Dalle's Business Strategy to ensure business doesn't close


#1

Suppose you are the manager of a restaurant (e.g., Dalle‘s) in Kathmandu. The economy is doing poorly, and people are not eating out as much as they used to. If you do not do something to increase revenue or decrease costs, you may have to close the business. What strategies will you adopt to make your business sustain and flourish? Defend your arguments and how you would experiment with different strategies as well as take risks and foster collaboration to attract additional local customers.


#2

Economy recession puts customers in a position where they have to set a priority between spending and their expenditures. They tend to reduce their spending and save money for unforeseen activities. This is more prevalent in a country like Nepal where people prioritize saving over spending due to lack of job security, solely being responsible for the whole family and instable economic and political condition.

If I were a manager, I would experiment on the following strategies to sustain my business.

Creative Marketing

When the economy is down, it forces you to spend the money carefully. Nonetheless, challenges give rise to innovation. I would make extensive use of social sites as they are the cheapest form of marketing which offers a wide range of coverage. Besides, people continue to use social media regardless of the political or economic condition. I would collaborate with organizations such as e-sewa which would maximize the visibility of my restaurant, with online food delivery services such as Foodmandu and Bhoklagyo. Besides, I can also partner with organizations in exchange of gift vouchers when people eat at my restaurant and vice versa for the organizations I partner with. I would also look back at my sales in the past to observe the type of demographics that has been recurring, to effectively prepare a marketing strategy targeting them.

Reengineering the product

As people cannot spare money to spend in the restaurants, I would work on lowering the costs of the product to maintain a constant flow of customers. It can happen through bulk purchase of raw materials. I would also hold meeting with my team on what food item is sold more frequently than others. KFC is famous for their chicken, Pizza Hut for their pizzas and Delicious Momos for their momos. The item which is the bestseller of my restaurant could be sold at a slightly lesser price, enticing people to come back for it. Meanwhile, price of side dishes that people order with this item could be increased. Likewise, I would market such items which has more profit margin than the ones with lower profit margins. I would also try to introduce items in my menu, which would cost me less but would fetch me more sales and profit margins.

Catering to customer needs

If people are not ready to eat outside, why not take food to their home? Giving them services as free delivery or partnering with food delivery companies could still work in continuation of sales as it saves people the cost of coming to the restaurant. To add to that, I would go and try to associate my restaurant with offices, and corporate houses around my location to provide lunch services to them to maintain sales and regulate the cash flow. People have to eat lunch regardless. If I am able to provide them lunch at a price they would have to spend anyways, along with the benefits like reward points giving them a free lunch for say, every fifteenth time they use my service, then it would definitely be appealing to them.

Referrals

Referrals are popular these days. Wouldn’t it be great if it fetched you a cup of cappuccino by just referring the restaurant to some of your friends? Getting some blog writers write about the restaurant in their blogs, getting reviews published in the newspapers are some of the things I would focus on. Restaurant reviews are published regularly on “The Himalayan Times” and on a Youtube program sun by M&S v-mag.

Specific timings and local context.

Many restaurants, especially bakeries, offer discounts in the evening or at certain time of the day. I would also introduce this in my restaurant where customers can get the same food at a cheaper price for some time period of the day.

I would also bring in schemes such as special discount for local customers as they would bring in their family and friends to make use of the discount and in turn, my business will keep running.

Events and special food items

I would take time to organize events in my restaurants on a regular basis. Or at least, find people who would organize their events at mine. This would ensure the flow of customers in my restaurant. For instance, stand-up comedy is relatively new in Nepal’s context. If I could get someone to arrange their stand-up show in my place then, I would be supporting a new initiative, creating visibility for my restaurant and also generating some sales.

I would also take regular inputs from my staffs on improvisation of food items. Fusion of local food to that with modern ones would be a good enough risk to undertake. Serving of a new food item on one special day of the week, could attract customers in search of new food items. It also generates some kind of excitement among the customers as they would want to come back each week to try that special dish.

Quality of the food

Most importantly, the quality of the food at my restaurant would never be compromised. There are various ways of cutting down the costs and to increase the sales but compromising on the quality of food is something I would never do. I would work on creating a brand value of my restaurant by maintaining the quality regardless of any recession or economic downfall.


#3

When the economy is doing poorly, people will opt for saving money and eating out less is one of the ways to do so. The economy downfall is something no business can control but what they can do is to change the strategies to sustain in such difficult times. The given scenario is challenging for any business and it is the time when the managers/leaders have to provide serious attention for working towards the strategies and ideas that will help them to reduce costs and increase revenue in order to prevent the business from closing down.

