Running a Restaurant and a Bar - Case Study Example

Research about Running a Restaurant and a Bar Insert of Introduction Project Yuatcha Bar andRestaurant Aims: The main aim of this study is to look into the need for the establishment of a bar and a restaurant in London. This is to be used as a response to the increasing demand for the services provided by the facility in an increasingly competitive environment for hotel and bar services. Vital information concerning the establishment of the facility will be collected by using both primary and secondary data. Prospective customers and other important stakeholders will be interviewed to get their opinions on the best location for the project, its functionality and management strategies. Besides, secondary materials are also going to be used to find out the requirements needed for the establishment of the facility among these, the historical background on tourism and hospitality development in the region, prospects in the development of the small scale hotels and bars in the region as well as the consumption trends and potentials of the people intended to use the facility upon its inception. An increasing trend has been purported in the United Kingdom over the last few years as a result of the rising trends in development and financial development in the region. The United Kingdom has been receiving a lot of international as well as regional attention as a destination for various persons and groups. Pegged on the fact that all persons visiting the united kingdom either on routine basis or occasionally has to stop over at some point for refreshment as well as for meals, establishing such a facility will be great option to generate money and build income base in the tourism sector. Tourism and hospitality sector has been experiences a booming demand in the region with the highest levels of demands registered during international and regional fairs such as during the United Kingdom’s public holidays and family days among others. Besides UK has been growing rapidly as an international destination for international fairs, conferences and workshops where several people always gather to participate in such related events and activities. Most of the big hotels and internationally recognized leisure and hospitality places in the region are very expensive offering classy services and accomplishments. These places are therefore not suitable for the quick- go services seekers who would want to take a little moment of their times for a stop over meals and drinks while on transit. There is therefore a big and prospective market for the restaurant and bar developers here given their limited number in some crucial points common with visitors from within and across the globe. Moreover, it has been noted that UK’s urban population, like that of the rest of the world has been skewing towards town and urban life. Most of the people who come into these towns depend much on the small restaurants and bars for their refreshment and leisure provisions as compared to the big, international hotels and leisure provisions centers. The increasing number of urban population is therefore the main target for this facility among the international personalities who visit the region and occasionally pay a visit to the bars and restaurants. Literature review The United Kingdom is rated as the world’s sixth largest economy with regard to the nominal Gross Domestic Product as well as the sixth region with the largest economic power in the world in terms of purchasing capability. She therefore is among the nations of the world with strong economic, cultural, military, scientific and most importantly political influence in the whole globe (Hollis et al, 2003). This stable and consistent growth in the British economy was however influenced by the 2008- 2009 global economic recession whereby the region’s economic and purchasing power was lowered to larger percentage. This led to a high drop in the economic capability of the region by a higher margin as compared to the times before. (Dahl, 2004) has predicted a renewed economic weakening in the region sometime in the near future base on clearly observed world economic growth index. This he has done by closely analyzing certain important economic parameters such as the world’s production and consumption trends as well as the overall growth patterns in various regions of the world which are considered as the world’s economic mainstream. For this round however, the British fraternity has decided to play it safe and avoid the pinch on their pockets and their economy as well. Combating strategies have been put in place to curb these issues by laying down certain solution based agenda such as the rapid growth in the hotel and beverage industry. Restaurants, hotels and institutions sectors in the United Kingdom have been ranked as the forth largest consumer industries in the region after food retail, motor vehicle industry and the clothing and footwear industry. This is however said to be subject to certain dynamics dictated by the increases or falls in the prices of food in the region. This can either increase the prices at these centers leading to the falls in demand or lower the prices resulting into the rise in demand. Some scholars have predicted a fall in demand for the fats foods provided in hotels and restaurants in the region as a result of the global hit felt some years back. Hollis et al predicts that most of the UK residents will still have to be very