Food for Fork Restaurant - Research Proposal Example

Food for Fork Restaurant Foundation of Business Analysis Submitted by: Naif Date: 9th September, 2012 Table of Contents 1.0 Introduction 1 1.1 Objectives 2 1.1.1 General Objective 2 1.1.2 Specific Objectives 2 1.2 Research Questions 2 1.3 Preliminary Analysis and Justification 2 CHAPTER 2 5 2.0 Methodology and Methods 5 2.1 Data Collection methods 5 2.2 Descriptive Analysis 5 CHAPTER 3 12 3.0 Results and Discussion 12 3.1 Determining the level of demand and price level for an upscale restaurant 12 3.1.1 Hypothesis Testing 12 REFERENCES 17 CHAPTER 1 1.0 Introduction Establishing and operating new business is a task that requires considerable resources, information and time. The following report has been prepared for an entrepreneur, Michael Jenkins a restaurant sales executive, having a dream of establishing his own upscale food restaurant within a city of 500,000 inhabitants. However, the entrepreneur has inadequate information on the population tastes and preferences for the restaurant business. The general objective of the report is to establish whether there exists demand for the restaurant business within the city and the average price level. The data collection method has been conducted using questionnaire survey administered within the city and there were 400 respondents interviewed. Data analysis was done using the Statistical Package for Data Analysis (SPSS) with both descriptive and statistical techniques used to test the hypotheses. The report is divided into four sections, the background information, the methodology and methods used, presentation and discussion of the results and finally summary and conclusions observed. 1.1 Objectives 1.1.1 General Objective The general objective of this report is to determine whether there exists a market for an upscale food restaurant within a city of 500,000 inhabitants. 1.1.2 Specific Objectives The specific objectives for the report include; 1. To determine the level of demand and price level for an upscale restaurant. 2. To establish the design and operating characteristics of a food restaurant. 3. To determine the most appropriate location for a food restaurant. 4. To identify the most appropriate media unit in promoting the restaurant business. 1.2 Research Questions a) Is there demand for an upscale restaurant and at what price level? b) What should be the design and operating characteristics of the restaurant? c) Where should he locate the restaurant? d) Which media should he use to promote the Restaurant? 1.3 Preliminary Analysis and Justification SWOT Analysis To identify the viability of an upscale business idea, a SWOT Analysis was performed to establish which areas require attention during the study. Table 1: SWOT Analysis Strengths Vast experience and expertise in operations of the food restaurant business. The proprietor has enough financial resources to establish a food restaurant business. Weakness Inadequate information of the proprietor on the income, tastes and preferences of the population on their view towards an upscale restaurant. No assurances on the populations interest on the business venture. Threats Existence of a number of restaurant businesses within the city. Location of the restaurant and driving time to the restaurant by the likely customers. Opportunities Unique business venture “upscale restaurant featuring the finest entrées, drinks, and desserts in an elegant atmosphere”. An existing market from a population of 500,000 people. From the above SWOT analysis, it is worth noting that the restaurant business could be successful if the issues on the weaknesses and threats are addressed. The inadequate information on the demographics of the city’s inhabitants can provide assurances to Michael Jenkins to his business idea. Despite having considerable financial resources and expertise, Michael Jenkins seeks some information on one of the cities with a population of approximately 500,000 people before establishing an upscale food restaurant. As a result, this report specifies whether there exists demand for a food restaurant and other factors that would make this business successful. This include; the average price level , the appropriate location of the business, medium of advertisement and the operational characteristics of the restaurant. CHAPTER 2 2.0 Methodology and Methods This section presents an overview of the methodology used in this study. It presents the data collection and descriptive data analysis methods. 2.1 Data Collection methods The primary data collection method was done using questionnaire survey in which 400 respondents were interviewed. Secondly, Michael Jenkins provided relevant information on the break-even analysis based on his involvement in the restaurant business. 2.2 Descriptive Analysis This section presents some of the salient characteristics that can be observed from the data about the respondents’ tastes and preferences. 