Trends in PPPs

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Int. J. Production Economics

Int. J. Production Economics 126 (2010) 111–120

0925-52

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journal homepage: www.elsevier.com/locate/ijpe

Waffle House Restaurants hurricane response: A case study

Özlem Ergun, Jessica L. Heier Stamm�, Pinar Keskinocak, Julie L. Swann

H. Milton Stewart School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, GA, USA

a r t i c l e i n f o

Article history:

Received 16 January 2009

Accepted 22 August 2009 Available online 27 August 2009

Keywords:

Supply chain management

Crisis management

Disaster response

Case study

73/$ - see front matter & 2009 Elsevier B.V. A

016/j.ijpe.2009.08.018

responding author. Georgia Institute of Tec

W, Atlanta, GA 30332-0205, USA. Tel.: þ1785

404 894 2301.

ail address: [email protected] (J.L. Heier

a b s t r a c t

Natural and man-made disasters present an increasing challenge to the management of

supply chains for businesses, governments, and humanitarian response agencies.

Sharing best practices enables the continued improvement of processes that can

further impact lives and livelihoods in the event of a disaster. This case study highlights

the experiences of Waffle House Restaurants, which has been nationally recognized for

its response to hurricanes in the United States.

& 2009 Elsevier B.V. All rights reserved.

1. Introduction

Supply chain management practitioners and research- ers have made significant contributions to improving the efficiency and effectiveness of a broad spectrum of organizations. Comparatively little work has been done to date, however, to apply logistics methodologies to the supply chains associated with disaster response. Arguably some of the most urgent challenges faced by our society include the development of effective methods to prevent, mitigate, and respond to emergency situations caused by natural or man-made disasters. Preparation for and response to disasters frequently require the coordination of resources and personnel from local, regional, national, and international governments, non-governmental orga- nizations (NGOs), the private sector, and the affected population. As such, these challenges provide many opportunities for supply chain management professionals to make valuable contributions.

Some organizations have been successful in respond- ing to disasters, and closer investigation of their practices helps move this field forward. Among those who are well- recognized for their ability to respond is Waffle House

ll rights reserved.

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Restaurants, and this paper aims to understand why this company has been successful. The paper is organized as follows. The research objectives, case study methodology, and selection of Waffle House Restaurants as the emphasis of the study are described in Section 2; this section also provides a review of literature in this area. Section 3 describes the philosophy, structure, and processes associated with Waffle House Restaurants’ hurricane response. An analysis of Waffle House Restaurants’ success in terms of supply chain and crisis management tools, the types of decision tradeoffs inherent in disaster response, and lessons that translate to other organizations are detailed in Section 4. Concluding remarks are presented in Section 5. Information on how to obtain teaching materials based on this case study for use in undergraduate, graduate, and professional education is provided in Appendix A.

2. Research objectives and methodology

This study is motivated by the impact of supply chain management methodologies in the day-to-day business operations in the private sector and the opportunity to improve their application in disaster response scenarios. It seeks to answer several questions:

K

Are there private sector organizations that succeed in responding to natural disasters?

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Ö. Ergun et al. / Int. J. Production Economics 126 (2010) 111–120112

K

Why is such an organization successful? J What type of crisis management and supply chain

management techniques are used? J What are the roles of the different functional

groups of the organization in the disaster response? J How do the functional groups collaborate within

the organization? J How does the organization collaborate with other

stakeholders?

K

How can lessons from the experience of the organiza-

tion be generalized to others?

A case study approach was selected to investigate these research questions. As described by Yin (2009), the case study is a relevant research method when investigators seek to know how or why a phenomenon occurs, have little control over actual behavioral events, and are concerned with contemporary issues. Each of these characteristics describes the research topic at hand. Case studies also provide concrete examples of practical applications of management techniques, and thus, can help other organizations develop ways to translate theory into practice. By presenting this research as a case study, we pursue several important objectives. The study aims to highlight the processes and decisions that make Waffle House Restaurants a leader in hurricane response. Hence, while addressing the research questions posed, this study also stimulates improved disaster preparedness in other organizations by raising critical issues in disaster pre- paredness and response. Finally, the case study lends itself to the development of educational materials for use in academic and professional training environments. Devel- oping greater awareness and competence among supply chain professionals is a critical step toward improving disaster response and the case study approach helps achieve that goal.

After framing the research questions and selecting the case study methodology, Waffle House Restaurants was selected as the focus of this study. The company began with a single store in 1955, but now has restaurants in 26 states and a dense presence in the Southeast region of the United States. This geographic presence makes the stores vulnerable to the effects of hurricanes and has led the company to develop nationally-recognized disaster re- sponse processes. Their proactive approach earned them recognition from ABC News following Hurricanes Katrina and Rita for their ‘‘rapid ability to provide relief in disaster,’’ alongside Wal-Mart, Home Depot, and Lowe’s (Hayes, 2008). In contrast to these other companies, Waffle House Restaurants is privately owned. It does not have its own transportation fleet and has comparatively fewer resources at its disposal, making internal and external collaboration a key component of its success in hurricane response. Unlike other companies that partici- pate in humanitarian response, such as major global logistics firms United Parcel Service (UPS) and TNT, logistics is not the primary business of Waffle House Restaurants. The company’s use of supply chain manage- ment tools in support of its response efforts thus provides insights for others who strive to do the same.

