October 11, 2004
This proposal is intended to pinpoint the problems and introduce actions or solutions for the active restaurant operator-owner and manager who are involved in the Moviante Restaurant. The analysis is divided into four parts: (1) problem identification, (2) causes of the problems, (3) solutions to the problems, and (4) recommendations. Additionally, there will be a complete discussion on problem solving designed to avoid future, foreseeable undesired outcomes.
Statement of the Problem
Mark Jaslow, the manager of Moviante, described that the business level in the spring and summer of 1998 was booming. However, from November on, business began to decline. Even the effort to eliminate costs such as labor hours, laundry expenses, and advertising budget seemed to be useless. Further, Moviante discontinued offering lunch in December owing to the fact that the advertisements for lunch specials failed significantly to promote business. According to the income statement of 1998, Moviante has suffered operating losses of $3,208. This loss is primarily due to declining sales revenue while increasing in operating expenses. What actions should Moviante take in order to reverse annual loss of this year as well as any losses that possibly incur in the future?
1. Operating Loss – this is a major problem of the restaurant. As shown in 1998 income statement, total costs are approximately 90 percent of total sales. This showed a red flag of the restaurant. Also, the majority of restaurant sales come from weekend nights rather than the weekdays (See Table1). Operating Times| Sales Volume/week| Percentage of Total Sales| Weekdays| $3,000| 40%|
Weekend nights| $4,500| 60%|
Total| $7,000| 100%|
Table1: Sale Volume per week
2. Advertising and Promotion – according to an informal survey of 25 residents within a ten mile radius of Ithaca conducted in February 1999, no respondents recognized the name “Moviante”. More surprisingly, they did not know what it was or where it was located. Furthermore, of all the coupon ads that advertise in the valley’s free newspaper with a circulation of 29,000, only ten coupons were redeemed. The restaurant was promoted using 13 local newspapers within a 30 mile radius, 1 free valley newspaper, New York Times, New York Magazine, local radio station. Indeed, the restaurant had placed advertisements using these media; however, Ithaca residents did not know or hear about it. Therefore, the problem here with regard to media used and advertising or promotion strategies is another major concern. 3. Target Market – Moviante is located on a side street in the college town of Ithaca, New York. Because of easy accessibility to Route 80, the restaurant would capture the transient vacationer who might be enroute to ski, camp, or fish. According to Schore, he said the major problem was how to divert those travelers from the superhighway and into Ithaca. Nevertheless, the restaurant firstly offered different meal periods to attract different customers (See Table2). Meal Period| Target Market|
Lunch| Intown and regional businesses|
Dinner| Remote areas|
Afternoon snack| Students, shoppers, locals|
Brunch| Remote areas|
Late night snack| Students, locals|
Table 2: Meal Period and Target Market
Take out| Locals|
The strategy of attracting different customers with different meal periods did not work out very well because the majority of customers were described as mostly upper middle class couples in the $30,000-$40,000 income bracket from the surrounding cities within half an hour of Ithaca. As a result, the problem here is that the target customers are not the people who mainly patronize the restaurant. 4. Menu – items on the menu seems to be another problem of Moviante. Of the ten items on dinner menu, one was vegetarian...