Benefits and Negatives of Restaurant Business
The nature of restaurant business can be classified under the service category, more specifically the food service category. At any restaurant, products are sold and so are intangible services such as cooking, marketing, table service, etc. The income that gets generated is acquired from food items served to the customers. The ability of cooking and serving delicious dishes helps make money. Inside the restaurant, raw materials would be purchased and with the help of the brilliant skills of competent cooks and service crew, the restaurant is able to deliver or serve tasty food. The skills, however, would be worthless if there are no raw materials for cooking. Each of these aspects are vital and contributes immensely to the success of the business (Ong 2012).
Benefits: The food service industry is growing since the late 1970s and this trend is expected to be continuing through as the busy people have chosen to eat out mostly instead of taking time out for preparing meals at their homes. This implies that the right restaurant at the right location would be a lucrative opportunity. Successful restaurateurs have often went on to become popular figures in the society (Khan 2014).
Negatives: Restaurant business is people business, mostly of use if meeting is public is the new trend. However, this also implies that the staff at these restaurants, especially the servers, might also possess some strong and useful people skills. A challenge one would likely to face and find is recruiting and retaining the right kind of employee (Chen 2014).
PESTEL analysis is the influence of the political, economic, social, technological, environmental and legal factors on the performance of an organization. It can often be implemented in a separate manner or with some other tools as per the requirement of the venture (Yüksel 2012). With the help of PESTEL analysis, businesses can decide on taking any approach, majorly a futuristic one, and it even helps the new organization in identifying possible obstacles and overcoming them. Irrespective of the scale of the new business, it is required that the PESTEL analysis is used installation of strategic management within the roots of the organization for making sure of better productivity and decreased risk for them in the long run (Kolster 2017).
i. Globalization helps restaurants in finding ingredients in a much easy manner. The restaurants are now no more limited to serving only what is in season where the location of the restaurant is. It is now easy being a seafood restaurant even if the area is landlocked, for example, as the fresh fish is available at the door quickly. Additionally, globalization has helped increase the number of possible suppliers for multiple restaurants, which has in turn reduced the bargaining power of suppliers and helped with the bottom line (Radovic-Markovic 2012).
PESTEL Analysis and Strategic Management
ii. Advancement of the world wide web has stimulated trade in food service business. Evidence has been found that has showed that internet has had a significant effect on international trade in this business. First of all, it has helped in offering an opportunity for the businesses in selling to their customers all across the world. A good example of this can be McDonalds and KFC. Customers have been able to get information regarding the current products on sale or any latest service available at the restaurant (Mak, Lumbers and Eves 2012).
Previously restaurants used to be limited to just the local farms for their produce requirements. The scenario can be changed considerably with the help of transportation management technologies so that they can now have their produce, their vegetables trucked or flown in from any location and thus they are no more vulnerable towards the demands for renegotiating contracts. Vegetable can also be now available in all possible locations, making it easier to obtain raw materials for dishes. Inventory management services would be helpful in managing the inbound receiving, inventory, and material inspection process in a restaurant business. The restaurant can leverage a good combination of asset and non-asset based facilities and specialized transportation equipment for securely managing these activities. Logistics companies can help by providing inventory management via a range of measures for including Purchase Order (PO) on-line access (Giebelhausen et al. 2014; DiPietro et al. 2012).
a. Most of the restaurants attempt at appealing to everyone, which is a huge mistake that they do. People have different tastes and needs and the bottom line of it all is that there are no simple way in which they can appeal to every one of them at the same time. For the startup restaurant, the main objective would be of determining who the target market is for them. Based on the menu they would be serving and the atmosphere of the restaurant, the target market would be defined. If the startup is a high-end restaurant, featuring gourmet menu and formal environment, then the target market would be mostly affluent people. If they would be serving pub-style fare with a casual atmosphere, the middle class people would be the market the restaurant would be attempting to reach (Harrington, Ottenbacher and Way 2013).
Serving the best food not always means having a full restaurant every night if no one is aware of the quality and taste of the food. At times something extra is required, a little bit of promotion for attracting more customers to the restaurant. The easiest part is making the customers fall in love with the food. However, there is a need of getting those people through the door of the restaurant in the first place for that to be happening. Two most helpful approaches can be used for doing this.
