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BIBM678 Strategic Planning for Small Business: Spicy Hut Restaurant

Develop a systematic strategic plan to implement effective strategies. Discuss about the business plan of the Spicy Hut Restaurant.

Answer:

Introduction

Spicy Hut Restaurant is providing fast food services in Lower Hutt, Willington. The company is creating its business plan by taking some business initiative. This plan of the company continues the previous paper. The paper includes the analysis of general and business environment for the restaurant. There are some factors, which will generate some challenges to this new start-up, but the company may have some opportunities to overcome these challenges. Furthermore, internal environment analysis is conducted to evaluate its strengths and weaknesses. Some business systems are recommended to succeed in the competitive business environment. There are some trends, which can be seen in today’s fast food industry. At last, the stages of business life cycle of Spicy Hut Restaurant are stated.

General Environment

Food industry in New Zealand is growing with an effective growth rate. There are some factors of external environment, which may affect the new business initiative. It includes legal, political, economic and social factors, which affect the business indirectly. The health and safety regulations are very important for the fast food industry. This is the external factor, which affects internal environment of business operation of Spicy Hut Restaurant. The fair trading laws can impact the performance of the company (New Zealand Medical Association, 2014). The fair trading laws of New Zealand prohibit the companies from engaging in the some conducts and practices. With this, country is implementing some strict employment laws, so the employers cannot take the benefits of employees. Furthermore, the people of the City have average income structure, so they do not prefer to go out and have food outside. One more important factor for this initiative is that population in the city prefer to eat the kiwi food rather than other country’s food.

Business Environment

In the business environment, there are some factors that influence the new initiative. Customers and competitors are the major components of this. The primary factor is the presence of strong competitors. There are various players in the fast food indu


stry in New Zealand, like Kiwiberri, McDonalds, and Burger Fuel etc. However the company can take advantage by providing South Indian food, because there are very few restaurants with this cuisine. The taste and preferences of customers is very important to consider. The people are more fond of the kiwi food and they prefer to eat the food produced by the local raw material.

Opportunities 

Spicy Hut will have the opportunity to grow in this competitive environment as the industry is growing continuously with the CAGR of 2%. Now, the information technology is improving, so it can take the advantage of technology to enhance the quality of service. Company is engaging in the corporate social responsibility and other social activities; it can provide various opportunities to the restaurant. It will assist it in developing a strong brand image in the city (Steiner, 2010). With a few steps, it can expand its menu by including more variety of food using local ingredients of the country. Providing healthy foods and nutritious ingredients are very opportunistic for Spicy Hut to achieve more popularity in the fast food market. Spicy Hut can expand its business digitally as the young generation is actively engaging on the social networking sites and online activities.

Threats 

Factors which pose the treats to Spicy Hut are largely to do with the competition and fluctuation in the market. Unhealthy issues are the major factors, which can create challenges to this business initiative. Some of the above-mentioned trends pose the threats for this restaurant; like demand of local ingredients, adverse impact on the young people and pressure to increase the wages of workers. The industry is highly competitive as it is which means economic fluctuation and price fluctuations in the prices of raw materials have the capacity to harm this restaurant financially. It order to keep the differentiation in the market, it can take benefits of the opportunities and strengths for overcoming the threats and weaknesses and maintain the quality of food and corporate social responsibility (Spicy Hut, 2017). This will assist the restaurant in creating their brand image and keep the demand for South Indian food very high.

External trends

There are some critical factors and trends, which are relevant to this business initiative. There is need of solving these issues by existing companies in New Zealand today. This initiative has to consider the relevant trends to grow in the industry (New Zealand Food Technology, 2013). The major trends are such as; wellness and health trends, major focus on the local produce and influence on young generation. The relevant external trends in the sector are explained below:  

Wellness and Health trends:

Having more than 3000 well-organized fast food restaurants across the country, New Zealand food market is facing strong scrutiny over the requirement to offer more healthy food products. The food companies are facing the constant price pressure there is an equal motivation to offer more health options for retaining the customers and creating brand loyalty (Nelson & Alkhafaji, 2013). The significance of this trend is obvious because most of the players are offering healthy food products. So the Spicy Hut will require introducing the healthy food products to establish the business in the market.

The demand of local produce:

The demand from the society to push the brands of the fast food companies to utilize the local produce is getting vast by every year. Now, there are many organizations, which have created their menu by using the local produce recipe to attract more local customers (Lynn, 2011). This makes the local customers happy that they are contributing to the agriculture and livestock industry of New Zealand by consuming them. The food players target to capture local ingredients and go ethnic for encouraging the food consumer. This trend has emerged this industry as a major cash cow. The Spicy Hut must consider this trend of the sector and use the raw material produced in the New Zealand itself.

Negative impact on young generation:

Using low cost options and strong brand image, the fast food players choose to attract the most profitable segment, i.e. young generation. As the youth of the country move to the larger cities for the studies and work, the fast food industry has cashed on the youth as a significant market segment. The major issue arises when the young people do not take it seriously the health and side effects of the fast food. Their major consideration is generally only the low riced food and convenient.

