Business Strategy & Planning For A Restaurant

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1. Introduction:

A Business Strategy and business plan has been prepared for a fast food restaurant with the name of ‘Health and Taste’ The outlet of Health and Taste will be located near Melbourne airport. This area is mainly chosen, as it is the second busiest airport in Australia. This new medium-sized fast food restaurant will serve fast foods to the tourists and the local foodies. In accordance with a new report on the eating habits of the Australians, per month they make visits fast food restaurants 51.5 million times (Good Food, 2014). Therefore, there is hardly any doubt that a fast food restaurant in this area will be a profitable business. The focus of the restaurant is on both health and taste. In order to serve healthy foods to the customers, the focus will be on organic ingredients. Creativity and experiments with popular fast food items will also be the focus of the restaurant in order to ensure taste. In this business plan, the goals and objectives of the business have been mentioned after analysing the business environment. Financial analysis, marketing and sales data and operational management issues will be helpful for the business owner to start the business successfully. The organisational structure of the restaurant will be flat in order to facilitate strong and effective communication between the employees and the management.

2. Discussion of the Business Environment:

As commented by Poon (2011), business environment refers to the external and internal factors, which influence a business marketing. The author opines that factors such as clients, suppliers, competition, laws of the nation in which a business operates, market, technological improvements, economic condition and social factors are the external factors of the business environment, upon which the success or the failure of a business is largely dependable. Kennerley and Neely (2010) opine that though a business cannot have any control over the external factors of the business environment, they should be effectively analysed before the formulation of business strategies and business planning. Therefore, it can be stated that analysing the external business environment is of utmost importance for a business as the formulated business plans and strategies should address the external environmental issues. The strength and opportunities of the external environmental factors need to be utilised in the plans and the issues of the external factors should be well addressed in the plans.

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Internal environment refers to those factors that exist within the business itself and that can be completely controlled by the organisation (Chaney and Martin, 2007). In order to study the internal business environment, the case study of the internal factors is required. Effective analysis of the internal environment is helpful for a business to understand the strengths and weaknesses of the business. As mentioned by Montazemi (2011), internal business factors include Business Strategy policies, managerial factors, structure of the organisation, factors related to human resource, production capacity, business objectives etc.

Considering the importance of the external and internal factors of Business Strategy environment, both of these factors are analysed here. As the restaurant is yet to open, it is not possible to conduct a full-fledged analysis of the internal factors. So, only an overview of the future business has been anticipated in the internal environmental analysis of Health and Taste.

2.1 Discussion on the Internal Business Environment—

The discussion on the internal Business Strategy environment starts with a summary of the restaurant. This will help the business owner to have a general overview of the internal feature of his Business Strategy.

2.1.1 Summary of the restaurant—Health and Taste will recently open at the Melbourne airport area. The specialisation of the restaurant will be on creative fast foods. As, nowadays, people are greatly concerned with health, both the health and taste factors are considered. The area in which the restaurant will be located experiences huge gathering of people from many nations. In addition to this, there are locals who love eating out with their families and friends. Hence, at the time of preparing the menu, this factor has been considered. Instead of local common fast foods, creative fast foods are included in the menu so that both the foreigners and the local foodies will love to enjoy the dishes. The restaurant will offer the customers both the benefits of fine dining and fast food. The restaurant offers the benefits of fast food with affordability and fast response times, as well as take-out options to the customers (Chaney and Martin, 2007). The tastier and healthier alternatives to common local fast foods such as French fries and burgers will be offered to the customers of Health and Taste. The restaurant will provide sitting to 100 people. Some additional advantages will be given to the customers such as parking place and free WiFi inside of the restaurant. The decor of the restaurant will be attractive enough to attract the food lovers.

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2.1.2 Organisational Structurein order to increase the employee engagement, the structure of the organisation will be flat e.g. non-hierarchical structure of organisation. At the top most level of the organisational structure, there will be the director or the owner of the business. At the next level, there will be two mangers and at the last level, there will be general employees. The general employees will work under the two managers and the managers will report to the business owner. Flat structure of the business will facilitate effective communication between the workers and the managers (Chaney and Martin, 2007). This will also be helpful to lower the sales as managers cost more than the general employees do. The existence of only one level of management will also facilitate easy decision-making (Lee, 2011).

