Butter has been replaced by margarine in Happy Pancake House restaurants throughout the southwestern United States. Only about 2 percent of customers have filed a formal complaint, indicating that an average of 98 people out of 100 are happy with the change. Furthermore, many servers have reported that a number of customers who ask for butter do not complain when they are given margarine instead. Clearly, either these customers cannot distinguish butter from margarine or they use the term ‘butter’ to refer to either butter or margarine. Thus, to avoid the expense of purchasing butter, the Happy Pancake House should extend this cost-saving change to its restaurants throughout the rest of the country.’The business manager of Happy Pancake House restaurants, whose responsibilities include the management of finances and inventory, has made a wise move when he made the decision to substitute margarine for butter in all of the restaurants in his chain. His decision is based on several assumptions. First, the managers assume that their customers cannot tell butter from margarine. While they may notice a difference in taste, they may not have an absolutely keen palate. They may not notice a difference between butter made from cows’ milk, butter made from cream, and margarine made from vegetable oils. Second, the managers assume that their customers use the term ‘butter’ interchangeably with ‘margarine’. Perhaps the customers of business managers at Happy Pancake House restaurants are from the South, where butter is the favorite spread, and margarine is only used as a substitute for butter in restaurants. The managers are misjudging their customers. Third, the managers assume that their customers are unwilling to pay a higher price for butter, a product that is more expensive to produce than margarine. The managers may be correct that their customers are unwilling to pay a higher price for butter, but butter is not a luxury item. As with any other food product, the managers should charge a reasonable price for their customers’ favorite spread. If Happy Pancake House customers feel that the price is too high, they may choose to eat other foods instead.

The managers of Happy Pancake House restaurants also assume that their customers are satisfied with the taste of margarine. How valid this assumption is is not clear from the statement. Perhaps a few of the customers are satisfied with the taste of margarine. However, the manager at Happy Pancake House restaurants may have received complaints from a small percentage of customers. The managers may have received complaints from customers that are dissatisfied with the taste of margarine, but they do not want to file a formal customer complaint. They may have complained to the staff, but the staff may not have been aware of the problem. If the managers had received complaints from a small percentage of customers, they may have chosen not to make the change. The managers should gather more information from their customers before making the decision to replace butter with margarine. If only a few customers are dissatisfied with the taste of margarine, the managers should consider offering a choice of spreads at the condiment bar. If customers are highly satisfied with the taste of margarine, the managers should not hesitate to make the butter-to-margarine substitution. The managers should also consider the possibility that some of their customers use butter as a flavoring. If their customers use a flavored butter, they may not notice the taste of margarine. In addition, the managers should gather information from their customers about the products used in the preparation of meals. If a customer orders chicken fried steak, he may not mind the addition of margarine. However, if the customer orders a chicken fried steak with a side of mashed potatoes, the customer may prefer butter with his potatoes, not margarine.

The managers of Happy Pancake House restaurants should also explore the possibility of using less expensive butter in some of their restaurants. The managers should test the response to this change. If the change results in an increase in the number of customers, the managers may decide that butter is still a reasonable alternative to margarine. If only a few customers order butter with their meal, the managers may decide to replace the more expensive butter with margarine in all of their restaurants. The managers should also discuss the benefits of using margarine with their customers. They may point out that margarine is made from vegetable oils, which have a lower energy content than butter. They may also emphasize that margarine is less expensive per pound. If customers are willing to pay more for butter, the managers may inform them that the butter is healthier. If customers feel that margarine is healthier, they may be willing to pay more for it. If customers prefer the taste of butter, the managers may advise them to purchase a small tub of butter from the grocery store. If the managers are confident that their customers cannot distinguish butter from margarine, they should inform their customers that Happy Pancake House restaurants now serve margarine instead of butter.