2.1. Supply chain management and disaster response in the

literature

Standard supply chain management problems such as resource allocation, transportation planning, and inven- tory management all develop a new level of complexity in the context of disaster response. Infrastructure and resource availability is uncertain, and demand can vary widely both in volume and location. Decisions must often be made very urgently and with limited information. In this context, there is a need for complementary tools from both crisis management and supply chain management. Before describing the ways that Waffle House Restaurants has dealt with some of these challenges, we summarize previous work in these areas.

The classical text on crisis management is Weick and Sutcliffe’s Managing the Unexpected (Weick and Sutcliffe, 2001), in which the authors examine a number of what they call high reliability organizations, such as nuclear power plants, firefighting crews, and aircraft carriers. These high reliability organizations face substantial risk of disastrous events but routinely perform very well. From these successful organizations, five practices are derived that are essential for others that seek to perform as well and manage crises effectively. These practices include a preoccupation with failure, in which error reporting is encouraged and even small problems addressed; a reluctance to simplify interpretations so that all perspec- tives are considered; a sensitivity to operations, with a focus on detailed workings of the organization as opposed only to strategy; a commitment to resilience by building individuals’ capacities and returning to a state of pre- paredness as soon as possible; and a deference to expertise, empowering those who have experience in a needed area regardless of their rank.

Kovoor-Misra and Misra (2007) describe five phases of effective crisis management: crisis prevention, prepared- ness, containment, recovery, and learning. In the same volume, Clair and Waddock (2007) emphasize the im- portance of a systems approach to crisis management: ‘‘If a company could adapt already existing systemic ap- proaches to include its crisis-management activities, then it might be more likely to address the crises proactively rather than after the fact.’’ In addition to discussions of preparedness approaches that make use of specific plans, other researchers have examined characteristics that make organizations inherently resilient and seek to measure this resilience potential (Mallak, 1998; Somers, 2009). Somers (2009) demonstrates that resilience poten- tial correlates with certain activities that can be influ- enced by managers, such as organizational structure, participation in community planning activities, and the extent to which management seeks information about risks.

Given our focus on supply chain management tools within the context of disaster response, the literature on supply chain disruption and risk management also provides insights. Tang (2006) provides a detailed survey of work in this area. He notes that the majority of the existing models deal with operational risk rather than disruption risk, and while many companies recognize the

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importance of risk assessment, few invest time and resources to mitigate disruption risks. The author high- lights several important open research areas to develop quantitative models that can help companies better manage disruption risk. Of particular relevance to this case study are the consideration of different objective functions and management targets (besides expected cost), as well as strategies for demand, supply, and product management.

Tomlin (2006) quantifies the value of mitigation and contingency strategies in the face of supply-side disrup- tion risks. The author derives optimal policies for a single- product, two-supplier case in which one supplier is fully reliable and the other is unreliable but less expensive. Inventory mitigation, supplier choice mitigation, and contingent rerouting (by choosing another supplier) are examined. These theoretical results provide insights for the kinds of policies that may be effective in practice. Despite much work in the area of risk and uncertainty, research in the area of supply chain disruption as a result of disasters remains an important and growing field (Kouvelis et al., 2006).

Several articles describe supply chain operations in the context of humanitarian response. A detailed overview of the challenges of humanitarian logistics, in particular the interaction of many stakeholders, is provided by Van Wassenhove (2006). This study and a related article (Tomasini and Van Wassenhove, 2005) also highlight the opportunity for humanitarian agencies and private com- panies to learn from one another to improve operations, emphasizing the successful partnership between the World Food Programme and TNT. Others (Bui et al., 2000; Iakovou and Douligeris, 2001) have addressed the important role that information management and dis- semination play in response efforts, while (Beamon and Kotleba, 2006a, b) examine questions of inventory management in disaster response supply chains. Leggiere (2009) describes improvements made in the FEMA procurement system since Hurricane Katrina, including the use of both pre-positioning and pre-negotiated contracts with suppliers of relief necessities. Despite the research that has been done to date, Larson et al. (2006) emphasizes the need for additional quanti- tative research to support planning and processes for disaster response.

1 Company background was obtained through personal interviews

with Waffle House Restaurants personnel and by consulting the Waffle

House Restaurants media kit, available upon request at http://www.waf-

flehouse.com/faq.asp.

