Assignment Writing Help on The new normal? US food expenditure patterns and the changing structure of food retailing

Executive Summary

Company Description

Oliver’s Café and Grill is an ethnic restaurant located in Orange County near deaf community in California State. The restaurant serves American delicacies mainly BBQ Rib and pizza as well as Italian delicacies. The restaurant is one of a kind in the region since it has an open kitchen where customers can view our chefs as they prepare delicacies. The restaurant has a capacity of 150 seats in the outside patio cover. It also has a gas heater patio to serve during the winter and a private dining room. The setting of the restaurant has family styles tables with comfortable seats to accommodate different family sizes.

Mission Statement

The mission statement of the restaurant is to be a family style restaurant that will serve Italian food on picnic tables. It is also the mission of the restaurant to encourage people who do not know each other to share a meal and learn sign language. Oliver’s Café and Grill restaurant aims at ensuring that all the visitors visiting the region have an ideal dining experience that will leave them striving for more.

Industrial Analysis

Restaurant industry is one of the growing industries in the US. It has been noted that the neighboring restaurant has received significant growth in the last few years. The growth is as a result of changing trend of eating culture where several locals are dining out. Consumers are willing to sacrifice the indulgence of dining out now than they were in the past thus, leading to the increased growth of the industry.

Products and Services

Oliver’s Café and Grill restaurant offers an American menu that includes BBQ Rib and pizza. Daily menu also includes seasonal American cuisine incorporating locally grown ingredients. The restaurant also serves Italian menu including wine and beers. Customer orders food from the menu list and it is prepared as they wait by qualified chefs to ensure that the food is customized. As chefs prepare their meals, customers have a chance to learn sign language displayed in their dining table using sign language alphabet. Customers usually learn to order some item and spell them using sign language.

Target Market

Oliver’s Café and Grill restaurant will target locals and visitors in the region. Locals are mainly the young generation most between 25 and 40 years with high incomes and spend their income by going out and eating in expensive restaurants therefore making the ideal customers for our product and services. The county also receives many visitors that will provide a big market for our product and services

Marketing and Sales Strategy 

The restaurant will integrate marketing tools including product, place, price, and promotion to formulate its marketing strategy. The restaurant will offer quality products and services at competitive pricing.  Promotion will be conducted to increase customer awareness of products and services (Timothy & Benjamin 319).

Competition

Competition is a marketing factor that Oliver’s Café and Grill restaurant will not ignore. There are few established restaurants that will offer direct competition to the restaurant. These restaurants include Eureka restaurants that have chains of restaurants in California, Twenty Eight restaurants, and orange hill restaurant among others neighborhood restaurant. Although these restaurants are well established, Oliver’s Café and Grill will have a competitive advantage since there are no restaurants near the deaf community. The restaurant will also give customers a chance to learn sign language, increasing their competitiveness. The manager will also act like a deaf and, therefore, will communicate with the high number of deaf in the region.

Management

Michael Livingstone is the owner is the owner of the restaurant. He will act as the manager and a deaf chef in the restaurant. Livingstone has high experience in the hotel business since he has worked as a senior chief for ten years.

Susan Kagan will be the marketing director. She has marketing experience from International Corporation such as Samsung and Pepsi and has worked in five-star hotels.

Paul Junior will be the senior chef. Paul has worked in various hotels as a chef for eight years therefore experienced to handle the task.

Operations

The restaurant will operate in an outside patio cover with 150 seats and stylish tables. It will also have private dining room and a gas heater patio to hold customers during winter or cold nights. It will have 25 five employees who will work on shift basis. Local arrangements will be made with suppliers will be done with farmers and suppliers to supply the required ingredients.

Financials

The restaurant aims at achieving sales revenue of $ 30, 0000 within the first year of business amounting to a gross profit of $200,000. The sales expense is expected to grow at the rate of 10% within the five years.

Sources of fund

The initial cost of setting up the restaurant is estimated to be $2.5 million. The fund will be obtained from the owner personal saving. However, the owner will acquire a loan of $200 000 loan from the bank to subsidize the capital requirement.

