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Success Factor for Alley Cafe - Essay Example

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This essay "Success Factor for Alley Cafe" evaluates and analyzes critical success factors for Alley Cafe. The essay is a retail audit of a medium-sized retail organization with a major focus on its critical success factors. The audit will help in identifying the current market demand…
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Success Factor for Alley Cafe
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Critical Success Factor Report: Alley Cafe Contents Introduction 4 1 Company Background 4 2 Objective 4 3 Research methodology 4 2. The Retail Audit 4 2.1 Market definition 5 2.2 Market size 5 2.3 Market trends 5 2.4 Market forecast 5 3. Micro Environment Analysis 5 3.1. Market Shares 5 3. 2 Competitor Analysis 6 3.3 Customer Profile 6 4. Macro Environment Analysis 7 4.1 Opportunities and threats facing the market 7 5. The company 7 5.1 Strengths and Weaknesses 7 5.2 Marketing Assets 7 6. Conclusion and Recommendations 7 7. Critical Success Factors 8 7.1 Segmentation targeting and positioning 8 7.2 Location 9 7.3 Price 10 7.4 Merchandise 11 7.5 Customer Service 11 7.6 Store Environment 12 7.7 Sustainability 13 7.8 Customer Communications 14 7.9 Human Resources 15 7.10 Brand Management 16 Reference List 17 Appendices 21 1. Introduction 1.1 Company Background Alley Cafe is a vegan and vegetarian cafe situated at Nottingham, United Kingdom (Alley Café, 2014a). The aim of the Cafe is to provide an overall relaxed atmosphere as well as exquisite vegetarian food. Apart from that, the Cafe also offers quality entertainment such as, creative acts and events, inviting innovative artists from all over Nottingham. The traditional architecture of the Cafe provides a classic feeling and is known for supporting local talents with open nights and gallery wall spaces. Alley cafe is primarily famous among vegetarian customers for offering wide range of vegan foods. Apart from that, it has created a personal niche by conducting events with budding local talents. The Cafe offers a platform where talented enthusiasts perform live as well as display their arts and paintings on gallery walls of the Cafe. The gallery wall is a place where paintings and artworks of numerous new talents are displayed. Some of the well-known and preferred menus are baked organic beans, toast and scrambled eggs (Alley Café, 2014b). 1.2 Objective The objective of the report is to evaluate and analyse critical success factors for Alley Cafe. The current report is a retail audit of a medium sized retail organisation, Alley Cafe, with major focus on its critical success factors. The retail audit will help in identifying the current market demand and make future forecasts accordingly. This information will be subsequently used for recognizing success factors specific for the industry in which Alley Cafe operates. 1.3 Research methodology The research methodology includes both primary and secondary research. Primary research has been done by conducting a customer survey in order to analyse present market demand for Alley cafe and competitor’s positioning in the market. Secondary research includes extensive review of the company and competitors through literature study, articles, journals and authentic websites. 2. The Retail Audit Factors Explanation 2.1 Market definition A market can be described as a medium or channel that allows sellers and buyers of a specific service or good to interact and facilitate exchange (Armstrong and Kotler, 2012) 2.2 Market size Out of 177 respondents surveyed for retail audit, 83 never visited the Cafe (Figure 6). Taking the higher margin in each category for money spent, average monthly income for Alley Cafe is estimated to be around 1011 Euros. Also, majority of customers spend less than 15 Euros while visiting Alley Cafe. The survey conducted revealed that out of the total individuals residing in the two major post codes, Alley Cafe has the potential to reach 7055 individuals. 2.3 Market trends Majority of Alley customers either visited twice or once in a month. However, 29 respondents said that they visit the Cafe once in two months. 2.4 Market forecast The demand for coffee is more during the winter season. Apart from that, United Kingdom is a majorly coffee consuming nation. Many new small and local coffee shops and snacks bar are being launched, increasing overall competitive environment of the local market (Figure 8). Also, survey results showed that customer demand for full English breakfast, green tea and cocktails might increase in future (Figure 9). 