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Executive Summary
The sphere of entrepreneurship consists of a number of peculiarities and activities that have to be defined in time in order to avoid failures and mistakes. In this report, the basics of entrepreneurship will be evaluated from one particular sphere – the restaurant business, and, to be more exact, the activities of one Russian restaurateur, Arkady Novikov, will be taken into consideration.
With the help of this report, it is possible to make certain clarifications as for the different aspects of entrepreneurship and prove that such points like motivation, team management, decision-making process, and proper strategy formulations play a significant role in the development of business and its successful implementation into the world of business. In spite of numerous difficulties and challenges in the restaurant industry, it is still possible to define its main objectives and strive for their accomplishment within a short period of time.
Introduction
Nowadays, many people would like to be involved into the process of entrepreneurship in order to have a chance to earn money, to be recognized in society, and to make use of their skills and knowledge to develop the chosen sphere of business. Carsrud and Brannback (2007) admit that “entrepreneurship is important to economic wealth creation at the national and individual levels” (p. 6), this is why when people get involved into entrepreneurship, they have to be able to recognize the purposes of their activities and the benefits of the chosen steps. The impact of entrepreneurship into the economic sphere is considered as huge, for example, by means of “acting as a conduit through which knowledge created by incumbent firms’ spills over to agents who endogenously create new firms” (Acs et al. 2009, p. 17).
Among the variety of entrepreneurship types, it is possible to define the restaurant business due to its abilities to unite different spheres of human activities. After the evaluation of the current state of affairs, it is necessary to underline that the restaurant business is one of those where the idea of competitiveness and the desire to introduce the best services turn out to be the leading ones. In this report, the idea of entrepreneurship within the frames the restaurant business will be evaluated in order to clear up what the main steps to success in the chosen business are and what challenges may appear on business developers’ ways to this success.
With the help of the achievements of one of the most popular Russian restaurant business’ owners, Arkady Novikov, the concept of the restaurant business becomes clearer and more comprehensible: “Moscow’s massive inequality is a blessing for its high-end hostelries: there are plenty of rich Russians to patronise them and more than enough poor ones to make labour cheap” (The Economist 2006, p. 62). The process of restaurant entrepreneurship’s development is regarded as a complex activity with a variety of issues to be considered: individual learning, motivation, control, team management, etc are the areas that promote the development of the restaurant business and their owners’ activities.
Peculiarities and Objectives of the Project
One of the main objectives of this report is to prove that such aspects like properly chosen entrepreneurial behaviour, individual learning, decision-making process, employees’ motivation and control, self-employment, team management, and strategy formulations are integral for entrepreneurship. Based on the example of the restaurant industry and the activities of Arkady Novikov, the peculiarities of entrepreneurship may be defined properly taking into consideration every single detail. However, the above-mentioned objectives are not the only ones that have to be accomplished in this paper.
Such additional points like identification of personal traits, challenges owners and employers may face, and opportunity recognition also becomes influential for the development of the project. Under the current conditions of living, people have to deal with numerous difficulties; and the idea of entrepreneurship encourages to take serious actions and to evaluate the outcomes of the chosen activities beforehand.
To gain a better understanding of the peculiarities of the restaurant industry, online sources where the ways of restaurant business development are mentioned should be used. It helps to comprehend what precautions and ideas are the most effective for modern times. A number of theoretical literature like books and articles has been also used to define how theory has to be implied to practice and what expectations of such theoretical backgrounds are. For example, Davidson (2002) believes that entrepreneurship research is obligatory for those people who want to know the basics of entrepreneurship. This is why the evaluation of the educative literature is the significant point in this project as well as the interview with Arkady Novikov, a famous Russian restaurateur.
The development of the restaurant industry in such huge countries like Russia have been predetermined by numerous events such as USSR collapse, investments’ growth, and the necessity of Westernization. People were deprived of the opportunities to find enough money to start their own business and earn money, this is why they tried to make use of cheap labour-power; and one of the most successful examples was Arkady Novikov whose achievements and attempts made him popular and recognizable around the whole world. This is why such backgrounds for the restaurant business have to be admitted as the most influential ones.
