Theme Restaurant Business Plan: Ledbury Road, London

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INNOVATION AND ENTREPRENEURSHIP
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Contents
INTRODUCTION...........................................................................................................................................3
TASK 1 – BUSINESS IDEA DEVELOPMENT....................................................................................................3
TASK 2 - BUSINESS PLAN..............................................................................................................................3
MARKET ANALYSIS...................................................................................................................................3
INDUSTRY ANALYSIS................................................................................................................................4
OPERATIONS DETAIL................................................................................................................................5
SWOT ANALYSIS.......................................................................................................................................6
FINANCIAL REQUIREMENTS.....................................................................................................................7
CONCLUSION...............................................................................................................................................8
REFERENCE..................................................................................................................................................9
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INTRODUCTION
Innovation and entrepreneurship terms are closely related to each other and used together in
the business world. Innovation can be defined as the coming up with new and unique ideas
with creativity (Jensen et al., 2016). And entrepreneurship is defined as applying innovation on
the existing product or services so that they can better satisfy the needs of the customers. The
success of the entrepreneur depends on the kind of innovation they bring in their product or
service (Kirzner, 2015). Innovation also helps in distinguishing the product/service from its
competitors and even helps in gaining a competitive advantage over its competitors.
TASK 1 – BUSINESS IDEA DEVELOPMENT
To bring innovation in the existing product and services the owner of the restaurant decides to
transform the restaurants into themed restaurants. The reason for this transformation is the
increasing number of restaurants in the city. Further, these restaurants offer quality foods at
similar prices. Therefore it becomes difficult for the owner of the restaurants to make the
position in the market. Theme restaurants offer good quality of food along with a pleasant
experience. Themed menus, trained staff members, music, etc. are the following things that
contribute to the mood setting of the customers (Wirtz et al., 2016).
TASK 2 - BUSINESS PLAN
MARKET ANALYSIS
Restaurants are an essential part of the culture. Themed restaurants are all about the menu
and the theme. The theme can be different such as seafood, pure vegetarian or it can be based
on the culture of a particular region. Nowadays the customers find it difficult to search for a
quiet and comfortable place for gathering and chatting. Even the customers hesitate to visit the
restaurants because of the rush and more waiting time. Therefore to attract more and more
customers the owner decides to convert the restaurant into a themed restaurant. The target
market of the restaurants in four categories: age (single, youngsters, high school and college
students), family, gender (both male and female), income (lower and medium income level).
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The total size of the target market is 2000 people and the geographic location of the restaurant
is Ledbury Rd, London. As per the marketing research was done by the market analyst the
market for the themed restaurants will be in the growth stage because it is a new concept that
attracts many customers (Gao et al., 2018).
INDUSTRY ANALYSIS
The characteristics of the restaurant industry can be assessed through Porter’s Five Forces
Model:
 Barriers to entry: It is easy to enter in the themed restaurant industry because it
requires very less investment and it will be easy for the established restaurants to
achieve economies of scale. The new entrant must consider the fixed and operating cost
and they must ensure that they should be able to establish the cost advantage. The new
entrants can achieve the cost advantage by purchasing the raw material or
merchandising in bulk quantities.
 Supplier power: Due to the presence of the large number of suppliers the power of
supplier is very low. The restaurants can easily get the raw material at the lower prices.
Other than the number of suppliers, the size and number of restaurants is also a
considering factor at the time of deciding the power of supplier. In London, the number
and the size of the restaurants are very high so that they can easily negotiate with the
supplier because of their bulk order (DeMicco, 2015).
 The purchasing power of customers: The themed restaurant's industry is also affected
by the customer's choice and their switching behavior. The power of customers remains
very less because there are no other theme restaurants in the city. The factors that
customers considered are the prices of the food, items, and quality of food offered by
the restaurant, etc. The restaurant must consider these factors before deciding the
prices and other related decisions.
 The threat of substitute: The switching of the restaurants will depend upon the services
of the restaurants. If the services of the restaurants do not match their expectations,
they will switch to other restaurants. If the switching cost of the restaurant is low they
can easily shift their loyalty to another similar restaurant. But the restaurant can charge
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a high price if they prefer premium quality and amazing experience (Varelas and
Georgopoulos, 2017).
