Theories of Business Behavior of Bills Produce Store - Research Paper Example

INTRODUCTION: The restaurant industry of UK is very competitive and owners need a solid understanding of market needs, inventory management, human resource and quality. Restaurants combine inexpensive ingredients in a creative way to create value for customers and generate profit. But that is not where it all ends. To succeed in restaurant industry you need to understand the general environment in which the restaurant operates the financial conditions and marketing techniques (bplans.com). The United Kingdom restaurant market is pretty resistant to economic downturns and recessions. According to Christie & Co market analysis while UK’s branded market is struggling with the economic downturn, the tide is shifting towards newer ideas and innovative techniques. Although the recession have squeezed the spending of many customers still eating out traditions have heightened over time. New opportunities for newer businesses have opened up as branded companies are focusing on operational efficiencies leaving a gap for less established businesses to take advantage of. According to Christie & Co business intelligence (2010) as operators of established brands are reassessing their portfolios and eliminating those that do not meet their requirement, a gap is created which could be filled by other regional operators. This is creating a change in UK’s restaurant map in 2010. The slow down in economy, promotional activity and consumer spending power will change the face of how business is done which will allow a number of fledging groups to emerge and find some niche for their operations. BILL’S PRODUCE: One such restaurant is Bill’s produce which is a unique store and café unlike anything that exist in UK. It is a community business offering versatile menu, a fun place to eat and affordable prices. It has a very healthy environment and people can shop and eat amidst organic flowers, vegetable, fruits (billsproducestore.co.uk). This concept brings people closer to nature and encourages healthy eating. There are a variety of exotic fruits, vegetables, flowers to shop for and a mouthwatering homemade cakes, pizzas and pies etc. This store was opened by Bill Collison who owned a grocery store in Lewes, East Sussex for over 20 years. It was a green grocery store and forerunner of Bill’s Produce. He opened First Bill’s produce store on the same location in 2001. This Bill’s Produce store is a restaurant plus a greengrocer store which has now acquired a loyal customer base in Brighton and Lewes. This small company is backed by Richard Caring who is ranked on number 146 in Sunday Times Rich List (2009) because of his fortune which is in excess of £350 million. Bill started his store through selling fruits and vegetables from a stall. Now Bill’s Produce has grown into a Café which uses fruits and vegetables grown on farms in the local areas (Telegraph, 2008). Apart from locally produce fruits and vegetables, Bill also offers flowers, hampers and catering services. Its menu has a lot of variety with a focus on good presentation (Barker, 2009). LOCATION OF BILL’S PRODUCE: Bill’s produce currently have two branches: Lewes 56 Cliffe High Street Lewes, East Sussex BN7 2AN Brighton The Depot 100 North Road, Brighton BN1 1YE PRODUCTS AND SERVICES: FRESH PRODUCE: Bill’s produce sell locally produced, good quality fruits and vegetables which changes with season (billsproducestore.co.uk). GROCERIES: Bill's carries a broad range of groceries, including many of its own label products, such as olive oil, balsamic vinegar, jams and chutneys (billsproducestore.co.uk). FLOWERS: Bill’s receive a daily delivery of beautiful fresh flowers from local suppliers along with a variety of seasonal plants. Outside the store you'll find a selection of trees and large shrubs amongst the colourful array of plants and flowers. Bouquets can also be arranged by advance order (billsproducestore.co.uk). PRIVATE HIRE: Bill’s Lewes store is available for full hire. With a bar and a choice of different menus, it can cater for up to 100 people (billsproducestore.co.uk). THEORIES OF BUSINESS BEHAVIOR PORTER’S FIVE FORCES MODEL As evident from the image above there are five main factors on which this model depends and those factors can then be divided into their respective other variables (Porter, 1980). According to the model:- Threat of New Entrants: The threat for new entrant is in any industry is low if the initial capital investment required is high, there is lack of government incentives especially for new entrants, only firms that are huge can make profits (economies of scale), if the customers are extremely brand loyal, access to technology specific to the industry is low, cost advantages