The methodology of the Project
To present this report and achieve the purposes set, a number of steps have been taking in accordance with the necessary order. First, the evaluation of entrepreneurship and its basics have been made to clear up its essence and its main points. Second, the restaurant industry is chosen as one of the most successful examples of world entrepreneurship and analyzed from a variety of perspectives.
This step makes it possible to define the major aspects of entrepreneurship and the qualities that have to be inherent to people in order to become successful owners of the business. The example of the Russian restaurateur Arkady Novikov is regarded as the most appropriate one because he started his business at the beginning of the 1990s and during a long period of time, he proved that the chosen industry is able to succeed and bring benefits.
To make use of the data collected, it is very important to create time limitations and find out the necessary sources accordingly. For example, the necessity to interview the entrepreneur is burning because his ideas and suggestions make the entrepreneurship research easier and more effective: the main points of the restaurant industry are already defined. With the help of the interview, the basics of entrepreneurship business are defined: though Mr Novikov admits that he never relies on business plans and other strategic formulas, his activities and propositions always gain recognition and support.
The analysis of books helps to define the main theoretical frames of entrepreneurship business and the restaurant business in particular. Up-to-date sources introduce the backgrounds of the chosen industry and properly explain the ideas of how it is better to carry on the process.
In general, the process of data collection turns out to be successful and effective because basic information on entrepreneurship and its features are found as well as several sources about Arkady Novikov’s activities and the development of the restaurant industry in Russia are chosen.
Literature review
The main points to be taken in the report should constitute the holistic character of motivation, challenges, leadership skills, and, perhaps, a little bit of luck. Jack (2005) investigates the changes that took place in Russia during President Putin. In this respect, the core of Russian economic and political relationships, meaning Moscow, flourished with lots of fashionable and cutting edge apartments, restaurants, hotels and other facilities. All these gave stimuli to turning Moscow around. The case in question is that concerning Arkady Novikov, as was mentioned before, is glorious for his intensive capability of opening restaurants throughout Moscow. The researcher writes in the book that the main factors that influenced Novikov to create and further develop his restaurants were the primordial ambitions and creativeness in cooking. That was the focal idea that showed Arcady the way to follow in newly born Russia.
In The exploding restaurant scene – in Moscow (2006) the observers have made a fair remark that after the Soviet reality Moscow experienced a real Renaissance in restaurants. Moreover, this study has reported that Arkady Novikov is presumably the main figure in the pack of restaurants serving Italian, French, Asian, and many more dishes in more in over 60 upper-class and middle-class restaurants (The exploding restaurant scene – in Moscow, 2006).
The leadership and administerial ability of this person characterize the gist of entrepreneurship at large. Moreover, to be a successful restaurateur, as Novikov, means to adjust diversity of approaches to make a definite place attractive. It is seen, as Borden (2009) views it, in the capability of aesthetical as well as cultural tints incorporated in “Bolshoi Restaurant” (or just “Big”) near the famous Bolshoi Theatre.
Motivation and control which is seen on the example of Arkady Novikov were, probably, borrowed by him from some western entrepreneurs who had come to Russia and Moscow, in particular, after the fall of the USSR. In this respect, Hunter (2000) provides a successful story of George Cohon who opened the first McDonald’s in Moscow in 1990. Moreover, Novikov worked there for some time.
Achieving the potential of entrepreneurship, one should be able to face challenges with an initially worked plan of actions. Thereupon, Bolton & Thompson (2002, p. 1) admit that a “true entrepreneur is someone who does things that make a significant difference.” Observing their standpoints according to it, one should realize the same feature as concerned with Arkady Novikov. This person could navigate the growth of restaurant business by way of sequential implementation of a different vision. There is no single restaurant that could repeat some other one. According to the interview with Arkady Novikov, it is seen that his potential is largely based on opportunity recognition.
