Redneck's Gourmet - Screening the Business Idea and Business Model - Case Study Example

Screening the Business Idea and Business Model Screening the Business Idea and Business Model Introduction The concept of entrepreneurship is of great importance in the current business era, because existing businesses struggle a lot to meet the intense market competition. An entrepreneurial venture should possess an innovative business idea that can place the company well ahead of its competitors. This paper will analyze the feasibility of a new business idea (Redneck’s Gourmet) using a screening inventory. The paper will also analyze the business’ value proposition, competitive advantages, market size, revenue, and financing in detail. Description of Service or Product Redneck’s Gourmet Burgers is an innovative restaurant service which would provide customers with an ultimate dining experience. The most fascinating feature of this restaurant service is that unlike any other hamburger restaurant, the Redneck’s Gourmet will cook burgers right in front of the customer. In addition, customers are encouraged to order their burger and demand whatever they want mixed in the meat. The well decorated surroundings, a full bar, and a stage for live music will be some other notable attractions of this restaurant. There will be uniqueness even in staff dress code. Even though it is mandatory for the staff to wear uniforms, they are permitted to personalize the uniforms to an extent. In short, all the settings and facilities of this restaurant service will be based on redneck lifestyle and values. Value Proposition Today there are not many places to sit down and eat a hamburger other than fast food facilities. Although many other restaurants have burgers on their menu, it is not the major focus of their menu. Most restaurants offer burgers only as a substitute product if their primary meals are not much demanded by customers. By giving primary emphasis to burgers, Redneck’s Gourmet will have a clear edge over fast food places and other similar facilities. Unlike a fast food restaurant, the Redneck’s Gourmet can promise customers great atmosphere to sit down and enjoy their meals. In addition, as Dupas (2011) points out, today’s people are increasingly concerned about their health and the dreadful repercussions of consuming foods prepared in dirty kitchens and surroundings. Hence, many people are reluctant to visit restaurants. In this context, Redneck’s Gourmet burgers can better serve the needs of health-conscious customers because burgers are prepared right in front of the customer in this restaurant. Thus, no customer needs to worry whether or not his/her burger was cooked in a clean kitchen as he/she can witness the entire cooking process from start to finish. Furthermore, customers get cleanly cooked burgers at affordable prices and a variety dining experience. Business Model The business model of the Redneck’s Gourmet is really innovative and it focuses on the consumer perceptions of health and safety. This business model is undoubtedly a consumer-oriented one as it allows the consumers to witness the cooking process from start to finish, and to determine whatever they want mixed in their meat. Market experts like Matin, Jandaghi, Khanifar and Heydari (2009) suggest that today consumer-oriented business models are likely to overcome the stiff market competition, and therefore the selection of this business model is well justified in the current market context. Furthermore, burgers are cooked in accordance with specific customized demands right in front of the customers, and hence customer satisfaction is nearly guaranteed. Likewise, this innovative restaurant service is proposed to be opened in San Antonio, Texas market where redneck people constitute a considerable percentage of the population. In addition to offering fresh and customized burgers at affordable rates, Redneck’s Gourmet promises lot of fun to its customers. Modern customers would support ventures that demonstrate their commitment to meeting customized needs and fostering the element of fun. This business idea is novel in the Texas market, and therefore brand promotion may not be a challenging task for the Redneck’s Gourmet. Market Size and Growth The proposed business venture will be operating in the restaurant sector, and hence it is necessary to evaluate the US restaurant industry in order to explore the firm’s market potential to be profitable. As of 2013 (as illustrated in The statistics portal), food and drinks sales of the US restaurant industry reached US$659.31 billion, which is significantly higher than the US$42.8 billion earned in 1970. This figure is predicted to cross 680 billion by the end of 2014. Currently the industry encompasses 600 thousand restaurants and employs nearly 13 million people (The statistics portal). Considering the size and scope of the US restaurant industry, the Redneck’s Gourmet can grow its venture fast to make profits within a reasonable period of time. As start-up ventures are greatly encouraged in the State of Texas, the organization can gain strong support from the government and other agencies concerned. In addition, modern people are always interested to follow a tasty but healthy food culture, and therefore the Redneck’s Gourmet can absolutely meet the needs of its customers. The fast recovery of the US economy also contributes to the potentiality of this venture because the organization can charge relatively higher prices for its products and services in a booming economy. Since US maintains good trade relations with all industrially and economically developed economies, it may be easy for the Redneck’s Gourmet to plan its global expansion in future. Competitive Advantages Undoubtedly, the organization’s plan to enable customers to opt what they want mixed in the burger and cook the items ordered right in front of the customers can clearly differentiate the Redneck’s Gourmet from its competitors, and this unique business idea would give the company a set of competitive advantages over its market rivals. Since this business is new to the market, it can enjoy those competitive advantages for a long time. Therefore, the Redneck’s Gourmet brand will be easily recognizable in the market after initial promotion, and eventually the organization can cut down its promotion expenses once the business gets established. Although the planned business venture is a hamburger restaurant, it also offers other items such as chicken and hot dogs on the menu, and hence this restaurant service will meet diverse customer needs. In other words, the business can also attract customers who want something besides hamburgers and keep their needs served well. As already discussed, there are few restaurants that offer hamburger as a major focus on their menu except some fast food facilities, and in this context the business’s decision to operate hamburger restaurant would really offer it an industry edge. Another competitive advantage of Redneck’s Gourmet lies in its packaging. The company has planned to maintain the matchlessness in packaging too, and therefore it can easily charge a higher (but affordable) price for its meals. By focusing on the concept of Rednecksexual, the organization