Small Business: Restaurant Case Analysis

Introduction

Within the frame of my individual project, I focus on the tertiary business sector (Chaulagain 2015). In this report, I use the data retrieved with the help of an interview with the owner of a small restaurant business in the United Kingdom, Ustar Ali. He and his son Saidur Rahman own a family business, an Indian takeaway called Saffron near Redhill Station. My interviewee has a vast experience of work in this sphere. Nevertheless, they have not updated their business plan yet, and there is a need to study their situation and provide them with advice on best practices that can strengthen their positions. Apart from that, it is important to provide the recommendations on improvements related to technologies of delivery and advertising methods.

Industry Choice Rationale

According to the report prepared by De Angelis (2013), restaurant industry remains one of the most successful in the United Kingdom; it is worth more than forty million pounds. As he states, there is a growing demand for newer types of services such as takeaway restaurants, and this fact also justifies my industry choice. As it is clear from the recent tendencies related to the industry, consumers in the United Kingdom are becoming more likely to curb expenses in other areas in order to be able to visit restaurants every week.

In reference to the choice rationale, it is necessary to state that, due to certain knowledge gap concerning this very type of restaurant service, there is an urgent need for further research on strategies used by small restaurant owners and specific business challenges they are supposed to face (Chen & Elston 2013). In this sphere, the quality of products must be strictly controlled, and it acts as an additional peculiarity increasing the risks of failure (Llach, del Mar Alonso-Almeida, & Bagur-Femenías 2013). As for its importance for the economy, the presence of popular small restaurants may often help to attract more tourists and, therefore, to strengthen economic positions of particular cities and get more opportunities for further development. Although there are industries employing more people (such as entertainment industry involving a range of diverse companies with large income) than restaurant business, the development of the latter is also supposed to be a factor helping to address the challenges related to low occupational levels. Apart from that, speaking about small restaurants, it is necessary to understand recent tendencies and issues associated with it. The most important issues related to the sphere include the problem of seasonability and expenses caused by special recommendations on products’ storage. In addition, such business is often associated with very high quality standards due to high levels of competition that is not always fair due to growing power of chain restaurants known all over the world. The opportunities and threats for the industry are the following:

Ideas and Opportunities, Feasibility

Ideas and opportunities remain an important part of any business because they allow entrepreneurs to define their goals and develop strategies (Hoyte, Noke & Mosey 2016). Ideas are something unreal but they may involve certain components or facts that already exist in reality (Zimmerer, Scarborough & Wilson 2005, p. 42). It sometimes happens that newer ideas involve the use of well-known concepts in different ways that may help to solve urgent and common problems (Alvarez 2016). Business opportunities are circumstances helping to implement the ideas and achieve certain goals that have been defined (Gruber, Kim & Brinckmann 2015, p. 206). All business opportunities are supposed to give an entrepreneur a chance to attract more clients and fatten the profits (Heck, Rogers & Carroll 2014, p. 186). Unlike ideas, business opportunities involve rudiments of plans used to implement newer practices. Nevertheless, supposed opportunities often turn out to be a dissipation of time (Palo & Tähtinen 2013, p.773). As for business ideas in the context of a small restaurant business, they may be related to starting a takeaway business with the use of newer practices to attract clients and obtain an advantage over business rivals. Business opportunities are defined with regard to certain tendencies on the market and preferences of target customers (George et al. 2016, p. 310). For instance, Ustar Ali and his son used an opportunity related to people’s interest in Indian food and the fact that delivery is very convenient for customers. Because it is clear from recent reports, the idea of a takeaway restaurant is popular and viable (Takeaway & fast-food restaurants in the UK: market research report 2016). Such business idea remains really viable and feasible.

