A business plan for La Italia Ristorante italian restaurant - Essay Example

? A Business Plan for La Italia Ristorante Italian Restaurant December 8, TABLE OF CONTENTS I. EXECUTIVE SUMMARY 3 II. THE BUSINESS AND MANAGEMENT 4 A. HISTORY AND OVERVIEW OFBUSINESS TO DATE 4 B. CURRENT MISSION 5 C. OBJECTIVES AND ACTIONS NEEDED 5 D. THE TEAM 6 E. PRODUCTS AND SERVICES 6 F. CURRENT SALE MIX 8 III. MARKET AND COMPETITION 8 A. DESCRIPTION OF CUSTOMER 8 B. CUSTOMER OCCASSIONS, NEEDS AND BENEFITS 9 C. MARKET SEGMENTS 9 D. MARKET SIZE IN THE AREA 10 E. LOCATION OF CUSTOMER AND FLOWS 10 F. MARKET PROJECTS OVER THE PERIOD 10 G. COMPETITIONS 10 IV. COMPETITIVE BUSINESS STRATEGY 12 A. PRICING POLICY 12 B. PROMOTIONAL PLANS 12 V. FORECAST AND RESULTS 16 A. OPERATIONAL BUDGETS 16 B. BUSINESS OBJECTIVES AND ACTION PLANS 19 VI. CONCLUSION 19 I. EXECUTIVE SUMMARY Passion for authentic Italian food is what prompted the management team to conceptualize La Italia Ristorante, the newest Italian full service restaurant located at the Edgware Station in London. Geared towards providing the target market with only the best when it comes to Italian cuisine, La Italia Ristorante’s operations will be focused on providing good food, served by an excellent team, within a restaurant that offers the perfect ambiance for fine dining. The crew will work towards making a mark among its customers by offering a unique type of service the ‘La Italia Ristorante’ way. As a start-up business, it recognizes the challenges that the team faces, first of which is the presence of many competitors within the area, and in the whole of London. The company has to have a way to get a chunk of the market share, develop loyal customers and achieve its business objectives. Financing will come mainly from personal savings, to be supported by a bank loan, which management sees to close within five years from start of operations, to do this, financial strategies focusing on cash flow and inventory management shall be implemented. Marketing and promotions will enjoy a huge chunk of the budget since management also sees the need and importance of a good promotional and marketing campaign. Other factors that management will employ are: effective human resources management and operations focusing on fulfilling the needs of the customers – looking at cost efficient ways to operate without sacrificing product and service quality. II. THE BUSINESS AND MANAGEMENT A. HISTORY AND OVERVIEW OF PROGRESS TO DATE La Italia Ristorante 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 at the Edgware Station, competing along the likes of II Mascalzone and Amaretto Pizza Restaurant. The restaurant sits 80 guests, with its 20 table sets. La Italia Ristorante 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 London’s vicinity 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. The decision to establish an independent restaurant springs forth from the fact management wants to be able to offer a unique experience, set apart from those quick service establishments. They also would like to maximize the fact the clients have an inclination to support local independent restaurants (Independent Restaurant Appeal – unique menus and local atmosphere could lure patrons away from chains, reports Mintel 2011) B. CURRENT MISSION La Italia’s mission is to be the preferred dine in Italian Restaurant within the vicinity, and the most chosen in terms on delivery service. C. OBJECTIVES AND ACTIONS NEEDED A start-up 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 British. 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 Ristorante experience. Management sees good customer service as a good marketing tool specially that it was found out that 67% of diners recommend restaurants to family/ friends because of good service and that one third of customers choose their restaurants basing on family and friends’ recommendations (Is Love Enough? 2011). Management wishes to avoid service failure and further efforts to recover reputational setbacks. Committing this error would cost the company much more than what it usually costs to provide the service team with the most appropriate customer service training (Recovery Strategies for Service Failures: The Case of Restaurants 2011). Furthermore, the management subscribes to the belief that one of the crucial entry strategy is to offer a solid value proposition unique to the business (Wickham P.A. 2004, p. 171) D. THE TEAM The company will hire senior kitchen crew, with one chief 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. Support teams in Marketing, Finance and Procurement shall also be employed. On top of this, the management wants to highlight the “La Italia Ristorante 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. This principle is derived from the fact that service delivered to guests within the service sector, specifically hospitality companies, is an important point of distinction and competitive advantage (Mediating Effects: A Study Of The Work Environment And Personality In The Quick Service Restaurant Setting 2011) E. THE PRODUCTS AND SERVICES Pasta dishes are considered to be La Italia Ristorante’s specialty. It offers 30 variants of pasta dishes, ranging from traditional to the experimental/ exotic recipes that are considered signature dishes. On top of the pasta dishes, it will also offer pizza, appetizers, pork, chicken and lamb full meals and desserts. La Italia Ristorante will be a full service restaurant where food will be served by waiters. Aside from dine in services, on site delivery will also be offered. The company will offer a guarantee whereby clients will get their orders for free if delivery service is delayed. However, terms and conditions apply, and the offer will depend on the proximity of the