New Restaurant in Summerlin Area, Las Vegas - Term Paper Example

Marketing Plan: New Restaurant in Summerlin Area, Las Vegas Introduction The business and marketing plan for opening a new restaurant in Summerlin Area of Las Vegas is based on the need felt for a restaurant which provides healthy Mediterranean food. The confluence of European, African and Asian countries cultures in this region with vegetable and fruits grown on fertile land made their food cooked with virgin olive oil an attractive feature for the visitors. People who hail from this region scattered throughout the US including Las Vegas. There are other people who prefer Mediterranean food simply for its taste and health. Therefore, there is a good business opportunity for a speciality restaurant opened exclusively for Mediterranean food. The main ingredients such as fruits, vegetables, whole grains, pasta, legumes, unsalted nuts, red wine and honey if bought in bulk will cost less and therefore, the restaurant can be very competitive considering the new variety of food it offers at a reasonable price. This paper discusses the marketing plans, strategies and control systems proposed in connection with this venture. Situational Analysis There are several environmental factors such as political, economical, social and technological which affect a company’s business. This is popularly called as PEST analysis, related mainly to the external environment. These external environmental factors need to be analyzed in relation to the internal strengths and weaknesses of the organization to identify the opportunities and threats for taking investment decisions in tune with the trend. PEST Analysis: But for the license to start the business and approvals in connections with wastage disposal from the local authorities, we don’t foresee any problem with regard to political or legal environment. The recessionary fears are over, and there are signs of revival in economy which will increase the disposable incomes of the middle class families which augurs well for the business. The society in the area and its cultural background is cosmopolitan in nature, which suits the customer profile of the proposed business. However, it will be a challenging task to create a customer base considering the diversity of communities with different food habits. The success lies in the second visits of the customers, which depends upon the quality and price factors. The clients are techno savvy and the restaurant plans to introduce online booking of the seats and door delivery. SWOT Analysis: The strength of the project lies in its concept. At the same time, the promoter has limited experience in the field. This need not be considered as a drawback, because he is backed up by his family which has rich experience in the business for more than a decade. The various communities in the area need changes and varieties in restaurants in tune with the changing life styles. The business in a niche market segment with limited competition has potential to grow in the long run with chain of restaurants of the same type. However, unless the company establishes its quality and service levels within a year, other existing companies in the restaurant sector will encroach into this segment. Objectives The main objective is to provide a different restaurant experience to the clients by providing quality food which differs in taste and flavour compared to the food provided by others. To make the service more efficient, online booking and door delivery system will be put in place. This is also expected to reduce the crowd level within the restaurant. Providing food at a reasonable price needs cost effective procurement policy. Maintaining highest level of standards and efficiency in operations to achieve the above objectives and build-up reputation in the long run are the overall objectives. Strategy The strategic management decision involves selection of suitable location and a building for the restaurant based on various factors such as size of the building, approach roads and parking area. The interior work and other infrastructure facilities for kitchen, dining halls and reception should be made within 3 months to prevent others from pursuing the same idea. Arrangements will be made for procurement from the established suppliers who are already supplying to similar restaurants in other cities. Thereafter, establishment of online and door delivery system should be undertaken. Tactics Management decisions with regard to Price, different food items in the Product line, interior layout and decoration of Place or dining halls where food and beverages are served and Promotional programs need to be finalized with great care. The first three areas are the sources for customer dissatisfaction. The promotional programs should be able to communicate with the customers effectively without offending their sentiments. Therefore broad functional classification, Finance, Restaurant and Catering Management, House Keeping and Marketing and appointment of functional heads are important. The functional heads with good experience in the field would be responsible for the tasks in their area and accountable to the General Manager who will be reporting to the Directors. These people will take charge of their functions from the third month. This will give them a month’s time to plan their activities in detail and obtain approval from the management. The restaurant becomes functional from the beginning of the fourth month. Budgeting Total available resources are split into capital budget and revenue