4. Environmental Analysis
4.1. Operating Factors
Some of the common goals in any restaurant regardless of size is the desire to make money, control food and labor cost and to retain employees . A restaurant is one of the toughest businesses to run successfully because of the long hours involved, the high turnover and the relatively low pay when compared to the number of hours. Therefore it is clear that human resource is a critical operating factor. An understanding of the nature of the market is also essential; factors like market saturation and market trends are critical to operating a restaurant . This also includes gaining an insight into competitor behavior. Apart from this there is a need to understand their customer base and customer trends. It is important that a restaurant focus on customer relations in order to build a presence in the community. This also includes continuous and cordial engagement with suppliers and helping local businesses grow. At Matthew’s Restaurant also these operational factors are very much in play.
4.1.1 Human Resources: There is a strong connection between treatment of employees and their retention and the overall customer experience. In the hospitality industry especially, it is essential that the expectation of employees be met with the same careful dedication as the guests’ expectations . By treating employees with the same care and consideration that is extended to guests, hospitality organizations ensure that their employees treat guests well and create a satisfactory customer experience. Motivation and empowerment are key to retaining employees. Only when an employee feels valued does s/he want to continue the employment. In restaurants there are full-time employees and hourly workers like the wait staff. Retaining wait staff is especially challenging since pay is a big motivator for the staff to remain. For independent restaurants like Matthew’s retaining wait staff means that pay and the opportunity for tips must be adequate. One way to ensure larger tips is to train wait staff in activities that increase tips from customers .Hiring experienced people is another method. At Matthew’s, the proportion of experienced staff is somewhat higher than novices. Yet it still leaves a large proportion of staff that needs to be trained after joining the restaurant. Kitchen training involves training on the dishes and style that is unique to the restaurant. Wait staff are trained on the menu and the wine list. The employees regard Matthew’s as valuable experience which will enable them to earn more per hour at other establishments of similar nature. This adds to the challenge of retaining employees. Matthew’s pay scale is on par with industry standard. Potential employees can directly approach the owner company M Hospitality for seeking a position. Most employees are from the Jacksonville area but a significant number, especially in the kitchen, bring their experience from other parts of the state. Staff is selected both for experience and for their ability to learn quickly, the latter is determined through an interview process. Methods need to be explored for making jobs here attractive to local talent.
4.1.2 Customers
4.1.2.1 Geographics: Most of the customers at Matthew’s Restaurant are from Jacksonville. Around 10% of customers are from outside the city. Many of them come from nearby cities like Tallahassee, Ponte Vedra Beach and Orlando. Visitors also come from other states like Ohio and even as far away as California .
4.1.2.2 Demographics: The primary target customer for this restaurant is aged between 25 and 50, people with income between $40,000 and above. The neighborhood has homes where rents start from $875 to upwards of $2,400 . Apartment rents start from $622 for a single-bedroom apartment and can range over $3,300 for a three-bedroom apartment . Corporate customers are also part of the target demographic. Companies with over 50 employees are preferred.
4.1.2.3. Psychographics/Lifestyle Data: Target customers are people who enjoy the fine dining experience and are willing to experiment with different types of ingredients. People who enjoy travelling and adventure would form an ideal customer base. People who favor local produce over exotic ingredients are also part of the target customer base.
4.1.2.4 Buyer Behavior: Many customers view Matthew’s as a special occasion place . There is very high incidence of repeat customers who bring family and friends for special occasions like birthdays and anniversaries. The restaurant also finds repeat customers in people who bring their dates for the dining experience. The customers expect high quality for the price that they pay both in the food and drinks. Most customers enjoy the extensive wine list that Matthew’s offers. Fine dining alternatives near Matthew’s include Taverna which serves Italian fare and Bistro AIX which serves quintessential French cooking. Bistro AIX is very similar to Matthew’s in philosophy, in that they primarily use locally sourced ingredients and provide a similar intimate ambience although costs are equal or in some cases, higher. Matthew’s is not very friendly for both children and the elderly in the menu choices, the pricing and the general ambience. This is a large segment that needs to be tapped into and Matthew’s should consider weekend specials that allow children and elderly to enjoy familiar versions of their menu items. This will also help to better tap the 30-49 demographic which is more likely to have young children and elderly parents in their care. Customers expect fast service and value for money in addition to demanding freshness of ingredients and preparation. Fine dining restaurants are facing competition from casual dining restaurants where these demands are met adequately . Matthew’s Restaurant needs to look at methods to improve time and price experience for its customers.
