Chapter 1 Systems Approach to a Foodservice Organization
-Foodservice operations are open systems that transform inputs into outputs. Every decision
made will impact a foodservice operation in many ways. The same/similar output can be
achieved using different inputs. Factors in the environment impact the foodservice system in
profound ways. Strategic management is critical to the success of a foodservice operation.
The foodservice industry is diverse. Sustainability efforts inc the quality of life for future
The Systems Concept
-Foodservice operations are open systems but systems can be open/closed based on the
amt of interaction w/ their environment. The systems approach focuses on the totality of the
organization considering the impact of internal & external environment on the organization.
-A model is a conceptual simplification of a real situation in which irrelevant info is excluded
& analysis is simplified. Models in foodservice enable managers, suppliers & others to
evaluate current practices & impact of proposed changes on the foodservice operation.
-Systems theory was credited to Ludwig Von Bertalanffy (1968) proposing that the focus
should be on the relationship among the parts of the whole & the whole is > the sum of its
-A system is a collection of interrelated parts or subsystems unified by design to obtain
1/more objectives. The ff are fundamental implications of a system listed by Luchisinger &
-A system is designed to accomplish an objective.
-Subsystems of a system have an established arrangement.
-Interrelationships exist among the elements.
-Flow of resources through a system is more important than basic elements.
-Organization objectives are more important than those of the subsystems.
-The systems approach to management is keeping the organization’s objectives in mind
throughout the performance of all activities; requires a communication network &
coordination among all parts; decisions & actions by the manager in on area of operation will
The Organization as a system
-Input of a system is any human, physical or operational resource required to accomplish
objectives of the system. Transformation involves any action/activity used in changing input
to output. The output is the result of transforming input into achievement of a system’s goal.
Eg. Primary output of a foodservice system is producing the desired quality & quantity of
-Expanded systems model of org incl 4 more parts: control, memory, environmental factors &
feedback. Internal (plans like goals, objectives, standards, policies & procedures) & external
(local, state & federal regulations & contract management) control provides guidance for the
system. The control ensures 1) resources are used effectively & efficiently, 2) org is
functioning w/in legal & regulatory constraints & 3)provides standards to be used in
evaluation of ops.
-Memory is all stored info that provides historical records of a system’s ops; analysis of past
records help manager in making plans & avoid repetition of same mistakes. Computers allow
rapid access to records. (*note fig 1-2)
-Environmental factors are things that occur outside of the foodservice system yet impact
some component of the system, eg. tech innovation, globalization, competition, changing
demographics, political changes. Feedback incl processes by which a system continually
receives info from its internal & external environment which is helpful for the system to
adjusting to need changes, eg. customer feedback is valuable for manager regarding
changes needed in food/services offered.
Characteristics of Open systems -Open systems are org that are in continual interaction w/ the environment. Characteristics
incl: interdependency of parts=integration & synergy, dynamic equilibrium, equifinality,
permeable boundaries, interface of systems & subsystems & hierarchy of the system.
-Interdependency is when each part of the system affects performance of other parts of the
system, eg. purchasing new piece of automated equipment may affect menu, type of food
purchases & employee schedules.
-Integration is the result of effective interaction in that parts are blended together into a
unified whole which leads to synergy—working together can create greater outcomes vs.
-Dynamic equilibrium/steady state is the continuous response & adaptation of a system to its
internal & external environment incl all conditions, circumstances & influences affecting the
system. To remain viable, org must be responsive to social, political & economic pressures;
director must evaluate cost & availability of food, labor & supplies & advances in new tech.
Change & feedback is important to maintain dynamic equilibrium & for an org to remain
-Equifinality means same/similar output can be achieved by using diff inputs or varying the
transformation process, ie. Various alternatives may be used to get similar results.
-Permeability of boundaries allows the system to be penetrated/affected by changing the
external environment. Boundaries are the limits of a system & permeability allows it to
interact w/ environment, eg. a hospital constantly interrelates w/ community, other healthcare
institutions & gov’t agencies. Walls of subsystems have to flexible for an org to be effective,
eg. the boundaries b/w the food production & service units must be highly permeable to
satisfy customer, ie. Must be interdependent.
