Bill Walker is a co-owner of the Alexandria Inn, an independently owned casual restaurant located in an urban area in the southeastern United States. The city in which the Alexandria Inn is located has a year-round population of 200,000 that increases to nearly 350,000 during the tourist season, which lasts for six months each year, with the peak being in the summer months. The restaurant has seating for 200, divided between three separate dining areas. An additional 45 seats are in the lounge area. There is currently no outside seating, although Bill has considered adding an outside dining area. During the most recent fiscal year, the restaurant had annual sales totaling \($2.1\) million, of which 70 percent was food, with the remaining 30 percent representing alcoholic beverages. There is a modest amount of offsite catering, which accounts for \($125,000\) annually.

The Alexandria Inn, which Bill and his co-owners developed as a mid priced restaurant, competes with several national chains located within a two mile radius. These chains include Macaroni Grill, Chili’s, and TGI Friday’s, all of which are quite successful. During the last year, Bill noticed that each of these national chains has been much more aggressive in advertising and promotions. These and other regional and national chains are running advertisements on a continuous basis both on radio and in print, as well as pulsating advertising on television. Most of this television advertising is during the period of high tourist demand. In addition to their use of advertising, these chains offer nearly constant promotions of one or more items on their menus, and are again more aggressive during the height of the tourist season.

Bill asserts that the target market for the Alexandria Inn consists of more than 125,000 people who live within an eight-mile radius of the restaurant.

About 40 percent of the restaurant’s business comes during the lunch period, and the largest demand during lunch is from individuals who work within two miles of the restaurant. Bill has cultivated a strong demand from several corporate office parks located near the restaurant. His strategy asserts that this demand is more consistent than catering to tourists. His goal is to keep a more even demand throughout the entire year, something that focusing on tourists as his primary target market would not allow......

Case Study Questions and Issues 

1. As an independent restaurateur, should he start advertising?

2. How should he achieve his goal of increasing dinner volume by 10–15 percent?

3. How should he increase his goal of increasing lunchtime off-site catering by 10 percent?

4. He is being given the hard sell by the radio station sales representative;
should he consider advertising in other media, such as print or television? Is direct mail an option he should consider?

5. His clientele is quite loyal, with approximately 60 percent of his customers being repeat customers. How can he best attract more business from this group while bringing in first-time guests?

6.Only about 10 percent of his business comes from tourists visiting the area. Should he advertise to attract this market? If so, how?