Fast food restaurants are an essential part of every urban economy. Urban lifestyles make cooking cumbersome and time-consuming. Many urban dwellers prefer eating out rather than making food at home. It is impractical for most urban dwellers to leave their offices to go home for lunch. In addition, not everyone can prepare and carry packed lunch to work. Therefore, the demand for fast-food restaurants will continue to grow globally alongside the growth of urban centers.
Cue Fast Food Restaurant (CFFR) will seek to meet the growing demand for fast foods in the UAE. The proprietors have observed the steady growth of the number of migrant workers in the UAE from many parts of the world. Fast food plays an important part in making it possible for them to fit in the UAE and to find a quick and convenient way of accessing food.
The Objectives of CFFR are as follows. First, CFFR will endeavor to provide its patrons with high-quality fast foods. Secondly, CFFR will commit itself to providing its clients with nutritious food, and not just junk food. Thirdly, CFFR will take care of its employees in line with the labor laws of the UAE, and in ways that promote maximum respect for each employee. Fourth, the CFFR will ensure that all its operations and those of its key partners are in line with sustainable business practices.
The sales objectives of CFFR will be to supply sufficient quantities of fast food items in the urban population of UAE cities, and to break even within the first six months. Secondly, CFFR will endeavor to double its sales every six months.
Key Success Factors
The two key success factors in the establishment of the CFFR are as follows. First, CFFR must raise the capital needed to finance its operations for the first three months. Secondly, CFFR must find an ideal location for its business. The ideal locations include malls, business centers, and high-rise office blocks.
CFFR is a fast food restaurant that will soon begin operations in the UAE. CFFR will provide UAE residents with healthy fast food and snacks served in packages that are easy to carry. This section describes the essential elements of the business.
The population of the UAE is growing at a tremendous rate because of the high number of migrant workers coming to the country to look for employment (The Oxford Business Group, 2008). When migrant workers come to the UAE, they usually deal with the challenge of finding food in a convenient way to meet their nutritional needs. The demand for food is highest during lunch hour on the weekdays, and in the evening during the weekends. This is because workers do not have enough time to go back home for lunch during the week. They prefer to buy food from fast food restaurants. The challenge that arises from this situation is that the existing fast food restaurants cannot cope with the number of people looking for food. Secondly, many of them offer foods high in calories but with very low nutritional value. Thirdly, many of them do not package the food in ways that customers can carry conveniently.
The above analysis shows that there is a growing market for fast foods in the UAE. The current number of fast food restaurants cannot meet the demand for fast food in the UAE. Secondly, there is a growing market for healthy fast foods. The number of people suffering from obesity and other diet related illnesses in the UAE is on the rise (The Oxford Business Group, 2008). This has made a significant portion of the people in the UAE conscious about their eating habits. Thirdly, speed of service is a key element in the purchasing decision of many fast food clients. The ability to serve food quickly and in convenient packages will create a competitive advantage for the CFFR in the UAE’s fast food sector.
Unique Selling Point
CFFR’s unique selling points are as follows. First, the restaurant will develop a reputation as the quickest fast food restaurant in the UAE. The ideas that will help the restaurant to attain this target include packing popular food items in advance to reduce service time during peak demand. The restaurant will also experiment with employing hourly casual workers to handle order taking and food service during the peak hours. Secondly, the restaurant plans to brand itself as a supplier of healthy fast foods. The goal will be to give patrons control over the number of calories they consume in the restaurant. The restaurant will use ideas like giving a preference to fruit juice over fizzy drinks in its menu.
The company will be a partnership. The founding partners are two brothers who are citizens of the UAE.
The three main aspects needed to get the business off the ground are as follows. First, the restaurant needs to identify a location for its business. The preference is shopping malls that are adjacent to office blocks. Secondly, CFFR needs to equip its kitchen and to furnish its restaurant. These supplies will come from stores in Dubai. Thirdly, the restaurant will need to train its employees in what it wants them to do. The best time to develop organizational culture is when a company is new (Burns, 2011).
The food and beverages sector in the UAE is evolving very rapidly. This comes from the influx of new migrant workers each year. The diversity in the UAE is creating a unique environment. The SWOT analysis of the proposed business is as follows
The first strength is that the two brothers who have a good working relationship will own the business. This will reduce the conflicts associated with partnerships. Secondly, the UAE is growing very fast, making it an ideal market for fast foods. Thirdly, the business concept is unique because CFFR wants to supply healthy fast food as opposed to unhealthy junk food.
