Report On Devlopment A Business Plan For The Broadway Café

Having recently acquired the Broadway Café, this report aims to develop a new, successful business plan designed to revitalize the Broadway Café. This strategy will consider several factors that make up the current business situation, such as the opportunity to implement Information Technology systems and supply chain improvements, the product mix by the Broadway Café, and the fact that the café has been a hotspot for several years before the decline in sales over the past 5 years.

Employees have a slew of concerns in the normal course of their employment with any company, often irrespective of the size of the firm. Surveys indicate concerns such as employee compensation, management structure or lack thereof, and pay equity. However, the Broadway Café has had declining sales because it has not updated its business practices since the year 1952. In circumstances such as these employees may begin searching for employment in other companies. This can be attributed to a myriad of reasons not the least of which employees are almost considered “fungible” in the sense that the skills required of food preparers, and servers can be transferred to essentially any other similar establishment. Therefore, it would be wise to quell concerns amongst employees as to the long-term survivability of the company such as assurances that modernity will ensue in the near future in the form of either of meeting after hours amongst staff, or at the very least a flyer containing the relevant information.

As stated previously there is generally little if any loyalty amongst food and drink establishment amongst staff because of the ease of transfer to other firms, however a positive work environment often times is unique; as a result, words of encouragement and kindness towards staff as it fosters loyalty. Customers also tend to see restaurants, eateries, and cafés as interchangeable due to nature of the interaction, e. g. cash exchanged for food is an impersonal experience which can be replicated. This can be remedied by creating a more personalized experience in the form of custom mugs for repeat clients, and loyalty programs to encourage repeat business, because this firm seems so averse to technology it may pursue a low-cost alternative such as a punch card for purchases per visit or per dollar amount spent which may be purchased online from zazzle. com. The Broadway Café apparently lacks any form of digital presence which is troubling as in the modern era websites can be inexpensively created through mediums such as wix. com, or GoDaddy. Competitive advantages are temporary because competitors can duplicate them, however bear in mind harnessing an established client base as the Broadway Café possess can lead to a sustained success in a competitive market. Seeing that the Broadway Café has operated unchanged since its inception in 1952 it is safe to assume that this particular restaurant has been allowed to operate unabashed for decades free from rivals. This makes the threat of a Starbucks entering town very credible. As a result, it would be prudent to apply one of the preeminent method for analyzing the environment in which the entity operates, namely Porter’s Five Forces Model.

  1. Buyer Power(High)
    • Low switching costs
    • Variety of products
    • Variety of services
  2. Supplier Power(Low)
    • Many suppliers
    • Supplies of nonunique products
    • High price sensitivity
  3. Threat of Substitute Products(High)
    • Instant coffee/coffee pot/ Keurig
    • Fast food restaurants Subway, Burger King Wendy’s etc.
    • Other drinks such as teas, smoothies, juice etc.
  4. Threat of New Entrants (Medium)
    • Fairly prohibitively costly to setup
    • Stringent health and safety standards
    • Mature industry
  5. Rivalry Among Existing Competitors(High)
    • Entry of commercial chain
    • Low profit margins
    • Oversaturated market.

Buyers in the modern age are privy to the greatest wealth of choice in consumer goods and dietary choices imaginable. As a result, consumers incur no costs to switch between one café to an eatery to a hole in the wall establishment. On the flipside the costs to switch between suppliers is not appear particularly high because the coffees, teas, baked goods, homemade soups, sandwiches, and salads sold by the Broadway Café do not require special precursors, should Brazil Beans become the most expensive wholesaler of coffee beans there is no requirement to purchase from this company. However, competition abounds not only from production of coffee from home sources but also from the multitude of franchise fast food restaurants that can produce comparable products at a comparable price point even if such firms do not currently operate in this market. Nonetheless the fierce competition has led to a shutdown of hundreds of franchise restaurants likely as a market correction for overcapacity in this sector of the economy.