Benefits and Challenges of Operating a Small Business

There are a lot of positive and negative things related to operating a small restaurant business. As for benefits of having a small business in the discussed sphere, it is necessary to remember that it does not require a very large start-up capital investment (Cacheche, Santos & Akabane 2015). Also, it is much easier to control processes and keep reports for those owning small business. A restaurant business also involves a lot of important decisions related to acquisitions, restaurant menu, delivery, prices, and other things; a small business involves a simpler structure, and this is why such decisions are usually made and implemented faster (Ibrahim, Dumas & McGuire 2015). Besides, if you own a small business, it is much easier to control employees and ensure that nobody tries to violate the rules (Goss 2015, p.6). Further, employees in smaller companies usually feel better and it may also improve the quality of their work. As for challenges of operating a small business, they include the minimum owner’s financial resources that may prevent the company from further development (Barber, Metcalfe & Porteous 2016, p. 26). Also, it is harder for smaller companies to withstand their business rivals possessing more money and influence (Sahut & Peris-Ortiz 2014). Due to the fact that activity of smaller companies is connected to constant financial risks, it is more difficult for them to take out loans (Storey 2016, p. 235).

The particular areas that I would like to study more thoroughly are operations and marketing. As for the business that I have chosen, there are a lot of operations related to it (indicated in the picture below). The analysis of business operations is needed to define whether different parts of the company fulfil their functions properly (Jogaratnam 2017). It may be supposed that Saffron’s owners act in accordance with core competency theory that prescribes relying on strong points to get competitive advantage; in their work, they tend to devote more time to cooking itself, and this is what makes their food popular. According to the answers of my interviewee, the structure of a takeaway business that I study is quite simple: there are two owners who act as equal business partners, one principal assistant, a few members of kitchen staff, and delivery drivers. According to my interviewee, the business processes related to the activity of the discussed company appear to be quite lean; the responsibilities are properly distributed among the employees. Although the number of staff members is quite small, it is enough to take orders, stock up with products, cook dishes, process the orders accepted, and deliver the food to clients (Wellton, Jonsson & Walter 2016). In general, it can be stated that the primary concerns related to operations planning are division of labour among ones working in the kitchen at Saffron and technical problems decreasing the speed of cooking, order processing, and delivery. Different devices are used to mitigate the influence of these factors; Saffron’s management have started using a new order-taking device helping to improve delivery time. In particular, they have managed to increase efficiency of the final operation, such as delivery (Cheng, et al. 2015). Therefore, it becomes easier for the company to satisfy clients and encourage them to recommend Saffron to their friends and relatives.

The second aspect of business that needs to be considered is marketing, which remains one of the core components of success (Alford & Page 2015). Saffron does not have an updated business plan and the measures that it takes in order to attract customers do not involve new and popular ways of advertising, such as the use of social networks (Taneja & Toombs 2014). The scheme below demonstrates that there are a lot of components that should be presented to increase popularity of the company and attract new clients. There is no doubt that implementation of all information mediums indicated it would be the best choice for the company (Morris, Allen & Wagner 2015). As it is clear from the analysis of marketing operations, Saffron primarily focuses on collaboration with customers without functional middlemen and this is why an increased attention should be paid to advertising. Nevertheless, during the interview, Ustar Ali mentioned only the use of printed pick-up materials and word-of-mouth-marketing (Groeger & Buttle 2014). It can be stated that the employees fulfil their functions really well because the company uses only a few marketing tools and still remains a competitor for other takeaway restaurants in the area.

SWOT analysis in the context of marketing may be important to understand Saffron’s marketing situation better (Sigmon 2014). Thus, strengths of Saffron are related to its ability to attract customers without the use of combative advertising (Garthwaite 2014). The weaknesses lie in insufficient use of the Internet and social media to promote the service (Behboudi & Hasanabad 2015). As for threats, the company may be swallowed up by businesses using these means to appeal to the target audience represented by young people. In the end, the opportunities are represented by the fact that Saffron is the only company selling Indian food; other takeaways on the street specialise in other cuisines. Saffron’s marketing strategy is not developed with regard to the wide range of channels of information, and this is why additional measures may be needed. As for further growth, it does not seem to be one of the management’s primary goals.

In the end, it can be said that Saffron is a company whose employees manage to meet the expectations of their clients (food quality) and this fact allows the company to stay the course. At the same time, many things are to be improved when it comes to its marketing strategy.

