caseMAR (1 page) Rita Salvaggio, the owner and manager of Salvaggio's floo, put in walls of surfwood, installed plumbing and elec- Trattoria, is reviewing the slow growth of her restaurant trical fixtures, added an extra washroom, and parchased the She's also thinking about the future and wondering if she necessary restaurant equipment. All this cost $240,000 sbould change ber strategy. In particular, she is wondering if which came from her own cash savings. She then spent an she should join a fast-food or family restaurant franchise additional $3,000 for glassware, $4,000 for an initial food chain. Several are located near her, but there are many fran- stock, and $4,250 to advertise the opening of Salvaggio's chisors without local restaurants. After doing some research Trattoria in the local newspaper. The paper serves the whole on the Internet, she has learned that with help from the fran- metro area, so the $4,250 bought only three quarter-page chisors, some of these places gross $500,000 to $1 milliona ads. These expenditures also came from ber personal sav- year. Of course, she would have to follow someone strategy and thereby lose her independence, which she chef at $1,100 a doesa't like to think about. But those sales figures do sound the business, she was ready to open. Reflecting good, and she has also heard that the return to the manager (including salary) can be more than $150,000 year. She has also considered Salvaggio's Trattoria but is aot sure how that will belp. She of getting rich overnight. Her busband, a high ings. Next she hired five waitresses at $550 a week and one week. Then, with a $48,000 cash reserve for else's owner- per page for business sense, Rita knew she would need a substantial cash reserve to fall back on until tbe business got on its feet. She expected this to take about one year. She had no expectations creating a Facebook knows people go to Salvaggio's web page for directions to see the menu but why might she eed Facebook or some and teacher, was willing to support the family until the restaurant caught on.) other social media? The restaurant opened in April and by August had a weekly Salvaggio's Trattoria is a fairly large restaurant-about 3,000 square feet-located in the center completed early in 2013. Salvagxio's sells mainly full- course home-cooked" Ialian-style dinners (ao bar) at moder- also got a few good customer reviews on Yelp. By September ate prices. In addition to Salvaggio's Trattoria, other businesses business was still in the sbopping center include a supermarket, a hair salon, a $6,000 in the business just to survive. liguor store, a computer repair business, and a vacant space that used to be a hardware store. The hardware store failed up ber wben aHome Depot located nearby. Rita has learned that pizzeria is coosidering locating there soon. She wonders bow 10 late-evening spots on a news program at a that competition will affect ber. Ample parking space is availa aims at ble at the shopping ceater, which is located in a residential sec during the next several weeks for some Google Local ion of a growing suburb to the east, along a beavily traveled advertising major traffic route. gross revenue of only $4,800, Rita was a litle discouraged without investing any new money in the business. She slow, and Rita had to invest an additional had not improved by November, so Rita stepped center of a small sbopping with this, but she was still able to meet all her penses a she spent $2,400 of her cash reserve for radio advertising middle-income America Rita also spent $1,600 more By April 2014, the situation had begun to improve, Rita nearby by June her weekly gross was up to between $6,100 and university and has lived in this town with ber busband and $6,600. By March 2015, the weekly gross had risen to about two children for many years. She has been self-employed in $8,400. Rita increased the working hours of her staff six to the restaurant business 1998. Her most recent venture before was a large restauraat that she operated successfully with for the future because she was finally doing a little better her brother from 2004 to 2010. In 2010, Rita sold out her than breaking even. Her full-time involvement seemed to be share because of illness.Following her recovery, she was paying off. She had not put any new money into the business anxious for something to do and opened the present restau- since summer 2014 and expected business to costinue to rant in April 2014. Rita feels ber plans for the business and rise. She had not yet taken any salary for herself, even her opening were well thought out. When she was ready to though she had built up a small surplus of about $18,000. start her new restaurant, she looked at several possible loca Instead, she planned to put in a bigger tions before finally deciding on the present one, Rita ex tem at a cost of $10,000 and was also planning to use what plained, "I looked everywhere, bui here I particularly salary she might have taken for herself to hire two new wait- noticed the heavy traffic wben I first looked at it. This is the resses to handle the growing volume of business. And she crossroads for three major interstate highways. So obviously saw that if business increased much more she would have to graduated from a local high school and a since ber graduation from college in seven hours a week and added another cook to handle the opening Salvaggio's increasing number of customers. Rita was more optimistic Having decided on the location, Rita signed a 10-year Evaluate Ritparand present marketing mutegy. What lease with the option to renew for 10 more years, and then should she do now? Should she seriously consider joining eagerly attacked the problem of outfitting the almost empty some franchise chain? store space in the newly constructed building. She tiled the