Mom and Pops Restaurants

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Mom & Pop’s Restaurants, Inc.

Facts

- Pop Westerfields had entered the restaurant business by taking over family restaurant at the corner of Halsted Avenue and Third Street, operating the first restaurant in in Homewood, Illinois, in 1982

- The initial “Strategy” was to serve very good meals in traditional American style at reasonable prices.

- In early 1990, the Westerfields owned six restaurants in Illinois, Indiana, Southern Michigan using Mom&Pop name, and employed 9 full-timed salaried staff members, and about 40 wage-earning waiters, cooks, and other helps.

Problems:

- The Westerfield faced a highly competitive for restaurant business in his territory of Illinois, Indiana, and South Michigan, for example, Burger King restaurant had introduced stuffed potatoes and a new salad bar and McDonald’s was expanding its menu to compete more and more traditional restaurants.

- So , the Westerfields try to look into alternative markets that were not as highly competitive for restaurant business such as nearby Canada.

- Pop’s main concern was choosing a method of dealing with one or several restaurants that were so distant from the existing businesses and, another nontrivial factor, so expensive to open and operate.

Solutions :

• The range of possibilities included a new restaurant , set up in the new location

1. A green field ( or de novo) investment.

❖ It requires site selection, major financial, legal assistance to comply with local law, and employment of basically all new staff

❖ The start-up cost would be in neighborhood of $150,000.

❖ None of the current employees was willing to move to the Windsor, Canada.

❖ (advantage) There appeared to be no significant limitations on importing any needed equipment or food into Canada

2. An acquisition of an existing Canadian restaurant.

❖ (advantage) It costed less than the new venture and the lower financial cost and...
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