Critical report
Food and Beverage in Hospitality Industry
Executive Summary
This paper discusses a marketing and management plan for a new food and beverage company in a hospitality industry in Auckland, New Zealand. In order to ensure that the industry will be successful, the development of a management plan has been done. Herein, the first factor that has been considered is to analyse the situation of the marketplace including the market trends and the business environmental analysis. This is done by assessing Auckland and its potentialities, the evaluation of the key accounts of the industry and the opportunities and threats that might be encountered by the industry. The second part will be the creation of a positioning statement to be used by the industry so as to be recognised in the marketplace. The third part is the discussion of the food and beverage marketing objectives, strategy, and action plan. Herein, the main focus of the strategy of the industry is to make the industry be known in Auckland. The forecasted revenues have been provided which will serve as the guidelines for the company.
Overview of the Company
This new food and beverage establishment will be associated in a hospitality industry in Auckland. This company will provide high quality food and beverage products and services. This restaurant will be on-service for customers who love to relax in hotel industries. This company will try to be partnered in leading hospitality industries in Auckland to serve more people and to reach different market segments from individuals, family to business people.
Situation Analysis
Accordingly, the Auckland region has over 600 food and beverage manufacturing businesses and there is still more of this kind in New Zealand. It is note that the food and beverage industry in the region has been continuously growing for 10 years. This is driven by the high demand for food and beverage products within the country (New Zealand and other nations. such demand is because of the factors like the exchange rate making in the NZ products cheaper for overseas buyers, the growth of the population and changing food and beverage tastes.
Market Summary
This food and beverage company possess good information about the market and knows a great deal about the common attributes of the most prized and loyal customers. This new food and beverage company will leverage this information to better understand who is served, their specific needs, and how this can better communicate with them (see Appendix 1).
Market Analysis
Potential Customers
Growth
2008
2009
2010
2011
2012
Individuals
8%
12,457
13,454
14,530
15,692
16,947
Families
9%
8,974
9,782
10,662
11,622
12,668
Business People
10%
24,574
27,031
29,734
32,707
35,978
Total
9.27%
46,005
50,267
54,926
60,021
65,593
Marketing Demographics
The profile for the new food and Beverage Company in Auckland customer consists of the following geographic, demographic, and behavior factors:
Geographic
v The immediate geographic target is Auckland city with the population of around 404, 658, and 1.25 million in the greater area of the region which is said to represent about one-third of the total population of the New Zealand.
v A 637km2 geographic area is in need of the food and beverage services
Demographics
v Male and female.
v Ages 25-50, this is the segment that
v Young professionals who work close to the location.
v Eat out several times a week.
v Tend to patronize higher quality restaurants.
v Are cognizant about their health.
v Willing to spend for food and beverages most of the time
v Tourists and travelers staying in hotels in the city.
Behavior Factors
v Enjoy a high quality meal without the mess of making it themselves.
v When ordering, health concerns in regard to foods are taken into account.
v There is value attributed to the appearance or presentation of food.
Market Needs
This food and beverage company is providing its customers with a wide selection of high-quality food and beverages which include chicken, pasta and salads and other highly demanded foods and also offer beverages from healthier drinks to wines that are exclusive and pleasant in presentation, offer a wide selection of health conscious choices, and utilize top-shelf ingredients. This food and beverage company seeks to fulfill the following benefits that are important to their customers.
- Selection. A wide choice of food and beverages products made to meet customer needs/
- Accessibility. The patron can gain access to the restaurant with minimal waits and can choose the option of dine in or take out. In addition, they can also avail the products and services in some hotels and spa centres.
- Customer service. The patron will be impressed with the level of attention that they receive.
- Competitive pricing. All products/services will be competitively priced relative to comparable high-end food and Beverage Company.
Market Trends
The market trend for food and beverage restaurants is headed toward a more sophisticated customer. The restaurant patron today relative to yesterday is more sophisticated in a number of different ways.
- Food quality. The preference for high-quality ingredients is increasing as customers are learning to appreciate the qualitative differences.
