Restaurant free essay sample

This proposal is intended to pinpoint the problems and introduce actions or solutions for the active restaurant operator-owner and manager who are involved in the Moviante Restaurant. The analysis is divided into four parts: (1) problem identification, (2) causes of the problems, (3) solutions to the problems, and (4) recommendations. Additionally, there will be a complete discussion on problem solving designed to avoid future, foreseeable undesired outcomes. Statement of the Problem Mark Jaslow, the manager of Moviante, described that the business level in the spring and summer of 1998 was booming. However, from November on, business began to decline. Even the effort to eliminate costs such as labor hours, laundry expenses, and advertising budget seemed to be useless. Further, Moviante discontinued offering lunch in December owing to the fact that the advertisements for lunch specials failed significantly to promote business. According to the income statement of 1998, Moviante has suffered operating losses of $3,208. This loss is primarily due to declining sales revenue while increasing in operating expenses. We will write a custom essay sample on Restaurant or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page What actions should Moviante take in order to reverse annual loss of this year as well as any losses that possibly incur in the future? Problem Identification 1. Operating Loss – this is a major problem of the restaurant. As shown in 1998 income statement, total costs are approximately 90 percent of total sales. This showed a red flag of the restaurant. Also, the majority of restaurant sales come from weekend nights rather than the weekdays (See Table1). Operating Times| Sales Volume/week| Percentage of Total Sales| Weekdays| $3,000| 40%| Weekend nights| $4,500| 60%| Total| $7,000| 100%| Table1: Sale Volume per week 2. Advertising and Promotion – according to an informal survey of 25 residents within a ten mile radius of Ithaca conducted in February 1999, no respondents recognized the name â€Å"Moviante†. More surprisingly, they did not know what it was or where it was located. Furthermore, of all the coupon ads that advertise in the valley’s free newspaper with a circulation of 29,000, only ten coupons were redeemed. The restaurant was promoted using 13 local newspapers within a 30 mile radius, 1 free valley newspaper, New York Times, New York Magazine, local radio station. Indeed, the restaurant had placed advertisements using these media; however, Ithaca residents did not know or hear about it. Therefore, the problem here with regard to media used and advertising or promotion strategies is another major concern. 3. Target Market – Moviante is located on a side street in the college town of Ithaca, New York. Because of easy accessibility to Route 80, the restaurant would capture the transient vacationer who might be enroute to ski, camp, or fish. According to Schore, he said the major problem was how to divert those travelers from the superhighway and into Ithaca. Nevertheless, the restaurant firstly offered different meal periods to attract different customers (See Table2). Meal Period| Target Market| Lunch| Intown and regional businesses| Dinner| Remote areas| Afternoon snack| Students, shoppers, locals| Brunch| Remote areas| Late night snack| Students, locals| Table 2: Meal Period and Target Market Take out| Locals| The strategy of attracting different customers with different meal periods did not work out very well because the majority of customers were described as mostly upper middle class couples in the $30,000-$40,000 income bracket from the surrounding cities within half an hour of Ithaca. As a result, the problem here is that the target customers are not the people who mainly patronize the restaurant. 4. Menu – items on the menu seems to be another problem of Moviante. Of the ten items on dinner menu, one was vegetarian while the rest of them were seafood and meat. Clearly, no variety of items was offered to vegetarian customers. Further, Moviante served much the same menu for lunch and dinner, only portions and prices were different. The menu was not created in such a way that can attract new customers. These all shortcomings would bring in the restaurant’s menu problem. Causes of the Problems There are a lot of symptoms stated and occurred at the restaurant. To make sure that these symptoms really cause the problems, it is necessary to verify each symptom closely. The problems stated earlier are involved with operating loss, advertising and promotion, target market, and menu. The following are those that cause the restaurant problems. 1. Management – the restaurant began to decline in sales revenue, incurring operating loss since November 1998. Obviously, this loss happened right after Mark Jaslow was promoted to be the manager of Moviante. Jaslow had been employed as a cook in New York City for the past six years and was just finishing his Hotel and Restaurant management degree at Cornell University. He was originally hired as the cashier/assistant manager in March 1998. He who has very few months of management experiences, are now responsible for all areas from the front to the back of the house. It would be problematic for a job that used to have two persons (Schore and Quinn as a co-manager) responsible for transferring to a job of one person. Perhaps, job overloading can result in an ineffective performance. It is also known that poor organizational structure and poor management are the major causes contributing to the firm’s failure (Reich, 1998). 