Be Our Guest

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Be Our Guest, Inc. Case Analysis

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INDEX

1. Key success factors & company performance…………………………………………………..3 2. Bank perspective regarding the performance…………………………………………………..7 3. Bank financing perspective at the end of 1998……………………………………………….10 4. Management perspective regarding the bank financing………………………………….13 5. Exhibit 1 – Annual Income Statements (1994-1997)………………………………………17 6. Exhibit 2 – Annual Balance Sheets (1994-1997)……………………………………………..18 7. Exhibit 3 – Quarterly Income Statements 1997……………………………………………….19 8. Exhibit 4 – Quarterly Balance Sheets 1997………………………………………………………20 9. Exhibit 5 – Forecasting………………………………………………………………………………………21 10. Exhibit 6 – Annual Ratios………………………………………………………………………………….22 11. Exhibit 7 – Quarterly Ratios……………………………………………………………………………..23

Tudor Team Five

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1. What are the key success factors in this equipment rental business? How has the company performed the past few years?

Key Success Factors Five of the key success factors are as follows:

First, the location of the business is ideal for handling several projects at once. This is due to their central Boston location. The ability to handle

several projects at once gives the company a competitive edge and allows them to attain a performance as close to the full potential of the company as possible.

Second, the company’s leaders have been successful in networking to primary and secondary clients. This has aided in growing a business that is

based on a foundation of good company/client relationships. These strong relationships have led to significant repeat customers as a strong basis of the company’s revenue. Fostering these relationships throughout the years of the company’s existence has also led to sustained revenue growth year after year. This revenue growth is shown in the financials and, using the

Compound Annual Growth Rate, it can be seen that this growth in revenue has been 14.26% from 1994 to 1997.

Third, the executive management is well experienced in the hospitality industry as well as other industries that relate to the successful operation of a business. Stephen Lizio was involved in the food and wine business prior to founding Be Our Guest in 1983. Al Lovata was previously a banker and

began his relationship with Be Our Guest as a financial consultant, later joining the organization full-time as the Chief Executive Officer. Lizio and

Lovata together form a foundation of strong knowledge of the hospitality

Tudor Team Five

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business and the vital knowledge of finance, thus giving the business a core of understanding both its industry and how to manage the money coming into the company. Simone Williamson was brought on to the team and

comes from years of experience in the food service business. She also came to the company with strong networking connections in the catering industry in Boston, which further reinforces the second success factor described above. This management team is made up of members that complement

each other’s strengths, as well as provide the necessary skill sets for running a successful business.

The fourth key success factor is that the company identified its business plan early on and held its course throughout the years without deviation to business expansions that would have resulted in higher profits but fewer turnovers. This can be seen in the company’s analysis of the potential of The executive team determined that this

entering the tent rental market.

market, though highly profitable, would result in time delays and longer turnovers and would split their core business. The team recognised that this split could result in lower profitability and splintering of the core business structure. Rather than expand into a low profit margin business "tents", in which the management lacks market expertise, they chose to stick to their initial business plan and focus on their key strengths rather than deviate from the...
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