2.2. Waffle House Restaurants hurricane response

This case study differs from much of the previous literature in that it describes the efforts of a particular private company, as opposed to a humanitarian agency, in preparing for and responding to natural disasters. The study showcases the Waffle House Restaurants hurricane response philosophy, the processes the company follows in preparing for and responding to hurricanes, and some of the lessons learned throughout the years of response activities. The case study details the responsibilities of the different functional groups of the company. It also describes ways that Waffle House Restaurants has im-

proved hurricane response processes as a result of lessons learned from previous hurricanes.

This case study contributes to the literature in crisis management and humanitarian logistics by providing concrete examples of effective techniques in practice. We relate the outcomes of our original research questions regarding the company’s success to the underlying theoretical framework in these disciplines. We demon- strate that Waffle House Restaurants exhibits several of the qualities of high reliability organizations and that the company has focused much effort on developing systema- tic processes for the phases of effective crisis manage- ment. This case study illustrates that planning for supply chain disruptions and using logistics methodologies, such as supply and demand management and inventory planning, can contribute to effective response in humani- tarian crises. Finally, it provides lessons for companies in the private sector as well as government and humanitar- ian agencies and raises questions for future research in this area.

3. Case description

Tom Forkner and Joe Rogers, Sr., opened the first Waffle House Restaurants store with a commitment to out- standing service, both to their customers and to their employees. This dedication to the community is still witnessed today, and perhaps is most evident in the company’s philosophy toward hurricane response. In this case study, we detail the company philosophy and describe their preparation for hurricane season, their response process, and the lessons they have learned to improve the process through the years.

3.1. Company background1

In 1955, the first Waffle House Restaurants store was opened in Avondale Estates, outside of Atlanta, GA. More than 50 years later, it has grown to approximately 1600 stores in 26 states. Of these, 650 are owned and operated by franchisees with the remainder managed by the company itself. Waffle House Restaurants has various offerings, including breakfast items, T-bone steaks, ham- burgers, country ham, pork chops, and grits.

Today, employees in stores across the country con- tribute to serving Good Food Fasts in Waffle House Restaurants open 24 hours a day, 365 days a year. The company is headquartered in Norcross, GA, and the Southeast remains a large market. Therefore, a significant percentage of Waffle House Restaurants are subject to the effects of hurricanes. The company’s hurricane prepara- tions involve employees from all of the functional groups in the organization.

The specific roles of each group in the hurricane response process are detailed in Section 3.4. To assist in

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Waffle House, Inc. Organizational Structure

President

Chairman & CEO

CFO

Vice President – Close Support

Vice President – Development

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Executive Vice Presidents (3)

Senior Vice Presidents (8)

Region/Area Vice Presidents 3-4 Division Managers, approx. 30

restaurants

Division Managers 3-4 District Managers, 9-12 restaurants

District Managers 3 Unit Managers, 3 restaurants

Unit Managers 1 Restaurant

Fig. 1. Waffle House, Inc., organizational structure.

Ö. Ergun et al. / Int. J. Production Economics 126 (2010) 111–120114

understanding the relationship between the groups, Fig. 1 illustrates the organizational structure of Waffle House Restaurants. There are two major divisions of the company: operations and non-operations. The operations division runs the company- and subsidiary-owned restaurants. Three unit managers, each responsible for one restaurant, report to each district manager, and three or four district managers report to each division manager. The region/area vice presidents are each responsible for three or four divisions, for a total of approximately 30 restaurants. The region/area vice presidents report to eight senior vice presidents, who in turn are responsible to three executive vice presidents. The final roles in the managerial structure are those of the president and of the chairman and chief executive officer, who have responsibilities for both operations and non-operations.

In the non-operations division, there are three primary areas. The chief financial officer, the vice president of close support, and the vice president of development each report to the president. The finance team is responsible for accounting, finance, franchise development and support, tax, and stock tasks. Close support manages marketing and communications, human resources and training, and operations control, which supports company operators. The development team is responsible for real estate, construction, and equipment and property management.

3.2. Disaster response philosophy

The processes used by Waffle House Restaurants to respond to hurricanes have evolved over the course of many years, but one fundamental theme directs all the response activities. ‘‘Nothing good can come from a closed Waffle House after a hurricane—not for us, not for the

community, not for the associates.’’ This statement from former Waffle House Restaurants president and chief operations officer, Bert Thornton, summarizes the com- pany’s disaster response philosophy. The company is committed to getting back into the affected areas, opening stores as quickly as it is feasible and safe to do so, and helping the local economy and restaurant associates rebuild. Despite the fact that operating in these conditions presents significant economic and logistical challenges, Mr. Thornton explains, ‘‘Our position is this: those customers and those associates are there for us in the good times, so it’s our responsibility to be there when times are tough. We do not take a back seat; we don’t subscribe to the theory that you just wait until everything is easy to do and then open up the doors. We’re always the first ones in.’’

Because of this commitment, the company’s reputation now precedes their arrival into an affected area. The National Guard and local authorities welcome the arrival of Waffle House Restaurants personnel, recognizing that they provide an essential service in the form of hot meals for National Guard personnel, local emergency respon- ders, electricians, and community members alike in the aftermath of a storm. Waffle House Restaurants’ commit- ment and philosophy have informed the development of an integrated hurricane response process. The effective- ness of the response stems from proactive preparation and continuous improvement.

