Running head: STRATEGIC MANAGEMENT PROJECT 1

Strategic Management Project

Wellington Pizza Café

Institutional Affiliation:

Author’s Name:

Date:
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Introduction and Purpose Of The Business

Wellington Pizza Café is the modern pizza restaurant that offers affordable pizza

foodstuff as the major food as well as other foods such as tarter torts, Cobb salad, pot roast,

twinkies, jerky, fajitas, key lime pie, wild Alaska salmon, among others. The business is located

on Bourbon Street – New Orleans, Louisiana in the United States. The business major objective

of the business is to address the increasing demand for exotic food in the New Orleans as well as

the adjacent community. The business is owned and operated as a family business by Angela and

Kevin Smith. The two have had the satisfactory experience in business over the last 20 years in

the catering industry.

The main purpose of this business is to fill the gap existing in the food industry and

utilize the opportunity to generate profits. It is demanding and challenging to start and operate

and restaurant business because the food and beverage industry is very competitive and has well-

established players with huge capital outlay. An entrepreneur is responsible for finding a suitable

location for the business, planning the operations and resource allocation for the business, hiring

the employees and marketing the restaurant and its products and services. Also, the business

owner or the entrepreneur should identify and define the goals and objectives of the restaurant.

The definition of business goals and objectives involves executive decision making concerning

the direction of the business, the foodstuffs to be offered and the style and structure of

management.

Product/Service Description
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Considering the current business environment and the kind of competition that exist

among the industry players, customers have preferred to diversify their consumption. Initially,

the food industry in the United States had a few specific varieties of food available to its

customers. However, due to the increasing customer demands, some retailers have decided to

specialize in some specific lines of food so as to increase market share. Wellington Pizza Café’s

priority is quality production while it seeks to provide affordable food products to consumers

because highly-priced products meet no market demands. Therefore, quality, affordability,

availability, technology and corporate social responsibility are the guiding principles of the

company, and this describes the nature of our products and the business itself.

The business’ pricing strategy determines the customer’s affordability and the volume of

sales. According to the business’ strategic plan, the business plans to produce the pizza food at

low cost, hence allowing it to set lower affordable prices for the customers. If the business set

higher prices for its products, it will not benefit because customers would not afford it. On the

other hand, the business shall run at a loss if it sets its prices too low compared to other market

players. Wellington Pizza Café’s aim is to set affordable prices for the consumers so as to benefit

from high sales volumes and the good reputation from the public. By so doing, the business

would have made the product affordable, allowing the customers to purchase it and hence

making the business to meet its target margins without necessarily exploiting the consumers. As

a result of stiff competition in the industry, our competitors might set their prices too low

because of their lower production costs. However, despite this, the business shall not compete

with prices because this becomes as dangerous competition. Instead, the business shall compete

with quality and ensure that it retains its customers.

Mission Statement and Value Proposition

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Mission statement: To provide top quality pizza foodstuffs to consumers within the local

community and across the country at affordable prices while adjusting to meet their demands.

As a business startup seeking to satisfy the needs of our customers, Wellington Pizza

Café will seek to address the disadvantages and fill the gap currently existing in the food industry

and the local foodstuff providers. In most cases, several people have found it difficult to

consume some pizza foodstuff because of their low quality and high price charges. Therefore,

Wellington Pizza Café’s mission statement seeks to provide top quality pizza foodstuffs to

consumers in the neighborhood and across the country at affordable prices while adjusting to

meet their demands.

The mission of the Wellington Pizza Café restaurant is to fill the gap in the food industry

created by the existing restaurants in the New Orleans and the entire United States by offering

affordable quality food to customers. Wellington Pizza Café looks forward to availing a variety

of foodstuff and drinks to the population to enable all customers to access the kind of food they

desire at fair prices.

Key industry trends

The US food and beverage industry comprise establishments and business players who

are primarily engaged in providing food services. Some of these players and competitors in the

food industry offer food to customers who order and served while seated in the restaurants while

others serve "take-away" food to clients who mostly comprises office staff who might not have

time to take their food while seated in the restaurant premises. Waiters and waitress services

serve both these two groups, and they pay after eating or after packaging their orders(Deloitte,

2017). In addition to the food and beverages, these business establishments serve alcoholic
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beverages, also in the form of "take-away" services or to customers who take them while seated

in the restaurant's premises. Moreover, they provide entertainment services especially during the

evening hours of weekdays and also during weekends.

