Feasibility Study Coursework

Feasibility Study Coursework

Introduction to The Business Idea

The feasibility study covers an analysis of a business concept’s viability before venturing or starting operations. The business idea selected for this assignment is a gourmet restaurant. The gourmet restaurant will focus on serving fine food and drinks encompassing international cuisine, sandwiches alongside baked bread famously known as Brioche. Brioche is described as a French bread with rich golden brown and decadently buttery crust with a high proportion of fat, butter, egg yolks, which explains the soft flaky and crumbly texture of the bread (Markowska, Rögnvaldur, & Wiklund, 2011, 56). The business concept is unique and entails significant levels of creativity. The restaurant idea, coupled with creative international cuisine and various marketing ideas, enhances the clarity of the business scheme, which ultimately promises a positive return for the investors and stakeholders as a whole.

The gourmet restaurant business focuses Brioche bread as the signature product consisting of a dry and wet kitchen and a bar overlooking the lower seating areas of the layout. The restaurant would have a spacious seating space partitioned into two floors with an arrangement, including a normal table setting, coach, and high seating structure. The primary product and services in the restaurant revolve around selling gourmet delicacies and drinks to customers from different regions around the world. The gourmet restaurant business feasibility study covers the market research targeting to determine eatables on the basis of demand and supply and food market trends. The business setting would be a London urban market region targeting clients from across the world. The restaurant will have a soft opening to teste the market with its varied menus to evaluate the final product before the grand opening of the business.

The purpose of the feasibility study is to assess the viability and sustainability of the business idea economically. It is inevitable to establish whether the business idea is worth the work, investment, and risk factors associated with venturing into the business. Some of the primary objectives of conducting a gourmet restaurant business feasibility encompass description of the sandwich industry, market analysis, financing sources, marketing strategy, pricing strategy, and description of the competition and target customers.

Products and Services

The proposed business idea is the gourmet restaurant business. Gourmet products are associated with high-quality food delicacies and beverage drinks. The gourmet restaurants from around the world are associated with people of a certain social class and culture with the slightly higher product and service prices because of the quality the business offers to the clients. This kind of business has high care, authenticity, and quality of products and services. The restaurant requires staff and employees with expertise, talent, and skills to deal with the products, food, and beverage preparation processes that accumulate to influence customer experience with the restaurant (Curtis et al., 2008). The gourmet products are becoming mainstream due to the consumer’s social class and education status and have global experience and exposure to more established high-quality food and drinks restaurants. To improve the quality and uniqueness of the business, the Brioche bread would be homemade to give customers a unique taste and a memorable experience.

Market Research

The market research for the gourmet restaurant will encompass the social and opinion research with systematic data collection and interpretation processes. The market research seeks to capture information about individuals, entities, and NGOs using applied social science tactics to promote decision-making process of the restaurant management. The goal of market research is helping the restaurant to gain a competitive advantage to stay ahead of competitors in this industry. It is vital in identifying techniques deployed in evaluating and analyzing of secondary and primary data that influence decisions in the restaurant business management.

Market research help in finding information about the market demand and supply of the restaurant products based on the estimated population of the region. It is from the evaluation of the population that the restaurant management makes decisions regarding production mix, capacity, and scheduling of human resources for optimal output. Demand describes the consumers’ willingness and desire to buy gourmet food and drinks at a given price. The factors influencing demand to encompass population growth, tourism, and business/foreign visitors’ trips over a given period like a year, customer growing awareness of healthy eating habits, and lifestyle culture of London. The last known population size of London is estimated at 9,304,016 in 2020, according to UN World Urbanization prospects, representing a population growth rate of 3.1% (Markowska, Rögnvaldur, & Wiklund, 2011). the market for the business large enough, especially with the vast influx of visitors to London from across the world. The city is also a home of many vital events, conferences, games, and ceremonies that increases the market base for the restaurant products and service demand.

Based on the population size of London of more than 9 million people that are expected to increase due to visitors, the food industry has a viable demographic to succeed as a business. The growing technology and innovation in the world have intensified competition in different sectors of the economy. Restaurants are not exempted because they form a vital part of any culture. There are many competitors in the London market offering a different variety of dishes. However, there are few, if any offering a highly specialized product similar to the gourmet restaurant business. Therefore, the competition will be more from substitute dishes rather than direct gourmet food and drinks products and services the business will be engaging in this market.

