbanded offerings in lower price.
- It is also recommended service diversity should also be enhanced in order to cater to larger customer segments. It is identified that they are focusing majorly on Chinese cuisines, which is one of their weaknesses in targeting different segments. Thus, introduction of more diverse cuisines will ensure that they will have more diverse customer segments and more footfalls.
To conclude, the notion of service delivery system has gained significant amount of prominence within the cannon of the contemporary business world and helps the different organizations to offer effective service to the customers. This is important from the perspective of the organizations since it helps the organizations to earn a higher amount of revenue and also growth. In this regard, the Haidilao hotpot restaurant chains is an important one since the service delivery model which it uses is a combination of traditional as well as modern system and has helped the restaurant to attain a significant amount of success over the years.
However, the restaurant is planning to expand its business to Singapore and thus it would have to make some changes in the service delivery model which is currently being used by it in the nation of China. For example, it is seen that the price of food charged by the restaurant is very less thus in order to earn higher profit the restaurant either needs to lower its operational cost or increase the price of food products offered by it. In addition to this, improving the backstage customer-waiter interaction of communication process is also likely to help the restaurant to improve the service delivery system used by it.
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