Business Analysis Report: Leon Restaurant Performance and Strategies

This report provides a comprehensive analysis of Leon Restaurant, a fast-food chain operating in the UK. The report begins with an introduction to small business enterprises and the hospitality industry, followed by a detailed profile of Leon Restaurant, including its strengths, weaknesses, mission, goals, and objectives. It then presents a financial analysis of the restaurant, including income statements, balance sheets, and key financial ratios, highlighting its performance over two years. The report identifies weaknesses such as low liquidity and small restaurant sizes and recommends strategies to address them, including hiring a financial manager, adding menu items for premium customers, and expanding store areas. It also suggests ways to maintain and strengthen existing performance, such as gathering customer feedback and improving food quality. Furthermore, the report recommends Manchester as a suitable location for business expansion, outlining the actions needed to successfully establish operations there. It concludes by assessing Leon's existing business objectives and plans, revising the plan to incorporate changes, and creating an action plan for implementation, as well as addressing the impact of proposed changes on the business and its personnel.

Small Business
Enterprise

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Profile of Leon restaurants with its strengths and weaknesses.........................................1
1.2 Analysis of business with the help of comparative measures of performance.................2
TASK 2............................................................................................................................................4
2.1 Recommendations with justification, appropriate actions to be taken to overcome all the
weaknesses.............................................................................................................................4
2.2 The ways in which existing performance can be maintained and strengthened...............4
2.3 Recommendations and justifications for the new areas where the business can be
expanded.................................................................................................................................5
TASK 3............................................................................................................................................6
3.1 Assessment of existing business objectives and plans.....................................................6
3.2 Revision of plan to incorporate appropriate changes.......................................................7
3.3 Action plan to implement the changes.............................................................................7
TASK 4............................................................................................................................................8
4.1 Impact of proposed changes on the business and its personnel........................................8
4.2 The way in which changes will be managed in business.................................................8
4.3 Monitoring improvements in the performance of the business........................................8
CONCLUSION................................................................................................................................9
REFERECES.................................................................................................................................10

INTRODUCTION
Small business enterprises are the organisations who employ small number of employees
and operate business with a small amount. They create job opportunities for the individuals as
they hire skilled workers so that they can contribute in the identification of development
opportunities. In hospitality industry various small companies are operating their business. Main
goal of this industry is to satisfy customers by rendering good services (Wynarczyk and et.al.,
2016). The organisation chosen for this project report is Leon Restaurant who is working under
hospitality sector in London, UK. It is a fast food restaurant chain and founded in year 2004. In
this assignment various topics have been discusses which includes profile of Leon Restaurants,
analysis of the business, actions to be taken to overcome all the weaknesses, the way in which
existing performance can be maintained, new areas where Leon Restaurants can expand its
business, existing business objectives and plans, revision and formulation of plan so that changes
can be implemented etc. A report on the impact of proposed changes on the business and its
personnel, plan to manage changes and monitoring the improvements have also been covered
under this report.
TASK 1
1.1 Profile of Leon restaurants with its strengths and weaknesses
Leon is the fast food restaurant chain in London UK. Its first outlet was opened in Carnaby
Street in year 2004 and it was founded by John Vincent, Allegra McEvedy and Henry Dimbleby.
Type: Leon is a restaurant and it is operating its business under hospitality sector.
Size: Leon Restaurant is a small size business enterprise and executing business
successfully in UK.
Structure: In Leon Restaurant Flat structure is followed in which all the employees are
free to communicate with the top executives. The owner of the restaurant take advice from its
workers as they directly interact with all the customers hence they have more experience of
dealing with them. This structure helps to motivate workforce because their opinion is
considered by the managers in decision making process.
Mission: Leon restaurant’s mission is to expand its business and provide good food items
to its customers so that they can be retained.
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Goal: Leon’s long term goal is to increase its profits and sales and to become a large size
organisation and be on the top of the industry.
Objective: Leon Restaurant is having various objectives, all of them are as follows:
 Enhance the quality of food so that needs and requirements of customers can be fulfilled.
 Offer such food item to the customers that they are willing to buy(Storey, 2016).
 Expand the business in more geographic locations so that profitability and sales can be
increased.
 Retain existing customers and attract prospect customers by providing good services.
Strengths Weaknesses
Quality of the food items is very good that
attracts large number of customers.
Liquidity of the restaurant is very low because
of improper management of funds.
Price of the food items is affordable for all type
of customers.
As price of the food items is very low hence
upper class customers think that food is not for
them.
