Challenges for small restaurants business in Bahrain

Prepared by: Hussain Fadhel Mohammed Abedeen 20063036 Moh d Hassan Humaidan 200630!" #e$: ! #ubmitted to: %&' Hala (baid

%e$ember )* 20!0
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+able of $ontents +opi$

#ummary !' introdu$tion 2' pro$edures 3' Findings 3'! Bad lo$ation 3'!'! Par-ing lots 3'!'2 Competition 3'!'3 .solated area 3'2 Food /uality 3'3 #er0i$e /uality 3'3'! 1mployee ser0i$e 3'3'2 2aiting time 3', Bad management 3','! Bad finan$ial planning 3','2 Bad strategi$ planning 3') 4a$- of e5perien$e and reasons for entering the business ,' Con$lusion )' &e$ommendation Appendi5

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#ummary
.n brief* this report in0estigates the pra$ti$al and realisti$ reasons behind the $hallenges for small restaurants business in Bahrain' .t aims at gi0ing people 7hom are interested in entering this field of business a guideline and an o0er0ie7 of ho7 to ta$-le those problems and to be 7ell positioned in today s bustling e$onomy' 2e found that bad lo$ation* bad finan$ial and managerial planning* along 7ith bad /uality ser0i$e in terms of employee s dependen$y and food taste are the ma8or issues that -ept business a7ay from su$$ess' Furthermore 7e $on$luded after studying those reasons that those indi0idual la$-s a $ompetiti0e edge and are not 7ell e5perien$ed or edu$ated in this field' Moreo0er* they tend to negle$t planning and its importan$e* do not pay attention to frontline employees and finally they don not fully utili9e their supply $hain line' .n the end* this report re$ommend people 7ho are interested in su$h a business to $hoose a proper pla$e for $ondu$ting their business* plan finan$ially and managerially $arefully yet be inno0ati0e and ha0e the $ompetiti0e edge that grants them su$$ess in their mar-et and to employee indi0iduals 7ith a good attitude and e5$ellent talent in order to pro0ide the highest ser0i$e /uality in the shortest time'

!: .ntrodu$tion
+here is no denying that small business represent a large sta-e in our today s e$onomy* it offers us ne7 inno0ati0e ideas and a less ris-y 7ay of entering the business field* to some people it offers independent and a ma8or sour$e of li0ing* for others it is 8ust another sour$e of additional in$ome* thus small business needs a lot of attention spe$ially today more then e0er due to its in$reasingly importan$e to our e$onomy gro7th' +his report fo$uses on one type of small business in Bahrain* that is* small restaurants' And by small restaurants 7e means restaurants that it s $apital do not e5$eed 30*000'000 B% and it employ no more then 20 employee* 7hile it is managed and o7ned by the same person' +oday many small business ;in$luding small restaurants< enter the mar-et /ui$-ly and lea0e it after a short period $arrying a loss* thus hurting the o7ner in many 7ays and hurting the e$onomy itself' For this purpose this report 7as initiated in order to in0estigate some of the many realisti$ reasons behind the $hallenges for small restaurant in Bahrain spe$ifi$ally and gi0e some of the pra$ti$al methods on ho7 to ta$-le those issues and prepare those indi0iduals 7ho are interested in entering this business field'
Reference: http://en.wikipedia.org/wiki/Small_business

2: Pro$edures
After studying the sub8e$t 7e found that holding inter0ie7s 7ith people 7ho a$tually been in the restaurants business for a period of time and failed in the end is the most effe$ti0e 7ay of data $olle$tion to our purpose* thus inter0ie7s 7ith 6 indi0iduals
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been held in order to ha0e a realisti$ idea of 7hy did su$h a 0enture fail'

3: Findings
Based on the inter0ie7s 7e made 7ith 6 indi0iduals* 7e found that there are many reasons behind failure of su$h a field* in 7hi$h 7e are going to dis$uss in this se$tion'

3'! Bad lo$ation

3'!'! Par-ing lots

Another reason for a restaurant in Bahrain to fail is its lo$ation' #ome $afeteria la$-s a $on0enient par-ing lot* 7hi$h -eeps many $ustomers a7ay from going and buying from them'

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Competition

#ome o7ners $hose their business lo$ation ne5t to a famous $ompetiti0e restaurant that ha0e a strong $ustomer base in 7hi$h it ma-es it harder for the o7ner of the ne7 business to attra$t enough $ustomers'

3'!'3

.solated areas

10en more surprisingly* is that some o7ners open a restaurant in an isolated residential area hoping to attra$t the $ustomers in that area and gets out of the business due to bad management of $ustomer base in a bad lo$ation'

3'2 Food /uality

Al7ays a$$ompanied to the issue of food is health issues and people no7adays are more $on$erned about health issues then e0er before' #ome restaurants dose not pro0ide a $onstant rate of $lean and healthy food* losing $ustomers due to a bad reputation of food and ser0i$e /uality'

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#er0i$e /uality
1mployee ser0i$e

3'3'!

