Understanding Customer Value and Costs

1.Robert should start by deeply understanding why the firm has been successful in the area and having won various awards. The main thing that should be in his mind is that the how to make clients feel that they get value for the money they pay to buy food. He must be very cautious of the five values including total customer value against the perceived total consumer value (Beneke, Flynn, Greig and Mukaiwa 2013). The total customer value is that perceived monetary value of economic or bundle, functional as well as psychological benefits expected by a customer from a particular market offering. The total customer cost is bundle of cost expected to be incurred by a customer in his evaluation, obtaining, utilizing as well as disposing of a given market offering (Chiu, Wang, Fang and Huang 2014). Thus, Robert has to full describe his offer to meet the expectation of the customer who the best out of his cash via product or service value on perceived metrics. The customer must add up all the values from 4 sources including product, services, personnel as well as image in order to perceive Robert’s offer as delivering a greater customer value. This is because her decision to buy is hinged on the examination of total cost against other offerings that is more than the money. Customer uses the toil and trouble when acquiring an item as the real price. Thus, a customer total cost will be inclusive of his time, energy and psychic costs which Robert must all take into consideration. Because the customer will have to evaluate all these aspects alongside monetary cost to establish a total customer cost and then consider whether the cost is too high with respect to total customer value. Thus, a buyer has the option to buy from any source he thinks delivers highest perceived customer value.

2.Finding a larger location in Fairfield: This is a good option for expansion, however, it will require huge capital start and also it might not be the ideal place as customers have known one place for a long time. This new place might not be convenience for customer who factor in the energy, time and psychic cost to determine the real price. Indeed where the customer will trouble and toil to get the new place, then the benefits will be reduced and hence not a good move.  

Adding a takeout option: Adding a takeout is a good idea and will add customer’s range of choices. This is a good idea because it will be adding value to the clients who might need to buy and go eat at up. However, Robert must ensure that the total customer cost from this idea doesn’t fall above its perceived total customer benefits.  

Adding a Takeout Option

Open more restaurants in surrounding communities: Opening more restaurants in the community will help ease the packing space. This will mean that those clients that trouble to get into the single one restaurant will be excited as more spaces is created. This creates a value in their mind. Hence, Robert should move on with these idea to tap this untapped customer base. However, he should note that the services and prices should similar to the existing one.  

Incorporate web marketing concepts: Incorporating web marketing concepts will be a marvellous idea. This is because, this is Robert’s area of specialization. If he does this properly, he will be able to reach a new niche and hence a benefit to not only the restaurant but also their new niche who will love their services.

And expand the sales of sauces: Expanding the sales is both beneficial to the firm and the clients. This is because the main goal of every business is to expand the sales’ volume. Thus sales expansion will be a plus to the firm. On the other hand, as the sale is being expanded, Robert must take not that the production quality is maintained despite the increase in output. Without which this won’t create benefit to the clients who prefer quality than quantity. 

3.Before approaching his father, Robert must make his mind to show interest in management so as to convince his father. His father will only be convinced if he has shown this interest because the father has his own model he ran for decades and cannot accept to change it without Robert’s own management strategy. Thus with the interest of management, Robert will be in a better position to approach the father by pin pointing the areas of weaknesses and each benefit attached to the new idea he is putting forth. And because his father doesn’t think that Robert can agree to join the management, it will be an added advantage for Robert if he has interest as this alone will convince his father. In case the company expands, the sister and her husband should take a more active role in the business because of the increased volume of work needed and even the departments. However, caution must be taken not to have them work in one restaurant or department but both of them must be under Robert’s supervision. Each one should be given a deputy managers for each new restaurant but work under Ed Tobor as their General Manager.  By doing this, everyone will feel included and appreciated in the business. And the net result will be a motivated team of workers who work for the better good of the business. This will lead to more profitability in the business as there will be increased production and quality of services.    

