copyright © 2014 by john wiley & sons, inc. all rights reserved. chapter 14 restaurant business...
Post on 06-Jan-2018
226 Views
Preview:
DESCRIPTION
TRANSCRIPT
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Chapter 14 Restaurant
Business and Marketing Plans
The Restaurant: From Concept to Operation, 7th edition
Courtesy of Panificio
1
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Objectives• After reading and studying this chapter, you
should be able to:– Describe the various forms of business ownership– Discuss the advantages and disadvantages of each
form of business– Identify the major elements of a business plan– Develop a restaurant business plan– Conduct a market assessment– Discuss the importance of the four Ps of the
marketing mix– Describe some promotional ideas for a restaurant
2
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Introduction• Business plans
– Increase probability of success• Communicate to financial backers
• Restaurants– Are experiencing extreme challenges
• Difficult times
3
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Introduction (cont’d)• New restaurant operation has a
choice of legal entities– Sole proprietorships– Partnerships– S corporations
4Courtesy of Panifico
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
What Business Entity Is Best?
• Under law, all businesses are operated as:– Proprietorships– Partnerships– Corporations
• Each has different tax consequences– Advantages and disadvantages
5
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
What Business Entity Is Best?
• Under law, all businesses are operated as:– Proprietorships– Partnerships– Corporations
• Each has different tax consequences– Advantages and disadvantages
6
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
What Business Entity Is Best? (cont’d.)
• Choice of entity affects:– Federal income taxes– Liability to creditors and other persons– Legal and/or personal relationships
among owners– Legal life and/or transferral of the
business entity
7
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Sole Proprietorship• Simplest and the most prevalent
– Restaurant operator does not draw a salary for federal income tax purposes• Reports as income the profit for the year or
deducts, as an expense, any loss for the year
– Proprietor is not an employee• However, income is subject to self-
employment tax
8
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Sole Proprietorship (cont’d.)• Advantages
– Simple and reasonable salary
– Funds can be withdrawn
• Without tax consequences
– Business can be discontinued or sold
• Minimal tax consequences
9
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Sole Proprietorship (cont’d.)• Disadvantages
– Owner cannot participate in qualified pension and/or profit sharing plans
– Owner is liable for everything– No legal existence apart from the
owner(s)
10
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Partnership • Any venture where two or more persons
endeavor to make a profit– General partnerships
• Complete liability but full management rights– Limited partnerships
• Share limited liability with no services performed • Advantages
– Flexible– No double taxation– Choice of limited or general partnership
11
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Partnership (cont’d.)• Disadvantages
– Same problems of legal liability as sole proprietorship
– Partner may create debts for the partnership
– Difficult to divide assets if business fails– Death, disagreement, and/or ill health can
make perfection into a nightmare– In bad times partners always see the other
as at fault12
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Partnerships
13
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Restaurant as a Corporation• Legal entity similar to a person
– Can borrow, buy, conduct business, and must pay state and federal taxes on profits
• Deciding whether to incorporate– Often depends on insurance coverage
• If available, a restaurant may decide not to incorporate
• Insurance will cover and limit sole proprietor’s liability, which might cause financial ruin in the event of a mishap or lawsuit
14
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Restaurant as a Corporation (cont’d.)
• Advantages– Limited liability– Ease of availability and affordability of
insurance through group plans– Corporate fringe benefits are available– Can sell and distribute stock– Investor friendly
15
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
• Disadvantages– Double taxation– Takes a lot of money to set up– Usually requires legal and accounting
advice• Can be costly
– Can lose control if too much stock is distributed
16
Restaurant as a Corporation (cont’d.)
