Derek always daydreamed about opening his own little restaurant but he had no idea about how to run one let alone where to begin. When he won the lottery he decided that this was the time for him to start his little dream and he decided to go back to the village that his parents lived. The village has about 5,000 inhabitants and is only 20 minutes by car from a large city. It already has two takeaways and three small restaurants that are doing ok. All three restaurants are mid ranged. A fine dining restaurant opened 3 years ago but it closed after 1 year. There is also a pub in the village that offers a limited menu during lunch period. Derek is unsure as to what type of restaurant he should open. Start-up money is not an issue, but he does not want to invest in an enterprise that is going to lose money.

a) What steps would you advise Derek to take next? (10 marks)

b) If you were Derek, what type of operation would you most likely attempt to open? Explain your decision. (15 marks)