2.2 Discussion on the External Business Environment—

Customers—the customers of Health and Taste are the local food lovers who reside near the airport area of Melbourne. In addition to them, people from other geographic location of Australia who use flights as a means of transportation are also counted as the customers of this fast food restaurant. The area in which the restaurant is located regularly experiences the arrival and departure of the foreign tourists. These tourists are also the target customers for Health and Taste.

Suppliers— Health and Taste will source the required ingredients from the local suppliers. This will be helpful in retaining the freshness of the sourced materials. Sourcing materials from the local suppliers will also reduce the transportation cost (Rainsford and Bangs, 2009).

Competition— as there are many fast food restaurants at the Melbourne airport area, it can be assumed that Health and Taste will experience tough competition from its major competitors. In order to have competitive advantage over its major competitors, the business focuses on offering healthy fast foods. As in the other fast food restaurants in the locality, only typical fried fast foods are available; addition of creative healthy fast foods in the menu will provide a competitive advantage for the restaurant (Purdy, 2010).

Laws— Health and Taste must comply with the Australian laws that are relevant to a fast food restaurant. Failing to comply with the legal requirements may result cancellation of the business licence (Fullen, 2005). As per the Australian laws, some information must be there in the food labels. These include description or name of the food item, list of ingredients, NIP (Nutritional Information Panel), advisory and warning statements. In addition to this, the restaurants must show energy or KJ information for the food items on the menu board (Foodauthority.nsw.gov.au, 2014).

 Technological improvements—though, for a fast food restaurant, technology does not influence the organisation largely, Health and Taste must look to the technological innovations of its competitors and use advanced technology in managing its operational issues. Use of advanced technology in the restaurant will facilitate the customers with easy ordering and payment system (Wong and Aspinwall, 2009). Use of internet will be beneficial for both the managers and the employees.

Economic condition—as the restaurant will be situated near the airport area of Melbourne, it can be assumed that the local people of that area spend a considerable amount of money on eating out. Like every customer, they want value for their money. Health and Taste needs to offer quality and creative food items for the customers.

Business Strategy SWOT

Figure 1: SWOT analysis of the internal and external market

3. Goals and Objectives:

The goal of Health and Taste is to offer the healthiest, the finest and the best tasting creative fast foods at the Melbourne airport area. The Business Strategy aims to offer excellent customer service. The goals of the business will be achieved by offering best customer service coupled with healthy and tasty foods at competitive prices.

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The objectives made for the Business Strategy are SMART (Specific, Measurable, Achievable, Realistic and Time based). SMART objectives will help the business owner to achieve the objectives in specified time (Rule, 2004). The objectives of Health and Taste are specified below:

  • To earn at least 150% ROI (Return on Investment) at the end of the second year
  • To be the leading fast food restaurant (by revenue) in the Melbourne airport area within two years
  • To earn 96% satisfaction of the customers (by doing survey on customer satisfaction) at the end of the second year
  • To keep labour cost between 35 to 40% of the total sales

4. Financial Analysis:

Key Financial Indicators—

4.1 Benchmarking:

Business Strategy

Figure 2: Health and Taste benchmarking

The bench business marketing states to analyze and estimate the performance of the restaurant in relation to any particular fact. As per the analysis and evaluation, it has been stated that the Health and Taste Restaurant. It has been operations is in a proper control to increase the productivity per year that is increasing sales  $ 2.3 million in 1st year that providing profitability of $ 2.9 million, in the end of the 4th year the sales volume is been estimated to reach $5.5 million that certainly increase the profitability to $ 6.1 million.