Good image in the local market of UK because
excellent service is provided to the customers.
Restaurants are very small in size.
Staff of the restaurant is very cooperative and
supportive.
As the restaurant is a small business enterprise
hence appropriate compensation is not
provided to the employees.
1.2 Analysis of business with the help of comparative measures of performance
The performance of the organisation can be analysed with the help of financial statements
and this will also guide to formulate appropriate strategies for the business so that it can be
operated successfully. Financial statements of Leon Restaurant are as follows:
Income statement:
Particular 2016 2017
Revenues 18000 21800
Less: Cost of sales -11500 -12400
Gross profit 6500 9400
Less: expenses
Salaries 800 900
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Advertising expenses 500 600
Rent 300 450
Legal expenses 150 180
Net profit 4750 7670
Balance sheet:
Liabilities 2016 2017 Assets 2016 2017
Capital 16800 18000 Current assets 2500 2800
Add: Net profit 4750 7670 Non-current assets 9000 14000
Total equities 21550 25670 Fixed assets 12750 12070
Current liabilities 1500 1800
Total debts 1200 1400
24250 28870 24250 28870
As analysed from the income statement of the organisation revenues of the Restaurant has
been increased in year 2017 as compare to 2016. Revenues for both the years are 18000 and
21800 respectively. Net profit of the restaurant has also been increased as compare to previous
year. Net profit for year 2016 is 4750 and for 2017 it is 7670.
Financial ratio:
Name formula 2016 2017
Current ratio Current assets/ current
liabilities
2500/1500= 1.67 2800/1800= 1.56
Debt turnover ratio Total debts/ total
equities
1200/21250= 0.056 1400/25670= 0.054
Operating ratio Operating profit/
revenues*100
4750/18000*100=
26.39%
7670/21800*100=
35.18%
From the above calculation of ratios, it has been analysed that current ratio have been
decreased up to 1.56 from 1.67 in year 2017 as compare to 2016. Debt equity ratio for the
organisation have also been decreased in year 2017 up to 0.054 from 0. 056. Operating ratio of
the restaurant has been increased in year 2017 up to 35.18% from 26.39% which is for 2016.
From the above analysis it has been determined that performance of the restaurant has
been enhanced as compare to previous year (Scarborough, 2016).
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TASK 2
2.1 Recommendations with justification, appropriate actions to be taken to overcome all the
weaknesses
It has been analysed that Leon Restaurant is having various types of weaknesses and to
attain all the goals and objectives it is very important to overcome all of them. The owner of the
restaurant can use conquer model to deal with all the weaknesses. In this model first of all the
weaknesses and their cause is identified. After determining them they are responsible to
formulate appropriate strategies so that they can be ignored and dealt effectively by the
organisation.
 Main weakness of Leon Restaurant is low liquidity which is because of improper
management of funds. It can be dealt with the help of hiring well educated, skilled and
experienced financial manager who can handle the funds appropriately. This will help to
increase liquidity (Liedholm and Mead, 2013).
 As the price of food item is very low hence the upper class individuals think that they
should not choose this restaurant. The owner of the restaurant should take this issue
seriously and add some new food items in its menu specially for the premium cl ass of
society so that all type of customers can be acquired by the organisation.
 All the fast food restaurant under Leon’s chain are very small in size they managers
should plan to expand the area so that space for the customers can be increased.
 Compensation for the staff members is very low the managers should provide good
wages to the employees so that they can work more productively.
2.2 The ways in which existing performance can be maintained and strengthened
Currently Leon Restaurant is operating successfully it is very important for the
organisation to maintain its performance and strengthen it. There are various ways that can be
adapted by the Leon for this purpose. All the ways are described below:
 Provide such food items to the customers that they are willing to buy: If Leon
Restaurant want to maintain its existing performance and strengthen than it should gather
information about the taste of customers it will help to offer them such food items that
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they want to have. This step of the organisation will also result in increased trust of
customers and their retention rate will get increased (Schaper and et.al., 2014).
 Provide training to the employees so that they can communicate with customers in
more effective manner: Employees are responsible to directly communicate with
customers hence it is very important for Leon to provide training to its employees. This
step will help the workers to interact with the visitors in appropriate manner they will get
satisfied with the services and good behaviour of the work force.
 Enhance the food quality: Improving the food quality will also help Leon to strengthen
its performance because it will result in increased number of customers who are highly
satisfied with the food and services of restaurant.