3.3. Hurricane response cycle

Preparation for hurricane response, for which the company dedicates significant time and resources, is part of Waffle House Restaurants’ larger disaster planning.

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Preparation begins in the spring, prior to the beginning of hurricane season. A major weather event triggers the response systems, and lessons learned are documented for future seasons.

Many years ago, hurricane efforts were a response task, but Waffle House Restaurants senior managers now consider them a response event. The change is reflected in the number of people and resources that are dedicated to hurricane planning. The leadership team is comprised of senior management from each of the company’s functional areas, and the team participates both in the annual preparation meeting and on-the-ground response. Many are 20- or 30-year veterans of the Waffle House Restaurants business. Though the response processes are well-documented, director of purchasing, Greg Rollings, explains, ‘‘They won’t be lost if they lose the checklist.’’

3.3.1. Pre-season preparation

The Atlantic basin hurricane season officially extends from June 1 through November 30 (National Oceanic and Atmospheric Administration’s Hurricane Research Divi- sion, 2007a). To make a quick and effective response possible, the Waffle House Restaurants hurricane response cycle begins with pre-season preparation. At the annual hurricane preparation meeting each May, all members of the hurricane response team gather at the corporate headquarters. Lessons learned from the prior season are reiterated, key responsibilities are confirmed, contact information and procedures are updated, and the re- sponse protocol and timeline are reviewed. In addition to the annual meeting at headquarters, communication and training occur at all levels of the organization. Associates at all restaurants receive information about how to prepare their homes and families for an imminent hurricane, as well as how to contact the company to confirm their safety and obtain information about return- ing to work.

Prior to the onset of hurricane season, response processes are also reviewed with Waffle House Restau- rants’ key vendors with whom the company interacts on a regular basis. Arrangements are also made to obtain supplies specific to hurricane response, including fuel and portable toilets. These items are critical because electri- city and water are often unavailable following a storm. At this time, other key assets including generators, vehicles, and communications equipment are secured either through purchase or lease agreements.

When Waffle House Restaurants reopen following a hurricane, they serve a limited menu rather than the full normal selection. The items and prices for this hurricane menu are determined prior to the hurricane season. These are filed with the appropriate government authorities in each hurricane-prone state to document the restaurant’s commitment to consumer protection practices. Prices are fixed to the current pre-season value and the lowest applicable tax rate is used. The resulting values are then rounded down to the nearest nickel to make it easier for associates to conduct transactions if cash registers are not operational. The hurricane menu is used to simplify operations in the immediate aftermath of a storm and will be discussed in more detail in Section 3.4.4.

3.3.2. Impending storm preparation

During hurricane season, weather in the region is monitored daily. If a landfall is deemed likely at Category 3 strength or above (National Oceanic and Atmospheric Administration’s Hurricane Research Division, 2007b), the hurricane response process is initiated. The first step in the process is the designation of a commander-in-control. This person, stationed at the corporate headquarters, is responsible for coordinating all of the response activities.

When a storm is imminent, the purchasing group executes a number of actions to prepare for store closure and reopening. In particular, the timing, destination, and quantity of food deliveries must be managed with suppliers. In addition to coordinating the food supplies in the days leading up to landfall, the purchasing department also secures recreational vehicles (RVs) and a refrigerator truck, as deemed necessary. The RVs are used to transport and house Waffle House Restaurants personnel who will enter the affected area immediately after the storm passes, while the truck is used to transport supplies from stores that cannot or will not reopen immediately to those that will. These vehicles are dispatched to staging locations closer to the storm area in the day before landfall. Along with the dispatch of the RVs and the refrigerator truck, the response teams from each of the functional areas are mobilized in the days leading up to the storm.

3.3.3. Post-storm action

Smaller hurricanes and tropical storms are handled on a case-by-case basis and may be addressed by a smaller team or through the company’s standard crisis proce- dures. However, for storms that are large Category 2 hurricanes or above and thus affect a significant number of restaurants, the Waffle House Restaurants hurricane team aims to have personnel in the affected area 12 hours after the storm has passed. These responders travel from their staging locations and immediately begin assessing damage and implementing a recovery plan. Each func- tional group within the company has specific responsi- bilities during the recovery, which are detailed in Section 3.4. The recovery plan draws on the documented hurri- cane response procedures.

3.3.4. Return to normalcy

Waffle House Restaurants is committed to speeding the return to normal operations for the sake of its employees and the communities in which it operates. Depending on the scope of the hurricane impact, this process may take less than a week or more than a year. The company is able to reopen stores more quickly than many other businesses because of their proactive approach developed over time. Lessons learned in each storm are used to improve future preparedness. Many of the processes outlined in the remainder of this case study are the result of experience in responding to hurricanes throughout the years. The company responds more quickly, has more resources dedicated to the response, and has identified what supplies and tasks are critical to a successful recovery operation.