3. Micro Environment Analysis 3.1. Market Shares Costa Coffee, Starbucks and Cage Nero are among major coffee suppliers in UK (Caterer and Hotel Keeper, 2004; Caterer and Hotel Keeper, 2004). Survey results indicated that average market spends for Alley café customers is about 16 dollars. 3. 2 Competitor Analysis Competitor Strength Weakness Cafe Nero High quality street coffee, Rapid Expansion (The Boston Globe, 2014). Single Supplier, market saturation in UK Costa Coffee Diversification, joint venture and partnerships (Schwartz, 2004). High traffic, longer customer waiting time Starbucks Brand name, first mover advantage, huge product portfolio and extensive global distribution (Brown, 2011) Low market share in UK, perceived as high priced Pret A Manager Widely extended channel of distribution of the retail chain throughout different regions of UK (Poulter, 2013). Lack of expansion and diversification and ineffective consumer marketing 3.3 Customer Profile Alley Cafe caters to a wide range of customers. The most common segmentation is vegetarian customers. In terms of location, most of the regular customers of Alley Cafe are from Nottingham and nearby regions owing to its local popularity (Figure 11; Figure 1). The customers of Alley Cafe are diverse with respect to their age. From the survey, it was found that young people of the age group 16-25 were most regular customers, followed by individuals of the age group 26-35. 4. Macro Environment Analysis 4.1 Opportunities and threats facing the market Strengths 1. Traditional ambience and high quality vegetarian food 2. Additional experience such as, live music nights and gallery wall Weakness 1. Location hinders brand awareness (Figure 2). 2. Pure vegetarian menu restricts customer base 5. The company 5.1 Strengths and Weaknesses Threats 1. Increasing direct and indirect competition 2. New entrants, foreign coffee makers and fast food brands entering UK market. Opportunities 1. Increasing popularity for healthy food products 2. Additional menus such as, salads and low-calorie breakfast, can increase overall footfall 5.2 Marketing Assets The three most important marketing assets of Alley cafe include in-house creative events, innovative and high quality food offerings and digital marketing campaigns. 6. Conclusion and Recommendations The UK coffee and snacks market is filled with numerous small and big brands. However, Costa Coffee, Starbucks and Café Nero are leading coffee brands with 1670, 790 and 560 stores across UK, respectively. They collectively constitute about 54 percent of the total branded fast food and coffee market share (Euro monitor International, 2014; The Food & Drink Innovation Network, 2014). The strategic retail audit and macro and micro environmental analysis revealed that Alley Cafe has successfully established a niche through unique ambience and affordable food and beverages. On the other hand, competition is becoming intense and new entrants are eating away large chunks of its market share. Recommendations 1. Enhancing restaurant-level margin and profitability through advertisement and branding strategies aimed at high spending consumers (Figure 9). 2. Providing proper training to the outlet managers and employees (Drejer, 2002). 3. Improving transaction facilities by introducing technologies for self-checkout or hiring more personnel (David, 2011). 4. Incorporating regular feedback system for improving two-way communication as well as increasing overall customer experience. 5. Alley cafe has the potential of reaching more than 7000 customers from the survey conducted. This will increasing its base of customers manifolds. 6. The average speed of Alley’s customers is around 17 dollars. By adding approximately 7000 customers through various advertisements and promotional programs, Alley’s monthly sales forecast will be around 119,000 Euros. 7. The survey indicated that apart from normal snacks and food products, the customers also demanded additional food items such as full English breakfast. Adding these items will definitely increase the footfall In Alley Cafe. 7. Critical Success Factors 7.1 Segmentation targeting and positioning Market segmentation is a critical success factor in the food retail industry. The major motivating factors for customers are drinks, meals and snacks, which according to the survey, scored highest in terms of demand. Other motivating factors included the Cafe’s environment, live music nights and gallery walls. Majority of Alley customers visit the cafe on a weekly and fortnightly basis. The cafe also consists of other channel members such