(Start-up and growth chain of restaurants)
This case details the start-up and growth of a chain of restaurants in terms of turnover and employee numbers. The vision of the founders was to quickly build a business around a brand name and to take that business to an Initial Public Offering (IPO). Mike Conyers and his Board of Directors established Leonardo’s in 1998, as a solely equity-funded (no debt) venture. Mike acted as managing director, alongside personnel director, executive chef and three other non-executive directors. Mike, an experienced restaurateur, perceived a gap in the Glasgow market for a value-for-money Italian restaurant chain that offered a wider choice to the customer. The concept did prove to be very successful during the first 2 years of operation and resulted in performance quickly exceeding company and customer expectations and all the forecasts. Mike now had big expansion plans for Leonardo’s. To expand the business significant debt was taken on. A significant change in the business climate, coupled with growth management problems led to the collapse of the business. Students can be tested on their knowledge of growth management issues and on the financial issues. Detailed financial figures for each operating unit are provided.
1. Time Context – September 13, 2009
2. Viewpoint – Students
3. Central Problem – The growth of the restaurant led to the collapse of the business, because the debt was taken on. 4. Objective
• Must Objective – To plan more about building a business. • Want Objective – Don’t be quick in building a business. 5. Areas of Consideration
• External Environment
- The business may become competitive.
- Many customers will eat in their restaurant. - The restaurant will become stable.
- Many will be getting mad or jealous of them.