-Interface is the area where 2 systems/subsystems come in contact w/ each other, eg.
overall organization system has many interfaces w/ other systems, eg. suppliers, gov’t
agencies, community orgs & unions. A pt of friction occurs when 2 moving parts come
together the same way as the interface b/w 2 subsystems can have tension. White & Slater
(1989) identified that the area b/w front-back of the house as a pt of max tension b/w
waitstaff & cooks, eg. in hospital, interface is patient tray service since food & nutrition
services personnel & nursing personnel are often in direct contact & conflict often occurs—
Who is responsible for clearing the patient’s bedside table at mealtime?
-An org can be describe as having 3 levels (Fig 1-3 proposed & modified by Parsons (1960)
& Petit, Kast & Rosenzweig (1985)). The internal level, aka technical core/
operational level is where goods & services of the org are produced. The organizational level
whchi provides coordination & services for tech ops is responsible for relating the technical &
policy-making levels. The policy-making/corporate level, is primarily responsible for
interaction w/ the environment & long-range planning, eg. corporate headquarters for
restaurant chains. The degree of permeability inc from technical to policy-making level.
-Hierarchy is the characteristic of a system that is composed of subsystems of a lower order
& suprasystem of a higher order. The largest unit w/ which one works is generally the system
& the units become subsystems. Subsystem is a complete system w/in itself that is an
interdependent part of the whole system. Eg. Hospital is a system & dietetic services,
nursing, radiology, etc are the subsystems.
A Foodservice Systems Model (*note Fig 1-4)
-developed to illustrate appl of systems theory to foodservice org. Includes the basic &
expanded systems model of org. Arrows represent the flow of materials, energy & info
throughout the foodservice system; gaps in the arrows from output to input on the periphery
of model represent permeability of boundaries of the system & reflect environmental
interaction contributing to its effectiveness.
-Inputs of the foodservice system are the human & physical resources that are transformed
to produce output. Traditionally, there are 4 resources: human (labour & skills), materials
(food & supplies), facilities (space & equipment) & operational (money, time, utilities & info).
Input req depend & specified by objectives & plans of org -The functional subsystems (*note Fig 1-5) of a foodservice system are classified according
to their purpose & may include procurement, production, distribution & service & sanitation &
maintenance. The type of system determines characteristics & activities of the subsystems;
the distribution & service subsystem is the most important diff b/w restaurants & onsite
foodservice ops. Designing subsystems to meet the unique characteristics of various
foodservice orgs (eg. schools, hosp, airlines) requires a systems approach in which overall
objectives & interrelationships of the system are considered.
-Management functions are performed by managers during transformation process to
coordinate the subsystems in accomplishing the system’s objectives incl planning,
organizing, staffing, directing & controlling which manage ops like human resources,
finances & marketing.
-The linking process of decision making, comm. & balance are needed to coordinate
characteristics of the system in transforming inputoutput. Decision making is the selection
by management of a course of action from various alt. Communication is the vehicle for
transmitting decisions & other info incl oral & written forms. Balance refers to management’s
ability to maintain org & be stable despite tech, economic, political & social conditions.
-The outputs are the goods & services that result from transforming inputs; express how
objectives are achieved. Primary output of foodservice system is the proper quantity &
quality as well as customer & employee satisfaction & financial accountability.
-Customer satisfaction is closely related to types & quality of food, services provided &
customer expectations, eg. college student will be satisfied w/ pizza on residence menu plan
but not when it is served in a formal function even though in both cases, pizza has good
quality. Employee satisfaction is important; managers should be concerned about their
satisfaction & help them in achieving & coordination personal & organizational objectives;
effectiveness of any system is largely related to quantity of work done by the employees.
-Financial accountability is important in for-profit & not-for-profit foodservice org; manager
must control costs in relation to revenue regardless of the type of operation. In profit-making
org, the profit objective generally is the % of income vs. in the latter, financial objective may
be to generate a certain % of revenues in excess of expenses to still have enough funds for
renovations, replacement costs/expansion of ops.
-Control involves goals, objectives, standards, policies, procedures & programs of the
foodservice or. The menu is the most important internal control; it controls food & labour
costs, type of equipment need, customer & employee satisfaction & profit. All plans are also
internal controls: standing plans are those used repeatedly over a period of time &
updated/reviewed periodically for changes vs. single-use plans are designed to be used only
one time for a specific purpose/function.