as, suppliers of raw materials, merchandisers and associated agencies for advertising and branding. Alley Cafe can target its retail customers on the basis of their demography, geography and lifestyle. This segmentation is beneficial when forecasting sales for different food categories as well as offerings. Segmentation is also critical during customer retention. For instance, students and music enthusiasts are regular customers for Alley Cafe. So, Alley can segregate customer segments and plan unique offering in order to retain their loyalty (Sheth and Sisodia, 2006). Consumers are shifting towards low cost and affordable restaurants for food and beverage options. At the same time, there has been an increasing demand for healthier food products (Office for National Statistics, 2013b). Alley Cafe can utilise this opportunity by adding healthier menus such as, low calorie breakfast and salads (Marieke, 2004). (Source: Foundation Degrees South West, n.d) The above picture shows the positioning of Alley Cafe’s competitors in the perceptual map. Though Alley cafe does not enjoy facilities such as wide choice, it can definitely enhance its internal environment and delivery process for increasing its positioning status among target customers. 7.2 Location The total turnover of the UK food retail market is around 6.2 billion Euros. According to industry estimates, around 1.7 billion coffee and snacks are consumed every year in UK shops (Euro monitor International, 2014; Department for Environmental, Food and Rural Affairs, 2012). Increasing number of food and coffee shops are targeting locations, which are always in regular sight of their target customers. Apart from its regular street outlet, Alley Cafe can also launch its outlets in places such as malls, universities and colleges, corporate buildings and IT campuses and shopping complexes. Alley Cafe can identify the above localities which are dominated by target customers, such as, areas housing outstation students (Hui and Bateson, 1991). While the current location is popular among its regular customers, moving to the above strategic locations will increase the customer base. The food retail market of UK is robust with predictable and established patterns of consumption. These venues are playing an important community and social role by contributing to UK economy and employment (Bakeryinfo, 2014). Alley cafe will have to keep a track on these trends and patterns. There has been a significant increase in corporate backed food retail chains indicating a new competitive era. The overall desire for premium fast food products is set to increase, which will influence export and import of raw foods such as coffee beans across countries. In future, fast food and eating out joints will be regarded as more than just a commodity with marketers trying to build a brand around the experience (Marketline, 2012b). Thus, alley cafe can expand its location base from being an independent cafe to contract based retail food service provider in large organisations and corporate offices. 7.3 Price It is important for Alley Cafe to analyse the pricing strategy for its food retail service. The food retail sector is composed of big and small, chain and independent retailers that have established an intense and competitive environment. Although bigger retail outlets spread across local and international markets can afford qualitative and luxury pricing, smaller outlets like Alley Cafe with one or few branches can function optimally by keeping prices affordable and cheap (Kang, 2006; Michael, et al., 2004). Thus, Alley cafe can keep its customers coming by offering mid-range and affordable food to them. The major pricing strategy which Alley Cafe should use can be penetration pricing. The increasing popularity of Alley Cafe provides an opportunity to launch more outlets across United Kingdom (Haberberg and Rieple, 2008). The brand can launch special diet menus for health conscious customers, thereby broadening its customer base. 7.4 Merchandise Alley Cafe can excel in merchandise management and achieve competitive advantage through two different ways. Alley Cafe can create a niche advantage for itself by concentrating upon unique merchandisers appealing target customers. The second way involves proper placement and presentation of those merchandisers. These can include coffee mugs, t-shirts, gift items and accessories. The main USP of Alley Cafe is its traditional ambience and high quality vegetarian food. The food range is also popular because of variance in taste of numerous food items that are offered. At the same time, the retail outlet’s unique offering of traditional and classic vegan food products will keep attracting customers. The Cafe is also known for its musical fests. Alley cafe invites new talents and hosts a live show every day in order to engage customers, apart from delivering high quality foods. It is important that the merchandisers kept in the Cafe reach the target customers on time. By providing greater variety in products, Alley Cafe will see higher sales volume. Customers are benefited as they can avail items, which are otherwise unavailable and Alley Cafe can earn revenue through investment in inventory (Marieke, 2004; Dubé, Chebat and Morin, 1995). 