Food for Fork Case Study(1)

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Module 1 – Data Analysis Report: GROUP A

GSBS6002: Foundation of Business Analysis
Module 1: Data Analysis Report
Food For Fork – Case Study
Michael Jenkins is a restaurant supply sales representative. He works in a large metropolitan area and calls on many of the restaurant owners in the city. His dream is to one day own his own r estaurant, which he wishes to call “Food For Fork” . He has substantial savings from his restaurant supply business and has r ecently gone over some financial figures with his banker. He and the banker both agree that he had enough capital to get serious about investing in his dream.

Michael dreams of a fine, upscale restaurant featuring the finest entrées, drinks, and desserts in an elegant atmosphere.

Foundation of Business Analysis

He knows that, although he has learned quite a bit about restaurant operation in his area and also quite a bit about upscale restaurants, he is not sure if there is an intere st in his city for such a restaurant. Even though the metro area is nearly 500,000 in population, he has no assurances that there are enough persons with the income and tastes necessary to make his business successful.

He needs some additional informatio n whether a market exists for his service. There are also other decisions for which he feels he needs additional information. He is not certain how to promote the restaurant in his town. Where will he promote the r estaurant when he first opens? Also, there are many choices to make about the design of the restaurant, the price the market is willing to pay for an upscale entrée, the best location, and so on. Michael Jenkins recruits a research firm to help him make decisions about opening an upscale restaurant in the area.

Is There Demand for an Upscale Restaurant and at What Price Level? The research company feels that one of the key issues deals with demand. Are there adequate numbers of c ustomers in their metro area to generate profitable revenue? There are big differences in markets in terms of consumer preferences and income levels. Population alone is not a g ood predictor of success.

Michael performs a break-even analysis and the project seems feasible, however he would like some measurement fro m the market, that consumers in the town will support an upscale restaurant. For example, what are they willing to pay for a dinner meal in an upscale


Module 1 – Data Analysis Report: GROUP A

restaurant? He made assumptions for the price per meal in the break -even analysis but doesn’t have any data to support them.
The research company told Michael , “If we can collect valid and reliable information on likelihood to patronize your restaurant, average amount spent in restaurants per month, and the average price to be paid per entrée, we can create a much more accurate break -even analysis and compare that with the number of patrons you can expect. This is the information we need in order to deter mine if you will have adequate demand for restaurant.” In fact, the research company had already made some estimates of demand using a forecasting model. They told Michael that as long as potential patrons earned a salary of at least $70,000 per year so that they had sufficient disposable income to eat at a high -class restaurant a nd if these same people s pent an average of $200 per month in restaurants and were willing to pay an average of $19 for an à la carte entrée, then the model predicted a very succ essful restaurant operation.

What about Design and Operating Characteristics?
How elegant should the décor be? Should there be live entertainment such as a jazz combo? Should the restaurant have a water view? Should the wait staff be form ally dressed in tuxedos? Should the menu include a variety of choices including exotic entrées not found in other restaurants such as truffles? Would traditional desserts be desirable or s hould they offer unusual desserts served with fanfare such as flaming Ba nanas Foster? And...
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