budget. The long term investment in buildings, vehicles, equipments and machineries will fall under capital budget. Roughly 70% of the investment goes to capital budget, and the remaining 30% will be used for revenue budget. Allocation to various functions under revenue budget is proposed to be made as below: Kitchen supplies (Non-food) = 6% Kitchen supplies (Raw material for Food items) 7% Dining hall maintenance = 3% Salaries and wages = 7% Electricity, gas and fuel = 4% Others = 3% Total = 30% System Controls The internal control system in an organization is very important for achieving the objectives and goals. The restaurant embarks on an elaborate budgeting process with each item of expenditure broken into various elements to exercise control. Therefore, actual expenditure at every stage will be compared to the budgeted expenses. The variances will be analyzed to causes to plug the loopholes or revise the budget suitably to make it more realistic. Once the restaurant becomes operational, the budgeting process will be extended to marketing and sales to ensure that all operations are seamlessly integrated and wastages are avoided. The various internal control procedures for reporting, approval of expenses, billing and payment will be established. Planning Planning is involved in all stages in terms of time, money and manpower. Functional plans such as Sales and Purchase depends upon the estimates or forecasts. The level of operations expected is also important for recruitment of people for the project and procurement of goods for the business. Planning is a continuous process involving effective interaction of all the divisional heads. The control system and the procedures will be reviewed on a continuous basis to strengthen the service and eliminate the drawbacks and inefficiencies. Implementation The best conceived plans should be complemented by and supplemented with efficiency in implementation. On the other hand efficiency of the team suffers if there is weakness in formulation of strategies, planning process or control system. Interaction among the divisional heads and cooperation between them in the implementation stage is crucial for the success. Therefore, at every stage of planning and budgeting the proposals are discussed with the functional heads and their concurrence obtained. This approach gives a sense of belonging and participation to the divisional heads. The sources of disagreements analyzed and the plans redesigned for acceptance of all the members, and the managements view is not enforced. When the budgets are prepared with their concurrence and acceptance they would like to live within the budged, unless the situation warrants revision. Management Control The management can use several tools for control apart from budgets in day to day operations. This will include monetary as well as non-monetary controls. Sometimes forecast with reference to consumer demands or preferences may have to be revised based on the experience. This should logically lead to revision of plans or control mechanisms. The control measures could be classified broadly into planning controls, profitability control, efficiency control and strategic control. The daily MIS (management information system) reports are designed to bring out the inconsistencies in the reports received from different sections of the business to make the control system meaningful. I. Planning Control Annual-plan control ensures the company achieves the sales, profits, and other goals established in its annual plan. At its heart is management by objectives. (Kotler, Keller and Abraham 634) The functional heads are largely responsible for the sales, catering, purchase, human resources, house-keeping and finance. These are mostly financial controls with reference to the budgets. These controls include: Increase or decrease in sales: Increase over the budget or previous month/quarter indicates growth in sales which forms the input for the current and next month’s planning process. Turnover: The increase in cost of sales should be commensurate with the increase in turnover. The discrepancy to a considerable extent indicates wastage in cooking or manufacturing of food items in excess of orders or demand. Financial ratio analysis: Increase in gas consumption or fuel cost in relation to cost of sales indicates inefficiency in fuel consumption. Similarly, higher percentage increase in the cost of materials used in relation to the percentage increase in sales indicates inefficiency or lack of control over material usage. If it is due to increase in prices of the materials, the prices of the food products need to be revised after taking into account the quantity used and prices of the various materials used in different food products. Market-based scorecard analysis: There are two components in this analysis, customer performance scoreboard and stakeholder performance score board. Scoreboard analysis reveals warning signals with regard to marketing performance. Product failures, cost overrun due to delay in project execution and other abnormal items need to be considered apart from the regular controls exercised. This will be discussed and analyzed in periodical meetings say, quarterly - review for three months and cumulative for the year. II. Profitability control The profitability control is essential to analyze the strengths and weaknesses. The results have to be evaluated based on various criteria to identify the reasons for profit or loss. Product wise analysis indicates the profit percentage and growth in sales product