#ome restaurants sadly employ indi0idual 7ith bad interpersonal s-ills or does not ha0e any $ommuni$ation s-ills at all and some of them ha0e bad moods 7ith the $ustomers'

3'3'2

7aiting time

=eeping $ustomers 7aiting for their food and e5$eeding the a0erage 7aiting time for a ser0i$e 7ill hurt the business and dri0e $ustomers a7ay from it'

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Bad management
Bad finan$ial planning

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(ne of the ma8or reasons for going out of a business is bad finan$ial management* 7hi$h is in analy9ing $ost issues or bad
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$apital and assets management for the business' (ne of the most fre/uent mista-es 7e ha0e figured and been told more than on$e is that some o7ners mi5 the money of the business 7ith their life e5penditures* and they -eep 7ithdra7ing from the business money again and again'

3','2

Bad strategi$ planning

Another reason from a managerial perspe$ti0e is that the o7ner does not ha0e a fle5ible ob8e$ti0es and $on$rete goals of his business and thin-s that the business 7ill dra7s the line for its su$$ess depending on lu$- more than planning'

3') 4a$- of e5perien$e and reasons for entering the business

#ome indi0idual la$- e5perien$e in the food industry and does not ha0e any ba$-ground at all 7hen entering this business field' Apparently* some indi0iduals enter the small business field 8ust to get an e5tra sour$e of in$ome 7ithout any passion about their business' 2e pro0ide a figure belo7 sho7ing ea$h reason and ho7 many times ea$h ha0e o$$urred in all of the 6 failing business story 7e ha0e inter0ie7ed* to ha0e better understanding of 7hi$h reason is more important and should be paid more attention to'
5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Number of occurrence Bad location

Food quality

service quality

Bad management

Lac of e!"erince and reason to enter t#e business

&eferen$e: http:>>777'business-no7ho7'$om>startup>business:failure'htm

,: Con$lusion
Based on our findings of the main reasons behind small restaurants failure and based on our analysis 7e $on$luded the follo7ing:

!: ?eed for planning

Planning is negle$ted in most small business today* and that applies to small restaurants as 7ell thus a proper finan$ial plan should al7ays be -ept in mind' Also* managerial planning is important' +hus* goals should be set and they should be fle5ible and reasonable at the same time'

2: 4a$- of edu$ated entrepreneurs'

7e ha0e noti$ed based on the inter0ie7s 7e made is that many of the indi0iduals are not 7ell edu$ated* 7hile e5perien$e $ounts for more and is an important issue* still edu$ations brings more into it by gi0ing the indi0idual 7ays of proper planning and $ountering problems and issues' +his figure bello7 sho7s the per$entage of edu$ated small restaurants business o7ner 7ho ha0e a %iploma degree or higher based on the inter0ie7 7e made to 6 indi0iduals 7hom their business failed'

5 4 3 2 1 0 resturant o$ners No qualification %i"loma B&.c

3: @tili9ing supplier relationship'

2e ha0e noti$ed further more from more then one inter0ie7 is that there is no real effe$ti0e relationship bet7een the restaurant o7ner and his suppliers'

,: 4a$- of moti0ated employees

1mployees ; spe$ially frontline < are a great asset in this business field ; if not the greatest < and unfortunately some business o7ner don t pay attention at all to this aspe$t* they tend to hire $heap labor for$e instead of loo-ing for moti0ated employees 7ho lo0e their 8ob and are 7illing to gi0e their best in it'

): 4a$- of $ompetiti0e ad0antage'

