Strategic Plan for Small Resturant

Strategic Plan for Small Resturant

Restaurant Strategic Plan

The following pages focus on proving a strategic plan for The Great Italian Food Company. The paper starts with the presentation of the company's mission and vision. This explanation is intended to introduce readers in the environment of this company. The values of the company are also presented. It is important to identify these values in order to determine the strategic options that the company should address.

The paper continues with the Environmental Analysis. This section describes the microenvironment and the macro environment, with the most important components. The internal and external environments are also address. In this case the most important components of the company's environment are represented by the economic, social, and technological environment, but also the company's customers, employees, managers, suppliers, owners, the government, and the community. These factors, their importance and characteristics are also addressed.

The SWOT Analysis is another important section of the strategic plan. Its importance relies on the identification and discussion of the company's strengths, weaknesses, but also of the opportunities and threats that the company must take into consideration. The Five Forces Analysis helps understand the industry in which this company develops its activity. Therefore, readers can learn about the competition, power of buyers, power of suppliers, threat of substitutes, and market entry barriers in the restaurant industry.

The paper continues with the Strategic Direction section. In this case, readers are presented the strategy that the company intends to develop. This section also discusses the company's product, pricing, distribution, and promotional strategies.In addition to this, the Goals and Objectives section describes the objectives that the strategy must reach. The Strategic Action plan is also presented in order to discuss the activities required by the strategic plan. The Recommendations section discusses certain issues that the company must address in developing its strategy.

Company Mission and Vision

The mission of The Great Italian Food Company is to provide high quality, Italian cuisine at affordable prices. The restaurant's employees are interested in providing their customers a dining experience that meets their expectations, and that determines them to become loyal customers. The company is also interested in developing a workplace environment that appreciates employees and increases their motivation. Therefore, the company's strategy is oriented towards improving customer and employee satisfaction.

Company Values

The values that The Great Italian Food Company promotes are represented by: integrity, providing high quality products and services, and corporate social responsibility. The company's managers have understood that in order to develop a successful business it is necessary to focus on integrity in relationships with customers, employees, and business partners. This helps the company to develop strong relationships with its business partners. In addition to this, it is important to invest in reaching high quality standards. This is intended to create competitive advantage. The Great Italian Food Company is also interested in involving in corporate social responsibility activities.

Environmental Analysis

Economic environment

In order to develop a successful strategic plan, it is important to take into consideration the economic environment that is able to significantly influence the activity of the company. In this case, the U.S. economy is dealing with numerous factors determined by the crisis. This situation has reduced the incomes of some of the customers of The Great Italian Food Company. This means the company must modify its strategy in accordance with these factors.

The economic environment also modifies the company's relationships with its suppliers (FAO, 2010). This is because the prices of raw materials that the company requires have increased, determining increased investments in supply purchases. In this case, the company must better allocate its resources. Therefore, the economic environment determines the level of investments of The Great Italian Food Company. This environment also influences the activity of the company's business partners.

When establishing the pricing strategy it is recommended to take into consideration the purchasing power of the customers targeted by the company. If the company's price level is higher than what its customers can afford, its sales are likely to reduce. Therefore, it is important to develop the product range and their prices in accordance with customers' incomes.

Social environment

The U.S. In one of the most developed country in the world, from an economic and social point-of-view. The most important factor that the company must address when analyzing the social environment is represented by the multicultural issues that affect it. The ethnic groups in the U.S. are represented by: white -- 79.96%, black -- 12.85%, Asian -- 4.43%, Amerindian and Alaska native -- 0.97%, native Hawaiian and other Pacific islander -- 0.18%, Hispanic -- 15.1%, other races -- 1.61%.

Technological environment

The company's ability of investing in technological developments allows The Great Italian Food Company to create competitive advantage. The technological environment in the U.S. is highly developed. This means that companies can use important innovations in different business sectors.

Suppliers

The company's suppliers represent an important component of the company's environment. This is because the success of The Great Italian Food Company also relies on the products purchased from suppliers. The company focuses on providing high quality products which require important quantities purchased from several suppliers. Therefore, it is important to develop a strong relationship with these business partners.

In order to reach this objective, the company must diversify its supplier base. This refers to the types of suppliers addressed by The Great Italian Food Company. The company must address small suppliers that can provide reduced prices for their products, but also large suppliers that have the production capacity required by the company. The Great Italian Food Company must select its suppliers based on several criteria. The company must take into consideration the price range of the suppliers, their location, and their production capacity. In addition to this, it is recommended to use a higher number of smaller suppliers instead of a smaller number of large suppliers. This strategy is intended to reduce the risks of not receiving the ordered products in case certain suppliers cannot deliver them.

Customers

The company's strategy is focused on the needs and requirements of customers. This is because The Great Italian Food Company understands the necessity of improving customer satisfaction. In addition to this, the company modifies its strategy based on the needs expressed by its customers, which can be attributed to environmental influences.

Employees

The company's human resources are an important factor that determines its success. Therefore, it is important to develop a strategy focused on improving the performance of employees. In addition to this, The Great Italian Food Company is interested in developing a motivational strategy based on the requirements of employees and on the resources of the company that can satisfy these requirements.

There are also other components of the company's environment. These refer to managers, owners, the government, society, and the community. The Great Italian Food Company takes these factors into consideration when developing its strategy. This activity is intended to reduce the risks associated with the influence of these factors.

SWOT Analysis

Strengths

The company's strengths are represented by its abilities and resources. The company must increase the effects that these strengths can have on the business. Therefore, it is important to focus on these strengths.

Tradition on the market -- this is an important advantage that the company can use when developing its strategy. This is because notoriety and tradition are important factors that can determine the number of customers that the company can attract. Most customers usually orient towards successful companies that are well-known on their markets. This is because this ensures customers that the company provides high quality products and services that are appreciated by other customers also.