Internal and External Factors Influencing Saffron

Analysing performance and market position of any company, it is important to pay attention to the wide range of internal and external factors influencing it (Trienekens, Romero & Cuenca 2016). To begin, it is important to define the areas of operation that present strengths and weaknesses of the company. With regard to the information reported by Ustar Ali, Saffron remains popular among the clients because it is one of the few companies selling Indian food in the area (Appendix A). Because the company is really small, there are no employees whose responsibility or professional strength is open to question (Assarlind & Gremyr 2016). Apart from that, the company tries to rely on popular dishes. As for the weaknesses, they lie in the fact that the company primarily ignores the use of additional sources to promote the services and enlarge the company. Activity and further development of a company may be defined with the help of different tools, including core capability matrix working with the most important missions (Yang 2015). According to value chain concept, primary activities are represented by operations and sales; although development of technologies is regarded as the secondary activity, I suppose that Saffron should pay increased attention to it (Helo, Gunasekaran & Rymaszewska 2017). According to VRIN model, Saffron does not possess products that are unique and inimitable although the situation changes if we analyse it at a small scale – Saffron’s competitive advantage is primarily based on a lack of Indian cuisine restaurants nearby (Keegan & Campus 2016). According to the concept proposed by Porter, there are five factors that need to be considered to define proper strategy; as for the two primary components, there is a real threat for Saffron that newer companies can appear and sell the same products due to their popularity (Qi, Sun & Chen 2014). As for product vendors, they are not going to pose such a threat as Saffron uses quite common products to prepare dishes. The situation is more dangerous for Saffron when it comes to competition with other takeaway restaurants because the former has no effective advertising strategy (Valvi & West 2015). Speaking about external factors that influence activity of this small business, it is necessary to use the PESTEL system (Anton 2015). As my interviewee stated during our conversation, he feels that political and legal factors influence his work most of all; at the same time, the importance of social factors, including changing lifestyles, should not be underestimated (Hassan et al. 2015). Nowadays, more people prefer using the Internet and mobile applications to make orders, and this is why the company should reconsider the way it works with clients (Harrison, Flood & Duce 2013). In the end, there are many internal and external factors influencing the company, but the major problems that need to be paid attention to include advertising and the use of innovations to increase Saffron’s competitive advantage.

There are a lot of qualities that people should possess in order to be called true leaders. In the first place, leadership is related to people’s ability to be responsible not only for their own actions but also for mistakes made by their followers (Barry 2015). In general, it can be said that leadership and management present two notions that are often used together, and it happens due to a strong connection between them (Răducan 2014). If we speak about leadership qualities, it is necessary to understand that they also depend upon the leadership style that has been chosen by the particular entrepreneur. In general, leadership styles are chosen based on certain aspects of personality that entrepreneurs possess (Solaja, Idowu & James 2016). At the same time, choosing the style that will help to improve the performance of the company and gain a competitive advantage over the business rivals, it is important to pay attention to differences between the leader and the followers related to their skills. It sometimes happens that the leader knows which measures need to be taken to control the company and prevent possible problems, but he or she has no advanced knowledge of some processes related to the sphere, whereas the followers are very skilled (DuBois et al. 2015). In this case, it is necessary to choose a more democratic style or even let the followers make their own decisions. If the situation is opposite and the leader is far more skilled than the followers, it is necessary to choose such option as autocratic leadership where all business processes depend upon the leader’s decisions (De Hoogh, Greer & Den Hartog 2015). As for my interviewee, I suppose that he prefers affiliative management style because the system he uses to manage his small business involves mutual support and fair distribution of responsibilities among the employees. The most common leadership styles are shown in the picture below.

Specific qualities small business owners should possess include emotional intelligence, good communication skills, responsibility, experience, and breadth of knowledge (Ionescu & Bolcaș 2016). There are a few components of emotional intelligence such as self-awareness and empathy and I suppose that my interviewee has all of them except for motivation because he does not appear to be interested in coping with new technologies, such as the Internet to improve the performance of the business. Also, I would like to notice that my interviewee has a vast experience in the area and it helps him to stay successful.

There are many factors that define the success of a small business. If we talk about internal ones, successful entrepreneurs have a lot of clients, their popularity appears to increase due to customers recommending a service or a product to their friends, and their products and they can easily implement newer practices that become popular among businesspeople in this sector (Chowdhury, Alam & Arif 2013). A small business that can be called successful is able to grow due to a skilful leadership of its owner and concerted efforts of employees who devote their time to it (Guchait, Lei & Tews 2016). I suppose that both leaders (Ustar Ali and his son) and seven employees working for them fulfil their functions properly, but there is one factor that can prevent Saffron from further development. This factor is certain old-fashionedness and an excessive attention paid to the use of traditional advertising methods (such as leafleting).

