Programme BSc Business Management With Finance

Module name Service and Operational Management

Schedule Term September 2015

Student Reference Number (SRN) 1051222

XXXXX

Report/Assignment Title Operational Report – The Canvas

Date of Submission
(Please attach the confirmation of any
18th December 2015
extension received)

Declaration of Original Work:

I hereby declare that I have read and understood BPP’s on plagiarism and that this is my original work,
researched, undertaken, completed and submitted in accordance with the requirements of BPP Business
School. The word count, excluding contents table, bibliography and appendices, is 2598 words.

Student Reference Number: XXXXX

1051222 Date: 18th December 2015

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BPP Business School

Title Page
Service and Operational Excellence
The Canvas Cafe & Creative Venue

Page 1 of 19
Contents
Title Page ................................................................................................................................................ 1
Introduction and overview ...................................................................................................................... 4
Analysis of operational challenges ......................................................................................................... 5
4V Operational Model ........................................................................................................................ 5
Volume ........................................................................................................................................... 5
Variety ............................................................................................................................................ 5
Variation......................................................................................................................................... 6
Visibility......................................................................................................................................... 7
Customer objectives and expectations .................................................................................................... 8
The five customer objectives: ............................................................................................................. 8
Quality ............................................................................................................................................ 8
Speed .............................................................................................................................................. 8
Dependability ................................................................................................................................. 9
Flexibility ....................................................................................................................................... 9
Cost ................................................................................................................................................ 9
Process and Layout .............................................................................................................................. 10
Process Assessment .......................................................................................................................... 10
Process Analysis ............................................................................................................................... 10
Layout .............................................................................................................................................. 11
Layout Analysis ............................................................................................................................... 13
Recommendations ................................................................................................................................ 14
References ............................................................................................................................................ 15
Appendix .............................................................................................................................................. 16
Appendix 1 – Canvas Menu .............................................................................................................. 16
Appendix 2 – Operational Survey Canvas ........................................................................................ 18

Page 2 of 19
Figures
Figure 1 - Map of location (Source: Google Maps) ................................................................................ 4
Figure 2 - Ruth Rogers, Owner (Source: Timeout London) ................................................................... 4
Figure 3 - Display of Events (Source: Timeout London)........................................................................ 4
Figure 4 - Overview of 4V Analysis for The Canvas (Source: Author, Dec 2015) ................................ 5
Figure 5 - Average monthly/daily customers (Source: Ruth Rogers, 2015) ........................................... 6
Figure 6 - Variety of demand during day (Source: Author 2015) ........................................................... 6
Figure 7 - Weekly visitors by Day (Source: Author 2015) ..................................................................... 6
Figure 8 - The Canvas 4V's Visiblity (Source: Owner) .......................................................................... 7
Figure 9 - Polar diagram illustrating Canvas Performance (Source: Canvas & Author, December 2015)
............................................................................................................................................................. 10
Figure 10 - The Canvas Floor Layout - Basement (Source: Author) .................................................... 11
Figure 11 The Canvas Floor Layout - Basement (Source: Author) ..................................................... 12
Figure 12 - The Canvas Floor Layout - Garden (Source: Author) ........................................................ 12
Figure 13 - Basement (Source: Author) Figure 14 - Kitchen Entrance (Source: Author) ............... 13

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Introduction and overview
The Canvas Café & Creative Venue (Canvas) is a small independent social enterprise that
produces freshly baked goods, hosts events and operates as a café. The canvas is located 0.5
miles north of Liverpool Street Station, by the touristic street Brick Lane (Figure 1). The owner
of the venue is Ruth Rogers (Figure 2), a former actress who after a successful campaign with
her charity Body Gossip, decided to open up the venue focusing on making Londoner’s happier
via making a creative space that enables customers to express self-confidence issues by writing
on their walls while enjoying the home made goods. The venue has been operating since
October 2014.