area from the restaurant, prevailing weather conditions and other substantial factors. The restaurant’s dishes and recipes, capped with the restaurant’s signature customer service and the unique product offerings are what makes up the company. This business opportunity is a mixture of a carefully developed product line up, which will be highlighted by the best customer service – the one that puts the satisfaction of the customer above everything else. As an SME, management recognizes the company’s unique characteristics, independent from large-scale F&B corporations (Beaver 2002, p. 91) The company’s keys to success are as follows: 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. A well managed inventory of raw materials to ensure steady cash flow. Highly experienced kitchen and business development team, hired to provide only the best products in the market. 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. F. CURRENT SALE MIX With the presence of numerous restaurants in the area, offering similar repertoire, La Italia Ristorante seeks to find its own position in the food industry by providing a twist to its products and services. One of the target projects is the La Italia Ristorante Italian Buffet Grande, which is offered every Friday and Saturday night. For ? 30 per head, guests will be treated to a wide array of appetizers, pasta, and pizza and dessert entrees. Add ? 10 and customers get unlimited beverage. There is also entertainment every weekend nights that would include acoustic performances from local artists. This is to set the mood for fun, laughter and good food that would surely make the target market going back for more. III. MARKET AND COMPETITION A. DESCRIPTION OF CUSTOMER La Italia Ristorante considers the mid range earning individuals and families to be their primary target market. These people are constantly searching for quality food at reasonable prices, and as such, they are willing to try out new food choices that promise both. The restaurant promises a good dining treat to its customers. The food choices being offered will surely captivate the discriminating tastes of the customers. Product research and development will be painstakingly done to ensure maximum satisfaction among the target market. Moreover, the full service concept will provide convenience among diners. The delivery service will also provide utmost convenience to the target market. People who have no time to prepare food will have the option to order good food and dine at the comforts of their home. B. CUSTOMER OCCASSIONS, NEEDS AND BENEFITS La Italia Ristorante’s target markets are those belonging to the 16 to 45 age range. The product lines mostly suit adult preferences. Focus will be mid income level families who reside and frequent the area. The restaurant will tap on the income level of at least ? 30,000 and above. It also targets 40% of the tourists who visit London for the theatre shows. Focus is specifically given to this group because they are the types of people who frequent La Italia Ristorante’s direct competitors. Cost efficiency and quality are two main features that this market group is in search for. C. MARKET SEGMENTS Market segments include working men and women in their early 20s to the 50s. They are mid income earning individuals, single or married, and who has the purchasing power and the capacity to decide on where to eat. The restaurant also caters to tourists and visitors who want to have a local dining experience. D. MARKET SIZE IN THE AREA Edgware is a convergence zone for travellers, and both highly commercial and residential area. The mere fact that people from other parts of London frequent the area guarantees the business good food traffic and revenues as well. There are over 300,000 people employed in the whole of London. This market segment is the focus of La Italia Ristorante’s Marketing and Operations. E. LOCATION OF CUSTOMER AND FLOWS Edgware is an area with good food traffic, being stop over for travellers and commuters, residents and tourists alike. There is already a captured market in the area in terms of demographics. F. MARKET PROJECTS OVER THE PERIOD Central to London’s food lovers is the annual Taste of Christmas which highlights local food companies and allows them to showcase their products to the market. For this year, participation to this annual food festival may be a perfect chance for the company to soft launch their brand and products. Participation may be by being an exhibitor or a sponsor. G. COMPETITIONS London 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 Edgware Station area alone, there are over 20 Italian Restaurant and more 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. Some of La Italia Ristorante’s direct competitors are Bistro Italiano and Rez’ Cucina Italia, 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. Bistro Italliano 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. Rez Cucina Italia is a home grown restaurant which offers similar products as Bistro Italliano. Their outstanding feature is their complementary meals for children under 10 years old, who can have either spaghetti pomodoro or pizza mergherita (Rez’ Cucina Italiana Restaurant 2010). They also offer main courses under ? 