The people demographics, a level of personal income as well as consumer tastes are the

major drivers of demand in most restaurants in the US food and beverage industry. Depending on

the capital outlay, the volume of operation, the level of production and prices charged, the

profitability of individual restaurants in the entire US food, beverage and drink industry

vary(FranchiseHelp, 2017).While some restaurants and companies depend on efficient business

operations to generate high revenues and profits at the year-end, some restaurants in the US food

industry depends on effective marketing, efficient management, and high-margin items to

generate high revenue and profits("Managing Business Risk in the Food and Beverage Industry",

2017). The US food, drink, and beverage industry is labor intensive and therefore small and

upcoming restaurants, and companies find it difficult to survive because huge capital outlay is

required.

As an indicator of the sales made by restaurants across the United States, the US

consumer spending statistics shows a 1.8% increase from November 2010 to November 2011.

Also, the same statistics shows that there was a 9.3% and 13.1% rise in the average US retail

prices for regular gas and diesel respectively from 16th January 2011 to 16th January 2012.

These are believed to be among the factors influencing consumer spending. Additionally, in the

third quarter of 2011, the US foodservice tourism spending, which is an indicator of restaurant

revenues, increased by 6.1% from the third quarter of 2010.

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The US food industry creates one of the largest and major employment opportunity in the

United States. Therefore, salaries and wages are a significant proportion of operating costs in this

kind of businesses. Moreover, the existence of a statutory minimum wage in the United States'

most industries increases the need for companies and firms to reduce other costs so as to be able

to meet the labor costs. For this reason, other operating costs such as marketing and advertising

need to be minimized as much as possible which hinder business success due to limited sales.

Another challenge facing the food industry in the United States apart from the minimum wage is

the competition from companies that serve prepared foods and meals("Managing Business Risk

in the Food and Beverage Industry", 2017). These companies and businesses include grocery

stores, delis, convenience stores and warehouse clubs. There is also competition from home

cooking which deprives businesses with customers who could have taken food and drinks from

their stores.

Most food industry players and establishments in the United States currently focus on

Italian cuisine, seafood, and steak. Other focus on the hamburger, pizza, and sandwich which

makes up the fast foods. The employees in most of these establishments perform a lot of duties

including the offering of services and managing. For instance, in most restaurants, waiters take

orders from customers, serve meals, beverages and drinks to seated customers, prepare and

present the checks to top-level management, and sometimes process payments. The increased

competition in the food industry site location for businesses may be critical because companies

may now turn and consider competition, the level of household income, visibility and

accessibility and population density.

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Management inventory is important for companies and restaurants in the food industry.

For this reason, companies in the food industry carefully manage their inventory especially those

inventory involving perishable food items including dairy products and fresh seafood to reduce

losses due to spoilage. The use of information technology and information systems in business

improves the efficiency of business operations. For instance, computerized information systems

are used to create and improve customer relationships, establish efficient marketing platforms

and maintain effective communication customers and suppliers(FranchiseHelp, 2017). Through

efficient information systems, these businesses ensure an effective and accurate communication

with suppliers and customers. Additionally, businesses and restaurants monitor their business

schedules using information systems and can, therefore, alert its staff in the case an order

schedule is running behind schedule. Also, inventory management systems assist in the effective

tracking of supply levels and in controlling excess inventory because excess inventory increases

the firm's operating costs (holding costs). There are information systems used to perform cost

accounting activities. This cost accounting programs assist the management in the determination

and estimation of individual costs of particular costs incurred by the organization.

The Food Service industry in the United States accounts the largest percentage of food-

away-from-home expenditures according to 2010 statistics done by the United States Department

of Agriculture and Economic Research Service. The Food Service category is composed of the

full-service restaurants, caterers, cafeterias, fast food outlets as well as other places that offer

food to the public at a profit. To achieve a sizeable market share, most of these food service

businesses are located within facilities such as lodgings, institutional facilities, government

institutions, recreational facilities, and retail stores for the sole purpose of dispensing meals and

snacks to customers(IBISWorld, 2016). The two largest segments of the Food Service industry,
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the fast food restaurant, and the full service accounts for the more than 50% of all the sales made

from the food-away-from-home. In fact, the full service offers additional services such as

ceramic dishware, alcohol services, and non-disposable utensils. On the other hand, food

restaurants are limited with no wait staff and thus uses convenience as a selling point for their

products. Also, their dining amenities are scarce.