cautious about how they spend their money as they try to focus ahead and plan for the emergence of a similar situation in the future (Hollis et al, 2003). The small hotel holdings have been encouraged by the British government and developmental programs to provide cheap and fast foods to complement the growing demand for food to the surplus populations (International Markets Bereau, 2011). There has been a remarkable change in the consumption trends of the British beverage industry with the consumers’ population having a skewed liking towards healthy, convenient and ethnic based foods. Besides, most British communities have resorted to devote much of their times on more economically viable productive sector by limiting time wasted in doing other things. As a result of this, the development trends have as well impacted on the food industry and the regions population has been involved in a growing trend for the consumption of quick meals, new ingredients, and single snack systems. These programs has been adopted as the solution strategies to plan upfront in preparation for the predicted economic down play in the region as has been predicted by economic analysts and other experts. Since the 2008- 2009 economic downfall in the British Empire, the industry has been among the most fragile sectors in the region than before. The falls in disposable income and escalation in unemployment rates in the United Kingdom through 2010 have however resulted in tough trading environments in the region. Small business operators have however devised a method to help them be retained in the market. Some of these strategies sort after by the small scale business operators such as the food and beverages industry include marketing strategies. Most of these business owners have sought opportunities to attract cash from consumers by providing promotional vouchers and discounts. Other small beverages shop owners such as pizza express, Zizzi and Bella Italia are among the many small restaurants which offered free meals services to their customers on the famous ‘buy one, get one free’ strategy. This was used as a business strategy to attract more customers in to the hotel and business sector. Gower notices that such business strategies can still be employed by young businesses to market themselves to the outside world (Gower, 2010). This would help them to make themselves known and attract more customers to purchase from their holdings. The good marketing strategies which were employed by the past business operators have created a well to do environment where café and bar operators, commonly referred to as pub owners in the UK, have maintained a strong presence despite the harsh economic down turn in the region. However, some business operators have recorded widespread losses as a result of the rise in rent prices and a long felt decline in the number of people dining out as a result of the economic downfall. Such are expected during the on coming economic thrush which has been predicted by the various economic analysts. On the contrary, (Dominc, 2006) notes that during such times, there is a recognized increase in the number of home delivery food supplies and take away delivery systems which have resulted into the tremendous boost in the sector. These trends are predicted to continue and even escalate should similar situations arise in the times predicted by the economic analysts. As a result of this, smaller niches and other affordable sub sectors flourished for instance the fast food supplies and the chained coffee supplies are among the beverage holdings which experienced a boost in their provision. Private consumptions in the United Kingdom have seen a reasonable increase since 2009 alongside the increase in the food service industry over the said period. Economic observers and experts have notified the business industry that there is going to be a continued fall in the employment sector with many people moving out of the employment sector increasing the number of those in the unemployment category. Due to this, it is predicted that high level restaurants will experience a great hit leaving the mid level restaurants to benefit during the tough economic times in the famous region. This is contrary to Gower’s observations that with the unstable economy, smaller independent operators may have to be thrashed out of the market rendering them unsuitable as an upcoming industry in the European continent. Gower argues that these small business or independent operators should take this as a warning to prepare and plan ahead before the onset of the tough times predicted here (Gower, 2010). Anon Statistical Framework Division, (2011) posts a rather contradicting observation in the development trends of the fast food industry saying by noting that the British people have a tendency of eating out especially during weekends and UK public holidays. He notes that this trend is not likely to change despite the tough economic times predicted by the said economic experts. This has been augmented by the rising number of single occupant households. These are more likely to consume more ready food rather than or book out dates with friends, this he says is a long term trend in the region which is likely to continue going o for a longer period of time. Methodology Any good research should be accompanied by good methodological systems used to carry out the research process. A bad research is as bad as nothing done at all. According to Kidd researches conducted in a