The first weakness of the business prospect is that the concept of selling healthy fast foods is untested and may backfire. Secondly, the entry barriers to the business are not very steep. This means that it is easy for new entrants to replicate the business model (Porter, 1998). The third weakness of the business prospect is that the population of the UAE is very diverse. The tastes and preferences of the customers can vary widely.
The first opportunity associated with this business prospect is that the number of people who need food during lunch breaks and during the weekends is on the rise in the UAE. The second opportunity arises from the diverse tastes of migrant workers. This is creating an environment where a niche-based approach to restaurant business will become predominant.
The greatest threat to the business prospect is that it is easy to replicate the business idea. This will make it necessary for the proprietors to create competitive advantages unique to CFFR. It is not easy to create and sustain such advantages.
The main aspects of the marketing strategy associated with this venture are as follows.
The three main aspects of the UAE fast food market are as follows. First, this market is very volatile. Changes in the quality of food or the emergence of new players in the market can lead to mass defection to new fast food restaurants. Secondly, the market consists of people from various parts of the world. This means that their tastes and preferences are very diverse. The third aspect of this market is that it is very sensitive to customer service standards. The market wants high quality fast foods served in a short time.
Target Market Segment
The market segment of interest to CFFR is the one that takes healthy eating seriously. There is an increase in the number of people suffering from diet related illnesses in the UAE. Many health programs in the country are stressing on healthy eating as the best way of curbing diet related diseases. In addition to the local population, many expatriates from the western world are also very sensitive to their caloric intake. Westerners are more aware of the value of healthy eating. CFFR will endeavor to serve the needs of this market segment.
The three main marketing methods that the restaurant will use are as follows. First, the store will use in-store marketing. The restaurant will run a loyalty program for the first month of operations. Customers who come to the store at least four times a week will get a free drink on the fifth day. This measure will build customer loyalty. The restaurant will use a stamped ticket to keep track of the customers who patronize it.
Secondly, the restaurant will use word of mouth advertising. CFFR will encourage its customers to invite their friends to the restaurant. One way will be by offering a reward for groups of five or more. Word of mouth is a very important avenue of marketing for any business. Satisfied clients tend to talk about their experiences with their friends.
Thirdly, the restaurant will use social media marketing to reach potential clients. CFFR will also use the social media to announce its presence to potential customers in the UAE. This will entail opening and operating a Facebook and a Twitter account. In addition, the restaurant will run an article marketing campaign that will deal with the benefits of healthy fast foods. This campaign will target the restaurant’s potential customers in order to create brand space.
The operational plan of CFFR will have three main elements. The first element will be the identification of key suppliers. Already the proprietors are in talks with several suppliers who deliver products such as wheat meal for the production of bread for sandwiches. CFFR will cultivate relationships with fruit importers and local fruit farmers to secure constant supply of fruits for making fruit juices and puddings.
Other suppliers that CFFR will engage include equipment suppliers who will provide CFFR with the equipment it needs as well as support in case of equipment failure. CFFR will take utmost care to work with suppliers who can offer after sales services when equipment breakdowns occur. This will be very crucial because the company does not yet have any relationships with equipment suppliers. According to Porter’s five-force analysis, the power of suppliers can influence how well a company develops its competitive advantages (Porter, 1998).
The second element of CFFR’s operations plan is product delivery. The predominant mode of delivering fast foods to clients will be via direct sales in the restaurants. CFFR will invest aggressively in how it delivers food to its customers. This is the best way to brand the company. Quality of service is one of the qualities that competitors cannot duplicate easily (Cullen, 2011). This makes it a great source of competitive advantage. However, CFFR will start making free deliveries within three kilometers of its premises in the first six months of operations. If the project is successful, CFFR will expand its delivery network to cover a larger area. CFFR will also handle reservations by taking orders on the phone and via email, ready for collection when the client arrives at the restaurant.
The third element of CFFR’s operations will be customer service and support. Essentially, the restaurant will use the self-service model. The objective of superior customer care in CFFR is to ensure that a customer does not spend more than five minutes in the queue. The customers will first place their orders, and then pay for the orders as the kitchen staff puts it together.
Another method that the restaurant will use is to pack food that people order in large quantities in advance, instead of waiting until customers arrive to start packing the food. This will go against the Just-in-Time principle of efficiency that advocates for production based on assured orders (Phillips, 2011). In addition to these measures, the restaurant supervisor will be in the dining area to respond to any customer queries. The idea behind this initiative is to ensure that the customers can reach the management of the restaurant at any time. This will also give the supervisor the opportunity to identify ways of improving the efficiency of services offered in the restaurant. Apart from these, the restaurant will operate a Facebook page, and a Twitter account to help handle communication with customers.
