Sylvia's Bar Business Strategy - Case Study Example

?Sylvia’s Bar Table of Contents Table of Contents 2 Introduction 3 Analysis of the Current Situation 4 Recommendations 7 Conclusions 9 References 10 Bibliography 11 Introduction Sylvia’s Bar is a night club and high street bar situated in Birmingham. The bar was established in 1986 and initially its target customers were local bank employees. Initially, the bar was doing good business but gradually its profits started dwindling. Several factors attributed to its diminishing profits. The cost of food and drinks were found to be much higher than what the customers were willing to pay and as a result a lot of food was being wasted. The staffs at Sylvia’s bar were trained in cocktail from South Birmingham College and thus their salary was much higher than market standards. The band that was performing in Sylvia’s Bar was initially very popular but gradually people have started losing interest and do not like the performance of the band any more. As a result, the bar is not being able to even recover the cost of hiring the band. Competition has also intensified with time making it difficult for Sylvia’s Bar to make their mark amidst competition. A staff and customer survey had been conducted. The customer survey revealed that they did not consider the price of food and drinks justified and they did not like the ambience in the bar. The staffs also do not enjoy working in the place since the work environment is too formal. Analysis of the Current Situation All organisations have a business strategy for success. The business strategy of an organisation revolves around making money and increasing profits of the organisation. Businesses make plans for increasing profits but often fail to execute those plans. Businesses which have been very successful have always stressed on ethical behaviour and performance and have laid down clear expectations which have helped them to achieve success. The key to success for businesses lies in their structure. Successful businesses have a fast, flexible and flat structure. The absence of too many hierarchical layers improves the information flow in the organisation. The other key to success lies in the recruitment of talented employees. Successful organisations try to retain their talented staff and provide them training to enhance their skills and make them capable of multitasking. Effective leadership also ensures success in a company. Innovation is extremely important for an organisation since it helps them to stay ahead of competition (Behe, 2008). It has been observed that companies in the hospitality industry especially restaurants and bars face failures which can be categorised based on the managerial, marketing and economic perspective. Managerial failure results from the management’s incompetence whereas marketing failure results from marketing reasons namely changing demographics, product portfolio realignment and repositioning among others. Economic failure occurs when profits and revenues are diminishing. Restaurants just like other businesses also pass through distinct life cycle stages. The most vulnerable stage is the first stage. Consequently, most restaurants fail during the initial years due to the fact that they lack resources and thus cannot easily adapt to changing conditions. The competitive environment of a restaurant in terms of its location, growth and how they differentiate themselves from their competitors determine their success. Often new restaurants fail because they lack proper planning, face cash constraints and are unable to compete with big players. Size and survival has a direct correlation in restaurant industry and so bigger players have a greater chance of survival. The restaurant’s location in the market, their proximity with competitors and ability to differentiate themselves from their competitors determine their long-term survival. Most restaurants fail due to their inability to adapt to changing market trends. Various internal factors like managerial inefficiency and incompetency lead to failures (Parsa & et. al., 2005). There exist multiple reasons which are contributing to the bar’s diminishing profits. The bar catered to the upper class people. They served high class food. The food and the drinks were also expensive. They had started suffering losses as the demand for their food had fallen. The management at Sylvia’s Bar had not invested in carrying out research to find what appeals to the taste of their target customers. They had been continuing with the same elaborate recipe since long and had not brought much innovation in their food items. They had not paid attention to changing demographics, changing lifestyle of people, changes in the eating patterns and food preferences of people. Their costs were much higher than their competitors and people did not consider the cost to be justified. They lacked a customer centric approach and were only concerned with what they produced rather than the needs of their customers. The bar always maintained a very classy image since they catered to the upper class. Sylvia’s Bar appointed employees who were classically trained from South Birmingham College. The well trained employees are paid much higher salary compared to the market standards. Antonio and Jack, the Assistant Managers in Sylvia also charge comparatively higher salary. They are old friends of Sylvia and she does not want to lose them. Razzzle Dazzle, the band that used to play in Sylvia’s Bar charged ?1200. Initially, the band was very popular and people were willing to pay the ?10 that was charged for entry into the club after 9 p.m. The customer inflow being low Sylvia has had to keep the bar closed from Monday to Wednesday. Competition has become intense in recent times making it difficult for Sylvia’s Bar to make sufficient profits. In 1986, when Sylvia’s Bar was established it was the only late night bar and customers had no other choice. The popularity of the bar has declined to a great extent and the bar no longer appeals to the youth who prefer to go to canal district which is considered more