La Italia Restaurant Business Strategy - Case Study Example

BUSINESS PLAN FOR LA ITALIA RESTAURANT I. Executive Summary La Italia aims to bring authentic Italian food in Downtown Denver by offering a varied mix of pasta and pizza dishes, recipes of which have been passed on from earlier generations of food enthusiasts who themselves, were immersed into Italian culture in the 19th and 20th centuries. La Italia management aims to bring their customers to this era by offering good Italian food in an entirely Italian experience. Understanding the threat of competition, this newbie recognizes its need to be innovative in its product lines and services. Price wars are all too common among the food industry but providing a good dining experience will be the key in capturing the market. The company shall be employing highly experienced chefs and kitchen teams to ensure that the quality being promised is delivered. Management plans to open its pilot restaurant in Downtown Denver to test the market and eventually see how they can further expand the business. La Italia is perpetually open to innovations and management sees themselves diversifying should the need arise. One of the aims is to make each visit to their restaurant as unique as can be. It will invest in product research to ensure that they reach this goal. II. Business Description La Italia is a full service Italian restaurant offering lunch, dinner and snacks from 10:00 AM to 12:00 Midnight, seven days a week. It is located in Downtown, Denver, competing along the likes of Osteria Marco and Venice Ristorante. The restaurant sits 140 guests, with its 30 table sets, which includes a function room for a small group of up to 50 people. The function room is designed for intimate gatherings and small parties. La Italia has a designated non-smoking and smoking area, which are the restaurant interior and main hall, and the veranda area respectively. The company also accepts delivery service within Denver’s vicinity. La Italia accepts delivery orders in two ways: one is through phone and the other, through their website. It implements a guaranteed 45-minute delivery time, and as a challenge, it offers 100% rebate for all those who waited for more than 45 minutes for the pizza and pasta deliveries. The food business offers cash and credit card payments. Food delivery is available from 10:00 in the morning, to 10:00 in the evening. All food products are guaranteed fresh and cooked only upon receipt of order. As a startup company, it plans to invest in sophisticated and top of the line kitchen equipment that would make cooking meals easier and time-efficient for the kitchen crew. It will also focus on interior design, to create a homey, relaxing ambiance that is actually a mix of classic Italian and modern American. The walls will feature elaborate paintings that depict both old and new culture. The furniture will be simple, yet elegant, made mostly of wood, carved with elaborate details. As the customers enter the room, they will feel the best Italian dining experience – the kind of customer service that will be marked as uniquely as the La Italia experience. The objectives are as follows: 1. To be able to launch and operate La Italia with the aid of a bank loan amounting to $ 250,000 with a payback time of one year. 2. To create a unique menu that would propel the brand to popularity, beating the market of the already Italian Restaurants in the city. 3. To expand with two more stores in neighboring cities of Fort Collins and Sterlings at the start of its second year. III. Industry and Market Analysis Denver is a place with many food stores and restaurants that offer a variety of choices to the market. Competition is very stiff, with every other nook having specialty stores and restaurants. In Downtown Denver alone, there are over 10 Italian Restaurants and over a hundred others offering American, Indian, Asian cuisine, among others. There is an endless string of food shops, restaurants, and bars in the area that makes it seemingly impossible for new entrants to establish another food business. Entrepreneurs venturing into the business must have something new to offer, or risk losing opportunities to those more established ones. The key is to be able to offer something unique to create switchers, and eventually, a healthy number of faithful customers that would make the business thrive and grow. La Italia’s target markets are those belonging to the 16 to 45 age range. The product lines mostly suit adult preferences. Focus will be upper income level families who reside and frequent the area. The restaurant will tap on the income level of at least $ 3,000 and above, 70% of families who stay within the area and shop at Downtown Denver. It also targets 40% of the tourists who visit Downtown Denver. Focus is specifically given to this group because they are the types of people who frequent La Italia’s direct competitors. They are willing to spend money on good food and great service. IV. Competitive Analysis With the presence of several direct many competitors, La Italia is confident of attracting its own group of loyal customers to gain revenues. In the food business, there