7.5 Customer Service Effective customer service is another important factor which can provide success to Alley Cafe in the food retail industry. Alley Cafe can adopt differentiated and personalised customer services in order to gain competitive edge in the food retail market. Cafe managers should ensure that food and beverages are served on a timely manner and each customer is attended properly. Alley Cafe can add another tactful service such as customer loyalty programs. In the food service industry, behaviour of customers is greatly influenced by attractive loyalty programs offering discounts, premium memberships, complementary offers and other benefits (PWC, 2014). This will help in increasing overall footfalls in the cafe and will strengthen brand loyalty among Alley Cafe’s regular customers. The distribution, supply chain and stocking activities can be greatly improved with introduction of technologies such as, EPoS (Electronic Point-of-sale) and fund transfer through electronic systems (EFTPoS). Figure 3 Blueprint for customer service maximisation (Source: Chase, R.B. and Stewart, D.M., 1994) The above customer service blueprint is a good indication of service maximisation. Alley Cafe can implement similar blueprint in order to minimise customer complaints and increase overall customer satisfaction. By ensuring that every customer is served properly and effective service quality is delivered without compromising on food quality or profit margin, Alley Cafe can achieve sustainable competitive advantage. 7.6 Store Environment Coffee outlets in United Kingdom are touted as a third home, where individuals spend maximum time, after home and workplace (Agriculture and Agro-food Canada, 2011). As a result, Alley Cafe will have to build a relevant and soothing atmosphere with distinguished design, music and interior (Baker, Parasuraman and Voss, 2002). Physical environment of Alley Cafe can greatly enhance overall experience of the customers. A positive experience inside the Cafe can induce emotional response, which in turn can significantly increase the amount of money and time invested in the outlet. Store environment or ambience has become an important source of competitive advantage in the food retail industry. Thus, a pleasant and complimenting environment will ensure a good mood and subsequently greater spending by the customers coming to the Cafe (Spangenberg, Crowley and Henderson, 1996; Michael, et al., 2005). In-store media, self-checkout facilities, intelligent shelves, electronic displays and advertising are few of the recent technological innovations which can be adopted by Alley Cafe (Marketline, 2012a). In order to attract the new-age internet savvy customers, Alley Cafe can bring in advanced technologies. These include mobile applications featuring services such as, store location tracker and daily menus and offers, in order to capture customer attention and generate footfalls (Caterer and Hotel Keeper, 2004). 7.7 Sustainability Environmental organisations and global NGOs are increasingly focussing upon critical global problems such as, recycling, pollution and degradation. Environment lobbyists and government authorities have been forcing restaurants and retail chains to become green and qualitative. Alley Cafe should start adopting various remedial measures to curb environmental degradation such as, recyclable packaging (Balmer and Gray, 2003). In order to remain sustainable, Alley Cafe can turn towards more innovative formulae such as, building a strong corporate social responsibility for their businesses. Such initiatives involve engagement in activities such as, recycling policies, fair trade, employee treatment and carbon emission policies. Irrespective of company size and brand popularity, firms are required to abide by the government rules and policies for establishing a clean environment (Fifield, 2007). Thus, engaging in activities such as environmental pollution cleaning, recycling and wastage control will increase the overall brand equity of Alley Cafe. This will also help in improving the environmental credentials of the Cafe. The UK government has made it mandatory for food retailers to promote healthy and qualitative eating. This has resulted in companies providing necessary information such as, calories count, fat percentage and minute nutrients composition, for all their products. Alley Cafe should maintain a stringent policy in terms of ambience, quality of service and food and cleanliness so that it is seen as an ethical firm both by the consumers and the low making bodies. The reduction in corporate taxes is a relief to the cafe amidst the current economic downturn (Yalch and Spangenberg, 1990). 