proper manner often act as an eye opener to the knowledge of certain underlying factors which would otherwise not be known should such searches not be conducted (Kidd, 2007). A research is defined by (Griffiths, 2006) as the step by step methodologies used by a group of experts to find out new ways of solving given problems. Researchers on the other hand are the various expert groups mandated with the aspect of finding the exact solutions to certain problems affecting the communities in which they live. Good research methodologies are considered to be the ingredients used to build up the body of the work carried out by researchers. Depending on the type of research being carried out by the persons involved, different types of research methodologies can be employed. These methodologies however, must be able to serve the sole purpose of these researches. The research process as (Wiggin, 2007) notes however must follow a given format which is often considered as the universal format for conducting researches all over the globe. These include topic identification, derivation of research objectives and the formulation of research hypotheses. This is then followed by the field observations and data collection to verify the set hypotheses in order to achieve the set objectives. The other steps in a research process are the analysis of the collected data. This can be done in several ways depending on the type of results to be achieved by the researcher. Data analysis can be done both qualitatively as well as quantitatively. Normally both qualitative and quantitative methods are employed in the same research with the qualitative methods used to complement the quantitative methods. The last stage in research process is the data presentation stage which involves the communication of the collected data in a manner which can be best understood by the people not directly or indirectly involved in the research. The results of any research must be communicated in a vivid and proficient way so as to inform the society. Inability to effectively and efficiently communicate the research findings to the prospective consumers is as useless as not conducting the entire research Data collection methods are varied and include both the primary as well as the secondary methods. While primary data collection methodologies are used to collect first hand data from the original sources, secondary data collection methods are used to collect secondary information which has been filtered and recorded in books, periodicals and journals. Examples of primary data collection methods include, interviews, administration of questionnaires, making free observations, among other closely related methods. Secondary methods are concerned basically of book reviews as well as the extraction of information from pre- existing sources such as books, journals and periodicals. The most appropriate and reliable methods for carrying out researches such as market researches are mainly primary methods such as the conduction of interviews, and the administration of questionnaires to the target populations. Target population is defined by (Hollis et al, 2003) as the group or community of phenomena on which the results of the research will have either a direct or an indirect impact. For a market research, this will include the market operators, the intended customers as well as the producers of the goods traded on. Market responses in this research were undertaken by conducting interviews in order to get people’s views on the possible location of the facility for proper allurement of the intended customer population. A total of 2500 respondents were involved in the research process and their suggestions and responses analyzed to ascertain the best location response for the intended facility. These respondents were drawn from across London where the facility was to be located using random sampling method. Besides London was chosen as the most preferred location for the facility based on certain factors arrived at through purposive sampling strategy. Some of these reasons involved the renowned, rich historical background of the city across the entire globe, its central location in the European continent which makes it the prime destination for most business operators, crews of diplomats. The last property of the city which made it the finest location for such kind of a business is its rich historical backgrounds as the central governing station in the region. The queen’s palace which attracts so many people from across the globe acts as a pool factor for most people increasing the consumers’ population in the region. The stratification of the population here makes it a viable option for as the best location for the restaurant with most visitors forming a tendency of eating out. Sampling methods were chosen here as an appropriate method for conducting the research since it id less biased as compared to the other research strategies. A representative sampling technique is one which covers the interests of the entire population intended for the research. A good sampling procedure has a large sample base. This sample base can however be hindered by several factors such as limited time and resources available to carry out the entire process. These are some of the reasons which prompted the designation of the number used in the sample. It is however very easy to use a small sample size as very large sizes, though representative enough, are very difficult to work with. 2500 is a whole