are always a lot of direct competitors, but the novelty and experience that La Italia would be presenting will surely tap the interests of the target market. A good ambiance, capped with an excellent product line and an equally excellent service – these are what La Italia promises its target market. Some of La Italia’s direct competitors are Osteria Marco and Panzano Restaurant, both particularly leveraging on their customer service quality and reasonable prices. Both are also open for long hours, everyday, and cater to meals from before lunch to late night. Osteria Marco offers lunch and dinner set meals at a packaged price. Highlight of the product line up is their pasta dishes, mixed and matched with Pizza and salad entrees. It also offers menu ala carte. This Bar and Restaurant offers entertainment as well. Panzano Restaurant is a home grown restaurant which offers similar products as Osteria Marco. Their outstanding feature is that they offer cooking classes on top of their usual products (Panzano 2011). This restaurant offers contemporary Italian cuisine at remarkably competitive prices. La Italia, however, still has an edge for its more diverse service line up, which includes buffet and delivery. The company targets to get 50% of both competitors’ frequent patrons, and create its own loyal and returning followers. The strategy includes creating loyalty, frequent client programs that aim to reward customers every time they visit the restaurant. A membership club will also be created for loyal patrons of Restaurant. The company’s keys to success are as follows: a. The products to be served are of the highest quality and unique. Combined with excellent customer service, superior interior decoration that matches the ambiance, the overall impact would that of an unforgettable dining experience, capped with menu items that would entice diverse age groups and food preferences. b. A well managed inventory of raw materials to ensure steady cash flow. Management targets zero wastage in raw materials, good relations with supplier for better inventory management. c. Highly experienced kitchen and business development team, hired to provide only the best products in the market. d. Carefully planned marketing activities and campaign that solidify the mission statements of the company. Guaranteed service and frequent diner programs will be the perfect base to spark loyalty among the target market. V. Marketing Strategy Promotional efforts will be essential in propelling the brand to success. On top of the advertising efforts, targeted marketing strategies will be implemented as well. Take for instance the plan to utilize and maximize the website in getting customers and interacting with them. The internet is the best way to interact directly with customers. The company intends to utilize search engines and search engine optimization, and it will also advertise in social networking sites. Rewards will be provided online for those who order or refer customers. Frequent customers will be given extra attention, and the company will create seasonal marketing programs from them. A successful launch is always accompanied by a tri-media campaign to ensure that the target market is reached. However, due to the limited advertising and promotions budget, it chooses to advertise mainly via radio plugs in local radio stations in Denver. Repeat exposure via radio advertisements would spark interest among listeners. Among the three mainstream media, radio is considered to be the most cost efficient as it requires the advertiser a fixed advertising cost, yet it allows the product to be continuously stimulating the consciousness of its listeners. Strategic merchandising is the key to promote the new business. Billboards and signage, announcements in key points within the city play a vital role in the company’s promotions plan. La Italia will ensure that the brand, the product lines, promotions as well as the service delivery details are displayed in two major billboard sites in two main entry points to the city. It will also display mini billboards and signage in public places such as shopping centers, supermarkets, subways, train stations and bus stations. Billboards should contain the brand name La Italia’s, as well as a short description of what is being offered. An enticing photo of two of the food store’s top products should be shown also, together with its contact details. The phone numbers, the website and the email addresses should be shown in the advertising materials as well. There will be leafleting activities in areas where applicable. Target areas are university vicinities, and places with high foot traffic. La Italia also aims to display posters in the universities, particularly in dormitories. Thematic promotional programs such as raffle and discounts will also be launched. This shall be done in tie up with local TV and radio stations. There will also be event celebrations such that customers will be given value added products and service in commemoration of certain occasions such as Thanksgiving, Christmas, Valentines and the likes. VI. Operational Issues La Italia will need to rent a space for its store operations. To