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3.4. Functional area responsibilities

In this section we describe the responsibilities of each functional group in the days immediately preceding and following a hurricane that affects company-managed stores. The primary areas of responsibility include the purchasing, construction and equipment, operations, people and information technology, and control functions. The response efforts are coordinated by a commander-in- control stationed at corporate headquarters in Norcross, GA. Senior managers are involved in every step of the response process and are among those that are on the ground immediately following a storm. In the case of franchisees, corporate leaders make available any re- sources requested, but the franchisees lead the response process.

3.4.1. Commander-in-control

Stationed at corporate headquarters, the commander- in-control communicates across all functional groups and mobilizes corporate resources to meet the needs of the personnel in the affected areas. This is a very intense responsibility, often requiring 18-hour work days. The company has identified a number of people with experi- ence in filling this position, and the person initially appointed to this role typically passes the responsibility to another after the first several days of the recovery effort.

3.4.2. Purchasing

The purchasing group has developed a timeline to assist with the many tasks necessary to prepare for and respond to a hurricane. Five days before the anticipated landfall, communications with suppliers are critical to ensure that the suppliers have adequate inventory of the emergency items (which are not part of typical orders) Waffle House Restaurants will need. Items such as to-go supplies, paper towels, cleaning materials, hand sanitizer, ice, bottled water, and canned drinks are all needed in much greater quantities following a hurricane than under normal circumstances. Communicating with suppliers is also critical so that they can begin planning for drivers and deliveries of supplies immediately after the hurricane.

As landfall nears and the areas likely to be affected are more clearly identified, suppliers are notified to suspend delivery to areas that are being evacuated. The company’s primary supplier has ready access to hurricane-affected areas because it also provides food for hospitals. However, other suppliers are often unable to mobilize quickly following a storm. To remedy this, purchasing personnel alert other suppliers in advance of an oncoming storm and stage extra product in restaurants that are outside the storm path but near the affected markets. This enables Waffle House Restaurants personnel to draw from these stocks to supply affected stores, transporting the goods themselves until normal shipments from these suppliers can resume. For example, two days prior to expected landfall, the company’s bread supplier makes its last deliveries to the affected area. In addition to the standard delivery, the bread supplier delivers safety stock to stores

that are out of the storm’s path but nearby. This bread will supply the reopened stores in the days immediately following the hurricane.

When a storm is imminent, purchasing personnel secure recreational vehicles to provide sleeping quarters for the teams arriving on the scene first. These teams are staged in locations that will ensure their safety while still allowing quick access to affected areas. For example, during a Gulf Coast hurricane, response teams are staged to the east and west of the predicted storm path. This enables them to enter the affected area as the storm pushes north. The RVs also serve as mobile command centers during the response. In addition to the RVs, the purchasing group secures a refrigerator truck that will be used to transport food from nearby restaurants to those that are selected to open first.

Two days prior to projected landfall, the purchasing group also places an order for the first truck containing ‘‘first-wave supplies’’: ice, bottled water, canned soft drinks, to-go supplies, and cleaning supplies. The contents of the first-wave truck have been standardized based on experience in past hurricanes. This truck is staged and ready to deliver supplies on the day after landfall as soon as the operations group has determined which units will open first.

The first restaurants that are opened are able to operate with the supplies from the first-wave truck, their remaining food, and items recovered from surrounding restaurants. As additional restaurants are identified for opening, the second wave of supplies is ordered. Until recently, when a store was identified for reopening immediately following a hurricane, each restaurant manager was responsible for determining the food and supplies that were necessary. In the chaos, this frequently led to a mismatch between orders and requirements. After Hurricane Ivan in 2004, purchasing personnel developed a hurricane inventory sheet with a par level for each item. This tool enables managers to inventory their current stocks and order up to the par level for each item. Standardizing this process has improved Waffle House Restaurants’ ability to effectively open and operate stores quickly after a storm.

3.4.3. Construction and equipment

The construction group has two primary responsibil- ities in the immediate aftermath of a hurricane: assess damage to all affected restaurants and manage refueling for all on-location responders. To execute these tasks, this group interfaces with several other functional areas before and after the storm. Prior to hurricane season, the construction and purchasing groups ensure that RVs are available to serve as sleeping quarters for response personnel and as command centers for the response. Following a storm, construction leaders work with operations managers to determine which stores can be reopened and in what order. These decisions are based on the physical condition of the restaurants; the availability of staff, food, and supplies; proximity to other restaurants; and proximity to major transportation routes. The equip- ment group is closely involved in these tasks, as well,

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arranging for generators and other equipment necessary to reopen restaurants.

Supplies of fuel are scarce and demand is high following a major hurricane. Frequently, Waffle House Restaurants must rely on generators to operate restau- rants until electricity is restored. In addition, the response teams must travel between all the restaurants in the affected area so fuel for vehicles is a necessity. The company has developed processes to obtain fuel by establishing relationships with suppliers in the pre-season and making arrangements when storms are imminent. This is a joint responsibility of the construction and purchasing teams.

