Business
Abstract
The case study is about Irie Caribbean Restaurant in downtown Toronto. The co-owner Leroy Morrison expressed his dilemma about the future of the business because of the apparent decline in customers and revenue, which hampers the goal of achieving viability. The discussion on the case study will address the areas where the restaurant needs to improve on to achieve its viability goal. In addition, the discussion will highlight the problem areas of the business and provide reasonable approaches to counter the issues at hand. More importantly, the examination of the given case opens an opportunity for Irie Caribbean Restaurant in finding a better solution to the problems apart from shutting down the lunch service period.
Introduction
Managing a restaurant business can be a daunting task particularly when expectations of its success appear to have not been achieved successfully. The case of Irie Caribbean Restaurant located in downtown Toronto is an example of a business that is experiencing difficulty in terms of establishing a steady momentum to achieve viability. Co-owner Leroy Morrison expressed his concerns about the future of the restaurant because of the perceived issues such as declining revenue, lack of sustainability in all meal periods, and inconsistency in marketing strategies. The discussion will examine the case of Irie Caribbean Restaurant, its current situation in terms of profitability, marketing possibilities, and other opportunities that will help the restaurant to achieve viability. In addition, the discussion will also examine the other factors impacting the business and evaluate how the business is responding to the perceived issues.
Leroy Morrison and Eglon Walker own Irie Caribbean Restaurant and it is located at College St. in downtown Toronto. The restaurant is specialized inauthentic Caribbean cuisine serving meals for lunch, dinner, take-out, and catering. However, it is apparent from the case study that the restaurant is not doing well in its second year as compared to its first year in business considering the 23.3% decrease in total sales. Furthermore, the restaurant has seen a significant decline in customer turnover as observed in the average daily covers from year one to year two. The decline in customer turnover and slow movement on catering functions had impacted sales, hence, Morrison’s dilemma involves the restaurant will soon be out of business.
Problem Statement
Morrison’s dilemma can be explored more effectively by determining where the problem is coming from. First, what steps do the restaurant need to take to improve its long-term viability? Secondly, how can the business in its current situation increase customers and profit? The two main issues branches out to sub-issues that Morrison will need to address in order to achieve his viability goal or to make a decision whether to cut operational cost by closing the lunch meal service. Based on the case file, the restaurant is within a very feasible market being situated in Little Italy where an estimated traffic of 500,000 people exists. Furthermore, the strip has 55 restaurants, but that should not pose a threat to the business since the primary competitors are offering non-competing products. Therefore, Irie Caribbean Restaurant should have been able to acquire position itself as the one Caribbean restaurant in the cluster. On the other hand, the problem with the market in the location is that it is not aligned with Irie Caribbean Restaurant’s concept.
This problem contributes to the lack of customer traffic towards the restaurant and it can be assumed that the market is either not very interested in Caribbean cuisine or there is a problem with brand positioning, visibility, and awareness. One of the problems identified by Morrison is that the lunch service is not performing well; hence, the restaurant was not successful in terms of generating sufficient demand to make the lunch period profitable (Jackson, n.d.). Another problem contributing to the declining revenue is that the catering segment of the business is not getting enough functions, which was not expected by Morrison. These problems also contributes to the inability of the owners to achieve the goal of creating a franchise system for the restaurant since its performance will not pose a positive attribute that will convince potential franchisees.
Analysis of the Situation
Given the described factors contributing to Morrison’s dilemma, there are several aspects of the business that Morrison should address in order to improve the business performance. It was assumed earlier that the lack of customers might be the result of insufficiencies in brand positioning. Branding involves creating an impression based on how the business presents its image by means of demonstrating the tangible and intangible assets such as product offers, price, menu, ambiance, interior design, food concepts, customer service, advertising, and marketing (Goodson, 2012). Apparently, Irie Caribbean Restaurant fails in many of the aforementioned attributes. First, there is a need to change the restaurant’s layout because its current interior structure does not provide a sense of convenience for the dining guests. There was no designated area as point of delivery for take-out and guests waiting to be seated apart from the bar section. The current interior arrangement also creates an obstruction for customers coming in and out of restaurant. This attribute takes away one of the major components of a restaurant’s ambiance and that is the welcoming atmosphere that should be established as soon as the customer walks in at the entrance.
