JM Signature Restaurant Case Analysis Framework

Foundation
Problem/Opportunity: y Successful restaurant owner plans to open new restaurant in entertainment district o The restaurant had recently failed in a location directly across from the Cedarcroft Centre y Joshua is unsure about his new business venture as it appears he's being overoptimistic with regardless with the accountant's calculations which assumed full capacity at all times y He may overstaffed as well considering the high level of expenses his plan faces y He is unsure of his marketing strategy y He loves to cook, doesn t really know how to run a business Stakeholders: y He set a goal of $4M in revenue for first year of operations, which is said to be overly optimistic by his accountant. y Joshua and his reputation, chef and servers Decision Criteria: y How much to spend on advertising y Proceed with business plan taking projected financial performance into consideration or do not proceed with it Criteria: - Cost of advertising mediums vs. advertising budget - Cost of advertising vs. exposure - Compatibility with accountant's assessment - Breakeven analysis

Analysis
Internal: y Strengths o JM is experienced, has a solid reputation with two famous restaurants:  Karma: located in the heart of Toronto downtown business community.  Lynx: focus on French dining trend. o Experienced with Business Clientel and their needs, imaginative menus, high level service and culinary experience y Weaknesses o The new restaurant maybe overlapped with the Karma due to the overlapping of location and target market. o With the Canadian restaurant industry there is approx. 5% failed restaurants in 2000 - Revenue: 2,772,000, Cost: 2,743,600, Profit: 28,400, Breakeven: 1,773,400

No current marketing strategy however previous ventures are targeted for upper class individuals - Marketing mix: o Price: high (greater than or equal to 50 bucks per person) o Place: downtown Toronto o Product: high quality restaurants and great service o Promotion: multiple mediums for advertising o External: y Opportunity o It has a great location with a low lease rate but would have to move quickly to obtain the space o Envisioned renovating the interior to portray a dcor that was French bistro with London Cool y Threat o Business plan to take over the lease of a failed Cape Cod Club that received a threat that it is a horrible location Consumer Analysis: y Consumers that are located in City of Toronto and working 45% above the national average y Attractions around such as SkyDome, first-class hotels, Theatre y Metro Toronto population = 5,016,400 y 17% of that number is above average income level y Financial mosaic: 21% established y Picky, critical, high taste Competitive Analysis: y One of the competitor is Reds which is a bistro located in the First Canadian Place in the heart of Toronto s financial district o Strength: ultra-cool bistro brand attracting young downtown business crowd; opened since October 2000 o Weaknesses: food itself is unappealing and it always packed expect on Saturday y Many already established restaurants in the entertainment district, advertised through various mediums

Alternative Marketing Strategies

y Alternative: Joshua has two choices: o Do not open a new restaurant: manage the two successful ones now and it seems he s too overly optimistic, may be spreading thin instead of focusing on developing 2 really good restaurants, no extra costs or hassles incurred o Open a different styled restaurant such as Japanese, Italian: bad location since it s a New England-like location, would be out of place and not blend in with the area o Hire a business manager to manage his business aspects, it seems he has a passion for food but doesn t really know how to manage a business and improve his current two restaurants o Open a small chic French bistro with London cool instead of a fully-fledged restaurant Quantitative o Advertising Cost Budget to attract initial crowd

On an average full-service restaurant with the revenue of $610,000. 5% are spend on advertising and promotion, which is total of $30,500. 70% of the total amount is spend on advertising, which is $21,350 and 30% of the amount is spend on promotion is $9,150. JM Signature Restaurant advertising cost example y Toronto Star $5,830 y Food & Drink Magazine $10,301 y Radio $600 (Breakfast of 60 seconds) $295 (Drive of 30 seconds) y Internet $4,800 (MIN # for 12 months) y Brochures $8,430 (Hotel) y Total: $30,256

Recommendation
Decision: If he should or should not proceed y Hire a business manager to manage his business aspects, it seems he has a passion for food but doesn t really know how to manage a business and improve his current two restaurants. Expansion right now is not a good idea, there are too many restaurants in the district and just because there is a low lease rate doesn t mean you have to take it.

Implementation Plan
Marketing Strategy: y JMs Signature Restaurant s target market is concentrated segmentation (niche) strategy y Advertise, get the name out of the two current restaurants, keep same positioning and target market since it is successful Marketing Mix: y Product o Every two weeks, chef will create a special signature dish o Special service, customers could choose to have recipes emailed to them to remind them to try it at home y Price o Full service/ higher bull size per person y Place o Downtown across from the theatre y Promotion o Mailing 2,000 postcards to a client o Newspapers and magazines to view the development of the restaurant o Use of Internet to grow popularity by making a website Expected Results: y Maintained sales for Karma, increased popularity for Lynx, Joshua actually getting a sense of business ownership