Challenges to lower menu pricing of Masala Café and Bar to maintain competitive edge in restaurant and café market

Running head: RESEARCH PROJECT
Research Project
Name of the Student
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RESEARCH PROJECT1
Executive Summary
This research report is based on challenges that restaurant face when lowering menu price of
Masala Café and Bar to maintain competitive edge in restaurant in Wellington. It has been
identified that restaurant market environment in New Zealand has been dynamic in nature
and consumers’ tastes and preferences are changing in rapid way. So, purpose of the report is
to identify how Masala Café and Bar is dealing with the challenge of lowering menu price. In
order to perform the analysis, a primary research has been performed and the data has been
collected from both customers and organizational members of Masala Café and Bar. To select
the respondents both probability and non-probability sampling method has been applied. To
collect the data, a set of close-ended questions have been prepared. Findings indicate the fact
that quality of product is one such significant element that consumers often consider when
visiting restaurant. When it comes to reducing the price of food items, it is highly important
for the organization to focus on a particular category where price strategy low can be applied.
This specified category would help to generate or bring back the competitive advantages.
Setting a low price strategy for all product items would generate operational risks. Thus, it is
mostly important for the restaurant to provide cheaper menu items in a specified category and
this helps the organization to gain consumer attention. It has also been learnt that price is not
the only factor that attracts customer- restaurant ambience, quality of food item, etc.
Moreover, the decline in price could also create a state of competition.

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Table of Content
1.0 Industry Background............................................................................................................7
1.1 Organization Background................................................................................................8
1.3 Issues / problem in the organization...............................................................................10
1.4 Research motivation.......................................................................................................11
1.5 Research aim and Objectives.........................................................................................12
1.6 Research question...........................................................................................................12
1.7 In-depth discussion of relevant theories.........................................................................12
2.0 Literature Review...............................................................................................................15
2.2 Current trends in the research topic...............................................................................15
2.3 Pricing challenges and consideration.............................................................................15
2.4 Pricing tactics.................................................................................................................20
2.6 Logic of Product line extensions....................................................................................21
3.0 Research Methodology.......................................................................................................23
4.0 Finding and Analysis..........................................................................................................26
4.1 Questionnaire for staff....................................................................................................26
4.2 Questionnaire for the consumers....................................................................................31
4.3 Questionnaire for the competitors..................................................................................37
4.4 Qualitative Findings.......................................................................................................44
4.5 Discussion......................................................................................................................45
5.0 Conclusion..........................................................................................................................49
6.0 Recommendation................................................................................................................49

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References................................................................................................................................51

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List of Tables
Table 1: Masala Café using quality material for producing food products..............................20
Table 2: Distributional channels for additionally increasing sales of Masala Café.................21
Table 3: Masala café focus on quality rather than quantity of food orders at a time...............23
Table 4: Senior management involve the staff or take feedback from the general level staff. 24
Table 5: Rate of consumer satisfaction....................................................................................26
Table 6: Customer satisfaction with respect to price of food menu of Masala Café and Bar..27
Table 7: Consumers opinion regarding the pricing of Masala Café with respect to other
brand’s pricing.........................................................................................................................29
Table 8: Masala Café need to introduce cheaper items............................................................30
Table 9: Cheaper menu items often attract customers to pay a second visit to the restaurant.32
Table 10: Ambience of the restaurant is necessary for attracting visitors...............................34
Table 11: Customers’ consideration towards the restaurant....................................................35
Table 12: Decline in menu prices create competition in restaurants.......................................36
Table 13: Pricing has impact on market competition...............................................................38

RESEARCH PROJECT5
List of Graph
Graph 1: Masala Café using quality material for producing food products.............................21
Graph 2: Distributional channels for additionally increasing sales of Masala Café................23
Graph 3: Masala café focus on quality rather than quantity of food orders at a time..............24
Graph 4: Senior management involve the staff or take feedback from the general level staff 25
Graph 5: Rate of consumer satisfaction...................................................................................27
Graph 6: Customer satisfaction with respect to price of food menu of Masala Café and Bar.29
Graph 7: Consumers opinion regarding the pricing of Masala Café with respect to other
brand’s pricing.........................................................................................................................30
Graph 8: Masala Café need to introduce cheaper items...........................................................32
Graph 9: Cheaper menu items often attract customers to pay a second visit to the restaurant 33
Graph 10: Ambience of the restaurant is necessary for attracting visitors..............................35
Graph 11: Customers’ consideration towards the restaurant...................................................36
Graph 12: Decline in menu prices create competition in restaurants.......................................38
Graph 13: Pricing has impact on market competition..............................................................39

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RESEARCH PROJECT7
Topic- Challenges to lower menu pricing of Masala Café and Bar to maintain
competitive edge in restaurant and café market
1.0 Industry Background
The Café and Restaurant industry has benefited from a surge in consumer patronage
over the past five years in New Zealand. It has also been identified that increasing
discretionary earning as well as positive customer sentiment have fuelled growth in the sector
revenue over the period. It has been noted that household have felt more optimistic about
their financial situation as well as higher income have provided them with a wider purchasing
power to spend on food and beverage sold by cafes and restaurants. In addition to this, it is
note that the range of dining choice available has expanded, supporting consumer patronage
and the revenue sector is expected to increase by an annualized 4.6% over five years through
2019-2020 to 6.3 billion (Kozlenkova Samaha & Palmatier 2014).
Repetti, Roe and Gregory (2015) mentioned that people now eat out more often than
ever for a greater range of occasions. Author of the article has also mentioned that the fact
that Hospitality sector in New Zealand achieved a great record sales of over 11.2 billion,
which represents the growth of sales over 3.6% over the previous year. However, after two
years of significant growth which is 9.7% and 8.5% settles at a more stabilised in 2018.
Olbrich, Jansen, and Hundt (2017) mentioned that this surge in growth remains reflective of
New Zealand’s slower economy over the last year and it is expected to stay restrained in the
nearer team. Thus, it can be added that barriers in then diary sector, growth constraints in
developing as well as uncertain influence of the government’s policies are expected to create
influence over the rest. It can be added that the sales for the good to increase by 5.7% in 2018
and in dollar terms and this could translate to a rise in annual sales of $148, which is slightly