Food for Friends Restaurants Expansion - Research Proposal Example

Food for Friends Restaurant’s Expansion: Research Informed Decision Making

Introduction

The effectiveness of business decision making processes is largely influenced by the amount and quality of data that the decision can access. That means that research is one of the most crucial activities for a business enterprise keen of maintaining a constant growth and performance. However, every task needs planning and collecting data is no difference. The quality and amount of data collected and its relevance to subject of research is largely dependent on the amount of time and effort put prior to actual task.

Food for Friends is a London based restaurant that specializes in vegetarian dishes and organic wines. The restaurant has been through tremendous growth since its establishment and currently plans to set up another second branch in London. While the restaurant has established itself as a magnificent brand and was ranked favourably among other restaurants and food cafes in London, concerns with regard to competition, reputation among already existing and potential customers, location of the new restaurant branch, and setting of prices feature prominently among the board of directors deliberations. This research intends to explore the origin of these concerns and deliver a comprehensive report and recommendations.

Research Objectives

Food for Friends has declared its intention to start a second restaurant in London in order to decongest its current restaurant and exploit the opportunity to maximise its profitability potential. However, before creating an expansion strategy, the board of directors wants to have a comprehensive understanding of the market depending on customer preferences, needs, and perceptions. These types of data can only be obtained by conducting a market research that will present both qualitative and quantitative data to allow informed decision making. Through this research, it is hoped that after exploring factors likely to determine the success of the expansion project, relevant conclusion and recommendation will be deduced from analysing the data collected. The three major aspects of investigation will therefore include;

• Customers’ perception of the food quality and taste, service, prices, and location of both the current restaurant and the new one for which opening is intended.
• The restaurants potential to operate another branch effectively without compromising market share and operational organisation of the current restaurant.
• Possible changes in the new and current restaurants that might need to be implemented following the opening of a second restaurant in London.

Underpinning the Existing Knowledge

According data experts, (LaValle, Lesser, Shockley, Hopkins, & Kruschwitz, 2010), decision making process based on quantifiable data contributes between 4% and 6% towards realizing the objective. Business decisions made after data analysis contributes more than 10% of profitability of the enterprise. Verifiable data rather than intuition are increasing becoming the preferred system of approaching business and investment decisions. Nevertheless, a number of considerations need to be made. Firstly, there must be a coordination process of collecting, analysing, and integrating the obtained data in the business activities. Secondly, the firms must nurture a data collection culture because inconsistent data can lead to incorrect conclusions. The question for this section of the report is what are the most appropriate methods of data collection in the context of Food for Friends restaurant expansion intention? What instruments are likely to produce project relevant data?

When developing a research design, it is important to adopt qualitative and quantitative techniques that will capture the exact needs that need to be addressed. The priority should be the approach that adequately answers important questions such as (Touch point 2013);

• What experience and behavior need improvement?
• What are the organizational systems that have contributed to the current achievement and how can that be integrated in the new venture?
• What are the organizational mission and vision for the future, and what type of data is relevant towards achieving the aspirations?
• What are the means and techniques used for measuring performance and how can they be implemented in appropriate decision making?
• What are other businesses and market entrants doing and how do that compare with the needs of the new project.

In order to achieve the research objective consistent with the above identified questions, it is necessary to organise the research process and tools into different classes depending on the data type and the available systems of research or resources allocated. These considerations will ultimately help in determining the most suitable research method (Maxwell, Rotz, and Garcia 2015).

In the context of Food for Friends restaurant, the intention is to identify opportunities for expansion. It is important to understand the market as well as other factors that are likely to influence the success of a new venture. The first question to answer is, does an opportunity for expansion of the restaurant exist in London market? How will the location of the new branch affect its performance, and what are the customers’ perceptions towards Food for Friends in terms of food quality, and services offered in the restaurant? Having identified the needs to be addressed by the survey, the next step is to devise methods of data collection. While most of the data with regard to customer service can be collected internally from customer feedback and interaction between staff and customers, it is important to devise questionnaires and conduct focus group survey in order to establish the existence of an opportunity and the experience clients would expect from the new venture. The data relevant for this research can be categorised as shown in table 1 below.