3.4.4. Operations

On a day-to-day basis, the operations group is responsible for running the restaurants. Following a hurricane, operations personnel work with the construc- tion group to identify which restaurants to reopen and in what order. They are also responsible for the on-site tasks that are necessary for operating the stores, such as food preparation, customer service, and cleaning.

Until Hurricane Hugo in 1989, Waffle House Restau- rants that were reopened in the aftermath of a hurricane offered the same menu as they did under normal operations. But this poses a challenge in post-hurricane conditions, especially for made-to-order breakfast items. Former Waffle House Restaurants president and chief operations officer, Bert Thornton, explains the advent of the hurricane menu:

I was standing in the middle of it and listening to people call out orders like, ‘‘Let me have an order over- medium plate scattered, smothered, covered, chunked, diced, topped, peppered, and capped,’’ and our people were going nuts. So I actually got up on a chair and I said, ‘‘Ladies and gentlemen, I’ve got good news and bad news for you. The good news is everybody’s gonna get fed. The bad news is –,’’ because I had hand-written on several pieces of paper for each salesperson—I said, ‘‘Your salesperson will show you what you can order. [y] but the bad news is it’s a limited menu. You can have anything you want; now here’s the list of things that you’re gonna want.’’

Since then, the hurricane menu has changed as Waffle House Restaurants personnel observed what worked well and what did not. For example, bacon is not available in a post-hurricane situation because it takes up a lot of valuable grill space and requires long cooking times. However, ham was added because it is fast. The decision about what to offer on the hurricane menu requires a consideration of the space and time available for cooking, both of which are at a premium in the aftermath of a storm. Waffle House Restaurants are typically the first, and often remain the only, restaurants open for some time after a major hurricane. Law enforcement, emergency responders, and local citizens are anxious for a hot meal. While they are grateful for any food, customers do have preferences and menu diversity is important. Choosing the menu items becomes a balance between resource

availability and customer utility. The hurricane menu does not differ significantly from the normal menu, but it is a combination of what people want most and what is easiest to prepare.

3.4.5. People and information technology

The people group has a number of important tasks following a hurricane. First and foremost, all employees must be accounted for. Prior to hurricane season, all associates are provided with a key chain attachment that is printed with a phone number to call to confirm their own location and the status of their restaurant. Working with operations and construction personnel, the people group helps redeploy associates to the stores that will be reopened first. If an employee is available, but his or her home restaurant has not yet reopened, that associate often works in a nearby restaurant until the home restaurant comes back online. The people group also works with the control group to manage payroll processes in the days following a hurricane.

At the onset of a response, at least one person in the people group must also secure hotel rooms for the response personnel and displaced associates. This is a difficult task given the high demand for rooms. To help address this issue, Waffle House Restaurants purchased a recreational vehicle following the 2005 hurricane season. The RV is outfitted with satellite capability to support internet and phone communications. This helps alleviate another challenge that arises in large-scale hurricane response—communications among people in the affected area as well as with the corporate headquarters. Because cellular and landline phone service are frequently un- available in the aftermath of a storm, satellite capabilities greatly simplify communications.

Information technology personnel are tasked with addressing hardware issues and securing any necessary replacement parts. They also assist with the shutdown and restart processes for restaurant computer systems. Finally, a corporate psychologist plays a vital role in response efforts and is available both to local associates and to responders.

3.4.6. Control

The control function has two primary challenges in the aftermath of the hurricane. The first is accounting for food that was already in restaurants prior to the storm. As part of the closing process, most food at each restaurant is stored in the freezer, where it stays frozen for a short period even if electricity is lost. If a store is chosen for immediate reopening, this food is still available for use. However, if the store cannot be reopened, the food may be transferred via refrigerator truck to another restaurant. The control group is tasked with tracking this movement of food to help maintain inventory accuracy for each store. The second challenge faced by the control group is administering payroll. Waffle House Restaurants pays hourly associates every Sunday and wages are paid in cash. Following a hurricane, banks are often closed, so cash must be brought in from outside the affected area.

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4. Case analysis

Having examined the hurricane response processes used by Waffle House Restaurants, we now analyze these practices in light of the original research objectives. This analysis includes a description of the tools used by the company, a discussion of decision tradeoffs and colla- borative efforts, and a summary of lessons to assist other organizations.

4.1. Tools for success

The discussion of Waffle House Restaurants’ hurricane response processes provides an affirmative answer to the first question posed by this study, which sought to determine whether there are private sector organizations that succeed in responding to natural disasters. The company’s success is measured in terms of the time to reach the affected area, the time to return stores to operation, and the ability to put people back to work.