Rivalry is so fierce amongst that profit margins of restaurants tend to be between 1 to 3 percent on average, which leads credence to claim of this being a mature industry due to the high expenses of operation and the low profit margins, therefore capital is perhaps spent elsewhere, rather than attempt to break into the market. Despite the difficult retail environment there are several factors to consider when combatting competition:

Product differentiation: while it is true that that Starbucks also sell coffee, baked goods, and sandwiches amongst other items they tend to be frozen and premade. Instead the Broadway Café makes these in store, as a result the company should leverage this through word of mouth advertising, coupled with their new online presence.

Switching costs: customer will incur no (or very miniscule) costs when switching from one restaurant to the next, however the costs can be psychological as well. If the Broadway Café can create a familial environment, they may deter customers from switching to another café.

Loyalty: tying in switching costs by offering custom mugs, loyalty programs such as old school punch cards exchangeable for perks such as free meals or just remembering customer names (as grandfather used to do) creates loyalty and loyalty creates future sales.

First mover advantage: the Broadway Café appears to be first of its kind in the neighborhood so to speak, as a result it likely has a storied history of people’s parents and grandparents who frequented this restaurant. Ergo there is a strong emotional connection that other secondary entrants let alone corporate conglomerates will not have.

Competitive advantage: these tend to be fleeting as competitors can easily replicate them, however the more sustainable the more difficult they are to replicate. It is unlikely that the Broadway Café can create goods more inexpensively (comparative advantage). However, the company can generate greater perceived value (differential advantage) by utilizing customer loyalty, and product differentiation to boost sales, and maintain market share.

Technology: this is admittedly a weak spot for the Broadway café, besides creating an online presence though a personal website, and social media accounts which are free to create and operate. The company should also begin to accept electronic payments, which can be accomplished through credit card terminals.

Competency: the organization needs to harness those things (competencies) which it does well such as operating in a bustling area, customer loyalty, and differentiated product, to overcome difficulties such as competitors offering similar products at lower costs and a lack of technological prowess.

Starbucks is a global behemoth, as per their third quarter earnings report for the year 2018, it earnt 5. 25 billion dollars’ worth of revenue and managed 28, 720 locations across the globe. While not to be alarmist however competing on a pure price basis with a firm that commands such enormous swatches of the global economy is unrealistic for a single coffee shop. However, the firm already possess a small loyal customer base and will likely need to sell goods at a slightly higher price point. As a result, the strategy most in line with success is a focused (differentiation) strategy. Therefore, it would be prudent to figure out grandfather’s recipes, the names of his customer base, and continue providing the stellar service the Broadway Café’s customers were used to. All the while attracting new customers who are drawn to the quaint nature and high-quality goods offered for sale.

Failure to pay payroll taxes will result in an IRS audit these are expensive and time-consuming endeavors Information technology plays a vital role for a firm stuck in the 1950s. As stated earlier creating social media accounts such a Facebook, Twitter, and Instagram for the Broadway Café should be the first order of business because there is no cost associated cost besides maintaining an active presence online. Grandfather was apparently able to maintain inventory, coupons, and payroll exclusively through a notepad. While this was certainly effective for many years it is an extremely inefficient mode of information storage. The most obvious solution is utilizing a bookkeeping software, such as QuickBooks, which takes the preceding items and convert them into one step, as an auditor this was the software most commonly used. For example, payroll is recorded and paid out through the software which also automatically deducts the proper amount of taxes per pay cycle. Not only that but payroll taxes are filed on the federal level quarterly via form 941. While the form itself is fairly simple to file it must be either mailed in or electronically filed. However, the IRS has no native ability to receive electronic submissions it instead relies on software providers to complete this task.

