Tackling the Insufficient Food Supply in the Sufficient Chinese Hot-Pot Chain Restaurant Industry - A Summer Project
Purchasing is widely acknowledged as a critical factor for business survival and success. This study uncovers the traditional purchasing model that affects the cost of vegetables and eventually food quality, based on our summer field research on Chinese hot pot restaurants. Seventeen retail branches were studied, and we propose an innovative procurement model to reduce the total cost of purchasing vegetables. In the new procurement model, vegetables shall be transported from the vegetable base to the central processing plant for cost-down measures by centralized processing and cleaning. Compared to the traditional method, the innovative purchasing approach integrates upstream supplying resources and standardizes vegetable processing, contributing to cost reduction in vegetables and processing. In the research, the group collected data about food sales, prices from suppliers, and related processing to calculate aggregate procurement costs containing vegetables, delivery, and processing costs. The calculation indicates that the new method produces an additional 21,102 Chinese RMB in vegetable and delivery costs. However, it removes the need for a vegetable cleaner in each outlet, which could save more than 70,000 Chinese RMB. Therefore, we verified such an assumption with qualitative interviews with the managers of hot-pot chain restaurants and found that the actual saving can be around 53,356 Chinese RMB. In addition, the standardization and quality control of dishes and fuller utilization of staff have been overlooked in prior daily operation management. Finally, the proposed new procurement model can also be applied to global hot pot restaurants.
Key words: purchasing, procurement model, saving
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