FOOD8000 - Restaurant Revival Project RESTAURANT PLANNING Your partner and you have just purchased a 60-seat restaurant called Owen's. The business has been in operation since 1996. It was a vibrant restaurant for many years and the locals were faithful regulars. Over the last 20 years the business has been gradually waning. This overwhelmingly residential neighbourhood saw its street widening, and vehicular traffic increasing to reflect the increased commercial presence. Real estate prices also rose dramatically making it difficult for young families to afford homes in the area, while those who bought their homes in the 80s and 90s sold at high profit to wealthy buyers. A few old timers are hanging on to their homes to see how high the market will go; they still come regularly. You and your partner saw a golden opportunity given the shift in demographics and trends. Your examination of the business records and sales trends as well as your interviews with the current owners have revealed the following: High employee turnover (74%) Employees are hired through Kijiji Menu is old school, 75% static. The static portion has not changed much in 20 years Remaining customers are old school but faithful Current owners don't know the food cost ratio but you calculate it out to 38%. Two cooks have been employed by Owen's for over ten years. The others are part- timers or staff which has been employed for six months or less. Four cooks in the kitchen on a busy night, 3 cooks for lunch shifts is what the current structure is, however business has been less than full capacity. Senior kitchen staff earn $21/hour while the junior cooks earn Ontario's minimum wage. The owner currently assumes the role of floor manager and has 6 servers on duty on busy days and 4 on slow ones. They make servers' minimum wage (less than the official minimum wage - please research this) and make most of their earnings through tips. The restaurant is open Tuesday to Saturday, closed Monday and SundayYour salary and wages are based on what opening hours? What prep hours? 4. Create your menu Your menu should be a food menu only. It will have four items only. (Chapter 4) For each item, explain how you created them and why you are including them on your new menu. Describe how they are connected to your revolutionary concept. Determine prices. For this you will need: (use an Excel spreadsheet for this part) Standardized recipes for all four menu items - if your recipe does not exist, then create it. You will not be evaluated on the quality of the recipe but it should make basic sense. Improvise measurements and quantities. Write the ingredients and the number of portions your recipe yields. Do not include recipe procedure. A standardized recipe requires you to list ingredients in the correct order using correct measurements. See content week 11 for example) ii. Know your costs. Use online grocery store prices or other source (GFS or SYSCO price lists, etc.) to cost out your items. Be sure to cite your sources carefully. Pay attention to quantity and package size. Use the recipe template in Exercise 1A from week 12. iii. Calculate your four prices. 1. Use the food cost ratio method first. Your selected food cost ratio should be between 21%-34%. Remember that you cannot have a high food cost and a high labour cost ratio. If one is high, the other must be low. Using the contribution margin approach, what would your prices be? Are they more appropriate or less so? Why? (see #5 below for data to derive your contribution margin) 3. Comment on the prices your two calculation methods generated. Are they acceptable given your business model, your target demographic and the competitive landscape? 4. Choose your final prices and justify your choice Determine your desired avg food sales - (total takeout food sales + total dine in food sales) / total number of food items sold (customers))YOUR NEW CONCEPT You are to redesign the restaurant into a whole new concept. Nevertheless, you want to be respectful to the neighbourhood tradition Owen's has become and to its faithful customers. Given the increase in commerce and competition, Owen's no longer has to be "all things to all people", and you decide to venture into a hyper-specialized niche which will make your establishment different from the growing number of casual restaurants in direct competition with you. As such you will ONLY have FOUR items on your menu. Your menu could be static or market, or hybrid. As the restaurant is licensed for 60 seats, you must retain dine-in but you ALSO decide to offer take-out but not delivery. (Hint: this is how you increase capacity beyond 60 seats without incurring new expenses from delivery. However, there will be added costs which you must factor in) YOUR PROJECT CONSISTS OF THE FOLLOWING: 1. Describe your new concept. What is the product, the style, the level of expense. Why did you