A restaurant is a place where meals are served to the general public. The type of meals served varies depending on the segment of specialization as well as the customer preference. Restaurant businesses are critical in economic development because they are leading in job creation across America (Hospitality Net, 2010). This is because of the huge populations that need the services of restaurants on daily basis as they engage in their jobs and other activities. In this paper we examine the restaurant concept so as to create an understanding for effective restaurant establishment and management.Restaurant Management Project
The restaurant that we focus on is proposed Nu Way Life restaurant. The restaurant will be dealing with several menu categories and thus shall be in full service segment. By being in full service segment it means that it can offer fine dining with a variety of foods and beverages as well as table service in comfortable surroundings (Hospitality Net, 2010). The reason for choosing full service segment is due to increasing demand of middle income earners who are seeking nicer atmospheres to take their meals. However, it may also have an attached fast food restaurant to serve those who may need take away meals.The form of its operation will start with an independent restaurant with an intention to expand into chained operations. This is because an independent restaurant will be easy to manage and control especially at the beginning stages. An efficient management will gain experience so as to manage the franchise chain once formed. The benefit of a franchise is that it captures a huge market as compared to independent restaurant which may be in a single location.The location of proposed restaurant is West Douglas because of the huge population of middle income earners. The success of the restaurant will largely depends on the number of its customers as well as their levels of income. Thus our customers are the middle income earners of West Douglas who form a large part of the population in the area. However, with expansion we will be targeting to attract other customers from all levels by engaging different marketing strategies.The restaurant industry is saturated with a lot of players where some are on big chains and others are independent. Therefore the competition in restaurant industry is very stiff and requires a lot of management strategies to attract and retain customers. These other players in full service segment of restaurant include; Extreme Pita, Cafe Ole, Woodys Bar-B-Q, Little Caesar Pizza and Naples Tomato just to mention but a few (Franchise Opportunities, 2010). Their concepts are mainly on large chain franchising which we are targeting in the long run.Although the restaurant industry has a lot of players, it is among the leading industries in income generation across the globe. That is why I believe that with sound management strategies, the restaurant will be in a position to stand a chance of success and grow to be among the largest restaurant chains in the world. The external and internal factors that favor restaurant business have more weight as compared to those factors that discourage business. Therefore I strongly believe that the business will be able to achieve projected profits being achieved. The SWOT analysis carried out on the business suggests that with proper management skills, the restaurant will be successful.Internal Factors Affecting the Restaurant
These are factors that are generated within the business operations of the restaurant that affect its performance. They include strengths that have a positive impact on the business as well as weaknesses that impact negatively on the business performance.The fist strength that favors business performance is having a strong branded image (SWOT Analysis, 2010). When we invest largely in the development of a strong brand name the restaurant will be in a position to attract and retain its customers. The importance of a strong brand name is that it will create customer loyalty which is sustainable in the long term. This is because some customers do not like changing their restaurants but rather use the one that guarantees them quality service.In addition, having a strong workforce of well trained staff gives strength to the company performance (SWOT Analysis, 2010). This is achieved through their creativity and innovation in product and service delivery at the restaurant. The intelligence of waiters and waitresses enable them to take several orders from customers at once and serve efficiently without delay. On the other hand well trained kitchen staff enables the restaurant to produce quality cooked food that is enjoyed by its customers. Thus well educated and trained staff is an asset of a successful restaurant that we plan to set up.
Moreover, the restaurant that maintains clean and tidy environment is bound to attract more customers (SWOT Analysis, 2010). The interior and exterior of the restaurant which is clean ensures an excellent environment for eating and as such customers will never doubt the cleanliness of the food served. Also, a clean environment favors restaurant business because the local authorities will not interfere with its operations since they will not have problems in issuing operational and health licenses relating to the restaurant. Therefore, high standard of hygiene remains to be strong factor that will increase business opportunities of proposed restaurant.The other strength that the restaurant will capitalize on is lowering prices as compared to that of investors (SWOT Analysis, 2010). The demand in restaurants is very sensitive to price changes because of the fact that restaurants are close to each other and offering similar food products. Thus lowering prices enables the proposed restaurant to pull more customers from competitors and increase its business revenues. However, the management should carry out cost benefit analysis so as to ensure that it does not run into losses by offering cheap prices. This is because losses can drive out businesses which may have finances to sustain its operations.Most customers are concerned with their health very much and the new restaurant is able to create a strength out of providing a well balanced menu. Well balanced menus of fresh and well cooked foods and cautious to health status of customers enable a restaurant to attract more customers who are concerned about their food. The ability of the restaurant to create a sense of caring of customer health develops increased customer loyalty which translates to increased incomes. This is a very effective factor that is considered by many restaurants now days