Figure 1 - Map of location (Source: Google Maps)

The Canvas employs 6 people who fully operate the store

from hosting events, baking and barista activities. The venue
is special as customers are able to write on the walls
expressing feelings. The price of the products ranges from
coffee and beverages £2-4, cakes and sandwiches £3-5, event
space bookings from £60-150 per occasion with special rates
for charities. The venue outsources some baked goods from
the local bakery as well as preparing and baking on-site cakes
and other goods. The venue operates Tuesday-Friday 9am-
9pm, Saturday-Sunday 10am-8pm, closed on Monday. The
café’s main competitors are: Nude Espresso, DF Mexico,
Joe's Kid, Doppio, the cafe at Second Home and at weekends
The Truman Brewery food market.
Figure 2 - Ruth Rogers, Owner (Source:
Timeout London)

The canvas displays their events on a large

chalkboard upon entrance, some of which are
free of charge. The café has two levels, the upper
floor operates as a café, the bottom during busy
periods as a café and transformed during events.
The venue has a garden that is being utilised as
an extension to the café and an additional storage
area that isn’t being utilised at the moment. Figure 3 - Display of Events (Source: Timeout London)

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Analysis of operational challenges
4V Operational Model
By analysing the business’ processes and by using the ‘4V’ Operational model (Slack et al,
2007), there are four distinctive operations processes that have been identified that are
particularly important.

Volume
High

Variation Low Variety

Visibility

Figure 4 - Overview of 4V Analysis for The Canvas (Source: Author, Dec 2015)

Volume
“Independent coffee shops and sandwich shops' strengths lie in their ability to offer a more
unique, more personal and more down to earth atmosphere.” (Coffee Shop Hotshots, 2014)
The canvas is a low volume, low staffed operation. The café serves a range of ‘short-order’
dishes that vary depending on customers and have relatively low repetition hence it is subject
to high unit costs for production. Due to the low amount of staff performing more of each job,
this results in low amounts of systemisation and repetition. This results in staff being highly
skilled in a wider range of activities, which reduces the likelihood of repetition being more
utilised. Though staff are expected to perform an array of tasks, the vast majority of the overall
responsibility falls to the owner who oversees the strategy of the business along with being
involved in the day-to-day “I am involved in everything that happens … even things like
cleaning dishes”. (Rogers, 2015) Though the Canvas prices itself similarly to those of the direct
competition, due to the high cost per unit the canvas cornering itself in with a rising amounts
of cost with market forced limit to sales price.

Variety
Relative to its size the canvas offers relatively high variety. The seasonal menu includes 7 types
of brunches (breakfast-lunch), 8 types of lunches including sharing plates and daily specials.
The café offers 9 types of coffees with teas, a range of smoothies with alcohol served by the
side and accompanied by home baked cakes and locally sourced goods (Appendix 1). The
canvas is currently referred to as a creative venue with seasonal standardisation in place for the
café and no significant standardisation for the venue. The menu varies seasonally, however due
to the size of the business it is fairly flexible to tailor goods to customers’ needs. The events
that the canvas holds have no standardisation in place, varies week-by-week and the website is
updated with the up-coming events. The result of this is that the café is unable to harvest the
advantage of ‘economies of scale’ (David Begg, 2013), as most of the goods are bought locally
in small batches from local producers and varies on frequent basis.

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Variation
The variation in demand for the canvas café is seasonal. A rising trend in January-March,
followed by fluctuation approaching the summer season with a turnaround in June with an
escalating trend towards winter. During January the café suffers a shortfall in customers due to
the fact that it closes for Christmas period. (Figure 5)

Average Monthly Customers Average Daily Customers

(10 Month) (10 Month)
2500 Minimum Maximum
2000
120
1500 100
Customers

80

Customers
1000 60
500 40
20
0 0

Figure 5 - Average monthly/daily customers (Source: Ruth Rogers, 2015)

The perception for people to go into coffee shops has changed over the years. “The environment
has to be great and people have to want to come and stay there…almost all of it is about creating
the best environment” (Woolfson, 2015). The demand for a work-space like ’indie’ venue has
been increasing in popularity. This is also backed by the unusual fact that the peak hour for the
canvas is between 14:00-16:00 (Figure 6). This results in predictability allowing routine tasks
to be carried out which lowers the units cost. Furthermore the variation demand increases
towards the weekend when events are held in the café or people are socialising. Though this
poses a larger threat of pubs and restaurants competing at the market place (Sutherland, 2015),
no significant changes in the staffing have been identified meaning an increase in inventory and
becoming overstaffed/understaffed. This results in a lack of ’utilisation of resources’ at a given
time (Slack et al, 2007). This is seen in the lack of adaptation during the summer period in a
significant sales decline. (Figure 7)