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Corporate Form
17
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
S Corporation• Permits business entity to operate as a
corporation – Allows it to avoid paying corporation taxes– Avoids a double tax upon liquidation
• Built-in gains from appreciation of assets– Useful for a family restaurant– Ideal if owners do not want to accumulate
after-tax income or if shareholders are in a low tax bracket
18
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
S Corporation (cont’d.)• Provides tax advantages for
dependent children or parents• Corporation taxes are avoided
– Profits from restaurant are taxed according to income brackets
– IRS requires officers draw a fair salary so company earnings are not overstated
• Benefits over two percent of annual salary cannot be deducted
19
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Buy–Sell Agreement with Partners
• Preserves continuity of ownership in the business upon sale– Made up of several legal clauses that
can control business decisions• Who can buy a departing partner's or
shareholder's share of the business • What events will trigger a buyout• What price will be paid for a partner's share
20
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Legal Aspects of Doing Business
• Steps required in California:– Form a business entity– Identify necessary permits and licenses– Identify local restrictions on proposed business
licenses– Obtain environmental or similar permit as
needed– Obtain state sales tax permit– Determine applicability of employer registrations– Get insurance
21
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Legal Aspects of Doing Business (cont’d.)
– Comply with relevant statutes and regulations with respect to employee’s wages
– Fulfill occupational and health requirements– Assess applicability of antidiscrimination laws– Check for eligibility for government assistance– File fictitious business name– Meet posting requirements– Obtain and return tax return filings– Learn reporting and notice procedures in
event of employee injury22
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
State Registration• Plans to open a new business should
be discussed with the secretary of state’s office– Fees run about $100 for registering a new
business– Most states have income tax on wages– State Department of Employee
Compensation must be contacted– Cities require permit to operate a business
23
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Sales Tax • New business is registered with the
state revenue– Most states require an advanced deposit
or bond
24
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
The Patient Protection and Affordable Health Care Act (PPACQ), and
Other Regulations
• Most important topic affecting restaurants
• Restaurants and hotels may also have to deal with other regulations and laws
25
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Business Plan• Improve chances of operational
success– Assist in obtaining financing– Communicate to potential investors– Define operational purposes
• Key ingredient:– Sustainability
26
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Business Plan (cont’d.)• Elements
– Cover sheet– Description of the business– Description of concept, licensee, and
lease– Market analysis and strategy– Competitive analysis– Pricing strategy
27
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Business Plan (cont’d.)– Advertising and promotional campaign– Other information– Financial data– Existing restaurant balance sheet– Appendices
28
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Business Plan (cont’d.)• Mission statements
– Generally do not change• Goals
– Reviewed as often as necessary– Established for each key operational area
• Strategies or action plans – Who is going to do what, when, and in
what order– Specific dates
29
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Marketing Philosophy– Patterns the way to relate to guests,
employees, purveyors, and the general public• Fairness, honesty, and moral conduct
– Finding out what guests want and providing it at a fair price
– Asks would-be operators:• Who will be my guests? • Why will they choose my restaurant? • Where will they come from and why will they
come back?” 30
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
The Difference Between Marketing and Sales
• Marketing– Broad concept– Includes sales and merchandising– Determines who will patronize the
restaurant and what they want in it– Ongoing effort– Gets into psyche of present and
potential patrons– About solving guest problems
31
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
The Difference Between Marketing and Sales
(cont’d.)• Sales– Part of marketing – Focuses on seller needs– Activities that stimulate the patron to want
what the restaurant offers– Sales mentality exists when seller thinks
about only of his or her needs • Pushes an item on a customer
– Closely related to advertising, promotion, and public relations
32
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Marketing Planning and Strategy
• Marketing plans – Must have realistic goals while leaving a
reasonable profit margin • Guest satisfaction, market share, sales, and costs
• SWOT analysis– Strengths, weaknesses, opportunities, and
threats• Strengths and weaknesses: internal factors and
can, over time, be controlled by management• Opportunities and threats: external factors
33
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
SWOT
34
© John Wiley & Sons, Inc.
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Market Assessment and Market Demand
• Market assessment– Analyzes community, potential guests, and
competition – Helps to answer the all-important questions:
• Is there a need for a restaurant? • Who will be the potential guests?
• Market demand factors– Population in the catchment area – Demographic split of this population
35
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Market Potential• Estimated maximum total sales revenue
of all suppliers of a product in a market during a certain period– How many people in the market area are
potential customers? – What is the potential for breakfast, for
lunch, for dinner? – Will your restaurant attract guests from
outside the immediate market area? – Who is your market?
