Business Report: Analyzing the Stockroom Restaurant's Failures

This report provides a comprehensive analysis of the Stockroom Restaurant at the Intercontinental Sydney Double Bay, examining the key issues that led to its operational failures. The report identifies several critical problems, including changes in concept and target market segmentation, the impact of local competition, staffing issues characterized by high turnover and inexperienced staff, mismanagement leading to poor sales and customer retention, and ineffective marketing strategies. The analysis delves into the specifics of each issue, providing context through academic literature and detailing the negative consequences on the restaurant's performance. The report highlights the importance of proper market research, effective staffing practices, and strategic marketing to ensure the success of a restaurant business. It also emphasizes the need for strong management, quality control, and customer satisfaction to overcome challenges and maintain profitability in a competitive environment.

Managing Food & Beverages

TABLE OF CONTENTS
BUSINESS CASE ASSESSMENT 1
DETERMINING KEY ISSUES THAT CAUSE PROBLEMS AND FAILED OPERATION
1
Change in concept 1
Change in Target market segmentation 1
Local competition at Double Bay 2
Staffing issues 2
Mismanagement 3
Marketing issues 3
REFERENCES 5

BUSINESS CASE ASSESSMENT
The Stockroom Restaurant is at International Sydney Double Bay was opened in year
2015 which was the only restaurant in the local area. It has faced various issues from first year of
operations and numerous challenges. It was appropriately designed as French fine dining
restaurant and even laid emphasis on elegant service with fine food and it became one
destination restaurant. With context to customer base, the Stockroom’s targets were hotel guests
and locals for breakfast, professionals and guests for lunch, families and couples for dinner. On
the contrary, there was specific shift within market which has attracted as its breakfast was same
and entire restaurant is attracted with old demographic for both dinner and lunch. Further, it has
also faced competition with diversified local offerings like Littlev Jean, Bibo Wine Bar, Matteo
along with Sake whereas all local restaurants have presence of significant refurbishment for
ensuring about better offering and product which competes within market.
DETERMINING KEY ISSUES THAT CAUSE PROBLEMS AND FAILED
OPERATION
Change in concept
At the beginning phase, this restaurant was developed as French design but after that it
modified to up market steakhouse along with maintaining the brand and image of the Stockroom.
However, prior to this its desire was to become one destination where these concepts lead to
increment in issues like frequent and number of dinners initiated to fall in dramatic manner. This
has also pressurized their staff for maintaining up to the mark quality, so it failed the entire
operation related to timing as well whereas it is open for 365 days with all facilities (Ryu & Lee,
2017). Moreover, this will also lead to dominance which is a negative aspect for any restaurant
or business.
Change in Target market segmentation
In the present scenario, it is very significant for restaurants due to expensive advertising
which creates increment in cost in struggling period as well. At the initial phase, its actual target
was hotel guests and breakfast for locals, families and couples for dinner and business and hotel
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guests for lunch. Before starting the restaurant, there was absence of feasibility study and market
research as this had created fast competition within restaurant industry (Kim, Choe & Lee,
2016). In this, it has articulated that at breakfast there are 80% customers whereas less than 20%
for dinner and lunch which creates problems for management of staff or operations within
Stockroom.
Local competition at Double Bay
Stockroom has various competitors as in 2015, it was the only fine dine restaurant but in some
while all innovative restaurants has diversified local offerings like Bibo Wine bar, Little Jean,
Sake and Matteo during developed local restaurants which has presence of refurbishment for
ensuring better offering along with products within competitive markets. The market alteration
has given outcome as closure of most well-known and established restaurants which survive
quiet days of Global financial crisis. It has been extracted that there was improper customer
segmentation which leads to issues in operations as demotivates the employee as well (Bai et.al.,
2017). On the contrary, competitors have done proper customer segmentation so young
generation and even staff prefer systematic organization. It has indirect relationship with brand,
image and monetary benefits such as perks and incentives as well. In the present scenario, dining
scene is highly sophisticated, aimed and competitive for purpose of attracting new and young
generation.
Staffing issues
It is replicated as procedure to hire all eligible candidates within the company for
positions. In simpler terms, this is an operation to recruit employees through evaluation of skills,
knowledge along with job roles. Staff plays major role in restaurant for operating business in
friendly and successive manner (Keyser, Clay & Marella, 2017). In the first year of operations, it
had presence of low employee turnover which signifies that restaurant has small number of
employees leave within stated duration that hires staff or employed at initial phase. Moreover, by
the time it had high employee turnover which is very challenging as it reduces the morale of the