Apart from these factors, there are certain measures uniting employees. Team building practices may help to improve a psychological situation in the company, make employees’ work more coordinated, and teach them to develop mutual assistance (Karmakar & Paneerselvam 2014, p.15). There are five principles of team building proposed by Belbin; the team can be called successful when the roles are clearly distributed with regard to personalities and strengths of the employees, and technical resources used help to maintain such systems (Burke & Barron 2014, p. 189). Unfortunately, I did not have an opportunity to conduct an interview with the employees of Ustar Ali and his son to ask them whether they use team building practices. Nevertheless, as it follows from the statement made by the owner, he tries to maintain order when it comes to distribution of responsibilities; at the same time, he also tries to fulfil certain tasks for his employees once they are pressed in time.

Reflections

Among the challenges related to the research, there was a lack of exact information on activity of the discussed company and its financial results. The primary problems influencing management itself are connected to the failure to use the range of means in order to advertise Saffron. Besides, there is a problem related to the fact that the company does not apply newer technologies related to the delivery with the help of various services such as UberEats.

Thus, I suppose that this experience has enhanced my understanding of processes within restaurant business as I had an opportunity to have a conversation with an experienced specialist related to the sphere.

Speaking about lessons that may be derived, I suppose that the owners of Saffron should pay more attention to the use of different information channels in order to promote the products and differentiate their takeaway from other companies selling Indian food. Therefore, the company owners may use such means of communication as the Internet (for instance, try email-marketing) and social networks (Hartemo 2016). As for the latter, it is possible to create communities in order to unite people who are established clients of Saffron takeaway. Besides, it may be necessary for its owners to improve technologies related to orders’ delivery and start collaborating with popular food deliverers to increase the number of clients and deliver orders faster.

If I were supposed to conduct similar research with regard to another company, I would try to use this experience to improve my performance; in particular, I would try to choose the company with open financial reports in order to implement this element into the research as well.

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Appendix A: Questionnaire

Q1. Can you tell me a bit about your business concept? (A brief description about your business)

A1. My business is an Indian takeaway. We cook our food from scratch with the mixture of Bengali and Indian traditional cuisine.

Q2. How long have you been in business? In this business? In other businesses?

A2. I’ve been in the restaurant/takeaway business for 5 years, I’ve also been involved in other aspects of business such as the property market; I have a few properties that I own and they are out on rent.

Q3. What type of business form do you have, sole proprietorship, partnership, corporation?

A3. Partnership, me and my son.

Q4. What are the advantages of this form of business ownership?

A4. It is really flexible for both of us, me and my partner (son) share the same vision.

Q5. How did you get started in this business?

A5. I am a food lover and I love my traditional Indian and Bangladeshi cuisine. So it is my passion and something I was always interested in.

Q6. How did you get the background and skills necessary to run this type of business?

A6. I worked in this type of business environment in my teen years so I had a lot of knowledge and skills that I have attained. And my chef (brother-in-law) has always encouraged me to get into business with him because he has many years of experience in this type of industry.

Q7. How do the social, economic, environmental, technological, legal and political environments impact your business?

A7. It has a massive impact on my business, especially with the legal and political factor.

Q8. Do you know who your competitors are?

A8. We are the only Indian takeaway in the street but our main competitors are a Chinese takeaway.

Q9. How do you market your business? How are people aware of your business?

A9. We do leafleting every weekend in the ten radios where our takeaway is located. We also have our loyal customers who help us get more customers through word and mouth.

Q10. How has technology, such as computers and the internet, impacted on how you conduct business?

A10. We have a new order take in device which is very helpful; it is really efficient and improved our delivery time. We are not involved with Just Eat or Hungry House.

Q11. Why is your business located at this site?

A11. It is near the main street and the main station is literally two minutes away. We are located where there are many local residences.

Q12. Do you have a business plan to operate your business?

A12. We don’t have an updated business plan.

Q13. Do you have employees? How many?

A13. Seven employees.

Q14. Do you do marketing for your business?

A14. Leaf letting and word and mouth.

Q15. What is your management style?

A15. I am a hands on person, I am involved, I help out my employees when it gets busy. I have standards that I have set my staff.