(Tiểu luận) group report operation managementtopic the coffee house

NATIONAL ECONOMICS UNIVERSITY Group report Operation Management Topic: The Coffee House Group Đinh Thanh Hoa Vũ Thị Ngà Trương Bích Ngọc Nguyễn Thị Bình Ngun Trần Thị Minh Nguyệt Hà Nội, 11/2022 Contents I Information of TCH II Operation Management Operation Model a) Input b) Process: c) Output: III Operational problems and recommendations * Some proofs of the problems 12 a) IV Motion waste 12 b) Design (product development) 13 c) Design (Product option) 14 Conclusion 14 I Information of TCH Name: The Coffee House Address: 195/10E 195/10E Dien Bien Phu, Binh Thanh District, Ho Chi Minh City.Dien Bien Phu, Binh Thanh District, Ho Chi Minh City  Product:  Traditional coffee  Milk Tea & Fruit Tea  Hi-Tea healthy  Cakes and Snacks The Coffee House is a coffee shop chain in Vietnam that was founded in 2014 from the dream of a "coffee house" of founder Nguyen Hai Ninh - a talented and famous person in the startup world   The Coffee House is one of the largest coffee chains in Vietnam in terms of scale and revenue According to Statista's statistics as of April this year, this chain ranks third in the number of stores, just behind Highlands Coffee and Trung Nguyen Currently, the chain has 146 stores in many provinces and cities across the country, according to information on its website  Overview of financial from Covid 19 period to now The impact from the Covid-19 pandemic and fierce competition in the market have made The Coffee House's business results tend to go down in recent years In 2019, the net revenue of this chain was nearly VND 862 billion However, this figure drops to VND 735 billion in 2020 and VND 475 billion in 2021 The Coffee House's gross profit margin has been over 70% in the last three years – a high level compared to many other coffee chains in the market This ratio of Starbucks Vietnam in 2019 is about 19.3% and by 2021 it is only 1.3% However, The Coffee House is still losing money due to high selling costs In the two years of Covid-19 (2020 and 2021), this chain's selling expenses were all greater than its gross profit Specifically, The Coffee House recorded a loss of VND 80.6 billion in 2019 By 2020, the chain lost VND 111 billion and continued to lose VND 249.3 billion last year The company's accumulated loss by the end of 2021 is nearly 434 billion dong The Coffee House is now part of Seedcom - an enterprise that owns a retail ecosystem including many companies such as Juno, AhaMove, Fast Delivery Last year, Seedcom raised VND 50 billion in bonds to increase the size of operating capital and invest in subsidiaries Currently, The Coffee House is valued at more than 1,100 billion VND The nine-month revenue of Seedcom - owner of The Coffee House, Kingfood Mart, Quick Delivery, AhaMove increased by 50% over the same period last year, reaching more than VND 1,500 billion In which, The Coffee House - a representative in the F&B segment is still the company that contributes the largest to the business's revenue, accounting for 37% On the first months of the year, The Coffee House earned 564 Billion VND, equivalent to more than Billion VND per day Explaining the growth of The Coffee House, a representative of Seedcom said that thanks to this chain, it continuously launches new product lines suitable for communication and omnichannel sales needs And in the near future, it is the return of The Coffee House Signature - a high-end model of the Coffee House that has been closed for more than year due to the Covid epidemic At the same time, this is also a problem of optimal cost, through the switch to using paper and vibrating cards at the store Glass cups are still served at the restaurant, upon request  Comparing with other competitors (Highland, Starbuck) In 2019, all three beverage chains have recorded "dizzying" growth rates, averaging 3040% In 2020, Highlands Coffee will continue to hold its position as the largest coffee chain in Vietnam, with the distance from the other group not much changed Total revenue reached nearly 2,140 billion VND in 2020 Meanwhile, The Coffee House with a relative decline The situation at Starbucks is not much different from The Coffee House These two coffee chains recorded revenue in the range of 700-800 billion VND In terms of profitability, we can see a divergence among the major coffee chains Notably, in the case of Highlands Coffee, the profit increased by 45%, reaching VND 80 billion The group of coffee chains that were already losing money suffered heavier losses, including The Coffee House, Starbucks According to Mr Dinh Anh Huan - Chairman of the Board of Directors, approximately two-thirds of the chain's nearly 180 stores must limit the number of customers entering the store during each epidemic to ensure the minimum distance This means a significant decrease in sales/stores Until the period 2020-2021, the business situation of large coffee chains is still heavily affected by the Covid pandemic Specifically, TCH is still the unit with the largest negative profit after tax (-434 billion dong), then Starbucks (-54 billion dong) and finally Highland still recorded positive profit after tax => It can be seen that TCH is the unit that suffered the heaviest losses during the pandemic The reason for the heavy loss of profit after tax is due to the high cost II Operation Management Operation Model The operation model of The Coffee House have steps: input, process and output a) Input Previously, in January 2018, TCH acquired Cau Dat Farm to grow and produce its own ingredients But so far, this business has sold Cau Dat Farm and has made some changes According to the CEO of TCH, from creating a suitable coffee growing model from the Cau Dat Farm area, replicate models have been applied by other farms or cooperatives around Bao Loc Lam