High quality products -- in this business sector it is important to try to reach high quality standards. This ensures that the company has the ability of investing in activities and processes intended to help provide high quality products. This category of products determines customers to think more on their quality instead of their price. Therefore, these customers might pay higher prices for high quality products.

Medium prices -- the company understands the incomes limitations of its targeted customer segments. Therefore, The Great Italian Food Company is interested in increasing its profits by increasing its number of customers, and not by increasing its prices. However, the company's price range must reflect the efforts made by the company in purchasing, producing, and commercializing the products it offers. Therefore, it is recommended to improve negotiations with suppliers in order to benefit from smaller costs that can be used in reducing the prices practiced by The Great Italian Food Company.

Weaknesses

Relationship with suppliers -- this is one of the factors that significantly influence the company's activity and that the company must improve. The problem in this case is that the company must expand its supplier base. The Great Italian Food Company is in business with a small number of suppliers. The company has experienced situations when some of these suppliers were unable to deliver the products ordered by the restaurant. 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.

Opportunities

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.

Threats

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 vertical integration in order to improve their distribution process (Investopedia, 2011).

There are several factors that influence the intensity of competition in this business field. 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 high prices on the market, determining companies to increase the rice that customers pay in order to purchase their products (Chapman, 2009). In the restaurant industry, suppliers are less powerful in comparison with other industries. This is because there are many competitive suppliers.

Threat of new entrants and entry barriers

Companies must take into consideration the entry barriers of the industry they are trying to address. Industries with little entry barriers are characterized by common technology, little brand franchise, access to distribution channels, and others. In the case of industries where it is difficult to enter, the barriers are represented by patent or proprietary know-how, difficulty in reaching certain distribution channels, and others. In the case of the restaurant industry, the entry barriers are not high.

Strategic Direction

The SWOT analysis presented numerous opportunities that the company can address. It is recommended that The Great Italian Food Company focuses on increasing the number of restaurants in the region. The reason behind this strategy relies on the fact that the company is not addressing the entire potential of customer segments in the region. Therefore, it is important to address the needs of these customers also.

Product Strategy

The company should develop a product strategy based on menu diversification and expansion. This is because the company intends to address other segments of customers that present different characteristics. Their interest in certain dishes determines The Great Italian Food Company to develop several menus oriented towards customers' necessities. However, the development of the product strategy should be based on questionnaires and surveys on customers' requirements (Cagan, 2009).

Pricing Strategy

In order t develop a successful strategy, it is important to modify the pricing range. The objective of introducing different types of menus also refers to the ability of reducing the costs associated with the production of these products (Gilkey, 2011). This leads to reduced prices. By providing products and services that customers can afford, the company can increase its sales by increasing the number of customers.

Distribution Strategy

The company must also focus on improving its supply chain management. This allows the company to better allocate its resources to activities that require significant investments. This strategy is also intended to reduce supplier costs. In addition to this, the company intends to improve its relationships with suppliers. As a result, it is expected that the company can benefit from less expensive products. This strategy should also include the delivery system that the company requires in order to increase its customer base. It is recommended that the company uses the help of specialists in the field in order to reach this objective (InfoTrends, 2011).

Promotional Strategy

The promotional strategy is one of the most important components of the marketing mix. In addition to the product development strategy, the company must also focus on providing certain promotions. Such promotions refer to free delivery, less expensive menus, diversified menus, and others (Bruch, 2006). In addition to this, the company should develop diversified menus in order to satisfy the needs of different categories of customers (PromoSales, 2011).

Goals and Objectives

The company's strategy must focus on reaching the following objectives:

Increasing sales

Increasing profits

Improve customer satisfaction

Improve employee motivation

Increase customer loyalty

Expand the range of products and services

Strategic Action Plan

Year 1

In order to develop a successful strategy, it is important to develop a market study. This is because the company must determine the efforts that must be invested in the strategy and estimate the profits that can be reached. Based on the results of this study, the company can establish the most important strategic aspects.

The following step consists in determining how many restaurants must the company develop in order to reach the established objectives. This requires the company to determine the area it wants to address. The size of this region is very important, same as the number of potential customers. The company must also determine the costs of this investment and establish whether it can afford it.

The company should also expand its range of products in order to increase diversification. Each restaurant developed by the company should also provide certain ethnic foods in accordance with the ethnic groups that can be found in each region. This allows the company to increase the number of customers and to satisfy the needs of different customer segments.

Other activities include the following:

Equipment purchase

Installation process

Licenses

Year 2

The company must continue the strategic plan with the improvement of employee motivation. This is intended to improve the performance of the company. It is recommended to use the help of specialists in the field. Other activities are represented by:

Marketing strategy

Supply chain management improvement

Development of motivational strategy

Years 3, 4, 5

During this period, the company should focus on the following issues:

Increasing sales

Monitoring the strategy and its effects

Evaluation of the strategy

Recommendations

There are several factors that the company must take into consideration when establishing its strategy. It is recommended to analyze the activity of competitors in order to develop strategies intended to counteract the effects of competitors' activities. Therefore, it is important to study the market in order to determine the important facts that the company can rely on when developing its strategy (Webster, 1991).

There are several opportunities that can be addressed by The Great Italian Food Company. It is recommended to address a combination of some of these opportunities. Therefore, the company should focus on expanding the number of restaurants and diversifying the menu. By expanding the number of restaurants, the company can reach larger categories of customers. However, this requires significant investments that cannot generate profits in the following period of time. In order to increase the efficiency of this strategy, it is recommended to focus on locations with reduced number of restaurants. It is not recommended to address regions with malls and other commercial centers. This allows the company to address a market with reduced competition, making it easier to increase its market share (Kurtz, 2011).