Business Management The Restaurant Business

Question: Describe about the Business Management for The Restaurant Business. Answer: Business Concept Introduction: The purpose of restaurant business, The Urban Kitchen is to serve a different taste of healthy food with unique service experience to the people of Auckland with most competitive style. The basic idea is to offer alternative healthy food diet for people who are busy in their daily schedule but is concerned about their physical health and wellbeing. The primary purpose of this business idea is to generate profit revenue from the excellent product and service quality. The crucial objective of the organization is that all the products of The Urban will be 100% organic and freshly grown in local farms and maintaining good hygiene in the restaurant with highly skilled employees to provide world class service customer experience. The restaurant will provide comfort and health benefit for food lovers by offering an excellent dining experience. Vision Statement: The Urban Restaurant wants to become one of the most trusted brands in organic food restaurant industry. Mission Statement: The Urban Restaurant wants to enter the segment with storming new healthy organic food products. The management has decided to set up the first restaurant in the downtown area of the Auckland city to attract highest number of customers. Goal And Objective: The primary business goal and objective of The Urban Kitchen is topresent the healthier and tastier organic restaurant food with real time experience and value of money over other dine out restaurants. The management of The Urban Restaurant has set goals with the SMART (Specific, Measurable, Achievable, Realistic and Time Defined) objectives to achieve. The management has decided to upgrade the skills and abilities of the employees from kitchen to the table service in world class etiquettes and maintain hygienic and clean restaurant environment so that the customer feels that The Urban Kitchen is there to take care of their health. The management of Urban Kitchen want to gain a subsequent 15% of the market share in the next two years of the Auckland restaurant industry. This business is based on the concept of good work ethics and liability to the community. For management making business profit is as important as developing and maintaining community development, so The Urban Kitchen will help the suppliers to produce organic vegetables and meats and encourage environmental protection and will donate a percentage of annual revenue profit in local environment conservation programs. Also, the management has decided to open a new restaurant in the airport area of Auckland in the next six months. Legal Structure Of Business: Initially the legal status of the business will be operated by two members; Mr. Jeff Richman and Mr. Goldie Orman which possibly will extend in case of other new outlets or products that may include considerable business growth. The Urban Kitchen is basically a partnership business where both the partners have equal shares and liable for all business taxes and debts. Suppliers: Providing fresh organic food is the primary objective of The Urban Kitchen so to maintain that the management has decided to approach local farms and cattle farms and assists them to produce organic vegetables and meats and from them the restaurant will buy their daily requirements directly. The Urban Kitchen has even planned to support financially and provide training to the farmers to growing organic vegetables. And then the management will establish a long term relationship with suppliers for reasonable organic food delivered every day according to the plan that will be beneficial for the restaurant. The Urban Kitchen has supplier centric strategic plans which will assists suppliers grow in long term. Customers: The Urban Kitchen will focus on families and individuals for various reasons. It has been observed that dining restaurants are visited by couples, families or single working men and women with friends. One of the possible reasons can be that most New Zealand families have both parents and partners working so there is less family time and also less time for elaborate cooking time. So, going out for dinner or lunch in dining restaurant saves the meal preparation time and people can spend that quality time with family or friends. Also, there is a trend of increasing business lunch or team lunches are held in dining restaurants because often business professional likes to held important meetings and discussion during lunch hours to save time and also working groups often held success party in dining restaurants to celebrate achievement or success. A business organization should conduct proper market segmentation to recognize the potential customers and effectively meeting their demands ( Andreasen, et al. 2003). So, according to the market analysis the following market segmentation has been done: Family, Business executives and young single Bachelors. Business Background: Mr. Goldie Orman has a strong background in restaurant and hospitality management, with 8 years experience and Mr. Jeff Richman was a business alumnus of Auckland University and has a five years experience in sales and marketing in various business organizations. Mr. Orman has previously been associated with a successful restaurant family business in Christchurch city in New Zealand. The restaurant was founded by his grandfather and named as The Ormans Fine Dine. Now it is managed by his father and he has worked for seven years in various positions within the business so he has an extensive knowledge in running a restaurant. Before that after his completion of graduation in hospitality management from William Blue College of Hospitality Management in Australia, he returned New Zealand and worked with Hotel DeBrett as kitchen staff. Where as