36
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Market Segmentation, Target Market, and
Positioning • Market– Total of actual and potential guests– Generally segmented into groups of
buyers• Similar characteristics
– Within these groups are target markets• Groups identified as the best for the
restaurant
37
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Marketing Director
38
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Typical Segmentations• Geographic
– Country, state/province, county, city, and neighborhood
• Demographic– Age, sex, family life cycle, income,
occupation, education, religion, and race• Behavior
– Occasions, benefits sought, user status, usage rates, loyalty status, and buyer readiness
39
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Positioning• Once the target market is identified
– Important to position the restaurant to stand out from the competition • Focus on advertising and promotional
messages • Key to positioning
– How guests perceive the restaurant• Involves tailoring an entire marketing
program
40
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
41© John Wiley & Sons, Inc.
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Competition Analysis• Analyzing competition’s strengths and
weaknesses – Helps formulate marketing goals and
strategies to use in the marketing action plan • Comparison benefit matrix
– Shows how your restaurant compares to the competition • You choose the items for comparison (e.g., name
recognition, ease of access, parking, curbside appeal, greeting, etc.)
42
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Marketing Mix: The Four Ps• Every marketing plan must have
realistic goals – While leaving a reasonable profit margin
• Cornerstones of marketing– Place (location)– Product– Price– Promotion
43
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Market Share Analysis
44
© John Wiley & Sons, Inc.
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Place/Location• One of the most crucial factors in a
restaurant’s success• Ingredients for success
– Good visibility– Easy access– Convenience– Curbside appeal– Parking
45
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Product• Main ingredient: excellent food
– People will always seek out excellent food• Especially when good service, value, and ambiance
accompany it• Three levels of restaurant product
– Core product: function part for the customer– Relaxing and memorable evening
– Formal product: tangible part of product– Physical aspects, décor, and a certain level of service
– Augmented product: other services– Valet parking, table reservations, etc.
46
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Product (cont’d.)• Product analysis
– Covers quality, pricing, and service • Atmospherics
– Design used to create a special atmosphere• Experiencing greater emphasis
• Product development– Innovative menu items
• Added to maintain or boost sales47
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Product (cont’d.)• Product positioning
– Conveys the best face/image of the restaurant • What people like most about it• How it stands out from the competition
• Restaurant differentiation– Owners usually want their restaurant to be
different in one or more ways• Call attention to food or ambiance
• Product life cycle – Introduction to decline
48
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Price (cont’d.)• Cost-based pricing
– Calculates cost of ingredients • Multiplies by a factor of three to obtain a food cost
percentage of 33• Competitive pricing
– Checks competition to see what they are charging for the same item
49
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Price (cont’d.)• Contribution Pricing • Method of computing a product’s selling
price so that the price contributes to the gross income
• Amount of labor cost involved with the preparation and service of the menu item
• Price and quality – Direct correlation
50
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Promotion• Goals of a promotional campaign
– Increase consumer awareness– Improve consumer perceptions– Entice first-time buyers– Gain higher percentage of repeat guests– Create brand loyalty– Increase the average check– Increase sales (particular meal or time of day)– Introduce new menu items
51
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Promotion
52
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Advertising• Extent to which a restaurant needs
to advertise depends on several variables– In-house advertisingFilling in the Periods of Low Demand– Tie-ins and two-for-ones– Loss-leader meals– Mailing lists
53
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Advertising Appeals• Six benefit appeals used in
restaurant advertising:– Food quality– Service– Menu variety– Price– Atmosphere– Convenience
54© John Wiley & Sons, Inc.
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Social Media• Potential for attracting customers
– Twitter – Facebook– Pinterest– Tumblr– Instagram
55
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Travel Guides for Free Advertising
• Listing can be worth thousands of dollars in extra sales– Mobil Travel guides – AAA Tour Book pages
56
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
Free Advertising• Yellow Pages Advertising• Local telephone director• Mailing lists• Develop guest loyalty and increase
sales by regular mailings– Newsy and informational– Photos of guests
57
top related