Financing Requirement and Sources

The sources of capital to start the business is covered in this section. Starting a business requires funds to cover the expenses and purchase of equipment to use in the restraint. According to the estimate of the business proposal for the restaurant, Gourmet Restaurant’s business start-up requires $5.2 million to start to operate. The amount encompasses the finance required to rent the restaurant facility or premises, purchase of machinery and equipment, which includes dough mixer, Proofer, Rational 5 senses white efficiency Oven, and Coffee Maker 2 outlets semi-automatic. Other equipment includes Refrigerator, Fraser, Blender, Sous Vide Machine, Fusion chef pearl professional sous vide immersion circulator 220V, Induction heater, and Mixer, among others. The restaurant will require furnishes like chairs, tables, stands, among others, and cookery. The expenses covered include the designing, renovation branding of the facility for the restaurant’s location.

The source of the funding is diverse. Raising the capital to start the gourmet restaurant is not an easy task because of the challenging economic situations in society—the sources equity financing, debt financing, and lease financing types. The equity financing involves using ownership rights of the business to solicit for funding. For this project, the sources of equity funding include personal savings, which include profit sharing, real estate equity, cash value insurance policies, and early retirement funds. Other equity funding came from friends and relatives, government grants, angel investors, IPOS among others. The other source of financing used to raise the capital is debt financing which refer to borrowing finances from creditors with terms of repaying the borrowed amount plus interest at stipulated future period (Norrman, & Pettersson, 2010, 7). Two debt financing was used include loan from friends and relatives, and a loan from a commercial lender. The final source of financing for the restaurant project was leasing the tangible asset or building space for operating the business based on the signed legal agreement with the property owner. It is critical because it does not tie up funds that would otherwise be used to purchase the restaurant facility that is very costly.

Marketing Plan for The Business   

The marketing plan targets to create market awareness of the restaurant and the services and products it is offering to the customers. The gourmet restaurant in London marketing plan is organized in different elopements encompassing vision, goals, purpose, among others.

Gourmet restaurant in London is a place that families, friends, and visitors organized around common love and special meal for a unique experience. The restaurant transcends a theme of putting real heart into client service and quality of food product to capture unique beautiful memories of a lifetime. Marketing goals of gourmet restaurant include achieving a revenue of $2.5 million annually withing the first three operational years and opening a second restaurant in 5 years’ time (ElQuliti, & Elalem, 2018, 9). the strategic goal of the gourmet restaurant is to become the best restaurant in country and beyond by end of three years. Also, the tactical goal includes implementing customer loyalty programs, customer feedback systems, and staff incentive systems such as bonuses. The purpose of the marketing of gourmet restaurant is creating a fun and comfortable environment that brings all kind of people from all walks of life to experience the unique tastes of the products.

Marketing is critical for the business to succeed in the highly competitive market. the marketing effort target to create a permanent picture of the restaurant in the mind of the customer. Many of new customers coming to the gourmet restaurant in London are referred by the existing customers and visit the website to check it out (Norrman, & Pettersson, 2010). The marketing plan targets to have an efficient website of the restaurant that is attractive and informative, easy to navigate so as to influence the decision of the potential clients visiting the website. In this modern era, employing new technology in marketing is critical to create public awareness of the restaurant and the products on the menu to increase the traffic in the facility. online marketing strategies through advertisement, social media marketing, and product promotion marketing efforts that target to increase customer base of gourmet restaurant (Pearlman, 2013, 21).

The restaurant staff and employees need sharp training to exhibit high standard of skills, experience in customer service to boots level of customer satisfaction. for instance, gourmet customers are treated with respect and care to achieve customer happiness and satisfaction because satisfied customer comes again and tells about the restaurant to others

Pricing Strategy

Setting gourmet restaurant menu prices is critical because it entails assessing different factors including costs of food staff, labor, competitors prices, and target customer willingness to pay a certain price for a given dish (McCall, & Lynn, 2008, 89). In the restaurant industry, a pricing task requires periodical price reviews due to changes in the industry, market price and customer mood fluctuation among others. menu pricing is the process of computing the3 prices at which different dishes on the menu at the restaurant would be sold. One of the factors to consider ion menu pricing is the direct costs which include direct cost of raw materials used to prepare different dishes on the menu. The cost of ingredients, cost related to food wastage, and portion size costs are what constitutes the direct costs influencing menu pricing (Pavesic, 1989).