4.1.3 Competitors
Most of the restaurants on the Hendricks Avenue and San Marco Boulevard are pizza and sandwich places. Of the few fine dining restaurants in the vicinity, Bistro AIX is closest in style and ambience to Matthew’s and hence has been selected for the competitor review. Like Matthew’s they also source ingredients locally. Bistro AIX is about three quarters of a mile from Matthew’s and on San Marco Boulevard.
Marketing: Bistro AIX serves lunch and dinner and has a separate dessert menu. The focus is primarily French style cooking although Mediterranean and American options have also been introduced in order to appeal to a larger customer base. Their catering menus also feature their specialties and also offer lunch and dinner, the prices being inclusive of soup, salad, mains and a dessert. Their wine list is also extensive and has been awarded the Spectator Awards for Excellence since 2004. Purchases can be made by the bottle or by the glass. Drinks also feature spirits like vodka, American whiskey, tequila and rum and also a selection of beers. Apart from this Bistro AIX also provides display menus. Pricing for the lunch and dinner menus range from $9 for escargot to $31 for pan roasted scallops; catering menu prices range from $29 to $88 per person which includes a soup, a salad, a main dish and a dessert. Customer reviews showed that for most lunch/dinner menu items, the pricing was considered fair . The service is very good, even on busy weekend nights. It is a standalone restaurant similar to Matthew’s and owned by Forking Amazing Restaurants. One of the company’s partners Chad Munsey had previously worked at Bistro AIX as a general manager . According to Munsey it has helped him to expand his repertoire from Italian and Spanish to now include French menus. Similar to Matthew’s, Bistro AIX also has strong presence in social media and is in the news through events that is sponsors or caters and promotions like on Father’s Day this year . Their focus is high quality food and money spent on décor and advertising is all about highlighting their food quality.
Operations: The owners are concerned with delivery quality food and excellent service. This is apparent in the customer reviews. There are generally no delays in service except on really busy days but not anything that customers found unacceptable. The excellent taste and flavors more than made up for the price. The portions are quite manageable and proportionate to price. However, this is not a place where young children can be accommodated easily both menu-wise and seating-wise. It is also not for people looking for a quiet dining experience. The sounds tend to carry from other tables . Also the wait team did not appear comfortable with large groups on walk-ins even when the restaurant was not full.
Finance: From what I have been able to research the restaurant earns between $2.5 million to $5 million in a year . Food cost and labor cost are their primary expenses.
Human Resources: In keeping with their mission to provide high quality French style food, the restaurant hires experienced people. Novices are also hired although not directly but through agencies and advertisements on job portals. They recently hired Michael Bump as executive pastry chef . The wait staff is well versed with the cuisine and the menus and is able to handle customer queries about the different items on the menu. It appears that there is a certain level of formal training imparted especially about the wines. The employees appear to be generally happy working there with most customers remarking that the staff is willing to assist and take care of the patrons .
4.1.4 Suppliers: Matthew’s sources almost all of its ingredients locally and crafts menus that reflect the seasonal produce. Most of the suppliers are local including general farmers and specialist farmers. The restaurant also has suppliers from other parts of the state and even other states especially for seafood items. Matthew’s maintains a cordial relationship with all its suppliers. Supplier loyalty is evident in the fact that, in case of issues with the products suppliers call and inform the restaurant in advance. Suppliers also inform the restaurant first in case they have any special produce on offer.
