Analyze the strengths and weaknesses of the plan proposed in the Room for Dessert case study and write a 3 page paper in which you:
1. Assess the strengths and weaknesses of the “people” factor.
2. Assess the strengths and weaknesses of the “opportunity” factor.
3. Assess the strengths and weaknesses of the “context” factor.
4. Assess the strengths and weaknesses of the “risk and reward” factor.
Room for Dessert Business Plan
The following is a business plan for an upcoming firm going by the name “Room for Dessert”. The firm, RFD, is a company that will offer dinning services to socially active professionals and graduates. Among the main services that the restaurant will offer include desserts and drinks like tea, coffee, wines and spirits. Room for Dessert has structured a business plan that will see them bring a new approach to the dinning and beverages industry. The approach will bring to the table quality service and products at very affordable prices at the most accommodating environment. The company will serve people in places such Northern and Southern California which are characterized by high traffic and socially interactive people. These places are full of energetic highly social college graduates and professionals whose earnings and social lifestyles will provide a good market for the company. The firm being located in these places will be exposed to different types of customers therefore forming two categories of markets.
The appealing market will be comprised of unconcerned consumers, vacillating consumers and single or couples without kids. Unconcerned consumers market will be formed by people who are not health and nutrition conscious therefore indulging in unhealthy eating habits (Lassiter &. Roberts, 2013). The Vacillating market will be formed by partially diet and nutrition conscious customers who are easily wooed by taste in their selection of eating places. The final section of the appealing market will be formed by youthful expensive couples and singles earning enough to pay for their socially active lifestyles.
This section of the market will be made by committed consumers usually people strict on their dieting and eating habits and therefore do not go for wheat and dessert based foods. The second section of the unappealing market will generally be comprised of people with little income for them to afford luxuries such as expensive dinning and daily social interactions in restaurants.\
Having researched the market Room for Dessert has identified various potential sources for revenue but they are unable to capitalize on all of them. This happens to be among the complications RFD is facing – the inability to decide how they can make all potential sources bring revenue and whether they should exploit one or all of the available revenue sources. With a number of solutions and considering the resources available the management of the company is left with the task of determining the most profitable but attainable revenue source.
The opportunities the company sees are restaurant sales, catering, events, restaurant supply, catalogue and retails sales but Room for Dessert is not capable of pursuing all of these potential revenue sources. They have to go with only a few of the opportunities and hope to venture into the others later on as the firm grows. The following opportunities have to be put off until later or completely done away with for these reasons:-
- Kiosks: Kiosks are usually too available and hence compared to a restaurant, a kiosk would be seen as a source of low quality. A fine-diner is luxurious and hence it shouldn’t be too available.
- Restaurant supply: In this opportunity there will be need for high production of the desserts and beverages to meet the demand. This contact created between RFD and other restaurants will result to competitors becoming aware of RFD trade secrets too. Supplying their products to other restaurants will dwarf their growth since the products they could use to form new investments are already available in other restaurants where they supply.
- Catering: Catering will need more employees, more products and it cannot be structured to fit the model RFD wishes to have. RFD wants to be a social, fine-dining restaurant and the two aspects social and fine-dining cannot be actualized in catering.
- Catalogue sales: Catalogue sales work the same way as the kiosk and so they would have the same impact on the business as having kiosks would.
To make the best and most profitable use of the opportunities available RFD needs to let go some of the opportunities and focus on making few but more profitable ones efficient in terms of high quality product & service provision. The point is, they need to be dedicated in restaurant sales creating a brand image upon which the other opportunities can later be based upon. Obviously, this is the most profitable of all the opportunities available and has little negative potential effects on the enterprise. Serving desserts and beverages is highly grossing. It is an excellent opportunity for high margins so RFD will make a significant amount of income.RFD’s business plan has a number of strengths and weakness
Sufficient research has been carried out and RFD has identified the various risks faced by businesses in this industry and the probable effects the risks may have on the business.
The strategy they have clearly stipulates the operations model and the marketing procedure they intend to employ in pushing their brand.
The research has given them a clear understanding of the industry as it pertains to the challenges experienced in high buy power, intensified competition and reduced entry barriers (Lassiter &. Roberts, 2013). It explains the measure and procedure they will employ in their entry and development.
They have a proper understanding of the market they envision which appears to be huge enough to be an excellent source of profits.
According to their plan they expect to experience a very high call in of customers expecting to serve more than three dinners per seat every day on a day of business operations.
Their business plan and research findings indicate presence of various risks but they don’t seem to have a plan on how to handle those risks. They don’t outline measure they intend to employ for the reduction or prevention of the risks.
In their cost of operations estimations they seem to have used a lot of estimation based on assumption rather than proper investigation. Considering it is a fine-dining restaurant, there is no doubt, professional chefs and other employees require higher salaries than they have estimated.
Another weakness lies in management, there seems to be a lack in managerial skills and experience. The managers charged with the responsibility of establishing and running this restaurant lack the skills and experience for running such venture.
According to Room for Dessert projections you can notice unrealistic estimation and optimism about sales growth, number of restaurants in the chain and brand development. Their projections on growth show that the restaurant will change from $0.3 million in year 1 and be in $50 million by year 6 total revenues. They estimate that by year 4 they will be generating $20 million in revenue. Those projections are quite unrealistic especially bearing in mind that the plan and strategies have been subjected to the market for tests (Lassiter &. Roberts, 2013). It is a given, this investment and the potential market spell possibility of success but further research needs to be done to ascertain applicability and chances of success for the model.
My recommendation for the company is they take time in perfecting the business model before they start expanding. They should lay a good foundation by establishing and nurturing the brand therefore preparing it for future growth and expansion which obviously will be more challenging. Before they start moving to other geographical areas including other countries, they need to first of all test the business model in states like Boston to make sure that the brand is effective. They also need to reevaluate the market to find out if they have timed the market well. Proper financial projections need to be done ensuring that the above recommendations have been taken into account. With better financial projections, research and management Room for Dessert will be a success. The idea if based on a well structured and managed model can become successful.