-A cycle menu is an eg. of a standing plan, eg. hospital has a 2-week menu cycle repeated
over 3 months, restaurants use the same menu everyday w/ maybe a daily special, various
org policies. An ex of a single-use plan could be menu for a special catered function; may be
used as a basis to plan for similar type events.
-Contracts & various local, state & federal laws & regulations are also control components.
Contracts are either internal/external controls; internal controls may be for security, perst
control & laundry services; legal req are externally imposed controls on the system. Manager
must fulfill various contractual & legal obligations to avoid litigation, eg. constructing a
foodservice facility, local, state & federal building & fire codes must be followed in the design
& construction; federal legislation like Occupational Health & Safety Act 1972 & American w/
Disabilities Act of 1990 specify safety & access req businesses must incorporate in ops. Ie.
Controls are standards for system evaluation & the basis for managerial process of
-Memory stores & updates info for used in the system, eg. maintaining inventory, financial,
forecasting & personnel records & copies of menus. These records provide info to
management for analyzing trends & making adjustments in the system. -Environmental factors incl. technical innovation, globalization, competition, changing
demographics, gov’t regulations, consumer demands, etc. that are external to the
foodservice ops. Factors involve how foodsercice relates to & interacts w/ customers,
employees, gov’t officials, etc & other influences affecting its operation; factors req org to be
flexible, willing to change, quality conscious & customer focused to be successful.
Environmental scanning describes the search for & acquisition of info about events & trends
external to the org.
-Feedback provides info essential to the continuing effectiveness of the system & for
evaluation & control. Effective use of feedback is critical to maintaining viability of system,
eg. customer comments, plate waste, patronage, profit/loss & employee performance &
-A systems approach to managing a foodservice op involves creative & intuitive strategic
thinking which synthesizes info from internal & external environments to create an integrated
perspective for guiding the org into the future. Harisson & Enz (2005) outlines the ff
-intent focused (vision for where org is/should be headed)
-comprehensive (views org as part of larger system)
-opportunistic (takes adv of unanticipated opportunities)
-long-term oriented (goes beyond present & looks into future)
-Builds on past & present (learns from the past & recognizes constraints of present)
-Hypothesis driven (evaluates creative ideas in a sequential process)
-Strategic management, according to Coulter (2005) means developing & implementing
strategies that assist an org in maintaining a competitive adv—the characteristics of a
company that distinguishes it from others. Barney & Hesterly (2008) says that competitive
adv occurs when firm is able to create more economic value (benefits exceed economic
cost) for consumers & competitors.
-Poster (1998) & Barney & Hesterly (2008) describe the 5 forces framework that reduces a
firm’s competitive advantage are outlined in Table 1-1.
Steps in the Strategic Management Process
-Involves analysis of the company & its environment, creation & implementation of strategies
to move company toward its goal & evaluation of progress. Strategic management has
become a critical component for all foodservice org regardless of profit status. (*note Fig 1-6)
-Analysis: incl review & revision of company’s vision, mission, values & objectives;
determines a company’s external threats & opportunities & identify strengths & concerns. A
careful analysis is needed of the company’s stakeholders (individuals/groups who are
significantly affected by/influence a company’s decision) & competitors (another org selling a
similar product/service to the same target market) & the economic, political & tech
environment. A company’s vision statement is a broad statement of where a company wants
to be in the future vs. its mission statement is more focused & describes what a company
does which differentiates it from others. Harrison & Enz (2005) says that the mission
statement direct decision making & resource allocation, inspires higher levels of performance
& pride, communicates org purpose & values & enhances org’s reputation.
-Implementation: involves determination of strategic direction for the company & creation &
implementation of strategies which are decisions & actions to help a company meet its
objectives & gain competitive advantage. Michael Porter (1985,1990) proposed 3 bases of
strategies: cost leadership (being the lowest cost provider of product/service for a broad
target market), differentiation (providing product/service that is unique, that customers value
& that they are willing to pay a higher price for) & focus (using cost leadership/differntation
strategy to target a specific, limited –size market niche). David (2005) says managers may
need to do several things to implement strategies effectively: change org structures, link
performance evaluation & pay to strategies, create org climate supportive of change &
adapt/modify production process. -Evaluation: assessing whether changes have occurred in org’s internal/external strategic
position & determining whether the org is progressing well toward achieving its objectives.