The Pressure to increase the minimum wages:

As the industry is growing rapidly, the demand to increase the minimum wages of the workers is also becoming very strong. A major challenge for this industry will be reacting to the living wage consideration which is seeking to increase wages, when the restaurants are not able to bear the pressure to raise the salaries, and then they take disagreeable actions to stable the expenses like; increasing the prices of products and cutting the staffs (Pinson, 2008). The new business initiative, Spicy Hut Restaurant must consider it and set the wages before recruiting the workers.

Understanding the food culture:

In the New Zealand market, there is need to understand all the food cultures, means all niches, preferences, trends and categories. All the people have different taste, so there is a need for an effective marketing research.

Positioning

The company will use an effective positioning statement, from which the customers would be able to understand the products and their benefits (Clemens, 2009). It will work as a strategy of the restaurant. The positioning statement of new business will be “Spicy Hut is the South Indian food provider to the people, who want to fulfill their hunger consuming fresh and nutritious ingredients at affordable prices”. The major focus will be for increasing the customer awareness in the community (Birt, 2013). It will direct all the strategies and tactics towards the objective of explaining who they are.

Product mix

This component of Spicy Hut restaurant covers the output, which it will provide to its target customers. The product or service mix includes the South Indian product line with the soft drinks. It places significant emphasis on creating a food menu which the customers prefer to eat. The organization will conduct a market research and analyze the needs and demand of the customers. By providing better food products, it will focus on establishing a harmonious, hygienic and entertaining atmosphere in the restaurant (Harmer, 2014). The ability to generate revenues will change at different stages of its business life cycle. It will focus on providing the vegetarian products by considering various environmental aspects. The supply of food products will be standardized, so there will not be shortage of food. Using these supply standards, it will maintain a proper stock and it will help the restaurant in becoming one of the most frequent visited places by the customers. This product mix will definitely establish the demands for the new business initiative.

Strengths 

There are so many strengths of Spicy Hut Restaurant. It is operating its business in the city of New Zealand and this is a fast growing industry in this country’s market (Zareil, & Paghaleh, 2011). It is providing South Indian food to the population, so it can attract more Indian customers, who are residing in New Zealand. The major strength of this restaurant is that it is focusing on the needs and preferences of the customers. Another commendable aspect of this initiative is its engagement in the corporate social responsibility and other social activities. The company is engaging in the human welfare activities, like it is paying the workers a deserving amount of wages (Agarwal, Grassl & Pahl, 2012). Other human welfare activities include distribution of the goods and it is not making any type of differences by paying fewer wages to the employees or taking more amounts from the customers. Additionally, Spicy Hut can take the advantages by providing an entertaining and hygienic environment in its restaurants. Furthermore, it is using the food safety standards and supplying standards.

Weaknesses of New Initiative 

There are some weaknesses of the company, which can be identified from the previous business plan. As every company, there is a scope of improvement in the business model of the Spicy Hut. It will offer a limited menu of South Indian dishes to its customers. It can work as a weakness for it. Now days, obesity and cardio-vascular diseases are rising in New Zealand, so the people are becoming health and wellness conscious (Thompson & Martin, 2010). This is reducing the demand of fast food among the public. This restaurant is more focusing on providing good environment than quality of food products. The company can use its strengths to overcome its weaknesses.

Business systems

Spicy Hut would use an effective business system for operating the fast food restaurant in the city of New Zealand. In order to run a successful restaurant, there must be a business system with the clear understanding of the operations. This industry has an especially high turnover rate and forefront workers. The best manner to handle with this issue effectively is to have workers, which are committed to one job in the operations. The company will use the business system to assess at each phase in the process of producing and delivering the products. It will use the prospecting business system, which include its business activities that will generate the prospective customers for the Spicy Hut. The efforts will be made to focus on the customers. First, the business system will define the geographical location of the restaurant, i.e. Lower Hutt, Willington. It is a strategic location for this business (Jones, Hill, Comfort & Hillier, 2008). After selecting the location, it will go to specialize its business, i.e. Fast food provider. Once the company goes through the geography and specialization, now it will prepare its database. It includes the properties and equipment, which are required to produce the food. It will look for that what items are needed to serve the customers. Then it will make a proposal to launch the business in the area.

Critical success factors

The fast food sector has grown very much from last few years. There are some critical success factors, which are associated with this business system of this food organization. These factors are such as; quality and standards of food, location of restaurant, service, facilities and branding. As a fast food player, providing a better quality is very important for the Spicy Hut (Upton, Teal & Felan, 2010). The people in the New Zealand are very conscious about the health, so the company can generate the revenues by providing high quality food. Fast food is about ease, so if you want to be successful as fast food player, then the outlet must be situated in high-traffic area. Spicy Hut is situated in such a location of Willington, where the customers can reach with ease. Other factors, which will lead the organization towards success, are service and facilities.