Many entrepreneurs enters the restaurants field of business be$ause its nature' +he restaurants industry is an a$ti0e business in 7hi$h people 7ill al7ays buy food at some point from an outside sour$e due to today s busy nature* thus entrepreneurs ta-e this point as granted and feel that opening a small restaurant for ser0ing the same food as many other restaurant 7ould still be profitable be$ause people li-es to try ne7 things in a ne7 7ay' @nfortunately this is one of the main reasons behind small restaurants an $afeterias going out of the business be$ause they la$- the sense of $reati0ity and $ompetiti0e edge*
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be it in their 7ay of doing the ser0i$e or the food they are ser0ing'
Reference: http://www.ehow.com/about_7489 ! _challenges"managing"small" business.html

): &e$ommendation
After studying the reasons and from 7hat 7e $on$luded to be the ma8or reasons behind small restaurants failure in Bahrain 7e $an say that there is no absolute or definite solution to su$h an e0en* but there are steps and rules and guidelines that 7e re$ommend to -eep in mind 7hene0er thin-ing of entering the restaurant business' !: Choosing the appropriate lo$ation is 0ery important* $hose a pla$e 7here it is $on0in$e to $ondu$t the business* and there is no tense $ompetition 7ithin that area* yet an a$$eptable amount of $ustomer base' 2: 1du$ation and e5perien$e ea$h represent an important asset to 7in in this field* you should be e5perien$ed in both the mar-et field in you pla$e and in the food your ser0ing* also edu$ation 7ould al7ays payoff in the end* one 7ay or another' 3: %o not enter the business 8ust for the sa-e of entering it* or to in$rease you personal in$ome be$ause that in itself is not enough* su$$essful business o7ners treat their business as their $hild and lo0e their field and ha0e a great passion
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in 7hat they are doing so if you donAt feel this 7ay it is going to be really hard for you' ,: =eep your ser0i$e in a high /uality shape from A to B* that in$ludes the food /uality in term of $leanness* the employee s beha0iors* their dependen$y and their attitude* and granting the $ustomers the ser0i$e they re/uire in the shortest time possible' ): Al7ays -eep in your mind 7hat is your $ompetiti0e edge* is it your supply $hain lineC (r is it your employeesC (r maybe the pla$e is so spe$ial that people li-e to $ome 8ust to sit there and ha0e funC +here are many 7ays in 7hi$h you $an differentiate your ser0i$e and your food from other restaurants* so plan it and then do it' 6: Planning is something not to be negle$ted if you 7ant your business to su$$eed* as mentioned earlier that many rely on lu$- more then planning' Plan your goals* plan your finan$ial situation* and plan 7hat 7ill you do to not only meet $ustomers e5pe$tation* but to e5$eed it and -eep it $onsistent for the future' 3: #upply $hain management is a big asset if it 7ere to be fully utili9ed* many small restaurants started 0ery small but 7ith a good supplier relation* granting them good terms* 8ust on time deli0ery and good food /uality along 7ith many $ompetiti0e ad0antages* thus* integrating 7ith your supplier and managing a good relation 7ith them is an e5$ellent 7ay to go'
Reference: http://www.fl#ingsolo.com.au/working"smarter/problem sol$ing/the"solution"to"small"business"challenges

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APP1?%.D
.nter0ie7 ;!<
!' 2hen and ho7 did you start your small restaurant businessC
. opened my restaurant in April 2006* . #tarted the business be$ause . 7anted to be independent person and as an additional sour$e of in$ome* and so . entered the restaurant business be$ause . felt it 7as guaranteed'

2' 2hy did you $hoose small restaurant business fieldC

Be$ause the idea sounds easy to start 7ith a small restaurant business than any other business* also the $ustomer demands for buying food and going out for restaurants in these days 7hi$h made 'me thought of starting this business

3' 2hat is better to lease or buy the restaurant and e/uipmentsC

. bought a restaurant and the e/uipments to shorten the time for me 'and get fast to the business

,' 2hat lo$ations do you prefer to start your businessC

+he lo$ation 7as easy for the $ustomer to a$$ess and $ome by my 'restaurant 7ith no $ompetitors nearby

)' Ho7 did the business start at firstC

%id goes 7ell many $ustomers $ome by and buy 7hi$h made me 'happy to see this begging

6' Ho7 do you set pri$e le0elsC

By the -no7ing ho7 mu$h is my total $ost is and the profit . need to get* so the pri$e 7as suitable for me and for the $ustomers 'e5pe$tations

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3' Ho7 do you find suppliers>manufa$tures>distributorsC

out

about

. made a resear$h for the suppliers in here and the distributors for the good /uality food industries to pro0ide me the in0entories and goods . needed'

6' Ho7 do you differentiate your business from other $ompetitorsC

+he /uality of the food . pro0ide and the good lo$ation . got my 'restaurant in 7ere definitely my ad0antages

"' 2hat 7ere your short and long term goalsC

My short term 7as to gain $ustomers loyalty and a good ser0i$e' After that in the long term . 7as going to e5pand the business by building 'other bran$hes

!0' %id you ha0e enough $apital or you too- loan to start your businessC
'. did ha0e the $apital to start my business and getting into it

!!'