An effective strategy evaluation program should be economical, provide meaningful &
accurate info in a timely manner, & identify factors that have led to an org’s current position.
Results will help managers decide if org is moving toward its goals as planned or if changes
are needed. Monitoring the environment incl awareness of changes & trends in the industry
is important in the strategic planning process. Foodservice professional org & trade lit are
good sources of trend info, eg. NRA: use of locally grown, hyper-local & farmer-branched
products were top trends (2010-2011). International Food Manufacturer’s Assoc (2009)
suggested that inc interest in health by consumers would influence food choices & serving
sizes offered in 2010 & these trends should challenge foodservice managers to review their
menus & consider healthfulness of the items & to what extent locally grown foods are
featured b/c incl these may inc operation’s competitive adv.
The Foodservice Industry
-The foodservice is exciting b/c it’s in a constant state of change, ie. In dynamic. Foodservice
ops are commonly categorized as either commercial or onsite/institutional foodservices.
Business in some of these foodservice ops is dependent upon economy; current info about
foodservice industry is available in NRA.
-Commercial Segment: incl foodservices in which selling food for profit is the org’s primary
activity, eg. restaurants, lodging, food & beverage, recreation & sports & convenience stores.
-Limited-service, limited menu=sometimes aka. Quick-service/fast food were
designed to provide a limited # of food items to customer in a short period of time. Customer
orders food at a counter & pays before eating. Targeting working professionals & parents
who want meals served quickly at low price. Many restaurants have created a new concept,
“fast/casual”, “adult fast food” or “quality-quick service” in which they combine speed &
convenience of fast food w/ food quality & exciting décor at a price b/w the 2; others offer
upscale menu & environment combined w/ quick-service techniques.
-Full-service restaurants=provide waited table service for customers. Guests are
greated & seated by host/ess, orders taken & delivered by wait staff & payment is after
eating. Style & ambiance varies greatly from casual to fine dining.
-casual dining restaurants: designed to attract middle-income individuals who
enjoy dining out but don’t want the formal atmosphere & high price found in fine
dining resto. Some have themes, e.g. Olive Garden, Red Lobster; some offer varied
menu, eg. Applebees, Bennigan’s, TGIF. Entrees are typically /= $100, eg. Spago in LA, Jean
Georges in NYC,e tc.
-Hotel & motel restaurants=a hotel’s food & beverage department is an exception if
profit >20% while rooms division has profit margins of 75-80%. Operating a full-service resto
is expensive & guests for some reason prefer not to eat in a hotel resto so food courts have
become popular to meet the needs of customers while keeping investment at low levels.
Food & beverage ops in hotels usually have longer hrs of service than independent resto b/c
they serve 3 meals a day, 7 days per week; requires multiple kitchens w/ 2x staffing,
expanded managerial controls & higher costs for distribution of food & supplies &
maintenance of the foodservice op. Hotel dining are labour intensive but room service is
even more; labour accounts for almost 50% of a hotel’s expenses & responsible for 25% of
all revenue but most food & beverage revenues are based on # of rooms sold per night. The
bed & breakfast (B&B) of the hospitality industry is inc; they are being opened as primary
businesses. A major change is the addition of restos offering service at only specific
mealtimes. -Country club restaurants=has the challenge of running foodservice outlets from
snack bars-fine dining. Individualized customer service occurs regularly here; foodservice
staff often prepare member’s favourite recipe even if it’s not on the regular menu or bring
members their fave cocktails before they even order. Typically feature 4 dining concepts: an
informal grill used mostly for breakfast/lunch or after a golf/tennis game, an upscale dining
room, a banquet facility & a snack bar. May be classified as not-for-profit but their financial
objectives likely will be able to generate sufficient funds for repair, maintenance & upgrade.
Members pay dues making menu items lower than profit-making dues, ie. Country club
members are really a hybrid of customer & owner; market is relatively small & outstanding
customer service is required. Professional assoc’n for club managers is CMAA.
-Airport restaurants=airlines are dec onboard foodservice to snacks, soda & cups of
hot coffee. As Americans became casual, so did airport resto. Each airport operates
differently; operators either bid on their own or enter into a franchising arrangement w/ a
major concession operator. Restos rely on airlines to attract people; most airport space is
priced high & this limited & unusual space req special equipment & higher costs. Most
airports req foodservice providers to cover all day & offer tak