Restaurant Swot Analysis

Strengths·Offers new type menu not available in the area·Huge selection of menu items to choose from·Prices are cheaper than competitors·Customer service is high·Small overhead·Menu FlexibilityWeaknesses·Restaurant is not established and new – no market presence or reputation·Cash flow issues in early stagesOpportunities·Food conscious – healthier choices·Working with local farmers to supply organics products· Little competition in marketThreats·Operating costs·High turnover rates for employees·Changing customer demands·Perception of productTrends·Healthy, organic foodIntroductionA restaurant owner who fails to plan plans to fail. Most restaurants will succeed, provided that their owners are determined, stubborn, and willing to take control of those variables that can be controlled. Changes in markets, competition, products, and customer perceptions are inevitable. Restaurants that can adapt to such changes because of foresight and careful planning will profit. A written business plan is helpful in so many ways that the time and effort to write and update it are trifling in comparison to the benefits it gives.

ConceptOrganics is a unique concept. It will very easily fit into the marketplace. This health conscious concept is very desirable. Organics Salad and Sandwich Shop will be a low priced restaurant, featuring prompt service in a relaxing atmosphere.

LocationThe location selected is in the heart of a major University and downtown corporate area. The location is accessible to the target market. It has visibility from the street, large parking area, and room for expansion. Without a good location most new businesses are doomed from the start.

CompetitorsWe have identified several competitors in the area and have begun to collect data on them. We have set up competitor files that house everything from their advertising, promotions, and as much about their financial dealings as possible. We will keep these files up to date and periodically review them. It is important to know more about the competition than they know about themselves. Questions to ask are when do they run sales, what benefits do they stress, how are their personnel, and are they consistent. Another method in checking the competition is visiting their restaurant; make note of how you are greeted, how long it takes for your food to arrive, menu choices, and prices. Currently, there are three restaurants and two bars within a two-block radius of Organics Salad & Sandwich Shop.

Two of the restaurants are fast-food, hamburger-based establishment which caters mainly to youths and lower paid retail and service workers. The other is a high-priced, gourmet restaurant that features French cuisine. One of the bars is a sports bar that serves only pizza and submarine sandwiches. The other is a tavern that does not offer food. Studies of the competitors showed that none of them presented substantial competition because of their different concepts and menu offerings.

Customer ServiceNo matter how well employees are trained and systems are improved, service will deteriorate if it is not monitored constantly. Undesirable conditions should not be allowed to continue to the point that a customer has to complain, because by that time other customers who did not bother to register their displeasure will undoubtedly have already left your clientele. Management should be the first to know when things are not rights. The secret to growth is getting new customers.

Some customers may come to the restaurant because it is the newest place in town, others will come because you are close by or because they have heard good things about it. It is important to understand a consumer’s decision-making process because it reflects how hard it is to get new customers and it points out the importance of taking good care of your present customers. To get new customers, people must be made aware of the existence of the restaurant through creative advertising and sales promotion programs aimed at first-time customers. New customers will also be gained by doing an exceptional job with your present customers, satisfying them so well that they will tell their friends about the restaurant. Without question, the most effective form of advertising is word of mouth.

Employee RelationsManagement should develop clear and reasonable policies and explain them to all employees so that everyone knows exactly what is expected of them. Getting the most out of employees begins with hiring the best people you can afford and training them properly, providing them with the right equipment and facilities to do their job well, letting them know that you are aware of what happens and care about how things are done, and soliciting ideas from improvement from them and letting them know that they are important to the organization. The rate at which employees terminate employment is a clue to problem areas that need attention.

Labor turnover has an impact on the profitability of a restaurant because the cost of replacing employees is very high. Management has a responsibility to provide the necessary equipment to do a job properly. It is unacceptable for employees to be producing inferior products simply because they lack the proper tools. Cooperative and loyal employees are the most important assets this restaurant can have. Make the employees want to cooperate. Let them know what the policies and objectives are. Let them know how they can personally benefit by working toward the accomplishment of the objectives and appeal to their professional pride and desire to be on a winning team.

Working with VendorsVendors are the largest source of credit. Most restaurant purchase inventory and services on credit and come to rely on their vendors to bank them during periods of tight or negative cash flow. Vendor lists will be made and we will avoid becoming dependent on just one or two vendors. Comparison shopping is good for the restaurant. Because I will be dealing with the local farmers and most of the food products will be highly perishable, deliveries will need to be made very often. There is a local cooperative that will help me take advantage of volume discounts. There are many questions to ask when dealing with a vendor for the restaurant and they are: what days of the week will you deliver to me, is there a minimum order, what are the payment terms, and how much lead time do you need for an order.

Operating ProfitablyTo operate a business profitably, you must keep a tight control over all of its profit centers. A profit center can increase or decrease the profits of an operation. The menu is the hub around which everything else revolves, it is essential to plan it carefully. Purchasing the right products in the proper quantities is important; and of equal importance is keeping them securely stored until they are used. In a small restaurant like Organics, it is important to have a certain level of control.

Industry TrendsAccording to the internet site www.restaurant.org, “more chefs and local farmers are working together to satisfy consumers’ appetite for fresh, homegrown foods. Farmers who work directly with chefs will “tweak their harvests in ways that support the chefs’ visions”. Organic produce is one of the hot new trends according to the National Restaurant Association. The recent industrial growth, coupled with the major boost the new Tempe Marketplace will give to the area’s economy, will substantially benefit the restaurant business.

ConclusionTo succeed and thrive, the restaurant must grow in a positive direction and steady pace that is indicative of the mission statement. Planning uses all skills, both right-brained (creative and intuitive) and left-brained (analytical and reasoning). It is expected that through effective sales promotion, rigid training, and the use of cost controls, the restaurant will be profitable from the first year and will be able to pay back loans and return on investment after only five years.

References

http://www.restaurant.org/news/story.cfm?ID=545Pearce, J., & Robinson, R. (2005). Strategic Management (9th ed.). Boston: McGraw Hill.