Organic and Natural Food Restaurants - Assignment Example

? Organic and Natural Food Restaurants Size and Growth of Industry The business intends to start a medium sized restaurant that can cater for the needs of the majority of people living in the major cities. New Brunswick dwellers are sensitive to the size of the restaurants. Research on the consumer trends indicates that city dwellers tend to select their restaurants according to the sizes (Carmona, 2004). Large restaurant tend to attract high-class citizens as opposed to medium class citizens. The firm intends to exploit this trend because it would dictate the growth of the restaurant. The business will measure the profit margin and rate of stock turnover as a way of evaluating the growth (Carmona, 2004). An indicator that the firm intends to use is the percentage in profit margin, as well as the number of consumers that the restaurant will command. Industry Maturity Sustainability of cash flow into the firm will act as a gauge, which measures the maturity of the firm. The firm expects to reach its maturity after the period of three years because it is a startup business. Since the product cycle of the restaurant would influence its maturity in the market, it intends to have a short product cycle. Another important factor that the business intends to consider in order to reduce its maturity age is the choice of products that it would introduce to the market. The business has forecasted its growth in the first year to be modest. In the second year, the restaurant will increase its stocks in response to market behavior. In the third year, it would stabilize its stock. The business anticipates its growth to follow the trends indicated in the graph below. Sensitivity to Economic Cycles The business intends to demonstrate sensitivity to the state of economy by conducting a survey on consumer trend in similar businesses before it rolls out its product. The knowledge of consumer economic status is crucial to the pricing strategy of the business. The prices of the business product determine the number of clients that the business would serve. Due to the sensitivity of this issue, the business will monitor consumer trends before introducing expensive products. Consumer behavior depends on geographical location and sociological influences. Consumers usually demonstrate negative or positive response to price changes, which would eventually influence the rate of stock flow (Anderson, 2008). Most businesses, which command large market share, are sensitive to the consumer behavior. The operation of the business in the city would make it handle a wide range of customers who are likely to project different product demand patterns. Highly demanded products would be a measure of how sensitive the business is to the immediate environment. Seasonality Product seasonality is crucial to the business success because it would influence customer retention of the business. The business intends to operate in all seasons; however, it would control its product supply during low seasons. The business target consumers demonstrate seasonal trends in buying behavior. The high season appears immediately after the consumers get their salaries or wages and the low season occurs during mid month. This seasonal trend would influence the sales of the restaurant. The business intends to characterize the high season with high product supply and reduce the product supply during low season. The same trend would also influence its pricing strategy in order to create a constant profit margin at the end of each month. The business innovation would be sensitive to seasonality. Changes in economic trends in the market might force the business to blend its products in response to this trend (Anderson, 2008). Technological Change The restaurant will use the internet technology to reach its customers. The Internet use is an option that the business intends to use in order to update its clients with the frequent changes in products and prices. Order placement and instant payment are some of the common trends that the business has observed in the new market. The business will respond to these characteristics by embracing the use of technology such as Internet, electronic payment system, electronic order system among other modern technological applications that are relevant to the business operation. However, the business will take caution against electronic frauds, which are rampant in the modern technological applications. Regulations/Certification Government regulations are very critical to business success because they influence the business location, operation hours, business customer choice, and taxes levied by the government. The business will seek permits from the government authorities that are relevant to its operation in New Brunswick. Business permits usually define the products that the business would sell in the market as well as the target consumers. New Brunswick government authorities influence the sale of beverages to under 18. This means that contravening such laws will influence the operation of the business leading to its closure or fine. The business intends to adhere to health regulations defined by the New Brunswick authorities. Since the restaurant activity would influence the progress of the activities within the environment, the government is sensitive to these influences. Supply and Distribution The business intends to ensure a constant product supply by developing a supply strategy, which responds to changes in product demand and product availability before the business stock is over. Product supply dictates customer satisfaction because it will influence the availability of the products in the market. Market analysts have noted that consumers demonstrate discontent whenever they miss a product in the intended shop (Neck, 2003). The production distribution chain influences delivery of the product. A long distribution chain creates delays that might adversely affect the business customer relationship. The distribution chain of the business will link directly with the distribution depots or from manufacturers from New Jersey in order to avert any delays. Consumer retention and satisfaction are crucial to the growth of the business. Consistency in product availability would