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Performance Analysis Corporation* Chapel Hill, North Carolina Performance Analysis Corporation, founded in 1979, is a management consulting company that specializes in the use of management science to design more efficient and effective operations for a wide variety of chain stores. Performance Analysis Corporation has evaluated the operation of banks, savings and loans, and grocery chains. Recently, the company has been involved in evaluating the efficiency of fast-food outlets. In the following application, we describe how linear programming methodology has been used to provide an evaluation model for a chain of fast-food restaurants. Fast-Food Business The fast-food business for a chain such as Mc-Donald’s or Kentucky Fried Chicken is characterized by hundreds, or even thousands, of individual restaurants, some of which are company owned and some of which are franchised. A typical restaurant may gross close to a million dollars annually, thus the impact of relatively minor improvements at a large proportion of the restaurants can have a substantial effect on a chain’s profitability and market share. Although each individual restaurant in a given chain usually offers the same type of menu (with some minor geographical variations), they must often deal with vastly different environments and competition. In addition, the age of the restaurant, facade used, ease of access and egress, hours of operation, scale of operation and so on can vary substantially from restaurant to restaurant. A major objective of company management in the fast-food industry involves the performance evaluations of managers of individual restaurants in the chain. These evaluations are the basis for awarding year-end bonuses and for personal advancement purposes. Unfortunately, there is not a single measure of performance such as profit that can be used as the basis for the evaluation since other measures such as market share and rate of growth are also important. A…

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