Introduction

A risk management strategy provides a structured and logical approach that helps in identifying, assess and managing risk in a business. It helps to build a process for regular updating and reviewing the measurement based on new developments or actions taken. Risk management can be developed and useful for a small or a big organization.

Impact of risk and risk management strategy

Risk is involved in all business in the short term, medium or long term. The first step in making or designing a risk management plan is to identify potential risks to the business. The other risk management strategies are assessing the business, ways of identifying risk, brainstorm, analyzing other events, assessing your processes and considering the worst-case scenario. By following these steps one can identify the potential risk’s to his/her business and take necessary steps to avoid them (Kimes, Chase, Choi, Ngonzi, 1998).

Monitoring and implementation

The Implementation and Monitoring step refers to making plans and taking important actions to communicate and put into operation the risk management decision. Implementation and Monitoring of the process will help in making the risk management action plans that can be implemented effectively and efficiently (Sadgrove, 2005).

The plan should contain the following steps:

• when should the risk management strategy be carried and how
• individuals and organizations roles, responsibilities and accountabilities
• plans for communication with the interested parties
• steps and rules that can be used for monitoring purpose and  evaluation purpose
• training, staffing, and financing necessities

With the help of Implementation and Monitoring the business can benefit by identification of new or changing risks and developing a more accurate portrait of the risks. It should be a continuous process, providing continuous improvement in the risk management program and decision-making process (Okumus, 2001).

Evaluation and monitoring

Features of Implementation Monitoring versus Results Monitoring

Elements of Implementation Monitoring

(Conventionally used for projects)

• Description of the problem and situation before the involvement
• Target for activities and immediate outputs
• Data gathering on inputs, activities, and immediate outputs
• Systematic reporting in terms of inputs
• Systematic reporting on the production of outputs
• Directly linked to a separate interference 

Elements of outcome Monitoring

Is used for a range of interventions and strategies

• Indicators for the result
• Data collection for outputs and how they contribute towards the achievement of the outcomes
• More focus on changing the perceptions of the stakeholders
• Systemic reporting on the progress towards outcomes
• Done in combination with strategic partners
• Capture information on the success or failure of partnership strategy in achieving the outcomes (Berry, 2000).

Implementation of plans and how the business idea helps in achieving the objectives.

A business requires a mission statement for guiding the business and the individual to run the business. It usually consists of Vision, Mission and Values. Once a vision is set for the business the next step is to create goals, strategies and objectives of the business as it gives a clear picture of the vision and mission of the company (Mason, Stark, 2004).

Proposal for Restaurant

Here is a business proposal for starting up a new Restaurant. The detail of all the procedures and costs we expect to start our business. We believe this new business will fill several not met needs in the area. There are very few restaurants in the locality and hence we see a growth of our business in coming years (McKeever, 2001).

Business Vision and Mission

The vision and mission of the business are as follows:

• Provide quality service to the customers
• Treat all the employees and customers equally
• Use of organic and eco-friendly products
• Reduce the wastage so that there is no harm to the environment
• Meet the customers’ expectations
• Follow all the ethical ways of working
• demonstrate affection, courteousness, competence, knowledge, professionalism and honesty in our work
• sell good and outstanding food and drinks
• maintain a clean, relaxed and well-maintained building for our guests and staff

 

Goal and Objectives of the business using SMART

SMART is the best tool to set the goals and objectives of the business. The goal of the company is to become one of the best restaurants in the world, to give healthy competition to its competitors and increase the revenue of the company year after year.

The objective of the business is to deliver the customers need on time and achieve the goal of the company by satisfying the customers and being specific, by being transparent (Oakland, Tanner, Gadd, 2002).

Legal structure of the business

Determining the legal structure of your restaurant business is one of the vital aspects. As the restaurant is a sole proprietorship the owner will handle all the work of the manager and will be paid for managing the work. He will be responsible for Financial Accounting, Marketing, Food Service and Facility Maintenance (Abrams, 2003).

