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    Organic Restaurant Business Plan - Market Analysis Summary

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    Organic Restaurant Business Plan - Market Analysis Summary


    My Organic Restaurant 

    Executive Summary

    The purpose of the business plan is to establish the strategy of an organic food restaurant in Australia. 

    Business Opportunities

    Apparently the economic condition in the country is an important factor because the better economic condition will increase the household income and the purchase power. Another factor that leads to better opportunities is the changes of the social preferences for better life styles. The restaurant industry in Australia is a $20 billion market and in the last five years the annual growth rate of the industry is about 3.5%. The quality of the product is superior to others as all the materials are resourced from local farmers fresh without any artificial ingredients. 

    Sales and Marketing Strategy

    The pricing strategy which is used in this case is the premium pricing. There are many strategies that the company uses for promotion such as TV and social media. There are two channels through which the services are delivered. 

    Operational Strategy

    The operation strategy focuses on sourcing fresh supplies from local farmers and serves them fresh. Also, training the employees and recruiting experienced chef to cater the customers need is another aspect of the optional operational strategy. 

    Financial Plan

    It is estimated that the net income of the business increases sharply from 52,500 in the first year to 262,500 in the 3rd year. However the profit margin of restaurant will not experience a rapid increase mainly due to the fierce competition in this industry.

    Introduction

    The purpose of the business plan is to establish the strategy of an organic food restaurant in Australia. The report incorporates many aspects such as the opportunities, marketing strategies, operation, and financial plans.

    The business opportunity

    There are many different factors which affect the opportunities of organic food market in Australia. According to Aday et al (2018), apparently the economic condition in the country is an important factor because the better economic condition will increase the household income and the purchase power. Therefore, once the economic condition improves, there will be more and more customers who are able to afford organic foods which are usually more expensive than ordinary foods. As is indicated by Trading Economics (2018), based on the economic growth of Australia, it is found out that the current GDP growth rate in the country is about 2.5% and this indicates that the economy already recovers from the crises before. Besides the economic recovery, another factor that leads to better opportunities is the changes of the social preferences for better life styles. According to Mcclure et al (2013), there are more and more people in the society who are concerned about the health problems generated from consumption of junk foods such as chronic diseases and diabetes. Many customers intend to have healthy life styles and consume foods that are organic. This is further stimulated by the fact that there are many customers who refrain from eating junk foods. Therefore, the organic restaurants would target Australian customers who are concerned about their health.

    According to IBIS (2018), the restaurant industry in Australia is a $20 billion market and in the last five years the annual growth rate of the industry is about 3.5%. The growth rate of the industry is still faster than Australian GDP growth and therefore the industry is still in the process of growing. This is especially the case for the organic food industry because it is more attractive than the traditional food restaurants. There are many factors that affect the business performance in Australia. One important factor is the ability for the restaurant to control costs. According to IBIS (2018), the cost control allows companies to reduce operational cost and improve the profit margins, so that it is easier for the company to compete with others. Furthermore, another important success factor affecting the restaurant is the ability to have sufficient amount of employees who have diverse backgrounds and they are able to attend to the needs of customers coming from foreign countries. With the fast process of globalization in the world, there are many foreign customers visiting Australia and it is critical for the company to have employees who are able to address the demands of these foreign customers.

    The sales and marketing strategy

    Sales and marking strategies are used to make sure that the company has good performances in terms of products, price, promotion and place. As is indicated by Magnini et al (2010), the product can be divided into three levels. In the core product level, this new business allows customers to feed themselves and to quench hunger. This is the basic demand that customers have. In the second level, the product includes quality, style, and branding. The quality of the product is superior to others as all the materials are resourced from local farmers fresh without any artificial ingredients. This would relieve customers of the concern about the transgenic foods. Furthermore, the style of the food is that it is cooked with very healthy process and ingredient and it is also served carefully with stylish dishes. The branding is also a very important factor because the company intends to become a famous brand among customers. In the third level the service and delivery are important. The service quality is enhanced as all customers have diverse backgrounds to understand different customer demands and they are also trained to have good etiquettes. The delivery is completed through in store consumption or online purchase.

    The pricing strategy which is used in this case is the premium pricing. As is indicated by Lee et al (2014), there are three types of pricing strategies and the premium pricing frequently leads to higher than normal prices. This is because the product quality is better than qualities of other products so that the customers are willing to pay for higher than normal prices for the products. The benefit of the premium pricing strategy is that it would allow the company to generate higher than normal profit margin. However, this also generates weaknesses and one of them is that the higher price would lead to lower demand. 

