Down Under Cafe: Menu, Pricing, and Business Sustainability

This report provides an overview of Down Under Cafe, a popular restaurant in Apollo Bay. It discusses the challenges the cafe is facing, such as increasing input prices and labor costs, and explores strategies for improving business sustainability. The report also examines the menu and pricing, as well as the rebranding and restructuring efforts of the cafe. It aims to provide potential investors with comprehensive information to make informed decisions.

Contents
Executive Summary.....................................................................................................................................2
1. Introduction.........................................................................................................................................3
1.1 Purpose of the Report.......................................................................................................................3
1.2 Background........................................................................................................................................3
1.4 Scope of the report............................................................................................................................4
1.5 Organizational Goals..........................................................................................................................4
2 . The Restaurant and the Menu................................................................................................................5
3. Lessons from the Mystery Shopper Surveys............................................................................................7
3.1 Mystery Shopper Design Observation and Concept Congruence......................................................7
3.2 Mystery Shopping: Key Lessons.........................................................................................................8
3.2.1 Menu..........................................................................................................................................8
3.2.2 Pricing.........................................................................................................................................9
4. Menu Mix and Pricing..............................................................................................................................9
4.1 Menu Mix Analysis.............................................................................................................................9
4.2 Pricing................................................................................................................................................9
5. Improving Business Sustainability: Key Strategies Implemented...........................................................11
5.1 Re- Structuring the Menu Mix.........................................................................................................11
5.2 Rebranding: The Bay Leaf Café to Down Under Café.......................................................................12
5.3 Key Strategy Recommendations for the Future:..............................................................................12
6. Conclusion.............................................................................................................................................12
Bibliography...............................................................................................................................................13

Executive Summary
The “Down Under” Café is a café operating in the world renowned Apollo Bay area. A popular
café in the area, previously known as “The Bay Leaf Restaurant” the Down Under Café is now
facing business constraints with increasing pricing of inputs such as protein (sea –food, meat
etc.) and labour.
This report aims at providing a broad perspective on the restaurant, the context in which the
restaurant operates as well some of the recent changes made as a part of the re-branding and
re-structuring. In a shifting environment where profit-margins are increasingly under threat
while exciting opportunities are available for the café to expand, the Café business needs a
fresh infusion of investment. The report aims at being more broad based and general, that
provide comprehensive and detailed understanding of the restaurant, in order to help investors
make their decisions.

1. Introduction
1.1 Purpose of the Report
Down Under is a casual Dining Restaurant located in Apollo Bay area of Australia.
Currently under re-branding process, the restaurant was previously know as “ The Bay
Leaf Cafe”
1.2 Background
A tourist hotspot by the ocean, the Great Ocean Road has some of the world’s most
recognized tourist spots such as Twelve Apostles. Hence, this area is a good location for
casual dining restaurants.
The Menu selection includes homemade Muesli for breakfast, a selection of gourmet
beef burgers, local seafood etc. along with freshly brewed coffee available throughout
lunch as well as a beer and wine selection that includes local and international names. It
distinguishes itself by providing, vegan, gluten free and vegetarian friendly food options.
Open throughout the week from 7 am to 2 pm, Down Under is a good venue for
breakfast and lunch for customers.
The strength of the restaurant is its intimate setting which reduces the feel of being to
commercial in a tourist hotspot. (Trip Advisor, 2019)
The layout of the café is designed to seat 30 people comfortably in the main dining area
and 20 people in the front seating area. The restaurant consists of a well equipped and
well stocked standard commercial kitchen, a loading dock and ample storage space.
The restaurant is a popular rest stop for buses plying from different parts of Australia to
the Apollo area, especially the 12 Apostles. (Trip Advisor, 2019) Hence, tourist economy
affects the business of the café to a very large extent.
The popularity of the restaurant is at a high. However, seasonality of tourism affects the
business. In addition, increasing prices of key ingredients like protein and fluctuating