As the manger of a restaurant in Kathmandu, following strategies can be adopted to sustain and flourish the business during economic crisis:

  • Customizing Menu: If the menu is customized with less number of items served, it will reduce the areas of expenses. But customizing menu does not mean randomly removing the food items from the menu. For this, we can take survey from the customers and look back at the trend of items ordered. The items that are ordered less frequently like once or twice a month and those with the very less profit margin can be excluded. The highly ordered items with the reasonable profit for the restaurant should be kept in the menu. This will help to limit the costs, increase the speed of service delivery and helps in creating a niche market for the products we are offering.

  • Paying Attention Towards the Quality of Food: The main reason for people visiting the restaurant is for food. The ambience, behavior of staffs are important but if the food served is not as expected, they cannot help in retaining the customers. By limiting the number of items in the menu, we can focus on few dishes to be offered and this will make it easier to control quality and ensure hygiene in the dishes we serve through standardization. Offering hygienic food will help to flourish the business through word of mouth advertisement by the satisfied customers.

  • Redesigning the Marketing Strategy: In order to sustain in the competitive market, marketing is must. The use of social media is the easiest and one of the most effective means of marketing these days as it helps to reach a lot of people at once. As a manager, one needs to ensure active presence in social media and online market. The collaborative marketing strategy can also help in this. For example, collaborating with a gift shop and beauty salon and offering the customers with a gift and/or free coupon for some beauty treatment over the order of certain amount can help in flourishing the business of all the parties involved. Similarly providing certain percent discount to the ones who refer their family or friends on continuous basis is also an effective marketing tool. In addition to that, happy hours scheme can be included when the food and beverages are offered at cheaper rate during certain hours. It will help in reducing cost through mass preparation and increase revenue through higher number of customers.

  • Working on Cost Reduction Models: The elimination of middlemen through direct contact with the suppliers of raw and unfinished products, use of alternative and cheaper sources of energy for cooking and reduction in the cost in human resource through of job sharing help in the reducing the cost and maintaining sustainability of the business.

  • Supporting and Showing up in Local Events: The people who live nearby the restaurant are the major customers for any business. The restaurant can make itself visible for the people of the community by supporting and showing up at the events organized in the locality. The support should not be necessarily be in monetary terms. This way the company is fulfilling its part of corporate social responsibility and at the mean time making people obliged to give back to the restaurant for similar support in the future.


#4

For a business to flourish or struggle there are no shortcuts. It’s based on the decisions and actions that the business takes and the timing of it as well. A good decision at a bad time makes it a bad decision itself. For anything to work perfectly, right decision should be made at the right time. However, having said that there’s nothing that states how something will work and some won’t in the business world, the business should always be willing to take a risk and move ahead with the consequences.

To have a successful restaurant, the rule is simple, always have the right intention as the restaurant owner and pass the same to all your staff. Train them well and have a solid business plan. You can’t expect customers to visit back again if you’re serving them food on a dirty plate or don’t provide them water even after several minutes of order. Location is very key as well. The business should test the menu for what will work, what won’t and must always be willing to remove or add items as per the demand of the customer.

All thing aside and focusing on the current state of the Dalle as in the scenario provided. The business is struggling and failing to do well as expected. It currently serves from five outlets around Kathmandu. The first thing I will want to do is to retain the current customer and try to attract new ones. For this, I’ll start off with a survey of the people that visit the restaurant on what they like, dislike and what they want to be improved. From scanning through the feedbacks provided in the form of review in Google Business, Facebook, Trip Advisor, it is obvious that we as the restaurant should train our staff well and also provide a glass of water to everyone while going to take an order or just after. At the moment, people aren’t provided with one even after several minutes of order and is something that makes the customer furious. The other thing I would like to do is speed up the process of serving food. Having a large variety of items and if people just ordered many of those, it’s difficult for ones at the kitchen to deliver at a speed with the same quality. So, it’s important to identify the demand for the product that we serve. If there’s an item which is just ordered like once every day (or very few times), that product can be removed from the menu and focus should be shifted to the ones that are selling well. That way, the staff’s workload will be cut off as they don’t have to divert to prepare a different set of meals. Also, the resources which are spent to prepare those items are saved as they won’t be required anymore. Helping serve food faster, reduce cost and also prevent wastage.