Business life cycle

In the small business planning, it is not necessary that every business go through every stage of business cycle. As the Spicy Hut is also a small business and this business will go through the 5 stages of business life cycle. In this business cycle, the First stage is establishment. At this stage, the company will establish its restaurant and plan for its operations. At this stage, planning must be very effective as it is an important phase of the business life cycle (Deloitte, 2017). The second stage for this business is growth stage. During this phase, the restaurant will have the negative profit as it will have the expenses of installation and marketing and promotional activities. After that, the third stage is expansion. This is the phase, in which the restaurant will start to earn the sufficient revenues and it will be clear that there is no doubt of survival of restaurant. And now it can expand its branches. The next stage is maturity, in which the restaurant will able to survive in unexpected situations. If there is declination in the fast food market in the country, the company can survive. It can expand its menu by adding other food products. The last stage of this business life cycle is decline stage. In this stage, the business will start to fail. The profits of business can decline and face the heavy losses due to some reasons, like; entry of new competitors, change in the customers taste etc.

Weaknesses of Current Participants

Easily imitable business: The major weakness of the current participants is that the products and business model of fast food restaurant can be imitated easily. 

Competitive food industry: In this industry, there are some strong competitors, who are already well-established and doing well. It is very difficult to establish a new business with the same products in the New Zealand fast food market. 

These weaknesses of current participants can be avoided by using effective strategies. The organization must implement the creative business models and there must be product differentiation. They should make market research for knowing the needs of customers, and then they must introduce new products. 

Conclusion

Thus, the strategic planning for each and every business is essential, whether it is small or big. The discussion includes the strategic plan for the Spicy Hut Restaurant, which is located in Lower Hutt, Willington. The business environment has some economic and political factors for the new initiative. In the food industry, the company may have various trends, which pose threat on it. It may have some opportunities and strengths by developing business in New Zealand fast food industry. Furthermore, the business system of this business initiative is explained in the paper. The organization can grow using the prospecting business system. The business life cycle of the restaurant includes 5 stages, i.e. establishment, growth, expansion, maturity and decline. There are some critical factors, which may lead the organization towards the success in fast food industry.

References

Agarwal, R., Grassl, W.  & Pahl, J. (2012). SWOT: introducing a new strategic planning tool. Journal of Business Strategy, 33 (2), pp. 12.

Birt, I. (2013). Writing Your Plan for Small Business Success. Allen & Unwin Publishers.

Clemens, R. (2009). “Environmental Scanning and Scenario Planning: A 12 month Perspective on Applying the Viable Systems Model to Developing Public Sector Foresight”. Systems Practice and Action Research 22. Springer: 249-274.

Deloitte. (2017). Consumer Trends in Food Industry. Retrieved from https://www2.deloitte.com/us/en/pages/consumer-business/articles/us-food-industry-consumer-trends-report.html. 

Harmer, W. (2014). Business Planning for Small Business: A step-by-step guide to the what, why, when and how of business planning. Balboa Press. 

Jones, P, Hill, C, Comfort, D & Hillier, D. (2008). Marketing and Sustainability, Marketing Intelligence and Planning, Vol.26, No.2, pp.123-130. 

Lynn, M. (2011). Segmenting and Targeting Your Market: Strategies and Limitations. Cornell University School of Hotel Administration.

Nelson, R.A.  & Alkhafaji, A. (2013). Strategic Management: Formulation, Implementation, and Control in a Dynamic. Routledge Publishers.

New Zealand Medical Association. (2014). Healthiness of Popular fast Food Items in New Zealand: Plenty of Room for Improvement. The New Zealand Medical Journal, Vol. 127.

New Zealand Food Technology, (2013). New Zealand fast Food Industry: a trend industry. Retrieved from https://www.foodtechnology.co.nz/content/new-zealands-fast-food-industry-trend-analysis/.

Pinson, L. (2008). Anatomy of a Business Plan: A Step-by-step Guide to Building the Business and Securing Your Company's Future. Aka Associates. 

Steiner, G.A. (2010). Strategic Planning. Simon and Schuster Publications. 

Spicy Hut. (2017). Spicy Hut Limited- Lower Hutt- New Zealand. Retrieved from https://www.companiesnz.com/company/2313529/spice-hut-limited. 

Thompson, J.L. & Martin, F. (2010). Strategic Management: Awareness & Change. Cengage Learning.Upton, N., Teal, E.J. & Felan, J.T. (2010). Strategic and Business Planning Practices of Fast Growth Family Firms. Journal of Small Business Management. 

Wang, C., Walker, E.A. & Redmond, J. (2006). Ownership Motivation and Strategic Planning in Small Business. Journal of Asia Entrepreneurship and Sustainability.

Warner, A.G., (2010). Strategic Analysis and Choice: A Structural Approach, Business Express Book.

Zareil, M. & Paghaleh, M.J. (2011). Strategic Management of Business in Food Industry: By an Integrated Deployment of AHP and Freeman Model. Business Management Dynamics Vol.1, No.3, pp. 47-52.

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