Eastern Food Restaurant Business Issues - Case Study Example

? Eastern Food Restaurant EASTERN FOOD RESTAURANT Overview Company Eastern food restaurant is an oriental based company that will run a double floor medium-sized restaurant business that will serve contemporary and healthy food. The restaurant’s location will be on 134-136 Wardour Street in London. Mission Statement The goal of the restaurant is to be a company that is multifaceted in its success. The first responsibility that the company will aim at is to consider the financial well-being concerning the restaurant. To meet this goal, the company, will consider the quality, generosity, understanding, and fairness between vendors, customers, staff, and management, the impact that the business choices and practices will portend on the environment the restaurant will be situated in, and the product’s effects on the well-being and health of the staff and customers. Being aware of the responsible actions and these factors that the result should give a sense of meaning and effort that go far beyond the goals of basic financial obligations. Development and Status The company Eastern Foods was incorporated in the year 1992 in November and certified. The company’s founders are Kenneth O, Donahue and Martha Lee. Martha is the company President while Kenneth is the company’s Vice President. The company has issued common stocks of over 10,000 shares with both Kenneth and Martha owning 2,500 shares each. The remainder of the stocks have been retained by the company for distribution in the future. Kenneth and Lee have loaned ?30,000 from their own funds to aid in start up costs and research for the restaurant. Eastern Food Restaurant’s found a suitable site for its UK based restaurant two months ago and negotiations on the lease period were recently completed, with the deal being in its final stages of completion. The restaurant’s location will be on 134-136 Wardour Street, which is adjacent to a densely populated area of the market that the restaurant will target. After the signing of the lease agreement, the company will have four months to construct the restaurant without any rent charged, this period being the one where the start-up fund balance should be raised. On the completion of this phase, Eastern Food Restaurant would be opened with the project’s operation phase set to begin. Future Plans Should the restaurant meet, by the tenth month, a majority of its projections, the company will begin to look for another location, to develop another restaurant, and start planning procedures for another restaurant. The company’s five-year goal is ownership of four restaurants in the greater London area whose annual combined profit the company expects to be in the range of ?20,000 and ?700,000. Industry Analysis The restaurant industry business is quite competitive, with lifestyle changes that have been created by modern culture fuelling the industry’s steady growth continuously. Increasingly more people possess less cooking ability, resources, and time. The importance of trends cannot be overstated, and Eastern Food restaurant UK aims to be well positioned for this interest in healthier and lighter foods going for moderate to low prices. The Restaurant Industry as it is today The service of food is the fourth biggest industry in the UK. The industry accounts for approximately $200 billion each year in sales. Independent restaurants account for approximately 20% of this total. The average Brit will spend approximately 20% of their income on away from home food, with the number having increased steadily over the past 5 years (Katz, 2006 pp140). The reasons for this are an increase in the variety of product, economic climate, and changes in lifestyle. Future Trends and Strategic Opportunities The growth trend predicated is quite positive in long and short term projections. Modern living has created increased demands that have made people be compelled to eat away from their homes. This is predicted to be as high as 35% in the coming six years. The national restaurant association, in 1998, released a food service Industry 2000 report (Rainsford & David, 2010 pp100). It forecasted the industry’s position in the year 2010. The panel had some highlight findings: Most consumers will increase the food and they spend away from home. Independent entrepreneurs and operators will be restaurant concepts main source. Nutritional concern and Food flavours will be vital at all operations dealing with food services. There will be increased attention given to environmental concerns. Products and Related Services Eastern Food restaurant will offer a beverage and food menu that carries a distinctive image. The restaurant’s products can be bought in 3 ways; restaurant table service, restaurant take away, and office or home delivery. The Menu Eastern Food Restaurant’s menu will be moderate to low priced as well as moderate sized and will offer a collection of British and ethnic items all having a common theme: healthy, familiar, and flavourful. The restaurant aims to create an image of nutritious and light satisfying food. An increased awareness of health and nutritional concerns has been witnessed in the last few years, with people who eat desire this