Human Resource Plan
The two proprietors and the manager will form the restaurant management team. In addition, the restaurant will employ four cooks, three cleaners, and two cashiers, as the inaugural staff of the company. The role of the management will be to ensure that the employees have all the resources they need to handle their jobs. This will include organizing staff training activities, and providing physical facilities for the staff. The supervisor, together with the rest of the staff will implement the plans drawn by the manager and the proprietors. Their work is to satisfy the customers of the restaurant.
The organizational diagram in the figure below shows the initial structure that the restaurant will use.
The recruitment plan of the company is as follows. The directors will recruit the manager competitively to ensure that the restaurant gets a person who can handle the work effectively. The first year will be an entrepreneurial phase for the restaurant. This means that it will be important to get a manager who can handle the entrepreneurial aspects of a new business. The proprietors will hire only someone with a bachelor’s degree in business or a business related field. They also prefer a candidate with experience in fast food restaurant management. The proprietors prefer to pay a human resource company to shortlist suitable candidates. A panel consisting of the manager and the two proprietors will interview the rest of the staff.
This section looks at the financial plan for the business venture.
Sources of Capital
The proprietors will finance the venture from their personal resources, but will seek additional funding to cover operations and staff expenses. The proprietors have sufficient funds to cover the costs of equipment and premises. The money will buy kitchen equipment and furniture for the dining area. Another important cost that the proprietors will cover is the cost of the restaurant’s interior décor. The ambience of a restaurant contributes towards the decision by clients to come again. The proprietors will also use the money to lease the appropriate premises for an initial three years.
The proprietors will seek funding to cover the operational expenses of the restaurant. These expenses include the cost of supplies, utilities, and salaries for the first six months. The sources of funding under consideration include a loan from a bank, or an equity stake from venture capitalists.
The following table summarizes the major start-up costs associated with the business venture.
|Salaries and Wages||20,000|
Table 1: Start-Up Requirements.
Balance Sheet Forecast
The following table shows the projected balance sheet of the restaurant.
|Year 1 (AED)||Year 2 (AED)|
|Cash in Bank||600,000||1,000,000|
|Cash at Hand||1,000||1,500|
|Salaries and Wages||20,000||30,000|
|Long Term Liabilities|
Table 2: Balance Sheet Forecast.
The three main things that arise from this plan are as follows. First, the chance to provide UAE residents with food is an excellent business opportunity. The market is growing and there is more space for new players.
The second issue reading this business opportunity is that the best strategy to become a player is to offer new ways of delivering food to UAE customers. There is a strong case for differentiation in this industry. The customers come from different countries and they have different value systems in regards to their diets. The best way of handling this opportunity is to become a niche player. This will attract a loyal customer base, and will establish the business as the place to go to when looking for healthy snacks.
Thirdly, it is clear that a business in a competitive environment can differentiate itself based on the quality of services it offers its clients (Porter, 1998). This is a better source of competitive advantage because it is very hard to replicate quality of service.
The two main recommendations to the proprietors relate to the financing of the new venture and the recruitment of staff for the business. The proprietors are thinking about the best way to finance the venture. The two main options on the table are taking a loan from a bank, or getting funds from venture capitalists. A loan from a bank will bog down the business and will make it harder for it to break even before the six months. This option will however ensure that the business owners do not lose control of the business.
On the other hand, financing from venture capitalists will make it easier for the company to start its operations on a strong footing. There will be no pressure to start paying for the capital. However, the company will have to consult with the venture capitalists before making any major decisions. Based on the potential performance of the business, the proprietors should take a loan, rather than accept capital from venture capitalists. The business is capable of paying the loan. This will ensure that they remain in charge of the company.
On the issue of recruitment, the current plan is to use a recruitment firm to hire a manager. While this is the professional approach to the issue, the proprietors should still take time to discuss whether they may have potential candidates in their network. It will be easier to work with someone they both know.
Burns, P. (2011). Entrepreneurship and Small business. Start-up, growth and maturity. 3rd edition. UK: Palgrave.
Cullen, J. (2011). Multinational Management: A Strategic Approach. Mason, OH: Cengage Learning.
Phillips, R. (2011). Efficient Frontiers in Revenue Management. Journal of Revenue and Pricing Management (26), 1-25.
Porter, M. E. (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon and Schuster.
The Oxford Business Group. (2008). The Report: Dubai 2008. Dubai: Oxford Business Group.