 

Overview of the business

The business aims to provide excellent food quality and safety. It even aims to provide friendly service, a good menu selection from various brands, new and regular offerings which can create enthusiasm for the customers and employees, and, finally, pleasure and high satisfaction from the customer. The new restaurant will be a better-quality with a full-service restaurant, serving breakfast, lunch and dinner, and having responsible alcohol service. The hallmark of the restaurant will be the fineness in all the ways such as wide range of menu selection, variety of food and drinks, complementing wines and friendly service (Hair, Celsi, Money, Samouel, Page, 2003).

Working hours: Sunday-Thursday 11 a.m. to 9 p.m.

                                              Friday & Saturday 11 a.m. to 11 p.m.
The purpose of the design is to set up the possibility of a flourishing result for this new restaurant business and to provide all necessary information and supporting materials to set the business strategies and obtain adequate finance.

The restaurant is a sole proprietorship business which is located in Queenstown. The restaurant has a big lobby for the customers to wait and a huge dining place. This restaurant was opened in the late ’80s and only served drinks and beverages to the customers. It has been now renovated completely with all the new technologies and facilities available for the customers. The critical success factors of the restaurants are good environment, quality food, satisfactory customer service and cost (Wu, Liang, 2009).

Internal and external environment study

The strength of the employees in the company is another crucial internal business factor and highly motivated, talented and hardworking employees provide better results. The external factor that affects the business is technological, governmental, economic, cultural, demographic etc. The SWOT template helps imagine the study. This helps to understand how these factors work together. When an organization compares internal strengths to external opportunities, it creates competencies in meeting the needs of its customers and the business. Hence the business should try to alter internal weaknesses into strengths and external threats into opportunities (Friesner, 2011).

PEST study 
PEST study measures the political, economic, social and technological factors that impact a business. PEST study helps the business to understand the environment it will function in. Political factor plays an important role in the restaurant business as it government influences and controls the business. The main factor for a restaurant is meeting all the health regulations laid by the government in the preparation of the food. The business should even make sure that they meet the other criteria’s like tax and labour laws. Economic factor even plays an important role in the success of the business. Restaurants are a luxury and not a necessity, hence economic growth acts as an important factor in the income of the restaurant. If the economic growth is good then people will have more disposable income which will benefit the business. Social factor has a huge impact on the restaurant business. The restaurant should make sure that they serve healthy food in the market instead of food with high fats. Even the attitude of the people plays an important role. Restaurants stand a good chance to make a profit where people prefer to eat out and spend money on food. Technology even acts as a vital role in the success of the restaurant business. If there is strong technological demand in the market, this may make it difficult for the business to enter the market (Grundy, 2006). 

PORTER’S 5 forces analysis
Porter’s five principles indicate the aggressive strength of the business. 

Bargaining power of suppliers

In the restaurant industry, the bargaining authority of suppliers is very weak. This is because restaurants do not manufacture their own food, but they buy from butchers, farmers, etc. 

Bargaining control of customers

In this case, customers have the power in deciding the price. As soon as prices are increased the customers will leave the restaurant and find another one (Naipaul,  Parsa, 2001). 

Threat of new entrants

There is always a threat of a new restaurant entry in the market as the restaurants business does not require much capital hence there are a lot of new restaurants in the market.

Danger of alternate products

There is always a threat of substitute products in the market as different restaurants offer different options and a variety of foods and drinks.

Aggressive competition within the industry
Competition among the restaurants is very high. Now a day’s people always want to eat a lot of in restaurants. Hence, more restaurants are being opened, which causes causing higher competition (Kara, Kaynak, Kucukemiroglu, 1997).

SWOT analysis

SWOT analysis shows the strength, weaknesses, opportunities and threats to the business. The Strength of the restaurant business lies in whether it is serving healthy food, quality service and fun of eating at the restaurant. Pricing even acts an important role in the success of the restaurant. Weaknesses give an idea of things to improve in the restaurant. Talented employees act as an asset to the company and help in the growth of the company. 

 Develop a marketing plan

This is essential to identify and cater to customer needs. The marketing plan should be decided well in advance so that they concentrate on a targeted group and make sure that they satisfy their needs which will help the business to earn more profit.