number representation of the entire London population which would make the manipulation and computation of the research findings easier as compare to an odd number. Group focused interviews were then used to gather the information about various market strategies and topical concerns on proper market indicators. Such issues that were covered in these interviews included the consumption trends and preferences for most people living in the region. This would help to know the kinds of food and drinks to stock at the bar and restaurant, for instance the brand of drinks most preferred among the incumbent population, feasting and eating styles for the sitting population among other market indicators. Group focused interviews were the most preferred here as a result of its appropriateness and accuracy in gathering a collection of views on certain pertinent issues such as the determination of market indicators. Random sampling method was preferred for the research process in order to avoid biases that would arise as a result of the researcher’s biases due to preferences. The interviews were conducted on a one to one or individual basis with the target population. This was aimed at improving the results by maintaining a direct eye contact with the respondent prompting him or her to give genuine responses. Some questionnaires were as well mailed to the respondents who could not be reached. In total 1500 interviews were conducted on a one to one basis and 500 questionnaires issued to the respective respondents. Secondary sources such as the review of pre- existing materials such as books, journal articles and periodicals were also used to provide secondary information where these could not be acquired using the primary methods. Such information as the number of restaurants and bars available in the region, operational modes and consumer trends were among the market indicators which were acquired through this method among others. Durational dynamics were as well reached though the observation of secondary methods to acquire the changing trends in the consumption patterns of the resident population in the region over a period of ten years. This actually helped us to make more focused predictions on the performance of the industry as well as plan upfront on the expansion and improvement capabilities. Charts and diagrams showing the changing trends in the consumption patterns of the products stocked in the market were also used to make more informed judgments on the accuracy of the targets intended. Data analysis was carried out by using both qualitative and quantitative methods. The explanations of the quantitative information received were as well done qualitatively to provide in depth understanding of the underlying issues unknown to the investors interested in the business in question. References Books Dahl, J. O. (2004). Restaurant managemen (4 ed.). London: Harper and brothers. Edition, D. F. (2006). Market Review – Food Industry Seventeenth. London: Cambridge University Press. Gower, I. (2010). Market Report 2010 Soft Drinks (Carbonated & Concentrated) (Sixteenth Edition ed.). Griffiths, J. (2006). Market Assessment 2006 Condiments and Sauces. Cambridge: Key Note Ltd. Hollis et al. (2003). Market Research Report on Quality Regional Food Businesses. London: ADAS Consulting Ltd for DEFRA. Kidd, S. (2007). Market Report Plus 2007 – Confectionery (25th ed.). Key Note Ltd. Wiggin, E. (2007). Market Assessment 2007 – Hot Beverages (4th ed.). New York: Key Note Ltd. Journals Anon News Release. (2010, August 18th). Spending on eating out overtakes meals home. National Statistics. UK Input-Output Analyses . Anon Statistical Framework Division. (2011, September). UK Business Activity, Size and Location 2011. Office for National Statistics . Food From Britain. (n.d.). Retrieved from Website www.foodfrombritain.com Thompson, M. (2007). Head of Communications and External Affairs, the Portman Group. Group. Speech to The Duncan Society. TnsTM Retail Share Track. (2007, June). Market Watch . Websites Food From Britain. (n.d.). Retrieved from Website www.foodfrombritain.com Research findings and analysis Over the last few years, the United Kingdom has experienced very tough economic times as the global economic recession bore a significant hit on the forth most powerful economy on earth. A slight increase in the region’s Gross Domestic Product (GDP) was however registered in mid 2010 where a slight increase was noted (Thompson, 2007). The research found out that as the region’s economic foundation keeps on running at the brinks of collapse, the rate of expenditure among the resident population continues to fall. This comes in as a result of the economic pinch felt in the pockets of these resident populations. Their spending systems are therefore restricted to the most basic requirements rather than the additional comfort facilities such as eating out with friends and family among others. Reduced spending leads to the down play in profit generation in the food and entertainment industry. This has a direct impact on the operations of the bar and restaurants in the region making it an unlikely economic venture. 80% of the respondents who were interviewed, 1200 interviewees, responded that during the hard economic times, they prefer home dinner and family gatherings for cheaper expenses. 9% continued eating out with friends and family members as well as close acquaintances on occasional basis. 