Harringon & Herzog (2007) provide a scope of arguments to prove that a real restaurateur is one sharing features of personal vision, leadership and sustainability. This is why the range of concerns going round for a real chef should be explicitly based on team management and development in communicating with staff and clients. A specific approach is considered to be referred to the Gastronomic Identity Model (Harringon & Herzog, 2007). Moreover, to add suchlike communication in a more extravagant, Novikov includes the aesthetical components reflection the atmosphere loosely related to the name of the restaurant. This feature demonstrates the way an entrepreneur should evaluate the current stage of progress along with further implications.
In this case, Harper (2006) infers that to make entrepreneurship different means to do it in an extra-ordinary way. The example of Arcady Novikov is reported to be similar a bit to that of Steve Schussler: “He recognized that a number of people wanted more than just a meal when they went to a restaurant – they wanted an experience” (Harper, 2006, p. 96). That is the attribute in market relations and management which shifted the restaurant business in Moscow in 1990s owing to Arkady Novikov. His strategy is largely grounded on going ahead in introducing a visitor to a spectacular and magnificent world of dreams and different association while having meals.
One should admit also the passion with which Novikov opened 2-3 restaurants each year. That is what characterizes him as an intuitive restaurateur. His position also proved to be successful as Novikov never took a glimpse at how thing were going on in different (dark) times for Russian economy. Von Gehr (2007, p. 3) interprets this claim based on position of New York restaurateur, Charlie Palmer: “Analysis cannot replace entrepreneurial intuition and passion.”
With more approaches to entrepreneurial behaviour possessed by Arcady Novikov, one sees the difference in what he succeeded and how it was possible for this entrepreneur. The question is that “the fundamental nature of entrepreneurship is acting on the basis of information and knowledge that not everyone else possesses” (Block, 2002, p. 726). Lahm (2007, p. 2) points that bootstrapping is, perhaps the optimal way in self-employment, self-sufficiency, and individualism to support successful and cutting edge “way of entrepreneurial life.” Thus, reviewing the professional way of Arcady Novikov, one agrees with the fact that he chose initially correct way for growing rich and successful.
Findings
The example of entrepreneurial manner demonstrated by Arkady Novikov in restaurant business provides a set of ideas on how to become a successful entrepreneur. Several studies reported about different algorithms for stepping forward toward new frontiers in entrepreneurship. However, less attention is grabbed to it by the majority of people. The pioneer in marketing cultural and aesthetical features prescribed in the interior and exterior parts of a restaurant, Novikov motivated the rest of entrepreneurs to shape this feature in Russia (Henry, 2007). Moreover, entrepreneurship in creative industries should not be adjusted to some clichés in maintaining business on the whole. It is a sort of creativeness united with personal inclinations to change the environment for better.
Stokes, Wilson and Mador (2009) admit that entrepreneurship in terms of developing markets is quite attractive in Russia and in Moscow, particularly. The fame laid on Novikov is that he could predict what people wanted at the time after the fall of the USSR. Here starts his genuinely distinct entrepreneurial activity. Calagione (2005) states that marketing environmental benefits, helps in expanding personal horizons and business. Thus, entrepreneurship is a dynamic sphere of relationships that need more efforts and creativity and dexterous feature of character.
Further still, the role of entrepreneurship grows when it turns out to be a sort of chain management. Networking business means expanding personal territory of influence. Hence, networks have their own practices in cultural and specifically delineated perspectives (Casson, 2006).
With this idea in mind, Novikov could not just stop increasing his administrative abilities outlined in opening new restaurants on a higher scale of influence. Entrepreneurship in food industries is thought of to be a basic need for the society (Lynn, 2009).