All the above mentioned ways can help Leon Restaurant to maintain and strengthen its
performance and will also be beneficial for the long term purpose (Gill and Biger, 2012).
2.3 Recommendations and justifications for the new areas where the business can be expanded
Leon Restaurant is currently executing its business in London. If it willing to expand its
business than Manchester city is the right choice for this purpose. This will help to capture large
market share. The organisation will require various resources like funds, new skilled employees,
a new store for the restaurant etc. Manchester is a city where people love to taste new food items
and it has also been identified that food businesses can grow there faster due to foody behaviour
of the local public of the city.
Leon can expand its business there to grab growth opportunity and this will be beneficial
for the organisation as the business can grow there with a high rate. As the vision of the
restaurant is to expand its business in more locations to expand the business hence it is good
opportunity to attain more success in the business (Goffee and Scase, 2015). Following are the
actions that can be taken by the owner to expand the business:
 Manage the liquidity so that large amount can be invested in the expansion.
 Use effective marketing techniques that may fit in the budget this will help to aware the
customers of Manchester about the food items of Leon Restaurant.
 Gather information about the market where the restaurant is willing to expand its
business so that effective strategies can be formulate to promote the business.
 Hire employees from the place where business is going to be expanded as they have more
information about the people’s taste and preferences.
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All the above-mentioned actions need to be taken by the Leon Restaurant to expand its
business in Manchester. It will help to successfully expand the business there.
TASK 3
3.1 Assessment of existing business objectives and plans
Leon is a Restaurant in UK and its current objective and business plan to attain all the
objective are as follows:
Objective: Main objective of Leon is to expand its business in more locations so that large
market share can be acquired (Eid and El-Gohar, 2013).
Business Plan: It can be defined as the detailed document in which all the information of
the actions is mentioned that are going to be taken in future. A business plan for Leon Restaurant
is as follows:
Executive summary: Leon is a fast food restaurant out let who is now willing to expand
business in Manchester. The organisation is planning for expansion for the purpose of capturing
large market share.
Company description: Leon Restaurant is currently established in London, UK. It is
operating business under hospitality industry and now planning to expand business in
Manchester.
Market analysis: The market of Manchester needs to be analysed by Leon as it will help
to analyse the needs and demand of customers. It is very important for the organisation to
conduct market analysis as it can help to successfully expand the business.
Marketing and sales: While expanding business in Manchester it is also very important
to formulate appropriate marketing strategies to aware the customers about the food items that
are offered or sold by Leon (Broekemier, Chau and Seshadri, 2015).
Funding request: For the purpose of expansion funds are the main requirement hence
Leon can gather funds from various resources like bank loan and investment. A loan from bank
can be taken by the restaurant for expansion. Funds can also be gathered from investors by
presenting a effective business plan in front of them.
Financial projection: It is the total amount which required for the expansion. Financial
projection for Leon is as follows:
Particular Amount
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New employees 3600
Market analysis 1000
Marketing and advertising 1200
Material for the foods 5800
Rent 1500
Total 13100
3.2 Revision of plan to incorporate appropriate changes
Leon Restaurant can expand its business in Manchester so that profit and sales can be
maximised. For this purpose, a detailed business plan has been formulated for the organisation in
which first of all the organisation need to conduct a market analysis in which all the information
of market will be gathered. It will help to enhance food quality so that customers can be attracted
toward the restaurant. Marketing activities are also very important to perform as it will help to
aware the customers about the new restaurant and the food items that are going to be sold by it.
After this the owner have to acquire funds for the business and it can be raised by bank loan or
the investors who may invest money with the help of an impressive business plan for the purpose
of getting higher returns. At last financial projections are going to be made as it will help to find
ways to spend money in appropriate manner (Bridge and O'Neill, 2012).
3.3 Action plan to implement the changes
Action plan is the plan in which all the implementation related information is recorded. A
detailed action plan for Leon restaurant is as follows:
Assess need: In action plan first of all Leon needs to assess the needs of change as it will
help to implement the changes effectively. As it is expanding its business in Manchester hence it
is very important for organisation to identify the need for the expansion.
Develop strategy: When the need for the change is being assessed then the managers of the
organisation need to develop strategy for the same.
Implement plan: After a strategy is developed by the organisation than the plan needs to be
implemented so that it can help to successfully run the change.
Evaluate or improve plan: At the plan which has been implemented is evaluated by the
managers of the organisation so that it can be analysed that change has been made effectively or
not.
