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Executive Summary
The Swordfish is a seafood restaurant located in Sydney’s waterfront district that specializes in creating healthy yet delicious dishes. It is managed by a team of entrepreneurs who founded the restaurant with the idea that serving freshly caught seafood would result in better flavors thereby bringing in customers by virtue of the quality of the food. While the restaurant is surrounded by other businesses that have similar offerings, the restaurant focuses on a competitive pricing scheme where the average price of an order is $10 with the most expensive item on the menu being $30.
The mission of the Swordfish is cook dishes that are not only freshly caught from the sea but are also healthy by being relatively free from excessive oils, fats or carbohydrates being added to the meal. It is the vision of the business to popularize healthy eating in Sydney by showing that health and good flavors can be combined into a single affordable dish. In five years, it is hoped that the Swordfish could open branches in Toronto and Halifax in order to spread its version of healthy seafood cuisine.
Presently, the business is under a partnership arrangement since it started out as a joint venture between a group of friends that desired to have their own seafood restaurant. There is significant growth potential for this type of business given the increasing level of consciousness people in Canada have been developing when it comes to their health and physical well being. The current total financial requirement of this business is $750,000 in order to establish itself.
The restaurant requires significant upfront capital for the rent as well as for purchasing additional furniture, decorations, kitchen equipment and to hire staff. The operational plans are rather simple and straightforward; the restaurant will buy fresh seafood from companies located near the waterfront and will both sell the excess inventory as well as cook the fresh seafood within the restaurant. Marketing the business will focus on establishing its reputation through the internet as well as by operating a small catering business for events in order to “spread the word” so to speak regarding the restaurant.
Industry Description
What industry does the business operate in?
The business operates primarily under the umbrella of the food services industry whose selling point is the fresh seafood that is served daily in the restaurant.
Demographics
The consumer demographics that the business focuses on consists of individuals that like to eat fresh seafood and are not hesitant to pay premium prices for it. Given the location (the waterfront in Sydney), the business is subject to a niche market of consumers that travel to the waterfront in order to experience the location in relation to its atmosphere, specialty shops and, of course, the seafood restaurants that are located nearby. Do note though that the location of the restaurant severely limits its access to a wider consumer base as compared to being located in a popular shopping mall or within the central business district of the city. This creates issues when it comes to dealing with the competitive environment that the business finds itself in.
Major Players in the Industry
The inherent problem with the current location of the restaurant is that it is subject to a far less diverse competitive market. While the waterfront is an ideal and scenic location, the majority of restaurants within the area are devoted towards the sale of seafood based dishes. As a result, the choice of a particular restaurant by a consumer is subject to greater scrutiny as compared to having a seafood restaurant located in a central business district where there are relatively few, if any, that specialize in the same sort of dishes that are being served.
This creates issues for the business wherein if the quality and type of food is the same, consumer choice would thus focus on the price or aesthetic appeal of the restaurant they would choose. Such a situation necessitates either lowering prices in order to be more competitive or investing into a better restaurant layout which would appeal to a consumers aesthetic sensibilities. Both of these choices result in a loss of capital and, as such, shows the inherent problem when several major players within a single location have the same product type.
Suppliers and Distributors in the Industry
The suppliers and distributors in the industry are from the fishery companies that bring in their catches on a daily basis to the docks. Due to the proximity of the restaurant to the docks and the fact that it buys its supplies in bulk, the fishery companies are able to give a substantial bulk discount.
Key Industry and Economic Trends
Presently, there have been numerous NGO driven movements within the industry to implement more sustainable methods of catching fish in order to ensure that the supply will continue to exist well into the future. This has resulted in the implementation of new policies in the fishery industry which limit the amount of catches within certain locations to specific times of the year. What this means for restaurants that focus specifically on the preparation and sale of seafood is that supplies for specific types of fish or other types of seafood based products will dwindle resulting in increased prices.
Such a situation will have an adverse impact on profits since raising prices may cause a drop in the number of consumers that go to the restaurant. Aside from this, there are also restrictions that have been implemented on the types of fish that are caught such as Blue Fin Tuna which is a highly sought after delicacy yet due to waning supplies has resulted in astronomical increases in its prices. These are the primary factors that seafood restaurants need to take into consideration since subsequent declines in fish stocks can dictate the type of food that can be served.
Social Factors that Impact the Industry
One of the more interesting factors that have impacted the industry has been the popularization of healthy eating habits which has led to people eschewing the consumption of red meat. People have focused more on eating healthy options such as chicken or seafood which the restaurant capitalizes on by providing its consumers with healthy yet affordable seafood options
Certifications Required
The primary certifications required by this industry consist of a health inspection certificate and a restaurant certificate authorizing the business to sell food. There are of course other certificates required such as a tax certificate, business certificate and other such requirements; however, these can be tackled in the local government office that specifically handles them.
