Effectiveness in the Business World: Restaurant Industry Analysis

This report delves into the multifaceted aspects of business effectiveness within the restaurant industry. It begins by classifying the nature of the restaurant business as a service-oriented sector, emphasizing the interplay of tangible products and intangible services, and the importance of raw materials and skilled personnel. The report then explores the advantages and disadvantages of the food service industry, highlighting its growth potential and the challenges of staff recruitment and retention. A key component is the application of PESTEL analysis to a start-up restaurant, illustrating how political, economic, social, technological, environmental, and legal factors influence business performance. The report further examines the impact of globalization on the restaurant business, including easier ingredient sourcing and the role of the internet. The report also covers the use of technology in restaurant operations, such as transportation management and inventory systems. It addresses the importance of identifying the target market for a restaurant and strategies for attracting customers, including effective marketing. Finally, the report emphasizes the importance of ethical considerations in business, including a code of ethics, employee relations, and the benefits of ethical conduct for the business. The report uses various sources to support the key arguments and provides a comprehensive overview of the subject.

Running head: EFFECTIVENESS IN THE BUSINESS WORLD
Effectiveness in the Business World
Name of the Student
Name of the University
Author note

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Table of Contents
Task 1...............................................................................................................................................2
Nature of Business.......................................................................................................................2
Advantages and Disadvantages...................................................................................................2
Use of PESTEL In Start-Up Restaurant Business.......................................................................3
Task 2...............................................................................................................................................3
Impact of Globalization...............................................................................................................3
Use of Technology.......................................................................................................................4
Task 3...............................................................................................................................................4
Task 4...............................................................................................................................................6
Importance of Ethics in Business................................................................................................6
References........................................................................................................................................8

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Task 1
Nature of Business
The nature of restaurant business can be classified under the service category, more
specifically the food service category. At any restaurant, products are sold and so are intangible
services such as cooking, marketing, table service, etc. The income that gets generated is
acquired from food items served to the customers. The ability of cooking and serving delicious
dishes helps make money. Inside the restaurant, raw materials would be purchased and with the
help of the brilliant skills of competent cooks and service crew, the restaurant is able to deliver or
serve tasty food. The skills, however, would be worthless if there are no raw materials for
cooking. Each of these aspects are vital and contributes immensely to the success of the business
(Ong 2012).
Advantages and Disadvantages
Benefits: The food service industry is growing since the late 1970s and this trend is
expected to be continuing through as the busy people have chosen to eat out mostly instead of
taking time out for preparing meals at their homes. This implies that the right restaurant at the
right location would be a lucrative opportunity. Successful restaurateurs have often went on to
become popular figures in the society (Khan 2014).
Negatives: Restaurant business is people business, mostly of use if meeting is public is
the new trend. However, this also implies that the staff at these restaurants, especially the
servers, might also possess some strong and useful people skills. A challenge one would likely to
face and find is recruiting and retaining the right kind of employee (Chen 2014).

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Use of PESTEL In Start-Up Restaurant Business
PESTEL analysis is the influence of the political, economic, social, technological,
environmental and legal factors on the performance of an organization. It can often be
implemented in a separate manner or with some other tools as per the requirement of the venture
(Yüksel 2012). With the help of PESTEL analysis, businesses can decide on taking any
approach, majorly a futuristic one, and it even helps the new organization in identifying possible
obstacles and overcoming them. Irrespective of the scale of the new business, it is required that
the PESTEL analysis is used installation of strategic management within the roots of the
organization for making sure of better productivity and decreased risk for them in the long run
(Kolster 2017).
Task 2
Impact of Globalization
1. Globalization helps restaurants in finding ingredients in a much easy manner. The
restaurants are now no more limited to serving only what is in season where the location
of the restaurant is. It is now easy being a seafood restaurant even if the area is
landlocked, for example, as the fresh fish is available at the door quickly. Additionally,
globalization has helped increase the number of possible suppliers for multiple
restaurants, which has in turn reduced the bargaining power of suppliers and helped with
the bottom line (Radovic-Markovic 2012).
2. Advancement of the world wide web has stimulated trade in food service business.
Evidence has been found that has showed that internet has had a significant effect on
international trade in this business. First of all, it has helped in offering an opportunity for
the businesses in selling to their customers all across the world. A good example of this

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can be McDonalds and KFC. Customers have been able to get information regarding the
current products on sale or any latest service available at the restaurant (Mak, Lumbers
and Eves 2012).
Use of Technology
Previously restaurants used to be limited to just the local farms for their produce
requirements. The scenario can be changed considerably with the help of transportation
management technologies so that they can now have their produce, their vegetables trucked or
flown in from any location and thus they are no more vulnerable towards the demands for
renegotiating contracts. Vegetable can also be now available in all possible locations, making it
easier to obtain raw materials for dishes. Inventory management services would be helpful in
managing the inbound receiving, inventory, and material inspection process in a restaurant
business. The restaurant can leverage a good combination of asset and non-asset based facilities
and specialized transportation equipment for securely managing these activities. Logistics
companies can help by providing inventory management via a range of measures for including
Purchase Order (PO) on-line access (Giebelhausen et al. 2014; DiPietro et al. 2012).
Task 3
Most of the restaurants attempt at appealing to everyone, which is a huge mistake that
they do. People have different tastes and needs and the bottom line of it all is that there are no
simple way in which they can appeal to every one of them at the same time. For the startup
restaurant, the main objective would be of determining who the target market is for them. Based
on the menu they would be serving and the atmosphere of the restaurant, the target market would
be defined. If the startup is a high-end restaurant, featuring gourmet menu and formal
environment, then the target market would be mostly affluent people. If they would be serving