In the US, the Fast food market has grown over the past few years compared to the

market growth rate for full-service restaurants. In most cases, fast food companies built more

food outlets as part of their growth strategy. Outlets are constructed near consumers so as to

enhance customer convenience and improve sales and business growth. Due to the dynamics of

the market, shifts in market share exists in the US Food service industry(IBISWorld, 2016).

These shifts in market share between the full-service restaurants and fast food influence the food

services offered in these two types of restaurants. For instance, some economic conditions are

associated with market trends that favor fast foods. In this case, the market share will shift such

that more fast food restaurants offering the variety of menus and dining amenities arise to take

advantage of the economic conditions. In response to this shift resulting from economic

conditions, the full-service restaurants might introduce comparable foods and services.

The Fast Food Restaurants industry in the United States has, for the past five years, been

struggling with the changing consumer preferences and the dynamics of the industry. According

to IBISWorld, consumer preferences in the fast food industry have been moving away from

saturated food service and other unhealthy foods, thus keeping the prices of the fast food

products low (IBISWorld, 1999). During the last five years, the fast food restaurants in the

United States performed relatively well compared to other players in the Foodservice and
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hospitality industry especially during the early two years of the five-year period. This could be

attributable to the low prices charged and the kind of convenience it offers to competitors.

The stiff competition experienced in the other segments of the foodservice and hospitality

industry has forced the fast foods to lower its prices in an attempt to attract customers and make

reasonable sales. As people become health conscious over the past five years increasingly,

consumer habits and preferences have been changing making the fast food restaurants to make

lower sales and decreased profitability (The NPD Group, 2016). Among the top players in the

Fast Food Restaurants industry, only the top four accounts for 33.9% of the entire market share

meaning that there is the low level of concentration in the industry. However, due to the diversity

of the food operations and styles, over 45% of the Fast Food Restaurants have downsized to

small businesses with less than nine employees. Another 55% of such establishments also have

less than 100 employees in total. In a nutshell, the concentration in the Fast Food Restaurant has

decreased over time owing to the changes in customer preferences and also due to the dynamic

nature of the Food Service Industry in the United States.

Business objectives (strategic and financial)

The Food and beverage industry is already dominated by well-established firms and

restaurants, especially in the United States. Therefore, according to the two business owners,

Angela and Kevin Smith, the following are the major purposes of starting the business:

 To generate monthly revenues of at least $4,500, reach annual revenues of

$18,000 within the first year of operation, which is expected to rise to $28,000 by the end

of the second year.

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 Achieve a profit margin of 5.2% and 6.0% in the first and second year of business

operation respectively.

 To obtain at least 45% of the total New Orleans market share and thus compete

with the leading players to achieve satisfactory sales volume monthly and yearly.

 To become a well-recognized pizza restaurant in the New Orleans through quality

service delivery and by meeting the demands of the customers.

Marketing strategies including any segmentation or market research plans

Wellington Pizza Café will position itself in the New Orleans city centre, as a premier

home-style restaurant accessible and noticeable from the main road. The business will provide

quality modern exotic foodstuffs, beverages and drinks to customers in the neighbourhood and

beyond, prepared with quality ingredients at reasonable prices. The business' major objective is

to attract the customers by making them enjoy an ambient restaurant environment with

checkered table cloths and with wood tables. Wellington Pizza Café restaurant offers a relaxed

atmosphere with employees and staff who, upon walking in, the customers will be greeted with

warm, welcoming smiles. Along with seasonal menus, our customers will enjoy our fixed menu

as the restaurant try to remain current and relevant to consumers while taking advantage of the

cost-saving meals.

While marketing its services, expanding the variety of foodstuffs available to our

consumers, the restaurant will attempt to remain relevant in the industry. The restaurant's website

is an important marketing tool. It is from this website that our customers get to understand us and

our services(Technomic, 2017). Moreover, our menu, map and driving directions guide the

customers on how our business environment is organized, how we treat our customers and the
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services available to them. They also get to understand our pricing policies, our standards and

seasonal menus and customer charter.