Expanding into New Communities

4.Here, Frank needs to relinquish his position as the CEO and give it to Ed Tobor who has been his deputy and have a clear understanding of the operation of the restaurant. Once this is done, Robert should then take up the General Manager position of both restaurant and made the vice president of marketing because he is an expert here. The daughter should be given the deputy management position of the new restaurant. Frank should, however, make it the chain of command very clear that his son and daughter will be reported to the new CEO. This will work smoothly as it creates a balance and assign the most experienced person in an area he or she can do best. It will also reduce conflicts as each responsibility and limit is outlined. Frank should thus remain as someone to be consulted for any technical advice but should not take part in the daily management of the restaurant. This is because when one delegates the duty, or the work, it should be followed by corresponding authority in order that the incoming person feels powered to do the work.   Thus by staying aside and letting his deputy, Ed Tobor to take over, the work will go well without hitches because Ed Tobor would have found difficulty working under his son who had just arrived yet he had been here and know everything about the restaurant. By making Ed Tobor the CEO, Frank would have prevented any fallout that would have appeared as if the business is only family affair whereby there is no promotion for non-family members.

5.If I were Robert, I would tell the father my experience with social media marketing, target market and niche and how to position products. I will start by giving my history of early projects and how they were successful due to the use of social media. I will tell my father that social media coverage is very big and large compared to the flyers and few add he has been using. From the marketing perspective, I will draw up a convincing marketing plan that captures everything right from the target market, niche, segment, marketing mix, budget and any other concern raised by the dad (Tuten and Solomon 2017). I will then review it first based on cost-benefit analysis to ensure that the outcome or the value created will surpass the cost. I will also explain to my dad the benefits of social media campaigns and how it draws traffic and creates sustained competitive advantage in the modern day restaurant marketing.  Robert would then be able to explain to his father the anticipated cost and the benefits from the new marketing strategy in a manner that will help allay any fears that the dad has (Kim, Koh, Cha, and Lee 2015). In so doing, he will be able to get a go-ahead with his plan without the reservation from his father that would otherwise made him work under pressure of thinking that the father is only waiting to see him fail to justify his reservations. The support and the consent from his father meant a lot to his plans’ success and hence he must come up with a plan that will eventually persuade and motivate his father. 

Incorporating Web Marketing Concepts

6.To effectively price the meals, I would start by listing all the ingredients of each dish and then calculating the cost of each meal ingredient in each dish. This will be followed by adding the total cost of ingredients to compute my food costs for that given dish excluding labour costs for serving or preparing the dish. I will then divide the menu price by food cost to determine percentage of price which comes. After this, I will calculate my overhead cost a meal served including all the non-food costs used in running the restaurant. Once this is done, I will determine my target food-cost percentage I want for my menu items by using my overhead costs. I will then examine my current menu prices to determine if they cover my overhead and food costs and remit a profit. Then I will determine if I need to compute different food cost percentage for different services or items. After this, I will analyse my sales by item to see whether my food-cost percentage is able to support my business. This process if followed effectively step by step, without anything left out, would work greatly towards helping the two to come to a common ground backed by evidence. By having the background of evidence, one will be persuade to buy in to the other’s idea without the need to have reservations. This is true because, when these two gentlemen argue without evidence, it would only be one’s word against the other and hence reaching a common ground would be impossible (De Visscher 2016).    

7.Hinged on the data given in Appendix 16, I am in total agreement by Frank and Robert to settle on Darien, Connecticut as the location for second restaurant. This is because this location outperformed all other considered ones based on such metrics as population size, average income, travel times as well as percentage of population. For example, it had a higher income-population, and higher population density. Moreover, a larger percentage of its dwellers are member of the family households. Longer commuting times increased the potential need for prepared meal than any other locations. In essence, this means that the location will attract more clients than any other location because they have better average income and even the population is bigger. I agree with this decision because even if other factors had to be considered, they would actually not have changed the decision as the ones considered were the main ones. However, Robert and Frank need to consider other factors going forward to offer to the best niche rather than merely looking at the size of the population.  When these people get down together to consider the specific niche they would want to serve, they will focus on solely on a narrow segment and this will be more efficient than when they wholesomely try to penetrate the market without exactly knowing who and where their client base is. Tailoring the services to a specific niche is effective since it will reduce the cost of marketing that would otherwise be used in unnecessary audience (Auchincloss, Leonberg, Glanz, K., Bellitz, Ricchezza and Jervis 2014).  The saved cost and time can then be used in the production of quality foods.  

Expanding the Sales of Sauces

8.The key financial ratios for this business are computed and briefly discussed below based on the meanings of any trends.