Industrial Analysis

In orange county, the restaurant industry has continues to flourish after recovering from the last recession period that hit the world. Studies shows that the hotel industry is growing at 8% annually since 2010. There has been an increase in the number of restaurants that are being established in the region, and this has been attracting many visitors and locals in the area. It has also been noted that there is a changing trend where individuals have shifted from taking fast foods from fast food cafes to dining restaurant (Melih, Lee, and Gary 407). Visitors and local in the region are looking for dining places where they can spend time with their families, and this has resulted to several malls in the region to use restaurants and foods joint to attract customers.

The dynamic growth in the hotel industry and the changing in the culture of locals have resulted in the restaurant businesses being one of the profitable businesses in the region. Restaurant business is also favored by the extensive supply of agricultural products in the area. Orange County being the third populated county in California is well connected to road and rail network that facilitate the delivery of fresh agriculture product making restaurant businesses to flourish.

Industry Trends

The favorable economic conditions have increased demand for neighborhood restaurants. Locals and visitors are looking for comfortable meals in familiar atmospheres. Locals have also increased desire to spend time with friends and family members in familiar atmospheres, and this has increased the need for small neighborhood restaurants (Melih, Lee, & Gary 407).

Products and Services

Oliver’s Café and Grill restaurant offers an American menu that includes BBQ Rib and pizza. Daily menu also includes seasonal American cuisine incorporating locally grown ingredients. The restaurant also serves Italian menu including wine and beers. Customer orders food from the menu list and it is prepared as they wait by qualified chefs to ensure that the food is customized. As customers wait for their meals to be prepared, they have a chance to learn sign language displayed in their dining table using sign language alphabet. Customers usually learn to order some item and spell them using sign language. Other services offered by the restaurant include swimming, children games, and indoor games such as chase and table tennis.

Target Market

The target market for the restaurant comprises of local and visitors in the region. Most locals are between 25 and 40 years with high incomes. The generation usually likes spending their income by going out and eating in expensive restaurants therefore making the ideal customers for our product and services. Orange County being one of the industrialized counties in California and hosts headquarter to most big companies in the world receives a lot of visitors. Visitors usually dine in classic restaurants in the region and like the taste of locally made meals thus providing a big market to restaurants.

Marketing and Sales Strategy

Marketing plays an integral part in the restaurant business by increase sales and gaining market share (Timothy & Benjamin 319). Advertising will be the main tools that will be used in marketing the restaurant. Advertisement will be carried out using posters, billboards and TVs. Word of mouth will also play an integral role in creating consumer awareness. The restaurant will conduct sales promotion to attract more customers, and this will be done by giving out coupons and discounts to various customers. Personal selling will be done by sending invitations of dinner effects to a specific group of people such as friends, investors, suppliers and corporate staffs. The restaurant will have a website that will display informative information such as daily menu and updates of upcoming events.

Another aspect that the restaurant will look in its marketing strategy is the price. Oliver’s Café and Grill restaurant will offer quality product and services at a competitive price. The price of meals will be slightly lower than that of our competitors, and this will help to gain market entry and dominance. The location of the restaurant is strategic, and target customers will have a chance to view chefs prepare meals as they pass.

Competition

The restaurants face competition from various established restaurants in the region include Eureka restaurants that have chains of restaurants in California, Twenty Eight Restaurant, and Orange Hill Restaurant among others neighborhood restaurant. These restaurants offer meals and drinks targeting locals and visitors. However, the price of their products and services is very high. By lowering the price of product and services, the restaurant will attract more customers.

Operations

Facilities

Oliver’s Café and Grill have adequate facilities that facilitate its operations. The restaurant operates in an open patio which can hold up to 150 customers. The patio is fitted with stylish leather seats and tables to ensure customers are comfortable. The restaurant also has a private dining room for private guests. During cold nights and winters, the restaurant has a gas heater patio to keep the customers warm. Modern kitchen equipments are used to ensure quick order preparation.

Production

Majority of the foods will be prepared in the restaurants. The restaurant has an open kitchen where customer’s orders will be prepared as they wait in the dining area. The restaurant will also offer ready foods for customers who will not be willing to place special orders.

Task Force

The workforce of Oliver’s Café and Grill will be made of 25 employees. Five of the employees are chefs with experience in preparing different types of mills. The other group of employees includes waiters and waitress, cleaners, cashier, and security guards. The restaurant also seeks additional workers in case there is a big event taking place.

