BORMIOLI ROCCO ALMA PLAN First of all, in order to manage restaurant in a ‘marketing oriented’...

B O R M I O L I R O C C O

ALMA

MANAGEMENT LESSONS

02

PLANNING AND SCHEDULING WORK OF RESTAURANT ESTABLISHEMENT

MANAGEMENT LESSONS 02 - PLANNING AND SCHEDULING WORK OF RESTAURANT ESTABLISHEMENT

STAGES OF MARKETING MANAGEMENT

INTRODUCTION

Marketing techniques play a fundamental role for any business.

In the restaurant industry their use is particularly important due to the specific characteristics of the business. Manufacturing industry produces goods that can be stored for some time and then distributed. Only from time to time producers receive feedback from their clients. Restaurants on the other hand, create ‘pro-ducts’ that need to be consumed immediately and in most cases it’s done in the same physical place. Talking about restaurant business we observe product/service dual nature: it is at the same time tangible (product) and intangible (service).

Another differentiating characteristic of the restaurant industry is the great importance of human resources that ma-kes the quality of product/service less uniform. In the hospitality/restaurant sectors the variability and incoherence between product/service is one of the leading rea-sons of customers’ disappointment.

That’s why the correct use of marketing strategies is crucial for this industry.

MANAGEMENT LESSONS

There are various strategies that can be adopted to make the business successful:Here are some of the most important ones:

• Staff needs to be chosen skillfully with a maximum attention. Low quality team member or one that is not well-trained can ruin in few minutes weeks or months of company efforts. The waiting staff can contribute positively and make ‘tangible’ the service

• The ‘tangible’ part of the product/service needs to be adequately designed (menu and wine list), presented and served.• The restaurant location is of the vital importance. The restaurant setting is the key factor to make business successful

or unsuccessful. The term ‘location’ we use to describe tangible factors as decoration, setting, cleanliness, staff uni-forms as well as ‘intangible’ factors as the feeling of staying in a secure and relaxing environment, the feeling of being welcome.

All these strategies do not need to be improvised but should be well programmed, managed and controlled by the ma-nagerial team.

02 - PLANNING AND SCHEDULING WORK OF RESTAURANT ESTABLISHEMENT


MARKETING PLAN

First of all, in order to manage restaurant in a ‘marketing oriented’ way, it’s necessary to develop a marketing plan.

Creation of well-organized marketing plan can bring valuable results it’s got its pros and cons however.

The advantages include: building company capability to follow market changes, to face and support them; helping managerial staff to use changes to the company advantage and to modify in time marketing strategy.Moreover, without data, it will be impossible for the managerial staff to understand the gap between obtained results and those prefixed.

The disadvantages are connected with the effort to create and implement the plan as well as with the time and money; in any case if the plan is developed correctly the benefits should outweigh clearly the disadvantages.


The marketing management process cannot be isolated from other processes taking place inside the business (techni-cal organization, human resources management, administrative management).It is composed of two stages:• Analytical and cognitive• Decisional and operative

The correct approach to marketing plan (as shown in the figure on the next page) includes the following activities:• Analysis of the business environment;• Goals definition;• Definition of the strengths and weaknesses; • Listing of possible alternative strategies;• Choice of the best strategy;• Development of the detailed action plan;• Plan implementation (from analysis till action);• Evaluation of the results.


strategic marketing operative marketing

MACROENVIRONMENT

• Economic indicators• Consumers trends• Legislation• Social environment• Political environment• Technological envi-

ronment

MICROENVIRONMENT

• Internal organization• Clients• Suppliers• Competitors• Potential new entries

• swot analysis• Development strate-

gies• Segmentation and

targeting• Positioning

• Product• Price• Place• Promotion

• Sales• Costs• Marginality• Break even analysis• Budget• Management control

business environment analysis

planning and controlling


STRATEGIC MARKETING

Analysis: Instruments for sistematic and continuative

analysis of market needs

• Management set up• Implant choice• Localization• Competitive strategies• Dimensional development• Development through networks

and alliances

OPERATIVE MARKETING

Actions: Marketing Mix operative leverages

• Menu management• Pricing• Restaurant space management• Communication• Promotional activities• Management of supplies• Logistics management• Service• Staff

MANAGEMENT LESSONS

COGNITIVE AND ANALYTICAL STAGES

The aim of such analysis is to collect, select and elaborate information in order to make management understand cur-rent framework and prospective external moves relevant to the business.

Such analysis needs to be performed considering two environments:• General or macro-environment: including all external factors on which company doesn’t have any influence but

allow to deduce threatens and opportunity;

• Competitive environment or micro-environment: company and all the related business players; from this analysis company can deduct its own strengths and weaknesses.