cooking style being a growing market. Production Production and assembly of the food will occur in the restaurant kitchen. Most of the dishes will be prepared from scratch using vegetables, dairy products, and meat, all fresh. There will be strict standards of presentation and packaging, quality production, and sanitation assured by the Chef of service and kitchen staff. Service A customer can purchase food in three ways at Eastern Foods Restaurant. They may sit in the dining room on one of the 60 seats and be served by the waitperson, from the takeout counter whose orders will be prepared from communication over the fax or telephone, and delivery for a limited area over a certain time. Future Opportunities There exists a market segment, which prefers eating at home even though they do not possess the time to prepare a home made meal. To date, there are numerous caterers who provide families and individuals with a month long supplies of pre-made food. Eastern Food Restaurant will develop and researched on a basis of trial. Should it succeed, it has the potential to emerge as a major income source that does not require additional production space or staff. Key Issue 1 Target Market and Marketing Plan & Sales Strategy Eastern Food restaurant’s products will cover a diverse area which is densely populated. Though located in an urban downtown setting, the area is populated by tourists and people who eat out. The area is well known for and caters to the group that the restaurant is targeting. The tourists that come to the area are also diverse. Market Location and Customers 134-136 Wardour Street area is one of London’s most desirable locations for retail. The Chamber of Commerce in 2009 rated it the city’s 2nd best market for retail entrepreneurship. There exist over three hundred businesses in the mile area with an average sale estimate of ?215 per foot2. There will be three major segments from which the restaurant’s customer base will be drawn. These are: The local population— this area of London has a population around the year of approximately 150,000 and is strategically located in the London area. It is also in a 20 minute range of seven major suburbs. Tourism—there are 9,000 rooms available for tourists between inns, bed & breakfast, motels, and hotels. Local businesses-- the London Chamber of commerce has over 800 enterprises listed in the downtown London area which average 10 employees per enterprise. Eastern Food restaurant’s product image and food concept aim at capturing three different profiles of customers; Curious and open-minded-- the restaurant’s caption is “if you taste it, you will absolutely adore it”. Via word-on –the street, publicity, and marketing, the restaurant aims at making people look at new experiences and learn of the inexpensive, convenient, fun, and tasty nature of healthy foods. The unisexual person who is health conscious- the restaurant aims to target those on prescribed or restricted diets, as well as those whose commitment is to a healthy diet. Market trends and the Future Downtown London’s demographics and population have been steady for the past ten years, with tourism going up by 20% in the last 4-5 years and the prediction by the concerned ministry of its continued growth (Rainsford & David, 2008 pp140). There is also an exciting increase in the rate of local businesses by a rate of 18% per annum. Health consciousness via awareness of nutrition and changes in the diet has been on a gradual growth over the last couple of years. Extensive studies by the British government have imbued everyone with a fresh definition of a healthy and balanced diet. The medical and scientific community, the government, and large food corporations have backed this trend. This trend will be vital by the turn of the next decade (Rainsford & David, 2008 pp140). Since people increasingly prefer staying at home and cook less, the restaurant’s delivery strategy should become an accepted and widespread trend of eating. Market penetration The restaurant does not expect the entry into this market to be cumbersome. The restaurant is highly visible and has heavy traffic, both foot and automotive, the whole day. Local residents are known to support opening restaurants, while the preferences of the tourists are not fixed. In addition, the company has budgeted ?12,000 for a campaign that will involve pubic relations and pre-opening advertising. Marketing Strategy The restaurant will create an amalgam of marketing avenues that will focus on the restaurant’s unique aspect of tasty and healthy foods. These avenues will convey the restaurant’s message, image, and presence. These are: Direct mail- delivery offices and subscriber lists. Print media- magazines, local newspapers. Hotel guides- brochure from the Chamber of Commerce, concierge relations Broadcast media- local programming and shows of special interest like Hell’s Kitchen Miscellaneous- charity events, the yellow pages The restaurant has set up a firm for public relations, which will be retained after construction is up to help acquire broadcast and print coverage more so during the beginning. The effort at marketing will be divided into three phases; Opening- a press packet will be sent by the restaurant’s firm for PR