Secondly, the signage was not very visible from a considerable distance and it was not lighted either. Branding begins at how the restaurant presents its identity to its environment, which means as simple as putting up a front signage. Although, the city regulations require outdoor signage to be bolted to the ground and the restaurant do not plan on erecting a pylon signage, then, Morrison should consider investing a little in improving the restaurant’s outdoor signage. Another factor to consider for improvement is the menu. Given that the Caribbean cuisine uses a lot of shrimps and chicken, the restaurant should also consider exploring other menu possibilities because it appears that its current offering lacks variation.
It can be noticed from the sample menu in the case study that there are several redundant items on the menu that uses the same food concepts. For example, the appetizers are composed of shrimp entrees and jerk chicken, in the dinner section, it mentions almost the same items, and the same goes with the lunch section were similar items are also existent. This also goes the same with the salad and soups items, most of them are just one of the items. This lack of product variation will eventually lead to customers being tired of the same food over and over again. The menu stimulate more excitement on the part of the customers in a sense that when they see the menu, they become excited to try all the things in it or at least make the customers thought of coming back to try other things in the menu that they haven’t tried before. In other areas of inefficiencies, it appears that the restaurant does not have a good projection of its workforce because of the problem that they are experiencing where they are sometimes overstaffed or understaffed.
In addition, there was no attending staff in the bar area, which makes it difficult for the servers to focus on serving the food because they also need to make the drinks particularly during rush hours. Since the restaurant is accommodating part-time employees, they should also include a part-time bartender that will be scheduled for work only during peak hours, but that can only be done by establishing an accurate workforce projection. Lastly, the most important aspect that the restaurant should improve on is its current approach to marketing. Although, the word of mouth is a good way to be known by the market, its outcome is gradual and difficult to measure. Considering the fact that there are 55 other restaurants in the area, a simple mention of the other establishments would lead Irie Caribbean Restaurant to be out of the customer’s memory. Therefor, the restaurant should utilize a more efficient, cost-effective, and effective means of word of marketing, and that is by bringing the noise in social media.
Steps Taken to Address the Problem / Recommendation
At the moment the management has not taken any significant action to address the situation other than to contemplate on cutting cost by shutting down the lunch meal service. However, it is not a viable solution, but an initiative to accept the situation and yield towards the consequences. Instead, the restaurant should ramp up its marketing efforts by introducing new offers. Example, the restaurant should offer meal combos that can be made available during slow periods of the day, utilize connectivity and the Internet for branding by creating a social media venue for the customers and the restaurant to interact. The social media strategy will also enable the management to understand what the customers are looking for and based on the social media response, the business would be able to respond accordingly to the demands. In this way, the restaurant would be also able to increase its customer base while keeping its traditional word of mouth approach to marketing. Increasing customer traffic towards the restaurant is the first step for the business to catch up on its needed increase in revenue. However, the management should also consider addressing the other problems mentioned herewith in order to establish a more effective strategy to achieve viability.
Conclusion
The case of Irie Caribbean Restaurant is common in every business not only in the restaurant industry. Achieving business sustainability and viability is a combination of strategies that begins with the initiative to improve every aspect of the business from creating a more welcoming ambiance to a more aggressive approach to marketing. Morrison mentioned that the market outlook in its trading area is seeing a positive future, but that can be only obtained if the business is learning from its perceived weaknesses. There are several opportunities for improvement, but it will take a more pro-active approach in order to achieve better outcome.
References
Goodson, S. (2012). Why brand building is important. Forbes.com. Retrieved 8 March 2016, from http://www.forbes.com/sites/marketshare/2012/05/27/why-brand-building-is-important/#7a35670f1e72
Jackson, L. Morrison's dilemma. Journal Of Hospitality & Tourism Cases, 2(2).
