Business Plan for RedHeart Cafe - Term Paper Example

 Dine...relax...linger... Such laid back words calms even the most stressed out city dwellers. For sure, no matter how cosmopolitan you maybe, we all miss lazy Sunday afternoon. This is exactly what the place would remind you – lazy days and good food that makes you miss home. The RedHeart Cafe is a cozy cafe that offers respite for urban dwellers who are stressed out by their daily grind in the concrete jungle. RedHeart cafe as suggested by its name is a dining place that offers all natural and organic food from our very diverse menu. The cafe has wide selection of food that has its origins from Southeast Asia. Nevertheless, typical American dishes are also included in the menu for those who miss homemade cooking. A study indicates that of Americans love to eat out especially those who live in a city due to the fast-paced lifestyle. There is so much work to be done that individuals like ( young working professionals ) do not have the time to cook. Going to the supermarket entails a lot effort and time that needs to be squeezed in a hectic lifestyle. There is also the fact that work demands such as overtime and crazy schedules produce a toxic lifestyle. This fact alone leads to higher risk for cardiovascular disease which kills millions of Americans every year. Worse, people consume fast-food laden with seasonings and additives that are harmful to the body such as MSG ( monosodium glutamate) and high-fructose corn syrup. A fast paced lifestyle, a stressful workplace and unhealthy eating habits all contribute to higher risk of obesity, hypertension and other bodily disorders. For this reason, RedHeart Cafe was established by its health conscious owners so that urban dwellers be relieved from the daily stress of life in a natural environment. In addition to this, the customer’s “ heart would also be pleased since the venue would focus on activities that promote dating, relationships and intimacy . Introduction Entrepreneurs usually need a sound business plan that is firmly rooted on feasibility that would bring profitability. However, the restaurant industry is highly competitive that is why there is a need to conceptualize a unique theme. A study made by De Noble and Olsen ( 1986) claimed that the hospitality industry has lot of uncertainty and is filled with complexity. The owners of the restaurant are aware of this scenario, thus they are financially committed in making the restaurant a success which capitalizes on good food and unique theme. RedHeart Restaurant aims to provide authentic Asian cuisine in a customer-friendly environment with a romantic twist. The total capital requirement needed in opening this restaurant is $25,000 of which $10,000 is allocated as start-up capital while $10,000 as business operations cash reserve. This plan is intended to secure a business loan of $40,000. Major part of the loan would be used in purchasing equipments, design as well as construction of the facility. Some 20% of the loan would be solely used for Operational Start-Up expense such as lease and payroll. Mission In Love will be an interesting restaurant since it is a fusion of different Asian cuisine such as Vietnamese, Korean, Chinese, Japanese, and Korean. In addition to this, In Love has a unique feature such as “PaPair Plates” and “Love Wanted”. The mission of the café is to offer authentic cuisine with superb service to our dining customers especially to couples and singles needing excitement. Costing RedHeart restaurant’s objectives for the first three years of operation include: Keeping food costs at less than 25% of revenue. Keeping employee labor cost between 25-35% of total sales. Maintaining a small, cozy cafe with authentic Asian cuisine. Averaging sales between $200,000 - 500,000 per year. In order to meet these objectives, the café owners must come up with a plan; thus, the function of planning by owners is imperative since it sets the proper direction for the enterprise. In fact, it must be recognized that planning is the key to whether can activity, project or goal can be successfully accomplished. Planning involves projection of expenses which can be numerically laid out as a budget. The budget reflects the plan in a quantitative manner. The Budget is defined as “estimate of costs, revenues, resources over a specified period reflecting a management’s reading of future financial conditions“. For every plan, there must be a budget since all activities incur expenses. The Budget The initial budget of the café is marked at $65,000. The following is the illustrated budget for the café for a 6-month period: Start-Up Expenses Lease ……………………………..$25,000 Improvements……………………. $10,000 Furnitures…………………………$3,000 Equipment and Supplies…………….$15,000 Utilities…………………………….. $1,000 Wages ……………………………...$4,000 Permit/Documents…………………..$1000 Promotion ………………….. .$6,000 Total………………………………..$65,000 Hopefully, through proper management of resources ( physical and human resources) and providing good service to customers, the return on investment would be in a year’s time. For the mean time, the employees must be conscious of the limited budget that the company has. Like any other normal start-up business, everything seems hard at first but perseverance is the key to success. Marketing Mix Aside from business operations, business must include in its strategic planning a sound and feasible marketing plan since this would guide the company in how it would achieve its target profits. The café must not only earn enough to cover the overhead expenses since the investors are also expecting a share from profit. In addition to this, there is also a need to pay debts since additional capitalization was borrowed to finance the café. Investment is crucial during the first year of operation since there are many costs and expenses that would be determined only during the first few months of operations. The Marketing Plan must consider the marketing mix so it can be fitted to the customers it intends to serve. Although the café is open to anyone who values healthy food and cozy place, the promotions is directed towards singles, couples