like low labor cost, are not present. There are plenty of other factors that determine threat of new entrants. In dining business threats of new entrants is high as capital requirement for grocery stores and café are comparatively low. Determinants of Buyer Power: The buyer in porter’s model is not very powerful if the number of buyers is high especially compared to the number of suppliers, it is difficult for the buyer to switch supplier because changing the supplier is expensive, and the buyer is not able to become the supplier himself. Buyer power is high as switching costs are low for customers looking for good dining experience. As there are large players in the market the threat is high. Also in UK many grocery stores operates giving customers wider choice and switching options. Determinants of Supplier Power: In exact contrast the supplier in Porter’s model has low power if there are plenty of suppliers within the industry, there is high threat of buyers buying their own suppliers, the brand of the supplier is not strong and it’s easy for the customers to find new suppliers for the product. Bill’s produce purchase their fruits and vegetables mainly from local farmers and some fine ingredients are imported from international market. This implies that supplier power is low as Bill’s produce can easily switch to many suppliers available. Threat of Substitutes: This is a fairly easy variable to understand. In this variable the threat is low if it is difficult for the buyers to switch to new substitutes due to high costs, there is a vast quality difference between the actual and the substituted product, there is low price advantage from the substitute as compared to its quality. Many substitutes are available for dining but Bill’s produce have a unique idea Bill’s produce is a unique idea therefore threat of substitutes is low. The display consists of fresh produce which provides an amazing backdrop for a dining experience. The display of fresh fruits and vegetable remind customers about the healthy food that they are consuming. The ingredients are also available so that customers can buy them and cook them at home. Rivalry among Competitors:- Competition in any industry is low if lesser number of firms are operating within the presence of a particular market leader, buyers cannot switch to other products, threat of substitutes is low, it is easier for firms to leave the business and move onto other area. The rivalry in dining business is intense in UK with many large scale and small scale business operating. MARKETING STRATEGY: SEGMENTATION: The market for restaurants and dining consist of many customers, products and needs therefore a company must segment its market into distinct group of buyers who have distinct needs, characteristics and behavior (kotlet 2007 p 48). Market segmentation is beneficial for both buyer and seller as the seller can develop expertise in a certain area for serving certain customers. These specialist techniques gain the company a competitive advantage. (John 1993). Bill Collison, who operated a green grocery store for 20 years before opening Bill’s produce, decided to choose his segment based on his prior experience. Bill have segmented his market and targeted those customers who place a value on healthy dining at affordable prices. Bill’s produce is utilizing Concentrated (niche) marketing strategy. It is a market coverage strategy in which a firm goes after a target share of one or a few segments or niches. It is especially appealing when company’s resources are limited. Through concentrated marketing Bill’s Produce have achieved a strong market position because of its greater knowledge of consumers needs in the niches it serves and special reputation it acquired (Kotler 2007 p 198). The evidence of its success can be drawn from the review it received: “Calling themselves a “produce store” somehow doesn't quite do justice to this place, a foodie heaven offering freshly delivered, locally sourced vegetables and deli-style goods. Where it really excels is in its fantastic café, which the Observer recently cited as making one of the best breakfasts in the UK . Half the fun comes from the grub's exuberant presentation, but it really delivers on quality and portion size too. Shepherd's pie comes packed with sweet potato mash and herbs, while the smoked salmon tartlet is brimming with beetroot, goat's cheese, sunblushed tomato, spring onion and meux mustard. Robust and imaginative salads and homemade juices are top notch. Sharing tables applies, but who cares in the sort of place every town should have.” (The Guardian, 2007) MARKETING MEDIA: The company is marketing its restaurant through the Internet. It has a website with the domain name of billsproducestore.co.uk. The website has