7.8 Customer Communications Alley Cafe should focus in improving its overall communication strategies for customers. Customer communication not only helps in providing offers and services to customers, but also in improving overall communication clarity between the management and customers. Better visuals, graphics and pictorial representation of brands and their offerings will generate higher and qualitative brand awareness for Alley Cafe. The nation is dominated by white Christians and major language spoken is English, followed by Scottish. The overall demographic statistics and location suggest that people make frequent visits to cafes and restaurants, rendering the food retail a burgeoning and growing sector (International Markets Bureau, 2013; Office for National Statistics, 2013a). The digital presence of Alley Cafe is spread across Twitter and Facebook. Alley can utilise the online media strategy with content being regularly updated and feedback and queries are attended instantly over Facebook and Twitter (Alley Café, 2014c). Alley cafe can allot a budget of 37,000 Euros for advertising, promotion and campaign for a period of six months. The overall communication budget for different media and distribution channel can be divided as follows; Amount/Activity (in Pounds) Jan Feb Mar Apr May Jun Advertising Outdoor 1000 1000 2000 1000 1000 Print 2000 1000 2000 1000 Television 3000 2000 2000 1000 1000 Social Media Promotional campaign 1000 2000 3000 1000 3000 Press Releases 2000 2000 2000 A Gantt chart has been prepared for evaluating and monitoring the different promotional tools for a period of six months; Activities Jan Feb Mar April May June Advertising Sales promotion Sponsorship Public Relation Direct marketing Radio Advertising E-Marketing 7.9 Human Resources Alley Cafe can increase its overall service quality by hiring service-oriented workers and employees. The ability of human resource in offering unparallel service provides competitive edge to food retail companies. Alley Cafe can also invest on training and grooming their employees and managers. Employee behaviour is a critical antecedent to customer behaviour and can subsequently result in repeat purchase generating higher revenue and profit for Alley Cafe (Leonard, Seiders and Grewal, 2002). Every employee in the cafe should be given definite task and role in personnel selling. Alley Cafe can add 2 employees in each department, where one employee will be in charge of the service time and other employee will ensure that customers are offered additional features such as merchandisers. Proper recruitment, training and development and motivation and retention facilities will help in enhancing the overall human resource quality of the organisation (Table 1). 7.10 Brand Management Retail brands are gradually evolving from old and traditional advertising to a more strategic and contemporary format. Alley Cafe can increase its target audience base by partnering with media firms and advertising agencies and engaging them in making strategies advertisements and promotional plans as these agencies and media firms are better acquainted with latest market demand and customer patterns. Apart from cafe and retail outlets, coffee machines are also becoming popular among households as rising amount of consumers desire to recreate coffee experience at their homes (Caterer and Hotel Keeper, 2004). In addition, new marketplaces such as, supermarkets, fast food joints and pubs, are adding fast foods such as breakfast and coffee as a necessary item to their menus (The Food & Drink Innovation Network, 2014). Partnering with these channels will be highly beneficial for the Cafe. Reference List Agriculture and Agro-food Canada, 2011. Consumer Trends Hot Drinks in the United Kingdom. [online] Available at: < http://www.ats-sea.agr.gc.ca/eur/5742-eng.htm> [Accessed 3 May 2014]. Alley Café, 2014a. About Us. [online] Available at: http://alleycafe.co.uk/?page_id=2 [Accessed 3 May 2014]. Alley Café, 2014b. Menu. [online] Available at: http://alleycafe.co.uk/ [Accessed 3 May 2014]. Alley Café, 2014c. Contact Us. [online] Available at: http://alleycafe.co.uk/?page_id=17 [Accessed 3 May 2014]. Armstrong, G. M. and Kotler, P., 2012. Marketing: An Introduction. 