to media and announcements placed in adverts, in vital places. This has a budget of ?5,000. Ongoing- this will be a campaign that is flexible and will be regularly assessed for effectiveness. Its budget will be ?5,500. Point of sale- staff that is well trained can substantively drive up the average check and enhance the overall experience of the customer. In building a client base, referral via word-of-mouth is very important. Future plans and strategic opportunities Office catering even beyond the restaurant’s local confines is viewed as a possible large gross sales possibility. The restaurant would have to hire a sales agent for the product’s direct marketing and the daily catering and delivery functions. Key Issue 2 Operation, Management and Organization The restaurant is a 3,000 foot2 space that as a former restaurant and only requires some tweaking of structure. The codes and licence’s issue are in order. More furnishings for the dining room and new equipment will be bought and installed by the contractor. The restaurant offices are presently at Martha’s home. The restaurant’s opening hours will be from 11 AM to 11 PM 7 days of the week. The restaurant will close for public holidays like Christmas. Employees will be trained and educated in the restaurant’s philosophy and applications, as well as their operational duties. The chef will provide them with extensive information about healthy eating. Much emphasis will be placed on research into the restaurant’s product’s integrity and quality. These products will be tested constantly for purity and freshness. Management daily via the computer system will check food inventory and costs control. Most of the restaurant’s food will be prepared on premises. Food will mostly be made to order and will be stored in the basement in large coolers. Food meant for delivery may be prepared as take-out or earlier made and stocked. Key employees and Principals Martha Lee is the president of the company that will run the restaurant. She is also the proprietor of Cereals and Veggies, a Manchester based retail and wholesale store. The company has since 1991 created a mainstream image of a high profile nature for natural and healthy foods. The company opened a cafe attached to the retail store that she named Eastern Foods that turned into a profitable and popular success. She decided to expand this concept and create a chain of restaurants. Martha brings a successful record of accomplishment in the industry for natural foods with an innovative management style, which keeps with the mission statement. Compensation and Incentives Eastern Food restaurant will remunerate employees with competitive salary and wage packages. Packages concerning benefits will be given only to key personnel. Board of Directors, Consultants, and Professional Support Resources The restaurant has impressively put together a board representing some of the areas top professionals. The restaurant is relying on this to develop the restaurant into a great asset. No consultants from outside have been retained now but for the design department. Presently, the restaurant is searching for an executive chef and a general manager. The restaurant aims to choose these vital employees well and to give them incentives for growth and performance. Martha Lee will be the restaurant’s COO and President, to whom the chef and general manager will report. The sous-chef and assistant manager will be responsible to respective managers, with the rest of the employees being responsible to them. Martha Lee and other stockholders will remain owners with possible offering of stock to employees when and if deemed they are appropriate. Recommendations Eastern Food restaurant is a concept that is innovative and targets a growing new market. The restaurant must assume that the market will be responsive and grow faster over the next few years. The restaurant should aim to form a reputation of security, consistency, and quality. The restaurant should also concentrate on delivery and take-out, which are the areas that show the most promising growth. With the changing market, the restaurant will have to add products to keep up sales. After opening of the restaurant, the management should keep an eye on the profit and sales, and if the restaurant is on target, to meet its goals for the year 1 end, then the company should look to expansion of a second unit. As with any venture, risks will be involved. The project’s success hinges on the restaurants acceptance and strengths in the client’s eyes. The restaurant should expect competition from copycats after the first year. Chain competition comes in a bit later. As the restaurant expects to expand in the next five years to five units. The end of that period will see the restaurant entertain any possibility of a larger restaurant buy-out. The restaurant may also seek to sell up. References Katz J B. Restaurant planning, design, and construction : a survival manual for owners, operators, and developers. New York: John Wiley, 2006. Rainsford P, & David H. The restaurant planning guide. Chicago: Upstart Pub, 2008. Rainsford P, & David H. The restaurant start-up guide : a 12-month plan for successfully starting a restaurant. Chicago: Dearborn Trade, 2010. Read More