and families too. The following illustration presents the Marketing Mix of RedHeart Restaurant. THE MARKETING MIX Location The location of RedHeart would be right in the Midtown district of Atlanta. This area is chosen since many developments would take place in this area. According to the website of MidtownAtlanta.org, there are no less than 70 restaurants thriving in the area. Foot traffic is one consideration in planning for a location since people who pass-by maybe attracted to eat in this place upon seeing the physical set-up. Nevertheless, the RedHeart restaurant would not only stand out because of its good food but because of its theme. The restaurant would be decorated with vivid colors of red in different hues. Moreover, the seats are lounge type which makes the place cozy thereby encouraging intimacy. Product Although the main product of the café is good food, it must be kept in mind that good service must come along with such product. Customers value the service they get from a diner or café since food is an issue close to the heart. For one, the waiters or waitress can help in promoting the restaurant’s quality service by being very respectful of the customer’s wishes. At the same time, it is the customers themselves that would refer the place to their friends or relatives which would contribute to the place’s popularity. After all, good or exemplary service is hard to forget and people appreciate that. For this reason, this business plan also should include human resource training and development plan. A good model would that be of Starbucks where the employees are highly motivated by the company. Pricing Pricing is an important aspect of restaurant promotion since expensive food would turn away customers especially in this time of economic downturn. Customers are now keen on the value for dollar of the food which makes RedHeart competitive for its affordable prices. Usually, a set meal cost $15 and a $25 meal is enough for two people to share. Rice is also unlimited which is popular to Asian diners. Moreover, waiting staff are available to service the budget conscious diners which is a factor that can be attributed to a successful restaurant ( Pratten, 2003). The main concept behind the pricing is affordability that would be enhanced by good customer service. Marketing Plan & Sales Strategy Market Penetration The RedHeart Café can easily penetrate the market since it is located in a very visible area. The foot traffic is high so passers-by can easily spot the unique restaurant. In addition to this, marketing campaign would be launched targeting college students as well as office workers who want authentic cuisine with a twist. Marketing Strategy The main focus of the restaurant are two things: authentic cuisine and a place to love one’s heart, physically and metaphorically. A good choice of marketing mix can deliver powerful messages to the curious public about the place that would establish image and presence. Print media – local newspapers , advice columns for couples and singles, college journals as well as blog-sites that discuss topics about heart diseases; Broadcast media – Special shows that discuss the RedHeart activities of the restaurant, guest speakers at the restaurant who would discuss topics on love and relationships as well as important topics that concern the real heart: such as how to keep a healthy heart and avoid cardiovascular diseases; Direct mail – An invitation for all couples and singles to experience “love” by dining at the restaurant It is advisable that a public relations firm would be in-charge of promoting the activities of the restaurant for a quarter of the year so that the place would become a household name. The marketing plan has a three-pronged approach, namely: 1) Opening – The PR firm would be sending a press packet that would serve as an announcement to all possible media exposure. Strategic location of printed advertisement and a billboard would send a strong presence to the market. A budget of $6,000 is allocated for this promotion. 2) Ongoing – A Thematic Campaign on a Monthly basis would keep the public interested. Schedules of guest speakers, as well as singers would be open to the public to draw the crowd. The “PaPair Plates” is a promo wherein diners who opt to use paper plates will find a list of potential dates on the back of the plate. These people can be contacted for a blind date by the restaurant. 3) Point of sale – The staff should be trained in handling customer relations as well as promotions. The most important form of referral is word-of-mouth which is a must in building a large customer base. In conclusion, the restaurant industry is highly competitive so there is a need to come up with the idea of setting up a restaurant that combines authentic cuisine as well as “Love” theme. This would be a first in the restaurant industry in Atlanta Georgia. The main goal of this restaurant is to provide diners with affordable meals, friendly service, and a chance to meet other people. In order to be profitable, the restaurant would operate on a small scale thereby maintaining a low labor cost and food cost. The restaurant has a good location since the area has high volume of foot traffic. The Marketing Strategy of the restaurant is based on a three-pronged approach that would be handled by a PR firm. Coupled with unique theme, aggressive media exposure and friendly service, the place would hopefully gain a large customer base. Over-all, the commitment of the investors as well as the marketing effort would contribute to the restaurant’s profitability. References DeNoble, A. F., & Olsen, M. D. (1986). The foodservice industry environment: Market volatility analysis. Hospitality Review, 4(2), 89-100. Ethnic Food Restaurant Business Plan. Retrieved from http://www.bplans.com/ ethnic_food_ restaurant_business_plan / company_summary_fc.cfm. Outdoor Dining Guide to Midtown Atlanta. Retrieved from http://www.hiwassee.us/ midtown/ content/outdoordining.shtml Pratten, J.D.. ( 2003) The importance of waiting staff in restaurant service. British Food Journal Volume: 105 Issue: 11 .Page: 826 – 834. Read More