2nd ed. New Jersey: Pearson Education. Baker, A., Parasuraman, D. and Voss, G., 2002. The Influence of Multiple Store Environment Cues on Perceived Merchandise Value and Patronage Intentions. Journal of Marketing, 66(4), pp. 120-141. Baker, H., Jones, W. and Nichols, M., 1994. Using core competences to develop new business. Long Range Planning, 27, pp. 13-27. Bakeryinfo, 2014. UK coffee shops to exceed 20,500 by 2018. [online] Available at: file:///C:/Users/USER%20567/Desktop/1st%20may/UK%20coffee%20shops%20to%20exceed%2020,500%20by%202018%20-%20British%20Baker.htm [Accessed 3 May 2014]. Balmer, J.M.T. and Gray, E.R., 2003. Corporate brands: what are they? What of them? European Journal of Marketing, 37(8), pp. 972–97. Brown, H., 2011. External Environmental Analysis of Starbucks and the Coffee Industry. [pdf] University of Hampshire Available at: [Accessed 3 May 2014]. Caterer and Hotel Keeper, 2004. More brands to go in coffee shop shake-up. [online] Available at: http://www.catererandhotelkeeper.co.uk/articles/1/12/2004/56347/more-brands-to-go-in-coffee-shop-shake-up.htm [Accessed 3 May 2014]. Chase, R.B. and Stewart, D.M., 1994. Make Your Service Fail-Safe. [online] Available at: [Accessed 5 May 2014]. David, F., 2011. Strategic management: Cases and concepts (13th ed.). Florence, South Carolina: Pearson. Department for Environmental, Food and Rural Affairs, 2012. Food Statistics Pocketbook. [online] Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/183302/foodpocketbook-2012edition-09apr2013.pdf [Accessed 29 January 2014]. Drejer, A., 2002. Strategic management and core competencies: Theory and application. Connecticut: Greenwood Publishing Group. Dubé, L., Chebat, J-C. and Morin, S., 1995. The Effects of Background Music on Consumers’ Desire to Affiliate in Buyer-Seller Interactions. Psychology and Marketing, 12(4), pp. 305-319. Euro monitor International, 2014. Hot Drinks. [online] Available at: file:///C:/Users/USER%20567/Desktop/1st%20may/Coffee%20in%20the%20United%20Kingdom.htm [Accessed 3 May 2014]. Ferrell, O. C., and Hartline, M. D., 2010. Marketing strategy. 5th ed. Connecticut: Cengage Learning. Fifield, P., 2007. Marketing Strategy. London: Routledge.  Foundation Degrees South West, n.d. Brand Perceptual Map. [online] Available at :< http://media3.bournemouth.ac.uk/marketing/10branding/05position.html> [Accessed 5 May 2014]. Haberberg, A. and Rieple, A., 2008. Strategic Management. Oxford University Press, New York. Hui, M. K. and Bateson, J.E. G., 1991. Perceived Control and the Effects of Crowding and Consumer Choice on the Service Experience. Journal of Consumer Research, 18(9), pp. 174-184. International Markets Bureau, 2013. Market Analysis Report. [online] Available at: http://www.gov.mb.ca/agriculture/statistics/agri-food/uk_foodservice_en.pdf [Accessed 15 January 2014]. Kang, S., 2006. Chasing Generation Y. Wall Street Journal, 9, pp.1-18. Leonard, B., Seiders, K. and Grewal, D., 2002. Understanding Service Convenience. Journal of Marketing, 66 (7), pp. 1-17. Marieke, D., 2004. Consumer behaviour and culture: Consequences for global marketing and advertising. Thousand Oaks, CA: Sage Publications. Marketline, 2012a. United Kingdom - Hot Drinks. [online] Available at: [Accessed 3 May 2014]. Marketline, 2012b. United Kingdom - Hot Drinks. [online] Available at: [Accessed 3 May 2014]. Michael, L., Grewal, D., Kopalle, P. and Hess, J., 2004. Emerging Trends in Pricing Practice: Implications for Research. Journal of Retailing, 80(30), pp. 13-21. Michael, L., Grewal, D., Peterson, R.A. and Connolly, B.N., 2005. The Concept of the “Big Middle. Journal of Retailing, 81(2), pp. 83-88. Office for National Statistics, 2013a. Population. [online] Available at: [Accessed 2 May 2014]. Office for National Statistics, 2013b. An Overview of Population and Migration Statistics. [online] Available at: [[Accessed 2 May 2014]. Poulter, S., 2013. Storm in a coffee cup brewing as Pret a Manger hikes the cost of a Cappuccino by 11p. [Online] Available at: [Accessed 3 May 2014]. Pret A Manger., 2013. About Our Company. [online] Available at: [Accessed 3 May 2014]. PWC, 2014. Key success factors. [online] Available at: [Accessed 2 May 2014]. Schwartz, B., 2004. The Paradox of Choice: Why More is Less. New York, NY: Harper Perennial. Sheth, J. N. and Sisodia, R. S., 2006. Tectonic Shifts, the