Kudler_Fine_Foods_Problems_Statement

As Kathy Kudler states in her mission she is committed to providing the finest selection of the best foods and wines so her customers can create their culinary visions. She has been able to accomplish her mission on different levels, but she has not reached her vision of becoming the premier gourmet grocery store. The problems that have plagued Kudler Fine Foods include unsold perishable items, lack of income produced at the Del Mar location, and how Kathy delegates responsibilities within her organization. As stated in her strategic plan 12% of perishable items are removed from the store’s shelves every 2-3 days. This is done in good effort to maintain her mission of only providing the best selection of the finest foods. With this turn over of goods not sold, she is losing money, and wasting time. These are goods either produced in store or purchased. When the thrown out perishables are produced in store Kudler is not only spending money on the materials to produce, but the employee’s salary to make the items. These employees are high end employees such as butchers and bakers, which make up a significant amount of her payroll. When the items are purchased, Kathy herself spends time on ordering of these items. That is only a portion of the issue with these items not sold; the money that is lost is significant, and effecting her bottom line, and ability to use her finances to invest in opportunities to help Kudler grow to be the premier gourmet grocery store. The Kudler Fine Foods Del Mar location is just able to stay above break-even. Even though this location is seemingly not losing money, not making money is the same as losing money. There is no profit provided to put back into her organization, and help her reach her vision. Since it is only one of three locations, Kathy spends close to a third of her time and energy and financial resources on this location. This location also holds the high end employees, such as wine steward, butcher and baker. These well paid and skilled employees were a part of her mission to help provide a quality of goods and service above the others. Having these employees at this location is a waste of resources. Even though Kathy has plans to open a location close by to absorb the Del Mar location that is some years away. How Kathy invests her time into her organization is a problem as well. Kathy spends much of her time on ordering she does not delegate an appropriate amount of tasks to her staff, and takes on too much for her to accomplish all her responsibilities well. Evidence of this is in another of the major problems, the amount of perishable goods that are thrown out. If Kathy either spent more time properly ordering, or relinquished this duty for someone with more experience, then she would not be losing so much on goods not sold, and have more time for other endeavors with her business that would allow her to focus on her vision for her organization. Kathy had no experience in running a gourmet food shop, and even though she has had some success so far, she has not reached what she could achieve if she would allow delegate some of her daily tasks and focus more on achieving her goal. The high-end payroll spent on her stores’ butchers, bakers and wine stewards is also a problem at Kudler. She spends almost 9% of her net sales on wages, and a significant portion of that is for high end employees. There is no doubt that some of her success is due to the skills of these employees, but how their time is spent is in question. If she was able to better use these employees or delegate their time better she could have the same effect of their skills, while spending less on wages. Now that we have detailed the major issues at Kudler Fine Foods, we are can look into how to solve these issues. To reduce the amount of foods that Kathy removes unsold we have a few viable options. One solution would be rotating these items with similar goods that her cliental could use as well. If Kathy is removing 12% of her fresh fruit for example, then instead on always shelving pineapple, she should rotate purchasing that with a substitute such as mango. This is just a broad example but one that offers a solution to throwing out both mango and pineapple. Another solution and the strongest one I have found would be to let someone with more experience in ordering take care of this task. The end result would be less food removed from shelves, and Kathy herself having more time to perform other responsibilities within the organization. With the cliental that Kathy caters to, quality of the item is key. Keeping foods that are not in the best condition is not an option, but she could offer these items at a discount for immediate use. She could also let her customers know if she is out of a product then it is only because she refuses not to provide the best quality, and therefore order less. I worked in many high end restaurants, and that was often the motto. When we got in an especially good steak or seafood product we would only offer a limited amount, to ensure it would be sold out, and the product would not go to waste. With some or all of these solutions in place there is no doubt that her percentage of goods not sold would lessen, and she would have more time to focus on her vision for Kudler Fine Foods. Breaking down a retail business to the basics is a good way to evaluate the business. You make money and you spend money, if you can’t make more money, then you simply need to spend less money. An immediate solution for helping the Del Mar location would be to cut back store hours, and the amount of perishable goods the location holds. This would allow for less spent on the 2 largest expenses, goods purchased and wages. The store should also remove the high end employees, or have them only there for small hours during the week to help control costs. Kathy does have a plan in place to open a nearby location to absorb this one, which is good for the long run, but actions taken immediately can have immediate effects of the income produced from this location. To resolve how much time Kathy spends on tasks that she could have someone else do and do better as well would help the organization reach its vision. Kathy would be able to spend more time with the customers, more time on actions that can provide income like advertising. She could also learn what it would take to become a wine steward, so she could essentially work on two problems with one solution. She would be able to lessen her second biggest expense, wages, and get to spend more time with her customers. While not assisting her customers she would also be able to perform other tasks. She is a very hands on owner, and letting her stay in the front of house, instead in the back ordering will give her a better perspective on where her organization is headed. Kathy needs to let her store managers do more for her, like the hiring of staff, and possibly putting in orders for their stores. Since the managers only experience their own store they should have a better idea of what is needed, not needed, and what their customers expect. As noted in previously a way to lessen her second biggest expenses, wages. She should rotate the high end employees. She should only provide a wine steward on certain days of the week, allowing one steward to work at different locations. She can also use a baker for one location to service all three locations, but having Kathy or another employee move baked goods from store to store. If these steps were taken to resolve these problems Kudler Fine Foods would be able to more quickly take advantages of opportunities such as expansion to more suitable areas, expand her profitable, but small catering services, expand her product line, and make more in revenue to be more attractive for possible acquisition. Throwing out less food, making the Del Mar location more profitable and spending less on wages would result in more revenue for the organization. Kathy delegating her responsibilities to others would allow her to focus on more important roles for a business owner, and have what she has been doing completed by someone with more experience and therefore performed better than she had. With these solutions in place Kudler Fine Foods would be more profitable, and more focused on becoming Kathy Kudler’s initial vision, the premier gourmet grocery store.