2.2.1 Population Characteristics Table 2: Population characteristics Descriptive Statistics N Range Minimum Maximum Mean Std. Deviation Variance Skewness Statistic Statistic Statistic Statistic Statistic Statistic Statistic Statistic Std. Error totspent 400 $206.00 $101.00 $307.00 $207.9400 $40.11945 1609.570 -.092 .122 avprice 400 $38.00 $1.00 $39.00 $19.2300 $7.55943 57.145 -.085 .122 income 400 160000.00 1000.00 161000.00 77087.5000 28896.92760 8.350E8 .067 .122 From the table it can be observed that the average amount spent on meals only in the restaurants by the respondents is $207 with the highest spending $307 and the lowest $101. The respondents also expect that the meals would averagely be priced at $19 with the highest expecting the average price to be $39. In terms of incomes earned by the respondents, it can be observed that the highest paid person earns $161,000 while the lowest paid individual earns $1,000. 2.2.2 Age and gender characteristics Gender From the table 3 below, it can be observed that there were about 51 percent male respondents while the female respondents consisted of 49 percent. This shows that there are no significant differences in the population sizes by gender within the city as per the respondents interviewed. Table 3: Gender What is your gender? Frequency Percent Valid Percent Cumulative Percent Valid Male 204 51.0 51.0 51.0 Female 196 49.0 49.0 100.0 Total 400 100.0 100.0 Age characteristics Fig. 1: Age distribution of the respondents From the figure above, it can be observed that majority of the sampled population by age are within ages 24 – 48 years with the highest frequency represented by those with age 41 years. 2.2.3 Promotional tools and media The following information is how Michael Jenkins would best advertise his business. It can be observed that the noon news and the 6:00pm news are the most preferred and thus the timing of the advertisements should be around those times of the day. A combined advertisement in the Easy listening and talk news radio stations will provide more coverage for the promotion of the new restaurant within the city. Table 4: Newscast time Which newscast do you watch most frequently? Frequency Percent Valid Percent Cumulative Percent Valid 7:00 am News 96 24.0 24.0 24.0 Noon News 108 27.0 27.0 51.0 6:00 pm News 101 25.3 25.3 76.3 10:00 pm News 95 23.8 23.8 100.0 Total 400 100.0 100.0 Table 5: Popular radio programming To which type of radio programming do you most often listen? Frequency Percent Valid Percent Cumulative Percent Valid Country&Western 99 24.8 24.8 24.8 Easy Listening 105 26.3 26.3 51.0 Rock 92 23.0 23.0 74.0 Talk/News 104 26.0 26.0 100.0 Total 400 100.0 100.0 2.2.4 Location Table 6: Post code of the respondents Please check the letter that includes the Post Code in which you live (coded by letter). Frequency Percent Valid Percent Cumulative Percent Valid A (1 & 2) 93 23.3 23.3 23.3 B (3, 4, & 5) 109 27.3 27.3 50.5 C (6, 7, 8, & 9) 94 23.5 23.5 74.0 D (10, 11, & 12) 104 26.0 26.0 100.0 Total 400 100.0 100.0 Table 7: Preference of the waterfront view Prefer Waterfront View Frequency Percent Valid Percent Cumulative Percent Valid Very Strongly Not Prefer 43 10.8 10.8 10.8 Somewhat Not Prefer 55 13.8 13.8 24.5 Neither Prefer Nor Not Prefer 77 19.3 19.3 43.8 Somewhat Prefer 150 37.5 37.5 81.3 Very Strongly Prefer 75 18.8 18.8 100.0 Total 400 100.0 100.0 Drive time to the restaurant From the tables 6 and 7 above and figure 2 below, it can be observed that majority of the prospective clients live within the area B and D combined. At the same time most of them would prefer a water front view when in the restaurant and would somewhat not prefer a drive time of less than 30 minutes to access the restaurant. This provides a clue as to where the restaurant should be situated. 2.2.5 Design and operational characteristics Table 8: Elegant décor Prefer Elegant Decor Frequency Percent Valid Percent Cumulative Percent Valid Very Strongly Not Prefer 21 5.3 5.3 5.3 Somewhat Not Prefer 58 14.5 14.5 19.8 Neither Prefer Nor Not Prefer 78 19.5 19.5 39.3 Somewhat Prefer 131 32.8 32.8 72.0 Very Strongly Prefer 112 28.0 28.0 100.0 Total 400 100.0 100.0 The table shows that combined, about 50.8 percent of the prospective patrons would prefer elegant décor. Secondly, only 15.3 percent of the respondents would prefer large variety of entrees Fig 2: Drive time to the restaurant Table 9: Large variety of entrees Prefer Large Variety of Entrees Frequency Percent Valid Percent Cumulative Percent Valid Very Strongly Not Prefer 79 19.8 19.8 19.8 Somewhat Not Prefer 101 25.3 25.3 45.0 Neither Prefer Nor Not Prefer 155 38.8 38.8 83.8 Somewhat Prefer 29 7.3 7.3 91.0 Very Strongly Prefer 36 9.0 9.0 100.0 Total 400 100.0 100.0 Formal wait staff wearing tuxedos Table 10 below indicates that only 38.3 percent of the respondents would prefer the wait staff wearing tuxedos. This indicates that the remaining 61.7 percent would somewhat not be concerned about the tuxedos and therefore, a need to consider other forms of dress code. Table 10: Formal waitstaff wearing tuxedos Prefer Formal Waitstaff Wearing Tuxedos Frequency Percent Valid Percent Cumulative Percent Valid Very Strongly Not Prefer 79 19.8 19.8 19.8 Somewhat Not Prefer 78 19.5 19.5 39.3 Neither Prefer Nor Not Prefer 90 22.5 22.5 61.8 Somewhat Prefer 88 22.0 22.0 83.8 Very Strongly Prefer 65 16.3 16.3 100.0 Total 400 100.0 100.0 CHAPTER 3 3.0 Results and Discussion In this section, key findings of the study are presented and discussed. The first part groups the research questions that investigate specific objectives. Secondly, hypothesis testing is done with a view of making inferences. Lastly, key findings are discussed. 