employee. Simultaneously, there was departure of restaurant manager and executive chef both
are main pillars of every restaurant is also reason of the turnover. In the similar aspect, its
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manager has faced issue for extracting quality to ensure problem of high turnover but on similar
note bad reputation within industry had also created hurdles in this task (Lee et.al., 2019). Thus,
in this context, green employees were hired as they have lack of flexibility and experience as
someone were on student visa or visa of working holiday as per requirement of operations.
Furthermore, it has lack of staff loyalty which is signal of failure and even there was
mismanagement of staff. It could be elaborated as unsystematic requirements of job such as bar
served through kitchen team along with delivering room service to in house guest and roistering
issues and student visa holder staff (Baker, 2016). In addition to this, labor cost for both bar and
restaurant was high especially in previous year.
Mismanagement
With reference to this case study, it has faced issue of mismanagement within Stockroom’s
operation. There is lack of retention of staff due to bad reputation and brand image as it is very
important in this after departure of executive chef and restaurant manager. The employee
retention is referred as every practice which sticks employees to any company for longer
perspective as this will lead to raise productivity (Yost & Croes, 2016). Simultaneously, it has
lack of sales management like increment in cost of wastage due to presence of low quality food
and product’s spoilage which is directly linked with worsen stock and ordering management.
Apart from this, restaurant had shown difficulties with reasonable sales as well and for-profit
management as well where profit had turned into negative numbers. In the same series, food
quality was reduced with satisfaction level of the guests and it has been viewed that complaints
of guests were not determined properly and solved. With these stated issues, restaurant was not
able for retention of customer and lack of communication (Rizk & Perão, 2015). This could be
elaborated as restaurant and bar manager were operating as separate entities and there was
pressure from the top management.
Marketing issues
Marketing is replicated as study along with management of relationships of exchange as
it is business procedure to create relationship with customers and satisfying them. With reference
to this section, Stockroom was facing competition from other local restaurants which had
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impacted the revenue and brand reputation as well (Johnson, 2019). Furthermore, poor marketing
had reduced the customer because of poor distribution and less promotion of its services. It could
be interpreted as lack of marketing such as advertising and application of social media. This all
issues had transformed poor performance in operations as worse reviews from customers. It had
led to lack of interest from its investors and even its owners were also not capable for investing
funds to improve business and modernize as per current business requirements (Josiam et.al.
2017).
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REFERENCES
Bai, X., Marsden, J. R., Ross Jr, W. T., & Wang, G. (2017). How e-WOM and local competition
drive local retailers' decisions about daily deal offerings. Decision Support Systems. 101.
82-94.
Johnson, H. L. (2019). Building a Better Back of the House: North Carolina Women Chef-
Restaurant Owners Crafting Identities and Organizations via Carework.
Josiam, B. M., Malave, R., Foster, C., & Baldwin, W. (2017). Assessing quality of food, service
and customer experience at a restaurant: The case of a student-run restaurant in the USA.
In Hospitality Marketing and Consumer Behavior (pp. 129-156). Apple Academic Press.
Keyser, R. S., Clay, K., & Marella, V. K. (2017). Lean Restaurants: Improving the Dining
Experience. Journal of Higher Education Theory and Practice. 17(7).
Kim, S., Choe, J. Y., & Lee, A. (2016). Efforts to globalize a national food: Market segmentation
by reasons for ethnic food preferences. International Journal of Contemporary
Hospitality Management. 28(10). 2310-2330.
Lee, S., Lee, K. S., Chua, B. L., & Han, H. (2019). Hotel restaurants’ challenges and critical
success factors in Klang Valley, Malaysia: the inseparable roles of support centers and
revenue streams. Journal of Quality Assurance in Hospitality & Tourism. 20(1). 16-43.
Ryu, K., & Lee, J. S. (2017). Examination of restaurant quality, relationship benefits, and
customer reciprocity from the perspective of relationship marketing investments. Journal
of Hospitality & Tourism Research. 41(1). 66-92.
Yost, E., & Croes, R. (2016). Conditions associated with increased risk of fraud: A model for
publicly traded restaurant companies. The Journal of Hospitality Financial
Management. 24(2). 92-109.
Rizk, M. C., & Perão, B. A. (2015, September). Diagnosis of food waste generation in a
university restaurant. In WASTES 2015-Solutions, Treatments and Opportunities:
Selected papers from the 3rd Edition of the International Conference on Wastes:
Solutions, Treatments and Opportunities, Viana Do Castelo, Portugal, 14-16 September
2015 (p. 265). CRC Press.
Baker, S. P. (2016, January). Practical Solutions to Prevent Slips, Trips, and Falls in Hotels and
Restaurants. In ASSE Professional Development Conference and Exposition. American
Society of Safety Engineers.
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