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Red Crab Group of

Restaurant, Inc
Accept or Reject a Special
Project

A Case Study

Submitted in Fulfillment of the
Requirements in Production and
Operations Management Prof. Marvin I.
Norona, MBA, PIE



2014

San Beda College
Graduate School of Business
Mendiola Street, San Miguel, Manila



Rodolfo Parreo Jr.
Submitted by:

Red Crab Group of Restaurant, Inc
Accept or Reject a Special Project

Red Crab Group of Restaurant aims to be the top crab and seafood restaurant and be among
the top 10 restaurant chains in the country, to create a strong network of world class,
pioneering specialty restaurants combining the best Filipino Agro resources and talent with
global flavors and design and to define crab & seafood dining in the country. THE RED
CRAB VISION is a citizenry who can experience and be proud of its aquamarine industrys
best bounties through RED CRAB as the countrys best casual seafood restaurant chain.
Mr. Raymond Magdaluyo the owner of red crab group of restaurant, are asked by his former
classmate and friend who happens to own a business nears his two branches. His friend asks
him if they can use one of his restaurants every week as a venue for a meeting and recreation
as well. They will occupy the whole restaurant after their office hours and they will stay for 3
to 4 hours. The company has 130 employees, and they are willing to pay 500 php. per head.
The contract for this special project will last for a year.
The owner asks Ms. Elaine Botabara the Operations director of red crab to decide on these
special functions, whether they will accept the offer. Ms. Elaine is a bit worried about this
offer because dinner is their pick hours. But also hesitant to just reject the offer since it is a
good friend of Mr. Raymond.
The following day Ms. Elaine called Mr. Ronald Garcia the manager of Makati branch, Ms.
Lisa Gamboa the manager of Morato branch, the branch internal auditor and accountant for
an emergency meeting to determine if they will incur any opportunity cost.
They all discuss all the area that will affect the operations of the restaurant. The first area of
concerns is the manpower, Makati branch dont have a problem on it but Morato branch
needs to hire additional 5 extra labor 3 in the kitchen and 2 for the dining area and they will
be paid 250 php each.
The next area of discussion is the turn-overs the Makati branch has a higher turn-over rate
than the Morato branch. Makati branch also has a higher Average check per transaction,
meaning their market has a higher paying capacity.
The Purchasing and forecasting will also be affected for the Morato branch since the number
of pax for the special function is larger than their usual capacity. It may require them to buy
an additional Chest Freezer Storage that will amount to 70,000 php.
Ms. Elaine asked them to provide all the necessary information that they will need for
decision making.


Makati Branch Morato Branch
Man power 100 employees 50 employees
Ave. Turnovers
10 am - 2 pm (Lunch) 150 pax 50 pax
3 pm - 5 pm (Lean hours) 30 pax 10 pax
6 pm - 10 pnm (Dinner) 230 pax 100 pax
Ave. Check per pax P 1,100.00 P 600.00
Capacity 250 pax 150 pax
Guide Question:
What areas and function to consider whether to accept or reject a special project?
Should the branch accept the project or just continue regular operation?
Which branch will have and lesser opportunity cost?
What alternative would you recommend?
What branch will take the special function / special project?
Prepare a Pros and Cons table to help you determine which branch will accept or whether to
reject the special project.

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