Geo-economic Realignments of Globalizing Markets. New Delhi, NY: Response Books (Sage). Spangenberg, E. R., Crowley, A.E. and Henderson, P.W., 1996. Improving the Store Environment: Do Olfactory Cues Affect Evaluations and Behaviors? Journal of Marketing, 60 (4), pp. 67-80. The Boston Globe, 2014. British coffee chain Caffè Nero coming to Boston. [online] Available at: file:///C:/Users/USER%20567/Desktop/1st%20may/British%20coffee%20chain%20Caff%C3%A8%20Nero%20plans%20first%20US%20store%20in%20Boston%20-%20Business%20-%20The%20Boston%20Globe.htm [Accessed 3 May 2014]. The Food & Drink Innovation Network, 2014. UK Coffee Shop Market demonstrates strong sales growth. [online] Available at: file:///C:/Users/USER%20567/Desktop/1st%20may/Food%20&%20Drink%20Innovation%20Network%20%C2%BB%20UK%20Coffee%20Shop%20Market%20demonstrates%20strong%20sales%20growth.htm [Accessed 3 May 2014]. University of Cambridge, 2013. Future Scenarios for UK Food Industry. [Online] Available at: http://www.fdf.org.uk/corporate_pubs/IFM_report2_Sep2010.pdf [Accessed 4 February 2014]. Yalch, R. and Spangenberg, E., 1990. Effects of Store Music on Shopping Behaviour. Journal of Consumer Marketing, 7(2), pp. 55-63. Appendices 1. Retail Audit of UK eating out market 1.1 Market Definition A market can be described as a medium or channel, which allows sellers and buyers of a specific service or good to interact and facilitate exchange (Armstrong and Kotler, 2012). This medium can be a tangible place, such as restaurants, shops, malls, or intangible such as, online websites. In the present retail audit, the organisation under study is Alley Cafe, in brick and mortar format. 1.2 Market Demand The retail food market of UK has shown a strong growth in terms of sales. At present, there are more than 16,500 eating out outlets across United Kingdom and the industry is showing overall growth rate of 6.4 percent every year. In addition, one out of five coffee consumers is a regular cafe visitor. 1.3 Market Forecasts The future market place for eating-out industry will be influenced by further participation of consumers. 2 The Micro-environment 2.1 Competitors The major competitors of Alley Cafe include Cafe Nero, Costa, Starbucks and Pret a Manager. Cafe Nero Cafe Nero is a private chain of coffee and snacks outlets with European style. There are around 500 branches in UK as well as in foreign lands such as, Poland, Cyprus, Turkey, Middle East and Ireland (The Boston Globe, 2014). Strengths and Weaknesses: The major strengths of Cafe Nero are its high quality regular coffee, imported beans offering exquisite taste as well as artisan food popular among European masses. Also, rapid expansion into new regions have provided promotional and brand enhancement opportunities, thereby increasing overall customer base (Ferrell and Hartline, 2010). The major weaknesses associated with Nero include dependence on a single supplier, over-presence in UK and violation of various retail and tax laws. Costa Coffee Costa Coffee is a British Coffeehouse with headquarters at Dunstable, UK. The areas served by the company include United Kingdom, China, South Asia, Middle East, Eastern and Central Europe. The coffee brand has more than 2000 stores; of which, almost 1670 are in United Kingdom (Schwartz, 2004). Strengths and Weaknesses: Apart from serving in independent outlets, coffeehouses and restaurants, the coffee chain also operates by partnering with airports, hotels, cinemas, multiplexes, high-end pubs, supermarket stores, motorway services and even certain hotels. As a result, overall penetration and brand awareness of Costa Coffee is high (Schwartz, 2004; Baker, Jones and Nichols, 1994). The brand is quiet famous among young consumers and has achieved many awards for its qualitative service and innovative food offerings. As a result of the high traffic, customers have to wait to receive their order, which is a major weakness for Costa Coffee. Starbucks Starbucks is a global coffee and fast food brand with headquarters in Seattle, Washington. It is the largest coffee brand in the world with more than 20000 stores across 54 nations (Brown, H., 2011). Strengths and Weakness: The brand name, first mover advantage, huge product portfolio and extensive distribution are few of the major strengths of Starbucks. Few of its weaknesses include high price limiting its customer base and frequent controversies related to marketing strategies and violation of laws. Furthermore, overall market share of Starbucks in UK is quiet low with only about 790 stores (Brown, H., 2011; The Food & Drink Innovation Network, 2014). Pret A Manager The company presents numerous food options. The retail chain is spread across 290 outlets over the globe, but United Kingdom provides core market for the firm (Pret A Manger, 2013). Strengths and Weakness: Widely extended channels of distribution across different regions of UK is a major strength of Pret A Manger. Lack of expansion and diversification and ineffective consumer marketing are few weaknesses of the company (Poulter, 2013). 