Challenges of Sylvias Bar in Birmingham - Case Study Example

?Sylvia’s Bar in Birmingham Table of Contents Introduction to the Case Study 3 Defining the Issue 3 Analysis to the Problems 5 Recommendations and Conclusion 6 References 8 Introduction to the Case Study The case study is about Sylvia’s Bar, a high street bar and night club located in Birmingham. The bar came into being in the year 1986 and deals with fashionable wine as well as cocktails targeting the local bank workers. It has been noticed that during initial days the turnover of the company was quite high. However, in the recent times the company’s sales have declined eventually and the profits have also dropped drastically. Soon, even the popularity of the bar also faded away. Consequently, the main objective of this report has been to identify the issues surrounding the bar and to analyse the problems. It also aims at offering adequate suggestions to the company so that it can improve its profitability and recapture the lost popularity. Defining the Issue There are generally three reasons behind the failure of a restaurant which include economic perspectives, marketing perspectives as well as managerial views. Among these three perspectives, most of the restaurants have been observed to fail because of the economic perspectives. The economic perspective can lead to failure of a restaurant because of the reasons such as lowered profits, weakened revenues and declining profits. The restaurants may also fail because of the marketing perspective wherein they may fail to operate at any specified locations, deliberate strategic selection of relocation, adjusting with the changing demographics, meeting the unrealised demand for any new product or service, consolidation of the market in order to acquire new market share in the targeted regions as well as rearrangement of the product portfolio necessitating chosen unit closures. Managerial perspective comprises the failures in the restaurants that occur because of the lack of competency within the managerial teams (Parsa & et. al., 2006). In the context of this case study, it has been noted that Sylvia faces many significant issues that need to be resolved in order to enhance the sales of the company and to increase the profits as well. One of the main issues that the restaurant has been confronting is related to the cost along with the menu of the restaurant. The drinks as well as the food menu have been targeted at high class people and therefore it becomes difficult for the middle class people to dine in the restaurant and thus the demand of the food has declined. Staffing has been the other vital issue related to Sylvia’s Bar. Since the restaurant employs the staffs who have completed their education from South Birmingham College, these staffs generally demand higher pay in comparison to the normal staffs. In such circumstance, it can be stated that a significant amount of the money earned by the company goes to the staffs which is a noteworthy issue in Sylvia. The other main issue hampering the profitability of Sylvia’ Bar has been related to the modes of entertainment that the restaurant uses for the purpose of attracting the customers. The restaurant plays old classic bands which belong to 1960s to 1990s. The old bands may be preferred by some of the customers but may not be the ultimate choice for the youth. Competition is one of the marketing problems that tend to hamper the effectiveness of the companies thereby impacting upon the sales as well as the revenues of the company. It has been noted that during the initiation of the restaurants, there were no competitors of Sylvia’s Bar. However, in the recent times there are many local bars which cause a significant problem for the company. The attractiveness of the High Street has also been declining in the current times with young customers wanting to visit fashionable canal district. The company’s customers as well as the staffs are also not much satisfied with the service offered by the company. Customers state that they dislike the weekend entertainment that Sylvia offers. The customer’s further state that the restaurant is highly priced and they would not mind paying high for the classy night outs with better quality services. The staffs revealed the fact that they are dissatisfied with the uniform that they are supposed to wear as it is quite formal and makes them feel like working at church. Analysis to the Problems Among all the issues that have been listed above, it can be deciphered that the issues of cost and menu are observed to be the crucial problems which need due attention, otherwise, it may badly affect the profitability of the company. It is because of the fact that the company targets high class customers the prices of the drinks as well as food items have been high. However, given the declining profits and sales of the company, it is significant for it to identify if other class of people or income group can be targeted as well. If the company is targeting the middle income group people then in such circumstances, it becomes vital for Sylvia to reduce the price of the food items. It is because of the high price the company’s owner, the staffs as well as the potential customers of the company are facing tremendous problems. High priced food items will restrain new customers from entering into the restaurants and as a result of it the sales of the company will be hampered. Such high price food items offer wider scope to the competitors who aim at serving the customers with low priced food. It is a well known fact that the location of the restaurant in its market and its capability to differentiate itself from that of the competitors assist it in determining its survival in the long run. Sylvia’s Bar has been offering its customers with high priced food items and along with it the restaurant plays old bands which are quite unattractive for the customers. It can be analysed that the main reasons behind the failure of the restaurant has been lack of documented strategy, incapability to set up and to formalise operational principles, poor choice of the location, lack of fit between restaurant perception and location and failure to uphold operational standards that led to too many service gaps in the restaurant. Recommendations and Conclusion It is to be mentioned that the restaurant business needs necessary management skills so that it can reach required level of success in the face of stiff competition. Sylvia’s Bar needs to implement strategies and initiatives that will be centered on long-term sales as well as profit of the company. The restaurant needs to make strategies that will assist it to differentiate itself from the competitors. High labour cost has been a grave issue in the restaurant. Therefore, it can be recommended that Sylvia’s Bar makes certain reforms in its salary payments to the staffs. The staffs must be paid average wage as per the standard that has been set. By implementing improved technology as well as equipments in its kitchen, Sylvia’s Bar will be capable of offering its customers with more consistent and high quality product at a rapid rate while producing considerable labour cost savings. Furthermore, by implementing new restaurant information system the profits of the restaurants can be enhanced via increased efficiency in the kitchen and better inventory control. In order to drive the sales, promotional activities also require due attention (Brinker International, 2011). In Sylvia’s Bar, the music that is played is not preferred by the young customers of the present times. The songs which were preferred by the people in the olden times seem to be unattractive for the young group of customers. Nightclubs need to play music such as house music, electronic, trance and other forms of dance music styles such as techno. This will help the restaurant to draw significant amount of customers. Satisfaction of the staffs also plays a major role in any organisation. A survey has revealed the fact that the staffs of the company are bored because most of the times they need to sit idle. Such boredom has a negative impact upon the productivity of the restaurant. It can be recommended that the staffs of the restaurant must be kept busy with other tasks so that they can keep themselves occupied with some sort of work. Outings can be arranged for the staffs once in a week for recreational purpose. This will motivate them to work with full dedication in the restaurant. The restaurant needs to target all income group people rather than just high income group and thus must make necessary changes in its menu options. The food items must be reasonably priced so that it becomes affordable for all groups of people. By implementing the above mentioned strategies the restaurant will be capable of improving the condition. Within few months the sales as well as profitability of the company will be enhanced. It is significant for the manager of the restaurant to monitor the progress on a quarterly basis. If the performance of the company does not improve with the help of the above mentioned strategies then the restaurant will have to prepare other feasible strategies to enhance the position of the restaurant. References Brinker International, 2011. Annual Report 2011. Business. [Online] Available at: http://www.brinker.com/company/Brinker2011/annualreport2011.pdf [Accessed March 16, 2012]. Parsa, H. G. & et. al., 2006. Why Restaurants Fail. Cornell University. [Online] Available at: http://www.econ.ucsb.edu/~tedb/Courses/Ec1F07/restaurantsfail.pdf [Accessed March 16, 2012]. Read More