Strategic Plan, Part II: SWOTT Analysis - Essay Example

STRATEGIC PLAN SWOT ANALYSIS OF TRUFFLES: An Italian Restaurant Situation Analysis ‘Truffles’ is a high end Italian Restaurant that has been recently launched in the USA. Operating only one branch each in 5 of the states, they are paving way to expand nationally at a high speed. ‘Truffles’ has been well received in the market and has gotten good reviews from food critics. They offer limited variety of Italian food however of premium quality. Its homemade pasta, bread, liquor and cheese have gained fans in a very short span of time.

Only premium quality of liquor and meat is served. However with growing market they need to expand their operations to other states as well as open new branches. Market Demographics The profile for Truffles customer consists of the following demographic and behavioral factors: Demographics Male and female. Age 25 plus Professionals and executives who work close to the location, tourists and families. Upper Middle to High class Behavior Factors Patronize higher quality over price. Health conscious.

Enjoy good ambience and good presentation of food SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Truffles. Internal Environment External Environment STRENGTHS OPPORTUNITIES Familiarity and acceptance of Italian cuisine in all communities. Pure Italian cuisine prepared with premium homemade ingredients. Relationships with suppliers getting strong since frequent purchases are made in bulk.

Well groomed and courteous staff Highly trained chef and customer attentive helpers Excellent central location of all branches, which is easily accessible to the target audience. Location of the branches in main tourist areas surrounding famous landmarks and buildings. Preferred corner locations for all branches, enabling less energy consumption and open environment. Excellent and cultured themed décor that increases appeal of the entire restaurant. High customer loyalty. Simple yet high quality food that is value for the price asked; healthy food portions and appealing presentation.

Marketing and fan following increased through cost free social networks such as facebook and twitter. Green initiatives taken to enhance social responsibility by recycling oil and paper napkins, using electricity saving bulb, alternate power option through solar panels. Common Restaurant structure for all branches and layout for building brand equity and recognition. Simple and well monitored inventory and supply management. Restaurant should never run out of any ingredient no matter how small (strategy).

Focused and authentic service Pre-cooked / half cooked items included in inventory that allow less time for service without compromising on food quality, hence faster service than competitors. Daily chef’s specials Different sitting arrangements for all target audience such as romantic balcony, open air roof top, bar, booth and outdoor patio arrangement. Free entrees served since inception. Free sampling of new addition to the menu Time-pressed lifestyles and increased working hours have lead to increased number of people and families coming to restaurants.

Growing market and growing popularity since the place offers genuine Italian goods of premium quality. Online social networks show many potential customers awaiting launch of Truffles impatiently in their area. Truffles is yet to grow globally since a huge market exists for Italian cuisine all over the world be it Middle East or Asia, Europe or Australia. Business opportunities increasing in takeaway and home delivery or curb to go options. Franchising of the restaurant in other states and countries to overcome the financial constrain.

Restaurants selling breads, pasta, cheese, liquor, salamis, herbs and sausages, not just an outlet for dine in but a small grocery store as well selling Italian homemade ingredients. Many restaurants can easily venture into catering business without incurring infrastructural cost and operate out of their restaurant offices and gain huge profit. WEAKNESSES THREATS Limited menu Limited budget to expand fast, hence loosing on a lot of opportunity cost. Few branches as compared to widespread publically traded chains Competition from small road side delis and pizzerias to fine dining restaurants and hotels.

No security setup. Less car park space. Especially during night time it’s advisable to come in a cab since the area is a busy tourist attraction. Getting table at night can be difficult without earlier reservation due to the busy location. Recession in local as well as global markets that have reduced an individual’s disposable income. Competition and offerings from other specialty cuisine restaurants such as Chinese, Japanese, Thai or Indian. Constant threat from low priced, huge quantity fast food chains recognized all over the world.

Ever expanding publically traded chains and wide array of small. Local establishments. Closely placed restaurants. Cyclical nature of the industry. Increase in sales tax and labor laws. Changed in health regulations. Terrorist / extremist group attacks Synopsis of the environmental factors discussed in the SWOT table above by doing PEST analysis (Kotler, 2002): Political Factors Government enjoys certain degree of control over every industry and businesses through its regulations and policies.

In case of Truffles, imposition of new taxes, increase in tax rates, restrictions or complexities introduced in employment laws, trade restrictions imposed or tariff levied on import of premium ingredients would directly affect the business. This can be both favorable and unfavorable in case of increased taxes the cost of food served would go high in tandem with high input costs and some customers may prefer to switch to less expensive options. Increased taxes would also increase operating cost for the restaurant.

Truffles should adapt to a diverse group of vendors / suppliers both local and international for supply of their premium ingredients. Diversity amongst vendors and suppliers will help them cope with international or local price fluctuations and would help them balance the cost of their inputs at all times. This would not only safeguard them from a possible threat but has presented itself as an opportunity to benefit from cost fluctuations locally and internationally; hence providing Truffles with bargaining power over its suppliers.

Political stability of a country also plays a pivotal role. If a country is politically stable they would have a stable economy and so forth good tourism industry as well as local people willing to go out and eat. Economic Factors Economic factors are extremely important to a restaurant. They decide the true fate of a restaurant’s success; a country were economic growth is consistent or stable, people would have ample disposable income to indulge in luxuries such as dining out. Where as if inflation goes up and economic growth is hampered the situation would be reversed and people would prefer to cook at home and save money.