4.2 Sales Forecasting

Particulars Year 1 (in $ m)  Year 2 (in $ m) Year 3 (in $ m) Year 4 (in $ m)
Unit Sales
Breakfast 8.0 10.0 15.0 18.0
Lunch 6.0 12.0 15.0 20.0
Home deliveries 6.0 8.0 10.0 12.0
Total Sales 20.3 30.1 40.6 50.5

 

Table 1: Sales Forecasting of Health and Taste

(Source: created by the learner)

The sales forecasting of the Health and Taste fast food restaurant estimates that the sales growth of breakfast to be prepared reach to $18 millions, lunch to $20 million and home deliveries reach to $12 million at the end of 4 years of business. As per the sales evaluations, the growth rate for each section is quality slow. As per the breakfast, the growth rate is 3-5% per year, lunch 5-6% of the growth rate, as per the home deliveries of the restaurant shoes a growth vision of 2%. In reaction to increase, the profitability and growth frequency the restaurant operations and functions need to be updated said that the Health and Taste can generated revenues and increase its market growth more frequent and effective manner.

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The analysis and evaluation suggests that the cash reserve in the company at the beginning of the year $ 20 m that will increased $ 40 m at the end of 4th year/. It states that company can able to easily executed investment to increase Business Strategy activities. The total assets of the company valued $ 100 m in year 1 that has increased to $ 145 m in the following year and at the end of 4th year the company generated $230 m of assets stating the restaurant will be at a strong positioning after 4 years. As per the properties in the beginning, it valued $30 million that increased to $ 90 million. Thus, management can also take decision on entering the global market place.  As per the liabilities, the total; liabilities of the restaurant is $ 72 m in first year and $ 160 m that is less than the assets owned by the company stated liquidity and efficient of the Health and Taste restaurant is strong and positive to make growth and development.

5. Marketing and sales data:

5.1 Marketing data—

As commented in Westcott (2014), the fast food industry experienced a rapid growth in the last decade, as eating out has become a way of life for the Australians. Previously, chiefly hamburgers dominated the fast food market of Australia. For the past five years, this industry has experienced 3.7% per annum rise in the revenue. According to a research conducted by (Poon, 2011), out of the total expenditure on fast foods, 25% is spent on hamburgers, 15% is spent on rolls, wraps and sandwiches, 5% on chips, fish, sausage rolls, 19% on sushi and salads, 11% on chicken, 6% on confectionery and desserts and the rest 16% on pizza.

The fast food market in Australia has experienced significant changes in the last decades due to the influence of the foreign trends (NewsComAu, 2014). Availability of the packaged foods in the supermarkets has been a negative impact on the fast food industry of Australia.

5.2 Sales data—as per the sales forecasting for Health and Taste, at the end of the first year, there will be sales $8 million for the breakfast items, $6 million dollar for lunch and $6 million dollar for take-out food items. At the end of the next year, the sales on breakfast will reach up to $10 million dollar, $12 million dollar for lunch and $8 million dollar for the takeouts. At the end of the third and the fourth year, this will reach to $15 million dollar and $18million dollar for the breakfast items, $15 million dollar and $20 million dollar for the lunch items, $10 million dollar and $12 million dollar for the takeouts. Therefore, at the end of the fourth year, the total sales of these three items will be $50.5 million dollar.

6. Operational Management issues:

The total space requirement for the restaurant is 3,000 square feet. An open concept design and central dining area will be featured by the restaurant. There will be sitting arrangements for 100 people. At the time of summer, there will be arrangements for sitting out of the restaurant and special summer menu will be provided to the customers such as non-alcoholic beverages. The customers can enjoy free WiFi inside the restaurant area. Initially there will be 2 managers who will supervise the activities of 10 employees. With the growth of the business, the number of employees and technological usages will be increased.

7. Conclusion:

It can be concluded from the above plan for Health and Taste, that if the plan is implemented effectively, the objectives of the Business Strategy will be easily achieved within the specified period. The location of the business is one of the major strengths of the business. As Melbourne Airport is the second busiest airport in the country, there are huge gatherings of local and foreign people on the regular basis. This is the reason behind the existence of a number of fast food restaurants in that area. Though, due to the existence of the other fast food restaurants, Health and Taste will experience tough competition, the strengths of the restaurant will help it to sustain the hyper-competitive market. The other restaurants mainly offer burgers and other typical fried fast foods to the customers. In Health and Taste, the conventional fast foods will be presented in an unconventional way. Not only the taste but also the health and nutritional value of the food items will be considered.

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