Thus, starting a restaurant, a person should be highly motivated to reach out the pivotal purposes despite facing different challenges on such a “triumphal march.” The thing is that most of the beginners in this field fail after the first year, for the lack of coordination and sufficient planning. Thereupon, Lynn (2009, p. 2) admits: “In fact, the more streamlined you can make it, the better your chances for success.” That is the way it looks today. However, it is still not so late to start a personal restaurant business guided by what the eminent restaurateurs admonish.
Discussion
Looking at the information reported in the literature review, one is about to feel responsible for realizing the features of being a restaurateur. The example of Arkady Novikov is in case, and this clarifies the holistic perspectives enlisted in the paper. The field of opportunities and challenges he faced invigorated him to pioneer new prospects on restaurants in Moscow. The whole evaluation of Novikov, as an entrepreneur, falls into the scope of approvals on the part of eminent researchers in the West.
The arguments are mainly based on concrete facts and assumptions prescribed. However, the continuation of the main idea in the literature review has faced a counter feedback in part grounded on the general entrepreneurial practice. On the other hand, some parallels were drawn up to constitute the practical consequences of rational approach in creative industries.
To say more, the similarities stated in both parts of the report are found at the juxtaposition as referred to the one-sidedness in main points. In other words, the findings outlined in part what has been discussed in the literature review part. The area of the main points discussed includes: decision making, opportunity recognition, team management, and strategy formulation. All in all, there is a distinct transition between the parts related to the personal features of an entrepreneur and entrepreneurship as such. The two parts correspond to each other in terms of the observation, on the one hand, and current inferences, on the other hand.
A complex vision of these parameters indicates the validity of the reported topic. As the culinary industry is in a constant vortex of change, thus, restaurant entrepreneurship should also be flexible to maintain such changes (Hamilton,Cornelio, & Papagni, 2009). Hence, the main points to be discussed have been taken into consideration.
What is more, the difference that is seen between two parts is in the way of challenging the main prospects. Thus, the reviewed literature fits specific topics and ideas that are off in the findings section. Moreover, the scored information in the findings shows more some notes (techniques) to be implemented. The overall discussion does not shake the initial gist of the project in order to complement the genius of being a successful entrepreneur at the very outset of business start-up. At this point there is a unification of what was discussed in both sections of the report. An observer should relate personal suggestions as for the ideas represented above solely in terms of practical improvements. It is so, as the restaurant business is considered to be growing currently. Thus, the further implications in reviewing current and previous studies should propose a global model for reaching success in entrepreneurship.
Conclusion
In the report, the analysis of the entrepreneurship business and its peculiarities has been presented. To narrow down the limits of the research, one particular sphere is chosen: the restaurant industry. The example demonstrated by Arkady Novikov that the restaurant industry might be improved in many different ways like chain management organization, motivation factors, and means of control.
Though sufficient planning is regarded as the crucial step, Arkady Novikov demonstrates that sometimes attempts to break the rules and take actions independently without thorough planning may become winning and rather effective. In order to start a restaurant business, a person has to respond to a number of characteristics and be enough motivated because numerous challenges may decrease the quality of actions and thoughts.
Restaurant business has a number of peculiarities that have to be considered in time. If the owner fails to meet one of the demands and requirements of the chosen project, there is still a possibility to improve the situation by means of changing another aspect of entrepreneurship. Organizational change and its proper management play a crucial role in any business, and the restaurant industry and the actions by Arkady Novikov in particular serve as a good example of how entrepreneurs may improve their work and achieve the purposes set.
Appendices
Interview with Arkadiy Novikov
Introduction from magazine
“ I’m never using business plan for my projects…” Famous restaurant entrepreneur A Novikov used to rely on his intuition.
Co: You are always considered as an extraordinary restaurant entrepreneur and ‘Moscow city’s pride”. What do you personally think about your accomplishments?