Upselling: This is a sales technique whereby a customer is induced by a seller to

purchase more expensive items from a set of available items which could be upgrades or other

add-ons so that the seller can make a more profitable sale while benefiting the customer with

marginal discounts. Wellington Pizza Café allows its customers to purchase a certain variety of

foodstuffs, beverages and drinks at certain discount prices to enable the restaurant benefit from

increased sales.

Promotional specials: Wellington Pizza Café offers promotional specials during certain

periods of the year such as during Christmas holidays and also as offers for new foods

introduced. This could be offered as either a temporary price reduction on the original price of

the item of a menu or as a seasonal menu item. This would be effective for the business because

when customers understand that certain particulars offers are available for a short period, they

will rush to purchase them which helps us in increasing sales and generating revenue.

Promotional specials can as well be offered on some particular days of the week as may be

decided by the management.

Customer loyalty programs: One of our important marketing strategies is word of mouth.

Wellington Pizza Café recognizes regular and loyal customers and guests and will seek to

increase the number of repeat customers by rewarding the loyal customers who regularly visit the

restaurant. This will be a great incentive to our customers as it attracts them and motivates them

to visit the restaurant even more frequently. Other customer loyalty programs such as free menu
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items, birthday specials and discounts on particular menu items will keep our customers visiting

frequently.

Target Market Description

Wellington Pizza Café's major target market is the New Orleans residents and the entire

US population in general as the business expands to other cities in the country. This will be

achievable by the fact that the company's major marketing avenue is the online marketing

especially through the internet and the social media. Recognizing the fact that there is a lot of

competitors in the US food industry, the company shall aim at creating value for its product by

maintaining quality, offering fair prices and creating good customer relationships across the

country(Cain, 2013). The company shall also target the middle-income earners living in the

suburbs and cities in the United States. The company shall also target both the youth and adults

as it plans to offer a variety of food currently offered by other top restaurants in the United

States.

During the restaurant's first year in operation, the business acknowledges the fact that it

will face stiff competition from the well-established restaurants. Although the restaurant's name

will be new in the market and therefore cannot be recognized by several potential consumers, the

management will invest heavily in marketing the company and the products/services offered for

the purpose of creating a recognizable name and gaining a reasonable market share. Currently,

there has been increasing population in the New Orleans, and this could be an advantage to the

restaurant. Since we shall be relying on the New Orleans population for most of our sales, we

shall utilize the growing population to maximize our sales and generate enough revenue for our

business.
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Brief summary of SWOT and business risks

STRENGTHS WEAKNESSES

 Currently, there is no competitor in 

Lack of adequate finances to expand
the Bourbon Street – New Orleans that our production size and reach
offer exactly the same product. international markets as our
 Our niche is growing and has a great competitors.
potential.  Our name is not currently known
 The members of management team across the country, and
have had experience working in the internationally, thus it is difficult to
food industry, and thus understands find lasting customers.
the market well.  Our management team is
inexperienced with the product and
hence difficult to forecast and make
decisions.
OPPORTUNITIES THREATS

 There is further expectation of further  Competition from the well-established

increase in disposable income which
will most likely be channeled to the
consumption of foodstuffs, including
our product.
 We shall focus on small niches,
neglected by large competitors, hence
we are likely to have a small stable
market locally.
companies such as such Barbeque
Ben's, Hedarys Restaurant, and
Cracker Barrelwhich threatens the
growth of our company.
 It might be difficult to maintain the
quality of our product according to
customer demands.
 It is hard to displace established
industry leaders.

Business Risks

Wellington Pizza Café, as well as its major product, is likely to face various strategic

risks, financial risks and compliance risks. Strategic risks as results of poor industry regulations

and operating requirements. They result from the normal industry operations anytime within the

business. They include shifts in consumer tastes and preferences, and emerging technologies that

must be used by the business, or else the product becomes obsolete(Wikinvenst, 2017). To
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mitigate strategic risks, the business puts in place measures to adhere to the industry changes and

new technological advancements while constantly soliciting for information and feedbacks to

easily detect these changes.

The business’ financial risks relate to the manner in which money is handled in business.