DECISIVE STAGE

Needs to be faced with the following approaches:

Analytical approach

• Analysis and definition of the selected market needs• Market segmentation: macro and micro segmentation• Analysis of the potential market attractiveness• Competitive analysis: definition of the advantages over competition• Definition of the positioning strategy

Executive approach

• Drawing up of the marketing plan (goals, strategies, tactics);• Definition of the marketing levers following integrated marketing approach (4P: Product, price, Place, Promotion);• Budget definition (sales budget, purchase budget, HR budget, etc.) • Execution and control of the activities.

MANAGEMENT LESSONS

MARKETING MIX LEVERS

While strategic marketing focuses on the business as a whole, its environment and competition, operative marketing focuses mainly on product and its characteristics, price, its introduction to the market, promotional strategies.

Marketing mix describes the various marketing levers that intend to reach company goals starting from satisfying the needs of customers. Company needs to use correctly all the variables to make the product/service more attractive to the consumers, more than their competition products.

Those levers are usually called the 4Ps of marketing:• Product • Price• Place• Promotion

In the restaurant business sector those 4P need to be harmoniously implemented ‘by restaurant’ and ‘in the restau-rant’. The goal is to stimulate and guide customer acquisition process, make them satisfied and loyal; differentiate products/service from competitors. Product, price, promotion and distribution represent marketing mix variables.


MANAGEMENT LESSONS

Il productNowadays, it’s impossible that companies, especially those serving food, can remain on the market always offering the same products: changes in production techniques and new trends generate a request for quality product that needs to be genuine and creative.

Also the customers’ life habits and their social characteristics have changed so as their needs and requests of services and products. With the help of the updated market surveys it’s possible to navigate among customers choices and de-cide which segments to target, it’s however important to quantify and classify them according to the selected criteria: age, gender, income, profession, social status, religion, nationality. In order to formulate marketing strategy it’s also important to compare the attributes of the product/service to those of the competitors. Another crucial factor is the ‘assortment level’ meaning whole set of products offered to satisfy the clients’ needs and make them loyal (variety of food&beverage proposals, price range, specialization degree, innovation etc.) .


MANAGEMENT LESSONS

For the restaurant industry ‘the product’ is intended as both physical object and intangible service. Not only the pro-duct content is important but also is its packaging (pre-packed products packaging, dish presentation, mise en table) as well as the way the product is served. All those features are important to define the product. IIn order to plan and manage this lever it’s important to pay attention to the aspects related to the staff:

• skilled and professional kitchen staff ;• skilled and professional waiting staff;• materials, layout, lighting, cleanliness and atmosphere;

PriceThe price is the most important and delicate lever among marketing mix elements. Price attracts customers but it also directly influences the business profitability: if it’s too low it can give impression of low quality and be counter-produc-tive. Pricing is often one of the most complicated and influential actions the manager needs to take. Price can create the last friction between the product and the consumer needs so it has to be justified by the product utility and quality.


MANAGEMENT LESSONS

Obviously, price strategy depends on the company goals and various factors:

• if the business objective is increase in profits the price needs to be in the high-range (with a risk that the num-ber of requests will lower)

• if the business goal is to maximize sales the price needs to be low (compatibly with distribution and production costs)

• if the aim is to gain market share the prices needs to rise systematically (in order to increase profits and at same time block competitors)

PlaceAs place it’s intended the location where customers can buy product/service and the way to reach the location.The choice of the location is of crucial importance as it cannot be changed but only managed.The elements to consider are potential and characteristics of the market in the selected area (number of residents, income, number of tourists etc.) the intensity and typology of competition, as well as regulatory constraints.


MANAGEMENT LESSONS

PromotionAs promotion we intend all the ways to communicate what company can offer to the clients. The most significant elements of this marketing leverege can be summarized in:• Communication related to meny and wine card;• Event organization (degustations, theme evenings, parties etc.);• Pubblicity;• Public relation;• Web presence (website, social networks etc.);• Direct marketing (fidelity programmes/cards).

Balanced and combined use of all those elements can bring much better results that focusing mainly on one of them.