fashionable. The company conducted an employee and customer survey. The results of the survey further reinforced the fact that the popularity of the bar was declining. Customers no longer liked the ambience and the environment at Sylvia’s Bar. The entertainment in the bar no longer appealed to them. The staff at Sylvia’s Bar also felt that food and drinks were overpriced, customer inflow was low and consequently a lot of food was getting wasted. Recommendations Restaurant business is extremely competitive and it is particularly important to stand out from competition. Often a lot of information and insight can be obtained from competitors by observing their business style (Rainsford & Bangs, 1996). It is extremely important for businesses in the services industry to regularly obtain feedback from their customers and employees since it helps them to consistently provide efficient service. The staffs have direct interaction with the customers and thus it is essential to recruit them very carefully. Employees should be trained to maintain hygiene. Most employees in the restaurant obtain on the job training, however Generation Y employees learn better through audio-visual modes. This is because they learn better if they understand the reasoning behind the practices and the implication of not following them. The image of the restaurant and its popularity can be enhanced through online marketing. Social networking tools are used nowadays for such purposes. Lastly, effective marketing helps in building image for the restaurant. Building an emotional bond with the customers is a marketing tactics to ensure success. Restaurants can provide their customers with a memorable experience on a birthday, a date or any other occasion for celebration. Public relation campaigns can help in building long-term relationship with customers. These campaigns may be in the form of providing sponsorship, inviting a well known chef to cook, inviting famed musicians to perform in their restaurant. It is important to understand the psychographic and demographic profile of one’s restaurant. Creativity is also extremely important in restaurant business in terms of creating a good ambience, providing a good experience to customers, designing new dishes and drinks among others (Ferasat, 2009). Sylvia’s Bar has been functioning in the same way for several years. They need to realise that innovation is extremely important for every business. Businesses in their maturity stage should innovate in order to survive. They have always maintained a high class image and charge high prices for their food and drinks but they need to justify the high prices. They should make their food more appealing by designing new recipes and improving on presentation of their food. They can provide complementary drinks to their customers or offer combo meals. They can reduce their expenditure on their staff by outsourcing their staff whereby the third party staffing company would be responsible for providing them the necessary training. The white and black uniform of the staff at Sylvia is too formal. A coloured uniform could add more warmth to the restaurant ambience. They need to concentrate more on their ambience and create a cheerful atmosphere which would be more appealing to the youth. They have to differentiate their services from their competitors by providing their target customers much better service. They can hire another band in addition to Razzle Dazzle and ensure that music of different genre is played. This can ensure that the music does not become monotonous. They can resort to several promotional campaigns like providing ‘happy hour’ whereby discounts are provided on drinks for a certain period of time during a day. They can promote these offers through various social networking tools and blogs. Sylvia’s Bar needs to develop a psychographic profile of their target customers which will help them to understand the tastes and the preferences of their customers and accordingly provide their services. Conclusions Sylvia’s Bar was suffering from dwindling profits. The reason behind their decreased revenue was the fact that their customers no longer enjoyed visiting the bar and did not feel it was worth spending their money on. The food and drinks were higher priced and there were much better and cheaper restaurants. The employees were highly paid. Customers did not like the performance of the band anymore. The customers did not like the ambience and the staff too felt that the atmosphere was too formal just like their uniform. Sylvia’s Bar is required to bring about innovation and creativity in their food, presentation and ambience. The atmosphere has to be made more jovial. They could reduce cost by outsourcing their staff. The band’s performance could be made more entertaining by catering to different genres by playing different music at times. They could go for greater promotion to enhance the image of their bar. These aspects would certainly provide a genuine prospect for Sylvia’s Bar to enhance their market position and profitability. References Behe, B., 2008. The Basics. Does Your Company Have the Formula for Success? [Online] Available at: http://www.flor.hrt.msu.edu/assets/Uploads/DoesYourCompanyHaveTheFormulaForSuccess.pdf [Accessed March 12, 2012]. Ferasat, K., 2009. Using Traditional and Emerging Practices for Managing and Growing Your Dining Establishment. Five Tactics to Create a Sustainable Restaurant Business. [Online] Available at: http://gbr.pepperdine.edu/2010/08/2009-student-paper-winner/ [Accessed March 12, 2012]. Parsa, H. G. & et. al., 2005. Types of Restaurant Failure. Why Restaurants Fail? [Online] Available at: http://www.econ.ucsb.edu/~tedb/Courses/Ec1F07/restaurantsfail.pdf [Accessed March 12, 2012]. Rainsford, P. & Bangs, D. H., 1996. The Restaurant Planning Guide. Kaplan Publishing. Bibliography Andrews, L., 2003. Buying & Selling a Restaurant Business, for Maximum Profit. Atlantic Publishing Company. Rainsford, P. & Bangs, D. H., 2000. The Restaurant Start-Up Guide: A 12-Month Plan For Successfully Starting A Restaurant. Kaplan Publishing. Read More