Chow Restaurant Business Plan Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Chow Restaurant Business Plan Case Solution

Pricing strategy

Being a newly startup business with limited customer reach and being faced with an intense competition; the company is recommended to pursue the bundle pricing strategy and allow the customers to purchase meals and products bundles to optimize their cost and product value. Being a low cost provider;the company would be benefited from the economies of scale due to the niche product offerings.(Arthur A. Thompson, 2015).

Organizational structure

There is only one general manager and one chef and key management for bar, floor and kitchen.The upper management is responsible for the decisions and actions that are made. This, in turn, encourages the lack of delegation, which reduces the productivity as a whole. Due to this reason, the company must know that employees’ engagement as well as knowledge sharing is pivotal to the successful performance of the business. The firm with high engagement levels would be having a high total shareholder return, lower employee turnover, higher productivity and a better financial performance.The knowledge sharing holds an equitable significance since it can build a learning organization,facilitates a decision making capabilities and stimulates the innovation as well as the cultural change.

New menu

The new menu must incorporate the updated prices, which must be slightly lower than the actual, in order to attract a wider base of customers. It would allow the company to increase its sales, cut its operational cost, interact closely with the customers, improve the sustainability of the business, create more capital that can be used for growth and reduce the competition from the marketplace. Additionally, the menu must include seven options per food category and promote the sale of specific items with photos, invest in digital signage boards,update the menu with special&seasonal items.

Areas of cost containment

There are various areas of cost containment, consisting maximization of profits by establishing realistic financial benchmarks, comparing them to the actual business performance and eliminating the factors causing variances between the two measurements. The company must control the labor cost by lowering the employee turnover, automating the manual processes, analyzing the stock requirements through yield management and tracking as well as managing the inventory using first in first out method and utilizing the daily specials to reduce the cost.

Breakeven analysis
In order to calculate the number of guests required to reach the breakeven point; the total fixed cost and variable cost are identified. Sales would be increased as a result of discounts & free purchase to visitors; whereas, the COGS of any restaurant must not account more than 31% of the sales, due to which it is assumed to be 25% of the sales. The total operating expense is assumed to be 35% of the total sales. The total breakeven point of the restaurant is when it reaches an average of $346704 in sales per year. The breakeven point (in dollars) is $346704.0673 for the first projected year, and it is assumed that the average amount spent per guest is $50, which is used to divide the breakeven (in guests), thus total guest per year would be 6934, 578 per month and 19 per day.

Areas that entity may pursue in order to grow its operations.

CHOW restaurant could achieve the sustainable advantage by being a low cost provider, which might stem from the disparate sources as a low-cost distribution system, highly efficient assembly process, or a superior sales force utilization.The company must maintain the healthy core business by increasing the sales through leveraging the infrastructure and traffic, and managing the operating margins. It must ensure the consistency of the good quality via more streamlined presentation and preparation, expanding its brand appeal via facility remodels and continued menu innovation, increasing the brand awareness via improved media advertising at local and national levels and developing and/ or enhancing the innovative marketing program via its website, digital media, social media and email communication.

To deal with the robust market competition; CHOW restaurant must pursue differentiation strategy, which should be its franchisee program. Adding to the efficiencies, the company should also grow its franchisee owned restaurant location. In addition to this, the company should focus on satisfying the needs and preferences of its customers in international markets, in order to achieve the above average profit margins. Also, the company should have an access to the flexible and multi-skilled workforce to meet the customers’ demands, and it is significantly important for the company to react adequately and quickly, to the regulations and changes in the food safety and handling area

To minimize the exposure to the high employee turnover rate; the company must develop training programs for the employees.By doing so, a collaborative training programs with learning skillsshould be introduced, to provide an opportunity to the employeesto learn the new market tactics. Suchoffering of the career plan will boost the motivation level of the employees, leading the restaurant towards having better sustainability and retention. (Rogers, 2020).....................

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