Weekly Visitors by Day

120
100
80
Visitors

60
40
20
0

Figure 6 - Variety of demand

during day (Source: Author
2015)

Figure 7 - Weekly visitors by Day (Source: Author 2015)

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Visibility
Though the ‘4Vs’ model proposes that “customers will have a relatively short waiting
tolerance” (Slack et al, 2007, p. 20) the business wants to provide a welcome and home-like
feel when customers enter the café, each item handled with care. This in return provides a large
operational challenge during the peak-hours when customers want to get an early cup of coffee
and head off to work. Furthermore the customer is directly exposed to the processes within the
café resulting in ‘high received variety’ (Slack et al, 2007). Though customers are willing to
pay more for the quality of the product (Riell, 2015) and the experience during the purchase,
due to high visibility of activities carried out, it is difficult for the café to achieve high resource
productivity which results in high-cost operations. This is also reinforced by (Nadiri & Gunay,
2013, p. 44) however with a special emphasis on how “…managers should ensure that personnel
are completely customer oriented”, in order to ensure customer satisfaction is met as the
operations are visible to customers. Furthermore, there is little visibility for additional space
downstairs, which may result in customer not wanting the enter supposing the venue is at full
capacity.

Figure 8 - The Canvas 4V's Visiblity (Source: Owner)

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Customer objectives and expectations
The way in which the canvas secures, utilises and positions their resources will have significant
impact on the extent to which they successfully pursue specific performance objectives (Barnes,
2008). This has been further examined by (Slack et al, 2007) who argue that there are five
performance objectives that organisations should evaluate their performance of operations
against.
The five customer objectives:
The following are based on the results of the survey that was formally done at the café/bakery.
The original survey is sampled in the appendix. (See Appendix 2)
Quality
Quality is referred to as ‘doing things right’, providing goods that are ‘fit for their purpose’ and
produced according to their specification. Taste, Aesthetics Feedback
Customer Expectation:
Provide high quality, ethically sourced products
Provide high quality service
Provide comfortable environment
Performance Against Objective:
“…ethical, locally sourced and homemade produce… a friendly and welcoming atmosphere”
(Rogers, 2015). The café provides high quality products as expected by customers, the baked
goods are locally sourced from the local bakery The Dustry Knuckle, coffee is sourced from
Square Mile in Bethnal Green and the loose leaf tea from ‘We Are Tea’ in Holland Park. Cakes
are baked on-site and served to customers. The café is willing to source transformed products
and input resources to meet customer demands. This is reinforced in the customer satisfaction
rate for food quality (56% very satisfied and 22% quite satisfied), service quality (24% very
satisfied, 44% quite satisfied) (The Canvas Survey, 2015). Customer service had received
negative feedback which contradicts the café to be a comfortable environment, unless this key
area of concern is not addressed it may result in a reduced satisfaction.
Speed
Speed is referred to as ’doing things fast’, minimising the time elapsed between the placing of
the order and receiving the products.
Customer Expectation:
Relatively fast service on goods
Quick to respond to queries/orders
Performance Against Objective:
Though most customers order to stay-in, delivery of services is sluggish. Occasionally coffee
that are not up to the standard of the barista’s expectation are thrown out resulting in a higher
cost per unit, increasing overall costs and increasing wait times. This is indicated in the minority
online feedback “dreadful service” (Google, 2015) backed by 32% between neutral and
dissatisfied with service (The Canvas Survey, 2015).

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Dependability
Dependability refers to providing the product/service to the customer when they are needed.
Customer Expectation:
Provide products and services in timescale quoted
Keep queues to a minimum
Stock available for orders
Open as advertised
Performance Against Objective:
The Canvas meets the customer expectation to provide goods and services in the timescale
quoted, the majority of the time. “Sometimes the food and coffee take too long to arrive”
(Canvas, 2015). The café does not have any specific strategy in place to adjust to demand during
peak hours, which may result in a build-up of queues delaying the duration between order and
receiving of goods. This is especially important during morning peak hours when rush hour
customers are willing to switch to faster alternatives as they are more reliable in providing the
goods on time.
Flexibility
Customer Expectation:
Respond to demand in capacity
Quick to respond to queries
Keep queues to a minimum
Staff occasionally find it difficult to adjust to change in demand. The canvas does not have any
specific outlined strategy to cope with an increase/decrease in demand meaning that staff are
left either overworked or are not doing something productive. This results in a build-up of
inventory which increases the cost per unit yet again.
Cost
Customer Expectation:
High quality, high price
Competitive pricing
Stock is ordered twice per week which provides sufficient resources, there is a slight
opportunity to source from cheaper alternatives. The findings of the survey showed that most
customers (72%) believe that the café offers a reasonable price for the products. The cost of
the products is slightly unproportioned to the selling price, which may be raised according to
the competition.

