Executive Summary
This paper presents a business plan to
start a restaurant in Halifax, Nova Scotia. The proposed restaurant will be
called ‘Good Day’ and will focus on selling breakfasts and light lunches (dine
in and take away). Although there are over 1500 registered food outlets in Nova
Scotia, the need for new restaurants is on the rise since the industry
contributes around 23% to the tourism sector (which is rapidly growing) and
increasing number of households are preferring to eat out; due to paucity of
time or lack of cooking skills.
The target market of ‘Good Day’ will be a
local population spread over 20 square miles and tourists. The restaurant also
faces competition from hundreds of other restaurants and eateries established
in proximity however, the offering made by good day which is of breakfasts and
light lunches is hardly focused upon by any other competitor. The aim is to
establish ‘Good Day’ meals as a necessity to enjoy a regular working day or
weekend.
Note must also be taken that 60% of food
service ventures do not survive beyond two years and 22% beyond eight. This is
because every good cook cannot be a restaurant manager; as this is both a
service and manufacturing industry management skills are required to mitigate
problems of both. In the sections to follow we make a structured approach by
means of various analyses to formulate a sound business strategy for starting
up ‘Good Day’ restaurant in Halifax, Nova Scotia (Canada).
Introduction
Good Day is a restaurant planned to being
established in Halifax, Nova Scotia in the next 1-2 years. Although there are a
plethora of restaurants in Halifax, almost none of them focus on serving
breakfast, a light lunch or light snacks as a core item on the menu. This show
in the statistics, where 10% of total Canadian dinners are served by
restaurants, only 3% of breakfasts are eaten out. This presents a huge
opportunity to be capitalised upon since a growing part of the population is
having less time to eat at home due to tight work schedules or the lack of
cooking skill.
By creating a comfortable and inviting
ambience at a convenient location; and by serving delicious and healthy meals,
Good Day aims to build its core clientele. Also part of the sales will also
come from selling frozen foods, food mixes, local handicraft and art displayed
on the walls of the restaurant.
However, restaurant business is not all
that rosy a venture it is often portrayed as. The Goldmine it is often thought
to be has a very high failure rate. Restaurant businesses are the second
biggest cause of bankruptcies in Canada after service stations. Hence care and
caution must be followed while implementing the idea of starting up a food
service business. In this paper we will follow a structured approach (applying
established management techniques) to thoroughly examine the business idea of a
breakfast restaurant. This will be done by way of seven major sections in this
paper, the executive summary, introduction, industry analysis, marketing plan,
operational, financial plan and risk assessment.
Industry Analysis
The restaurant industry contributes to over
1.7 billion $ in revenue yearly which forms approximately 4.4% of Nova Scotia’s
GDP. This industry also directly employs over 32000 people and is projected to
grow at the rate of 2.8% annually. Considering the statistics it becomes all
the more lucrative to operate in this industry; moreover, the following trends
make the picture all the more exciting.
1.
Busy lifestyle
Increasing number of people in the proposed
locality is being absorbed by the ‘corporate culture’; which leaves them with
less time for themselves. Mounting pressure of work schedules keeps people
always on the go. This has opened up a need gap where one needs the same
comfort of eating a nutritious meal at home, in a setting which gels better
with work life. Also the lack of cooking skills in the new generation demands
an eatery which fills this gap in demand and supply.
2.
Health conscious
Seven out of ten adults surveyed want to
have healthy meals; this is due to rising concerns to prevent against
conditions such as obesity and high cholesterol among others. Consumer preference
for boiled, broiled, grilled food and salads has increased vis-à-vis fried food
and meat. Focus is on tasty and healthy meals.
3.
Dine in as well as take away
With decreasing time for self, food on the
go is the preferred choice of restaurant goers; with over 65% of restaurant
meal occasions happening at quick service outlets. This has only increased the
relevance of including a take away option in dine in format of Good Day
restaurant.
Marketing
Plan
The marketing of Good Day restaurant is to
be done over three phases, pre opening, post opening, and point of sales.
Although a public relations firm will be hired for pre opening marketing, most
point of sales marketing will be the duty of restaurant managers (An annual
budget of 10000$ has been set aside for this purpose). Discussed below are key
marketing strategies to be employed:
1.
Local press and media
The PR agency hired will use its resources
to build publicity and buzz in the local media; using their relations with the
press and utilising their economies in using media such as outdoor bill board
advertising and flyer distribution.
2.
Social Media and Email campaign
Creating viral and buzz marketing campaign
on social media such as facebook and twitter will create an audience for the
restaurant. Also floating email campaigns among the target market will bring
the business and customer group closer. Various promotions can be undertaken
from these platforms.
3.
Coupon
The PR firm can help engage local
businesses and residents by distributing promotional and trial coupons. Also
the restaurant itself can help build loyalty and increase its clientele by
distributing free meal coupons to regulars and to ones who bring along a friend
on subsequent visits.
