Business Decision Making Zest Restaurant Chain - Solution

Questions: Scenario A restaurant chain plans to open its second restaurant in London. To ensure this is a viable move, the shareholders are keen to understand the market. Therefore you are asked to carry out a planned data collection and data analysis to help the board of directors in understanding the customer pricing preferences.(e.g. income price, age price) Task 1 Report on Data Collection and Analysis, In this report; Create a plan for primary and secondary data collection with presenting the survey methodology sampling frame used Design a questionnaire to collect data and provide a justification for its design Collect data and summarise the collected data using representative values Analyse the collected data using measures of dispersion. You must be able to use the analysis of the pricing preferences to inform and support decision making. Carry out suitable calculations to draw useful and realistic conclusions and provide valid recommendations. Your calculations must include quartile, percentiles and the correlation coefficient. Explain how these calculations helped you to draw useful conclusions. Task 2. Prepare a Business Presentation and a formal Business Report to disseminate information effectively which include; The findings which should be used to draw valid conclusions .You must use spreadsheet software for all calculations and incorporate graphs and charts(line,pie,bar chart,histogram,scatter ) to clearly and effectively present the findings. Trend lines in graphs to assist in forecasting for specified business information. For example, this may include peoples eating behaviours overtime and preferences against seasonal changes. A business presentation to disseminate information effectively Prepare a formal Business Report to be presented to the board of directors Use appropriate information processing tools to analyse the information Plan for the project, identifying relevant CRITICAL PATH, PERT, GANNT Chart, to implement a business process and the recommendations you are suggesting from your findings. For example, a business process to serve customers (It is essential to use appropriate project management software) Different financial tools such as discounted cash flow, net present val ue and IRR functions to evaluate the financial viability of the proposed recommendations Ansers: Introduction The current study focuses on the preparation of report which will discuss the viability of the second restaurant that will be opened by a Zest restaurant chain. The market scenario will be studied in order to understand the preference of the customers in terms of price which can be helpful for the board of director to take decision. Task 1 Plan for primary and secondary data Primary data is considered as a firsthand experience and it can be authentic and reliable. The primary data can be acquired by using different sources such as: Questionnaires: The manager of the restaurant can prepare questionnaire by listing question that can provide true information about the customer preferences and behavior (Bazerman and Moore, 2009). Therefore, the manager can tabulate the answer to reach to a particular point and take decision. Interviews: The interviews can be conducted by the manger in person with the customers in order to know their choices and believes. On the other hand, telephonic interview or social chat can be done to generate the answer from people (Epstein, 2012). Observation: The researcher of the restaurant can observe the behavior of customers and their buying pattern while purchasing the product. Therefore, it would help the restaurant to decide the price for their food menu. On the other hand, secondary data are generated from the resources that already exist. Internal Sources: The manger can gather or study data of other restaurant chain relating to sales and their marketing activity. The sales record can be helpful in knowing the growth of revenue each month and types of marketing activities adopted by other business to attract customers (Brannen, 2009). Moreover, the customer response can be known towards that restaurant that can help the restaurant not to commit the same mistake done by other restaurant. External Sources: The managers can go through different journals, articles, news or internet to collect the information that can be used for attracting the consumers in the restaurant (Ellis and Levy, 2009). The managers can know the factors that is preferred or ignored by the customers. The social networks sites like aNobii, academia.edu, etc. can be useful for gathering relevant information for the study (Grnroos, 2010). Moreover, secondary research paper can help in collecting relevant facts that can be employed for studying the market in more efficient way. Survey Methodology and Sampling Frame The quantitative study can be effective for acquiring useful information from the large pool of customers. Through this study, the researcher can understand the opinions, behaviors, beliefs, preferences, etc. The manager can carry questionnaire survey in order to do the research for knowing the consumers pricing preference (Kjellberg and Helgesson, 2010). Therefore, in order to conduct study, 50 consumers can be taken in account as sampling frame that can provide right idea about fixing price for the product. Design of Questionnaire For designing a questionnaire, quantitative technique can be used for the customers with a preparation of close ended questions. The close ended question has been selected so that marketer of the restaurant can analyze the information at quick pace which can help in taking quick decision (Sandler, 2013). The open ended question has not been considered as it takes more time to classify