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 Figure 9 - Polar diagram illustrating Canvas Performance (Source: Canvas & Author, December 2015)

Process and Layout

Process Assessment
The resources that are to be transformed are ordered and purchased in ‘batches’, implying that
each part of the operation has stages when the process repeats itself. (Slack et al, 2007)
On average every interaction with the customers are varied however there is a given range in
which customers are able to choose services. This varies from food, coffee, soft drinks, cakes
or other goods. The way in which these are prepared have a formalised structure that each is
assigned to be done. Materials that have been purchased are prepared according to the
specification of the current menu in the kitchen.
Process Analysis
On average there are two orders that are requested per week. An order delivered on Monday in
order to serve the customers Tuesday-Thursday and a secondary order is received on Thursday
which provides sufficient resources for the café to operate until Sunday. This is then repeated
on a weekly basis at a volume from the same supplier. The goods are delivered into the kitchen
where the resources are built up as inventory. When a customer requests a specific dish, in the
kitchen the order is prepared according to the specification, transforming the resources to match
the description of the order. All food related items on the menu are prepared in the kitchen and
delivered either to customers who are in the basement or on the ground floor located in the café
area. Goods that are complementary to the café are displayed on the counter and restocked as
demand for the product rises. With regards to the performance objectives, this way the business
is able to constantly provide high quality goods to their customers and enables flexibility for
orders in demand.
The cakes are baked on site in batches that are prepared on Mondays. As observed there is not
a clear structure with regards to the quantity of the cakes that are baked. In many situations
there is a surplus of cakes that have not been consumed that goes to waste. Furthermore, the
full time baker is costed at a very high £18 per hour at a 10 hours per week basis which increases

Page 10 of 19
human resources costs and adds to cost per unit. As a result of high fixed costs the margin for
profit is reduced. To add to that, a deeper analysis of the profits indicated that cakes are the
least highly selling product in the café but requires the highest amount of human resources costs
to produce. Applying the 7 Wastes model (Johnston et al, 2012) a possible a reduction in hours
and a deeper analysis of the demand for cakes with accordance to the cost unit associated with
the production should be conducted.
Layout

Figure 10 - The Canvas Floor Layout - Basement (Source: Author)

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Figure 11 The Canvas Floor Layout - Basement (Source: Author)

Figure 12 - The Canvas Floor Layout - Garden (Source: Author)

Page 12 of 19
Figure 13 - Basement (Source: Author) Figure 14 - Kitchen Entrance (Source: Author)

Layout Analysis
The floor layout of the café is a ‘functional layout’. The counter is located at the centre of the
café on the ground floor which is convenient for customers who are planning to stay-in or take
away. There is a direct pathway to the counter upon entry which ensures that those customers
who are willing to purchase a coffee to take away to their workplace are able to do so without
significant barriers. Customers who are staying within the café on the ground floor are able to
quickly request assistance from the staff who are at a close range. Due to the kitchen located
downstairs, this sometimes causes inconveniences when delivering of the food. The stools on
the ground floor are great aesthetic additions to the café however they are barely used. This
space could be more efficiently utilised as it is the primary avenue for customers entering and
leaving, perfect for promotions. The garden is completely unutilised during the Christmas
period, resulting in a higher cost of maintenance as it will need to be repaired or replaced.
The positive side of this functional layout is for events, as a major part of the Canvas’ income
is from events. The basement is positioned well for hosting catered-for events with toilet
facilities and the kitchen is very closely. The positioning of the debris is very puzzling without
any clear structure, which results in a lot of unutilised space.