Mr. Jeff Richman after completion of his masters in business from Auckland University joined various marketing farms and have also worked in hosp itality sector for more than three years. With the extensive knowledge of restaurant business of Mr. Goldie Orman and marketing skills of Mr Jeff Richman, the two formed the partnership to start a restaurant business which will be unique in its class irrespective of its food products and service quality. Business Purpose: Success Factors: One of the most significant factors for the sustainability of any restaurant business is its clarity and uniqueness and The Urban Kitchen has both of it. It has a very unique product offering; it is offering foods that are prepared from organic food materials, so it will be less harmful for health rather it will fulfil the dietary requirements in an individuals meal. Secondly, it is located in the most prominent heart of the city area with buzzing population with business as well as residential population. Despite busy traffic area the restaurant is offering a parking space for the customers to continue a hassle free dinner with loved ones or for business purposes. Two fulfil he requirements of the single bachelors the management have even planned to setup a unique prompt and speedy delivery system. The restaurant I also offering a world class customer service to its customers and increasing the value of the service. Thus, it can be concluded that The Urban Kitchen w ill be one of the most prominent and successful dining restaurant in downtown area of Auckland city with distinctive food and customer service experience. External And Internal Environment Analysis: The characteristics of industry are identified and any important trends outlined: The restaurant and food industry in New Zealand is one of the fiercest competitions that can be experienced in Asia Pacific realm other than Australian market both in context to international chains and local players (Kiwis eating the easy option,. 2016). Even if New Zealands restaurant industry is regarded as one of the most matured market still it has got lot of potentials and demand because of the new immigrant populations especially in the urban areas. According to the fourth Annual Hospitality Report, this was publicized by The Restaurant Association of New Zealand, the total sales in 2014; restaurant industry was $7.6 billion which was 6% more than previous year and Auckland witness an annual growth rate of 6.3% (Restaurantnz.co.nz, 2016). Thus, opening a restaurant that serves healthy and organic food to the citizens of Auckland has a great potential to sustain and grow. Competitors And Formulating Competitive Strategy: This segment recognizes the competitors and portrays their business strengths and weaknesses and also analysis of the opportunities and threats in the present situation. There are number organic cafes and bakery in Auckland city like Jam Organic Caf, Little Bird Organics the Unbakery etc and pizza shop like The Italian Job, but The Urban Kitchen dine out restaurant will be one of its kinds. There is hardly any dine out restaurant which serves organic food. So, in this market segment the competition will be indirect because there are hardly any organic dine out restaurant in Auckland. So, the competitors are those business organizations which meet similar kind of needs, i.e the need for alternative healthy food and diets. So, the main competitors will be sandwich, juice and salad selling food outlets and organic packaged foods (frozen foods). Porters Five Point Analysis: The Porter's Five Forces framework is an uncomplicated but dominant means for analyse and recognize where power lies in a business circumstances (Kotler, 2008). The Porters Five Point analysis is crucial, since it facilitate to comprehend equally the strength of existing competitive situation, and the strength of a position the business wants to achieve. Supplier Power: Less number suppliers Higher Suppliers Power Buyers power: Unique in the product style Less availability of substitutes Threat of new entry: Higher capital cost Higher cost for employee training Higher cost for training of farmers for organic farming Threats of Substitution: Less availability of substitute in the market Competitive Rivalry: Less number of organic dining out restaurants Swot Analysis: A SWOT analysis gives an overview of the current strengths, weaknesses, opportunities and threats in the current market situation. Without a proper situation analysis a business cannot have a proper idea about the possible changes or competitors advancements and thus can lose the competitive advantage (Hollensen, 2015). Strengths: The management of The Urban Restaurant has a strong experience in restaurant business and marketing. Strong supply chain network where the restaurant has strong control over the quality of the food products. The Urban Kitchen is one and unique in its style, as there are hardly any competitors in the market in dine out organic restaurant. Weakness: Generous supplier centric and employee centric attitude will increase the financial risks. Slightly higher in pricing in comparison to fast food due to organic farm grown raw materials use. The Urban Kitchen is new and not a well recognized brand in the market. Opportunity: Increase in awareness of ill effects of fast foods and acceptance of organic food as main dietary food source. Lack of competitors in the dining out organic restaurant industry will give a chance to The Urban Kitchen to grab maximum market potential. The restaurant will be situated in the heart of the downtown of Auckland and it is a high traffic area, so possibility to attract lots of customers. Threats: Due to farm grown organic food materials use and highly expensive skill development programs for the employees, the operation cost of the product is comparatively higher than popular