Abstract
Restaurants have a significant role in the business, the intellectual, social and artistic life of a prosperous society. Most of the important events take place in the hotels. Having a chain of restaurant is essential because it leads to decreased production cost such as purchasing raw materials, transportation costs among others and in return, high profits are likely to be experienced. With cost reduction, the pricing of products is also low hence attracting more customers. However, before buying an existing business, it is important to carry out an environmental analysis of the firm. The most appropriate tool for the analysis is SWOT analysis. It analyzes both the internal environment strengths and weakness, opportunities, and threats are the external environment.
In the report, there is less strength of the restaurants compared to the business weaknesses. However, Robert has a solution to the existing weaknesses such as good strategy, a popular brand and empowered workforce that he will use to change the weaknesses to strengths. The identified strengths are fixed assets and business locations. Several opportunities are present for the business and among them is improved technology and economies of scale. The threats present in the business are increased competition and loss of capital. Possible management processes that will be used to ensure the present opportunities are pursued, and the threats are taken care of are discussed. There is much emphasis on marketing and employee empowerment to ensure excellent customer services. According to the report, if the Robert follows the recommendations of the SWOT analysis and the suggested management process, he is likely to be more successful on his investment. He will turn the face of failed loss-making restaurants to successful profit making restaurants.
It is important for Robert to engage in the chain of restaurants business because he will have different units operating in various locations that may be global, regional or national. Operations management is normally accessible because there is a lot of duplication of design, operations, and menus in every unit. Chain of restaurants ensures consistency and standardization to buyers. It is easier to have a central purchasing and distributions system since operations are themed to a central ideology. He can decide to have different systems of various units such as dine-in, takeaway and casual dining among others. Robert will also enjoy economies of scale when he gets to control different units of restaurants.
SWOT Analysis
SWOT Analysis is a framework used in developing strategic alternatives when analyzing business situations. It is applicable both the corporate level and in individual business companies. SWOT is a short form that indicates strengths, weaknesses, opportunities and threats. Strengths are those positive factors of a company that makes it more competitive than its immediate competitors do. Weaknesses are those negative factors that if not responded to, can lead to the business failure or loss of competitiveness. Opportunities are those future factors that enable an organization to grow. Lastly, threats are the negative factors that can arise and affect the business competitiveness. Strengths and weakness are internal factors of an organization while opportunities and threats are external factors. As the way of ensuring Robert makes the right decision on whether to purchase the chain of restaurants, a SWOT analysis is crucial. The SWOT analysis elements are discussed separately in this essay (Danca, 2016).
Strengths
As discussed in the introduction, strengths are those potential factors of a corporation that makes it have a competitive edge. One of the greatest strength of this chain of restaurants is fixed assets. The businesses have the equipment, buildings and fixtures. This is the strength because Robert will not have to start from a scratch in establishing the business that may take much time. The other strength of the business is that they are located in different location ensuring the widespread reach of customers.
Weaknesses
These are the features of the company or the product that can lead to growth or failure of the company. Weaknesses affect the value offered by the company and give competitors a competitive edge. One of the major weaknesses of these restaurants is that they are making losses. Notably, three of the five restaurants are making losses while one is at the breakeven point and the other one making minimal profits. It means that the invested money is hardly received back. The other weakness is poor management. Inexperienced people ran three of five stores and probably that is why they incurred losses. The success of any business is considerably affected by the management strategy used by the owners. Managers should be able to lead the employees to achieve the organizational goal that is making the profit. If the owners are not experienced, they are likely not able to be the best managers of the business and. Therefore, they need to have a well-experienced management team. The other weakness that affects the restaurants he wants to purchase is the lack of enough capital. In the case study, one can some restaurants are closed due to bankruptcy. The case study points out that there are decreases in the sales meaning that there have been decreasing in the number of customers that visit the restaurants. This is the major weakness because Robert will be tasked in ensuring that he can win back the lost customers, (Butera, 2016).