the responses in useable data. What are the most important factors in selecting restaurant? Total Respondents No. Of Respondents Response % Cuisine 50 12 24 Price 50 10 20 Service/Hospitality 50 6 12 Hygiene 50 18 36 Location 50 4 8 What stimulate you to visit restaurants? Total Respondents No. Of Respondents Response % Loyalty Program 50 2 4 Taste 50 17 34 Price 50 9 18 Variety 50 3 6 Discount 50 6 12 Quality 50 13 26 How much do you spend for a meal in restaurants? Total Respondents No. Of Respondents Response % Over 40 per head 50 5 10 30 - 40 per head 50 7 14 20 - 30 per head 50 12 24 10 - 20 per head 50 16 32 Less than 10 each head 50 10 20 How often do you dine at restaurant? Total Respondents No. Of Respondents Response % Once a week 50 2 4 2-3 times in a week 50 6 12 Once in a month 50 10 20 Twice a month 50 14 28 Once in 2 weeks 50 18 36 What meal do you consume most frequently? Total Respondents No. Of Respondents Response % Breakfast 50 7 14 Lunch 50 10 20 Diner 50 20 40 Beverages 50 13 26 Summary of collected data For conducting the survey, the college student and income group people has been considered as representative value. It can be observed that from first question, price is the third most preferred choice for selecting restaurant. It shows only 20 % out of which 12% are student and 8% are income group. In the second question, taste of the food motivates the people to visit restaurant than price. The 16% college student and 18% income group totals 34% that prefers taste. In the third question, the college student hardly spend more than 20 whereas, high income group people normally bear all the cost per head. In the fourth question, college student preferring going restaurant more in comparison to income group who visits once or twice in a month. Analysis of data using measures of dispersion NUMBERS FREQUENCY X FX Frequency - Mean (Frequency Mean)2 0-5 6 2.5 15 (12.7) 161 5-15 12 10 120 (6.7) 45 15-25 16 20 320 (2.7) 7 25-35 11 30 330 (7.7) 59 35-45 5 30 150 (13.7) 188 TOTAL 935 460 Table 1: Calculation of Measures of Dispersion Mean = 935 / 50 = 18.7 Variance = 460 / 50 = 9.2 Standard Deviation = Variance = 9.2 = 3.033 It can be analyzed from the estimation of measures of dispersion that the most of the customers have same response towards the pricing activities of the restaurant. As the standard deviation is lower this suggests that both college student and income group people significantly have same opinion about the pricing preference (Miller, 2012). On the other hand, the variance between the two representatives is also less which adds that customers prefer other factors beyond going the pricing factor. Explanation of quartiles, percentiles and correlation coefficient Quartile is considered as the value that fragments the data table into four different categories at approximate value into four similar divisions like 25%, 50%, 75% and 100%. Quartile 1 = (6+12) = 9 Quartile 2 = (6+12+16+11) / 2 = 22.5 Quartile 3 = (6+12+16+11+5) / 2 = 25 It can be observed that, the customers does not consider only the pricing factor but also taken in account other issues that meet their expectation and desires that can lead to satisfaction (Boulding et al. 2010). It can be assumed from the calculation that less than or around 25% of the customers takes the price factor while visiting the restaurant. The calculation helped in knowing whether the customer really consider the price or some other factors in order to dine at restaurant. Therefore, it was effective for the restaurant to make decision and restudy the perception of the customers to engage the customer in their restaurant chains in London. From the calculation, it can be observed that, the restaurant perception that customer prefer the price totally fall on the nose (Gil-Lafuente, 2013). Therefore, the restaurant has to think over the quality and hygiene to engage the better customer base in their new restaurant. NUMBERS FREQUENCY Cumulative Frequency 0-5 6 6 5-15 12 18 15-25 16 34 25-35 11 45 35-45 5 50 Table 2: Calculation of Cumulative Frequency Percentile = Number of scores below X / Number of Scores 100 = 45 / 50 100 = 90 percentile It can be analyzed that maximum number of customer may not turn out to restaurant if the restaurant fails in providing quality and hygiene food. Therefore, it lead to loss to restaurant. Price () (x) No. Of customers (y) xy X2 Y2 10 25 250 100 625 20 37 740 400 1369 30 30 900 900 900 40 28 1120 1600 784 45 25 1125 2025 625 50 19 950 2500 361 x = 33 y = 27 xy = 5085 x2 = 7525 y2 = 4664 Table 3: Calculation of Correlation Coefficient Correlation Coefficient = 5085 (33) (27) / 6 7525 (33) 2 / 6 4664 (27) 2 / 6 = 4936 / 7344 4543 = 4936 / 5776 = 0.854 Therefore, it can be conclude that price is positively correlated as one of the factor in relation with the preference of customers. Conclusion and Recommendations From all the study, the management of the restaurant has to taken in account all other factors such as quality, hygiene, hospitality, discount, etc to provide better service in their new restaurant. Moreover, the total quality management can be effective in increasing the performance level and providing best value to the customers. On the other hand, the ambience of the restaurant has to be decorated in pleasant ways that can sooth the customers. The price of the food has to be reasonable. Task 2 Graphs and Charts for representing findings Graph 1: Factors selecting Restaurant Graph 2: Factors Motivating Customer to visit Restaurant Graph 3: Customer paying for a meal Graph 4: Customer Dine at Restaurant Graph 5: Frequent meal consumption by customers Graph 6: Satisfaction level of customers Graph 7: Turnover of Restaurant Graph 8: Restaurant Growth Rate in London It can be observed from