information about menus and offering as well as general information about the company. Basically Bill’s produce markets its restaurant and green grocery store through electronic media. Various articles and customers reviews are tools used by Bill’s produce to spread the word about his restaurants. COMPETITIVE ADVANTAGE OF BILL’S PRODUCE: If a company can differentiate and position itself so as to provide superior value then it gains competitive advantage. Bill’s produce have differentiated itself on healthy dining experience with organic and locally grown fruits and vegetables. Bill’s provide healthy eating with affordable prices, quality service and customer experience as it was published in Telegraphs’ restaurant review: “The menu is heavy on quiche and light on blood, but customers here defy the usual vegan stereotype; cool youngsters, yummy mummies, pensioners and suited businessmen are all sharing tables. I like the higgledy-piggledy feel: what's cooked is what happens to be on the shelves. And the detail is wonderful: an attentive waitress discusses at length the preparation of my hot chocolate, which is sumptuous.” (Telegraph 2008) STRENGTHS OF BILLS PRODUCE: Bill’s produce have gained its competitive advantage on following strengths: Bill human resource strategy involves staff that is passionate about their jobs, what they cook and sell. (billsproducestore.co.uk). the staff at Bills is extremely accommodating, swift and courteous according to a review in menureview.co.uk. Differentiation of their dining experience and catering to market segment that is health. There is a strong emphasis on quality and healthy dining. There are massive salads and interesting sandwiches. The presentation of food is really good Bills produce offer affordable prices and good quality meals. The restaurant critic Charles Campion chose Bills produce as his top 14 places to eat for which offer a meal for under £10. Also Rebecca Seal pronounced Bills produce as her budget favorites. (Seal 2008) FINANCE Bills Produce store was a family owned business initially. But surprisingly, Richard Caring, a millionaire businessman became a partner in this family owned small sized restaurant. Undoubtedly after which the financial position of the restaurant strengthened and the company raised its profile in the capital. Caring became the partner in this restaurant because he finds the idea of ‘greengrocer shop with a restaurant in the middle’ as fantastic and sees a potential growth in terms of business (Shipton, 2008). He wants the business to flourish and expand all over the country. And so the Bill’s produce store plans to open two new restaurants in the year 2010. The restaurants are to be opened in Reading and Horsham and according to Bill Collinson, these are going to be major expansion programs leading to significant profit contributions (The Grocer, 2010). The restaurant does not seem to have financial problems for the expansion as far as it is backed by a businessman like Caring. Richard Caring suggested that the restaurant will be hit by the credit crunch and so the business might get affected. But this was not the case as the owner of the restaurant, Bill Collinson said that Bill’s produce was not strongly hit by the credit crunch of 2008-2009 and the restaurants were just as busy in the recession as they have always been. Bill’s aim is to provide superior quality food to all its costumers at affordable prices. Many costumers find the food being tasty and presentation being nice but as far as the financial matters are concerned, many of them believe it is not the value for money they receive. They find the food being over priced for example £10 for a ceaser salad or for a snack and drink! WORKS CITED PAGE Bill’s Produce Store. Retrieved from http://www.billsproducestore.co.uk/ Zara Restaurant and Lounge: Ethnic Food Restaurant Business Plan. Retrieved from http://www.bplans.com/ethnic_food_restaurant_business_plan/executive_summary_fc.cfm Hussain, Humayun. (2007) The guide – Bill's LEWES, the Guardian. Gerard, J. (2008) Restaurant review: Bill's Produce Store – Telegraph Bills Produce Store, The menu Review, Retrieved from http://www.menureview.co.uk/147.html Seal, R,. (2008). Eat Out for Under £10. The Observer: Observer Food Monthly Kotler, P. Gary A., (2007) Principles of Marketing 12th edition, Prentice Hall Owen, Christie, D., The UK Restaurant Market: And the brands played on, Christie + Co Business intelligence England, London John, Heuman (1993). Market segments in foodservice, Tea & Coffee Trade Journal Barker, M. (2009). Bill's Produce Store to hit the expansion trail, The Grocer. Shipton, Ben. (2008). Business profile: Richard Caring, Restaurant magazine Porter, M. (1980) Competitive Strategy, Free Press, New York Read More