achieve its desired look, the store will also have to be renovated and with the help of an Interior Designer, will be arranged to achieve the desired look integrated with wooden fixtures and furniture. Other assets for acquisition include cooking and bar equipment, kitchen and dining equipment. The company plans to invest in top of the line equipment that would be beneficial to restaurant operations. Much of the capital expenditures will be allocated to this portion, but management sees it worthwhile because it is a long term investment that would reap long term rewards to the company. Kitchen equipment is its main assets second to human resources. Equipment suppliers such as Lakeland and Dentons are highly visible in the city. Since this company will have to purchase kitchen equipment and tools, there is a chance that La Italia will partner with the store that provides the most reasonable price and arrange for payment terms. Raw materials are likewise highly available in the city, but some raw materials will be sourced from specialty stores, particularly materials such as herbs, spices, wine and specialty items. Advertising expenses include design and production of merchandising materials; tie up fees, projected sponsorship and talent fee costs. The marketing manager shall oversee this side of the business, ensuring that there is proper allocation for advertising, public relations and marketing. The full service concept entails the involvement of many dine-in crews. With the presence of full time and part time staff, there is also a need to put a training program in place. A restaurant is a service-oriented business and much regard should be placed to the kind of service. Operations would rely heavily on a smooth turn over transition among the staff and kitchen/ dining crew. VII. Human Resource Management La Italia operates under sole proprietorship and the owner will serve as its Chief Executive Officer overseeing operations and support teams. He will employ the services of one Finance Officer to directly assist him with the Finances of the store, and one Marketing Officer who will manage the advertising campaigns and needs of the store. The company will hire senior kitchen crew, with one head chef who will oversee both business development and kitchen operations. He will be the key in creating signature dishes that is also unique to the restaurant. The store boasts of its highly competitive kitchen crew, who are in charge of developing and introducing variations in the menu. On top of this, the management wants to highlight the “La Italia experience” – a premium type of customer service rendered by its staff, crew and delivery personnel to ensure utmost customer satisfaction. Their corporate campaign “45 minutes or you get it for free” reflects the company’s commitment to make a difference by being the only store that offers such kind of guaranteed service. There will be one store manager who is in charge of daily store operations. There will be a total of two full time staffs and eight part time staffs to provide assistance backroom (kitchen) and dine in areas. Two full time staff will act as senior personnel rendering service to the customers. They will be deployed on a different shift schedule. Together with the part time staff, they will be the front liners who will conduct sales, take orders and deliver the food to the tables. They will also be trained to ensure that they perform the right services to the customers. VIII. Financial Projections Company’s anticipated income and profit are just conservative projections. Basing on real costs researched from the industry and similar engagements, company start up costs are also considered to be more realistic than predictive. The management did this to have leeway for emergency costs and for inflation/ other economic factors. Store Space Rental (Inclusive of first six months rental) $ 12,000 Store Renovation $ 80,000 Store Equipment and Furniture $ 80,000 Advertising and Promotions $ 30,000 Permits and Licenses $ 5,000 Initial Stocks Purchase (Raw Materials) $ 20,000 Other Expenses $ 23,000 TOTAL $ 250,000   Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Projected Gross Income Coffee 5,000 5,000 8,000 8,000 10,000 10,000 Confectionaries 3,000 3,000 5,000 5,000 8,000 8,000 Total Projected Gross Income $ 8,000 $ 8,000 $ 13,000 $ 13,000 $ 18,000 $ 18,000 Projected Expenses Equipment and Materials             Store Construction and Architecture 80,000           Store Equipment and Furniture 75,000           Registration and Rental Costs             Business Registration Costs 5,000           Store Space Rental 12,000           Manpower Costs 7,000 7,000 7,000 7,000 7,000 7,000 Ads and Promo Costs 10,000     10,000     Others 1,000 1,000 1,000 1,000 1,000 1,000 Total Project Costs $ 190,000 $ - $ - $ 20,000 $ - $ - Coffee 10,000     10,000     Confectionaries 10,000     10,000     Total Projected Expenses $ 210,000 $ - $ - $ 40,000 $ - $ - Net Income $ (202,000) $ 8,000 $ 13,000 $ (27,000) $ 18,000 $ 18,000 Works Cited “Panzano” November 30, 2011. http://www.panzano-denver.com/ “Osteria Marco”. November 30, 2011 http://www.osteriamarco.com/ Read More