the graphs that restaurant chain can gain benefit from the market of London that can ensure better sales and profit for them. On the other hand, the shareholders can be able to receive benefit too. Moreover, the turnover of the restaurant can increase more. Trend Lines Graph 9: Trend Line of Customers eating behavior overtime Graph 10: Trend Line of restaurant growth rate in London Business Presentation Formal Business Report The plan for expanding the restaurant chain in London can turn out to be profitable venture for the whole venture and shareholders. The market research conducted by the researcher shows that the market of London is viable to start a new operation. The restaurant growth rate in London is booming that can be effective for long term profitability and gaining better market share. On the other hand, the restaurant can be able to attract large number of customers. The current financial growth of the restaurant shows that the restaurant has positive chance to excel in London with their restaurant as it is well known in the present market. Therefore, the image of the restaurant can be effective in engaging customers and number of suppliers (Birt, 2012). As per the primary research, which is conducted on the basis of questionnaire points out that customers mainly prefers quality and taste first and other factors are consider secondary. Therefore, for providing the best service and do well, th e efficient and quality employees has to be hired that can provide superior service and also produce quality food that can satisfy the customers (Bsr.org, 2014). On the other hand, the researcher presented before the board of directors that the restaurant has to be careful from the well established restaurant such as Chez Bruce and TheWolseley Restaurants (Gummesson, 2009). This restaurant has a better customer base in the proposed area. Therefore, quality, price, ambience of the restaurant has to be designed that can help in giving tough challenges to those restaurants. Apart from that, the growth rate of restaurant in London shows a positive sign that restaurant can earn can earn high profit that can help in future expansion. Moreover, the turnover rate of restaurant is increasing at higher rate and due to that many small restaurants are earning good and it shows a good chance that the restaurant can also increase their turnover value (Carpenter and Fairhurst, 2009). The eating behavior of the consumer reveals that, behavior of customers in London has changed and customers have become health conscious. Therefore, the fatty food product has to be removed and organic and low cholesterol food has to be supplied if profit has to be earned. Application of appropriate information processing tools Management Information System: Through this technique, the management can pass on the related information about the working behavior or providing service to consumers to the employees. Therefore, decision can be made on the basis of MIS and for taking tactical and strategic decision and handling daily operation, DSS can be adopted (Ho, 2010). Business Intelligence system: The system can be effective for analyzing the data in order to reach at effective decision. The management of restaurant can be able to combine skill, technology, process, practice and application for evaluating the information and develop better decision (Fraedrich et al. 2011). Therefore, it can help in improving the operation of restaurant and attain goal of opening restaurant in London. Project Plan and determination of critical path TASK 1st Week 2nd-3rd Week 4th-5th Week 6th Week 7th Week 7-8th Week Plan for Business Approving Planning Recruitment of project team Market Study Market Analysis Developing Marketing Plan Scrutiny of the Plan Implementing plan Project Attainment Table 4: Gantt char for Restaurant business Critical Path Analysis TASK Activity Duration Plan for Business 1 5 months Approving Planning 2 4 months Recruitment of project team 3 10 months Market Study 4 8 months Market Analysis 5 6 months Developing Marketing Plan 6 10 months Scrutiny of the Plan 7 7 months Implementing plan 8 11 months Project Achievement 9 5 months Figure 1: CPM for Expansion Plan (Zest Restaurant) Start= Activity 1 + Activity 3 + Activity 4 + Activity 7 + Activity 9 = (5+10+8+7+5 = 35) Start= Activity 2 + Activity 5 + Activity 6 + Activity 8 = (4+6+10+11 = 31) Start= Activity 2 + Activity 1 + Activity 3 + Activity 4 + Activity 7 + Activity 9 = (4+5+10+8+7+5 = 39) Start= Activity 2 + Activity 3 + Activity 4 + Activity 7 + Activity 9 = (4+10+8+7+5 = 34) Start= Activity 2 + Activity 5 + Activity 6 + Activity 7 + Activity 8 = (4+6+10+7+11 = 38) The 3rd route can be effective for the restaurant to implement the plan and provide quick service to customers. Financial Tools Net present Value Year Cash Flow Discounted Cash Flow (10%) PV of cash flow 2014 35600 0.909 32360 2015 40000 0.826 33040 2016 43000 0.751 32293 2017 47000 0.683 32101 TOTAL 129794 Initial Investment 117850 Net Present Value 11944 It can be observed that, restaurant can be able to generate profit from the Londons market. Year Cash Flow Discounted Cash Flow (14%) PV of cash flow 2014 35600 0.877 31221 2015 40000 0.769 30760 2016 43000 0.674 28982 2017 47000 0.592 27824 TOTAL 118787 Initial Investment 117850 Net Present Value 937 At 14% IRR rate the restaurant can be able to equate the initial investment of restaurant with the PV of the future cash flow. References Bazerman, M.H. and Moore, D. (2009) Judgment in Managerial Decision Making. 7th ed. Hoboken, NJ: John Wiley Sons, Inc. Birt, J. (2012) Accounting. 1st ed. Milton, Qld.: John Wiley and Sons Australia. Boulding, W., Staelin, R., Ehret, M. and Johnston, W. J. 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