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TASK 4
4.1 Impact of proposed changes on the business and its personnel
The change which is going to be implemented in Leon Restaurant will affect the
organisation internally as well as externally (Blackburn, Hart and Wainwright, 2013). All the
impacts are as follows:
Internal impacts:
 The change will help to increase the profitability of the organisation.
 It will enhance the work quality of employees as they will get higher compensation
according to their performance.
External impacts:
 Help to increase the market share of the organisation.
 Result in increased number of customers.
 Risk for the restaurant will be increased as it is not possible to establish a business
successfully in a new location.
4.2 The way in which changes will be managed in business
For all the organisations it is very important to manage the change which has been
implemented by them. As Leon Restaurant is willing to expand the business in Manchester
which is huge change and it is essential for the organisation to manage this change effectively.
The way in which it will be managed is as follows:
 Managers and owner of Leon restaurant will have to collect all the required resources for
the expansion.
 Market information will be gathered by them so that they can offer those food items to
the customers that they are willing to eat.
 Good quality food items will be offered to the customers so that their trust can be gained.
 All the activities will be planned in appropriate manner so that change can be managed
effectively (Ackermann, 2012).
4.3 Monitoring improvements in the performance of the business
It is very important for Leon Restaurant to monitor and improve the performance of the
organisation it can be monitored and improves with the help of following methods:
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Financial stewardship: In this model the business turnover will be measured by the
organisation. Leon Restaurant needs to analyse its financial performance in a specific time period
after change.
Customer satisfaction: while delivering services to the customers it is very important to
take feed back from them so that it can be determined that organisation is delivering good
services or not. this will also help to make improvements in the existing plan of the company
(Customer Satisfaction, 2018).
Internal business process: As the main aim of Leon Restaurant is to increase its
efficiency and profitability which is possible with the help of appropriate training that should be
provided to the staff members. The performance can be improved when productivity of the
employees will get enhanced which is possible with the help of free flow of information within
the restaurant.
Organisational capacity: Creativity always attracts customers hence the performance
can be maintained and improved with the help of such elements that can grab attention of
customers. Innovation in the service delivery method is supported for launching customer’s
enjoyment.
Performance measures and targets: As in most of the organisations targets are given to
the employees and their performance is measured on the basis of accomplishment of targets. In
Leon Restaurant the managers can set targets for the staff members and they will put their high
efforts to achieve all the targets this will help to improve the performance of whole organisation.
CONCLUSION
From the above project report, it has been concluded that small business enterprises are
the organizations who are running business with less but skilled employees. In hospitality
industry various companies are working who are rendering different types of services to the
customers. For all the companies it is very important to consider the choice of customers so that
they can be retained. They have less resources to operate business but they use all of them in
appropriate manner. It is essential for small business enterprises to cater for improvements
according to customer’s preferences so that larger market share can be captured by them.
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REFERECES
Books and Journals:
Ackermann, S. ed., 2012. Are small firms important? Their role and impact. Springer Science &
Business Media.
Blackburn, R. A., Hart, M. and Wainwright, T., 2013. Small business performance: business,
strategy and owner-manager characteristics. Journal of small business and enterprise
development. 20(1). pp.8-27.
Bridge, S. and O'Neill, K., 2012. Understanding enterprise: Entrepreneurship and small
business. Macmillan International Higher Education.
Broekemier, G., Chau, N. N. and Seshadri, S., 2015. Social media practices among small
business-to-business enterprises. Small Business Institute Journal. 11(1).
Eid, R. and El-Gohary, H., 2013. The impact of E-marketing use on small business enterprises'
marketing success. The Service Industries Journal. 33(1). pp.31-50.
Gill, A. and Biger, N., 2012. Barriers to small business growth in Canada. Journal of Small
Business and Enterprise Development. 19(4). pp.656-668.
Goffee, R. and Scase, R., 2015. The Real World of the Small Business Owner (Routledge
Revivals). Routledge.
Liedholm, C. E. and Mead, D. C., 2013. Small enterprises and economic development: the
dynamics of micro and small enterprises. Routledge.
Scarborough, N. M., 2016. Essentials of entrepreneurship and small business management.
Pearson.
Schaper, M. T. and et.al., 2014. Entrepreneurship and small business.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Wynarczyk, P. and et.al., 2016. Managerial labour markets in small and medium-sized
enterprises. Routledge.
Online
Customer Satisfaction. 2018. [Online]. Available through:
<https://www.netigate.net/articles/customer-satisfaction/4-great-ways-improve-
customer-satisfaction/>
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