KPI for the business are as follows

Food Costs

Kitchen Labor

Seating

Basket Items

These KPI’s have been chosen as they indicate if there is surplus usage on particular menu items, Kitchen labour can be measured against food sales, how often are the tables being turned over, what items are evening diners order before dinner and after dinner. These are a few of the basic KPIs that can help you increase profits. 

Price strategy

Restaurants should use cost-plus pricing for an assured income. Cost pricing includes all the operating costs that incur while managing a restaurant which includes rent, wages, gas and electricity. 

Property strategy

The infrastructure of restaurants should be perfectly designed which brings a great ambience and give creates space for the customers. 

Place strategy

The location of the restaurants plays a very vital role. A busy street will attract more customers and good business for the restaurant. 

Position strategy

This will present a home-style food for a rational price in a relaxed home-like setting. 

Promotion strategy

Word of Mouth and advertisement helps in increasing the popularity and the business of the restaurant (Levenburg, Magal, 2004).

Marketing budget and timeline

Fixing the right cost and capital invested in the business is the most important process as any wrong decision can affect the profit of the restaurant.

Human resource plan

Hiring the correct person at the correct time increase the efficiency of the restaurant (Mason, Stark, 2004).

Preparing shift roster for the staff.

• Use the Shift Roster is to get information of who is on the floor and how long each employee had been working (Hawkins, Mothersbaugh, 2009).
• Tracking labour hours for each shift.
• Helps managers to keep labour costs within budget

Shift Roster Manager                                                                                                                          Date                                                                                                                                             Shift

Schedule

Actual

Services

IN

OUT

IN

OUT

HOST

Bartender

Kitchen staff

Dishwashers

 

Risk management plan and conclusion

There is always a risk involved in the restaurant business such as Coverage for Supply-Chain Risk, Equipment Risk, Spoilage and Contamination, Food Safety and Recall Risk. These risks can be avoided by safety measures and a good management system (McKeever, 2001).

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References

1. Kimes, S. E., Chase, R. B., Choi, S., Lee, P. Y., & Ngonzi, E. N. (1998). Restaurant revenue management applying yield management to the restaurant industry. Cornell Hotel and Restaurant Administration Quarterly, 39(3), 32-39.

 

1. Sadgrove, K. (2005). The complete guide to business risk management. Gower Publishing, Ltd..

 

1. Okumus, F. (2001). Towards a strategy implementation framework. International Journal of Contemporary Hospitality Management, 13(7), 327-338.

 

1. Levenburg, N. M., & Magal, S. R. (2004). Applying importance-performance analysis to evaluate e-business strategies among small firms. E-service Journal, 3(3), 29-48.

 

1. Berry, T. (2000). Hurdle: the book on business planning: how to develop and implement a successful business plan. Palo Alto Software, Inc..

 

1. Mason, C., & Stark, M. (2004). What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels. International Small Business Journal, 22(3), 227-248.

 

1. McKeever, M. P. (2001). How to write a business plan. Nolo.

 

1. Oakland, J., Tanner, S., & Gadd, K. (2002). Best practice in business excellence. Total Quality Management, 13(8), 1125-1139.

 

1. Abrams, R. M. (2003). The successful business plan: secrets & strategies. The Planning Shop.

 

1. Hair, J. F., Celsi, M. W., Money, A. H., Samouel, P., & Page, M. J. (2003). Essentials o

 

1. Wu, C. H. J., & Liang, R. D. (2009). Effect of experiential value on customer satisfaction with service encounters in luxury-hotel restaurants. International Journal of Hospitality Management, 28(4), 586-593.

 

1. Friesner, T. (2011). History of SWOT analysis. Marketing Teacher, 2000-2010.

 

1. Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229.

 

1. Naipaul, S., & Parsa, H. G. (2001). Menu price endings that communicate value and quality. Cornell Hotel and Restaurant Administration Quarterly, 42(1), 26-37.

 

1. Kara, A., Kaynak, E., & Kucukemiroglu, O. (1997). Marketing strategies for fast-food restaurants: a customer view. British Food Journal, 99(9), 318-324.

Hawkins, D., & Mothersbaugh, D. (2009). Consumer behavior building marketing strategy. McGraw-Hill.