Business Dining Issues - Essay Example

Summary of Contents Business dining enjoys profitable and growing demand. Even cash-strapped corporations must entertain key clients. Fusion cuisine using organic ingredients constitutes a gap which this project seeks to fill. This new restaurant will operate as a partnership between the author as partner, a master chef, and a logistics expert. The project requires a capital outlay of $500 thousand. 20% of this fund requirement will flow from retained earnings of the three partners. The rest of the fixed capital will be placed with private equity owners, in the first phase. Working capital will be sourced from a bank secured by fixed assets, principally the restaurant site. Capital pay-back is expected in the fifth year, with an IRR of 20%. The project aims to list on a stock exchange after five years. Business The author is a business management professional. The master chef has over two decades of experience with specialty outlets in a large hotel chain. The logistics expert has networked with Community Service Agriculture projects to source fresh organic farm produce for distinguished and aware urban consumers through gourmet outlets. These three partners have enjoyed social contacts since their student days, and would like to establish a chain of exclusive restaurants. Product and Service The project seeks to provide business clients with superior dining and entertainment experiences. Fresh, healthy, and safe food and beverages will be offered in a discrete ambiance. Lunch and dinner will be on offer throughout the week. The core product will be enhanced by attentive service in luxury surroundings. The package has been conceived to appeal to professionals from the world of business. Gross revenues are estimated at $2.5 million a year on project maturity. The intention is to open a chain of dining outlets with public finance, once the first project phase achieves maturity. Market Financial services and global corporations are the biggest spenders in the business dining segment. A survey of restaurants within a 50-mile radius of the proposed project site indicates that the outdoor locales in the vicinity, and such as available for the project, are preferred by senior executives for internal meetings, and for important guests as well. Restaurant association data shows that the potential market for the operational area of the project could be around $10 million. Hence, the initial market share target is modest and eminently feasible to achieve. Marketing Plan The average cost of a meal, excluding alcohol, is targeted at around $50 a head. The return on sales is set at around 10%. Full table capacity utilization is targeted for 24 months from opening. Market share improvement efforts will be through opening additional outlets at new locations. However, the floor plan of the restaurant includes provisions for future plans to host small group meetings. Branding is a key marketing objective. The restaurant seeks to occupy a currently vacant market niche for business professionals. The casual dining space is crowded, and is threatened by material and labor cost inflation. Gourmet and specialty dining choices are unsuitable for regular use. All business guests do not enjoy ethnic food options. Formal dining atmospheres tend to be stifling for people who have to spend long hours in office spaces. Awareness of healthy eating benefits is growing at the same time. Lunch buffets, which were once the rage of business executives, have lost favor because of suspicions that they are used to recycle stake food. Fusion cuisine has been well-accepted in California, and is known for working with fresh ingredients. The project seeks to offer a novel dining option within a reasonable commuting area of a key business district. It will leverage the unique and discrete strengths of each of the partners, and will work on a business model designed for superior returns on investment. Product Customer engagement is the platform on which the product element of the Marketing Mix should be built. The project management has identified large corporations in the vicinity of the proposed restaurant. These companies not only spend substantial amounts on business dining, but require lunch catering for employees. Key executives from the marketing and administration functions of these corporations will be invited to participate in a customer panel for the restaurant. Their feedback, ideas, and needs will form bases for everything from décor to the menu and items stocked in the bar. This approach will become a source of competitive advantage because the entire product will be designed by representatives of the targeted market segment. Lunch and dinner during all days of the working week will be first phases of the final product offer. The final phase will evolve in to a total business entertainment solution that can be replicated at new locations. The journey between the first and ultimate phases of the product offering needs to be divided in to manageable steps. A first step will be to introduce live entertainment during dinner, with discounts for providing custom immediately after office hours. The lunch and dinner menus will be designed, at this stage, to so contrast with each other, that executives are not averse to having both meals at the restaurant. The next step will be to provide discrete and elegant business meeting services. The modern office is dotted with vending machines. The operations-room environment may not be conducive for strategic discussions