availability and rising costs of labour are threatening the profit margins, while affecting
quality.
Competition in the restaurant area is increasing rapidly in the area due to the popularity
of the location. Hence, the café has re-invented itself recently. The feel of the café is
quaint and local. This can be improved or highlighted further with the help of a re-
branding exercise. The “local” vibe can be emphasis with more local oriented dishes but
keeping in view, the cosmopolitan nature of Australia.
1.4 Scope of the report
The scope of this report is to produce a concept for the restaurant by assessing the
supply side and the demand side scenarios of the current market. Various challenges as
well the strengths of the market within this area will be discussed. The scope of the
report is more related to providing a broader perspective on the context in which the
restaurant is based and the changes expected from the on –going re-structuring
rebranding. It does not provide a background on the restaurant or financial details
regarding the restaurant other than It is hoped that the report will provide enough
information to potential investors to help them make primary decisions regarding
investment potential.
1.5 Organizational Goals
The restaurant aims to serve the highest quality of food with as emphasis on providing
“local taste” to the tourists while maintaining competitive prices that make it accessible
to tourist from all classes. (Great Ocean Road Regional Tourism, 2019)
The Bayleaf Restaurant is well known as a “local favorite” and is a recognizable part of
Apollo Bay Tourism. (Great Ocean Road Regional Tourism, 2019) However, the
restaurant is not seen as Australian Icon. “Down Under” hopes to fit in the Apollo Bay
tourism destination more conceptually.
It is important to make the restaurant an “Apollo Bay Icon” and a brand that people
instinctively associate with Australia and Apollo Bay.

2 . The Restaurant and the Menu
Location: 131 Great Ocean Rd, Apollo Bay, Victoria 3233, Australia
Target Market: The local population of Apollo Bay area is slightly over 1500 people.
(Australian Bureau of Statistics, 2018) Hence, the local market Is almost negligible. The
restaurant is expected to sustain almost entirely on the visitors and tourist population.
 Australian tourists, especially from the state of Victoria. These tourists would
normally be on small vacations. These may include all age groups and group
sizes. (Allam, 2016) Approximately 2.9 million visitors took domestic day trips to
the Great Ocean Road area in 2017. (Great Ocean Road Tourism, 2018)
However, intuitively, these tourists may have more interest in getting away from
daily lives to spend more time in the country/side beach etc. Activities popular
among such tourists are hiking through the Otway national park, surfing, etc.
(Allam, 2016)
However, intuitively, these tourists may have more interest in getting away from
daily lives to spend more time in the country/side beach etc. Activities popular
among such tourists are hiking through the national park, surfing, etc.
 International Tourists: Approximately 2,183,000 international tourists visited the
region in 2017 (Great Ocean Road Tourism, 2018). International tourists from all
over the world to visit Australia, in general, want to experience the local culture
in the form of food. The focus is more on seeing and experiencing more than
“adventure” or “relaxation”. The destination choices may be uniquely Australian
such as “12 Apostles” and visiting the National Park for sightings of Koals and
Kangaroos. Among the international travelers, millenials are the fastest growing
category who take a keen interest in “local food experiences” and rate them high
among their travel priorities. This phenomenon is especially true of tourists to
Australia. (World Tourism Market, 2018)

Table 1 SWOT Analysis of TheBAyleaf Cafe
Strengths Weaknesses
 Great Location: The Apollo
Bay is a national and
international Tourist hotpot
 Great Local Produce: With
plenty of farms and fishing
areas located surrounding
the Apollo Bay area, local
produce is easy to procure
making the economics of
the market easier.
 Competitive market: The
Apollo Bay area, being a
tourist hub with several
restaurants, a well
developed “Restaurant
Market” over the supply
and demand side is
available. Hence, it is easy
to gather inputs as well as
demand. Hence,
competitive pricing is
possible.
 Non-availability of finance
for expansion.
 Seasonality of demand due
to the lack of a
domestic/local population
 Lack of local labour supply.
Given the extremely small
local population, adequate
skilled and unskilled labour
is not easily available at
competitive prices. This
decreases profit margins
and hampers the process of
providing a standard of
product and service to the
customer
Opportunities Threats
 To grow the restaurant into a
gourmet brand that can be
replicated on different locations.
 High labour costs
 Fluctuating prices of key
ingredients like sea food.