10. La Italia Ristorante, 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. IV. COMPETITIVE BUSINESS STRATEGY C. PRICING POLICY The company will not implement a price war with its competitors. As such, pricing will essentially cover cost of production, other marketing and operational expenses plus profit that would enable the business to run with a smooth cash flow, and allocate bank loan servicing. Targets would be proportional to expenses and any excess will serve as profit for the company. It will save on operational costs as necessary. To compensate the pricing plan, management will offer a Unique Selling Proposition, which is quality customer service whether for dine in or delivery clients. Unique Selling Proposition will set La Italia apart from the rest of its competitors (Restaurant Operations: Food and Menu Pricing For Your Restaurant – Why You Are Doing It Wrong and How To Fix It 2011) D. PROMOTIONAL PLANS 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. Start up marketing efforts will include both above-the-line and below-the line advertising. With this, management is confident that the message is sent through the target market. La Italia Ristorante targets to implement the following promotional plan to launch and introduce the service: 1. Above the Line Advertising 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 London. 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. 2. Below the Line Advertising Merchandising 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 Ristorante 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 centres, supermarkets, subways, train stations and bus stations. Billboards should contain the brand name La Italia Ristorante, 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 Ristorante also aims to display posters in the universities, particularly in dormitories. Leaflet inserts in broadsheets and magazines will also prove to be useful in promotions as this strategy tends to be more personal. Promotional Activities La Italia Ristorante will partner with student organizations to support various school events and activities with the interest to plug and advertise the products and services. The management will allot appropriate funds for sponsorships of student projects that would enable them to advertise the restaurant among the target market. There will be discount and privilege offerings for frequent patrons, and a loyalty card to ensure repeat purchase among the market. Patrons who call in at least 5 times in one month gets the La Italia Ristorante membership card which entitles them to special privileges and incentives on their next purchase. Internet Marketing Internet Marketing has become popular because Internet access is becoming more widely available and used. Well over one-third of consumers who have Internet access at home report to using the Internet to make purchases (What is Internet marketing 2004). Moreover, statistics show that internet users increase at a rapid rate that in five years’ time, it is predicted that 80% of United Kingdom’s population will have a computer with Internet access at home (Advertising 2007). With this, La Italia Ristorante sees an opportunity thru Internet Marketing. Management finds the potential of offering their products and services through a company website which lists down the entire menu, and other pertinent details regarding the food service. Customers could even place orders online, and expect delivery within the specified time. La Italia will also tie up with other complementing brands such as book shops and magazine stands, and maximize co-branding and cross advertising in these companies’ websites. 3. SCHEDULE OF ADVERTISING Management targets to launch the business in January 2012. Two weeks prior to store opening, management will start announcing this new business venture through leafleting in strategic areas such as flyer inserts in university papers and other similar publications. Simultaneous during the launch date, the billboard shall be placed in the two strategic spots within the city, and shall be displayed for the first three months of operations. The effort shall be sustained by mini billboard displays in approximately 20 other locations in the city. The Official Website shall be made available from the very first day of operations. Word of mouth via internet shall be utilized thru advertisements in some of the cities local and tourist websites. La Italia Ristorante will also post in social networking sites such as Facebook, Multiply among others to be able to make the rounds to target buyers online. V. FORECASTS AND RESULTS C. OPERATIONAL BUDGETS Start up expenses will be secured through a bank loan, with a projected period of 5 years to pay off. PROJECTED CASH FLOW Jan. Feb. March April May June Projected Gross Income Dine In ?11,000 ? 12,000 ? 13,000 ? 14,000 ? 15,000 ? 16,000 Take Out and Delivery ? 35,000 ? 32,000 ? 34,000 ? 35,000 ?36,000 ? 37,000 Total Projected Gross Income ? 46,000 ? 44,000 ? 47,000 ? 49,000 ? 51,000 ? 53,000 Projected Expenses Business Permit Costs ? 5,000 Brochures/ Flyers/ Business Cards ? 10,000 ? 10,000 ? 10,000 ? 10,000 ? 10,000 ? 10,000 Billboard Production/ Rentals ? 10,000 ? 5,000 ? 5,000 Construction Phone Line Connection/ Connectivity ? 1,000 ? 1,000 ? 1,000 ? 1,000 ? 1,000 ? 1,000 Personal Computers Manpower ? 18,000 ? 18,000 ? 18,000 ? 18,000 ? 18,000 ? 18,000 Office Furniture Website Creations and Hosting Others Total Production Costs Dine In ? 5,000 ? 5,500 ? 6,000 ? 6,500 ? 7,000 ? 7,500 Takeout and delivery – inclusive of gas/ toll fees and other transportation costs Total Projected Expenses ? 39,000 ? 37,500 ? 38,000 ? 40,500 ? 42,000 ? 43,500 Net Income ? 7,000 ? 6,500 ? 9,000 ? 8,500 ? 9,000 ? 9,500 La Italia Ristorante 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 equipment, and dining equipment. Advertising expenses include design and production of merchandising materials; tie up fees, projected sponsorship and talent fee costs. The management shall ensure that there is sufficient cash flow and that financial plans are adhered to. They will focus on a good inventory and cash management to ensure maximum profitability. Anticipated starts up costs are seen below: START UP EXPENSES Store Construction and Architecture 240,000 Phone Line Connection/ Connectivity 1,500 Storage Cabinets 12,000 Racks and Display Cabinet 12,000 Personal Computers 6,000 Office Furniture 6,000 Couches 6,000 Stationeries/ Letterheads 1,000 Store Signages 1,500 Business Registration Costs 1,000 Store Space Rental 4,200 Manpower 3,500 Print Ad 2,000 Sponsorship Budget 1,000 Website Creation and Hosting 5,000 Brochures/ Flyers/ Business Cards 1,000 Others 1,000 Start Up Expenses ? 