4.2 Remote Factors
For any business, there are certain factors that are outside its control. These are generally at the level of governmental policy, changes in the general economy of the country which affects buying and selling decisions, changes in trends adopted by society and the advances in technology that can aid a business or provide advantages to competitors at the cost of our business. Environmental change is an example of a remote factor beyond the control of a business. Growth of the algae Karenia brevis, (also called the “red tide” and an occurrence in Florida coast) results is rising toxicity levels of coastal waters and deaths of marine life which negatively impacts restaurants dependent on seafood . The losses to restaurants between 1995 and 2000 were estimated at $6.5 million monthly in the nearby areas. The next section looks at some of the remote factors affecting Matthew’s Restaurant.
4.2.1 Political Regulations
The restaurant industry is not regulated by any particular federal legislation however the Occupational Safety and Health Administration (OSHA) make safety regulations for all workers including restaurant workers. The Department of Justice enforces employment laws uniformly across industries including the restaurant industry . The USDA is in-charge of promoting healthy eating habits which impact the way people eat and therefore impacts the customer base of restaurants . From 2015, under the Affordable Care Act, all restaurants are required to provide health-plans to full time employees regardless of how short their employment is expected to be . Each of these factors adds to the cost of operations for a restaurant, whether in the form of medical benefits for employees or sourcing of ingredients from suppliers who do not use certain fertilizers. In the pricing at Matthew’s, these costs are reflected somewhat. As costs increase it is unclear if Matthew’s can continue with the prices that are currently listed.
4.2.2 The Economy
In the restaurant business too, fluctuations in the economy affect the business. For example an economic downturn can impact the way suppliers behave – they may change their core produce, which means the restaurant will have less menu choices to offer. In fact, people may spend less therefore there may be less than expected income for a restaurant resulting in layoffs. During the 2008 financial crisis, the restaurant industry suffered monthly job losses. In November 2008 alone 17,600 jobs were lost . The trend seems to have reversed as the economy has started to show improvement; restaurant sales exceeded grocery sales in early 2015 . It is projected that in 2016, restaurant sales will be to the tune of $40 billion in Florida . By positioning itself for the younger post-work crowd, Matthew’s appears to be in a good place to capitalize on the upward changes in employment trends.
4.2.3 Societal Trends
Society’s approach to food undergoes changes constantly. Restaurants, by very nature of the business, have to keep in touch with consumer demands. In 2016, it is predicted that food will become more plant based and not just for vegetarians and vegans. More and more people are embracing greater quantities of plant based food . There is also a shift towards wheat-free flours or gluten free food and towards consumption of lesser-known meat and seafood options. In Florida, there is a notable trend towards consumption of local produce. People are becoming conscious of the origin of the food and how it came to the table . Restaurant patrons are looking for sustainable food choices. Matthew’s Restaurant has already been a forerunner in these trends and hence strongly positioned to meet the demands of its customers.
4.2.4 Technology
Technology plays a significant part in most businesses today. Restaurants are no exception. Technology usage in restaurants aims to increase customer engagement, reduce operational cost for the restaurant, improve food preparation and storage and reduce food wastage and therefore lead to better profits. Front of House (FOH) and Back of House (BOH) are the major technology categories. Point of Sale or POS systems which handle food and beverage orders, transmission of orders, check settlements and timekeeping are being rapidly adopted by restaurants . Hand-held POS is also gaining popularity. At Matthew’s there are no hand-held POS systems. Waiters will take orders and enter them into the restaurant’s standard POS system. This increases wait times which increases meal times and therefore time gap between one meal to the next is significant. Handheld technologies would definitely be worthwhile to research. Payments is another area where technology is being rapidly adopted by restaurants. Customers prefer faster payment processes once the meal is over and by leveraging systems like smartphones and RFIDs, restaurants can reduce the time gap between completion of one meal and the beginning of the new one . By being able to seat people faster, more customers can be accommodated in a night. At Matthew’s these type of payment methods are yet to be adopted. This would be a worthwhile option to explore. Social media is changing the dining experience. Customers share their experiences almost instantaneously and review forums like Yelp are fast gaining credence among diners . Matthew’s Restaurant has a strong social media presence and the management engages with customers through Facebook, Yelp and TripAdvisor.