N: I don’t like to be praised. There was a moment when many people were saying “ You are the best, you are the number one”. This is very pleasant to hear, but you can’t be the first al the time. In this business, like in sport, there is a constant competition. Many of my competitors are slightly behind me and some of them are even went ahead… That’s why I don’t over react on such comments. We’ve done a lot during past 10 years, but when I think about how many people have done even more, I understood that everything is relative and you always have to think about future perspectives.
Co: About perspectives, what is going to be next? It must be very challenging to control your own “empire”?
N: I think the word empire is not appropriate, empires have a tendency to collapse. I prefer the word “company”, it is more sophisticated. As for my business, control over companies, in particular, they are all under my surveillance and I act as consultant-coordinator. I have business partners who help me in managing, but the main pressure is on managers in some cases on cookers. However sometimes the whole business depends on cleaners and cloakroom attendants.
If they don’t act friendly-nobody will come to our place, if it’s dirty –nobody will ever come back. Everything is important: how the carpet lay, entry illuminated, how waiter smiles to clientele, how the bill is served.
Co: You are often criticized that the interior dominates over “kitchen”. What can you comment on this, what is more important to feed the customer or to create a unique atmosphere?
N: There are a lot of people who go to restaurants? They can be divided on several groups. People who want to enjoy the quality of food, people who want to enjoy the interior and people who want both. Also there are people who just want to hide from everybody. I’m trying to satisfy all of their needs. That’s why it’s difficult to say what is vital for me. I just want to Maximize target audience and to meet their expectations.
Co: Hoe do you begin the work on a new project? You make a business plan, think through the interior…
N: I never create a business plan, though I graduated from economic university in Moscow. I’m trying to keep all in my head, it’s difficult to forecast the success of a new project. The success can even depends on how friendly is your staff. Neither economist nor analytic can predict it.
Open a new restaurant is creativity first of all. It always begins with an idea. Any word can be a stimulus. Every new project is like a child. Parents never know what he will become. Everyone wants hip to be happy, healthy and clever. Even healthy and clever parents don’t always have healthy and clever children. It’s like we do, opening a new restaurant you never know what is going to be like in the end. There is an element of adventurism. There are people who know the business from inside and there are people who just have money but can’t create anything proper.
There is a calling – you can just take the money and begin work, and if it is not, then, even with a million, you risk of burning out. By the way, I wasn’t not born a restaurateur, I studied in the process. But I like to open new restaurants, I get pleasure from it.
Co: In Russia the culture of visiting restaurants differs a lot from European style, where people go to the restaurant at fixed time and often in order only to eat. Does Russian specificity affect the business?
N: In Russia the restaurant business and culture is completely different from that in Europe. It depend on what to compare. Speaking about posh restaurants, posh Moscow restaurants can provide decent competition, as for classic ones we don’t have such. Once I’ve been to Ducas restaurant Plaza Athenee in Paris, with a special “aquarium” room, where you can observe the cookers work. I don’t know how many years should pass in order for our cookers to learn to work like that. They didn’t say a word. I had a feeling that I was attending a surgery operation. They kept eye-to-eye contact between each other. Top class performance.
Of course we also have good cookers but it’s not the same, the main Russian problem is that we don’t have a culture of a supper. For instance it’s impossible to make an Italian business man o stay in his office during supper time. That’s why all places are crowded during this time. From 13 to 15 they have supper time and dinner after 19. I appreciate it a lot. In our country everything is completely different. If the restaurant is 20-30% full we consider it very good.
Co: Is it true that $150 000 is enough to open a small restaurant and you will probably need $500 000 to open a proper one?
N: Not long ago I was invited as a consultant for people who spent $2 million on the restaurant. And u say $150 000? Of course you may try with this amount of money if you want. I can give you an example. Everything depends on what you want to create. Let’s imagine we want to open a new restaurant with you. Let’s say for 50 seats. We will need a place of 300 sq m, in order to make a good kitchen, cloakroom and toilets.