Cost Controls

Minimizing the cost of operation is one of the objectives of Oliver’s Café and Grill. Thus, proper cost control measures have been put in place to reduce excess cost in production of food. First foods are prepared when customers place orders to reduce food wastage. The restaurant has also developed a good supply management that ensures a constant supply of ingredients from local suppliers. This reduces the amount of inventory that the restaurant holds to reduce the risk of damages on perishable ingredients. Oliver’s Café and Grill use alternative sources of energy that include solar and wind energy to supplement its energy cost thus reducing costs.

Customer Service

Oliver’s Café and Grill has put up systems that ensure fast order processing and delivery. The restaurant is also committed to the well-being of the customers.

Financial Data and Projections

Start Up Costs

The initial cost of setting up the restaurant is estimated to be $2.5 million. Most of the funding will be from the owner’s savings however he will also acquire a bank loan to fund some of the expenses.  The money will be used to acquire facilities of the restaurant such as premises, kitchen equipments, and dining facilities among others. Some of the amounts will also be used in paying licenses and start up marketing initiative.

Oliver’s Café and Grill Projected Startup Expenses

Premises                                  $800,000

Development Fee                    $400,000

Kitchen Equipments               $200,000

Dining equipments                  $250,000

Legal                                       $10,000

Stationery                                $2,000

Brochures                                $1,000

Insurance                                 $100,000

Rent                                        $50,000

Marketing and Others                         $687,000

Total Start-up Expenses       $2,500,000

Projected Sales and Profits

The hotel anticipates making a sale of $ 20,000 in the first month of its operation. However, it is estimated that the sales will increase every month as more customers become aware of the restaurant. In the first years, the hotel will is projected to have a sale of 279,415 in the first year, $707,301 in the second years and $770,608 in the thirds year. It is projected that the hotel will operate at a loss in the first year of businesses due to a large amount of expense that will be incurred in setting up the business. However, the restaurant will start earning profit from the second years due to increased marketing efforts.

Projected Expenses

Payroll Expenses

The restaurant will incur an annual payroll expense of about $170, 000 to pay it staffs and casual laborers. The payroll expenses will increase in subsequent years as the restourant add more staffs and increase employee’s benefits.

Marketing Expenses

Oliver’s Café and Grill is planning to conduct various marketing campaigns such as advertisement and sales promotion in order to attract customers. It is estimated that the restaurant will use about $ 2, 400 annually in marketing expenses. 

Other Expenses

Other expenses of the restaurant will include the administration expenses, rent, insurance and depreciation on assets.

Projected Profit And Loss

 The table below shows projected profit and loss for the restaurant in the first three years of the business.

Oliver’s Café and Grill Projected Profit and Loss

                                                Year 1                         Year 2                         Year 3

Sales                                        $279,415         $707,301         $770,608

Cost of Sales                          $125,737         $318,286         $346,773

Total Cost of Sales                  $125,737         $318,286         $346,773

Gross profit                          $153,678         $389,016         $423,834

Expenses                               

Payroll                                    $166,912         $272,160         $279,720

Marketing Expenses               $2,400             $2,400             $2,400

Depreciation                           $15,000           $15,000           $15,000

Insurance                                $2,400             $3,600             $3,600

Rent                                       $18,000           $36,000           $36,000

Total Expenses                      $204,712        $329,160         $336,720

Profit Before Interest and Taxes ($51,034)    $59,856           $87,114

EBITDA                                 ($36,034)         $74,856           $102,114

Interest Expense                        $8,000         $8,000             $8,000

Taxes Incurred                             $0               $15,557           $23,734

Net Profit                              ($59,034)         $36,299           $55,380

Works cited

Beatty, Timothy KM, and Benjamin Senauer. “The new normal? US food expenditure patterns and the changing structure of food retailing.” American Journal of Agricultural Economics 95.2 (2013): 318-324.

Madanoglu, Melih, Kyuho Lee, and Gary J. Castrogiovanni. “Franchising and firm financial performance among US restaurants.” Journal of Retailing 87.3 (2011): 406-417.