Table 1: Food for Friends Restaurant Research Plan

Data Type

Internal Sources

External Sources

Business Operation

Budgets

Sales

Purchases

Final accounts

Consumer response

Competitors trends

Market research

Human Experience

Customer reviews, complaints, and feedbacks

Interactions

Staff performance reviews

Productivity

Consumer trends

Market Survey

Product and service design trends

Source: Touch point 2013

Having established the research needs, it is also important to investigate the approach according to already published literature in the form of commentary, expert opinion, and empirical research with regard to business expansion. Enterprise expansion is always faced with challenges but it is upon the planners to implement a strategy that puts into consideration different types of challenges and ways to overcome them. Perhaps one of the most common of these challenges is costs. According to Lavey (2015), the question of financing a second location should be the very first consideration when planning expansion. While it is possible to have the opening and operation of the second location fully financed by the old location, the results are not always appealing and losses have been recorded in the entire enterprise following establishment of a second location. Lavey (2015) recommends adequate capital accumulation to avoid over dependence on the original location.

Sometimes, the second location can be at the expense of the original location where key personnel or resources are allocated to the new location. In restaurant business, handling customers is very important and one member of staff can create incredible difference. Arrangement for training should be made in advance with the operation of both the original and the new locations in mind. There are two systems of approaching the concept of location expansion. The first approach connects consumer decision making process with the location of the business premises, while the other theory is concerned with application whereby the entrepreneur has to integrate location based consideration in implementing marketing and planning expansion (Benninnson, Clarke, and Pal, 1995).

According to Rice (2011), location influences the movement of sales as customers look for utility maximisation, which means that the ultimate choice of the consumer is one that provides the best value in terms of cost and time. The services that attract consumers are the one where minimum time is spent locating or accessing the service and the amount of money spent is comparatively low. This might not feature as challenge for Food for Friends since London is known to be strategic location for restaurant business. However, the location of the second location might have far-reaching impact on the original business due to proximity, and movement of staff. Such implications should inform the expansion strategy.

Besides marketing and customer attraction factors, business expansion also impacts the operational and management of the current business. A restaurant business is particularly demanding as far as operational costs and labour requirements are concerned, therefore, a well informed evaluation of resources should be conducted prior to opening a second establishment. Business growth is known to exert immense pressure on cash flow, and production capacity of an enterprise, therefore, due diligence in market research, resource requirement, and skills distribution among the establishments is inevitable.

Data Collection

Determination of the most suitable methodology to employ for a data collection and other research processes is determined by a mini research often known as pilot study. Through the pilot study, the researcher can decide the most appropriate questions to ask and the most appropriate section of the population to target (Rust and Zahorik, 1993). To conduct the pilot study, a sample of 100 participants was targeted from the population that is mainly London residents and visitors of the restaurant. About ten devices including smart phones and tablets are provided to facilitate the research. This sample will participate in the survey in intervals of ten per session. The sessions are estimated to last between 20-30 minutes and two research assistants will be assigned to monitor each session. An app with the questions for participants will be forwarded to restaurants customers and simple but relevant questions will be asked. The overall data collected from the pilot study will inform the development of collecting data for the entire research, which is scheduled to take about five days.

Pilot study

To perform the pilot study, ten participants will be selected from restaurants visitors. The inclusion of the visitors in the survey will be informed by several factors including the frequency of using the restaurant services, gender, age, and both residential and occupational residence. The immediate objective will be to discover whether an opportunity for establishment of another Food for Friends restaurant in London exist, secondary aims of the study will be;

• Understand customer experience in the current establishment and their expectations if a new restaurant is established.
• The effect in terms of market share a new establishment is likely to have on the original restaurant.
• What changes would the customers prefer in the second restaurant in terms of price, tastes, location, interior design, and service and what concepts to maintain.