because of increased health complications across the globe.The restaurant will have a weakness associated with its new status. A new restaurant which is not well established is not able to benefit from a huge customer base which is developed over time (SWOT Analysis, 2010). Moreover, since it is new it may not be in a position to negotiate reduced prices from its suppliers. This makes the growth process to be slow and hinders market penetration. However, the management should be able to put in measures of publicity and brand development which is quick and customer focused. This weakness is going to be defeated over time of continued operation.In addition, a new establishment requires huge investment in capital. However, limited funding is a weakness that affects the rate at which the restaurant enters the market and expands (SWOT Analysis, 2010). The financial institutions will not extend sufficient funding since the restaurant is not well known and may have few assets. Therefore, with continued business and improved confidence of financial institutions over time, the restaurant will overcome the weakness of limited funding. In addition, it will be in a position to reinvest its retained earnings over time and improve its business operations.Another weakness is that the restaurant industry is the limited products offered. This means that the new restaurant will offer products which are already offered by the competitors (SWOT Analysis, 2010). This is further aggravated by the fact that is difficult to differentiate restaurant products from those offered by competitors. Thus the only factor to utilize is the customer service offered to the customer while serving the similar food products. This is a general weakness across the restaurant industry and it slows the growth process of a business.Moreover, there is general lack of knowledge of customers in the market (Restaurant Business Plan, 2010). This is because of the fact of being new in the market. In the restaurant industry, a company can know its customers out of continuous service to them. Thus for new restaurant it has to take time to understand its customers slowly for some duration of service to be able to understand their needs as well factors that retain them. The slow development of this knowledge of customer has a negative impact on growth of the restaurant as compared to established restaurants.Furthermore, lack of relationship building with employees, customers and suppliers is a big hindrance to restaurant growth (Restaurant Business Plan, 2010). The policies developed by the restaurant when it is entering into business are not able to cover all the aspects of business relations. Thus lack of effective relationships automatically impacts negatively on operations thus reducing the income of the business. Therefore, the challenge lies on the company to speed up policies of building relationships so as to avoid this weakness.
There is an opportunity that arises out of competitor closure. When a main competitor in the restaurant industry closes down, the new restaurant will be able to take up the opportunity and bridge the gap left by competitor (SWOT Analysis, 2010). The customers of the previous competitor will be left with no choice than to seek other alternative restaurants and the new restaurant will benefit from it. This is a great opportunity that occurs whenever a player in any industry exits leaving its customers in a state of seeking other suppliers of their products.Another opportunity in when a new office complex is developing in the nearby (SWOT Analysis, 2010). This is because of the fact that people who will work in the new offices will form part of the customers of the new restaurant. The offices will create a new client base which has the means to buy food in the restaurant over lunch and any other snacks in between. In addition new office complex may also attract big companies which are in position to pay food for their employees thus enabling the new restaurant to benefit from guaranteed income from large corporate clients.Space is a problem to growing restaurants over time. However, opportunity arises whenever a building next door is available for expansion (SWOT Analysis, 2010). This may come out of a business moving to another place leaving the room available. Thus the restaurant will be in a position to carry out structural adjustments to enable expansion to facilitate it to serve increased customers. This opportunity should be utilized by the restaurant immediately whenever it arises because there are places in which business premises are on very high demand.Moreover, the restaurant has opportunity to expand to other markets through chain franchising (Restaurant Business Plan, 2010). Many successful businesses depend on a large network of chains which cover huge markets. Therefore it is important for the new restaurant to take up expansion opportunities and cover the entire local market and proceed to the entire globe. The opportunity of growth will be determined by the strategic objectives of the company and the rate at which the company is making its profits to sustain expansion processes. When the restaurant is set up, it is bound to enjoy the opportunity of new leadership which is customer focused (Restaurant Business Plan, 2010). This is because an entire recruitment will be done of staff which is skilled and trained in hospitality industry. The new staff gives an opportunity for the growth of the new restaurant by creation of new leadership team with energy to deliver the required success. The opportunity to focus on the customer as the restaurant grows is a sure way to increase the rate at which the company carries out its expansion process.There is a threat posed by stiff competition in the restaurant industry. There are a lot of restaurants locally and some with franchise across several regions. This threat is increased when a well known brand is moving to the nearby area of the new restaurant (SWOT Analysis, 2010). This makes it so difficult for the new restaurant to grow because most of the customers would prefer a well known brand over the new establishment. This threat usually cuts across several businesses and the only way to survive is to apply strategic objectives that can survive the threats.In addition, running a restaurant business is challenging and faces continuous threat due to changing consumer demands (Restaurant Business Plan, 2010). There are ever changing circumstances in human lives which include eating styles. The demand of customers changes from time to time and may be difficult for the new establishment to keep up with the demands especially if they