2% of the respondents in this category indicated that they would not mind taking eating out with family members on a regular basis. This group comprises mainly of the high income earning groups which felt a rather small pinch during this time. The economic surveyors predict that this trend will be experienced should the tough economic times repeats itself on the continent. This might have a strong feel on the purchasing systems of the resident population which is also our target population. The table above shows the expenditure trends in the united kingdom in a period of ten years (from 1006- 2010, represented by 1- 5 respectively) on fast food and restaurants among the resident populations and the visiting population. From the diagram above, it can be evident that the trends in spending out for family dinners and eating out parties changes with the corresponding changes in the economic endowment of the region A remarkable increase in the spending rates was noted at the end of the economic tough times when most people and families were experienced to prefer going out for dinner and outdoor parties. This gives a clear prediction of the future trends in the mode of consumption in the food and beverages industry. With the predicted economic down fall in the region, there is expected to be a remarkable fall in the spending systems of the people and this is bound to fluctuate as the income amounts increase (Anon News Release, 2010). The increase is likely to bring about a significant boost in the fast food sector. The United Kingdom’s economy is however likely to remain stable for a short while before the predicted fall. The right time to venture into the business of operating a bar and restaurant is therefore now when the economy is still stable. A total of 500 questionnaires were dispatched to the various respondents across the region. 450 of these were collected back and results analyzed to arrive to a conclusion. 47% of the respondents who filled the questionnaires indicated that they would like to dine out and seek entertainment services at bars and restaurants close to their abodes. 23% responded that they would prefer going out far from where they lived while 30% wouldn’t mind going either far or near their residential places. This means that the bar and restaurant planned here must be placed at a close proximity to the resident population as many people would want to dine close to their abodes. This was aimed at reducing transport costs which was in turn reflected in the amount of money spent at these leisure centers. The correct location for the hotel and bar for maximum income generation should therefore be in a place where most of the people lived. This will ensure that all those who would wish to dine out in close restaurants to their homes gets it easy to access it. Population distribution data in London therefore becomes of prime importance for location determination. Besides, land rents will have to be among the key determining factors for location. Areas of high land value means high prices of foods and other services provided at the facility which would at times discourage most people from receiving their services from the facility (tns Retail ShareTrack, 2007). As the research indicated, five- eighths of the total respondents would not want to spend more than one- third of their standing salaries eating out. This implies that the more customers the facility will attract, the more income it will generate since most of the people in the region would not prefer spending so much eating out with friends or even relatives. There is as well another group of people who depend entirely on bars and restaurants for their daily provisions. These are mostly those from single households. They spend most of their times in these places, from where they get their daily services in terms of foods, drinks and entertainment. Most of their leisure times are spent chatting with friends and close acquaintances in such places. This population is shown t o be increasing steadily in the United Kingdom thus forming a substitute to the decline in spending rates among the resident populations. Putting up a nice bar and restaurant in these areas will therefore register better performance even when tough economic times dawn on the United Kingdom and the hinterland. Despite the declining trends in on spending rates among this special group depending on the level of income as well as the economic situations in the region, they form a good substitute to the sector during tough economic times. The table below shows the ranking of the top ten food service operators in the united kingdom’s by banner sales in 2010 (Dominic, 2006). Company Banner sales (USD$) Foodservice Market Share % 1 Punch Taverns 6,978,913,976 5.90 2 McDonalds 4,050,457,700 3.53 3 Mitchells & Butlers 3,371,663,330 2.82 4 Whitbread 1,956,680,525 1.56 5 JD Weather spoon 1,876,114,754 1.56 6 Yum! Brands 1,758,311,443 1.50 7 Greggs 1,207,363,084 1.03 8 Subway 1,143,753,869 0.97 9 Dominos Pizza 788,949,600 0.67 10 Starbucks 751,635,400 0.59 The trends indicated above were achieved as a result of the hotels and restaurant owners struggled to compete with meals which were being provided in supermarkets thereby encouraging more customers to register at these places. This is a strategy which can be employed by my bar and restaurant especially at the early stages of development so as to attract more customers into the system. Some bar and restaurant operators such as Domino’s Pizza, Whitbread, McDonald among other prominent