Besides the 941 QuickBooks can also generate W2s pdfs which can be sent to a printing company to produce employee tax documents for filing season, or more popularly emailed to their respective recipients. QuickBooks can also be used to pay vendors directly or print out the respective check to pay vendors. This is much faster than manually recording, adding, multiplying, and filling out forms by hand, which leads to greater cost saving as it frees up time. The cost for QuickBooks is either 26. 95 dollars per month or a one-time purchase of 300 dollars. Coupons are an excellent method to generate sales and attract new customers however once a promotion is decided the key is distribution, enter SendPulse a bulk emailing software which offer plans which can send mass email to 2, 500 unique recipients and up to 15, 000 emails on a monthly cycle free of charge, more than enough for a single store. Should more capacity be needed plans are available on a progressive scale, suitable for any and all clients. Every single publicly traded company issues yearly financial statements namely an income statement, statement of equity, and balance sheet, which are prepared on a monthly basis and filed yearly and automatically generated by bookkeeping software. A statement of equity would simply reflect the entire owner balance and would be of little use.

However, the income statement would reveal the profitability of menu items during the month, and the balance sheet would record current inventory used to generate those gains. In a given month the owner of the Broadway Café could analyze top selling items vs top income generating items, then analyze remaining inventory, and compare it to price of new inventory with vendors. If the price of given inventory decreases, it can be purchased in larger amounts and then create coupons and email them to those on the company’s subscriber list. Thereby passing cost saving onto consumers, increasing satisfaction, while maintain profit margins at consistent amount month to month. A firm should analyze internal and external conditions via a SWOT analysis. Focusing on the value chain analysis (the full range of activities that businesses go through to bring a product or service to their customers) it is evident that minor retooling is necessary to increase the efficiency of operation.

The non-digital nature of operations entails that multiple individual must partake in essentially identical tasks. With the addition of a credit card terminal as aforementioned and a digital cash register both food and drink can be ordered at counter A and B, preferably one could be closed when foot traffic is low and opened when there are more patrons. Picking up beverages and ordering food at counter B creates a bottleneck based on the speed of beverage creation, instead each terminal should interchangeably complete these tasks. In addition, the digital registers will create an order number which is given to both the back end and one to the customer, who can then wait at a table for their order to be fulfilled. Since counter A and B now handle both ordering and payment counter C and D now serve only to pick up orders. A digital board like those used at DMV stations could optionally be used to keep track of orders for customers while creating a quiet environment. Simply put splitting food and beverage ordering into two processes while robust creates bottlenecks and unused capacity. Besides an efficient process flow, one must set an objective measure of evaluating or checking something by comparison with a standard, this is known as benchmarking Perhaps the simplest and most effective method would be to compare profit margins with the national average for small businesses because Starbucks operates at 18. 87% net profit margin ((net profit/revenue)x100) per their quarterly report while most restaurants tend to earn between 1% to 3%. This may serve as a more realistic expectation of profitability and can be calculated by bookkeeping software on a quarterly basis.

A key advantage that the Broadway Café possess is that unlike large competitors such as Starbucks it does not need to serve everyone, everywhere, all the time. Also, certain expenses such advertising and costly leases are not a concern for the Broadway Café. Likewise, large firms such as Starbucks can negotiate discounts with large suppliers of the raw ingredients and precursors utilized in the production of their beverages and comestibles available for purchase at its various location and kiosks. However, this also comes with the downside of being tethered to their sales contracts and unable to nimbly navigate amongst vendors. These are the assets which serve as a competitive advantage for the Broadway Café namely the ability to purchase items locally eliminating transport cost and inexpensively purchase either what other vendors are selling a discounted price. In the past only, what was in season could be consumed, in the present this serves a stark reminder of farm to table restaurant models. Likewise remaining competitive entails purchasing orders at the lowest cost available, as per the constraints of the ordering system there are various manners of purchasing a box of coffee. Of those methods however, this appears the most cost effective, this report was created utilizing addition and multiplication formulas native to excel which eliminated the need to manually calculate each possible scenario.

As a result of trial and error this combination appears to be the optimal mix of coffee beans to earn the maximum profit possible. The café should couple its homestyle feel, with its cultural and historic significance to the town as a sort of revival. Embracing the storied history, and as a conduit for the established client base while simultaneously utilizing advances in technology to streamline business processes which will ultimately carry the Broadway café forward and provide the competitive advantage it needs to edge rivals.

15 July 2020
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