Market Strategic for Full-Service American Restaurant and Bar - Research Proposal Example

Market Strategic for Full-Service American Restaurant and Bar Industry Overview The restaurant and bars industry of Arizona is quite flourishing and tends to be the driving force for the economy. The sales generated by the restaurants in Arizona allow the state to earn tremendous sales tax revenues. At the same time, this industry is fruitful for job seekers because it creates heavy employment. According to a report published by National Restaurant Association (NRA, 2015), the restaurants in Arizona work as socially responsible entities, providing with healthy food and excellent services. The same report suggested in the year 2013, Arizona had 9,024 restaurants and bar; every dollar spent in these restaurants generated an extra $ 0.90 as sales tax. Moreover, in 2015, the sales are expected to grow by $ 11.5 billion making this industry by far the most flourishing one in the United States. Approximately a 4.9% increase in sales is expected and as the NRA (2015) report suggests, that Arizona is building a culinary atmosphere. The state offers high quality services and cutting-edge food and this is the reason why it was able to host the Fiesta Bowl, Pro-Bowl, Super Bowl and numerous golf events. Increased tourism and influx of such international events improved the popularity of the state, leading it to become the industry leader. The restaurant and bar industry opens employment to 273,200 people which is expected to grow in 2025 (NRA, 2015). Galonsky (1) in her study stated that the tourism level in Phoenix increased from 47.1% in 2012 to 51.4% in 2013. This increase of tourism shows that the market for restaurants and bars is flourishing and it can have more investments. Overview of Theories & Standard Industry Practices This research paper is based on the secondary research done from valuable, authentic resources. Statistical Data has been obtained from U.S. Census Bureau and other peer reviewed articles. The paper is based on the scope of a full service American Restaurant and Bar in Phoenix, Arizona which specifically targets Hispanics and White Americans. The main intention is to apply all market segmentation and advertising theories in order to generate the best possible solution for this restaurant. The most important reason behind this topic is that numerous consumers have started to demand healthy food from restaurants therefore it is a good opportunity that can be grabbed and utilized. Rapid population growth and globalized economies have really stressed our environment. There has been a significant increase in consumption of food and called out for sustainability measures. According to Freeman (7), sustainability practices are emerging in restaurants which focus on the education (training and capacity building), accountability of processes (whether they are socially acceptable or not), future planning and participation of the community. Every restaurant should act responsibly in order to provide healthy food. Some of the trends observed n the restaurant and bars industry are: Consumers demand more value for money such customer loyalty programs or simple rewards Marketing through E-Mails has become a popular trend in which operators send flyers online because consumers like online promotions (NRA, 2010) Consumers enjoy interactive activities like tasting the food, meeting the chef and cooking demonstrations Green efforts done by the operators such as organic food, or environmental friendly practices are preferred by consumers these days Innovations in payment and ordering methods like online orders, online payments etc have attracted tech savvy consumers Consumers are more concerned about health than ever and demand for healthy food dishes especially for the children These industry practices and changing consumer demands suggest that new restaurants must incorporate the needs and tastes of people. Market Analysis The total population of Phoenix in the year 2013 was 1,513,367 (U.S. Census Bureau, 2015). Out of this total population, 65.9% is White Americans and 40.8% is Hispanic population. This means that these two races are the most common ones in Phoenix and are a part of our target market. The location of the restaurant would be 6740 W. McDowell Rd, Phoenix, AZ 85053 which already has numerous restaurants nearby such as, Texas Roadhouse Bar and Restaurant, Lin’s Grand Buffet, Chipotle Mexican Grill, Sainz Mexican Restaurant, Chruch’s Chicken, Denny’s Restaurant and Subway. Some of the nearby bars are: Sushinola Roll, Lalos Snack Bar and Sixty Eight degrees Aspados. However, only one of them is restaurant as well as bars (i.e. Texas Roadhouse Bar and Restaurant), others are either restaurants or just bars. Therefore, there is a market opportunity of opening a restaurant plus bar on this road. The area is well populated with total households being 517,348 (U.S. Census Bureau, 2015). Out of these, 63.8% are families, families with own children under 18 years is 32.9% and married couple families are 42%. These households will become the primary target market for the restaurant. The largest market is of people between the ages 5-50 years. Thus, all marketing activities would be directed towards young adults (18 years and more) because they are the