5. SWOT Analysis
Product/Service: The menus are true to the restaurant’s philosophy of local produce/innovation (4)
Product/ Service: Dinner and catering services (3.7)
Product/ Service: Happy Hour Pricing: Customers found prices favorable in relation to the extensive food and drink options (4.5)
Ambience: Best in class for fine dining (4.5)
Promotions/sales/social media: Able to generate traffic with limited spending on promotions. (4.2)
Promotions/sales/social media: Strong engagement with customers through social media channels (4.6)
Positioning: The restaurant is well-known as a fine-dining establishment (4)
Hiring: Employees, especially kitchen staff, are talented (3.8)
Employment Laws: Follows the laws (4.5)
Performance evaluation/appraisals: When restaurant is doing well, employees are given financial appraisals (3.9)
Finance: The financial position is quite strong (4)
Operations: Tasting menu is consistently rated high (4.2)
Management team: Owner managers indicates strong commitment to success of restaurant (4.1)
Weaknesses
Pricing: Customers find portion size small relative to price (2)
Product/Services: Catering menu: Limited vegetarian options for starters and mains (3)
Marketing planning: Needs to encourage more customers to try the unique cuisine on offer (3.1)
Wage parity: Management needs to perform a comparative analysis to understand retention possibilities (3.8)
Recruitment: No special efforts for non-executive staff (3)
Employee training: Training is provided about menu and wines but no cross functional or formal training (2.8)
Job policies: Some jobs are better defined than others (2.5)
Orientation: No handbook, only through HR and older employees (2.1)
Operations: Certain menu items are consistently less in demand in spite of good reviews (2.1)
Administrative management: Hiring, training, customer relations are some areas for improvement (2.3)
Opportunities
Economy: Improvement in spending on dining out
Positioning: Position the restaurant as a fine dining option that supports the community through sourcing local ingredients.
Marketing: Leverage social media to market the restaurant to the 25-39 demographic.
Customer: Create opportunities for expanding customer base to include families with young children and the elderly.
Buyer behavior: Adopt methods that reduce payment times for customers to provide speedy services and reduce wait times between seatings.
Supplier: Strengthen supplier ties by supporting their products and creating more business opportunities for them.
Societal trends: The trend towards consumption of local produce is in line with the restaurant’s philosophy. Increase in consumption of vegetables, provides the opportunity to create vegetarian menus that will cater to a growing consumer base of vegetarians and vegans.
Technology: Leverage technologies like smartphones for payments and placing orders through dedicated apps which reduces wait times and increases the number of patrons who can be seated at any given table.
Threats
Human Resources: Lack of formal training and adequate job policies can lead to low employee morale which leads to unsatisfactory service.
Customer analysis: May not view the restaurant as a anytime option for fine dining; the feeling is entrenched that this is a ‘special occasion’ place.
Competitor analysis: Although priced higher, customers are willing to dine repeatedly citing superior portion sizes relative to cost and overall better service quality.
Political regulation: Rising cost of healthcare provisions for employees will increase cost for the customer.
6. Key Factor Analysis
Product/Service: The menus are true to the restaurant’s philosophy of local produce/innovation (4)
Product/ Service: Dinner and catering services (4.3)
Product/ Service: Happy Hour Pricing: Customers found prices favorable in relation to the extensive food and drink options (4.8)
Ambience: Best in class for fine dining (4.5)
Promotions/sales/social media: Able to generate traffic with limited spending on promotions. (4.2)
Promotions/sales/social media: Strong engagement with customers through social media channels (4.6)
Positioning: The restaurant is well-known as a fine-dining establishment (4.8)
Hiring: Employees, especially kitchen staff, are talented (4)
Employment Laws: Follows the laws (4.5)
Performance evaluation/appraisals: When restaurant is doing well, employees are given financial appraisals (3.9)
Finance: The financial position is quite strong (4.7)
Operations: Tasting menu is consistently rated high (4.8)
Management team: Owner managers indicates strong commitment to success of restaurant (4.8)
Weaknesses
Pricing: Customers find portion size small relative to price (2)
Product/Services: Catering menu: Limited vegetarian options for starters and mains (2.1)
Marketing planning: Needs to encourage more customers to try the unique cuisine on offer (1.8)
Wage parity: Management needs to perform a comparative analysis to understand retention possibilities (3)
Recruitment: No special efforts for non-executive staff (2)
Employee training: Training is provided about menu and wines but no cross functional or formal training (2.3)
Job policies: Lack of uniformly adequate policies (2.1)
Orientation: No documented orientation schedule (2.1)
Operations: Certain menu items are consistently less in demand in spite of good reviews (3.5)
Administrative management: Hiring, training, customer relations are some areas for improvement (2.5)
Opportunities
Customer analysis:
Customers are increasingly oriented to sustainable food
Customers are opting for more fresh and vegetarian options
They want to see the food as it is prepared
Customers want faster services, less wait times and electronic payment options
Children and elderly is a demographic to tap into
Economy: Recovering economy is encouraging dining out opportunities.