- Presentation/appearance. As presentation of an element of the culinary experience becomes more pervasive, patrons are learning to appreciate this aspect of the industry.
- Health consciousness. As the people and clients in Auckland in general are more cognizant of their health, evidenced by the increase in individuals exercising and health club memberships, patrons are requesting more healthy alternatives when they eat out. They recognize that an entree can be quite tasty, and reasonably good for you.
- Selection. People are demanding a larger selection of foods and beverages; they are no longer accepting a limited menu.
The reason for this trend is that within the last couple of years the restaurant offerings have increased, providing customers with new choices. Restaurant patrons no longer need to accept a limited number of options. With more choices, patrons have become more sophisticated ( 2004). This trend is intuitive as you can observe a more sophisticated restaurant patron in larger city markets in New Zealand where there are more choices available.
Market Growth
This food and beverage company will continue to diversify its restaurant interests, and will continue to provide innovative food and beverages which adheres to the healthier food and beverage needs of the people in Auckland. In the second quarter, the company wish to acquire other companies or merge with other establishments in the city to enhance its market share.
This food and beverage company will aim on higher earnings and sales by providing quality food and beverage products and services. Their expansion on different hospitality industries to increase their target market will be pursued as part of their management plan (1990).
Another variable that is contributing to market growth is an increase in the number of hours our demographic is working. Over the last five years the number of hours spent at work of other archetype customer has significantly increased. As the number of work hours increases, there is a high correlation of people that eat out at restaurants and food and beverages establishments. This is intuitively explained by the fact that with a limited number of hours available each day, people have less time to prepare their meals and eating out is one way to maximize their time.
Target Market Growth
SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing this food and beverage company
Strengths
- Strong relationships with vendors that offer high-quality ingredients and fast/frequent delivery schedules.
- Excellent staff who are highly trained and very customer attentive.
- Great retail space that is bright, hip, clean, and located in an upscale mall, suburban neighborhood, or urban retail district.
- High customer loyalty among repeat customers.
- High-quality food offerings that exceed competitor’s offerings in quality, presentation, and price.
Weaknesses
- This food and beverage company name lacks brand equity particularly in the area of Auckland
- A large marketing budget to develop brand awareness in the area.
- The struggle to continually appear to be cutting edge.
Opportunities
- Growing market in Auckland with a significant percentage of the target market still not aware that this food and beverage company exists.
- Increasing sales opportunities in take out business.
- The ability to spread overhead over multiple revenue centres. This food and beverage company will be able to spread the management overhead costs among the multiple stores, decreasing the fixed costs per store.
Threats
- Competition from local restaurants that respond to this food and beverage company superior offerings.
- Fast-food restaurant chains found in other markets coming to Auckland.
- A slump in the economy reducing customer's disposable income spent on eating out.
Services and Menu Planning
This food and beverage will create foods and services which are highly differentiated and superior to competitors. Customers can taste the quality and freshness of the product in every bite. The following are characteristics of the product:
1. This food and beverage products and services are in high-quality.
2. Raw food products and materials to be used came from trusted supplier to ensure quality control and healthy products (food and beverages).
3. Vegetables are organic and fresh with three shipments a week.
4. Meats are all top-shelf varieties, organic when possible.
At this food and beverage company, food is not a product; the experience of dining is a service. This food and beverage company prides themselves on providing service that is on par with fine dining. This is accomplished through an extensive training program and only hiring experienced employees. The menu of the company will be divided into different meals, breakfast, lunch, snacks, and dinner meals. The company will offer side dishes and main dishes to meet customer demands. The company will also offer inexpensive meals which will be served under NZ$8. Using fresh foods and other seasonal ingredients these inexpensive meals aims on generating to customers and trends in the market.
The menu will have fix prices ranging from NZ$25 to NZ$70 depending on the specialty of the menu and the price of the ingredients used for it. Dinner menus will have lesser prices as compared to breakfast and lunch price while snack price will be much cheaper compared to other menus to gain more customers in Auckland.
Critical Issues
This food and beverage company In Auckland. is still in the speculative stage as a retail restaurant. Its critical issues are:
- Continue to take a modest fiscal approach; expand at a reasonable rate, not for the sake of expansion in itself, but because it is economically wise to.