In addition to that, I’ll keep marketing the product and service to attract new customer with improved serving time, great ambiance, hygienic food, and competitive pricing. The campaigns can run on Facebook a very popular social media platform among Nepalese youth. That way, at a very low cost of marketing, we can reach a huge mass around Kathmandu (with targeted ads). I’ll also make sure that the business’s food cost is in line and isn’t losing money by constantly checking the inventory, preparation process of the food, wastage of it and pricing. Looking at the trend and practices, we can create a custom menu every single day (different for different location as the demand varies as per the location as well) with few best sellers always sticking to the menu and others changing over. That way, it’ll give an idea of what sells and what doesn’t that well making the business plan for a menu that really works over a period of time to have a menu that does works – even then the business should be willing to make changes as per the demand of time.

There is so much more that can be done like by social media contest with prizes, add picture boards in (or outside) the restaurant so that people can take a photo around it and with current tech-savvy youths, they’ll certainly take a snap and share. But for the time being, that is how I’ll start to bring the business back on track as when it comes to restaurant simple things matter and if people feel they’re treated well with the ambience, quality of food and the service, they’ll certainly return as often as they can and will spread the word around to the people they know as well.


#5

Economy recession puts customers in a position where they have to set a priority between spending and their expenditures. They tend to reduce their spending and save money for unforeseen activities. This is more prevalent in a country like Nepal where people prioritize saving over spending due to lack of job security, solely being responsible for the whole family and instable economic and political condition.

If I were a manager, I would experiment on the following strategies to sustain my business.

Employee Retention

When the economy is down, it is obvious hard to retain employee with paying. But, when they are in our hard time, we can also share the situation to them for their retention. This is important because employee come under the core team. Here, if the situation is worst then usually people use to fire there employee. This is not the solution for the company and the employee. Rather, we can share the real situation to them and in spite of paying their full salary we can pay half and make them with us for the time. I think this would play more attachment between company and the employee (Mishra, Spreitzer & Mishra, 1998).

Creative Marketing

When the economy is down, it forces you to spend the money carefully. Nonetheless, challenges give rise to innovation. I would make extensive use of social sites as they are the cheapest form of marketing which offers a wide range of coverage. Besides, people continue to use social media regardless of the political or economic condition. I would collaborate with organizations such as e-sewa which would maximize the visibility of my restaurant, with online food delivery services such as Foodmandu and Bhoklagyo. Besides, I can also partner with organizations in exchange of gift vouchers when people eat at my restaurant and vice versa for the organizations I partner with. I would also look back at my sales in the past to observe the type of demographics that has been recurring, to effectively prepare a marketing strategy targeting them.

Reengineering the product

As people cannot spare money to spend in the restaurants, I would work on lowering the costs of the product to maintain a constant flow of customers. It can happen through bulk purchase of raw materials. I would also hold meeting with my team on what food item is sold more frequently than others. KFC is famous for their chicken, Pizza Hut for their pizzas and Delicious Momos for their momos. The item which is the bestseller of my restaurant could be sold at a slightly lesser price, enticing people to come back for it. Meanwhile, price of side dishes that people order with this item could be increased. Likewise, I would market such items which has more profit margin than the ones with lower profit margins. I would also try to introduce items in my menu, which would cost me less but would fetch me more sales and profit margins (Cooper & Kaplan, 1988).

Catering to customer needs

If people are not ready to eat outside, why not take food to their home? Giving them services as free delivery or partnering with food delivery companies could still work in continuation of sales as it saves people the cost of coming to the restaurant. To add to that, I would go and try to associate my restaurant with offices, and corporate houses around my location to provide lunch services to them to maintain sales and regulate the cash flow. People have to eat lunch regardless. If I am able to provide them lunch at a price they would have to spend anyways, along with the benefits like reward points giving them a free lunch for say, every fifteenth time they use my service, then it would definitely be appealing to them (Singh, 2006).

Specific timings and local context.

Many restaurants, especially bakeries, offer discounts in the afternoon, evening or at certain time of the day. I would also introduce this in my restaurant where customers can get the same food at a cheaper price for some time period of the day.

I would also bring in schemes such as special discount for local customers as they would bring in their family and friends to make use of the discount and in turn, my business will keep running.

References

Cooper, R., & Kaplan, R. S. (1988). How cost accounting distorts product costs. Strategic Finance, 69 (10), 20.

Mishra, K. E., Spreitzer, G. M., & Mishra, A. K. (1998). Preserving employee morale during downsizing. MIT Sloan Management Review, 39 (2), 83.

Singh, H. (2006). The importance of customer satisfaction in relation to customer loyalty and retention. Academy of Marketing Science, 60 (193-225), 46.