Promoting Restaurant Business
b. Leaving smart flyers: There is no use wasting time and money on any random generic flyer with every possible special event and picture that can be fitted into it, just with a hope that people would find it, then read it and then get converted into a customer. Simply distributing the menu would not be sufficient anymore. Instead of doing it distributing a smart flyer for attracting more customers to the restaurant would be more helpful. A small, but targeted flyer with one simple and direct message would do the promotional job. The restaurant needs to make sure that the offer would be lasting for at least a month so that the people gets time finding it for using it.
Creating partnerships with local businesses: Conversation with local businesses in the area can be started. Many of them are privy to regular catering orders for special lunches or meetings at a consistent basis. Offering them discounts to make sure they are ordering from the restaurant would be helpful, alongside making sure to hand the, with full menu in person. This method would be helpful in creating a steady stream of revenue for the restaurant for increasing their bottom line every month.
Ethics is concerned with any person’s moral perceptions regarding what is right and what is wrong. Decisions that are taken within an organization might be carried out by a single person or groups, but whoever takes them would get effected by the culture of the company. The decision of ethically behaving is a moral one. It is up to the employees to decide what the proper course of action is. This might involve refusing the route that would be directing to the principal short term profit. Ethical conduct and corporate social responsibility is known for bringing in huge benefits for the organization. Ethics is important for any business as it brings in a lot of profit for them such as attracting customers for boosting sales and reputation, making employees want to continue with the business, reducing employee turnover, attracting more potential employees who wishes to work for the organization, reducing cost of recruitments, enabling the organization getting more talented employees, attracting investors, keeping eth share price of the business high, and protecting eth business from takeover (Crane and Matten 2016).
Ethics is concerned with any person’s moral perceptions regarding what is right and what is wrong. In the context of ethics, all the businesses would be benefitting from having a code of ethics in their organization. Code of ethics serves as a form of guidelines for taking decisions, both at owner level and on the frontline. Restaurants face huge amounts of significant ethical issues related to food costs and quality. The restaurant business can take care of the employee relation area of ethics that is most often neglected. Scheduling issues is most of the time the reason behind overworking and underpayment of employees. Double shifts and working early-morning shifts immediately after late-night shifts needs be removed, with commitment made towards breaking the trend of employee stressing. Addressing this inside the purview of code of ethics for the business would be hugely beneficial for the business’s reputation among possible employees. The organization has to make sure that the code of ethics is being followed by everyone in the organization, from the lowest rung to the top management (Weiss 2014).
References
Chen, L.F., 2014. A novel framework for customer-driven service strategies: A case study of a restaurant chain. Tourism Management, 41, pp.119-128.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
DiPietro, R.B., Crews, T.B., Gustafson, C. and Strick, S., 2012. The use of social networking sites in the restaurant industry: Best practices. Journal of Foodservice Business Research, 15(3), pp.265-284.
Giebelhausen, M., Robinson, S.G., Sirianni, N.J. and Brady, M.K., 2014, September. Touch versus tech: When technology functions as a barrier or a benefit to service encounters. American Marketing Association.
Harrington, R.J., Ottenbacher, M.C. and Way, K.A., 2013. QSR choice: Key restaurant attributes and the roles of gender, age and dining frequency. Journal of quality assurance in hospitality & tourism, 14(1), pp.81-100.
Khan, M.A., 2014. Restaurant franchising: Concepts, regulations and practices. CRC Press.
Kolster, M., 2017. The Use of Market Feasibility Studies in the Restaurant Industry for Small and Medium-sized Restaurants.
Mak, A.H., Lumbers, M. and Eves, A., 2012. Globalisation and food consumption in tourism. Annals of tourism research, 39(1), pp.171-196.
Ong, B.S., 2012. The perceived influence of user reviews in the hospitality industry. Journal of Hospitality Marketing & Management, 21(5), pp.463-485.
Radovic-Markovic, M., 2012. Impact of globalization on organizational culture, behaviour and gender role. IAP.
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.
Yüksel, ?., 2012. Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), p.52.
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