The questions to be included in the questionnaires include;

• How would you rate the services of Food for Friends restaurant on a scale of 1-5 where 1 represents poor service and 5 represents exceptionally good service?
• How far do you have to travel within London to come to Food for Friends?
• Would you prefer a branch of Food for Friends near you?
• What aspect of Food for Friends restaurant most appeals to you and you would like to see it adopted by other restaurants?

Competitive prices

Quick service

Comfortable interior

Music

Food taste and quality

Secondary data collection

The above questions form just a section of the pilot study and the response obtained from the study will be modified to create the final draft of questionnaires and questions for focus group interviews. This will be part of the primary data collection. For secondary data collection, most of required data can be obtained internally from supplier documents, sales journal, and information available in the accounting record. Customer support department will also provide important information from documented complaints and feedback.

Sampling

One of the most important stages of data collection is sampling. There are several techniques that a researcher can employ to sample the number of participants to include in the survey including random sampling and stratified sampling, among other methods (Creswell and Vicki, 2007). For this study, a simple cluster sampling whereby customers coming into the restaurant will be approached by assistance located at the entrance of the premises. The selection of participants will be done with consideration to include different demographic distribution in the population. London is a metropolitan city where all races, gender, age, and economic status are represented in almost any single sitting. However, for the purpose of this research the only relevant distribution are gender and age, therefore, equal representation in the sampled population will be considered.

Sample Size

It might not be easy to estimate the number of restaurant consumers or the potential customers to a new venture. Nevertheless, with an understanding of capacity of an existing restaurant, one can estimate with significant accuracy the number of clients to expect in one sitting. London, being one of the biggest cities of the world, the population can be expected to reach millions. The estimate for the number of people who use restaurants services can reach up to one million. This study targets this one million people who eat in London restaurants. In order to determine the sample size that can effectively represent this population, a number of calculations will need to be conducted, including;

• Population: The entire group who the finding of the research should reflect.
• Precision level: maximum permissible difference between the sample statistic and the population parameter
• Confidence level: The confidence level is the probability that a confidence interval will cover/span the population parameter.
• Sample Size: The number of respondents involved in research data collection
  • Data Analysis

The data collected from the study need to be analysed to allow for reliable interpretation. There are different systems of analysis depending on the type of research and the type of data collected. For this study, data collected was mainly quantitative and a quantitative analysis involving organisation of data into clusters according to research questions and then representing it is charts and tables was adopted.

The research sort to establish whether there exists an opportunity for expansion by setting up a second location of Food for Friends restaurant in London. Among the issues that emerged with the plan, and from the progress of the study this far are highlighted in the research questions as follows;

• Is the restaurant well established in terms of financial performance, operations, and market share to allow for expansion to a second location?
• What is the customers’ perception of Food for Friends restaurant as far as food quality and taste, service, prices, and location are concerned?
• How will the opening of a second restaurant impact the already established one?

Respondents’ Demographic Distribution

The research involved 100 participants 50 of whom were male and the other half females. The participants also represented the population across different age groups. Table 2 shows how respondents were distributed according to gender and age.

Table 2: Demographic distribution of respondents according to gender and age

16-25yrs

26-35yrs

36-45yrs

46-55yrs

Above 55yrs

Total

Male

10

10

10

10

10

50

Female

10

10

10

10

10

50

Total

20

20

20

20

20

100

Distribution of Food for Friends customers by location

In order to determine the most strategic location for the second restaurant, and the extent to which the new restaurant will affect the original restaurant, it was important to understand the distance travelled by customers who frequent the restaurant. If the new establishment is established closer to the majority of the current establishment’s customers, the volume of sales, and internal competition between the two eateries might affect the overall performance of the business. An effective decision concerning the location can only be made upon consideration of proximity to customers. Table3 shows the distance between customers and Food for Friends restaurant.