This space we should rent or buy. Good location will cost you from $600 to $1500 for 1sq m per year. It will be about $300000 per year and $ 25 000 per month. Note that you will have to pay from the moment of sighning a contract, but you will probably spend 4months for renovating the place. It’s $100 000 now and $100 000 will go on kitchen equipment, interior, furniture, hire staff and to buy appropriate vines, drinks and food… Very money consuming venture. An you never know when this investment is going to return to you and will it be successful or not.
Co: What is more profitable to open? Posh or cheap place?
N: The both can be profitable. Everything depends on how you manage. For instance, which problems you face opening a posh restaurant? People start to talk about is it tasty or nor, do they like interior or not, I it a good location or not, is there a parking space or not? When you open a cheap restaurant there are no such problems. First of all there should be a high attendance and the proper pricing. The location is a very important point as well, it’s better around the underground or pedestrian zone. In cheap restaurant cases you don’t need a creativity anymore, you should be a ruthless counting. So it’s never clear what is more profitable. The only thing I can say is that a chain of restaurants is always better.
Co: in general, is this business rentable?
N: Of course yes. We don’t have a bank or a rich sponsor.
Co: Do you feel the competition?
N: Of course yes, maybe it’s not good for us but our customers have the opportunity to choose from different prices and quality of restaurant.
Co: do you always buy or rent the space for your new projects?
N: It depends on the circumstances. Sometimes we buy, sometimes rent. Nobody gave me a property for free yet.
Co: Does anything change in restaurant business?
N: Classic restaurant style is becoming less demanded. France is still keeping the brand, nevertheless there are more and more fans of mixed cuisine. Everything is changing-cuisine change, interiors change, there are more and more fashionable restaurants in the world. As you know fashion is constantly shifting.
Co: Restaurant business in Russia is unstable. What if the crisis of 1998 will happened again?
N: Of course it frightens me, I think about it, but it doesn’t scare me that much. As for actual restaurants everything will depend on location, rent terms and loans. Of course every single crisis in this country affects the business.
Reference List
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Bolton, B & Thompson J 2002, The Entrepreneur in Focus: Achieve Your Potential, Cengage Learning EMEA, Stanford, CT.
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Davidson, P 2002 ‘What Entrepreneurship Research Can Do for Business and Policy Practice’, International Journal of Entrepreneurship Education, vol. 1, no. 1, pp.5-24.
‘Face Value: Arkady Novikov, the Restaurant Tsar’, The Economist, vol. 378, no. 8467-8470, p. 62.
Hamilton, DC, Cornelio, L & Papagni, C 2009, Love What You Do: Building a Career in the Culinary Industry, iUniverse, New York, NY.
Harper, SC 2006, Extraordinary Entrepreneurship: The Professional’s Guide to Starting an Exceptional Enterprise, John Wiley and Sons, Hoboken, NJ.
Harringon, R & Herzog C 2007, “Chef John Folse: A Case Study of Vision, Leadership & Sustainability,” Journal of Hospitality &Tourism Education Vol. 19, No. 3, 5-10.
Henry, C 2007, Entrepreneurship in the creative industries: an international perspective, Edward Elgar Publishing, New York, NY.
Hunter, S 2000, Entrepreneurs, Weigl Educational Publishers, Toronto.
Jack, A 2005, Inside Putin’s Russia: Can There Be Reform Without Democracy? Oxford University Press US, Oxford.
Lahm, RJ 2007, BOOTSTRAP MARKETING: AN ANALYSIS OF CONSTRUCTS AND IMPLICATIONS, Conference, Austin TX.
Lynn, J 2009, Start Your Own Restaurant Business and More: Pizzeria, Coffeehouse, Deli, Bakery, Catering Business, Entrepreneur Press, New York, NY.
Stokes, D, Wilson, N & Mador, M 2009, Entrepreneurship, Cengage Learning EMEA, Stanford, CT.
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Von Gehr, J 2007, The Effective Entrepreneur, The Effective Entrepreneur, New York.
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