Buca di Beppo Restaurants

Reservation System:

A Centralized Call Center

Presented 13 July 2006

By A.D. Otero

Background

• Buca di Beppo is an Italian food restaurant chain within the United States consisting of over 104 franchise locations[1]

• Mostly caters to evening diners so doors usually do not open until the late afternoon

• A majority of the clientele prefers to call-in their reservations

• If the local restaurant is not open at the time the call is made, or the local phone lines are tied-up, then a reservation can not be placed

[1]Reuters (2006). Company Profile for BUCA. Retrieved July 10, 2006 from the World Wide Web: http://www.investor.reuters.wallst.com/stocks/company-profile.asp?rpc=66&ticker=BUCA.O

Project Statement

• Anywhere between 1 and 5 reservation calls are not placed on a daily basis

• Average table party of 6• Average table tab of $138[2]

• Buca di Beppo is potentially losing out on $14,352 per day1 X $138 X 104 = $14,352 per day

$430,560 per month!!$5,166,720 per year!!

[2] ContanctCenterWorld (2004). Buca di Beppo. Retrieved July 9, 2006 from the World Wide Web: www.contactcenterworld.com/view/ contact-center-case-study/Buca-di-Beppo.asp

Project Objectives

• Buca di Beppo should implement a centralized Voice over Internet Protocol (VoIP) based phone reservation system

• Will create a centralized phone system that will connect all of the 104 restaurants’ reservation capabilities together in a centralized location

• Customers will be able to dial their local restaurant reservation number at any time of the day and are automatically redirected to the central reservation system via the IP-enabled phone switch

• Callers can reach an agent at the call center (even when the local restaurant is closed) and place a reservation

• Reservations in the centralized database will be constantly synchronized with each restaurant’s local reservation system

Project Scope

• The central reservation office will be co-located at the Buca di Beppo corporate headquarters in Minneapolis, Minnesota

• The central reservation center will include the reservation server with a database-backend customer preference database and VoIP phone switch

• All of the 104 restaurants’ preexisting phone switches will be migrated from the PSTN to support the VoIP features

• All 104 restaurants will be connected over dedicated Internet connections

• The local restaurant phone switches will be configured for call redirection to the central reservation center during off-hours

• A subset of restaurants in the Minneapolis area will run a pilot project of the call reservation system before the system is rolled-out throughout the US

Current Status

• All restaurants have a local connection to the PSTN

• All calls to the local restaurant are not processed if the call is placed during off-business hours

• Each restaurant currently maintains its own reservation database

Expected Benefits

Expected Benefits

Estimated Calls Gained (Daily) 1

Estimated Value of Each Reservation (Party of 6) $138

Number of Restaurants 104

Estimated Daily Revenue Benefit $14,352

Estimated Monthly Revenue Benefit $430,560

Estimated Yearly Revenue Benefit $5,166,720

Expected Costs

Task ID Task Name Total Costs

1 Analysis $19,200.00

2 System Design $978,200.00

3 Implementation of Pilot Program $17,600.00

4 Evaluation Phase $24,000.00

5 Implement System Wide Program $60,800.00

Total Costs of Project Implementation $1,099,800.00

Recurring Costs After Deployment $187,000.00

Profit Analysis

24 Month Profit Analysis

$0.00

$1,000,000.00

$2,000,000.00

$3,000,000.00

$4,000,000.00

$5,000,000.00

$6,000,000.00

$7,000,000.00

Estimated Costs

Estimated Benefits

Return on Investment

• Return on investment (ROI) is calculated by subtracting the project costs from the benefits and then dividing by the costs

ROI = (Revenue-Costs)

Costs

• Based upon the estimated benefits and costs, a Return on Investment analysis yields a ROI rate of 485.72% within a two year window of system deployment

• This return increases to 1895.09% if the ROI is extended to a five year window

Implementation Plan

• Success Criteria

– Central reservation center is brought online

– All remote restaurant sites are connected to the centralized call center via Internet

– VoIP and database connections are verified

– 10 restaurants in the Minneapolis area will run a pilot project and data is collected for analysis

– After a satisfactory analysis of the pilot project data, the final system is rolled-out to all 104 restaurant sites.

– Customers are using the new reservation services throughout all 104 restaurant sites by the end of the project

– Project is finished on time and on schedule

– Project budget is not exceeded

Implementation Plan

• Communication Management Plan– Weekly Status Reports– Milestones– Risk Related Items– Event Related Items (as needed)

Risk Identification

Risk Risk DescriptionProbab

ilityImpact

R1Insufficient bandwidth between

sites.Low High

R2Faulty hardware at restaurant or

centralized sites.Low High

R3Software failure at centralized and

remote sites.Medium High

R4Hacker attack on the VoIP or

database infrastructure.Low High

R5 Cost Overruns Medium Medium

R6 Scope Creep Medium Medium

Risk Mitigation

Risk Risk Mitigation

R1 A dedicated, leased-line with a robust service level agreement (SLA) will be negotiated with the service provider. There should be specific quality of service requirements as well as penalties for violation of the SLA.

R2 A comprehensive warrantee plan should be purchased from the system vendors. Onsite ready spares should also be maintained with the delivery quota of 24 hours.

R3 System backups should be conducted on a daily basis at the centralized site as well as remote sites.

R4 Do not connect the reservation system to the public Internet. The system should remain private and all data should travel over the dedicated lines.

R5 Include costs for potential cost overruns in the Rough Order of Magnitude (ROM).

R6 Conduct meetings with stake holders to define scope.

Project Evaluation

• Project will be completed and coordinated using the System Development Life Cycle (SDLC) framework

Task ID Task Name Expected Outcome

1 Analysis Feasibility study and project scope.

2 System Design Detailed network design and databases schema.

3 Implementation of Pilot Program

A pilot program consisting of a subset of 10 restaurants in the Minneapolis area.

4 Evaluation Phase Analysis of pilot program and decision on full system wide implementation.

5 Implement System Wide Program

A complete roll-out of the centralized call reservation system, including all 104 restaurants.

Resources Required

Risk Description Type Costs Quantity Total Cost

Alcatel VoIP Capable PBX

Material $5,000.00 110 units $550,000.00

Alcatel WAN Gateways Material $2,000.00 110 units $220,000.00

Database Solution Material $5,000.00 1 unit $5,000.00

Leased Line ISP Fees Material $1,800.00 104 units $187,200.00

Convergence Engineer (Data/Voice) #1

Work $40.00/h 1400 hrs $56,000.00

Convergence Engineer (Data/Voice) #2

Work $40.00/h 360 hrs $14,400.00

Project Manager Work $40.00/h 560 hrs $22,400.00

Database Analyst Work $40.00/h 1120 hrs $44,800.00

Schedule and Critical Path

• A critical path analysis of the centralized call reservation system yields a critical path timeframe of 205 days

• 8 hour work days• No overtime planned

WBS

Network Diagram

Conclusion

• If the centralized call reservation system is not implemented, Buca di Beppo will continue to miss out on benefits that are currently estimated to be $5,166,720 each year

• It is possible to reap the benefits of this lost revenue by simply partitioning a project budget of $1,099,800 for the inception of the call reservation system

• Breakeven point within two months of full implementation

• ROI of 485.72% over 2 years• ROI of 1895.09% over 5 years

Issues Covered

ANY QUESTIONS?