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Recommendations
Overall The Canvas is positioned a “high quality, high price” café that aims to do great for the
community however has its flaws. The recommendations will be broken down into 4 segments.
The Staff to complement atmosphere
The Canvas aims to provide a unique, home-like feeling to their café. This was indicated both
during the interview with Ruth and listed on multiple occasions in her business plan. Partially
this aim is achieved through the delivery of high quality goods, however there is a severely
important aspect of staff that contributes to providing an environment. Staff need to take overall
responsibility in providing the feeling to the day to day operations of the business. They need
to be encourage to ask customers how their food tastes, whether they are satisfied with the
service and provide a homely service to the customers. “…it’s the little things that matter.”
(Parker, 2015)
Visibility – additional spaces
The Canvas does very well in terms of visibility. The customers are able to instantly see the
capacity of the venue and see what the interior looks and feels like thanks to the glass window.
The downside of this is a potential danger, where customers will choose alternatives as the café
might seem at full capacity. There is no label within the café (or at least visually made clear)
that would indicate that the café is able to provide further spaces in the basement. There is a
sign that indicates that there are spaces in the garden however this has not been adjusted for
during the Winter season, where little to no customers use the garden – though many would be
in favour of sitting in the basement. This has been proven that there is significantly more traffic
on the ground floor than there it is down the basement (events unaccounted for).
Standardisation of events
There is significant emphasis on the standardisation of events for the Canvas. Ruth has indicated
that occasionally staff are unsure as to what events are being hosted at the café and during what
times. This creates significant confusion as the basement of the café has to be re-organised and
transformed into a creative venue that is able to host guests. This results in staff inefficiently
spending time and hindering the operations of the venue increasing further costs.
Adjustment to layout
Though not a radical change, the stools on the ground floor are posing inefficiencies as little to
no customers use the space. This would serve much better purpose for marketing materials or
updates.

Page 14 of 19
References
Barnes, D., 2008. Operations Management: An international perspective. London: Thomson
Learning.
Canvas, C. T., 2015. Customer Satisfaction Interview [Interview] (11th December 2015).
Coffee Shop Hotshots. 2014. [Film] Directed by Jacqui Farnham. United Kingdom: BBC
Business Boomers.
David Begg, D. W., 2013. Economics for Business. 4th ed. New York: McGraw-Hill.
Google, 2015. Google Feedback. [Online]
Available at: https://www.google.co.uk/search?sourceid=chrome-
psyapi2&ion=1&espv=2&es_th=1&ie=UTF-
8&q=the%20canvas%20caf%C3%A9&oq=the%20canvas%20caf%C3%A9&aqs=chrome..69
i57j69i60l2j69i61j0l2.5024j0j7#es_th=1&lrd=0x48761cb60a005015:0x640cd481b04f17a1,1
[Accessed 11 December 2015].
Johnston et al, R., 2012. Service Operations Management: Improving Service Delivery. 4th
ed. Essex: Pearson Education Ltd.
Nadiri, H. & Gunay, N. G., 2013. An empirical study to diagnose the outcome of customers'
experience in trendy coffee shops. Journal Of Business Economics & Management, 14(1), pp.
22-53.
Parker, D 2015, 'Let them eat cake!', Management Services, 59, 2, pp. 30-33, Business Source
Complete, EBSCOhost, viewed 10 December 2015.
Riell, H., 2015. 'Winning the Coffee War'. Convenience Store Decision, 26(11), pp. 62-64.
Rogers, R., 2015. The Canvas operation [Interview] (27 November 2015).
Slack et al, N., 2007. Operations Management. 6h ed. London: Pearson Education Limited.
Sutherland, E 2015, 'Consumers' shifting priorities', Publican's Morning Advertiser, 205, p.
10, Business Source Complete, EBSCOhost, viewed 7 December 2015.
The Canvas Survey (2015) Survey on Performance Objectives, 11th December 2015.
Woolfson, D 2015, 'Perc up your profits', Publican's Morning Advertiser, 193, pp. 32-35,
Business Source Complete, EBSCOhost, viewed 7 December 2015.

Page 15 of 19
Appendix
Appendix 1 – Canvas Menu

Page 16 of 19
Page 17 of 19
Appendix 2 – Operational Survey Canvas
Sample size: 50
Summary Visual Representation of Data

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