Malcolm Baldrige National Quality Award
2001 Award Recipient – Small Business Category

Pal’s Sudden Service

Highest Official:
Thomas A. Crosby
President/CEO
Public Affairs Contact: Susan Berry
Public Affairs and Media Director
423-926-9494
Web Site: www.palsweb.com

Pal’s Sudden Service is a privately owned quick-service restaurant company with 17 locations in northeastern Tennessee and Southwestern Virginia. Pal’s has about 465 employees; 95 percent are in direct production and service roles and 5 percent in management. Pal’s competes directly with national fast food chains. It offers a menu of hamburgers, hot dogs, chipped ham, chicken, french fries, and beverages as well as breakfast biscuits with country ham, sausage, and gravy.

Quality and Performance Achievements:

  • Pal’s current market share of nearly 19 percent is up from 10 percent in 1994. The positive trend indicates that Pal’s is positioned to overtake its best competitor and become the market leader by 2004.
  • Pal’s health inspection scores have been in the high 90-point range (out of 100) since 1996, while the scores of its best competitor have been in the low-to-mid 80-point range.
  • In customer satisfaction, including quality, speed, and customer feedback, Pal’s is outperforming its primary competitor. For example, Pal’s customer satisfaction figures for quality in 2001 are at 95.8 percent versus its best competitor’s, which at 84.1 percent. Pal’s order handout speed has improved by over 30 percent since 1995, decreasing from 31 seconds to 20 seconds, compared to its competitor’s performance, which increased from73 seconds to 76 seconds over the same period of time. Pal’s level of customer complaints over the last seven years is less than one-fourth of the level of the best/primary competitor and is continuing to trend downward.
  • Pal’s uses a variety of processes to learn about its customer’s expectations. Owner/Operators participate regularly in “Marketing-By-Walking-Around” activities, interviewing current and potential customers to identify their wants and needs. Additionally, Pal’s has established a web site that provides customers with information about its food products, administers Pal’s contest with store coupons as prizes, and includes local entertainment information. The web site also provides customers with opportunities for communication, all of which are answered personally by the company’s president.
  • Pal’s core menu is designed to meet its various customer groups’ requirements for product quality, order accuracy, speed of service, and customization. All menu items are freshly prepared in the individual stores and are thrown away if they are not sold within a predetermined time – for instance, five minutes for french fries.
  • Pal’s has established a competitive advantage over its primary competitor by reducing front-line employee turnover. Specifically, Pal’s turnover rate was close to 200 percent in 1995, 127 percent in 2000, and continues to decline in 2001. In comparison, the best competitor’s turnover rate in 2000 is over 300 percent. At the management level, the turnover rate for Owner/Operators and Senior Leaders has been near zero over the past eight years. In addition, sales per labor hour improved by approximately $6 from 1998 to 2001.
  • Pal’s supports its key communities at the corporate and individual store levels with financial and staff resources. For example, the corporate senior leaders are top sponsors of the United Way and recent efforts to support the September 11th aftermath. At the store level, Owner/Operators participate in a wide variety of activities, such as teaching food service and food safety classes at high schools, serving as schools’ business partners, donating materials for special events, and sponsoring special community, school, and church events.
  • To improve workplace health, safety, and ergonomics, Pal’s takes a “prevention first” approach. Employee injuries in the three areas reported (cuts, burns, and lifting) have all decreased in relation to the number of hours worked over the past six years. On-the-job injury/accident claims have declined 75 percent since 1992.
  • Pal’s training processes support accomplishment of its objectives and improved business results. Owner/Operators and Assistant Managers have primary responsibility for staff training. Pal’s uses a four-step model to train its employees—show, do it, evaluate, and perform again—and requires employees to demonstrate 100 percent competence before being allowed to work at a specific work station, which may require repeating specific training modules before demonstrating that level of competence. In-store training on processes, health and safety, and organizational culture is required for new staff at all facilities via computer-based training, flash cards, and one-on-one coaching. Cross-training is required of all store-level staff to ensure their complete understanding of all production and service procedure and of quality standards.