NICK’S PIZZA & PUB Crystal Lake, Illinois Your start in the pizza business came in the eighth…

NICK’S PIZZA & PUB Crystal Lake, Illinois

Your start in the pizza business came in the eighth grade when your father opened the Village Pizza Restaurant. After graduation, you entered the construction business, building homes for more than a decade. But then, something drew you back. So, you took the family recipes and started your restaurant, Nick’s Pizza & Pub (far enough away to avoid competing with Dad).

Your goal was simple: to build a fun, family restaurant. Nick’s Pizza & Pubs—there are now two—have 26-foot high, floor-to-ceiling stone fireplaces, stuffed bears and moose, “antler chandeliers,” huge aquariums separating the bar restaurant, and wood everywhere—oak floors and huge beams recycled from century-old barns. And they’re huge, each seating 320 guests. On a Friday night, 1,500 customers will eat at Nick’s, most waiting an hour for their tables, while having a drink and eating free peanuts at the bar. Those 1,500 customers will eat 600 pizzas, and carryout customers order another 200. Why do they come? Beyond the great pizza, they come for the value. A medium cheese pizza is $11; soft drinks are $1.75, with free refills; and the popular Italian beef sandwich is under $6.00. Nick’s is affordable, especially for a sit-down restaurant.

With things going so well, you decided to open three more restaurants in the next five years. Unfortunately, the recession changed your plans. Guest counts dropped by 20 percent, or 100,000 people per year, decreasing revenues by nearly $1 million. On top of that, your managers were having difficulty controlling costs. Each week, they conducted a physical count, comparing food inventories (tomato sauce, flour, cheese, beef, liquor, etc.) to the previous week and then adjusted for this week’s sales. But beverage and food costs were still above goal, 22 percent of revenues for beverages, and 20 percent of food revenue. The problem, as you discovered, was your management, all hired externally because of their extensive experience at established, well-known restaurant chains. Their idea of leadership learned in the “command and control” cultures of other restaurants was telling people what to do. So, they had someone else put in the inventory numbers, and when the numbers came out wrong, they didn’t dig deeper or ask questions to discover why.

In the end, with costs up, revenues down, and lending standards tightening, the bank didn’t approve the new construction loans. So rather than expanding, your immediate challenge is to fix and grow the two Nick’s restaurants you’ve got. Frustrated with your managers, you gave responsibility for reducing costs to a 24-year-old who had worked for you since she was 16. She fixed the problem in four weeks by discussing the kitchen, wait, and bar staff, who suggested immediate solutions to reduce costs.

Sensing that she was onto something, you pulled together the staff in both restaurants to make a financial presentation that showed in detail how and where Nick was earning revenue and incurring expenses. After answering their questions, you asked for their help on three key issues: pay, hiring, and training. Of course, everyone wants to be paid more, but with costs being an issue, are there ways to pay people more but link those increases to the company’s profitability and workers doing their jobs better and staying with the company longer? If so, how? Next, because hiring talented workers is key in the restaurant business, how should Nick redesign its interview and selection process to find better and keep the best kitchen, wait, and bar staff? What is it about interviews that don’t work and should be abandoned? If so, what should be done instead, and why? Finally, at most restaurants, training is merely shadowing experienced workers to see what they do. What could be done at Nick’s to improve the training that would help them do their jobs better and continue learning and improving over time?


  1. Employee Selection-How would you find and select new employees for each of the critical jobs? Explain why and the selection criteria you would use.
  2. Employee Training-How would you train new employees, and why?
  3. Employee Compensation and Motivation-Given the competitive nature of the business, how would you compensate employees and yet maintain the business’s profitability? Be specific and explain what the costs would be? What additional things would you do to motivate the employees to meet the business goals? Explain why you feel they would be effective?
  4. Business Controls– What type of business controls would you use to ensure that the business’s goals are met? Explain why you would use each one. What kind of feedback would you use, and what corrective actions would you take if goals were not met?
  5. Summary and Conclusions-summarize the key points of the paper and your conclusions.

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