Reports from local and national news media attest to the results that the Waffle House Restaurants hurricane response process achieved, specifically in the wake of the devastating 2005 season. From Mississippi, where two restaurants sustained damage and seven others were completely destroyed by Hurricane Katrina: ‘‘Waffle House is rebuilding along decimated US 90 with an efficiency apparently matched only by the casino indus- try,’’ (Frulla, 2006). The Pascagoula, Mississippi, location was reopened less than three days after Hurricane Katrina raged through the area. A restaurant industry professional reporting for a trade magazine stated, ‘‘A veteran of restaurant openings, I did not expect the event to be so momentous. But that Waffle House, by opening its doors, assured the community that there was a chance life could return to normal. It provided comfort and a sense of home amid unfathomable devastation,’’ (Ruggless, 2005). Re- ports from Port Arthur, Texas, in the days after Hurricane Rita carried a similar theme: ‘‘Since the hurricane came ashore, very few people in Southeast Texas have been able to enjoy the restaurant experience, mainly because there’s no restaurant open to experiencey The Waffle Housey was among the first restaurants to open in a storm- ravaged city that’s thirsting for electricity,’’ (Keys, 2005).

While these news articles illustrate the results, they do not highlight the crisis and supply chain management tools the company uses to achieve them. Examining the steps of the company’s hurricane response cycle, however, reveals many of Weick and Sutcliffe’s (2001) practices for high reliability organizations in action. The continuous learning approach helps address even small problems in hurricane preparedness so that larger failures do not result, providing evidence of the practice of preoccupation with failure. Waffle House Restaurants is certainly an organization that is sensitive to operations. Senior management team members started their Waffle House Restaurants careers in the kitchen and the hurricane plans reflect the detailed on-the-ground approach. The com- pany measures its effectiveness by how quickly it is able to return to normal operations, demonstrating the

commitment to resilience. As evidence of the practice of deferring to expertise, the people on-site have the authority to make decisions regarding the response effort with little need for information to travel up long chains of command that can hinder decision making in larger organizations.

We also see that each of the five phases of effective crisis management described in Kovoor-Misra and Misra (2007), namely crisis prevention, preparedness, contain- ment, recovery, and learning, are represented in the Waffle House Restaurants hurricane response cycle. While the extent of crisis prevention and containment are limited in the case of hurricanes, these do play a role as restaurant locations ready their buildings and personnel for anticipated storms. Much of the company’s success stems from preparedness and learning, both of which enable more efficient recovery. Observations of Waffle House Restaurants hurricane response process provide empirical confirmation of Somers’ findings that such activities are correlated with resilience potential (Somers, 2009).

Supply chain management tools have been implemen- ted as Waffle House Restaurants personnel learned from hurricanes over time. Examples include pre-negotiated contracts and agreements with suppliers, inventory pre- positioning plans, procurement strategies, and inventory management tools such as par level policies. One challenge that the company faces is that it does not own its own transportation fleet. Waffle House Restaurants has addressed this by building strong relationships with suppliers and by renting refrigerator trucks to help transport supplies after hurricanes. Waffle House Restau- rants must also take into account the perishable nature of its inventory in its hurricane supply plans and inventory management. These practices illustrate the kinds of disruption risk management theories described in Tang (2006), Tomlin (2006), which enable Waffle House Restaurants to succeed in effectively responding to hurricanes.

4.2. Decision tradeoffs

There are several decisions that must be made before or during a hurricane response that highlight the tradeoffs faced by functional groups within a single organization or multiple stakeholders in a collaborative response. This case discusses many interactions between functional groups and highlights collaboration between Waffle House Restaurants, its suppliers, the National Guard, and other stakeholders during a hurricane response. To illustrate the decision processes involved in such relation- ships and describe the collaborative activities in the Waffle House Restaurants response plan, we consider two decisions that involve tradeoffs: the choices of hurricane menu items and store reopening.

The choice of items on the hurricane menu highlights the tradeoffs between customer satisfaction and efficient operation with limited resources. Customer preference and the time and space required for food preparation are important factors in the menu decision, particularly from

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the perspective of the operations functional group. From the perspective of the purchasing group, supplier relation- ships and capability to sustain deliveries also impact menu choices. However, from the control perspective, the storage and refrigeration requirements and item shelf life impact this decision. Trade-offs between decision factors could be weighed in terms of estimated cost or in the value of customer satisfaction. The choice of menu items impacts suppliers as well. Waffle House Restaurants has managed this relationship by establishing clear commu- nication processes with suppliers and an ordering time- line for items that are specific to hurricane response, including greater quantities of ham and canned beverages instead of fountain supplies. Limited resources may require reduced offerings of goods or services across most organizations, but the best ways to manage this depend on the objectives and functions of the organization.

Many factors can also affect a store reopening decision. Proximity to a major roadway or airport is a positive factor from the operations standpoint for ease of customer access, from the perspective of construction and equip- ment personnel who may need to supply gasoline for generators, and for the purchasing group to ensure that supplies can get in quickly. The current inventory levels at the candidate stores and their location with respect to other stores from which inventory can be transferred are important factors. If one store has electricity and the other does not, this has a strong influence on the reopening decision. If generators or food supplies are scarce, the order of importance of the factors can also change.