highest in number and the most energetic ones too. In addition, the U.S. Census Bureau (2015) suggested that 60% of the population (16 years and over) is employed which means our target market would be able to afford the expenses of the restaurant. These people are mostly private wage and salary workers, employed in business, management, services and sales occupations. Out of the total population of Phoenix, 17.6% is earning between $ 50,000- $74,999 per year followed by 14.9% earning between $ 35,000- $49,999. With an approximate $ 5,000 per month, a family can afford to dine in a restaurant or bar at least twice a month. This is a good figure for a prospective operator who wants to open a full service restaurant and bar in this area. This feasible market would have access to the location and the unique marketing activities will help it to differentiate from other nearby competitors. Moreover, innovative dishes and competitive pricing would help in establishing a strong name in the industry. Market Share The formula for calculating Market Share is: Market Share = (Restaurant’s Sales Revenue in 2014) / (Industry’s Total Sales Revenue in 2014) Total No. of White Americans & Hispanics: 951,958 + 589,877 = 1,541,835 (U.S. Census Bureau, 2015) Proposed spending expenditure on dinning out per person: $ 100 per month Restaurant’s Sales Revenue in 2013: 1,541,835 * $100 = $ 154,183,500 It is assumed here that each person would spend $ 100 on fine dining. It is a conservative figure because it’s not necessary that all the consumers would spend this amount, some may exceed it and others may not spend at all. In addition, three popular restaurants have been selected on the basis of which the total market share would be calculated. The total revenues (for year 2014) of three closest competitors are: 1. Texas Roadhouse: $ 1,582,148 (TR Annual Report, 44) 2. Chipotle Mexican Grill: $4,108,269 (CMG Annual Report, 27) 3. Denny’s: $ 472,295 (Denny’s Annual Report, 4) Industry’s Total Sales Revenue in 2014: $ 6,162,712 Market Share: $ 154,183,500 / 6,162,712 Proposed Market Share: 25 % Positioning Strategy It is observed from different annual reports of successful restaurants running in Phoenix, that people have shifted their preferences towards healthy dinning. Therefore, this restaurant will be positioned as ‘The finest dining experience which offers numerous contemporary organic dishes, a multi-cuisine menu and excellent bar services ensuring a high-tech, state-of-the-art interior.’ Since the target market is above the age of 18 years and mostly working class, and families, it is important to incorporate latest technological changes. Such as using smart phones for activities like, searching nearby restaurants, making reservations, checking nutritional information, paying for the meal online and much more. Moreover, the West McDowell Road already has too many Mexican restaurants and there is room for a new place which offers different cuisines like Thai, Italian and Chinese. Marketing Plan Advertising Methods The restaurant and bar operator would allocate a budget for advertising. It would launch an online campaign which would reach out to the target market using social media platforms for example, Facebook, YouTube, Twitter and Instagram. Photos and videos of the restaurant and bar would be uploaded so that the audience can have more awareness regarding its menu, interior and popularity. On-ground activities would include out-of-home billboards, distribution of flyers in nearby popular malls and television commercials on local channels. Sales Tools The advertising will focus on attracting new guests and increase the frequency of visits of current guests. This would be done using various sales tools like menu, website communication, sending sales representations to households and launching mobile applications. Applications would be launched to allow users for online ordering, table reservations and payments. Promotions Sales coupons would be introduced which can be bought in bulk by customers and presented when they visit the restaurant. The restaurant and bar would have promotional hours in which the customers would get special discounts on meals. Loyalty Plan Customers would receive a loyalty card after dining five times in three months. This card would be used for 10% reduction in meals ordered. In this way repetitive dining trips would be made by them. Works Cited Chipotle Mexican Grill, Annual Report, 2014, Accessed online on 4th May, 2015, Denny’s, Annual Report, 2014, Accessed online on 4th May, 2015 Freeman, Emily, Restaurant Industry Sustainability: Barriers and Solutions to Sustainable Practice Indicators, Online Thesis, April 2011, Acessed online on 4th May, 2015 Galonsky, Shara, Phoenix Market Alert, Republic Media, February 2014, pp 12, Online Research National Restaurant Association, Arizona Restaurant Industry at a Glance, 2015, Web, Accessed on 4th May, 2015, < http://www.restaurant.org/Downloads/PDFs/State-Statistics/2015/AZ_Restaurants2015> National Restaurant Association, Restaurant Industry Operations Report, 2010, Web, Accessed on 4th May, 2015, Texas Road House, Annual Report, 2014, Accessed online on 4th May, 2015, U.S. Census Bureau, Profile of General Population and Housing Characteristics, 2010, Web, Accessed on 4th May, 2015, Read More