MGT601 VU Assignment No 2 Spring 2012 Solution

Starting a business is a risk taking decision and its success or failure depends on many
interrelated matters. In the initial stages of business, the entrepreneur faces many problems and
challenges. The success ratio of small and medium size businesses can be observed from the fact
that one-third of entrepreneurs close their businesses within the first two years. Skilled human
capital, lack of adequate financial support, tough competition, easy availability of substitute
products and market saturation are the critical issues that need special attention. If you observe
any market or shopping malls over a past few years and you will notice that the retailers,
wholesalers and superstores are very closely located and new businesses are escalating the
competition. This observation is most found in the restaurant industry as new restaurants are
opening and market is now saturating.
The Case
Mr. Saleem is a local resident of Koh Murree and hard worker and cool headed person. He has
two year working experience as an accountant at Usamania Restaurant, Murree. Mr. Saleem also
has a family business of Carpet with double story shop at Mall Road, Murree. He thought that
the restaurant business would be more profitable than carpet business keeping in view the
location. So, Mr. Saleem suggested his family members to close the carpet business and open a
restaurant. This business idea was based on the observation that tourists frequently visit Muree
with their families and Mall Road Murree is a busy place. Thus, Mr. Saleem and his family
opened a restaurant with name “Ravi Restaurant” at Mall Road, Murree where the market is
already saturated with the restaurants. They invested two million rupees and started working with
20 employees.
Assume that you are working on behalf of Mr. Saleem who is running and managing the wholerestaurant business. You are required to answer following questions keeping in mind the above mentioned scenario.
1. Identify what sort of problems or challenges could be faced by Mr. Salem during and after the establishing of Ravi Restaurant? 10 marks
2. How Mr. Saleem can overcome these problems or challenges for successful business operations. You are required to device the whole business strategy for his restaurant.15 marks

Idea Solution:

1 Let the staff know your expectations. The job description for employees needs to be thoroughly outlined at the time of hiring. Set strict requirements and guidelines about such things as the menu, recipes, time management, assignment of tasks and code of employee conduct. Have regular meetings with your head chef and all other department heads to discuss any problems, suggestions and productivity concerns. Remember, you set the tone for the efficiency of your restaurant, so it’s important to establish your authority.

2 Build employee morale. If those who work with you feel disrespected or unappreciated, their job performance can suffer. Avoid talking down to those who work under you and give them the feeling that they are part of a team. Motivate them with training workshops and special activities. Provide rewards, incentives and recognition for staff members who excel. Have a “suggestion box” where employees can leave comments about their concerns or ideas for improvement.

3 Make sure your customers are happy. If patrons are pleased with the food quality, service and prices at your restaurant, they are more likely to return and bring others with them. Creating a relaxing environment, having employees treat them with respect, providing them with prompt service and well-prepared meals, as ordered, all contribute to the satisfaction of those who come to your restaurant. You may want to leave comment cards, so customers can let you know what they liked or disliked about their visit.

4 Sit down with the head of each department and plan a budget. Find the best equipment, food and beverage suppliers at the most cost-effective prices. Control fixed and variable expenses. Make all employees conscious of how many resources they utilize that may cause you to exceed monthly costs, such as wasting food and cleaning supplies. Make sure you have enough cash on hand to meet your payroll, so your staff can be paid as scheduled.

5 Develop a good marketing strategy to get the word out to more potential customers about your restaurant. Come up with creative and effective advertising, including ads in newspapers, and distribute flyers in nearby areas. Offer customer incentives, such as a “Customer of the Month Wall” with photos of patrons on display. Selected customers might receive a free meal or menu item of their choice.

6 Make sure your restaurant meets the highest health standards. Cooking and dining areas, as well as restrooms, should be thoroughly sanitized. It should be emphasized to employees that they are required to wash their hands and make certain that utensils, dishes and glasses are clean before customer use. Cooks and chefs must be careful to avoid cross-contamination of cooking utensils and make sure that all surfaces are properly cleaned.

7 Ensure that your restaurant meets all safety regulations. Emergency exits should be clearly marked in the event of a fire or other unexpected event, and doors should be easy to open. Make sure you do not exceed the seating capacity for your restaurant.

8 Replace staff members who consistently fail to meet your standards. Those who are routinely late, treat customers rudely, do not get along with fellow employees and who are unmotivated can cause dissension. However, this should be done only after every effort has been made to encourage them to improve their performance.

9 Consider using a restaurant consultant, if sales are continually down. A consultant can give an objective evaluation of your restaurant and tell you about strengths and weaknesses. He can work with you to design a strategy that will cut costs, improve sales, update the look and feel of your establishment, draw more customers, conceive more appealing menus and create better marketing.