Competitor analysis: Competitor has a kitchen that customers can see, customers report more value for price and better service.
Human Resources: Make the restaurant more attractive as a career option for young people and develop formal training and growth plans.
Threats
Competitor analysis:
Trade area has more casual dining establishments – which offer better portions for lower prices – than fine dining.
Fine dining options offer several cuisine options, although not many offering modern American cuisine.
Most restaurants are offering familiar food options, not much of experimental cuisine.
Nearest fine dining competitor, Bistro AIX, has faster service times which is attractive to customer although they have a shorter wine list than Matthew’s and higher prices in some cases.
Bistro AIX has a more extensive catering menu and offer more gluten free and vegetarian options in all menus.
Customer analysis:
The target demographic aged 25-39 is highly technology savvy and Matthew’s needs to ramp up its technology spending to keep pace.
Not catering to needs of children and elderly also threatens first-time or repeat visits from the 30-49 demographic who are more likely to have children and elderly in their care.
Works Cited
Bistro AIX. "Wines, Spirits, Beers." 2016. Bistro AIX. 15 July 2016 <http://www.bistrox.com/wp-content/uploads/2016/04/AIX-WineMenu-Spring2016.pdf>.
Bull, Roger. San Marco's Bistro Aix purchased by St. Johns Town Center restaurant. 14 July 2014. 15 July 2016 <http://jacksonville.com/business/2014-07-14/story/bistro-aix-san-marco-purchased-town-centers-ovinte#>.
BusinessBay. Bistro Aix Jacksonville, FL - 32207. 16 July 2016 <http://businessbay.us/bistro-aix-jacksonville-fl-32207.html>.
Cavusoglu, Muhittin. "An analysis of technology applications in the restaurant industry." 1 January 2015. University of South Florida. 17 July 2016 <http://scholarcommons.usf.edu/cgi/viewcontent.cgi?article=6654&context=etd>.
craiglist. Apartments/Housing rentals. 16 July 2016 <https://jacksonville.craigslist.org/search/apa>.
Ernst & Young. "RESTAURANT & CASUAL DINING INSIGHT REPORT." September 2014. EY. 15 July 2016 <http://www.ey.com/Publication/vwLUAssets/EY_-_Restaurant_and_Casual_Dining_Insight_Report/$FILE/EY-casual-dining-report.pdf>.
First Coast News. King Estate Wine Dinner. 7 June 2016. 15 July 2016 <http://events.firstcoastnews.com/King_Estate_Wine_Dinner/329702130.html>.
Ford, Robert C., Michael C. Sturman and Cherrill P. Heaton. Managing Quality Service in Hospitality: How Organizations Achieve Excellence in the Guest Experience. Clinton Park: Delmar, 2012.
Global Food Forums. 2016 Food Trends. 2016. 16 July 2016 <http://www.globalfoodforums.com/food-news-bites/2016-food-trends/>.
Harris, John P. "Operating a Successful Restaurant." Innovation and Empowerment: SNU-Tulsa Research Journal 3.1 (n.d.): 1-33.
homes.com. Jacksonville, FL 32207 Rental Homes. 16 July 2016 <http://www.homes.com/rentals/32207/p2/>.