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pub-style fare with a casual atmosphere, the middle class people would be the market the
restaurant would be attempting to reach (Harrington, Ottenbacher and Way 2013).
Serving the best food not always means having a full restaurant every night if no one is
aware of the quality and taste of the food. At times something extra is required, a little bit of
promotion for attracting more customers to the restaurant. The easiest part is making the
customers fall in love with the food. However, there is a need of getting those people through the
door of the restaurant in the first place for that to be happening. Two most helpful approaches
can be used for doing this.
Leaving smart flyers: There is no use wasting time and money on any random generic
flyer with every possible special event and picture that can be fitted into it, just with a hope that
people would find it, then read it and then get converted into a customer. Simply distributing the
menu would not be sufficient anymore. Instead of doing it distributing a smart flyer for attracting
more customers to the restaurant would be more helpful. A small, but targeted flyer with one
simple and direct message would do the promotional job. The restaurant needs to make sure that
the offer would be lasting for at least a month so that the people gets time finding it for using it.
Creating partnerships with local businesses: Conversation with local businesses in the
area can be started. Many of them are privy to regular catering orders for special lunches or
meetings at a consistent basis. Offering them discounts to make sure they are ordering from the
restaurant would be helpful, alongside making sure to hand the, with full menu in person. This
method would be helpful in creating a steady stream of revenue for the restaurant for increasing
their bottom line every month.

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Task 4
Importance of Ethics in Business
Ethics is concerned with any person’s moral perceptions regarding what is right and what
is wrong. Decisions that are taken within an organization might be carried out by a single person
or groups, but whoever takes them would get effected by the culture of the company. The
decision of ethically behaving is a moral one. It is up to the employees to decide what the proper
course of action is. This might involve refusing the route that would be directing to the principal
short term profit. Ethical conduct and corporate social responsibility is known for bringing in
huge benefits for the organization. Ethics is important for any business as it brings in a lot of
profit for them such as attracting customers for boosting sales and reputation, making employees
want to continue with the business, reducing employee turnover, attracting more potential
employees who wishes to work for the organization, reducing cost of recruitments, enabling the
organization getting more talented employees, attracting investors, keeping eth share price of the
business high, and protecting eth business from takeover (Crane and Matten 2016).
Ethics is concerned with any person’s moral perceptions regarding what is right and what
is wrong. In the context of ethics, all the businesses would be benefitting from having a code of
ethics in their organization. Code of ethics serves as a form of guidelines for taking decisions,
both at owner level and on the frontline. Restaurants face huge amounts of significant ethical
issues related to food costs and quality. The restaurant business can take care of the employee
relation area of ethics that is most often neglected. Scheduling issues is most of the time the
reason behind overworking and underpayment of employees. Double shifts and working early-
morning shifts immediately after late-night shifts needs be removed, with commitment made
towards breaking the trend of employee stressing. Addressing this inside the purview of code of

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ethics for the business would be hugely beneficial for the business’s reputation among possible
employees. The organization has to make sure that the code of ethics is being followed by
everyone in the organization, from the lowest rung to the top management (Weiss 2014).

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References
Chen, L.F., 2014. A novel framework for customer-driven service strategies: A case study of a
restaurant chain. Tourism Management, 41, pp.119-128.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
DiPietro, R.B., Crews, T.B., Gustafson, C. and Strick, S., 2012. The use of social networking
sites in the restaurant industry: Best practices. Journal of Foodservice Business Research, 15(3),
pp.265-284.
Giebelhausen, M., Robinson, S.G., Sirianni, N.J. and Brady, M.K., 2014, September. Touch
versus tech: When technology functions as a barrier or a benefit to service encounters. American
Marketing Association.
Harrington, R.J., Ottenbacher, M.C. and Way, K.A., 2013. QSR choice: Key restaurant attributes
and the roles of gender, age and dining frequency. Journal of quality assurance in hospitality &
tourism, 14(1), pp.81-100.
Khan, M.A., 2014. Restaurant franchising: Concepts, regulations and practices. CRC Press.
Kolster, M., 2017. The Use of Market Feasibility Studies in the Restaurant Industry for Small
and Medium-sized Restaurants.
Mak, A.H., Lumbers, M. and Eves, A., 2012. Globalisation and food consumption in
tourism. Annals of tourism research, 39(1), pp.171-196.

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Ong, B.S., 2012. The perceived influence of user reviews in the hospitality industry. Journal of
Hospitality Marketing & Management, 21(5), pp.463-485.
Radovic-Markovic, M., 2012. Impact of globalization on organizational culture, behaviour and
gender role. IAP.
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Yüksel, İ., 2012. Developing a multi-criteria decision making model for PESTEL
analysis. International Journal of Business and Management, 7(24), p.52.