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.
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.
Treme will penetrate the market through promotions targeting two distinct segments. The first segment consists of consumers who are unfamiliar with creole or southern cooking but would be open to trying it. The second segment comprises individuals who are already familiar with southern cooking but have not yet had their needs fully satisfied.
The penetration strategy will focus promotional efforts on both of these groups in order to generate customer traffic into the restaurant. This traffic will allow Treme's products to reach consumers in a profitable manner. Through a compelling value proposition, this promotional approach is expected to cultivate a loyal following of customers who become repeat purchasers over time.
The market development strategy mirrors the structure of the product development strategy described below. It is composed of two segments: consumers who are unfamiliar with southern cooking and its value, and those who are familiar with southern cooking but whose needs remain unmet. To develop this market, Treme will position its offerings as a unique alternative to conventional dining options. This niche will be cultivated as consumers seeking a distinctive experience discover Treme.
Product development is critical to Treme's long-term success. New product development enables the restaurant to stay ahead of competitors and continue appealing to evolving consumer preferences. It can also open new marketing channels and help grow market share — an important consideration given that many potential customers may be unaware of what Treme offers. The product development strategy will focus on three areas: customer needs, brand extension, and technology.
Customer needs analysis will focus on the underlying demands of the target market. According to recent census data, Brandywine is composed of approximately 34% African American and other minority residents. This demographic composition presents meaningful product development opportunities. The company can direct efforts toward the remaining 66% of residents who may not have been exposed to southern cooking. Input from this group can help fuel future market gains, while dishes tailored to their preferences will support market share growth. Simultaneously, the 34% who may already be familiar with southern cooking can provide valuable insight into existing product offerings and unmet expectations.
The second component of the strategy involves brand extension. Drawing on the needs assessment described above, Treme can extend its product offerings to serve both market segments. This approach will enhance the overall brand and the value attributed to it (Tauber, 1988). Extensions will be designed specifically for each segment — those new to southern cooking, and those familiar with it but underserved — creating an inclusive brand identity grounded in customer satisfaction.
Finally, technology plays an increasingly important role in consumer engagement. Social media platforms such as Twitter, Facebook, and Instagram will prove invaluable for gauging customer sentiment, identifying which products perform well, and informing future product development. Technology will allow Treme to better understand underlying consumer attitudes toward its brand and offerings, enabling more responsive and effective product decisions.
Organic growth is the most compelling growth strategy for Treme for several reasons. Organic growth allows the restaurant to establish a loyal customer base that will endure over time. Joint ventures can pursue a similar objective; however, they frequently produce conflicts over future growth strategies, customer demographics, and general business operations. Under a joint venture, disagreements between two parties holding different visions for the business are almost inevitable. Through organic growth, the company's vision and mission remain intact, as owners are not subject to a partner's controlling viewpoint. Management is free to focus on the areas it deems most important without the influence of a partner with differing aspirations.
"Organic growth preferred over franchising and acquisitions"
"Moderate early growth accelerating over medium term"
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