 Growing competition due to
growing popularity of the
destination.
3. Lessons from the Mystery Shopper Surveys.
Surveys were conducted among Mystery shoppers in order to understand the
perception that is created with the restaurant menu of “Down Under”. The idea behind
the survey was to understand:
 The perception that the restaurant creates in terms of whether organizational
goals are being fulfilled.
 Whether the restaurant delivers upon it’s mission statement of “Providing the
community with the best produce our region has to offer; prepared and served
with love and commitment to quality”
 Whether the current menu fits the concept of the restaurant and whether the
menu is easy to follow.
 Which are the most popular and unpopular items on the menu.
3.1 Mystery Shopper Design Observation and Concept Congruence
A total of three surveys were conducted. The following were the key results of the
surveys conducted:
 The clarity provided by the menu is appreciated by all three customers. For example,
one responder wrote “All the menu items have been well described with adequate
information of what goes into each dish. Different allergen information has been
provided, which I think is quite important for this day and age.
 The restaurant design and menu give the perception that it fulfils the
organizational goals “in some ways” as described by all three responders.

 2 out of three responders believe that the restaurant delivers in its mission
statement “in most ways” while one believes that it delivers “in some ways”.
According to responders, that availability of imported food and food ingredients
is what goes against the idea of “local food” and “local produce”.
 The menu is perceived to be concept congruent, by and large, with the
exception of “Gnocchi with Mushroms and Teggio Cheese”, as rated by all
responders. The “Mojito cheesecake parfaits with finger lime caviar” and
“Kangaroo Fillet with Broccolini & Hummus” are the most popular food items on
the list while “Gnocchi with mchrooms and Teggio cheese” is the most
unpopular item on the menu and were not perceieved to be “concept
congruent”.
3.2 Mystery Shopping: Key Lessons
3.2.1 Menu
The concept of the restaurant revolves around providing ‘local taste’ and ‘local produce’
Menu is largely perceived to be concept congruent. The clarity is appreciated while the
white/cream colour also seems to get a nod from the responders since its simplicity gives a
country feel. The picture of the cow is also, aimed at doing the same.
However, concept congruence does not come across easily for items like Gnocchi and Garden
Salad, as these are not uniquely Australian. These items are concept congruent since they
highlight the local farm produce. However, this relation is not easily understood by the
responders.
3.2.2 Pricing
Pricing is perceived to “medium” to on “the high end”. Pricing of “Kangaroo fillet” was
perceived to be comparatively low.

4. Menu Mix and Pricing
4.1 Menu Mix Analysis
The Menu is expected to provide for both the categories of tourists. Hence, while
“kangaroo filet” may not be a novelty for local Australians from within the state, an
option like the “Mojito cheesecake parfaits with finger lime caviar” helps provide a
luxurious option. Options like “Gnocchi with mchrooms and Teggio cheese” and
“Caesar’s Salad”help cater to a larger base within the local tourists such as the
vegetarians, vegans and the health conscious. Products like “beef burgers” go well
with the concept of “surf and turf” and may help gain popularity among the local
tourists.
For the international tourists, options like “Kangaroo Fillet with Broccolini & Hummus” are very
well suited , especially the well travelled millennials. Similarly, local beers and wine selection
helps provide additional options to this market.
4.2 Pricing
Pricing of menu items is aimed at retaining at least a 20% margin. This helps provide a cushion
for those seasons where the prices of inputs may increase, thus improving cost of food items. It
also helps the restaurant to break even in the off-season market.
The survey results pointed that price of Kangaroo Meat, which is perceived to be a gourmet
item was not priced high enough to match the rest of the menu. However, the Kangaroo Fillet is
popular among international tourists, who may find Australian pricing too high. Given that the
Kangaroo fillet offers decent margins, pricing was not raised. It is important to increase the
sales of Kangaroo fillet.
Table 2 Brief Sales Data of Selected Itemss
Menu
Item
No.
Menu Item Menu Mix
% (MM%)
Item
Food
Cost
Item
Contribution
Margin

1 Pinot Braised Duck leg 32.79% $12.20 $17.80
2 Caesar Salad 12.91% $5.57 $14.43
3 Gnocchi with mushrooms and
Teggio cheese 23.04% $11.01 $15.99
4 Grilled Calamari with Tarragon and
Garlic Butter 6.12% $3.47 $12.03
5 Kangaroo Fillet with Broccolini &
Hummus 8.42% $6.04 $13.96
6 Mojito cheesecake parfaits with
finger lime caviar 16.72% $9.87 $8.13
Pinot Braised
Duck leg Caesar Salad Gnocchi with
mchrooms and
Teggio cheese
Grilled Calamari
with Tarragon
and Garlic
Butter
Kangaroo Fillet
with Broccolini
& Hummus
Mojito
cheesecake
parfaits with
finger lime
caviar
$15,433.00
$2,773.86
$9,787.89
$818.92 $1,963.00
$6,366.15
$37,950.00
$9,960.00
$24,003.00
$3,658.00 $6,500.00
$11,610.00
Latest Costs Versus Revenues of Selected
Items
Total Items Menu Cost Total Items Menu Revenue
Figure 1 Snapshot of Costs versus Revenues of Selected Items