Jamrisko, Michelle. Americans' Spending on Dining Out Just Overtook Grocery Sales for the First Time Ever. 14 April 2015. 17 July 2016 <http://www.bloomberg.com/news/articles/2015-04-14/americans-spending-on-dining-out-just-overtook-grocery-sales-for-the-first-time-ever>.
Jax Chamber. FORKING AMAZING RESTAURANTS ANNOUNCE FATHER’S DAY PROMOTIONS. 14 June 2016. 15 July 2016 <http://www.myjaxchamber.com/news/2016/06/14/member-news/forking-amazing-restaurants-announce-father-s-day-promotions/>.
—. FORKING AMAZING RESTAURANTS HIRES MICHAEL BUMP AS EXECUTIVE PASTRY CHEF. 7 July 2016. 16 July 2016 <http://www.myjaxchamber.com/news/2016/07/07/member-news/forking-amazing-restaurants-hires-michael-bump-as-executive-pastry-chef-8232/>.
Kimes, Sheryl E. and Joel Collier. "Customer-Facing Payment Technology in the U.S Restaurant Industry." 6 January 2014. Cornell University School of Hotel Administration. 16 July 2016 <http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1075&context=chrpubs>.
Lynn, Michael. "Seven Ways to Increase Your Servers’ Tips." Cornell HRA Quarterly 24-29.
Morgan, Kimberly L. and Sherry L. Larkin. "Economic Impacts of Red Tide Events on Restaurant Sales." 2006. Florida Health. 16 July 2016 <http://www.floridahealth.gov/environmental-health/aquatic-toxins/_documents/morgan-economic-impacts-two.pdf>.
Murphy, Edward V. "Who Regulates Whom and How? An Overview of U.S. Financial Regulatory Policy for Banking and Securities Markets ." 30 January 2015. Federation of American Scientists. 16 July 2016 <https://www.fas.org/sgp/crs/misc/R43087.pdf>.
National Restaurant Association. "Florida Restaurant Industry at a glance." 2016. Restaurant.org. 16 July 2016 <http://www.restaurant.org/Downloads/PDFs/State-Statistics/2016/FL_Restaurants2016.pdf>.
—. Issues & Advocacy. 2016. 16 July 2016 <http://www.restaurant.org/advocacy/Health-Care>.
Nestle, Marion and Ted Wilson. "Food Industry and Political Influences on American Nutrition." 2012. Food Politics. 16 July 2016 <http://www.foodpolitics.com/wp-content/uploads/Ch-22.pdf>.
Ryan, Bill. "Restaurant Failures: Factors Linked to Business Closings." Downtown Economics 142 (2008).
smallbusinessdb. Bistro Aix - Jacksonville, FL 32207. 16 July 2016 <http://www.smallbusinessdb.com/bistro-aix-jacksonville-fl-32207.htm>.
Sonnenberg, Maria. Local, healthy foods top trend for 2016. 30 December 2015. 16 July 2016 <http://www.floridatoday.com/story/entertainment/dining/toast-of-the-coast/2015/12/30/local-healthy-foods-top-list/78036666/>.
TripAdvisor. Bistro AIX. 2016. 15 July 2016 <https://www.tripadvisor.in/Restaurant_Review-g60805-d396934-Reviews-Bistro_AIX-Jacksonville_Florida.html>.
—. Matthew's. 2016. 16 July 2016 <https://www.tripadvisor.in/Restaurant_Review-g60805-d396943-Reviews-or10-Matthew_s-Jacksonville_Florida.html#REVIEWS>.
Wang, Xiaofan. "How different types of restaurants behaved differently through the recent recession an analysis of stock market and financial ratios." 2012. Iowa State University. 16 July 2016 <http://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=3827&context=etd>.
Yelp. "Bistro Aix." 2016. Yelp. 15 July 2016 <http://www.yelp.com/biz/bistro-aix-jacksonville>.
—. Matthew's Restaurant. 15 July 2016 <http://www.yelp.com/biz/matthews-restaurant-jacksonville>.