Dong, Dak Nong - Dak Lak The Coffee House has worked with networks of many different farmers Therefore, it can be said that the model in Cau Dat Farm has completed its historical task Currently, TCH's raw materials are obtained from cooperatives or farmers around Lam Dong according to the standards set by TCH The Coffee House will use this raw material with strict principles in cultivation and preliminary processing: care according to clean production processes, hand-picked with over 95% ripe fruit rate, "clean and immediate" preliminary processing After picking, both green and ripe seeds are put into the machine and sorted After that, the coffee will be peeled and brought to dry in temperature is above 30 degrees Celsius and the humidity is low These materials will be transported to the roasting factory in District 7, Ho Chi Minh City with a maximum capacity of about 20 tons/month to be proactive about the quality of the raw materials Document continues below Discover more from: Operations Management Đại học Kinh tế Quố… 132 documents Go to course 12.3 Phạm Tố Uyên OM - OM_Individuals_123 Operations 100% (1) After that, the coffee beans are transported to The Coffee House Management stores and stored in airconditioned warehouses 24/24, the temperature maintained at 20 degrees Celsius b) Process: OM Group-3 Report 37 Business Idea Operations Management 100% (1) Report Artemis Smart 17 Watch Operations Management 100% (1) Tài liệu OM - OM The employees will instruct customers to enter the cashier's counter to order the drinks, the cashier will guide the guests to choose the beverages according document to the customer's needs, based on the menu placed immediately In addition to some exceptional cases at the store, Operations when new beverages, seasonal drinks, combo, different promotions, the cashier will ask 100% (1) whether they want to try that Payment will occur after the order Management is completed, at TCH, payments including cash, online banking, card, momo When the payment is done, staff will give their customers an invoice and a table number based on the order number on the invoice After ordering and paying, customers will freely choose their seats to wait for their drinks Customers Finalgives Paper will be served water and enjoy music In addition to the receipts the cashier the customer, there will be a copy of the bill the employee will keep with the bartender From here, the Operation… bartender will put the bill in order and start making it The preparation 29 of drinks must follow the recipe and be completed within the allotted time for each bill, unless there are too many drinks at Operations 100% (1) that time, it will take about 20-30 minutes for an order When the brew is complete, the staff will Management arrange the drinks and at the same time place them on the tray, properly bill for the drink and ready to go Staff will go to every nook and cranny to find the right table for drinks and deliver them to guests Operations and In addition, currently, some branches of TCH are experimenting with self-service to reduce time Project and improve productivity After ordering and paying, the customer will receive aManagement vibrator and 27 Operations Management 100% (1) wait for the staff to make the dish When the order is completed, the staff will press the customer's card number, the machine will vibrate to notify the customer and the customer will go to the counter to receive the order Besides buying directly at the store, TCH also sells online Customers can order via TCH's app or shopee food, Baemin, Grab food to purchase In particular, customers can “ buy Online pickup in store “ when they just need to order, pay and schedule a pick-up via the app, so they can go to TCH's stores to pick up their goods without having to wait in line Traditional Takeaway c) Output: After enjoying the service and products at the stores or in app, customers will have the assessment through the TCH app whether buying online or offline of the products that determine their brand loyalty At TCH, they have designed an app for the customers to give feedback about the products or staff If there is a problem, TCH will handle it immediately For example, the writer once wrote a review through the app about the coffee cup with some powder on the bottom, less than minutes later the manager came and asked for permission to make a new cup Moreover, currently, TCH is developing a Loyalty Program - The Coffee House Rewards, which customers come to The Coffee House stores or order The Coffee House's app to accumulate BEAN by way of transactions when buying our products (10,000 VND = BEAN) That Bean number will help Customers exchange for thousands of attractive offers III Operational problems and recommendations By conducting a small survey on social platforms and through feedback on online ordering platforms such as Grab, Baemin, Gojek, We have some feedback complaining during months recently (September, October, November) quality of products, services and operational issues at The coffee house chain of stores, as the following: Problem Frequency Product Quality 22/66 Services 21/66 Design 23/66 By researching and analyzing the operation process at this coffee shop chain We have found a number of causes leading to the above problem, the biggest cause affecting product quality is the unreasonable transportation of raw materials And the transition to the form of using paper and plastic cups has created a mixed wave on the customer side  Transportation waste  Motion waste  Design ( Product Development)  Design (Product Option) PROBLEM Transportation waste With the food and beverage products, the cost of supply chain and preserving raw materials is high The coffee is transported from Lam Dong to be processed at the roasting factory in District 7, Ho Chi Minh City and then