It also relates to the extension of credit to customers and the period in which they are required to

pay. It also includes the debt load of the business and those clients who are not able to pay for

their consumer products. Financial risks also occur due to unfavorable changes and fluctuations

in interest rates and exchange rates(Wikinvenst, 2017). To mitigate the financial risks, the

business plans to roll out a plan for managing credit customers and the criteria for advancing

credits to consumers. The continuous audit will also be conducted to determine defaulted

customers who are required to settle their debts.

Lastly, Wellington Pizza Café’s compliance risks are a kind of regulatory risk associated

with bureaucratic and legislative regulations and rules of the industry. They are related to

investment purposes of the firm as well as the industry best practices. They include the business'

failure to adhere to the employee protections regulations and safety and health regulations of the

industry, as well as environmental protection regulations set for the industry. The business plans

to mitigate these risks by adhering to the rules and regulations of the industry.

Management structure include organizational chart only

The top management of the Wellington pizza restaurant would involve four key

personnel: two divisional/departmental managers, one human resource manager and one person

in charge of finance. The two divisional managers also act as operational managers in the two

major divisions of the restaurant- the restaurant and the bar. The two are also the general
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managers of the restaurant because they are the major shareholders as a family. As the restaurant

grows, the management will be divided into specialized positions to create more efficiency. The

four management personnel are:

Kevin Smith: Kevin Smith holds a Bachelor's degree in Business Management and a Master's

degree in Business Administration coupled with 20 years' experience in Real estate industry

where he worked as a line manager for ten years and as a general manager for five years. Earlier

he had worked as an operational manager for two years at Datacom Inc. This means he has close

to 30 years' experience and therefore, he qualifies for the position of division manager in the

restaurant. In the restaurant, Kevin Smith is a joint owner of the business with his wife, Angela

Smith. Kevin Smith is the head of Bar Division in the restaurant and also acts as the general and

operation manager in the meantime.

Angela Smith: She is the head of the Restaurant Division in the business. Together with Kevin,

they act as general and operational manager so as to drive the growth of the restaurant because

the two are the joint owners of the business. She holds a bachelor's degree in Business

Management and currently undertaking a master's degree in Project Management.

Andrew Riise: Humphrey Turner is the Human resource manager in the firm, managing

operational employees on a day-to-day basis. He also recruits and arranges training programs to

new employees.

Maryanne Williams: She is the finance manager in the restaurant. She holds an undergraduate

degree in Business Administration and six years' experience in the accounting sector.

Keys to success and conclusions

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For the restaurant to succeed in its operations and increase its profitability, there is the need to

device appropriate strategies for success. The following are Wellington pizza café's keys to

success.

I. Repeat business: The business will always want every customer who comes to the

restaurant to come back again and recommend the restaurant to others around. In other

words, we want to build a good business reputation in the public such that every customer

who visits our restaurant goes back with good image and information about us. This helps

the company in marketing, thus increasing our market share, sales, revenue generation

and profitability.

II. Top notch chefs and training programs: To offer quality services to customers, the

restaurant will undertake to hire top notch chefs and also train them regularly so as to

keep their chef on top. Also, the restaurant will pay favorable salaries and wages to these

chefs to ensure that we retain them and continue offering quality services to clients.

III. Location and Convenience: Convenience is essential to customers and for us too. The

restaurant needs to be close to the market and as accessible as possible to allow clients

reach us without problems. If customers get to travel far to reach us, they will deflect to

competitors who could accessible. Therefore, we need to get close to the market.

IV. Provide variety: The restaurant will attempt to provide a wide variety of foodstuffs,

beverage, and drinks to customers. This will provide them with required choices, thus

enabling them to choose.

V. Pricing: Pricing is the most critical secret to a business success. Although the business

wants to make profits, the interest of the customers will also be considered. If we price

our services and products too high compared to competitors, we shall loose the market to
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them. Again, if we reduce the prices by a larger margin, we shall operate at a loss, which

will make us close down. Therefore, the best strategy is to consider the going conditions

in the market, company pricing policy and the condition of the consumers while setting

favorable prices.
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References

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Wikinvenst,. (2017). RISKS RELATING TO THE FOOD SERVICE INDUSTRY for

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d_Service_Industry