5. Improving Business Sustainability: Key Strategies Implemented
5.1 Re- Structuring the Menu Mix
The Menu of Bay Leaf Café was very varied. Hence, the menu mix has been re-structured to
increase fewer items. The Menu still caters to a variety of audience. However, selected items
with high profit margins have been taken.
Items retained in the menu by and large provide a mix of items that have been very popular
among tourists as well as have significant margins. Additionally, all of these items tend to fulfil
the organizational goals very well.
Every single one of these items provides a profit margin between 22% and 55%. Hence, even in
case of inflated prices, the restaurant looks well towards profitability. The prices of some food
items , especially the sea food items and non-locally sourced items like lettuce, are prone to
fluctuation.
In addition, the Grilled Prawns were replaced by Grilled Calamari in order to reduce costs to
increase profit margins. The price of Caesar Salad was increased from AUD 18 to AUD 20.
Gnochhi and Ceasar Salad have been retained to provide vegetarian and vegan options.
5.2 Rebranding: The Bay Leaf Café to Down Under Café
The name Bay Leaf Café does not flash an image of downright Australian. It would be more
connected to exotic cuisines like Sri Lankan food. Hence, to highlight the “local vibe”, the café
has been rebranded to “Down Under”. Down Under is quintessential Australian. It is not too
local and represents the concept of the restaurant food well, since Australia is a country with
unique bio-diversity like Koalas and Kangaroos but is also, an amalgamation of cultures.
The menu, however, has retained the clarity and simple and country look of the previous menu,
since it was appreciated by the consumers.
5.3 Key Strategy Recommendations for the Future:
 Providing more children friendly options: This may help increase the customer base of
the restaurant.

 Push towards a “Gourmet Restaurant”: Most of the ingredients are locally sourced.
Plenty of the beef and meat sourced is comes from “organic sources”. Plenty of Menu
items are in some ways “gourmet”. Hence a greater push towards making the
restaurant more gourmet-yet-casual will be implemented. This would include sourcing
more organic meat and vegetables, increasing the list of local beer and wine etc. This
push may help justify the prices which in some cases, may prove to be “too high”
6. Conclusion
It is hoped that the re-structuring of the menu will help improve the cost-profit margins. It is
also hoped that the re—branding will help the Café fit –in more with the changing nature of
tourism where-in local experiences are more popular. The re-branding will also re-assert the
vision of the restaurant which is to provide “local produce” and “local taste”.
The restaurant has exciting opportunities in terms of branding and expansion. Availability of
Finance will go a long way in the process.
Bibliography
Allam, J. (2016, October 3). Where to Go on the Great Ocean Road, Otways Australia. Retrieved
May 29, 2019, from Youtube: https://www.youtube.com/watch?v=Bgp59QpItuc
Australian Bureau of Statistics. (2018, December 13). 2016 Census QuickStats. Retrieved May
29, 2019, from Australian Bureau of Statistics:
https://quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/
SSC20048?opendocument
Great Ocean Road Regional Tourism. (2019). Great Ocean Road . Retrieved May 29, 2019, from I
am Apollo Bay: https://www.visitapollobay.com/restaurants/bay-leaf-cafe/#moreinfo
Great Ocean Road Tourism. (2018). Latest Research Report. Retrieved May 2019, 2019, from
Great Ocean Road Tourism: https://www.greatoceanroadtourism.org.au/resources/research/
Trip Advisor. (2019, May). The Bay Leaf Cafe. Retrieved May 29, 2019, from Trip Advisor:
https://www.tripadvisor.in/Restaurant_Review-g261654-d2265130-Reviews-The_Bayleaf_Cafe-

Apollo_Bay_Victoria.html
World Tourism Market. (2018, June 7). Putting world food on the travel menu. Retrieved May
29, 2019, from wtm: https://news.wtm.com/putting-world-food-on-the-travel-menu/