Social Factors Social factors shape the market, human preferences, culture, attitudes all shape up a potential market. For example health awareness and organic food boom has moved people’s preference to eat healthy & quality food. Food industry has reacted positively to this trend and is already offering variety of organic food and homemade / home grown varieties to attract customers. Truffles is already catering to idea of healthy food by using organic and premium quality ingredients in preparation of Italian cuisine.

Technological Factors Technological advancements can only be made in the restaurant in terms of media used for promotions, maintaining customer data base, inventory management and supply chain software, cooking equipment and storage equipments. Truffles have state of the art equipment present in its kitchen to provide tasty meals in short time which is one of its key strengths. They are linked with their loyal customer base through social networking sites and often involve them in promotions and announcements for the restaurants.

Usually additions in menu are announced and marketed online. Environmental factors Every organization is recognizing the importance of contributing to the wellness of the world we live in and reducing carbon footprints. Many green initiatives have been taken by restaurants as well as Truffles such as using energy efficient lighting, replacing old roof with cool roof programs that reflects heat and prevents it from transferring to the level below hence less energy consumption for air conditioning, cooking oil recycle to create biodiesel and paper napkin recycling (replacing linen napkins with 100% recycled paper napkins) saving cost, water & energy consumed to wash and dry linen napkins.

There is a ban on smoking inside the restaurant as well. This has enabled Truffles to gain respect and recognition in various communities and created good will for the restaurant as well as new customer base. Such initiatives are welcomed by all organizations hence providing Truffles with the opportunity to attract new business groups and host events / meetings for such a cause. Hence ongoing trend has again resulted in an opportunity for Truffles which is being exploited and benefits are being reaped.

Truffles has been flexible is adapting to changing trends and influences due to its relatively small size, easily accepted and recognized culture. However, they do have their limitations; main being the financial assistance required to expand to other areas and increases the number of branches. They can either opt for offering franchise rights in areas where they see a potential market, or they can take loan at a competitive rate from a bank to expand their business. Truffles has supplier / vendor relationships with several local organic farms as well as international re-known companies offering premium cheese, herbs, flour and liquor.

They have strong relationship with their vendors since they frequently buy in bulb proving to be a good business for their suppliers. Local vendors are preferred for fresh fruit, meat and vegetables. They order goods daily to keep their stocks fresh. Truffles is 20% self sufficient in making its own supplies such as pizza dough, pasta, sauces, wine (to some extent), growing herb in a back garden enjoyed by customers as well. Due to the aspect of making its own inputs Truffles can convert a small corner into a grocery shop and sell pasta, wine, salamis, herbs to the customers.

Customers nowadays prefer such steps and enjoy multipurpose restaurants. This opportunity comes with hardly any requirement for investment and provides customer with an innovative approach to remember Truffles and ensure repeat visit. Similarly Truffles can also evolve as a catering business with hardly any investment required, they can operate directly from the back office at the restaurant; however, additional staff would be required to handle the catering business without compromising on the restaurant business.

This staff would require different training from that of the restaurant staff. A major threat faced by all nowadays is of security. In order to safeguards its assets and provide customers with a relaxed and safe environment Truffles should be more security minded and install security cameras and other safety gadgets that enhances the safety element. It would result in a very bad way if security risk is left as it is and any unfortunate event occurs, this would lead to the end of the restaurant.

Competitive advantage of Truffles is its good quality and premium food. However if the customer wants variety (which is one of the key factor keeping the customer interested) it would be better to increase the menu than sticking to fewer option. Already established restaurants have an edge by offering variety of Italian cuisines. New items should be added to the menu gradually for example one each week and should have a weeks’ dedication for its promotion. Promotion can be done by offering small portion of the same for free first day.

Promote the same though online promotions as well to increase customer awareness. Truffles provide its customers with a friendly and relaxed atmosphere. To retain customer Truffles has made it a strategy to serve an entrée free each day (which would be made from last day’s leftovers, without putting a dent in the cost structure). Truffles can reap substantial benefits from tourism industry. This can also pave its way toward global exposure. Tourists can promote the restaurant in their native places.

However, this step is a farfetched vision, but an opportunity from the very start. Main issue for Truffles is to expand its branch network to at least all major states of USA. This is the next major step the company would take after opening initial restaurants. This would require market analysis, establishment of facility, hiring of staff, searching for suppliers and promotion for the launch. Conclusion & Recommendation: Truffles can be seen amongst big names of the industry in a few years due to its quality and taste of food, management’s flexible approach towards ever changing customer preferences, going green initiative and adaptive taste which can be enjoyed by people belonging to various different cultures.

I would recommend the restaurant to expand locally and globally on war footing to maximize on opportunity cost. Increase its menu size is also an important step towards success. Truffles should come up with new promotions on special occasions just to involve customers and make them feel part of the restaurant’s strategy. Word count (excluding table) -------------------------------------- 1,552 words References Armstrong, Gary & Kotler, Philip (Ed.). (2001). Principles of Marketing. USA: Prentice Hall. Berry, L.L. (1995). On Great Service: A Framework for Action.

New York, NY: Free-Press. Kotler, Philip (Ed.). (2002). Marketing Management. New Deli: Prentice Hall. Wilson, Richard M. S. & Gilligan, Colin. (Ed.). (2001). Strategic Marketing Management: Planning, implementing and control. UK: Butterworth-Heinemann.