304,700 Start Up Assets Cash Required 5,000 Start Up Inventory 45,000 Other Current Assets Long Term Assets Total Assets ? 50,000 Total Requirements ? 354,700 Flyer Inserts are at ? 700 per 10,000 pieces of flyers. Inserts will be done in three of the most popular broadsheets and/or local publication every Sunday starting two weeks prior to launch date until the sixth month of operations. After which, the management will gauge the effectiveness of this effort to determine whether to push through with the strategy or not. Flyers cost approximately ? 110 per 10,000 pieces, or a total of ? 8,580 production costs for flyer inserts alone and another ? 8,580 production cost for flyers to be used for other purposes. Design will be in house so it would not entail any extra cost. Billboard rentals are pegged at ? 5,000 per month or a total of ? 30,000 for the first three months, and additional ? 2,500 for the production costs. Website design and hosting is anywhere from ? 5,000 to ? 8,500 per month. Of course, there will be efforts to help lessen the advertising and promotional costs. One of these is to establish tie ups with advertising and publishing companies, to cross sell products and promotions, and provide partners with discounts and support for their own marketing efforts. La Italia Ristorante restaurant will always be open to project tie ups, because mutually beneficial activities provide maximum profitability among partners. D. BUSINESS OBJECTIVES AND ACTION PLANS 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. There will be a monthly budget review and budget forecasting to allow the management to identify loopholes in cash management and implement other programs to increase profitability of the company. This is on top of the annual budget planning where management makes forecast of sales versus the anticipated operational and capital costs. Another equally important way to measure the marketing plan’s success is the actual feedback from patrons and clients. A successful Loyalty Program means people have reasons to come back for more. The management will conduct customer surveys and launch marketing plans to aim to gather feedback from the target market. The company’s five year plan is something they would like to adhere to. Budget is particularly tight during the first two years, since the owners are still building up their client base. Ultimately the five year plan can be the truest measure to evaluation and assess whether the objectives of this marketing plan are achievable or not. Financial targets as well non quantifiable rewards like the community’s trust and confidence are two ultimate goals that the management has. VI. CONCLUSION The three unique selling propositions of the restaurant are (1) good food, (2) reasonable price and (3) excellent service. Strategically located at Edgware London, La Italia Ristorante advocates to deliver all these by a implementing a carefully crafted operations plan that would minimize costs and maximize resources. Their keys to achieving these objectives are (1) proper manpower training, (2) intensive product research and (3) excellent inventory management. The management acknowledges that human resources are the main contributors to the success of a business, and as such, it endeavours to select highly qualified kitchen members and operations crew, who would understand the company’s mission vision and contribute to its achievement. The company will allocate ample funds for the planning and execution of its marketing plans, but will carefully choose the channels it will utilize. Social networking and other below the line advertising prove to be a more personal means to communicate to its target market, and as such, management will focus on these channels. Above the line marketing will also be utilized, but with utmost care and control. Management believes that word of mouth will be crucial in ensuring the restaurant’s success. Personal references and endorsements will represent the restaurant’s personal relationship with its customers. Ultimately, their goal is to make their presence felt in the area by crafting good dining experience for each and every client. The first two years of operations will be crucial to the company. It is within these two years that management will assess the effectiveness of the business plan basing on actual sales and customer feedback. Given that there is much competition in the area, most of which from highly established restaurants catering to the same market, La Italia hopes to create a niche of their own in Edgware as a restaurant, and to the neighbouring areas through their delivery service, by faithfully adhering to the plans and objectives in this business plan Reference List Beaver, G. 2002, Small Business, Entrepreneurship and Enterprise Development, p. 91 Benefits of an online marketing approach. Nextsbd.com. Retrieved December 11, 2010 from http://www.nextsbd.com/imarketing/benefits-of-online-marketing.php Independent Restaurant Appeal – unique menus and local atmosphere could lure patrons away from chains, reports. Mintel Press Release. Retrieved December 11, 2011 from http://www.mintel.com/press-centre/press-releases/753/independent-restaurant-appeal-unique-menus-and-local-atmosphere-could-lure-patrons-away-from-chains-reports-mintel. Is Love Enough? Mintel. 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