3.1 Determining the level of demand and price level for an upscale restaurant 3.1.1 Hypothesis Testing Average expenditure for a meal H0: average amount that people are willing to pay for a meal is not less than the forecast value of $19 H1: average amount that people are willing to pay for a meal is less than the forecast value of $19 One-Sample Test Test Value = 0 t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference Lower Upper What would you expect an average evening meal to be priced? 50.877 399 .000 $19.23000 $18.4869 $19.9731 The results indicate that the mean difference is $19.23 which is not statistically different from the forecasted value of $19. With this, we fail to reject the null hypothesis and conclude that the average amount that the patrons will be willing to spend is not less than $19. Average income H0: average income of the people surveyed is not significantly different from $70,000 H1: average income of the people surveyed is significantly different from $70,000 One-Sample Test Test Value = 0 t df Sig. (2-tailed) Mean Difference 95% Confidence Interval of the Difference Lower Upper What is your annual salary? 53.353 399 .000 77087.50000 74247.0371 79927.9629 The results indicate that the average annual income of the people surveyed is $77,087 which is statistically different from $70,000. Hence we reject the null hypothesis and conclude that the average incomes are statistically significant. Marital Status H0: there is no difference in the mean amount spent in restaurants each month across people with different marital status H1: there is significant difference in the mean amount spent in restaurants each month across people with different marital status Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 177.244 5.161 34.342 .000 What is your marital status? 16.751 2.616 .306 6.403 .000 a. Dependent Variable: How many total dollars do you spend per month in restaurants (for your meals only)? The results indicate that being married versus not being married increases the likelihood of spending more in the restaurants by 30.6 percent and is statistically significant at all levels. This could be explained by the fact that some couples may prefer to go out for dinner rather than stay and have dinner at home. They could also be working couples with work schedules that make them dine out. We therefore reject the null hypothesis and conclude that there is statistically significant difference in spending between married and unmarried couples. Relationship between income and total expenditure H0: there is no strong relationship between income and total expenditure H1: there is a strong relationship between income and total expenditure Correlations How many total dollars do you spend per month in restaurants (for your meals only)? What is your annual salary? How many total dollars do you spend per month in restaurants (for your meals only)? Pearson Correlation 1 .134** Sig. (2-tailed) .007 N 400 400 What is your annual salary? Pearson Correlation .134** 1 Sig. (2-tailed) .007 N 400 400 **. Correlation is significant at the 0.01 level (2-tailed). The Pearson correlation value of 13.4 percent indicates that there is a weak relationship between the annual incomes and the monthly total expenditure on food in restaurants. We therefore fail to reject the null hypothesis and conclude that there is no strong relationship between incomes and expenditure in restaurants among respondents Expenditure across gender H0: average monthly restaurant expenditure does not differ across genders H1: average monthly restaurant expenditure differs across genders Paired Samples Test Paired Differences t df Sig. (2-tailed) Mean Std. Deviation Std. Error Mean 95% Confidence Interval of the Difference Lower Upper Pair 1 How many total dollars do you spend per month in restaurants (for your meals only)? - What is your gender? 206.45000 40.04881 2.00244 202.51335 210.38665 103.099 399 .000 Since the t-calculated is 103.099 > 2.576, (rejection rule is t-calculated > t-critical), we reject the null hypothesis and conclude that the average monthly expenditure varies across genders. Factors influencing expenditure in a restaurant H0: average amount people spend on food each month is not explained by the average price people are willing to pay for meals, age, marital status, gender and income. H0: average amount people spend on food each month is explained by the average price people are willing to pay for meals, age, marital status, gender and income. General multiple regression equation Totspent = β + β1avprice + β2age + β3marital + β4gender +β5 income + ɛ Using Ordinary least squares method (OLS) Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 1724.156 423.400 4.072 .000 What would you expect an average evening meal to be priced? .037 .246 .007 .149 .882 What is your gender? 9.059 3.753 .113 2.414 .016 What is your annual salary? .000 .000 .116 2.487 .013 What is your marital status? 14.553 2.593 .266 5.613 .000 Year Born -.795 .214 -.176 -3.718 .000 a. Dependent Variable: How many total dollars do you spend per month in restaurants (for your meals only)? REFERENCES Wooldridge, J. M. (2009). Introductory Econometrics; A modern Approach. Sydney: South Western CENGAGE. Read More