Opportunities
Opportunities happen due to different reasons that may stem from changes in market, technology, consumer lifestyle and improved production methods. One opportunity is that consumers always want to try out new things. If the Robert changes, the brand as he wants to, he will get customers that in return would increase their sales. The other opportunity is the business will enjoy economies of scale. Economies of scale refer to the minimization of the average costs that come from a company operating on a great scale. Having many will mean buying raw materials in bulk at lower unit costs hence reducing the production costs. This would also help the management to lower prices hence attracting more customers. Technology in the food industry is improving day in day out. Availability of improved technology that may be product related, for example, GMO goods or processes and logistics related and consumer relations such as e-trade are opportunities to any business in the food industry.
Threats
The last part of SWOT analysis is assessing the risks of external factors that affect the business. One of the threats is competition from already existing profit making businesses. The other risk is the loss of capital in case the business do not pick up. Robert can only raise $3 million dollars out of the required $10 million dollars. He wants to borrow the rest of the capital that may be risky because he is not assured of the returns. Social trends are also a threat with many people opting not to take fast foods due to nutritional issues such as obesity. This may decrease the amount of sales recorded.
Concisely, the SWOT analysis has pointed out two strengths of the existing business which when added up with Robert efforts will lead to the success. With Robert, bringing in employees that are more experienced and a better strategy the success of the firm is guaranteed. This shows that Robert has solutions to the restaurants weaknesses. The success of any company lays on better strategy and an empowered workforce. When one looks at Robert, it is easy to point out that he has a well-developed experienced workforce that is advantageous in ensuring the success of the business. The SWOT analysis shows that there is still a potential in ensuring profitability of the restaurant business if appropriate management processes are adopted.
Management process applications
According to Mensah& Dei Mensah (2013), the aim of several food and beverage companies is to provide quality food and beverages in a clean and hygiene environment that possess well designed and comfortable facilities as well as provide friendly services that bring value for customers’ money. This is only possible if the management plays its role in ensuring the food and beverage business operations are running effectively. One management process is ensuring proper layout and design of the restaurants. The layout should in a way that allows the flow of operations in the restaurant. Adequate space should be provided which should be appealing to customers. The physical impression customers get from a restaurant determines their second visit. The other thing is improved customer services. Employees should be trained on how to receive the customers and make the buyers realize the value of their money. Good service delivery is essential in the restaurant business. Services delivery is primarily affected by communication skills of employees. It means that employees should be trained in effective communication skills.
Use of technology is useful in managing the chain of restaurants. Applicable technology in this industry includes the use of point of sale technology. This ensures financial accountability because every sale is well recorded and the accumulation tallied at the end of the day. The organization can also use e marketing whereby they can use social media as avenues. E-marketing and e-trade can be used as ways of ordering services and bookings. The purpose of research and development is to learn customer’s needs. Further, it helps to ensure the restaurants offer only the demands of the clients. This will ensure there is minimal wastage, and it will lead to the increase of sales (Davis et.al, 2013). . Managers should also embrace teamwork. Working as a team ensures all the employees are focused on achieving the organization's goals that are ensuring profitability and customer satisfaction. The other management process is providing financial management that includes cost control. When there is financial management, it is easy to avoid business losses. It also helps the management in menu pricing to ensure it is profitable and the same time it is not consumer exploitative. The other essential management process in this business is marketing. This can be done through offers, advertising, sales promotion among another strategy. Marketing will help restore the lost trust of customers and attract them to being loyal customers.
References
Butera, M. (2016). Food and Beverage Growth Plan Melbourne’s North. Retrieved 28 March 2016, from https://www.rdv.vic.gov.au/__data/assets/pdf_file/0010/1165519/Food-Plan 2014-FINAL.pdf
Danca, A. (2016). SWOT Analysis. Retrieved 28 March 2016, from http://nbta.no/wp content/uploads/2015/01/gbta_swot_analysis.pdf
Davis, B., Lockwood, A., Pantelidis, I., & Alcott, P. (2013). Food and beverage management. Routledge.
Mensah, I., & Dei Mensah, R. (2013). Management of tourism and hospitality services. Xlibris Corporation.