 Competitive rivalry: The competition in the themed restaurants is very less. The major
players in this industry are Sketch London and Circus. If the competition in the industry
is high it does not allow the small restaurant to earn higher profit.
OPERATIONS DETAIL
The location of themed restaurants is at Ledbury Rd, London. The transportations links used by
the customers to visit the restaurants is public transport, through railways, four wheelers, etc.
The theme of the restaurant is based on the magical forest. The dim light, slow and horrible
sound gives a different experience to its customers. The color of the sofa and the chair is pink
and with the funky stairs. This spectacular design matched with the menu. The distribution
channel used by the themed restaurant is a manufacturer, wholesaler, distributor and then to
the restaurants. The restaurant is backed with all regulations and rules of the government of
London. The owner of the theme restaurants considers the seating arrangements, merchandise,
and the recruitment decision because a theme restaurant requires more qualified and
competent personnel. This is because the customers come to the restaurants not only for food
but also for getting a pleasant experience (Oleynik et al., 2015). And it would be starting from
entering the door, services of staff members, food quality, waiting time and exit till the
customer left the restaurants. The merchandising of the restaurants is extended from the same
t-shirts of the employees to mugs and plates. In order to attract more customers, the themed
restaurant offer free gift and hats to the children and also to family members. The difference
between the restaurants and themed restaurants in terms of services of the employees is that
the employee of the restaurants serves the food in a better way while it is expected from the
employees of the themed restaurant to be capable and personable of performing during dinner
shows.
The operations of the themed restaurants are totally different from the restaurants in terms of
human resource management, financial management, administrative management, operations
management, etc. The major advantage of the themed restaurants is high profit in a
comparatively short period of time. Theme restaurants can charge high prices for its product or
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services to their packed audiences and this revenue can be used to improve their services or
opening additional restaurants. Further, this can be used to create own brand name with the
unique theme restaurant as its differentiation strategy (Chapman and Nettles, 2019).
SWOT ANALYSIS
A SWOT analysis is an important tool to analyze the internal and external factors affecting the
business. The SWOT analysis must be included in the business plan because it helps in
evaluating the present situation and gives a piece of evidence for future actions. SWOT stands
for strengths, weaknesses, opportunities, and threats of the restaurants. The SWOT analysis of
the themed restaurant is as follows:
Strengths
Strength of the restaurant is considered as the internal factor and these are the advantages of
the restaurant over its competitors. The main reason why the customers come to the
restaurant is that we serve the quality and delicious food and several kinds of drinks to our
customers. Even we are offering customized food to loyal customers. Our prices are low so that
it can be afforded by all our target customers are the main strategy that theme restaurant uses
to stand out from the competition. The unique selling points (USP) of the restaurant are online
booking, a beautiful environment, and décor (Mäenpää and Brandt, 2016).
Weaknesses
Weaknesses of the restaurant are a low investment in the advertisement including social media
marketing such as Facebook or Twitter. The company is not able to attract its target customers.
The owner of the restaurant invests its funds in designing the interior and exterior of the
restaurant and due to this reason the owner cannot be able to stand out from the competition.
Better taste and a wide range of food products attract more customers.
Opportunities
The market of the restaurant is very large and also there are various types of demands that a
customer can make. By doing the proper market research and analysis of consumer behavior
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the restaurant can grab this opportunity for expanding the market presence. The restaurant can
also make changes in their theme according to the occasion or festival. Also, the restaurant can
start to prepare tasty, healthy and special food on the order of the customer (Genoveva and
Siam, 2017).
Threats
The threats of the restaurant included in the external factors. The biggest threat to the
restaurant is intense competition. The competition in the theme restaurant is increasing due to
its market attractiveness and growth. Lack of awareness among the customers regarding the
theme restaurant is again the threat for the restaurant because many of the middle and lower
income cannot afford the luxury services of a theme restaurant. The similar foods are easily
available at the lower cost which again contributes to increased competition.
FINANCIAL REQUIREMENTS
Developing a business plan is a very complex and lengthy process because all the process is
based on the prediction. The business development plan is incomplete without outlining the
model and planning aspect such as analysis of cost, cash flows, sales, equipment, etc.