transported to all branches across the country This makes the cost of shipping, especially to the northern provinces, wasted, not to mention the cost to maintain the product during transportation RECOMMENDATION In order for the transportation process to be shortened optimally, we suggest that TCH should build an additional roasting facility in the North This construction may cost initial construction, space, machinery and roasters, but in the long run, this will shorten at least 600 km when transporting coffee to the northern provinces Currently, Hanoi has the most establishments in the North, also a large central city, gathering skilled coffee-making experts Not to mention, a professional coffee roaster only costs about 2-3 billion VND Therefore, in order to ensure the quality of the raw materials (because the coffee after roasting cannot be stored for more than weeks) and reduce operating costs in the future, we suggest that TCH will have a coffee roasting facility in Hanoi (see where it can be shipped to other provinces easily) Motion waste TCH currently has problems in the process TCH applies technology to order processing of handling online and offline orders, especially in the recent “ Pickup“ model There was a problem in arranging orders and preparing products for customer order by “Pickup “model Customer order in app, pay and setup time to go to TCH store receive products However, when it comes up to time, there are no more products that customers have pre-ordered on the app and customers only received notification calls, refunds and apologies This technology can be like an automatic picking machine For each order, the staff will enter the raw material data and receive a sufficient source of raw materials After the material or product is removed from the machine, the machine will automatically connect to the system to confirm the remaining stock of the store Thus, it will help TCH manage the quantity of raw materials more efficiently In addition, the TCH app also connects to this system of each store so that when there is an online order or pickup, the machine will automatically record that material and product into the system to avoid the use of raw materials for another order by the staff In addition, TCH needs to train employees and employees, managers should be responsible for problematic orders Design ( Product Development ) TCH changes from glass cups when used at the shop (which is the difference of TCH compared to competitors) to paper cups and mostly plastic cups According to TCH, the representative of TCH said that, TCH sees this change as an opportunity to improve the service process to make water faster as well as avoid unnecessary errors in the preparation process At the same time, this is also a long-term strategy for the desire to create diverse products However, TCH has lost a group of people who care about environmental issues and only want to use glass and at the same time, there are also some shortcomings such as affecting the quality of drinks, TCH needs to propagate more about the fact that TCH is still using glass cups when requested through the company's media pages The Coffee House can Marketing campaigns about recycling plastic cups and turning them into useful products TCH can design a thermal bag designed specifically for The Coffee House's paper cups This bag will help customers more conveniently move and keep the heat / cold and ensure the quality of the product And each customer will buy it once and use it forever which are difficult to bring and easy to spill Design ( Product Option ) Despite putting product quality first, TCH received a lot of comments about the quality of the product not worth the price Drinks are lacking in features and prices are not cheap, but that is also one of the main reasons why customers cannot stay with TCH To improve products, TCH has continuously launched new products since the beginning of this year However, the taste of the menu in general has not received the satisfaction as expected In the article "What's going on with The Coffee House?" in the 24h.com newspaper published on Sunday, October 30, 2022, there was a customer's note when there were sizes for customers to choose from (small, medium and large) However, when choosing a small size (price 29,000 VND / glass), the staff said, only serve from medium size Therefore, the menu of TCH needs to be reviewed more closely Developed a new type of snack and offered it to customers after purchasing beverages such as: Peanuts, chips, etc In the coffee market, there are very few cafes that offer free snacks to customers after they order drinks This service will make a difference for TCH The prices of these snacks are very affordable but can imprint on customers' minds a new way of serving TCH also should buy reports on trends in the F&B industry of Vietnam and the world about daily drinks and has seasonal changes to update trends because when customers want to find the best strange drink to try, they will look for another brand TCH should update the menu regularly * Some proofs of the problems a) Motion waste b) Design (product development) (Source:https://www.24h.com.vn/kinh-doanh/chuyen-gi-dang-xay-ra-voi-the-coffee-housec161a1409970.html ) c) Design (Product option) (Source: https://www.24h.com.vn/kinh-doanh/chuyen-gi-dang-xay-ra-voi-the-coffee-housec161a1409970.html ) IV Conclusion Through this report, managers can better understand the system at The Coffee House And with the above suggestions will be the basis for The Coffee House to have the next strategies in the future Overall, The Coffee House has achieved proud results in the branding process The service at this cafe is highly appreciated in private cafes in Hanoi Thanks to this report, The Coffee House will find the best solutions to bring the best value to customers