4.
Cards in Fish Bowl
This regular method can be employed to
collect business cards of guests. Contacts and emails can thus be obtained
which can be used to ensure repeat visits by initiating communication of
promotions, etc through emails or text messages.
Operational Plan
The operational plan will cover the
following:
1.
Facility
It is of core importance to find a
convenient location to operate from, since the target customer wouldn’t want to
travel far for a breakfast. Goal is to find a location which was a restaurant
so it can be operational after minor renovation. Also, priority will be on
finding old furniture which can be refinished along with new decors and
accessories to bring out the special aesthetics.
2.
Hours of operation
The restaurant will operate from 6.00 am in
the morning until 6.00 pm in the evening. This is in line with the focus on
breakfast, light lunch and light snacking menu focused upon. Also everything on
the menu will be available in the operating hours.
3.
Employee Training
Employees will be regularly trained in
their field of operation with regular briefing in cross operational fields to
build understanding of the various business function should the need arise of
their filling additional or different roles. Also the chef would brief them
regularly to build an understanding of the meals served.
4.
Systems control
Weekly inventory count and daily food count
will be a necessary check to minimise wastage and monitor finances and stores.
Food production will be mostly in house excepting for a few items like bakery
which can be purchased from reliable local vendors to minimise on cost and save
time.
Financial Plan
The business requires two levels of
funding; first being seed capital and the second being growth capital. Seed
capital will encompass all start up and daily funding needs and growth capital
is the extra funds needed to expand the current facility or to open a new one
once the model is successful. Financial needs can be detailed under the
following heads:
1.
Start up cost
This will be the initial cost to bring the
business into existence. This will typically include, cost of acquiring place,
furniture, décor and machinery. We have set out 150,000 $ for the initial
capital expense and 15000$ for initial promotional expense.
2.
Marketing
As already briefed the restaurant
management will undertake an active marketing program across various media
(including hiring a public relations firm for this purpose). A total of 10000$
annually has been set aside for marketing. However, such expenditure may be
modified according to needs.
3.
Operational
Daily operational expenses such as employee
wages, maintenance, inventory and taxes are aimed to be met from the revenue
generated from sales. However, for the first six months, deficits if any, will
be met from the initial start up capital brought forward.
Fund sourcing
Seed capital will be sourced from the
owners’ contribution from their private sources. Once the business grabs a
foothold in the market (assumed period for establishing clientele being six
months from start) all daily/operational expenditure will be met from revenue.
Growth funds needed for expanding may be
met through bank loans or venture capitalists; choice being made according to
circumstances at that time.
Risk Assessment
In an industry so prone to failure and the
average rate of profit returned before taxes being less than 5%, it does good
to do a risk assessment of the proposed business model.
1.
Competition
It is very probable for the competition to
adapt themselves to the model of Good Day, once it is successful. Imperative
will be to stay ahead of the competition by continually innovating and
following an aggressive marketing strategy to capture the interest of the
target market and ensure consumer loyalty.
2.
Model failure
It is also very probable that the model can
fail altogether, since it has been noticed that not a lot of people eat
breakfast outside currently. Also an average Canadian household visits a
restaurant for a snack or a meal only 11.3 times over a period of a fortnight.
To mitigate this risk, a thorough understanding of the trends and a strong
alternate business plan (in the same industry) or exit plan is needed.
3.
Costs
With a business with very high revenues and
marginal profits, costs play a pivotal role in determining the success or
failure of the enterprise. It is of importance to do real time costing,
budgeting and setting up contingency or back up funds to sustain in times of
adverse costs from the ones projected initially.
Conclusion
Through the above sections we have learnt
how to do a basic analysis of a proposed business idea. Good Day restaurant has
a good chance of survival and success should the management follow a thorough
research plan which encompasses study of trends and actual costing. By means of
financial regulation and managerial prowess one can turn this venture into a
profitable one.
Due note must be taken of developing the
marketing, operational and financial plan in detail while shaping the proposal
of starting up, to be presented to various potential parties inviting them to
join in the venture.
References
2.
En.m.wikipedia.org/wiki/Nova_scotia
3.
Nova Scotia’s restaurant
industry; Canadian restaurant and foodservices association
4.
SunShine Café: A Breakfast Restaurant
Business Plan By Lillian I Burrow; A professional paper in partial fulfilment
of the requirements for the Master of Hospitality Administration Department of
Hotel Administration
5.
Fact Sheet
Foodservice Industry in Nova Scotia; Restaurant Association of Nova Scotia
6.
A Guide to
Starting and Operating a Restaurant Business in Nova Scotia; Prepared by: THE
ECONOMIC PLANNING GROUP of Canada Halifax, Nova Scotia
No comments:
Post a Comment