Government Regulations that impact the industry
The government regulations that impact this industry consist of:
- Food Safety Standards.
- Employee Safety Standards.
- Restaurant Cleanliness Standards.
- Adherence to proper standards in taxation.
Growth Potential
The growth potential of this industry is actually rather small given the limited amount of space in the waterfront as well as the considerable level of competition between businesses having the same product. However, despite these setbacks, there is still a considerable amount of potential that could be exploited.
Distinguishing Characteristics
In order to distinguish itself, the restaurant will focus on serving healthy seafood dishes that are not overly laden with oils, breading, dressing, etc. These dishes will focus on a more natural flavor for the what is being served and, as such, should be appealing to the growing global consumer demographic that is focused on healthy eating habits.
Direct and Indirect Competitors
The direct competitors in this sort of enterprise are composed of the other seafood restaurants in the general area while indirect competitors come in the form of other buyers of seafood from the fishery company that the restaurant acquires its products from. It is unlikely that the restaurant’s indirect competitors will have any significant impact on the restaurant’s operations; however, the same cannot be said for its direct competitors.
It is likely that the restaurant’s direct competition will bring about some form of price leveraging strategy wherein they will utilize the patronage of their present day consumers along with their larger capital and well established supply chain to lower their prices to make themselves seem more appealing. This is a strategy that needs to be taken into consideration during the first few quarters of operation.
Potential Obstacles and Risks
Some of the potential obstacles that come with establishing the restaurant come in the form of issues in acquiring different types of seafood. At the present, there continues to be territorial disputes in the Atlantic over areas where different countries can fish which could potentially adversely impact the fishery industry leading to declining levels of specific types of seafood. Aside from this, there is also the fact that there may be an oversaturation of seafood restaurants at the pier which could make it harder for the business to properly penetrate the local consumer market.
The Swordfish does not have a first mover advantage and is basically selling the same type of product. This creates issues as to whether or not consumers would actually choose the restaurant’s offerings where there are well established alternatives that they can go for.
Business Description
The Swordfish is a specialty restaurant that focuses primarily on a seafood based menu whose main appeal is its freshness and the fact that the food has undergone little in the way of significant processing or frying before it reaches a customer’s table. The restaurant’s main area is 300sqm (square meters) in size with the kitchen reaching 100sqm. There are 10 tables in the restaurant that comfortably seat 50 people at maximum capacity.
The assets of the restaurant are comprised of the following:
- Furniture and cutleries.
- Restaurant Equipment.
- Storage equipment.
- The various fixtures and decorations that have been placed inside.
What the business does well
In terms of operational value, the business excels in its capacity to provide fresh and healthy seafood at an affordable price to consumers. Since the seafood is bought fresh everyday and other fresh ingredients are used, this creates a level of quality that other restaurants in the inner city simply cannot match. Customers would be able to recognize the difference in quality and the fact that it is affordable contributes towards the appeal of the restaurant.
Sales Volume
The Swordfish would average roughly 30 to 40 people within a given day (more on weekends) with an average of roughly $30 per customer. That is equivalent to $1200 a day and within a month is roughly equivalent to $28,000 (weekends and holidays not included in operational dates). The potential income of the Swordfish over the coming years is reflected below which will be influenced by its growing reputation in the area as well as with its consumers.
This is indicative of the fact that as the popularity of fresh and healthy seafood continues to grow within Sydney, the more likely it is that the number of customers on average that patronize the Swordfish will increase over the next couple of years. Another aspect that should be taken into consideration is the current position of the restaurant in the market as the premier source of healthy seafood cuisine in the waterfront area in Sydney and the fact that it markets this specific aspect of its cuisine as compared to other seafood specialty restaurants within the area. The financial performance of the company will certainly get better and increase over time as the number of its patrons continues to grow.
Innovative Products and Services
Aside from serving healthy seafood, there are no particularly innovative products that the restaurant is serving.
Opportunities
Based on the analysis of Hislop (2012), it was noted that consumers within Canada are generally becoming more self-conscious regarding their health and physical appearance. Strategies in targeting today’s “brand of Canadian consumer” should therefore concentrate on the creation of products that emphasize low fat, no cholesterol and contribute toward a healthy lifestyle. It is based on this that by creating seafood dishes that are delicious, affordable and healthy, this would appeal to the current growing consumer base within Canada that has a high level of demand for such products. One factor that should be noted though is that while such a market does exist within Canada, it is not necessarily isolated to the waterfront area in Sydney.
