Treme Restaurant Growth Strategy and Contingency Plan
This paper outlines a comprehensive strategic business plan for Treme, a creole and southern cuisine restaurant located in Brandywine, Maryland. It addresses financial contingency planning in the context of macroeconomic risk, including high unemployment and declining median incomes. The paper then describes the restaurant's market penetration, market development, and product development strategies, targeting both consumers unfamiliar with southern cooking and those whose needs have gone unmet. Growth strategies — franchising, joint ventures, and acquisitions — are evaluated, with organic growth identified as the most appropriate path. The paper concludes with a projected growth timeline covering two, five, and ten years from the business start date.
- Contingency Planning and Financial Risk Management: Financial safeguards against macroeconomic and consumer risk
- Market Penetration Strategy: Promotions targeting familiar and new southern cuisine consumers
- Market Development and Product Development Strategy: Brand extension and technology-driven product growth
- Evaluating Growth Strategies: Organic Growth, Franchising, and Acquisition: Organic growth preferred over franchising and acquisitions
- Projected Business Growth Over Two, Five, and Ten Years: Moderate early growth accelerating over medium term
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What makes this paper effective
- The paper grounds each strategic recommendation in concrete macroeconomic data (unemployment figures, median income trends), giving abstract business concepts real-world relevance.
- It systematically evaluates all three major growth strategies — franchising, joint ventures, and acquisitions — before justifying organic growth, demonstrating balanced analytical thinking rather than unsupported preference.
- Financial discipline is shown through specific decision criteria such as IRR thresholds, NPV requirements, and minimum cash reserve targets, lending credibility to the contingency framework.
Key academic technique demonstrated
The paper uses a structured elimination approach to strategic decision-making: it presents and critiques each alternative growth strategy before arriving at its preferred conclusion. This technique — common in business case writing — shows the writer understands competing options rather than simply asserting a position, and it draws on cited academic sources to reinforce claims about mergers, brand leverage, and vertical integration.
Structure breakdown
The paper is organized around five distinct strategic questions, each treated as a standalone section: risk and contingency, penetration strategy, market and product development, growth strategy evaluation, and a forward-looking growth projection. This modular structure, typical of business plan assignments, allows each strategic domain to be addressed independently while contributing to an overall coherent vision for the restaurant's future.
Contingency Planning and Financial Risk Management
The risk embedded within the overall market stems from uncertain macroeconomic factors and their implications for consumer confidence. Unemployment remains stubbornly high at 7.7% — levels not seen since the Great Depression (Beaudreau, 1996). Median household incomes in the United States fell from approximately $51,000 prior to 2008 to a more modest $48,000 (DeNavas-Walt et al., 2012). During this same period, commodity prices have increased. The prices of gas, food, utilities, and rent have all risen over the past five years, placing a significant strain on consumer confidence and discretionary spending.
This environment directly affects Treme, as the restaurant relies on the discretionary income of individual customers to generate profit. A contingency plan is therefore warranted in the event of adverse economic circumstances. The main sources of risk for the company include shifting consumer sentiments and adverse financial conditions that could impair the company's ability to compete and operate. The contingency plan will accordingly be financial in nature.
Treme will not take on heavy debt burdens that could jeopardize future operations. The company will also establish lines of credit to address unforeseen changes in macroeconomic conditions or consumer sentiment. These lines of credit will be reserved strictly for emergency situations, providing liquidity and funding to core operations only when necessary. In addition, extensive cost controls will be in place to ensure the conservative use of capital.
Any investment must clear a hurdle rate of at least 10%, and the Internal Rate of Return (IRR) on any investment must also meet this threshold. Any capital project without a positive Net Present Value (NPV) will not be undertaken. In cases where multiple projects compete for limited cash flow, the project with the highest NPV will be selected. Cash reserves should amount to at least six months of business funding, covering wages, rent, utilities, inventory, products, and other operational necessities.
Through these conservative measures, Treme can navigate volatile macroeconomic conditions that may harm competitors. It is precisely during such turbulent periods that disciplined financial planning can enable the company to gain market share and grow its customer base.
References
Beaudreau, Bernard C. (1996). Mass Production, the Stock Market Crash and the Great Depression. New York: Authors Choice Press.
DeNavas-Walt, Carmen; Proctor, Bernadette D.; Smith, Jessica C. (September 2012). "Real Median Household Income by Race and Hispanic Origin: 1967 to 2010." Income, Poverty, and Health Insurance Coverage in the United States: 2012. U.S. Census Bureau. pp. 6–13.
Tauber, E. M. (1988). "Brand leverage: Strategy for growth in a cost-controlled world." Journal of Advertising Research, 28(August–September), pp. 21–38.
Maddigan, Ruth; Zaima, Janis (1985). "The Profitability of Vertical Integration." Managerial and Decision Economics, 6(3), pp. 161–179.
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