Marco`S Restaurant: Assessment and Remedies

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Table of Contents

Abstract
Introduction
Operational Costs
Declining Profits
Staffing
Conclusion
Recommendations
References

Abstract

The evaluation of the process of economic ruin incurred by Marco’s restaurant, and the suggestion of remedies thereof is the key objective of this report. An elaborate analysis was done with a specific focus on how the current organization of the restaurant has led to continue to occasion losses and dismal performance. The process includes Operational Costs, Declining Profits, Staffing, and Promotion as the main areas that would determine the analysis and rescue process. Generalized recommendations were made with certain specifications that centered on the need of improving the staff morale, the need to bolster competition in the local industry, and the need to launch aggressive promotion campaigns that would ensure a return of profitability and systematic growth of the clientele. Secondary sources were cited to give force to some of the opinions that are represented in this report.

Introduction

Marco’s Restaurant on High Street in Birmingham is in the grips of imminent collapse unless drastic rescue measures are carried out in good time. For the last seven years since 1994, the restaurant has witnessed a steady decline in profits and is now encumbered by a series of increasing losses. The almost dysfunctional situation has arisen mainly because of administrative oversights. The owners of the facility have been reluctant to introduce operational systems that would adjust the restaurant to the commercial realities of the current economic dynamics. Consequently, the restaurant is now faced with bankruptcy as it is practically insolvent due to the heavy losses it has incurred. This scenario usually results from unchecked overheads against returns. The objective of this report is to point out the fundamental weaknesses that have stifled the growth of Marco’s restaurant leading to its current dismal performance.

Operational Costs

One major reason why Marco’s restaurant has stayed on the path of losses is the heavy costs of operation. Marco’s restaurant relies on a menu of expensive ingredients that cost lots of money. The problem is that the continued making of these expensive foods is without regard to consumer preferences. Most of the food prepared goes to waste since customers have revised their tastes from the times the restaurant began. For instance, the restaurant offers 15 pasta dishes and 25 types of pizza per day. The facility also offers about 12 deserts and all prepared from the restaurant. One major weakness of this restaurant is that in order for the restaurant to sustain its exotic menu the budgetary allocation of ingredients must come up to 657 pounds a week. However, about 365 pounds, about half the weekly budget goes to waste because of the shifting trends in food consumption at the restaurant.

Most of these foods go to waste as the restaurant does not attract sufficient clientele during the breakfast and lunchtime hours. Despite this reality, the owner has stuck to the same routine for the sake of preserving the Italian traditions which is one of the trademarks that the restaurant has always endeavored to use as premium. The opening up of another Italian restaurant in the locality with a flourishing performance is proof that the Italian factor must be customized to meet the specific preferences of the clientele. The owner of the restaurant Marco and Maria have stuck to the exotic tradition despite the fact that it lacks any meaningful commercial value.

Declining Profits

The steady decline of profits at Marcos restaurant in the last seven years testifies the dire need for revamping the organizational structure of the restaurant. The shift from profits and loss over the last seven years is illustrated in the profits of 250 pounds in 1994, to losses of 1800 pounds in 2001. The fact that the business is also exercising the repayment of a loan of 350 pounds per month heightens the predicament. Looking through the functions of the restaurant there are certain areas that could be revised to save the business certain expenses. The core areas of this business could be revised such that there is more focus in areas where much of the firm’s profits seem to originate.

Some of these areas that might be revised to save costs include the abolishing of the breakfast and lunch shifts given the high costs involved in running them against the low profits they bring to the restaurant. The business has been losing about 150 pounds by operating a breakfast and lunch schedule whose profitability fell from 30 percent seven years ago to insignificant levels in the current economic environment. The implication to this abolishing of the breakfast and lunch schedules would be that the business would be able to save over 600 pounds in costs. Shedding off non-performing sectors of an enterprise is one way through which beleaguered firms have turned around their fortunes. This money could be used in meeting some of the firm’s operational overheads in servicing the monthly debt.

Staffing

Marco should inject some professionalism into the facility. The restaurant runs mostly by family members and friends. He should do a gradual fading away of the staff from the friends and family and advertise for positions. As a measure to instill a sense of professionalism at the restaurant, the management should consider promoting some of the skilled workers in the restaurant to managerial positions. For instance, the management should consider hiring Steven in the Kitchen department so that he replaces Marco as the staffer in charge of kitchen operations. This is because Steven is an expert in the field with proven experience and skills. The hiring of trained personnel usually gives the workplace a formal ambiance. He should also assign more staff at the most crucial hours of the evening and face out the rest.

Marco and his wife should not engage in the direct running of the business but instead, delegate the work to skilled workers. The roles of administrators at workplaces should remain administrative and if possible they should limit their physical presence in the working area in order to relax the working environment for the junior staffers. The handing over of the management activities should therefore involve the active selection of managers from the workforce to create room for service improvement. This will give the workplace some ambiance of professionalism and restore the morale of the workers. The management should also take steps and delegate. Similarly, Maria and her sister Clara should relinquish their positions at the front area to employed staffers so that the operations of that particular section capture the spirit of dutiful enterprise.

Conclusion

The rescue of the Marco Restaurant is an activity that shall be anchored on three main areas. These areas are the intervention against the continued drain of profits by cutting on costs and halting non-core activities of the organization. It will also be done by improving the existing services to brand the facility, as an ideal destination for meals and recreation.

Recommendations

As part of a strategy to return the business to profitability, the management should launch aggressive customer promotions and relations exercises. Sales promotions usually create a significant euphoria that a struggling business can effectively convert into goodwill. This should be in form of gifts and other forms of value additions to their services that might be useful in capturing their lost clientele and retaining the present ones.

The restaurant should also make forays into the commercial niche of its main competitor Guiseppe by seeking alternative lunch deals with local offices. This should be done in ways that shall bring out its competitive edge especially through the provision of better and trendy services.

The management should also seek to improve the morale of its workers through the change of their dress code to align with their individual preferences at the workplace. For instance, the uniforms should be replaced with some form of smart casual. This will help rejuvenate the spirit of the workers towards service delivery.

Marco should consider revising his strong cultural links to Italian cuisine in a way that would also celebrate the emerging trends and preferences. One way through which this could be achieved is by aping the system of the main competitor Guiseppe and adding improving on it as a matter of identity.

References

Brigham, F. E, and Ehrhardt. 2008. Financial management: theory and practice. Edition 12. New York: Cengage Learning.

Buttle, F. 2008. Customer Relationship Management. Oxford: Butterworth-Heinemann.

Harte, J. 1997. Management crisis & business revolution. Piscataway, New Jersey: Transaction Publishers.

Kincaid, W., J. 2003. Customer relationship management: getting it right! Upper Saddle River, New Jersey: Prentice Hall PTR. 2003.

Kotler, P., and Gary, A. 2010. Principles of marketing. Edition 13. Upper Saddle River, New Jersey: Pearson.

Nieuwenhuizen, C. 2009. Entrepreneurial Skills. Edition 2. Cape Town: Juta and Company.

Veblen, T. 2005. The Theory of Business Enterprise. New York: Cosimo, Inc.

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