    Promotion is also very critical for the company because promotion improves the brand value and increases the sales. There are many strategies that the company uses for promotion. The first promotion strategy that is used is the TV advertising to audiences indiscriminately. The TV advertising is used so that the company collaborates with the food channels to target customers who are interested in delicious foods. Furthermore, another strategy that is used is the online marketing and the company sends out emails to potential customers to attract people to the restaurant. Another promotion strategy is the social media. According to Lim (2015), the development of information technologies stimulates the social media market and the company will open up its websites in Facebook and Twitter and start to communicate with customers on a real time basis. Customers will give feedbacks about the foods, services, and other comments. This would allow the company to upgrade the products and services to better serve customers. Moreover, the company would donate money to local communities to help people in disadvantaged positions. This would allow the company to shoulder its responsibilities to the society and community so that the reputation of the restaurant is enhanced. 

    The place measures where the services would be delivered to the customers. There are two channels through which the services are delivered. The first one is the physical restaurant where customers are able to sit down and enjoy the foods. In the meantime, according to Heroux (2002), there are more and more restaurants collaborating with the e-commerce platforms so that the foods are ordered online and delivered to the customers. 

    The operational strategy

    The operational strategy includes many aspects. According to Parsons et al (2018), the operational strategy is adopted for the company to realize its strategic goal. In this case the company serves customers with healthy organic foods. There are many steps that are used in this process. The company would contact the major suppliers of organic raw materials such as local farmers so as to discuss with them the possibilities of establishing long term collaboration. The long term collaboration with the local producers would generate many benefits. For example, one benefit is that the cost of the supplies is fixed so that the company does not have to weather the fluctuations in the price of the supplies. Furthermore, through entering into long term contracts the company is able to reduce the costs of supplies. Furthermore, as is indicated by Leonidou et al (2011), one of the important aspect of operation of restaurant is the management of inventory because the grocery products can become obsolete. In this case, the company will install the refrigerators that are able to maintain the freshness of the supplies. Also, the inventories are managed to make sure that they are sold income and fresh. Furthermore, another aspect of the operation is that all people who are working in the restaurants will be well trained such as taking orders from customers and bringing dishes to the customers. In order to make sure that the service quality is good, the company would ensure that the experienced workers are paired up with the new workers and the experienced workers would teach the new workers about the procedures of customer service so that the new workers are able to follow the procedures and ensure that the service quality is good. Therefore this is conducted to make sure that customers are satisfied with the services that are provided. Another aspect of the operation is that the restaurant would look for famous chefs that are renowned for preparing delicious dishes. The restaurant would recruit such chefs to make sure that they are willing to stay with the company and prepare foods to satisfy the demands of customers. This would further improve the popularity of the restaurant. Moreover, another aspect of the operation strategy is that the customer service team will be trained to survey the market about the market feedbacks about the service quality, tastes, and other comments. The customer service team would organize data and give feedbacks to the chefs and the waiters so that the proper changes are incorporated to make sure that these customers are satisfied in the future. 

    The financial plans

    From the table above, in the first year the restaurant is just started so that the revenue is relatively small and only 500,000 is generated. However, in the next two years the revenue increases considerably as the company is able to take advantage of its marketing practice to target more customers. It is anticipated that the revenue increases to 2.5 million in the 3rd year. The gross profit is affected by the costs of raw materials that are generated. As is indicated by Di et al (2018), the profit margin of restaurant is usually not very high because of fierce competition, so that it is reasonable to assume that the gross profit margin is at about 40%. The company will then have SG&A which includes the administrative costs and marketing costs. The marketing costs are generated to make sure of the fast expansion. The SG&A is assumed to be 25% of the total revenue generated. The tax rate is assumed to be 30%. It is found out that the net income of the business increases sharply from 52,500 in the first year to 262,500 in the 3rd year. The accounts receivable are generated but this item will not be large as most customers pay by cash or credit card. The accounts receivable is assumed to be 10% of revenue. The inventory is strictly controlled to make sure that it does not become obsolete. Therefore the dishes remain fresh when they are served to customers. Furthermore, the company does not need to have significant amount of fixed assets because the premises are rented and the company only owns the furniture and equipment. Furthermore, in order to make sure that the company does not incur high insolvency risk initially, the company does not use any debt for financing purposes. Therefore the liability only contains the accounts payable as the company delays payment to suppliers. 

    Conclusion

    In conclusion, apparently the economic condition in the country is an important factor because the better economic condition will increase the household income and the purchase power. Another factor that leads to better opportunities is the changes of the social preferences for better life styles. The restaurant industry in Australia is a $20 billion market and in the last five years the annual growth rate of the industry is about 3.5%. The quality of the product is superior to others as all the materials are resourced from local farmers fresh without any artificial ingredients. The pricing strategy which is used in this case is the premium pricing. There are many strategies that the company uses for promotion such as TV and social media. There are two channels through which the services are delivered. The operation strategy focuses on sourcing fresh supplies from local farmers and serves them fresh. It is estimated that the net income of the business increases sharply from 52,500 in the first year to 262,500 in the 3rd year.

     


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