Strategic Plan For Small Resturant Research Paper

Length: 16 pages Sources: 15 Subject: Business Type: Research Paper Paper: #2493015 Related Topics: Strategic Thinking, Italian, Strategic Analysis, Food Delivery
Excerpt from Research Paper :

This situation determined important problems, like supply shortages, leading to the restaurant's inability of satisfying some of its customers' requirements. Therefore, it is recommended to expand the supplier base.

Location capacity -- the restaurants do not have the capacity of serving a high number of customers. There are situations where numerous customers must wait until they can be seated to their tables. Some of these customers find such situations unacceptable. Therefore, they prefer to go to other restaurants with a greater serving capacity. This leads to increased efforts from the company in improving customer satisfaction and loyalty.


Expanding the number of restaurants -- this is a good idea in order to increase profits. However, this strategy requires significant investments. The company must analyze the market and determine whether this investment can be supported. It is important to determine the size of the market, the possibilities of customers, and the financial resources that are necessary in this case.

Expanding the range of products -- the company can also include other products that customers can purchase. This refers to frozen foods like the ones that customers serve in these restaurants. The reason behind this idea relies on the fact that customers like the restaurant's products and would like to purchase some that they can eat at home. This opportunity provides important advantages for both the company and its customers. These frozen foods can be cheaper than the foods served in the restaurant. Therefore, customers can eat their preferred meals while paying smaller prices. The company can also increase its profits by increasing the number of customers that can be addressed with this category of products.

Partnerships with celebrities -- this strategy is successfully used by numerous companies in different business fields. The company is considering the partnership with famous sports players. This is intended to increase the number of customers attracted by these players. In addition to this, the company can introduce higher prices in the case of its products and services. However, increasing the prices of the company's products might not have the best effects. This can also mean that the company must address different customer segments and this requires the company to modify its strategy.

Ethnic restaurants -- this is another opportunity that the company can address. There is a great market for different ethnic restaurants in this region. This can be attributed to the multicultural environment in the U.S. that supports such businesses. However, it is important to conduct thorough studies in the region and determine which are the most important ethnic groups. Based on these studies, the company's managers can identify the type of ethnic restaurant that can be addressed. This also requires the use of specialists in the field. This is because these managers do not have the experience and knowledge of building a business based on the foods of different ethnic groups.

Franchising -- this is another opportunity that the company must take into consideration. Based on the McDonald's success, The Great Italian Food Company can develop a fast-food menu based on Italian foods. In this case, these foods could be cheaper than traditional meals served in the restaurant. This could attract a higher number of customers. The franchising system can also help the company reach a larger area with smaller investments.


Competition -- the company's competitors represent the most important threat that the company must address. The restaurant industry is characterized by intense competition. Therefore, when developing the strategy it is important to analyze the different strategies used by competitors. It is recommended to study competitors that address the same customer segments with similar products.

Five Forces Industry Analysis

Porter's five forces is a model of industry analysis. The forces that this model refers to are represented by supplier power, threat of new entrants, rivalry within the industry, threat of substitutes, and the power of buyers.

Rivalry within the industry

This rivalry refers to the competition in different business sectors. This is usually measured by industry concentration. Companies in different industries modify their strategies as a result of the intensity of competition. This factor can determine the following strategic actions:

Modifying prices -- the prices of products and services can be increased or reduced in order to create competitive advantage.

Product differentiation -- this refers to improving the characteristics of different products and services and in addressing a series of innovations.

Distribution channels -- some of these companies use


The large number of restaurants increases rivalry because they must compete for the same customers and resources. Rivalry is higher in the case of companies with similar large market share. This is because these companies are competing for the leadership position in the market.

The slow market growth is another factor that increases competition. In this case, companies must compete for increasing their market share. In the situation where the market is developing, companies can increase their profits by addressing the increased market. The restaurant business is usually characterized by certain growth. The growth is different in accordance with the region and with the type of restaurants in the market in case. However, the economic and financial crisis has slowed the development of the restaurant industry. Some of these companies became unable to support their business. Other investors find it difficult to invest in this business because the number of customers in certain regions has reduced. This is because of the reduced incomes that determine these customers to not go to restaurants as much as they want to. However, this can be considered an opportunity by investors that have the ability to develop businesses in this sector. This is also the case of niche sectors of the industry.

High fixed costs also increase rivalry in different industries. This is the case of companies where most of the total costs are represented by fixed costs, determining them to focus on reducing the unit costs. This is not usually the case of the restaurant industry. The importance of fixed costs is reduced in comparison with other types of businesses (QuickMBA, 2010).

High storage costs are an important factor that influences competition and that can be attributed to the restaurant industry. The type of products use by the company requires large resource consumption. Therefore, the company and its competitors fight for the same customers in order to use these products in proper conditions.

Another factor that increases rivalry is represented by low switching costs. This refers to customers' possibility to switch from one product to another. In this case it refers to the possibility and intention of switching from one restaurant to another. This action obviously does not imply certain costs from the customer in switching its preferences. The customers simply select different restaurants. This situation is frequent on the restaurant industry. The characteristics of this activity also determine such situations. The numerous different types of restaurants determine customers to express their varied references. Therefore, it is difficult to benefit from customer loyalty in this business (Euromonitor International, 2011).

Low levels of product differentiation also determine increased rivalry. This is usually not the case of the restaurant industry, because of the different characteristics of the restaurants. However, fast-food chains benefit from little differentiation. Therefore, it is recommended that the company invests in its branding strategy in order to improve brand identification.

The diversity of rivals can also increase competition on the market. Companies in the restaurant industry are characterized by strong diversification. This situation can be attributed to the different cultures, strategies, and objectives of these restaurants. Therefore, The Great Italian Food Company must study the cultural environment that influences its activity.

Threat of substitutes

The substitute products refer to products in other business sectors. The threat of substitutes becomes important when the demand of the product is influenced by price modifications of its substitute products. In the case of The Great Italian Food Company the substitute products are represented by fast-food chains. The fact that such restaurants introduce lower prices and numerous promotions determines customers with reduced incomes to address fast-food chains instead of traditional restaurants.

Power of buyers

The power of buyers is represented by the influence that customers in an industry can have on the production process or on the level of prices in that industry. In the restaurant industry buyers are not concentrated, which means they have little power. The distribution of purchased products is not standardized, because buyers purchase little quantities of these products (Value-Based Management, 2011). Buyers in this industry are fragmented, they are numerous, and present different characteristics. This is the case of most consumer products.

Power of suppliers

Suppliers can also exert great influence in certain industries. This is mostly the case of business sectors that focus on production and that require large quantities of raw materials. Powerful suppliers can significantly influence the industry through the prices they provide. They can introduce…

Sources Used in Documents:

14. Promotional Strategies (2011). PromoSales. Retrieved September 30, 2011 from

15. The Economic Environment (2010). FAO. Retrieved September 26, 2011 from

16. Webster, F. (1991). Industrial Marketing Strategy. Retrieved September 30, 2011 from

Cite this Document:

"Strategic Plan For Small Resturant" (2011, September 28) Retrieved December 5, 2021, from

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