fast food products. There is a higher risk of business loss or slow down if similar type of business opens up in the area. Pestel Analysis: Political: New Zealand government has taken serious steps to promote health hazards from fast foods. So, keeping high standards of the food product will be the first priority in this case. Otherwise New Zealand has a very supportive government law for new start-ups. It is also to maintain employee welfare and payment of minimum wage according to government rules. Economic: New Zealand is a developing nation and its food industry is highly potential despite its small population because of the large number of immigrants coming each year. The average income of citizens is also stable. Social: The fast food industry is one of the prominent sectors in the food industry in New Zealand. But there is a growing trend of awareness among the people regarding the ill effects of fast food and health awareness. People are now looking for food that is good for health so selling organic food is the new food sector in the food industry. Technological: In todays competitive market technology plays an important part in achieving competitive advantage. So, the management of should adopt technological innovation throughout its business operations to present a customer friendly and world class dining experience to the customers. Environmental: As The Urban Kitchen is an organic base dining restaurant, so it is taking initiative for environmental protections. Also, the management should also reduce activities that can effect in causing pollution. Legal: In New Zealand, every business in food industry should get license from Health and Safety Licence of New Zealand which comes with some terms and conditions which The Urban Kitchen should maintain. Stakeholders Analysis: In simple terms stakeholders mean individuals who are directly or indirectly affected by organizations success or failure. The Urban Kitchen has the following stakeholders- Directors, Employee/Staffs, Customers, Suppliers, Local Government, and Pressure Groups. Directors are the investors who will be directly affected by The Urban Kitchens success or loss as they are libalible for any debt and loans. Employees are the human capitals that are utilized to bring effectiveness in the business and they will also be directly affected by business policies and decisions. Suppliers are the key factor for suitability of The Urban Kitchen as maintaining quality of the organic food is solely upon them so they also plays an important part in the business. Government: The government rules and regulations assists in the best practice in the market, so they are indirectly related with The Urban Kitchens business decisions or actions. Pressure Groups: This groups action can effect directly as well as indirectly in organizations decision making or activities. Customer Group And Value Positioning: Families: This is the main target group of The Urban Restaurants because they are frequent visitors of dining restaurants. This target segment has two adults and two or more children in the family and sometimes accompanied by other family members like grandparents or relatives. They have a stable income and most of the time both parents are working and it is likely that they go out at least once in a week to have dinner at restaurants. The family dining out is mostly for replacement of cooking at home since both the adults have least time to devote in preparation of meals at home. This group is often health conscious but consumes fast food because storage of time to cook meals and easy availability of fast food. But they are always looks for alternative healthy diet for fast food. So, the management of The Urban Kitchen should focus promoting the use of organic food in the food ingredients and benefits of organic food for ones health. The restaurant should start a kids meal plan which will focus on the dietary requirements in a kids daily meal. The service of the restaurant should be family friendly; the customers are given enough time to enjoy their meal and time with family. The staffs should be helpful and friendly with this segment to make them comfortable with the environment. Marketing Objective And Kpi: Specific: Create awareness about the brand in the local population by 50% in one year Measurable: The result will be shown on the annual sales growth rate Assignable: Aggressive promotional campaigns through various communication mediums, like, internet promotion, food festivals, etc. Realistic: The promotional process is an ongoing process which should be modified according to situational needs. Time Related: The promotional campaign should start at least two months before the grand opening of the restaurant. The above objective plan can be measured by measuring the number of customer increase and tracking there frequency and spending. This will tell about the performance of the above selected objective. Marketing Mix: Product: The main product of The Urban Kitchen is the organic food items. It is a healthy food product ranging from herbs, spices, vegetables, fruits etc. The combination of tasty organic food, ambience and world class service will make The Urban Kitchen unique among its competitors. Price: As the basic product is organic food, so its operational cost is high. So, to maintain the profit margin, the management has decided to utilize the cost plus pricing strategy which is a cost based structure for setting the price according to cost of goods and services. Place: The Urban Kitchen has been planned to be located at the heart of the downtown area of the Auckland city. It is one of the prominent residential, financial and business areas of the city. So, there will be a lot of customers to attract. The proposed restaurant will be approximately 3500 square feet. That will include the kitchen areas, dining area and will