Liquidity Ratio:

Current Ratio=Current Asset/Current Liabilities

726715/354650=2.1

Quick Ratio= (Current Asset-Inventories)/Current Liabilities

(726715-345678)/354650=1.1

Operating Cash Flow Ration=Operating Cash Flow/Total Debt

102665/135000=0.76

There was a decreasing trend in the ratios between 2008 and 2010.

Profitability Ratio:

Gross Profit Ratio=(Gross Profit/Sales)X100

(943259/1793268)X100=52.6%

The gross profit ratio was moved from 52.0% to 53.6% and to 52.6% between 2008 and 2010. There was a decreasing trend between 2009 and 2010. 

9.In this section, the average key financial ratio for restaurant industry is obtained and compared with the Frank’s All-American BarBeQue restaurant in terms of average values. A comment on how well or poorly Frank’s All-American BarBeQue seems to be doing with relative to industry is presented. The financial ratios are helpful in the illustration of the weaknesses and strengths of a business. Such ratios computation are able to showcase any strange fluctuations or patterns or trends in the restaurant industry in their financial trends. Thus, by computing the financial ratios of the Frank’s All-Americans BarBeQue restaurant and comparing it with the industry averages, I will be able to showcase how such ratios are valuable tools in financial examination or analysis as well as forecasting. Moreover, these ratios will allow Frank as an entrepreneur to set particular goals and to effortlessly track progress towards these goals already set by Robert in this present case. I will thus select in my analysis, solely significant ratios that are applicable to Frank’s business as provided in the Balance Sheet and Income Statement and those which are restaurant industry-specific.     

As has been observed in the calcualtion, the the restuarnt has performed avaragely in the indusry when compared to the above indusrtry averages. For exampe, it has  Gross Magin of 52.6% which is above the avarge of 40% seen above. Based on the analysis, and comparison, it is apparently clear that Frank’s All-American BerBarQue has been well-managed and competes relatively well in the industry.

10.Here, the provided data in Appendix 16 on projected income statements and balance sheets for a 5-year forecast horizon is used to calculate same ratios as done in question eight and a comment is presented on the outcomes as done below:  

Liquidity Ratio:

Current Ratio=Current Asset/Current Liabilities

726715/354650=2.1

Quick Ratio= (Current Asset-Inventories)/Current Liabilities

(726715-345678)/354650=1.1

Operating Cash Flow Ration=Operating Cash Flow/Total Debt

102665/135000=0.76

There was a decreasing trend in the ratios between 2008 and 2010. 

Profitability Ratio:

Gross Profit Ratio= (Gross Profit/Sales) X100

(943259/1793268)X100=52.6%

The gross profit ratio was moved from 52.0% to 53.6% and to 52.6% between 2008 and 2010. There was a decreasing trend between 2009 and 2010. The restaurant is doing averagely well when compared to the industry averages. The firm is able to pay out its current labilities as seen in the current asset: current liability ratio above. This makes the firm being able to expand and meet its expenses without challenges.  

References

Auchincloss, A.H., Leonberg, B.L., Glanz, K., Bellitz, S., Ricchezza, A. and Jervis, A., 2014. Nutritional value of meals at full-service restaurant chains. Journal of nutrition education and behavior, 46(1), pp.75-81.

Beneke, J., Flynn, R., Greig, T. and Mukaiwa, M., 2013. The influence of perceived product quality, relative price and risk on customer value and willingness to buy: a study of private label merchandise. Journal of Product & Brand Management, 22(3), pp.218-228.

Chiu, C.M., Wang, E.T., Fang, Y.H. and Huang, H.Y., 2014. Understanding customers’ repeat purchase intentions in B2C eâ€Âcommerce: the roles of utilitarian value, hedonic value and perceived risk. Information Systems Journal, 24(1), pp.85-114.

De Visscher, F.M., 2016. Financing transitions: Managing capital and liquidity in the family business. Springer.

Kim, S., Koh, Y., Cha, J. and Lee, S., 2015. Effects of social media on firm value for US restaurant companies. International Journal of Hospitality Management, 49, pp.40-46.

Tuten, T.L. and Solomon, M.R., 2017. Social media marketing. Sage