As such, the restaurant would have to contend with differing consumer classes within the area and the sheer amount of competitor saturation that also exists at the location. Thus, it is expected that the Swordfish will only gain roughly 5 to 10 percent of the expected market within the waterfront area on the basis of the restaurant being “new”. Thus, future prospects for the store will focus on retaining consumer patronage by emphasizing the freshness and affordability of the dishes that are being served.
Production Plan
The total size of the Swordfish will be 500 square feet with 340 square feet being devoted to the sales floor of restaurant. The remaining 160 square feet will be devoted towards the serving and kitchen area of the store. The reason this particular layout was chosen was due to the need to have enough space for the food to be cooked.
In order to determine the average cost of remodeling a restaurant to suit the needs of the Swordfish, the website projectsatoz.com was consulted in order to get an overall evaluation of the costs. It was revealed that, on average, the remodeling expenses can reach $200,000. These costs include the interior modeling of the restaurant which is expected to cost $100,000, the exhaust fans which cost roughly $15,000, a walk-in refrigerator which costs $10,000 and connecting the gas line to the restaurant itself (for the stove/oven) which can cost $10,000 per year.
Materials and Supplies
Supplies (i.e. seafood) are bought from local fishery companies and, as such, there is little in the way of significant tariffs or taxation associated with the purchase. Aside from this, it should also be noted that since these fishery companies are also located near the waterfront, this makes it easy for the Swordfish to acquire fresh seafood as needed and get it to the restaurant before any significant amount of spoilage occurs.
Personnel
The employees of the restaurant will consist of: 1 manager (me), 1 permanent chef, 3 part time chef assistants, 2 in-house servers and 1 person on the register (me). This particular setup was chosen in order to deal with the 10 tables and 10 countertop seats of the restaurant. After going over the average salaries of employees on Canada’s employment website, it was determined that chefs on average have a salary of $3,500 per month, chef assistants earned $2,500, while waiters and waitresses earned $1,800 a month (based on a fixed rate established in Sydney).
Operations
A food service establishment permit gives permission to operate a restaurant, lunchroom, diner, etc., as required by the Sydney Public Health Law and Sanitary Code. The required fee varies from $75 – $175 and is administered by the City District Office.
This is dependent on the size of the restaurant, the location, type of product and is normally based on the discretion of the local district office. While this indicates the potential city fee, this does not include other expenses such as insurance costs, health and benefits, and other similar costs associated with starting a business. Utilizing loop.net (a real estate listing website), it was determined through an examination of local rental prices for waterfront property, that the rough cost for the desired location of the Swordfish is $80 per square foot per year. Since the rental location is 500 square feet in space, the total price is $40,000 per year.
However, it should be noted that this price does not include expenses related to the utilities cost and tax expenses associated with owning a restaurant business. Utilizing Google.com, it was determined that the average utilities expenses associated with a 500 square foot restaurant with average lighting, interiors and air conditioning would cost around $550 to $1,000 a month depending on whether or not it is during the peak season (i.e. summer).
Marketing Plan
The Market
Analysis of the market from the study of Bavington, Lowitt, Nagy & Nelson (2013) that delved into healthy eating habits in Canada shows that there is a sizeable population of healthy eaters in the city that the restaurant can appeal to. Furthermore, a large percentage of this population is located within Sydney which further increases the likelihood of them patronizing the restaurant since it serves healthy seafood that is free from added fats, oils and carbohydrates.
Through the work of Ricciuto, Tarasuk & Yatchew (2006), it was noted that around 40 to 50 thousand people pass by the Sydney waterfront on a daily basis and, as such, this creates a considerable amount of potential consumers to entice. Recent surveys from Wakefield (2007) that examined the area shows that restaurants at the waterfront averaged 40 to 50 customers a day and, as such, it can be assumed that a relatively new restaurant would be able to get at least 30 to 40 a day.
Aside from this, it is also important to note that the experience that customers get out of the restaurant outstrips what is available in a fast food place. In the case of the restaurant, its overall profile has a warm and friendly ambiance which is not only family friendly but actually promotes “a happy feeling” for customers. This creates a significant barrier to entry for future competitors given the ambience of the restaurant and the quality of the food which would be hard to replicate.
The competitive advantage that the restaurant would have is that it would focus not only in creating a good atmosphere for its consumers; it would also focus on selling healthy seafood dishes that would appeal to health conscious consumers. Combined, both factors create a significant competitive advantage that the Swordfish can take advantage of.
