Lazaridis School of Business and Economics

Business/Economics 275: Business Decision Models

Winter 2019

Haida Fast-food Restaurant

Joran, the owner of Haida, a local fast-food restaurant, has recently received many complaints
about the time customers are spending in the store. He has asked his niece, Andrea, a business
student, to help him in studying the efficiency of the operation.

As the first step, they have gathered some data. This data is taken over a typical 15-hour day
and includes each customer’s arrival time, the time it takes to order and pay at the single
checkout counter, and the time it takes for the kitchen to prepare and serve their food. The
data is provided in “Haida Data.xlsx”.

Andrea believes that customers understand that preparing good food takes time, and thus she
believes her analysis should focus on the waiting time in line before placing an order. She first
plans to calculate the average waiting time in the ordering queue from the data provided for
the day. She also wants to use this data to estimate the probability distributions of customer
inter-arrival times to the store and the service time at the ordering counter, and then simulate
the queue for 1000 days to find the expected waiting time in the queue and the percentage of
time that the cashier is busy. Since it is the first time that she is simulating a queueing system,
she also needs to find a way to validate her findings.

Financial concerns

Haida’s customer have two options to choose from: “Special of the day” and “not-that-special”
sandwich. While both sandwiches have similar preparation times (data provided in the Excel
file) and both are sold for $10, the preparation cost is $3 for each “Special” and $4 for each
“not-that-special” sandwich (these costs include the labour costs of the kitchen staff). Joran is
paying $15 per hour to the cashier and believes the long waiting times for ordering the food
creates negative word-of-mouth and may result in the loss of some regular customers. He
estimates that his restaurant is losing 50 cents per minute per customer waiting in the queue
before placing an order.

Using her simulation model, Andrea now wants to find a 95% confidence interval for the daily
profit of the store.
Marketing strategy

Concerned with increasing rate of complaints, Joran is thinking of announcing a 15-minute

service guarantee. With this policy, if a customer waits more than 15 minutes between arriving
at the store and receiving their sandwich, they will be served for free. This policy will increase
the arrival rate by 15% (but not change the arrival distribution). However, Joran is afraid that it
will exacerbate the current waiting problem. Andrea is wondering how to adjust her simulation
model to incorporate the new policy, and what recommendations she can make to Joran.