Question

Case Study: Le Chic Restaurant

The Le Chic is a restaurant located on a busy street in the centre of a major city. It attracts a steady flow of customers who like its commitment to quick service with good food. As such the management pride themselves on offering a standard menu, which includes a good range of affordable yet delicious dishes – from starters and appetizers, through main courses and specials to pastries and desserts. While Le Chic seats around 80 customers, its layout is basic restaurant style and customers have often said that it has a ‘fast-food’ feel to it which fits with its current business objectives but may not be ideal for the future. A major concern for management has always been to maximise efficiency and reduce turnaround times: orders must be swiftly relayed to the kitchen and the food brought to the table within 15 minutes, even during ‘peak hours’ – the intended outcomes being consistency in both customer service and daily sales targets.

Le Chic employs 35 people, 50% of whom have permanent contracts, working either day or evening shifts. The other half is split between part-timers and relief workers who are usually the ones to do double shifts over busy weekends. All terms and conditions of employment are negotiated on an individual basis.

Over the past few months staff have found it increasingly hard to maintain the desired levels of customer service. There seems to be a lack of coordination between waiting and kitchen staff. Once seated, customers often have to wait for as long as one and a half hours before being served while a large number of those queuing up outside usually just give up on the long waits and walk away in search of other eating options, which in the city centre are plentiful. More alarmingly, profit margins have remained ‘thin’ in the recent years and, for the first time in 10 years losses were registered on the restaurant’s balance sheet. Le Chic’s current manager attributes this particularly poor performance to the economic crisis and to the fact that the competition has all of a sudden tightened up with the opening of a pub and two new restaurants on the main street and a growing cluster of similar businesses within a mile radius.

Dispirited, the current manager has decided to step down to make way for a new manager, John, who has just completed his Masters in Business Administration but also has experience of working in another similar type of restaurant. John’s remit is to deliver a new business strategy that can effectively reverse Le Chic’s current performance and ensure its survival and growth in the longer term. Whilst recognizing that these are indeed difficult times, John believes that there is need, more than ever, for businesses demonstrate an ‘entrepreneurial spirit’ if they are to have any chance of success. He has therefore formulated a proactive and quite aggressive change strategy containing the following key components, which are to come on stream almost at the same time:

• Le Chic is to be turned into a chain restaurant. A total of £1.5 million is to be spent on the refurbishment of the existing site and on the set up of two new restaurants in different cities.

• The chain restaurant will differentiate its offerings in the form of a revamped more upmarket menu, a sumptuous décor and a new bar area, for which a select clientele would be more than willing to pay a premium.

• Around 60 new employees are to be recruited and deployed across the three restaurants. While all members of staff will have to attend induction training to meet the new standards of service, some of the more experienced staff will be transferred to the newly opened restaurants to help out with on-the-job training for new recruits.
• A new information system will be set up to link up Le Chic with its suppliers and standardize ordering, payment and accounting processes across restaurants. Also, a multimedia website will enable customers to access menus, make reservations, post feedback, download discount vouchers, benefit from promotional events or simply keep abreast of any development at Le Chic.

• Le Chic will seek opportunities for joint promotional alliances with potential partners especially those operating in the same areas of the chosen cities. A good example might be cinemas and local bowling alleys.

• Finally, Le Chic will demonstrate social responsibility by sponsoring community projects, which can contribute to the development of a strong brand image and a self-reinforcing cycle of social value, employee engagement, customer loyalty and enhanced return on investment.

All the owners of Le Chic think that John’s business strategy is very creative and the promise of bringing profit margins to 15% within 5 years. However, some have expressed their concerns with regards to the considerable capital outlay that John’s new strategy will require, which, if unsuccessful, will leave the business potentially bankrupt. To allay these concerns, John has asked to hire the services of a consultant to help him out with the execution of his new business strategy.

Coursework Assignment

You are required to step into the shoes of the consultant hired by Le Chic. Your task is to write a report addressing the key change issues that can have a significant impact on the implementation of its new business strategy. While practically oriented, your report should draw on appropriate change theories and models to include the following:

1. An analysis of the change context taking into account both the internal and external drivers for change. This should include both a PEST and SWOT analysis (please note that the word count contained within these tables will not be included in the overall word count, so please be as detailed as necessary). (500)

Answer 1

As a consultant i would say John's strategy is very good and would bring the Restaurant at par in competition with other Restaurants because most of the new restaurants are already implementing most of these techniques whether it be an information system to handle operations, or using social media to enhance Brand image.

If Le chic doesn't think of implementing the change they still might face chances of bankruptcy in future, because their competitors would gradually eat up their business by providing the consumers with lucrative offers, high end infrastructure and a lot of extra things which Le chic would be late to react to. The PEST and SWOT tables below would list both the aspects which are favourable and unfavourable to Le chic if this new strategy is implemented.

PEST Analysis:

The analysis will show how different factors will affect John's strategy if implemented:

P(Political factors)   

1. Whether the community or state guidelines are the same in all three locations, or vary? This will decide the amount of money to be spent prior to the actual returns.

2. Whether the Bar License would be easy to get or not in all three locations.

3. What would be employee benefits as per different state laws that restaurants would have to give.

E(Economic factors)

1. This actually helps in deciding whether the returns to be expected would fall in line or not. The amount of competition in the neighbourhood and the kind of people staying in the Neighbourhood. How much the people spend on Having food outside would help decide the Rate Card for the restaurant.

S(Social factors):

1. This factor will help us analyse the taste bud and eating habits of people in the neighbourhood. So that the restaurant can work on its menu, and thus customise it if needed as per the local people eating behaviour.

T(technological factors):

1. This brings into consideration the effective use of restaurant websites or even a mobile application which helps as an interface with the customer, improving the overall Brand image and also helping in getting more orders. Another aspect of it covers the technological advancement in house to make the day to day operation more efficient and less time consuming and less error prone.

With the help of this strategy there would be a lot of considerations that also comes into play which will be evident from the SWOT Analysis below:

S(Strengths):

1. The restaurant will become more competitive.

2. There would be more customer serving capacity and less wait lines if table booking could be done online.

3. If the decorations and ambience could be made better, the rates could be increased a little as well, because the restaurant already has good food quality and loyal customers.

W(Weaknesses):

1. If proper market analysis is not done, there are chances that new restaurants could suffer from consumer acceptance of menu or rate cards.

2. Unclear expanding preposition.

3. Improper training of employees, or exhausted or over worked employees leading to bad customer service.

O(Opportunities):

1. Find areas which are less competitive to expand and have consumers spending a lot on eating food outside.

2. Opportunity to accomodate more customers with the help of new technologies.

T(Threats):

1. Competitors could be the biggest threat. Their rate card could be very less as compared to Le chic.

2. Acceptance in a new territory and getting the same response as compared to original Branch.

Thus, both the analysis above shows the different aspects of moving forward with John's plan. i as a consultant would definitely recommend the owners of Le chic to move forward with the plan. As it will make sure they stay competitive in the market and not just survive but be the best.