COURSE: CA Purpose 1
Professor: Davinder Kaur
HOMEWORK ASSIGNMENT: Week #5 Industry Anaylsis and Market Definition
Due DATE: Open
I have chosen to venture into the world of Food Services in particular a Limited Service Restaurant with a mobile food service truck that will provide food to two key target consumers family style dining and the on the go working professional. I have decided to focus on the areas of the food service industry which seem to be an area that turns out failing restaurants quarterly. Primarily location, service, and financial management. These areas can be the difference between a thriving restaurant and failing one. In an article published by Cornell University in 2005 by H. G. PARSA, JOHN T. SELF, DAVID NJITE, and TIFFANY KING most restaurant failures are based in three key areas as follows below:
1. Economic perspective
This category includes restaurants that failed for economic reasons such as decreased profits from diminished revenues; depressed profits resulting from poor controls; and voluntary and involuntary bankruptcies, involving foreclosures, takeover by creditors, receiverships, or frozen assets for nonpayment of receipts.
2. Marketing perspective
This category consists of restaurants that cease to operate at a specified location for marketing reasons, such as a deliberate strategic choice of repositioning, adapting to changing demographics, accommodating the unrealized demand for new services and products, market consolidation to gain market share in selected regions, and realignment of the product portfolio that requires selected unit closures.
3. Managerial perspective
This category consists of restaurant failures that are the result of managerial limitations and incompetence. Examples of this group include loss of motivation by owners; management or owner burnout as a result of stress arising from operational problems; issues and concerns of human resources; changes in the personal life of the manager or owner; changes in the stages of the manager or owner’s personal life cycle; and legal, technological, and environmental changes that demand operational modifications.
However, the article also concluded that the current data stated by American Express that 90 percent of restaurant fail within their first year is a myth. After concluding that the economic simulation data provided by Sydney and many other academic research studies strongly support and show that only 30% of restaurants fail within the first year.
According to the U.S Census for Industry statistics there are only 16,047 limited service restaurants and 213 Mobile Food Service businesses in the NY, Newark-Jersey City, PA metro area. Also The U.S. Census as of 2013 states there are 1.6 million people living in New York City alone which do not include the individuals who commute to and from work. I Plan to launch a limited service restaurant with a mobile food service division that will serve these consumers. Because, there is a need for a restaurant that offers the type of cuisine and the lack of readily available soul food & Caribbean restaurants in the Midtown area that are not a franchise there is a need on the island for this type of cuisine. There are only a few places where you can go to obtain food of this nature which are Sylvia’s in Harlem, New York, Golden Crust which has recently opened up limited service locations in Manhattan in the past 10 years and a few upscale family style dining locations like Amy Ruth’s, Southern Hospitality, and Dave’s. For the most part there is a drastic need for this cuisine but from being a patron of these other restaurants I see the lack of quality ingredients, health conscious menu-alternatives, cost effective menu, and excellent service, which is the most important part of any service based industry.
As a restaurant owner I have learned in my undertaking of my field that what type of entity you open up as is just as important as where, when, and how you open.