4.3. Generalizing lessons learned

Waffle House Restaurants has learned from years of experience responding to hurricanes that impacted their locations. Other organizations can benefit from these lessons, including the need for well-documented pro- cesses and continuous updating based on new experi- ences. The hurricane response process is a good illustration of the phases of crisis management. Adopting a critical supply chain management component, the company has developed relationships with suppliers to help accomplish its goal of reopening stores as quickly as possible. Ideas such as the hurricane menu and the hurricane inventory sheets with par levels are transferable to other organizations that must make decisions about the breadth of goods and services to offer in a disaster’s aftermath and on their inventory strategies. Pre-position- ing inventory and drawing from nearby stores that are unable to open has also improved Waffle House Restau- rants’ response efforts and could be reapplied in other industries, government agencies (Leggiere, 2009), or NGOs. Perhaps most importantly, Waffle House Restau- rants has a proactive mentality that extends through all levels of the organization, stemming from the company’s founding philosophy to focus on the well-being of its employees and customers.

The private sector, governmental agencies, and non- governmental organizations can learn from the applica- tion of crisis and supply chain management methodolo-

gies in the example of Waffle House Restaurants. Key take- away messages for others seeking to improve their effectiveness are to develop the practices described by Weick and Sutcliffe (2001), to understand the important phases of crisis management (Kovoor-Misra and Misra, 2007), and to implement supply chain management principles with the awareness that planning for the disruption risks posed by disaster response may require different models than day-to-day supply chain practices.

5. Conclusions and future research

Waffle House Restaurants’ hurricane response pro- cesses have developed over decades of experience. The company’s commitment to its associates and to the communities in which they operate has driven the continuous improvement in these processes. Each func- tional area of the organization has clear responsibilities and plays a key role in enabling quick recovery following even a major event such as Hurricane Katrina. As a result, Waffle House Restaurants has earned recognition as a leader in disaster relief. The lessons learned continue to shape the future of Waffle House Restaurants and provide insight for other organizations to further develop their own response capabilities.

This exploratory case study aimed to identify a private sector organization that succeeds in disaster response, describe the crisis and supply chain management tools it employs, understand the roles of functional groups and collaboration in the organization’s processes, and extend lessons to other organizations. The results of this study raise several questions for future research. Additional studies should be done to determine whether organiza- tions that employ similar crisis and supply chain manage- ment practices meet with similar success in disaster response. Comparisons can be made between U.S. and international organizations, as well as between private sector, government, and non-governmental organizations. The development of supply chain management models and tools that can further improve disaster response, especially those that enable organizations to assess risk, resilience, and response approaches quantitatively, is also an important area of future research.

Acknowledgments

The authors gratefully acknowledge the Waffle House Restaurants personnel for sharing generously of their time, experience, and process documentation for the writing of this case. In particular, we would like to thank Monty Baldwin, G. Todd Lee, Will Mizell, Ann McKee Parker, Greg Rollings, Bert Thornton, and Pat Warner.

Support for this work was provided by the Georgia Institute of Technology Focused Research Program on Humanitarian Response, the Harold R. and Mary Anne Nash Junior Faculty Endowment Fund, National Science Foundation Grant SBE-0624269, and a National Science Foundation Graduate Research Fellowship.

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Appendix A. Teaching materials

One of the most important ways to advance the application of supply chain management and operations research methodologies to the challenges that arise in humanitarian response is by incorporating such material in educational settings. A primary objective in developing this case study was to provide additional resources to help meet the need for these materials. To this end, the authors have compiled a teaching version of this case entitled ‘‘Lessons in Disaster Supply Chain Management from Waffle House Restaurants.’’ It contains discussion ques- tions, quantitative problems, and teaching notes for instructors based on the material in this case study. This resource is available by visiting http://humanitarian.ga- tech.edu. The materials are part of a series of teaching resources for disaster supply chain management, which also includes ‘‘Big Depot Hurricane Planning Game’’ and ‘‘Hurricane Response Planning at The Home Depot.’’

The teaching notes for ‘‘Lessons in Disaster Supply Chain Management from Waffle House Restaurants’’ are designed to facilitate instructors’ use of the case in many different educational settings. The questions are organized in three self-contained sections (case discussion ques- tions, decision process analysis questions, and quantita- tive problems) so that instructors can choose those that most effectively contribute to the goals of the course(s) they teach. This case study is appropriate for use in undergraduate, graduate, and continuing professional education courses. Supply chain management is taught in each of these contexts with different degrees of technical analysis. The content of this case fits well with discussions of supply chain planning under uncertainty, disruptions in supply chain operations, and alternative objective functions in supply chain optimization. Discus- sion of these aspects will help all students develop an appreciation for the importance of context-specific deci- sion models, as well as an understanding of the contribu- tion that supply chain management professionals can make in disaster response.

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