Other factors include indirect costs encountered in the course of food preparation. For instance, the cost of tableware, lighting, cutlery, water supply, ambiance among other are included in the indirect costs along with labor expenses as salaries. overhead costs are the other factor influencing menu pricing and includes marketing budget and renovation expenses of the restaurant. Other factors include seasonal costs, service costs, competitor pricing, and customer psychology influence menu pricing strategy in a restaurant (Hair et al, 2008, 12). Calculating menu prices for different dishes entails assigning a percentage of each factor influencing the price to derive a percentage of profit the restaurant gets.

Gourmet restaurant will use cost plus markup pricing strategy to price its menu. It involves understanding the concepts of markup percentages, gross profit, and net profit percentages derived from cost used to make the dish and adding markup cost based on the percentages to get net profit percentage (Miller, 1992, 12). When the price is derived, then introduce other factors to be considered in finalizing the pricing decision including industry leader pricing, competitor pricing, and customer psychology.

Summary and Reflection on Your Learning

Different lessons to learn are prominent across the feasibility study. First, I learned that any business idea is viable if implemented using the right resources, place, and timing. The most significant aspect of the feasibility study is evaluation of the market research to understand whether the business idea feats in the market, can it survive the existing competition, and the barriers to entry into the industry. sourcing capital depends on the individual’s determination and desire to implement the business idea as there exists different financing sources including personal equity, debt financing and leasing financing. Also, learned that product pricing is influenced by different factors and market forces including customer psychology, costs involved, industry market leader pricing, and competitor pricing systems shape the pricing of the product.

Conclusively, the feasibility study explores the various aspects of a business idea, restaurant business in this case, to assess its viability and practicality. Based on the findings, the gourmet restaurant business idea is viable to implement. With proper restaurant management skills and expertise, and recruiting the right experienced staff team, the business would be expected to flourish and generate profits for the shareholders. The aspects of the feasibility study covered include the explanation of the business idea where the restaurant idea was introduced and evaluated. Market research assess the viability of the idea in terms of potential market for the produce from the business. other aspects include capital expected and financing sources, the marketing strategy, product pricing (Menu pricing) form the elements deployed in understanding the concept to determine its viability in the market.

References

Curtis, K.R., Cowee, M.W., Havercamp, M., Morris, R. and Gatzke, H., 2008. Marketing local foods to gourmet restaurants: A multi-method assessment. Journal of Extension, 46(6), pp.16-24.

ElQuliti, S.A. and Elalem, A.G., 2018. Feasibility Study for Establishing a Restaurant in Jeddah. American Scientific Research Journal for Engineering, Technology, and Sciences (ASRJETS), 40(1), pp.143-167.

Hair, J.F., Celsi, M., Ortinau, D.J. and Bush, R.P., 2008. Essentials of marketing research. New York, NY: McGraw-Hill/Higher Education.

Kiefer, N.M., Kelly, T.J. and Burdett, K., 1994. Menu pricing: an experimental approach. Journal of Business & Economic Statistics, 12(3), pp.329-337.

Markowska, M., Rögnvaldur, J. and Wiklund, J., 2011. Contextualizing business model development in Nordic rural gourmet restaurants. The handbook of research on entrepreneurship in agriculture and rural development, pp.162-181.

McCall, M. and Lynn, A., 2008. The effects of restaurant menu item descriptions on perceptions of quality, price, and purchase intention. Journal of foodservice business research, 11(4), pp.439-445.

Miller, J.E., 1992. Menu pricing and strategy. Van Nostrand Reinhold.

Norrman, M. and Pettersson, L., 2010. Gourmet restaurants and small-scale food production-Swedish rural and urban regions.

Pavesic, D.V., 1989. Psychological aspects of menu pricing. International Journal of Hospitality Management, 8(1), pp.43-49.

Pearlman, A., 2013. Smart casual: The transformation of gourmet restaurant style in America. University of Chicago Press.