include refrigerator space to store for storage of food products. The restaurant will also have own parking space exclusively for the customers. The working hours will be from Monday to Saturday from 9 am to 9 am and Sunday the restaurant will open at 5 pm to 11 pm. Promotion: For a newly opened restaurant the most successful promotional campaign will be through banner advertisements, posters, newspaper prints and advertisement through local radio station. By this method the organization will be able to reach maximum number of target audience with limited budget. Also, in this new age of technology, the management should also think about promoting through internet and social media, in this way they are going to directly target and communicate with potential customers. Annual Promotion Budget: Marketing Expense Budget Department Manager Date: 1/11/2016 1/12/2016 1/1/2017 1/2/2017 1/3/2017 Marketing John K Advertising through banner $10,813 $11,895 $13,084 $14,393 $15,832 Marketing John K Radio $800 $896 $994 $094 $196 Marketing John K Internet $4,000 $4,500 $5,000 $5,500 $6,000 Marketing John K newspaper $3,000 $3,060 $3,121 $3,184 $3,247 Marketing John K ------------ ------------ ------------ ------------ ------------ Total Marketing and promotional Expense $18,613 $20,351 $22,199 $23,170 $25,275 Mode Of Communication: Face to Face communication: The staffs will be the basic mode of communication of The Urban Kitchen as they will be interacting with the clients face to face on daily basis. The management has decided to conduct through training programs which will educate the staffs about service approach; customer awareness and customer complain handling. All grievances will be gently and sympathetically accepted by the team and straight away referred to management. There will be weekly meetings to planning and revising policies for customer handling and to maintain an effective communication process between the ground staffs and the management to identify any conflict of interest in the system. The suppliers will be handled Directly by Mr. Orman as he has a prior experience in customer handling. There will be a monthly meeting with the key suppliers as the business is based on organic food products so it is necessary to be with the key suppliers in good terms. Recruitment Method: The Urban Kitchen is a new start up business so in the initial stage the management has decided to recruit through external sources, to be specific through job portal posting. The recruitment process will be conducted by two screening process of interviews by human resource manager and later by the managing directors. The business will recruit people with background and experience in hospitality industry. Risk Management Plan: New Restaurant setup often formulates the following two common mistakes: underprepared or unprepared for start-up. It is always messy in the beginning and poor service and food quality often create bad impression among customers which force them to never come back again. Most of the restaurant start-up invests all their energy and financial strength in the grand opening but give less importance or attention to minor details like customer service. This can lead to decreasing word of mouth promotion which can lead to revenue and business loss. For The Urban Kitchen, there should be proper risk management plan so that it can possibly be back-up with organic food supplies, equipments and staffs. For the initial stage the operations plan will be accordingly strategized and reserved to minimum. The first impression and customer service is very important for building brand image and long time relationship with customers and The Urban Kitchen will not surrender this in order to convince the bottom line. According to anticipations, the marketing and promotional campaigns will be higher in the first five months and all campaigns will be closely monitored and analysed to decide their effectiveness. The management has also decided to keep a long term relationship with supplier and apply fixed price rate so that it does not affect suppliers in economic turmoil. Develop The Implementation Plan: Objective: Grand opening of The Urban Kitchen restaurant in 1st January 2017 is the initial objective of the business. Then the next objective is acquiring 22% of the market share of organic food products in first year. Task: Aggressive promotional campaign: Mr. Goldie Orman Staff Recruitment process: Human Resource Manager Set up of Restaurant area: Administrative officer under supervision of Mr. Richman Restaurant License: Mr. Goldie Orman Time Allotted: The opening of The Urban Kitchen Restaurant will be on 1st January 2017 so the promotional campaign should start immediately from 1st November 2016. The staffs should be recruited within 20th November and will be given basic 1 month training. The restaurant area construction should be immediately started. Mr. Goldie Orman will get the restaurant licence within next fifteen days. Progress: The management will setup a meeting every fortnight and will analyse and evaluate the progress of the tasks and will modify if changes are needed according to situational need. Reference: Andreasen, A. R., Kotler, P., Parker, D. (2003).Strategic marketing for organizations(pp. 44-53). Upper Saddle River, NJ: Prentice Hall. Hollensen, S. (2015).Marketing management: A relationship approach. Pearson Education. Kiwis eating the easy option,. (2016). Kiwis eating the easy option. Stuff. Retrieved 21 October 2016, from https://www.stuff.co.nz/auckland/local-news/7934507/Kiwis-eating-the-easy-option Kotler, P. (2008).Principles of marketing. Pearson Education India. Restaurantnz.co.nz,. (2016). Cafe and Restaurant Sales Surge in 2014 : Restaurant Association of New Zealand. Restaurantnz.co.nz. Retrieved 24 October 2016, from https://www.restaurantnz.co.nz/Story?Action=ViewStory_id=1735