- Continue to build brand awareness which will drive customers to existing stores as well as ease the marketing efforts of future stores.
Marketing Strategy
This food and beverage company advertising budget in the area of Auckland is very limited, so the advertising program is simple. This food and beverage company will do direct mail, TV advertising, banner ads, and inserts, with inserts in the Register Guard likely to be the most successful of the campaigns.
Lastly, this food and beverage company will leverage personal relationships to get articles of this food and beverage company in the Register Guard. Previous friends who have had their restaurant featured in the Register Guard have seen a dramatic increase of sales immediately after the article was published in the RG.
Mission
This food and beverage company mission is to deliver superior quality products and services for the customers and communities through leadership, innovation, and partnerships. The business exists to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
Marketing Objectives
1. Maintain positive, steady, growth each month.
2. Generate at least NZ$40,000 in sales per month in Auckland region.
3. Experience an increase in new customers who are turned into long-term customers.
4. Realize a growth strategy of one store per year.
Financial Objectives
1. A double-digit growth rate for each future year.
2. Reduce the overhead per store through disciplined growth.
3. Continue to decrease the variable costs associated with food production.
Target Marketing
The market can be segmented into three target populations:
- Individuals: people that dine in by themselves.
- Families: a group of people, either friends or a group of nuclear relatives dining together.
- Business people: people who belongs to business communities who will have meetings and general assemblies in the food and beverage establishments.
This food and beverage company customers are hungry individuals between the ages of 25 and 50, making up 53% of Auckland. Age is not the most defined demographic of this customer base; all age groups enjoy healthier menu and products. The most defined characteristic of the target market is income. This food and beverage company stores will be very successful in high rent, mixed-use urban areas. These areas have a large day and night population consisting of business people and families who have household disposable incomes over NZ$40,000.
Combining several key demographic factors, this food and beverage company arrives at a profile of the primary customer as follows:
- Sophisticated families who live nearby.
- Young professionals who work close to the location.
- Shoppers who patronize the high rent stores.
Positioning
This food and beverage company will position itself as a reasonably priced, upscale, fast-food restaurant. Auckland consumers who appreciate high-quality food and beverages will recognize the value and unique offerings of this food and beverage company products as well as services. Patrons will be single as well as families, ages 25-50. This food and beverage company positioning will leverage their competitive edge:
- Product. The product will have the freshest ingredients for foods and beverages to ensure quality and healthier menu. The product will also be developed to enhance presentation, everything will be aesthetically pleasing.
- Service. Customer service will be the priority. All employees will ensure that the customers are having the most pleasant dining experience. All employees will go through an extensive training program and only experienced people will be hired.
By offering a superior product, coupled with superior service, this food and beverage company will excel relative to the competition.
Marketing Mix
This food and beverage company marketing mix is comprised of these following approaches to pricing, distribution, advertising and promotion, and customer service.
- Pricing. This food and beverage company pricing scheme is that the product cost is 45% of the total retail price.
- Distribution. This food and beverage company food will be distributed through a take out model where customers can call in their order and come to the restaurant to pick it up, come into the restaurant, place the take out order and wait for it to be completed, or come in and dine at the restaurant.
- Advertising and Promotion. The most successful advertising will be banner ads, TV ads, and inserts in the Register Guard as well as a PR campaign of informational articles and reviews also within the Register Guard.
- Customer Service. Obsessive customer attention is the mantra. This food and beverage company philosophy is that whatever needs to be done to make the customer happy must occur, even at the expense of short-term profits. In the long term, this investment will pay off with a fiercely loyal customer base that is extremely vocal to their friends with referrals.
Purchasing, receiving and Storage
The company will consider the following purchasing and ordering technique. Accordingly, in purchasing approach the company will consider ordering technique to save mistakes and frustration for the supplier and the company. Make a sheet list of the ingredients needed including the price and the quantity calculations. The manager must be specific on the items to be purchased and list the items by brand whenever possible. Check each of the items on the order sheet to avoid overlooking some items. The manager should also base their ordering with the projected usages to prevent running out of food and ingredients.