with important clients. The restaurant will offer an alternative that leads to better business. Executives will be able to look forward to five-start business center services at affordable costs. Catering packaged meals within offices will be a next step. It will help to cover fixed costs better. The marketing objective at this stage will be to enable employers offer blue-collar staff and junior executives nutritious and economy meals in return for shorter breaks from work. The ultimate product offering stage will be to replicate the full business model at new locations. It will seek to brand the combined product and service offering. There is nothing comparable at this time, so the project will have a first-mover advantage. Place The place element of the Marketing Mix will follow a two-pronged strategy. One is to have a physical restaurant and business center within a 50-mile radius of every significant business district in the country. The other is to develop the best electronic commerce web site in the business. Executives will be able to order tables or delivery as per their choices. The brand will cover the national business world. Logistics will be an important support for the place element, ensuring just-in-time supplies of fresh ingredients to kitchens. Price The airline industry will be used as a benchmark for the price element of the Marketing Mix. Products and services within the restaurant will be priced in-between the casual-dining and the fine-dining segments. It will be the equivalent of a business-class fare for a trans-continental journey. Executives should be pleased when the check arrives after an excellent meal service. It will also provide an excellent margin on the cost base, using cutting-edge logistics for sourcing. The catering product-cum-service has to compete with casual dining and take-away services of junk-food vendors. Pricing will seek to cover out-of-pocket expenses with only very modest margins. It will be a tasty, filling, and affordable option to taking lunch breaks away from desks. Promotion Word-of-mouth will be the exclusive promotion route. The project does not need people from outside the target segment as customers. Any form of mass communication will be wasteful. Marketing and administration executives have their own networks. The project aims at customer delight, so that executives recommend the restaurant and the catering services to their peers. Journalists from local business media will also be targeted as agents of promotion. Management and Organization The managing partner has been trained in a reputed business school, but lacks actual business experience. The person is from a family of successful entrepreneurs. There is an assignment on the restaurant industry, which was done as part of the business management course. The chef has extensive experience with industrial kitchens and schools of cuisine. This person has relevant international exposure, and brings strengths of fusion cuisine to the project. The third partner has always been in logistics. This person has taken care to stay abreast of automation software. Fresh ingredients and inventory management are twin benefits that this person will contribute to the project. This person is also knowledgeable about the organization of a delivery service. The project calls for astute financial, marketing, and operational skills. The three partners will invest significant portions of their inherited estates and earned savings. These funds will be highly leveraged to acquire a first restaurant location, and thereafter to provide security for working capital. Excellence in segmentation, targeting, and the crafting of marketing strategy, constitute another skill set for project success. Personal contacts with industry executives, and regular networking with them, will be other success drivers. The overall marketing challenge is to engage targeted customers without using extravagant mass-media resources. Gourmet food ingredients are available only at specific locations and during certain seasons as well. Bulk ingredients, such as grains, are available from wholesale sources, with the need for both price negotiations and hedging. The logistics task is complex, and not all of the process can be automated. Recruitment and training of kitchen, service, and delivery personnel is a major project weakness. None of the partners know how to do this. A related issue is the development of wholesome business relations between friends. The managing partner is junior to the other two key management team members. The appointment of a Human Resources Development and Industrial Relations consultant will address both these weaknesses and risks. Pre-emption by the competition is another serious risk. Established restaurants and chains in the area can execute projects faster than a new enterprise if they get wind of the project concepts. Project execution speed and information security will be the two dimensions on which the partners and the consultant must guard against attacks by the competition. The project calls for capital to the tune of $500 thousand. Pay-back is slated to occur within 5 years of project start, after which the partnership will transform in to a listed corporation. Operations will produce 10% net returns on gross sales. The project will yield a discounted rate of return of 20% on investment. Partners will provide 20% of seed capital. Works Cited Payne, A, 2002, Services Management, Prentice-Hall Read More

 

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