Competitor Analysis
As a specialty restaurant that focuses on healthy seafood options within the waterfront district in Sydney, the business has a significant level of direct competition from other restaurants that have similar themes. However, there are advantages that the restaurant has over its counterparts. The first relates to the quality of the service that it is able to leverage. Since it is a relatively small restaurant, it is able to pay more attention to its customers and give them a better dining experience as compared to the larger restaurants in the area. Aside from this, the food that is being served by the business is far “cleaner” so to speak since it contains less oil, fats, salt and artificial flavorings resulting in a healthier menu. This sets the business apart from its competitors and makes it far more likely that health conscious consumers would patronize it.
Technology
Technology has little, if any significant impact on the way in which the restaurant does business aside from the refrigerators and cash register used.
Socio-political environment
When examining the current industry that the business is in, there is little in the way of significant impact when it comes to socio-political influences on the restaurant’s method of doing business.
- Products or services – all the products that will be sold within the restaurant will be fresh and cooked with a focus on ensuring the products contribute to a person’s health.
- Prices – the average price of the food in the restaurant will be $10 with the most expensive item on the menu being $30.
Action Plan
Promotion through Brochures
The primary method of advertising that was chosen for this type of business consists of giving out brochures in order to increase the brand awareness of people regarding the Swordfish. Brochures will be handed out near the waterfront as well as near the various apartment buildings that service the local population. They will also be dropped off at other nearby apartment buildings for the tenants that live there. It is expected that this strategy would be effective when it comes to getting the necessary type of customers for the restaurant.
Promotion through Catering
One unique avenue of promotion that the group can pursue is to have an alternative service for The Swordfish in the form of a catering service. By naming it “the Swordfish catering service”, not only will this promote the restaurant but it will act as an alternative income stream should business become slow. The restaurant already has a large kitchen which should prove to be well suited towards producing the necessary products for a small catering service.
Cost of Printing
After examining various printing options for the brochures, it was determined that using uprinting.com would be the most affordable and convenient option when it comes to the type of brochures needed. The initial amount that will be ordered will be 1,000 brochures that will have a nice advertisement for the Swordfish on the front with the list of products located at the back. With an average cost of $191.63 for 1,000 pieces, the frequency of the advertising process will be twice a month in varying areas of the waterfront.
I.T. Promotion
It was determined that one of the best ways in reaching our target markets in Sydney is to use traditional advertising (newspaper ads) in conjunction with a website with proper search engine analytics in order to help potential travel goers find our restaurant. As such, by having an online presence, the Swordfish Restaurant will be able to reach its target demographics at far easier and more affordable rate as compared to more traditional means of advertising. The Swordfish Restaurant will have a marginal I.T. cost of $2,000 for the website setup and design fee as well as $60 per year for the hosting and domain name costs.
The website will consist of a reservation section, a catering request section and a section where potential customers can view pictures of the restaurant and what kind of food it offers. When taking into consideration the effectiveness of social media campaigns and their capacity to reach thousands of people, it was determined by this report that the use of social media as a means of distributing marketing material for the Swordfish would be an effective strategy as well.
Financials
Note that increases in expenditures associated with employee salaries is based on a yearly increase based on cost of living calculations as well as increases in food expenditure cost associated with growth in sales. Increase in projected sales is based on a achievable 10% increase per year.
Year 1
Labor: $196,000 ($3,500 a month for the chef, $2,500 each for the assistant chefs, $1,800 each for the 3 waitresses)
Utilities: $9,600 ($500 a month for electricity, $300 for the gas oven)
Seafood: $36,080
Additional ingredients: $25,000
Project sales: $288,000
Sample Income Statement: Year 1 estimate along with costs.
Year 2
Labor: ($4,000 a month for the chef, $3,000 each for the assistant chefs, $2,000 each for the 3 waitresses)
Utilities: $9,600
Seafood: $46,000
Additional ingredients: $35,000
Sample Income Statement: Year 1 estimate along with costs
Year 3
Financials
Labor: ($4,500 a month for the chef, $3,500 each for the assistant chefs, $2,300 each for the 3 waitresses)
Utilities: $10,600
Seafood: $56,000
Additional ingredients: $25,000
Project sales: $410,000
Sample Income Statement: Year 1 estimate along with costs.
List
Bavington, D., Lowitt, K., Nagy, M., & Nelson, C. (2013). Where’s the Fish?. Alternatives Journal, 39(4), 24-28.
Hislop, B. (2012). Atlantic seafood industry faces challenges in the years ahead. Canadian Sailings, 1(1), 13-18.
Ricciuto, L., Tarasuk, V., & Yatchew, A. (2006). Socio-demographic influences on food purchasing among Canadian households. European Journal Of Clinical Nutrition, 60(6), 778-790.
Wakefield, S. (2007). Great expectations: Waterfront redevelopment and the Hamilton Harbour Waterfront Trail. Cities, 24(4), 298-310.
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