choose this concept? Describe your competitive landscape and explain why your concept would work in that environment. What is your vision, mission and goals (Chapter 6) What is working well with Owen's current business? What elements will you keep and why? What elements will be changed why? You will be evaluated on your ability to integrate what you have learned about demographics and psychographics, food trends, concept and design. (Be sure to use what you've learned from Chapter 3 and 5) 2. Describe your market positioning. As your concept and menu will be hyper-specialized, explain what kind of competitive landscape such a concept would thrive in. Why do you think your market is ready for your concept? (Chapter 5) 3. Determine your labour structure, management and training protocols. (Chapter 6, 14) If you are successful and the restaurant fills up, how many cooks and servers should you have? How many will be full time? Part time? Why? What will be your tipping policy? Design a hiring and training procedure along with pay structure. Your new policy should reflect your goal of addressing current labour shortage issues in the restaurant industry. You are also looking to modernize the way remuneration is done in restaurants to create more sustainable jobs that employees will be faithful to. If you decide to pay your staff a higher wage, you must show where the money will come from and demonstrate that you can still be profitable.5. Use the projections below to estimate one month of business. Explain how you came up with your sales projections (be realistic), your labour cost and use the figures in question 4 to calculate your food cost. Fill out the Income Statement below (you must fill in the yellow boxes). Show your calculations. Use an Excel spreadsheet. For the Month of March Total Guests # Menu Mix Item #1 26% Item #2 39% Item #3 14% Item #4 21% Income Statement Month of March Calculation: S Sales A Food Cost Gross Profit Margin A-B = aa Expenses Wages C Salaries D . Supplies $2500.00 Rent $6800.00 Advertising $2200.00 $2200.00 H Utilities Total Expenses C+D+E+F+G+H = bb Net Income Before taxes aa-bbNotes: A* Build your own daily sales projections using # of guests and the menu mix (both are given above). Use the prices you have derived in 4-ili B* Use the food cost figures you calculated and apply it to the item sales for the month C* Show your calculations. Determine work hours for front and back of house staff; apply respective hourly wages. If you are offering benefits, add 15% to the shifts that earn benefits. D* This line is for your managers who earn a yearly salary, NOT hourly wages. Remember this could be the owner or owners, or hired manager, OR no one at all if your managers (including the chef) are hourly. 6. Describe how you intend to grow your business over the next 12 months, 2 year and 5 years. How will you address competition from new restaurants who try to copy your concept? What is your sales objective for each time frame? Apply a reasonable growth rate to project where you will be in five years. What is the best-case scenario? How will you shield your business from bankruptcy assuming the worst-case scenario? Tips for Success: o Approach this project with the "big picture" in mind, rather than a mere series of questions. A business is a collection of moving parts that work together and your job is to adopt a systems-thinking approach to build a "healthy system" o Your perspective should be that of a manager, not that of a customer, and definitely not of a student (students tend chose low-cost solutions which are not always appropriate when building a business). While profit is the ultimate motive, you must also exercise sound business values: build a pleasant and fair workplace for staff, a fair net revenue for the owners, a thriving business and place of employment for the community and a source of delicious food and excellent service for the customers. Remember: if quality of product or service fails, you will soon be out of business. Your analysis should keep all these goals in mind. Wherever you feel the case presents incomplete information you are free to make assumptions provided you state them clearly. O Present your information clearly and professionally, as if you were presenting a business plan to a financial lender. Use APA@Conestoga carefully. Do not use images unless they are properly cited and absolutely necessary to demonstrate your point. You were placed in teams of two to foster tighter communication and lots of conversation. This is not a project that you can "split up", Consensus must be reached on all parts of this assignment. Use a single cohesive voice to write your final paper O This assignment does not have a length requirement. Get to the point, provide sufficient commentary to support your points, show all calculations and be factual. Likely this paper will be 8-12 pages