Chapter 12 – Evaluating Performance

Chapter Warm-Up

Prechapter Reading Material

• Food and Beverage Cost Control (Dopson and Hayes 2019, 316–334)

Prechapter Exercises

• Review the “Sample Income and Expense Statement” in Dopson and Hayes (2019, 318). How might income and expense items for a pop-up restaurant differ from those of a traditional restaurant? In which case would you expect income items to be higher (or lower)? In which case would you expect expense items to be higher (or lower)?
• Evaluate the following restaurants using customer reviews on Yelp, OpenTable, or Tripadvisor:

1. Dans at Green Hills, Reading, Pennsylvania
2. El Vez, Philadelphia, Pennsylvania
3. Wings over Happy Valley, State College, Pennsylvania. What have you learned about each restaurant from the online reviews posted by customers?

Chapter Outline

• Why Evaluate Performance?
• Evaluating the Financial Performance of the Pop-Up Restaurant
• Evaluating the Service Performance of the Pop-Up Restaurant
• Evaluating Team Performance of Self and Others

Why evaluate performance?

By now, you have successfully staged a pop-up dining experience—but the work does not end there! The penultimate stage of the conceptualization, development, and implementation of a pop-up restaurant involves the review and evaluation of performance. Performance is based on the goals and objectives established at the planning stage, when the hospitality management team set specific and measurable outcomes in response to the question, “What would success look like?” Evaluating performance is an important step toward determining if the operation was able to achieve the established standards for successful outcomes.

There are several reasons why evaluating performance is important. One reason is to establish operating standards. Evaluating performance is premised on comparing a business’s current performance with either the historical performance of the business or the performance of similar competing businesses. This helps establish operating standards for current and future performance, a process commonly referred to as benchmarking. 

Another reason for evaluating performance is for incremental improvements and innovation. By evaluating performance, the business is able to determine areas where there is a need for enhanced effectiveness or efficiency. Finally, evaluating performance can help confirm or disconfirm hypotheses about several metrics associated with the pop-up restaurant business—for example, menu item popularity indexes, menu pricing, sales mix, and guest experiences.

Two primary sets of performance goals exist for the restaurant: financial performance and service performance. Financial performance goals are concerned with the extent to which the restaurant’s operation remained within budget controls set at the outset and refer to revenue, expensel, and profit performance. Specifically, financial performance reviews seek to measure how well planning and implementation activities returned at or below budgeted expenses and returned at or above budgeted revenue. Service performance goals are concerned with the extent to which the restaurant’s operation was able to meet or exceed target metrics set for guest service experiences on the night of the event. The hospitality manager is therefore challenged to make optimal use of financial and guest feedback data from the pop-up restaurant to evaluate past performance and reestablish standards for future events.

Evaluating the financial performance of the pop-up restaurant

Traditionally, financial performance is evaluated by comparing budgeted revenue, expenses, and profit performance with actual revenue, expenses, and profit performance. In general, when actual income exceeds budgeted income, this is a favorable outcome. The reverse is true for expenses. When actual expenses exceed budgeted expenses, this is a less-than-favorable outcome. The difference between actual income and expenses leads to either a net surplus (profit) or a net deficit (loss).

Evaluating the service performance of the pop-up restaurant

Traditionally, service performance is evaluated by reviewing quality, service, and cleanliness standards through the eyes of guests and/or industry experts. Guests, or diners, are the ideal source of evaluation performance through feedback mechanisms such as comment cards, online surveys, and questionnaires. Today, several pop-up restaurateurs are able to capture guest feedback directly from customer reviews posted via online rating platforms such as Yelp, OpenTable, Tripadvisor, or Eater. These sites and the user-generated content, or UGC, they provide are readily accessible to both restaurateurs and prospective guests. For this reason, popupreneurs must understand the importance of promising and delivering high-quality restaurant experiences, as a bad review can dissuade future diners from visiting the establishment. This is true for temporary pop-up restaurants and permanent restaurant establishments.

Several restaurants establish standards for evaluating their performance based on the SERVQUAL questionnaire instrument. SERVQUAL, popularized by Parasuraman, Zeithaml, and Berry (1988), provides a gap analysis of customer service expectations and the actual service provided. The measurement instrument uses ten service quality determinants to evaluate gaps between customer service expectations and the service provided (table 12.1).

Evaluating team performance of Self and Others

Perhaps the most important review the hospitality management team can perform is one based on self-reflection.

KEY TERMS

• Financial performance
• Service performance
• SERVQUAL

REVIEW Questions

1. Why should hospitality managers evaluate performance?
2. Why is it important to evaluate the service performance of the pop-up restaurant?
3. Why is it important to evaluate the financial performance of the pop-up restaurant?
4. Why is it important to evaluate self- and others’ performance?

Review ACTIVITY