LEVERS OF DIFFERENTIATION

In the restaurant industry as well as in many other industry types the competition tends to have strongly local dimension that makes it necessary to adapt the business management to the competetive conditions of the single ‘square’ where the business wants to emerge. The following actions need to be implemented:• Differentation strategies aimed to ‘steal’ clients from our direct competitiors from the same area;• Strategies aimed to maintain and consolidate the aquired customers base

The main levers of differentiation of the offer of restaurant establishments (restaurants, bars, pizzeria, ice-creamparlors etc) are:

• Layout - quantitative and qualitative management of the internal and external business area;• Menu – managament of assortment range and variety;• Price – defintion and management of the offer convenience • Staff – related to the management of the team and service efficency

Balanced and coordintaed manovour of all the levers allow the restaurant to propose a distinctive offer that gives bu-siness advantage over the competition.


The layout lever

Architectural configuration represents one of the principal success factors, moreover, the dimensions and functions of the spaces contribute to define the format of the restaurant (multifunctional bar, bar trendy, restaurant-trattoria etc.). This factor is not so crucial in the distribution chain formats (supermarkets, hypermarkets etc.). Consumers go to the supermarkets because of their utility and their need to purchase necessary products, from the other hand they go to eat out motivated by pleasure and hedonistic needs. This feature makes it more important for restaurant business to take care about the business dimensions and organization of the spaces.

The competitive relevance of the architectural aspects requires business to plan spaces coherently with menu cha-racteristics, target customers, price range and quality of the service proposed.

The ideal layout of the restaurant should satisfy at the same time two different competitive needs: • guarantee comfort and pleasure of customers’ stay in the local• facilitate work of employees (waiting staff, kitchen staff).


Taking in consideration the above, the layout planning should consist on giving adequate dimension and function to the different typologies of areas, that can be generally classified as external and internal.

The external ones include ‘parking area’ (parking, garage and similar) and areas dedicated to handling of cargo (loa-ding and unloading of raw material food&beverage). These spaces are not directly related to the restaurant activity, they are also not present in all of the establishments.

From the other hand, the internal spaces directly contribute to the restaurant activity and can be classified in:

• warehouse space: where the goods are stocked before being transformed or sell (cellars, storages, cold rooms etc.)• work space: where the raw goods are transformed into final products/service (kitchens, laboratories, wine bars etc.)• consumption space: where food and beverage are served to the clients (seating places, tables, bar counter etc.).


Different dimensions and composition of the spaces is also conditioning productivity levels of different formats.

It’s possible to calculate the following space performance indicators (KPI - key performance indicator):

• indicator of the comfort of the seating area (m2/ place to seat): relation between the consumption area and number of seats. The higher the number, the larger area is dedicated for each seat so as consumers will feel more comfortable;

• indicator of the productivity of the consumption area (€/m2): relation between the business income and the dimension of the consumption area. The higher is the value of this KPI, the higher is the productivity of the consumption area;

• indicator of the productivity of the seating space (€/ place to seat): relation between the business income and the number of places to sit. The higher is the value, the higher is the value of sales related to each seat, and the better is the productivity of each table.


The menu lever

The menu lever is a crucial element to guarantee the success of the establishment. The variety and type of the menu is important to give consumers information about the restaurant offer.

This marketing lever is present in the public establishments as restaurants, mostly those serving at the table where consumers order full meals and need information about restaurant offer.

Menu can play important role in differentiating the local with the help of combination of variables as:

• clarity and facility of consultation;• nice quality of the editing and the layout;• variety of food offer for each meal;• Detailed information about ingredients and preparation techniques;• Coherence between local characteristics (location, price range, service level etc.) and the products offered;• Menu changes according to the season/weather;• Possibility of implementing changes by client in the menu (personalization, dosing, possibility of adding or remo-

ving ingredients from etc.).


Management of the lever menu in a competitive strategy presupposes that the restaurant manager is able to adapt the structure and products in the menu to the customers’ specific needs. It’s one of the most crucial elements on which restaurant business can focus its marketing efforts.

The first area to focus on is adapting the menu content to different occasions. Analysis of the food mix consumed in the restaurants shows that clients’ choices of meals vary from lunch to dinner. First and second course are more often ordered for dinner and starters and side dishes are more often ordered during the lunch time. It means that dinner brings twice as much income as lunch that’s why it’s advised to differentiate the menu.

The second area is related to efficiency of menu pages. Some psychological studies underline that the layout of menu can determine the customers’ choice. It means that clients do not pay the same attention to all the proposals but they concentrate on some parts. Inside the supermarkets there are some areas and shelves that get more customers atten-tion – in the menu there are also areas that are ‘hot’ and ‘cold’.


The first are characterized by the high capacity to attract the sight and attention and generate impulsive purchase, the second seem less attractive and their choice involves previous planning.