can seize a great opportunity with selling clothes in the restaurant. Redneck’s Gourmet provides an alteration area for customers to modify their clothes and hats as they want. All these services provided by the organization are something new to customers who in turn would choose Redneck’s Gourmet over other restaurant services. Management Since the Redneck’s Gourmet is still at the initial phase of establishment, the management team must pay specific attention to the development phase. The entrepreneur and the rest of the management team members must maintain set of skills and abilities to establish the venture in the market. Akpomi and Nnadi (2010) suggest that the management team must develop improved communication skills to interact with the staff, suppliers, and customers. They need to send text messages and e-mails, to attend phone calls, and to update Facebook statuses as part of their daily business operations, and therefore the element of communication plays an inevitable role in the venture development. In addition,as Hurrell and Scholarios (2014) purport, it is vital for the entrepreneur (s) to possess strong branding skills to grow their business and to establish themselves as experts in the industry. In the current marketing context, the management team cannot be effective unless they are mastered in online branding techniques. In contrast to the traditional business environment, today the process of branding starts with being active on social media, and is progressed through subsequent content publication on the website. The management team cannot grow the venture unless they have great abilities in selling. Although there is a sales team, the management team members need to support them and deal with potential clients at the initial stages of business growth. Similarly, the management team must be up-to-date with recent market developments and fast changing consumer expectations so as to be in line with current market trends. For this, the management team should plan and implement timely business strategies that can make use emerging market opportunities. In the opinion of Salome, Osita, and Marcel (2012), the management team must gain deep understanding of the firm’s funding, profit margins, and cash flow so as to make well informed financial decisions. In addition, this knowledge and related skills are essential to enhance transparency in financial accounting. Revenue/ Growth Projections Currently, the Redneck’s Gourmet management does not expect realizing a profit till one year and a half to two year period. The organization anticipates that it can start earning profits by the beginning of the third year, and it plans to establish its second restaurant by the fifth year. The company management also believes that it can start franchising by the 10th year to expand its business across the country. The expected financial growth or viability may not be achieved unless the US economy recovers from the dreadful impacts of the recent global recession. However, the Redneck’s Gourmet may realize a profit earlier than they expected if the business venture is able to post more sales than what was previously planned. The time taken by this new venture to be financially viable will depend on a number of factors such as changing market trends, variance in consumer spending, and effectiveness of promotion strategies. Considering modern people’s attitude towards health and safety, this restaurant service will be financially feasible by the beginning of the second year. However, it is recommendable for the management to reinvest the profit in the business itself in order to ensure that the company has adequate financial reserves to drive its market growth further. Financing Requirements Although the innovative business idea behind the Redneck’s Gourmet is feasible enough to attract customers and start turning profits by the end of the first year, it is vital for the company to raise sufficient funds for initial investment. The real problem lies in the fact that this venture would raise no profits within the first one and half years, and hence shareholders may be reluctant to risk their money by investing in a business venture once the firm’s financial future is uncertain. As a result, the organization may struggle to raise its initial investment. Currently, two investors have agreed the company to invest money in this new venture even after getting informed of all the anticipated risks. In addition to the estimated initial investments, the organization needs additional working capital to carry out its day to day activities. The company must also keep reserves for meeting unforeseen contingencies. Summary Modern people are ready to spend money on their health safety, and therefore this health-conscious business model may not find any difficulty attracting customers. The Texas government gives specific emphasis to encouraging new start-ups, and hence the Redneck’s Gourmet can obtain easy access to government resources and other related facilities. Use of customer satisfaction cards can greatly assist the organization to identify what the customer thinks about its food and business, and this practice also gives customers the opportunity to inform the management what they (management) could do to improve their services next time. The company’s key strategy is to focus on three different metrics including customer satisfaction, staff satisfaction, and revenue to ensure that everything is heading in the right direction. Conclusion From the above discussion, it is clear that the innovative hamburger restaurant service idea is potential enough to meet modern consumer interests. The central concept of this business innovation is to cook burgers right in front of the customers and enable them to choose what they want mixed in their burgers. It is expected that this business venture would start turning profits by the end of the second year, and two investors are already willing to invest their money in this project. In short, this innovative business venture can grow fast in the Texas market because of its uniqueness and future scope for expansion. References Akpomi, M. E & Nnadi, M. A. (2010). Entrepreneurial competence and entrepreneurship among National Youth Service Corps (NYSC) members In Nigeria. Interdisciplinary Studies Journal, 1 (1). Dupas, P. (2011). Health Behavior in Developing Countries. Annual Review of Economics, 3: 1-38. Hurrell, S. A & Scholarios, D. (2013). “The People Make the Brand”: Reducing Social Skills Gaps Through Person-Brand Fit and Human Resource Management Practices. Journal of Service Research. Matin, H. Z., Jandaghi, G., Khanifar, H & Heydari, F. (2009). Designing a competent organizational culture model for customer oriented companies. African Journal of Business Management 3 (7): 281-293. The Statistics Portal. Statistics and facts on the U.S. Restaurant industry. Retrieved from http://www.statista.com/topics/1135/us-restaurants/ Salome, E. N., Osita, I., Marcel, E. C. (2012). Entrepreneurial skills required by business related graduates for successful operation of a business enterprise in Enugu commercial center and environs, Kuwait Chapter of Arabian Journal of Business and Management Review, 1 (8). 37-52. Read More