2.2 Major Weakness/shortcomings of Alley Cafe Alley cafe is located at a corner of United Kingdom, hidden in Nottingham’s market square. As a result, brand awareness is quiet low compared to other well-known cafes in United Kingdom. Being a complete vegetarian Cafe, the brand has restricted itself to a very small customer range. This also limits opportunities for expansion and diversification. The Cafe often becomes overcrowded, which increases awaiting time for customers, resulting in negative customer perception. 3. The Macro-environment External Environment Characteristics Opportunity for Alley Cafe Political/legal The overall corporate tax bar for firms has been reduced by the government, besides lowering budget for media expenditure, sports and entertainment. The overall financial burden for the company will lessen. Economic UK has been able to quickly grow out of the recession and the government has been supporting economic recovery by easing policies and strict guidelines The domestic expansion of Alley Cafe will get a boost with increasing flexibility (Michael, et al., 2004) Socio-cultural Overall health awareness among consumers is increasing and customers are rapidly shifting towards low-cost restaurants due to economic downturn and fall in disposable income. The current market trend will help customers to shift towards vegetarian food, increasing demand for the restaurant. Technological Latest technologies such as, RFID (radio frequency identity) and ERP (enterprise resource planning), have improved overall efficiency of operations in the food retail industry. Implementing technologies such as, ERP and RFID, will help Alley cafe to increase its overall revenue and profits. Environmental As a result of increasing environmental degradation, service companies and smaller retail outlets have come under the radar of environmental lobbyists and government. Alley Cafe can utilise the opportunity to campaign its brand globally based on environmental campaigns and activities conducted. 3.1 Major Threats for Alley Cafe Competition from direct as well as indirect competitors is becoming stronger over time. Other theme restaurants are giving tough competition to Alley Cafe by enhancing their overall product and service offerings. 4. Human resource Management Table 1 Recruitment Recruitment will be based on service quality and skills, ability to work under pressure, and a patient nature of the worker Training and development Training and development will include software training for handling operations process, training for equipment handling and soft-skills training Motivation and Retention Motivation and retention activities include regular performance feedbacks, incentives, bonus, flexible work timings and frequent outdoor activities 4. Industry facts on Coffee and food retail industry Figure 4 UK Branded coffee outlets market share (Source: Caterer and Hotel Keeper, 2004) Figure 5 UK market sixe for hot drinks (Source: Caterer and Hotel Keeper, 2004) Figure 6 New Coffee Launches (Source: Agriculture and Agro-food Canada, 2011) Figure 7 UK market share by turnover and store numbers (Source: Agriculture and Agro-food Canada, 2011) 5. Survey Analysis Figure 8 Frequency of visits among survey participants Figure 9 Market shares of Alley cafe and competitors Figure 10 Products purchased from Alley Cafe Figure 11 Customer Opinion on additional products Figure 12 Alley Cafes Location Figure 11: Customer Ratings for Alley Cafe Additional questionnaire set 1. Have your coffee consumption increased over the last 3 years. If yes, tick all the reasons applicable. a. Professional life/ Work related b. coffee shop’s Convenience c. Drinking and menu options d. higher outdoor activities e. meeting place / Social atmosphere f. Family responsibilities g. Coffee popularity 2. Which season is more preferable for Coffee according to you? a. Spring b. Winter c. Summer d. All seasons 3. Do you think opting for a vegetarian diet is good for health in long run? a. Yes b. No c. Can’t say 4. Will you increase your visits to the food outlet if it includes organic and low calorie food products in its regular menu? a. Yes b. No c. 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