In terms of receiving, there are essential tips that can be considered by the management of this company. Good receiving technique can decrease shortages and avoid theft, both the deliberate and the accidental types. This can also reduce product spoilage. When receiving goods, the management should compare the invoice in the order sheet to know if everything is in place. Check the product if it meets the quality of the products needed in your company.
To make sure that you offer quality food and beverages on your customers, the management should also consider proper storage. In this regard, the following should be considered. First, isolate foods in terms of their types to prevent spoilage. Frozen foods should be maintained in freezer temperature 0 degree Fahrenheit and below and should be wrapped in moisture-proof or foil. On the other hands, refrigerated food should be maintained in refrigerator temperature at 33 to 36 degrees Fahrenheit. The management can also consider walk-in cooler. The management should also have the stock room or store room for grocery items which have a room temperature of 70 to 80 degrees Fahrenheit. Keep those opened products in sealed bags or closed containers to avoid spoilage. The most important thing is the labeling of the products with its names, brands and its expiration date. This is to ensure quality control and this is to know which product should be used first. Use the concept of First in First Out policy in the entire storage approach.
Financials, Budgets, and Forecasts
This section will offer a financial overview of this food and beverage company International, Inc. as it relates to the marketing activities. This food and beverage company will address Break-even Analysis, sales forecasts, expense forecasts, and how those link to the marketing strategy.
Break-even Analysis
The Break-even Analysis indicates that NZ$40,000 will be needed in monthly revenue to reach the break-even point (see Appendix 3).
Sales Forecast
The first two months will be used to get the restaurant up and running. By month three things will get busier. Sales will gradually increase with profitability being reached by the beginning of year two.
Expense Forecast
Marketing expenses are to be budgeted so that they are ramped up for months two through four and then lower and plateau from month five to month 10. Restaurants typically have increased business in the fall. This generally occurs because during the summer, when the weather is nice and it does not get dark until late, people tend to eat out less. From months 10-12, the marketing costs will increase again (see Appendix 4).
Contingency Planning
Difficulties and risks:
- Problems generating visibility.
- Overly aggressive and debilitating actions by competitors.
- An entry into the Auckland market of an already existing, franchised fast-food restaurant.
Worst case risks may include:
- Determining that the business cannot support itself on an ongoing basis.
- Having to liquidate equipment or intellectual property to cover liabilities.
Appendices
Appendix 1
Target Markets
Appendix 2
Market Forecast
Appendix 3
Break-even Analysis
Break-even Analysis:
Monthly Units Break-even
NZ$4,000
Monthly Revenue Break-even
NZ$40,000
Assumptions:
Average Per-Unit Revenue
NZ$10.00
Average Per-Unit Variable Cost
NZ$4.50
Estimated Monthly Fixed Cost
NZ$22,000
Sales Forecast
Sales
FY 2008
FY 2009
FY 2010
Individuals
NZ$103,710
NZ$262,527
NZ$327,424
Families
NZ$150,304
NZ$380,474
NZ$474,528
Business People
NZ$25,401
NZ$64,300
NZ$80,195
Total Sales
NZ$279,415
NZ$707,301
NZ$882,148
Direct Cost of Sales
FY 2008
FY 2009
FY 2010
Individuals
NZ$46,669
NZ$118,137
NZ$147,341
Families
NZ$67,637
NZ$171,213
NZ$213,538
Take out
NZ$11,431
NZ$28,935
NZ$36,088
Subtotal Direct Cost of Sales
NZ$125,737
NZ$318,286
NZ$396,966
Appendix 4
Monthly Expense Budget
Marketing Expense Budget
FY 2004
FY 2005
FY 2006
Direct mail
NZ$5,267
NZ$5,605
NZ$5,421
Banner ads and TV ads
NZ$11,704
NZ$12,455
NZ$12,047
Other
NZ$7,022
NZ$7,473
NZ$7,228
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Total Sales and Marketing Expenses
NZ$23,993
NZ$25,533
NZ$24,696
Percent of Sales
8.59%
3.61%
2.80%
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