Table 3: distance between customers and the restaurant

Less than100m

100m

100-200m

Above 200m

Total

Male

30

12

6

2

50

Female

22

14

8

6

50

Total

52

26

14

8

100

Customer’s perception on food quality and taste, service, prices, and location

The research instrument asked questions related to the perception of customers towards food quality and taste, service, price and location. Depending on the response obtained, the data collected was presented in chart as shown in figure 1.

Figure 1: customer’s rating for food quality and taste, service, price, and location

Some Quantitative data analysis here

Conclusion

The research has revealed a high rating among the customers with food taste and quality being the main customer attraction factor especially among the youth and price and location having considerable influence in decisions made by the older generation. Also important is the impact of the restaurant financial performance, which according to financial data collected, showed that the new restaurant would start on a low key performance, and continues improving overtime. On the other hand, the original restaurant will experience a low sales moment for a short period, probably one month after which it would re-stabilize and continue another period of growth. The greatest advantage of opening of a second location can be said to creation of room for expansion for the old premises as well as opening of new opportunities for the overall business.

Reference List

Bennison, D., Clarke, I., and Pal, J., 1995. Locational decision making in retailing: an exploratory framework for analysis. International Review of Retail, Distribution and Consumer Research, 5(1), 1-20.

Creswell, J.W., and Vicki L.C., 2007. Designing and conducting mixed methods research.

LaValle, S., Hopkins, M.S., Lesser, E., Shockley, R. and Kruschwitz, N., 2010. Analytics: The

new path to value. MIT Sloan Management Review, 52(1), pp.1-25.

Lavey, J., 2015. 5 Questions to Answer before Considering Opening a Second Location. [online] Available at: <http://smallbusiness.com/manage/5-questions-to-ask-before-opening-a-second-location-2/> [30th April 2016]

Maxwell, N., Rotz, D. and Garcia, C., 2015. Data and Decision Making: Same

Organization, Different Perceptions February 2015.

Rice, M. (2011). The expansion of a retail chain: an analysis of wal-mart

Locations in the United States (doctoral dissertation, university of north Texas).

Rust, R. T., and Zahorik, A. J., 1993. Customer satisfaction, customer retention, and market

share. Journal of retailing, 69(2), 193-215.

Touch Point.com, 2013. Using Data to Support Effective Decision Making. [Online].

Available at: <http://brightspotstrategy.com/2013/05/15/using-data-to-support-effective-decision-making/> [30th April 2016].

Appendix 1. Questionnaire

Please answer the question s in this questionnaire in the spaces provided

The information you give in this survey will be treated with utmost confidentiality and will not be used for any other purpose apart from this research.

Age:

Gender:

MaleFemale

Occupation:

Area of Residence:

• How often do you come to London?

Daily

Weekly

Fortnightly

Occasionally

• How frequent to you eat at Food for Friends restaurant?

Daily

Weekly

Fortnightly

Occasionally

• On a scale of 1-5, 1 for cheap, and 5 for very expensive, how would you rate the price for food at Food for Friends Restaurant?

1 2 3. 4 5

• How would you rate the services of Food for Friends restaurant on a scale of 1-5 where 1 represents poor service and 5 represents exceptionally good service?

1 2 3. 4 5

• How far do you have to travel within London to come to Food for Friends?

A few metres

A few hundred metres

A long distance

• Would you prefer a branch of Food for Friends near you?

Yes

No

• What aspect of Food for Friends restaurant most appeals to you and you would like to see it adopted by other restaurants?

Taste

Service

Price

All the above

Non of the above

• If Food for Friends Restaurant opened in another location would that influence your decision to eat in this original branch of Food for Friends?

Yes

No

• On a scale of 1-5, where 1 represents no influence and 5 represents great influence, does interior design and comfort influence your decision to eat at Food for Friends?

1 2 3. 4 5

• If anyaspect of the design changed, would you still eata at the Food for Friends restaurant?

1 2 3. 4 5