2hat is your e5perien$e in business and edu$ation le0elC

My e5perien$e 7as only in the management 7hi$h it 7as my 'edu$ation from the $ollege

!2' 2hat are the reasons for your restaurant business failure in your opinionC
.t 7as due to the $ustomer ser0i$e . had a hard time to fill the orders of the $ustomer re/uested' Also* . 7as using the business money for 'personal use 7hi$h effe$ted the business finan$ial situation

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.nter0ie7 ;2<
!' 2hen and ho7 did you start your small restaurant businessC
. started my restaurant at the begging of 2003* . started by selling $up$a-es at home and by then . ha0e been loo-ing for7ard to start my 'restaurant 7hi$h . did

2' 2hy did you $hoose small restaurant business fieldC

Be$ause . felt . had the e5perien$e and the lo0e for it thatAs 7hy . 'thought . $ould open my o7n business

3' 2hat is better to lease or buy the restaurant and e/uipmentsC

'For me is leasing* to -eep the $ost at minimum

,' 2hat lo$ations do you prefer to start your businessC

+he lo$ation 7as not the best* there 7ere some $ompetitors ne5t to me but due to the la$- of $apital . $hose this pla$e'

)' Ho7 did the business start at firstC

At the begging there 7ere not many $ustomers and then more started $oming

6' Ho7 do you set pri$e le0elsC

.t 7as set lo7er than my $ompetitor pri$es to gain more $ustomers 'to me

3' Ho7 do you find suppliers>manufa$tures>distributorsC

out

about

Mainly . $alled and tal-ed to some suppliers to get my in0entory 'and goods that . need from them

!,

6' Ho7 do you differentiate your business from other $ompetitorsC

'4o7 pri$e is my 7eapon to 7in this

"' 2hat are your short and long term goalsC

.s to $o0er my $ost and -eep getting profit* then . $an e5pand my 'business more and more

!0' %id you ha0e enough $apital or you too- a loan to start your businessC
'. started by ta-ing a loan for my business

!!'

2hat is your e5perien$e in business and edu$ation le0elC

. didnAt ha0e mu$h e5perien$e in the business* for the edu$ation 'le0el and . only finished my se$ondary s$hool

!2' 2hat are the reasons for your restaurant business failure in your opinionC

+he pla$e 7as a bad $hoi$e but as . said . 7as for$ed to $hose su$h a pla$e due to the la$- of in$ome* another reason 7as the de$rease in amount of sales due to la$- of $ustomers 7ho 7ent o0er to another $ompetitor on the ne5t shop'

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&eferen$es
!' +he #e0en Pitfalls of Business Failure by Patricia Schaefer ' http:>>777'business-no7ho7'$om>startup>business:failure'htm 2' +hin-ing (f #tarting a #mall BusinessC by Susan Ward. http:>>sbinfo$anada'about'$om>$s>startup>a>starto7nbi9E,'htm

!.

Ho7 to A0oid the Most Common &easons for #mall Business Failure by Caroline Jordan.

http://e%inearticles.com/&'ow"to"($oid"the")ost"*ommon"Reasons"for" Small" +usiness",ailure-id.!8/9 ,' #mall business from 2i-ipedia* the free en$y$lopedia http:>>en'7i-ipedia'org>7i-i>#mallEbusiness )' Hiring 1mployees: Challenges for #mall Business http://www.morebusiness.com/running_#our_business/management/hiring" challenges.brc /. +he solution to small business $hallenges by Robert Gerrish. http://www.fl#ingsolo.com.au/working"smarter/problem"sol$ing/the" solution"to"small"business"challenges

'. +he Challenges of Managing a #mall Business by Susan Thompson

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http://www.ehow.com/about_7489 ! _challenges"managing"small" business.html

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