Taking in consideration these two factors it’s possible to divide menu in the following 3 parts:

1. The impulse area: matches the area bigger than a page and is characterized by a huge visive impact on a client as it’s the first one he/she sees. Food positioned on this page is chosen impulsively and very often is the client’s first choice.

2. The reflection area: matches the central area of the menu, larger than a page, in this area there are usually listed the standard restaurant dishes. The dishes proposed are chosen frequently but following a rational reflection.

3. The selection area: the inferior part of the page with a minor visive impact, usually neglected by the client. The choi-ce of meals located in this area is followed by long thinking process and it’s not so frequent.


To maximize the impact of the layout of the menu in the offer differentiation process, the manager can use the fol-lowing strategies. First one is to dedicate a separate page to each course (one for starters, another for first course etc.) in order to give value to the whole offer. Moreover, he/she can insert alternative dishes of the same course in different areas of the page based on their profitability (popularity and marginality) and their quality (restaurant special dish).

Finally, the third action to take is to valorize integrative instruments of presentation of the offer and to make them complementary to the main dishes (wine list, water list, liquors list, coffee list etc.). This instrument can improve re-staurant’s image, underline its specialization and maximize the following three results:• selection of alternative proposals with different prices for each reference type;• consistency between the offer and dishes in the menu;• valorization of the local/regional products.


The price lever

Setting menu prices is pivotal decision and particularly complicated due to the following reasons:.

1. Average restaurant prices contribute to the customers’ general feeling of convenience of ordering food. This ‘fee-ling’ is not based on the price of a singular dish but rather on the total price paid.

2. The second reason is that consumer tends to associate price with quality. It means that the price range determina-tes whether the restaurant is to be considered ‘for everyone’ or ‘exclusive’.

3. The cost of goods sold is important factor in determining profitability. It is usually the main (or the only one) source of business income as the most of the independent and small restaurant establishments do not receive additional funds or discounts from their suppliers.

As demonstrated, pricing is one of the most crucial phases in the whole strategy but at the same time its definition can be done with high level of autonomy in each of the business formats. This relative independence is caused by the reduced possibility to confront products and services offered.


Especially when we talk about ‘transformed dishes’ chef/cook of the restaurant and waiting staff can give additional value to the offer and make it impossible for the clients to confront prices between different locals. Consequently, this reduced pricing competition among various formats and between these and stores is represented by elevate value of bars’ and restaurants’ commercial margin (difference between the revenue and the cost of the goods as % in the net profit). The value of commercial margin is usually manifestation of the pricing strategy of the business, independently of the sector. In the food service industry, the margin represents around/above 70% of the revenue (each 100€ cashed, 30€ is the cost of the raw goods food&beverage and 70 € is the first level net margin). Value decisively higher than the one generated by grocery stores or by retailers selling similar products. This factor contributes to the variety of the pri-ces of the same product/service and its value is only marginally conditioned by the cost of the raw goods. It’s however influenced significantly by the production cost (the cost of local functioning, equipment depreciation, cost of the staff etc.).

Therefore, differentiating strategy based on the price lever should consist on a coherent and profitable ratio (value for money) between these values and the overall experience offered by the local.


The staff lever

Staff plays very important role in the competitive strategy of the restaurant establishment. More than any other ele-ment , employees behavior contributes to the image of professionality and quality of the restaurant.

Moreover, the cost of the salaries is so high that it conditions the whole economic performance of the business. It is estimated that, calculating the whole annual cost of the restaurant as 100, the personnel cost prevails over any other expenditure, with an average ratio of 37-38%. Critical points in staff managing vary from one format/channel to another (collective restaurant vs commercial restau-rant, independent restaurant vs restaurant in franchising).

The first element of differentiation is the number of employees. There can be high differences between the number of employees in kitchen and serving staff, as well as variations between different formats or even among similar business types.


The second element is the productivity. The same number of employees can bring to different productivity levels between various formats. It is possible to measure three distinctive indicators of staff productivity (KPI = key perfor-mance indicator).• Efficacy indicator (€ sales per employee) : it measures the contribute of each employee to the general business sa-

les;• Efficiency indicator (€ labour cost per employee): it quantifies impact of each person on the business cost structure;• Profitability indicator (€ sales per employee/ € labour cost per employee): ratio between each employee contribu-

tion to the sales and his/her cost impact on the whole business.

The third element is represented by the division of the employees’ tasks:• Production staff, responsible on transforming and preparing meals (kitchen brigade);• Staff in a direct contact with the consumers (waiting staff, personnel of the bar).

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BORMIOLI ROCCO ALMA PLAN First of all, in order to manage restaurant in a ‘marketing oriented’...

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