restaurants in the region also pioneered in providing promotional vouchers to the customers who were regular consumers but started showing declining trends in their coming (Anon Statistical Framework Division, 2011). This encouraged more customers and helped them to maintain the pre- existing ones. As a result, their standing income shot considerably as more customers got attracted to their services. Proper control of the market and maximum income accruement therefore depends on operational systems and proper customer relations strategies. For the meantime as the business develops and stabilizes in a hotly competitive business environment, good customer relations would work out miracles for our intended hotel and bar as we gather more funds to provide for free eating vouchers to bring more customers on board. The research conducted here indicated that half of the British local consumers’ would prefer going out for meals and leisure in bars and restaurants when provided with eating and partying discount vouchers. We also found out that the most common discount vouchers were those from Pizza Express, Zizzi, Strada, Haha bar and Grilll and Bella Italia. Of all these restaurants which were dominating the market with discount vouchers on customers, Pizza Express voucher was the most common of all in the market. This was contributed to by several factors which the respondents mentioned in the research. Some of the strategies which were used by Pizza Express to sell most of her vouchers in UK are mainly based on the human resources operations and behavioral characteristics. Managerial strategies employed by the restaurant also played a very important role in promoting her sales. Besides, the employees- customers’ relationship also came out strong in contributing to the overall success of the restaurant (Gower, 2010). Just to mention but a bit, the British society is getting much concerned about their health and the contribution of the foods they consume both at home and in these restaurants in their overall well being and health conditions. Most people dinning out either with family members or with friends and close associates tied so much concern on the hygienic conditions of the restaurants they went to. All these considerations were at purr at Pizza Express with the requirements of the British consumers hence her large market control in terms of the number of vouchers sold (Dahl, 2004). As can be seen from these observations therefore, competition in the region for the same customers is very stiff and therefore, one needs survival techniques to b able to benefit from the trade or risk elimination. This information is therefore very important in planning ahead before the establishment of the facility. Financial base has to be well built to reciprocate market demands for foundation building. Market predictors however, clams that with the revival of the economy of Europe, new changes in the food service industry will have to be invented by the hotel owners, restaurant operators and other persons involved in the business to help wean the region’s consumers from using discount vouchers. However, restaurant which used this before, during the hard economic times, around 2008- mid 2010 may have to face a bigger challenge maintaining their customers. Conclusion We have found out that the establishment of the purported bar and restaurant in the United Kingdom requires one to have a proper knowledge of the market. It is however evidenced that the rates of income in the sector is highly dependent on the amount of income earned by the individuals in question as well as their ability to purchase item s from these food outlets. The market hit a hard economic time during the 2008- 2009 economic difficult times in the European continent lowering spending rates by a big percentage. This however had a direct reflection on the fall in income earnings from the hotels, bars and restaurants as the number of people dinning out continued to diminish with the escalation of these economic tough times. There is a prediction of an increase in economic growth in the region since 2010 thus a good moment is presented for the development of the bars and restaurant. References Books Dahl, J. O. (2004). Restaurant managemen (4 ed.). London: Harper and brothers. Edition, D. F. (2006). Market Review – Food Industry Seventeenth. London: Cambridge University Press. Gower, I. (2010). Market Report 2010 Soft Drinks (Carbonated & Concentrated) (Sixteenth Edition ed.). Griffiths, J. (2006). Market Assessment 2006 Condiments and Sauces. Cambridge: Key Note Ltd. Hollis et al. (2003). Market Research Report on Quality Regional Food Businesses. London: ADAS Consulting Ltd for DEFRA. Kidd, S. (2007). Market Report Plus 2007 – Confectionery (25th ed.). Key Note Ltd. Wiggin, E. (2007). Market Assessment 2007 – Hot Beverages (4th ed.). New York: Key Note Ltd. Journal articles Anon News Release. (2010, August 18th). Spending on eating out overtakes meals home. National Statistics. UK Input-Output Analyses . Anon Statistical Framework Division. (2011, September). UK Business Activity, Size and Location 2011. Office for National Statistics . Food From Britain. (n.d.). Retrieved from Website www.foodfrombritain.com Thompson, M. (2007). Head of Communications and External Affairs, the Portman Group. Group. Speech to The Duncan Society. TnsTM Retail Share Track. (2007, June). Market Watch . Websites Food From Britain. (n.d.). Retrieved from Website www.foodfrombritain.com Read More