influence the consumer behavior towards given business premises (Neck, 2003). The business intends to create consistent supply channels in New Jersey, making timely orders, which ensures that product supply meets the demand of consumers. The knowledge of product manufacturing processes would be critical in designing the product strategy of the business. The firm would conduct a survey on the product manufacture and product supply chain in order to devise a strategic proposal that would stabilize the product supply in the market. The consumers of the business products will acquire these products from the business outlets. Financial Characteristics The business financial characteristic is critical to its growth. Market analysts believe that expenditure influences the profit margin of the business (Neck, 2003). The business intends to raise its capital from its shareholders. The business will also seek funding from financial institutions in the form of loans in order to meet the capital requirement for the firm. The allocation of funds for the business would depend on the costs in various departments of the business. Expenses of the business will cover the operation cost, labor, overheads, etc. However, the business intends to use the least cost in each category in order to minimize the expenses. Expenses such as permits are payable once. The cost of putting up the right assets for the business would consume a large amount of the business capital. The business will service its loans using the net income that it generates from its business activities. The firm will generate income through sale of products as well as through sale of its services. The mode of service delivery will influence the amount of income that the business will command. In most cases, the restaurant income would come from services provided. Market analysts have observed that restaurant products such as beverages command a small profit margin (Schmidgall et al., 2002). This means that the business must capitalize on services it offers to earn good profits. Since the business expenditures influence the profit margin in the profit and loss account, the business will categorize its expenses according to the most valuable to the business growth to the least valuable. For instance, the expenses paid for employees’ salaries, rent, water supply, electricity, telephone, transport are critical to the growth of the business because they will influence the business image in the market. Good relationship that the business develops with its employees would translate into the amount of revenue that it would gain at the end of the trading period. High running cost is an indication of low profit margin (Schmidgall et al., 2002). The business wishes to balance its running cost by influencing the services it would offer as well as pricing of its products. Strategic prices influence the cost of the running by reducing the value. Retrieved on May 21, 2012 from http://www.bplans.com/coffeehouse_business_plan/images/8df7528e03584d11ad592dd9f7ad96e8.png Anticipated Changes and Trends in Industry The restaurant business is quite dynamic because of the changing trends in the economic stability of the nation. It is observable that consumers in the industry respond to the tough economic conditions by reducing their visitation in the restaurants (Carmona, 2004). This attribute is critical to strategic planning of the business because the business anticipates facing low market seasons and high seasons. At the same time, government policies in relation to operation of the restaurant are subject to policy development by the policy makers. For instance, policies that influence operation times of the restaurant might change, thereby subjecting the restaurant to change in profit margin. Manufacturing trends in the industry are also subject to changes especially during shortages in materials used to manufacture the beverages. The business will institute a marketing watchdog, which will brief it on the anticipated changes in product supply trends. This will enable the business to maintain large stocks, which would sustain its existence during limited product supply. The knowledge of the restaurant trends would enable the business to devise strategies for influencing the prices and product supply. Retrieved on May 21, 2012 from http://i.telegraph.co.uk/multimedia/archive/01816/beersales_1816184b.jpg Global Industry Concerns Global concerns are worth of consideration because they influence the flow of raw materials used by firms that influence the products of the business. For instance, globalization influences trade between countries. This might affect the supply of the beverages in the restaurant because of the demand characteristics that would be in the market. The global changes in weather are also critical to the business because they might influence the supply of materials used in manufacturing beverages. Politics is another concern in the global trend that would pose challenges to the growth of the business (McKean, 2010). The business intends to sell some imported brands of beverages that are subject to political influences. The knowledge of government influence would help the business to devise a strategy for introducing these products in the market. Other global influences that are critical to the business include the global economic trends. Importation of products from foreign market is subject to tariffs that are likely to influence the pricing strategy of the business. References Abrams, R. (1994). The successful business plan. Lanham, MD: Natl Book Network. Anderson, L. T. (2008). Accounting for Mother Nature: Changing demands for her bounty. London: Stanford University Press. Carmona, R. (2004). Statistical analysis of financial data in S-Plus. London: Springer. Denizci, B. (2006). Pricing effect of restaurant industry related factors on Fama French Three Factor Model. New York: ProQuest. McKean, J. (2010). Managing customers through economic cycles. New Jersey: John Wiley & Sons. Neck, R. (2003). Modeling and control of economic systems 2001 (SME 2001): A proceedings volume from the 10th IFAC symposium, Klagenfurt, Austria, 6-8 September 2001. Philadelphia: Elsevier. Schmidgall, S. R., et al. (2002). Restaurant financial basics. New Jersey: John Wiley & Sons. Read More