2. Marketing – one of the problems stated earlier is target customers are not the people who mainly patronize the restaurant. Moviante did not have clear marketing objectives, a detailed action plan of marketing strategies, as well as an effective marketing research and information system. Each of these factors deprives the restaurant of achieving its target market and business’s goals. According to survey, most Ithaca residents still did not know â€Å"Moviante† in spite of the restaurant’s marketing effort. Indeed, the restaurant’s target market was not clearly defined. Each group of the target market should be clarified regarding age, income, education, geographical area, and preference. As a result, the restaurant would not be able to develop an effective marketing strategy if the target customers were not defined clearly and correctly at the first place (Kerin Peterson, 2001). 3. Advertising and Promotion – all of the restaurant advertisements were eventually cancelled in November 1998 due to the operating loss. Ineffective use of promotional mix such as public relations, personal selling, and sales promotion can be a major cause keeping Moviante away from reaching sales volume. Obviously, Moviante failed to increase customer awareness of the restaurant and entice first-time buyers to try the restaurant. Hence, there would be difficult for the restaurant to create new customers, gaining a higher percentage of repeat customers. Advertising message is another cause of the restaurant problem. Simply stated â€Å"Moviante† and included a description of its food with the address and hours of operation would not entice or catch people’s attention. Below is the figure illustrated that the restaurant spent 75 percent on the simply stated â€Å"Moviante† ads while spending 25 percent on more informative ads with specific details about the food with redeemable coupons offered. 4. Menu – as far as the restaurant profit is concerned, the menu and menu planning are front and center in the restaurant business. The menu is the most important ingredient in guests’ experience (Walker Lundberg, 2001). Observations from menu in many Italian restaurants, northern Italian style restaurants are likely to offer green spinach noodles served with butter and grated Parmesan cheese. Also, items such as â€Å"gnocchi† which are dumplings made of semolina flour and â€Å"saltimbocca† which is made of thin slices of veal rolled with ham and fotina cheese and cooked in butter and Marsala wine are examples of popular items at the northern Italian restaurants (Walker Lundberg, 2001). However, Moviante which defined as northern Italian cuisine did not have any of those itemed mentioned appeared on its menu. Accordingly, lack of popular menu items, variety of items, vegetarian choices, and kids’ menu are the drawbacks of Moviante restaurant. Analysis of Alternatives or Solutions The following solutions were assessed and analyzed based on statement of problems and causes. The solutions were developed in order to help Moviante solve current problems and prevent foreseeable undesired outcomes. These also help the restaurant to succeed in the areas of profitability, customer satisfaction, as well as employee satisfaction which are the best wishes for all restaurant businesses. (Reich, 1998). 1. Management – key alternatives for Moviante regarding management include: * Develop management philosophy – this is a profound step that can leads to the restaurant success or failure (Reich, 1998). All stockholders and manager should have a meeting and clearly discuss about the relationship among sales volume, profit volume, and amount of service to be offered. * Organizational structure – an operational structure will facilitate the smooth operation of the restaurant (Kreck, 1978). Even though Moviante is operating as a small business, organizational structure is necessary. Using functional approach recommended by Reich (1998) to form an organizational chart, Moviante restaurant may be divided into dining room, kitchen, management, marketing, and finance/accounting. Additionally, having a clearly organizational structure can help the restaurant examine in detail of the tasks and jobs to be performed by each person (Walker Lundberg, 2001). * Evaluating and training – continually operating without performance evaluation is not motivated employees to make the best out of their ability. Training is also key to keeping satisfied, capable, confident, and competent employees (Walker Lundberg, 2001). Accordingly, all employees at the Moviante restaurant should be trained periodically to successfully meet restaurant goals. . Marketing – key alternatives for Moviante are provided to solve