wise. Territory wise analysis indicates the consumption pattern in various territories. The management will devise new strategies to reach such customers. Similarly, sales during weekends and holidays may indicate a pattern in consumption. This will enable the management to change the product profile periodically to keep in touch with the changing patterns and variation in demand. The other criteria include types of customers, trade channels, age group, quality preferences and tastes & flavours. The management can focus its attention on profitable products, channels or segments and eliminate the lines if they are not achieving at least break-even level. The contribution over and above the break-even level is acceptable to the management so that they could pursue the idea of advertisement or other sales promotion activities to improve its sales. Therefore, these controls involve marginal cost analysis and pricing decisions. III. Efficiency control The impact of the various factors on sales needs to be controlled on a regular basis to improve efficiency and keep the costs under control. Efficiency control in a restaurant set up has to take several aspects into account. The impact of the efforts taken and expenditure incurred on advertisements and sales promotion is very difficult to assess. However, the performances directly related to sales such as number of home deliveries made or number of calls made through tele-marketing services could be evaluated reasonably. Other non-financial controls in this industry are very important from the efficiency as well as profitability point of view. These controls include: Input output ratio for the materials used and food sold Quantity prepared and quantity sold, to find out the difference between quantity prepared and quantity sold Quantity of food items transferred to delivery section and quantity billed These differences, if analyzed to causes throw light on the efficiency of the people or the efficacy of the control system in place. In fact industry averages serve as the best guide for comparison in these cases. IV. Strategic controls The management is responsible to various stakeholders in carrying out its business operations. The stakeholders include employees, suppliers, customers, banks, local communities, local bodies, share holders and the government. Therefore, the company needs to keep the interests of these various stakeholders in the mind. Corporate social responsibility of the company is closely watched by the society. Therefore, the strategic controls are very broad in nature and made for a sustainable development of the company in the long run. It involves inter alia, transparency in operations, ethical attitude in the conduct of the business activities and protecting the environment in which the company operates. Financial auditing: Financial auditing aims at complying with the statutory principles and requirements. In the meantime, financial audit as well as internal audit brings out the inconsistencies in the books of accounts and inefficiencies and malpractices in spending. Statutory audit verifies the efficacy of the internal controls, and the auditor uses his experience with the other companies in doing his auditing work. The company is benefited by this experience to improve its control systems. Marketing audit: In the normal course it is very difficult to quantify the effects of advertisements or other promotional programs on sales. There are so many factors involved which affect the sales. Therefore, specialized agency with expertise in evaluating the performance in this regard will be in a position to give their opinion in respect of market acceptance, resistance factors, appropriate channel, reach of the communication, advertisement quality, advertisement standards, advertisement value and spread of network of the advertisors and so on. Consultancy: Appointment of consultants on retainer fee basis will be considered for restaurant and catering management, if necessary. Also, training and development programs to the employees will be arranged on periodical basis to keep up to the standards in the industry. Conclusion The well conceived strategies will not guarantee success of a project, since new projects are beset with several problems caused due to external factors which are not in the control of the management. Delay in implementation do happen many a times on account of delay in getting license from the local authorities or delay in getting various approvals from the government agencies. Also, the non-availability or late arrival of machineries and equipments cause delays in implementation. The delay in finishing one activity affects completion of another related activity. However, the management has taken sufficient care to ensure that the licence and all the required approvals related to commencement of the business are obtained on time. The management team has visited the suppliers of machinery and equipments personally to ensure proper packing of the materials and their timely delivery. To be on safer side, the management plans to start trial production in the new facilities well ahead of the time fixed for opening of the restaurant to public. In order to create awareness among the public of the company’s operations and advertisement value, dignitaries of the town will be invited to taste the food products in a function to be organized for this purpose, duly advertised in all the local newspapers. Bibliography Kotler, Philip, et al. Marketing Management: A South Asian Perspective. 13. Pearson Education Inc., 2009. Read More