The start-up cost of the theme restaurant includes:
 Buying the premises or lending on lease
 Raw material and cost of a drink
 Cost of staff members
 Legal and compliance
 Furniture and crockery/utensils
 Equipment
 Uniform of staff members
 Initial stock of ingredients
 Working capital
The owner of the themed restaurant must address all these costs after developing a business
plan. The estimation and predictions should be realistic and accurate. The owner should also
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consider the hidden cost in the theme restaurant so that there will be no shortage of funds at
the time of operations. The owner must also ensure that there will be sufficient cash reserve for
the next six-eight months because it is not necessary that the restaurant start earning revenue
from the starting period (Erdogan, 2016).
The owner of the theme restaurant is also responsible to take the license and permits related to
the restaurants and he must also aware of the liabilities of the restaurant. Other than this, the
owner has to invest in its supplies, utilities and catering equipment. Investing the funds in
acquiring the good quality of the equipment will benefit the owner, in the long run, minimizing
the maintenance and repair cost. Utilities include the lighting and heating in the kitchen and
dining area. It is true that a busy restaurant requires more energy and power (Leuz and
Wysocki, 2016).
The estimated cost of sales for the first month is £20, 000 which includes all the costs such as
cost of the premise, cost of acquiring equipment, utility, staff recruitment, and cost on
providing training and development to the staff members and so on. The minimum expected
price of the product is £ 2. And the maximum expected selling price of the product is £ 20. The
expected sales for the first month are £ 300.
CONCLUSION
Therefore it can be concluded that innovation and entrepreneurship cannot be separated with
each other. In order to be successful, an entrepreneur must come with innovation in the
existing product or services in order to stay ahead in the competition. The same concept was
applied by the owner of a restaurant. With the main aim of attracting a new customer, the
owner changed the way of doing business. He introduced the concept of theme restaurant
because the customers are looking for peace and space so that they can spend enough time
with the near and dear ones. The business plan of the theme restaurant includes the market
analysis, industry analysis, operations details, SWOT analysis and the financial requirement of
the theme restaurant.
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REFERENCE
 Chapman III, C.J., and Nettles, M.R., PANERA LLC, 2019. Systems and methods for
analyzing restaurant operations. U.S. Patent Application 10/304,020.
 DeMicco, F.J., 2015. Cracker Barrel: A strategic case study in restaurant
management. Journal of Foodservice Business Research, 18(4), pp.423-434.
 Erdogan, A.I., 2016. Investigating the demand of the small hotel and restaurant
businesses for bank financing: The case of Turkey. Journal of Empirical Studies, 3(1),
pp.1-6.
 Gao, S., Tang, O., Wang, H., and Yin, P., 2018. Identifying competitors through
comparative relation mining of online reviews in the restaurant industry. International
Journal of Hospitality Management, 71, pp.19-32.
 Genoveva, G. and Siam, S.T., 2017. Analysis of marketing strategy and competitive
advantage. Journal of Economic & Management Perspectives, 11(1), pp.1571-1579.
 Jensen, M.B., Johnson, B., Lorenz, E., Lundvall, B.Å. and Lundvall, B.A., 2016. Forms of
knowledge and modes of innovation. The learning economy and the economics of hope,
pp.155-182.
 Kirzner, I.M., 2015. Competition and entrepreneurship. University of Chicago Press.
 Leuz, C. and Wysocki, P.D., 2016. The economics of disclosure and financial reporting
regulation: Evidence and suggestions for future research. Journal of Accounting
Research, 54(2), pp.525-622.
 Mäenpää, J. and Brandt, A., 2016. Successful foundation for concept entirety and
marketing: Case Restaurant Fregatti.
 Oleynik, P.P., Nikolenko, O.I. and Yuzefova, S.Y., 2015. Information System for Fast Food
Restaurants. Engineering and Technology, 2(4), pp.186-191.
 Varelas, S. and Georgopoulos, N., 2017. Porter's Competitive Forces in the Modern
Globalized Hospitality Sector-The case of a Greek Tourism Destination. Tourism
Research Institute, 18(1), pp.122-132.
 Wirtz, B.W., Pistoia, A., Ullrich, S. and Göttel, V., 2016. Business models: Origin,
development and future research perspectives. Long range planning, 49(1), pp.36-54.
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