Problems

During our evaluation of Spike’s Junkyard Dogs, our group noticed a few notable

issues with the day to day operations of their business. One of the main things to

consider within their business is the volume of customers they see on a daily basis.

Through our interview of the Boylston location’s manager, we were told that they

typically serve about 1500 customers/day. Also within our interview, we were told that

their highest volume hours occur during lunch and late night. For the purpose of our data

collection, we therefore decided that 75% of their daily sales occurred during 11:30am-

1:30pm and 11pm-1am. Based on these initial assumptions, we were able to calculate

that during peak hours, Spike’s would face a customer flow of around 281 customers per

hour (See Exhibit 1). Of note for these statistics is the fact that their daily customer flow

may also be affected by both seasons and events. Based on the restaurant’s location,

crowds leaving Red Sox games can create much higher totals at very high volumes per

hour.

The problem Spike’s faces in terms of customer volume is the capacity of their

current process. With a hot dog roaster that can roast a maximum of 5 hot dogs as once,

and a cycle time of 3 minutes, they currently have a capacity of serving only 100

customers/hour (Exhibit 1). As was previously mentioned, they currently face a max of

281 customers/hour at peak hours, leaving them at a deficit of 181 customers/hour. This

poses a significant problem for their business because their current process does not

adequately provide their product at an efficient rate to suit customer needs.

Another problem our group pinpointed was the excessive amount of internal

failure costs associated with excess produce at the end of the day. As we mentioned
before, Spike’s orders their produce daily to ensure the freshness and quality of their

products. As a result of bad inventory management and sales forecasting, they typically

throw away 20% of this produce at the end of each day. Based on the fact that they order

$500 of produce each day, they typically incur an internal failure cost of $100 each day.

This seems like a very mismanaged portion of their business which we feel can be

significantly cut down.

We also observed a significant issue in the line buildup that often occurs in their

restaurant. While our group was visiting one of their restaurants, we observed about 10

customers leave the restaurant because they did not want to wait 10 minutes in line. We

felt this problem had arisen because their restaurant was understaffed. At peak hours on a

Saturday, Spike’s only had two employees working while at times only one employee

would be handling all of the work. Under this current setup, one employee mans the cash

register, while the other handles all cooking duties in the back. We found that this issue

could be very attributable to the long lines, as well as the long cycle time involved in

their process.

Recommendations
Based on our analysis of the process used for operations within Spike’s Junkyard

Dogs as well as their cost management our group decided on a few recommendations to

make their process more efficient and cut down their significant cost problems in the long

run. We first acknowledged the inefficiencies in their process flow, and decided that

their current process was incapable of handling their current levels of customer flow in

the restaurant. We felt that it was necessary for them to add both an additional roaster, as
well as an additional register. These additions would subsequently require two additional

employees at peak hours in order to maximize their capacity and handle their high

volume of customers. We felt that an additional register is necessary in order to reduce

their lines and retain the customers we observed leaving their restaurant based on long

wait times. With this additional register, we calculated that this would add an additional

50 customers to their current levels of 1500 customers/day (See Exhibit 2). Based on the

13 customers leaving per hour during peak hours, we were able to formulate this

calculation of additional customer flow.

While the additional register is vital to obtaining lost sales, we felt that the

additional roaster is necessary to make their process more efficient and also increase the

capacity of their process to handle the high number of customers during peak hours.

With an additional roaster, their new process would lower their cycle time to 1:30

minutes, while also allowing them to roast 10 hot dogs at once (See Exhibit 3). With an

employee manning each of the two roasters, the efficiency and capacity of their new

process is much more aligned for their volume of business. With their new, more

efficient process, they now have a capacity of serving 400 customers per hour. With a

new expected customer flow during peak hours of 291 customers/hour (See Exhibit 3),

their new process is very capable of handling typical customer flow, as well as higher

volumes of customers during special events such as Red Sox games.

The implementation of these changes relies heavily upon certain factors involved

Spike’s seasonal changes. The currently approaching winter break seems to be the

perfect time for Spike’s to implement these changes. Based on their location close to

numerous college campuses, their highest volumes of sales occur when students are in
fact in school. Additionally, while the summer would appear, therefore, to be a time of

low sales for Spike’s, this is not the case. Red Sox games are also an important source of

Spike’s customer base; therefore the summer is also an important time for their

operations. Based on these factors, we decided that the holiday season is a perfect time

for the implementation of these changes.

Another recommendation we had for Spike’s Junkyard Dogs assesses their

problem of internal failure costs associated with the waste of produce. Because of their

poor forecasting and cost management, they are currently incurring about $100 in internal

failure costs each day. While we decided on adding an additional register for the purpose

of shortening lines, we also felt that an upgrade in their inventory management process

would also be aided by this addition. With an additional register capable of monitoring

sales volumes, we felt that Spike’s would be much more capable of forecasting sales and

therefore better managing their produce ordering process. As they order produce daily on

a consistent basis(typically $500/day) they do not account for expected sales volumes

which leads to their high levels of excess produce at the end of each day. We feel that the

implementation of this new register would be able to refine their ordering process and

reduce their internal failure costs. We forecasted that this change could reduce their 20%

losses to about 10% each day (Exhibit 3).

With the implementation of the aforementioned changes to Spike’s operational

processes, we feel that they can increase the efficiency of their operations while also

increasing sales and reducing costs. Also important to these changes is the ability to

implement them during the holiday season in order to prepare for the return of students in

the New Year. Because of the various seasonal changes in customer base and volume
associated with their business, it is important in the short-term that they are prepared to

handle the students returning to the area once the semester begins. In the long-term these

changes are vital to the efficiency and customer volumes associated with Spike’s

operations.
 Exhibit 1
Current Spike’s Junkyard Dogs Operations

Current Process: Bottleneck= Hot dog roasting 3 minutes = Cycle time

Current Capacity: 60min/3min(cycle time)= 20 customers/hr. X 5 hot dog capacity(for

1 roaster)= Capacity of 100 customers/hr.

Current Customer Flow: 1500 customers/day X .75= 1125 customers from peak hours

1125 customers/ 4 hours* = 281 customers/hr. during peak hours

*: 4 hours decided based on 11:30am-1:30pm & 11:00pm-1am peak hours

Exhibit 2
Increase in customer flow

13 customers lost/hr. due to long wait/lines

13 X 4 peak hrs= 52 customers so we assumed~ 50 additional customers/day.

New levels of produce

Based on these additional customers, the cost of produce/day would jump from $500 to

$516.67: 3.33% increase in total customers(1500-1550) results in 3.33% increase in

produce ordered daily. $500 X 1.0333= $516.67

 Exhibit 3
More efficient process flow

Cycle time cut down from 3 min to 1:30 based on 2 employees working roasters as

opposed to 1.

Also, with an additional roaster, the capacity of hot dogs being roasted is now 10 as

opposed to the original 5.

Increased Customer flow

Customers per day increased to 1550. 1550 X 75% for peak hour sales= 1163 customers

during peak hours.

1163/ 4 hrs(total peak hours)= 291 customers/hr. during peak hours, an increase of 10

customers/hr.

Increased Capacity

60 minutes/1:30 minutes(new cycle time) = 40 customers/hr. X 10 hot dog capacity =

Total Capacity of 400 customers/ hr.

Cost Savings

Based on the total waste cost of $516.67 their current waste management levels would

produce an internal failure cost of $103.33/day.

$516.67 X 20% = $103.33

However, with our new inventory management procedures, they would reduce their

losses to 10%, or $51.67/day.

$516.67 X 10% = $51.67

This results in a savings of $51.67 per day from proper customer flow monitoring from

their registers.