involve huge capital investments. There are customers who may want some kind of foods not offered by the restaurant and if they do not get they never come back again.Also, if a competitor lowers prices it becomes a threat to the company (SWOT Analysis, 2010). Since the industry is price sensitive, any lowering of price by a competitor will move some of the customers thus lowering the income. Therefore the new restaurant should be on constant watch of competitors' price changes and respond accordingly so as to maintain the market share. This is a threat directed to the market share control.Moreover, there is a threat associated with operational costs which are set to increase. This will include cost of rent, labor costs and cost of food supplies (SWOT Analysis, 2010). This is a threat because rise in cost means the company has to respond with increasing its selling prices so as to maintain the profit margin. However, increased prices may drive the customers away. Therefore the company is left in a balancing act of market share and profit. This situation threatens the continuity and the expansion program of the restaurant.Furthermore, there is a threat when another competitor starts offering exactly similar products and through similar customer service (SWOT Analysis, 2010). The customer will not be in a position to differentiate the two restaurants in terms of products and service which may lead to some switching to the competitor. This threat becomes intense where the two restaurants are at a close proximity to each other. Thus the company will need to engage in more creative and innovative ways so as to keep its market share.The initial plan is to carry out a lean recruitment so as to keep the overall overhead costs as low as possible. The management team will depend mainly on the founders of the restaurant with little support. This means that we will hire additional staff as it becomes necessary from time to time. This will enable the initial investment to be recouped and invested in the business to expand it so as to be able to grow it sufficiently to the point hiring entire staff (Berry, 2010).The human resource unit will be set up to hire and foresee the staffing needs from time to time. The kitchen will have five members of staff who will include chief chef and four assistants. They should be trained in hospitality industry specializing in cooking of various food types. The other department of dining area will begin with three members of staff which we expect to increase as the restaurant grows. They will serve as waiters and waitresses.There will be administrative assistant who will assist the general manager in carrying out the general restaurant administration. Moreover, there will be a coordinator of research and development for new recipes. The coordinator is important for innovative menus and new food products. The accounting unit will initially be outsourced to bookkeeping services. However, cost benefit analysis should be conducted from time to time until when it is feasible to stop outsourcing. The estimated labor costs are as follows for the first two years of operation;Table of Estimated Labor Costs
1. Management Board2. General Manager3. Administrative Assistant4. Waiters and Waitresses5. Kitchen Staff6. Coordinator of research7. Accounting outsourcingTotal Estimated Labor CostsThe menu will be well balanced of several types of food. The importance of a menu of variety is that it attracts a lot of customers with different tastes and preference. However, it may be more costly to run a huge menu so the management will be monitoring consumption so as to continuously adjust to fit the consumer requirements. The restaurant will not be serving alcoholic beverages initially. This is because of unfavorable legislations that ensure that only alcoholic bars sell them thus making our restaurant difficult to sell. The complete menu is given in the table below;Nu Ways Life Menu
Sandwiches & BeveragesPork Tender (Tip-Top)Chicken Breast FiletCountry Fried SteakHot/Chili/Corn DogSoft Drinks-Coke/Diet Coke/Spr Tater Tots Cheese Fries/TotsChili Fries/TotsChili & Cheese Fries/TotsExpress Individual 6" PizzaStuffed Spinach BreadHalf order of LasagnaHalf order of Penne or Spaghetti$7.25
$6.75Spaghetti or PenneChicken NuggetsSmall Thin Cheese PizzaFried Mac & Cheese WedgesThe restaurant will carry out a market analysis to understand its target customers in terms of education, occupation, income, gender and even age. Once this has been determined, the restaurant should strive to have something for each target group every day. This will make it possible to attract all the groups which are usually attracted by their food types (Berry, 2010).The second strategy is to keep the price at lunch as low as possible so as to attract a lot of employees and their friends. This will leads to customer referrals and enables the restaurant to be competitive in the industry (Berry, 2010). The customer base is what causes a lot of restaurants to win and we shall concentrate on that. At dinner we will raise the prices a little bit because those who have dinners may be having as a luxury at these restaurants as most people are in their homes. All of these marketing strategies will be focused on customer satisfaction and maintaining profit margins desired.Current Operational Issues, Challenges and Future Trends
The current operational issues in the restaurant are focused at developing strategies and implementation so as to achieve the set objectives of the restaurant. They include total quality management system implementation to ensure efficiency in all business operations. Also, the management has to engage in marketing strategies that increase the customer base and ensure the growth of the restaurant. These are current operational issues to be handled by the management of day to day basis.There are challenges faced on daily operations. It includes the challenge of balancing between profit margins and market share in terms of fixing prices, ever changing customer demands and increase in operational costs. The restaurant has to develop continuous measures to handle these challenges successfully and maintain the expansion and growth process of the restaurant.The future trend of the restaurant is that it will be able to be a great chain of franchise. This is possible out of sound management and available opportunities globally. Since other restaurants which have over hundred thousands of outlets started small and grew, I believe the new restaurant future will be a success story of its own too. The restaurant industry will adopt technological aspects to meet with increasing competition.