these three major problems: (1) Moviante did not have a clear set of marketing objectives and strategies, (2) Moviante current distribution methods did not reach profitable market segments, (3) Moviante did not effectively use promotional mix variable to maximize its sales revenue. * Marketing objectives – this includes identifying target market an d establishing goals for each market segment (Abbey, 1993). First of all, Moviante needs to identify the types of market segments to be solicited. Moviante’s current market segments are too broad and vague, making it difficult for the restaurant to penetrate to all of them within a limited budget. However, the plan to capture the transient vacationer who might be enroute to ski, camp, or fish, as well as people from the city heading to the country want to stop in Ithaca is interesting. According to the study of consumer behavior, transient vacationer and visitors are more likely to spend much money in the restaurant along their way to travel than those of local people who live close or nearby that restaurant (Hawkins, Best, Coney, 2004). This group of people would help the restaurant generate higher average check. However, the local people should not be overlooking because these group can maintain the sales volume during the weekdays. * Marketing strategies – after target market is clearly defined, now the restaurant would be able to do the action plan for each market segment. The action plans should include advertising strategies and media planning to use for each segment. The table below shows potential market segment with planned advertising media: Target Market| Promotion Techniques| Advertising Media| Transient vacationers, visitors| * Coupon redemption * Happy hours| * Join the Chamber of Commerce with the promotion of â€Å"Main Street Ithaca† * Brochures, flyers, Website | Local residents (i. e. students, shoppers, regional businesses| * Coupon redemption * Happy hours, senior discounts * Support local sports team| * Radio, direct mail, newspapers * Sample menus, posters * Restaurant’s own Website| 3. Menu engineering – key alternatives to menu problems include: * Prepare a well-written menu – to make it easier for customers to read, menu should be organized, clean, and fresh in appearance (Gordon Brezinski, 1999). It is recommended that the price on the restaurant’s menu be aligned on the right. Also, too much detailed item description is wasted. * Items on the menu – as stated earlier in the causes of problem, Moviante as a northern Italian ethnic restaurant, should adopt popular items which have been used widely and successfully in other Italian cuisines. According to the consumer behavior study by Hawkins, Best, Coney (2004) customers are more likely to patronize the restaurants that offer popular items rather than those that offer ordinary dishes. * Special menu – with a growing number of people who are concerned more about what they consume, special menus including vegetarian meals, low-fat, or low-carb items are becoming to grow. More and more restaurants are providing specialty items to attract customers (Ruggless, 2003). As a result, Moviante needs to offer more vegetarian items and stay abreast to the consumer’s trends. Kids’ menu – the whole attitude of full-service restaurants changed when the fast-food restaurants started to appeal to families with kids by offering kid meals at desired sizes and prices (Gordon Brezinski, 1999). Most of the transient vacationers and visitors are more likely to be families with kids. Offering kids’ menu would be a good opportunity for the restaurant to brin g in more customers. Conclusions and Recommendations * The restaurant’s operating loss occurred since November 1998 was due to the major causes of poor management, lack of organizational structure, marketing and promotion problems, as well as menu problems. A restaurant needs a series of marketing programs that target its variety of customer segments and are designed to generate additional traffic from among the growing year-round resident population – particularly during the off-season. Accordingly, the restaurant should target and attract seasonal residents, visitors, and vacationers – in and out of Ithaca area. * Moviante’s marketing activities should take into account the lifestyles of the Ithaca residents, which are made up of year-round residents, seasonal residents, and tourists. * Weekend dinner business presents the biggest meal period sales volume. Hence, marketing programs are needed to address these meal period opportunities. * The restaurant’s new menu should be promoted. A great deal of thought and effort has gone into designing a menu that will communicate a better price/value perception than the current menu. Promotion of the new menu will also help promote the image of the restaurant. * Steps should be taken to improve the restaurant’s awareness in the community. * Generating groups and party business to maximize use of the areas of the restaurant. * Promotion incentives that encourage and reward purchase frequency over specified time periods may be employed. Decorating the restaurant in the holiday’s theme.