Faculty & Research
Multi-Unit Restaurant-Productivity Assessment: A Test of Data-Envelopment Analysis
By: Dennis Reynolds Ph.D. and Gary M. Thompson Ph.D.
Executive Summary: This report describes a three-step process for performing a dataenvelopment analysis (DEA) to compare restaurants' efficiency and to examine their best practices. To start with, prospective efficiency factors must be analyzed to ensure that they are relevant. Secondly, to put restaurants on an equal footing the first DEA should consider only managerially uncontrollable (nondiscretionary) factors as inputs. With uncontrollable factors accounted for, managerially controllable factors can then be assessed in terms of their effect on productivity. Best practices can be isolated and assessed in this manner. To illustrate this three-step approach, data from 60 full-service restaurants are analyzed. From a large number of prospective input factors, the analysis considers a short list of uncontrollable inputs-namely, hourly server wage, number of restaurant seats, and a coding variable representing whether the restaurant is a stand-alone facility. The output variables for this analysis were daily sales and tip percentage. Just over 20 percent of the restaurants operated with maximum efficiency, with the chain's average efficiency hitting 82 percent-good, but leaving room for improvement. However, the two discretionary factors that were proposed as differentiating the restaurants' efficiency-server hours and number of servers-proved not to be significant factors, inviting further analysis of the efficiency effects of additional discretionary factors.
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- Multi-Unit Restaurant-Productivity Assessment: A Test of Data-Envelopment Analysis By: Dennis Reynolds Ph.D. and Gary M. Thompson Ph.D.
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About Gary M. Thompson Ph.D.
Gary M. Thompson is a professor of operations management in the School of Hotel Administration, where he teaches graduate and undergraduate courses in operations management. Previously he spent eight years on the faculty of the David Eccles School of Business at the University of Utah. He holds a BS with first class honors from the University of New Brunswick, an MBA from the University of Western Ontario, and a PhD in operations management from The Florida State University. His current research focuses on optimizing restaurant table mixes, on optimizing conference schedules to improve attendee satisfaction, on course scheduling in post-secondary and corporate training environments, and on the effects on customer service of labor staffing and scheduling decisions. His research has appeared in the Cornell Hospitality Quarterly, Decision Sciences, the Journal of Operations Management, Management Science, Naval Research Logistics, Operations Research and other journals. He has consulted for several prominent hospitality companies and is the founder and president of Thoughtimus, Inc., a small software development firm focusing on scheduling products.
For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=84
