MBSA 2313 New Venture Creation (NVC) SEMESTER I, 2015/2016
Aan!a"# Re#taurant# (A)
$e%turer
& 'r A!riana Mo! Ri*a+
Stu!ent Nae
& Teo in C Cen-
Matr Matri% i% Nu Nu.e .err
& MBS MBS1 11 1153
ue#tion 1 (a) E+ain ow !i! te .u#ine## %on%et o Aan!a"# re#taurant ir#t initiate!4
Amanda West would like to switch to the consumer services, particular in social and environment mission after having a six years working experience with Sun Microsystem and Cisco System. She was interested in the food industry because she think that food was a common consumer goods which people buy everyday and it was spent by all socio economic levels. rader !oe, a food retailer who provide natural uni"ue food at an affordable price had inspired Amanda to set up her own business. Amanda was a M#A students from Stanford $niversity. She did her research and networking within the food industry during her first year study of M#A. She did her internship at the food distributor who distribute high "uality natural meal. he internship period was very important for Amanda to initiate her business concept and build a strong foundation for her future business concept as she was receiving first hand industry information and experience. A book named %&ast &ood 'ation( which criti"ued American)s unhealthy fast food culture had inspired Amanda to generate her own business concept. After reading the booking, she was able to identify that most of the American lived in a fast pace life where this situation could lead to the fast growing of fast food industry with increasing demand. #esides that, Amanda reali*ed that American women was re+entering to the workforce and they were no longer cook at home for the family. n this scenario, fast food had become an affordable and convenient option for them. -owever, most of the fast food option was lack of health alternatives. he problem of limited choices in fast food market had been recogni*ed by Amanda as a business opportunity. She had started to plan to start a healthy fast food restaurant during her study time. Amanda had oined an evaluating entrepreneurial opportunities course in her M#A to further explore her business concept. She team with other classmates who made up from different background like finance, public relation, and other field from the study course. She was able to listen to the sharing of others and have a better understanding of the industry from different perspective by knowing and grouping with them. he earliest business idea of Amanda)s /estaurant was emphasi*ing at the keystone idea of %health and natural fast food(
(.) Ia-ine ou are a %+a##ate o Aan!a e#t"# in 2005, wat !o ou tin7 o er %on%et (8ro# an! Con#)4
he 0ros of Amanda)s business concept was emphasi*ing in healthy fast food. She reali*e that American culture was highly depending on fast food for their mean during her earlier observation. he fast food option was also very limited healthy option. &urthermore, she found out the number of American women to reenter workforce who had no time to cook for family are increasing. And this is the reason she decide to go for the fast food with healthy option concept. &ood was a daily consumption goods where Amanda had a very big potential market for her business concept. #esides that, Amanda)s business concept matched with the current market trend which the fast food was highly demanded. -er idea of using healthy ingredient in the fast food was new and attractive in the market. Customer will be interest for this new business concept. 'atural and healthy concept fulfil Amanda)s vision who want to contributing to social and environment responsibility. Amanda could increase the health awareness among the customer in $S industry if her business concept could be launched. his achievement could fulfil the mission that she set. Whereas for the Cons of her business concept was the public perception for fast food. Amanda received warning from her school tea, about the perception of healthy and natural food were difficult to provide great tasting experience where the business concept was too limited in scope. 1uring the early interview, Amanda also understood that she co uld be difficult to control the cost of food for her healthy concept and price the food at a reasonable price. his is because the cost of healthy ingredients are more expensive than normal ingredient that used in the fast food. Amanda was trying to relate her business to the social responsibility which could be difficult for her to incorporate to her business at the early stage. Moreover, Amanda did not received a good support and received some warning to her business conept from her school professional and industry professional who had the experience. hey believed the first time restaurant was difficult to success where only 23 percent success rate for restaurant business. Additionally, business capital which is about 4 million dollar was too high for her startup capital. She might have difficulty to raise the fund from other investor because investor do not put high expectation from the food industry. She will need to find a chef who had
experience and knowledge in operation rather than only cook the food to customer for her new company. (%) ou+! ou a!9i#e er to +aun% te .u#ine##4
will not advise her to launch this new business if was Amanda)s friend. She had to ensure she got enough fund to support her business. he capital fund she need to raise was too high and not realistic for a new startup company. Most of her expectation was not realistic and it is diffult for her to find investors who share the same philosophy or passion with Amanda. &urthermore, she was not emphasi*ed in the rate of return and it tool ten year long term investment which is not easy and attractive to find the investor who are willing to do so. Although Amanda)s business concept was new in the market, but the food industry was very competitive and mature in term of different or similar business concept. She need to compete with various popular restaurant in the market who had been gaining the public interest which is very challenging and difficult.
ue#tion 2 (a) at are te #o%ia+ tren!# (o.#er9ation#) tat Aan!a a# oun! er re#ear% on Aeri%an :oo! in!u#tr4
Amanda noticed that American were very obsess with fast food because of their fast pace working life style in her early study from movie and book. She also notice that American women were reentering workforce and no longer cook for their family in home. When they are working, they did not have the time to cook for their family so fast food which is affordable and fast serving time become their preference. Most of the fast food in the market was not healthy for the people. Amanda also recogni*ed that it was challenging to gain the trust from public at the early stage. he social responsibility by the company created at the early stage were not convincing.
(.) E+ain te rea+ ro.+e(#) oun! in te in!u#tr4
n the early interview by Amanda and her team, they are managed to meet with 5reg Walford who had launched a smoothie business in -ouston, exas. Amanda team was told by Waldorf that location issue caused his business failure. &rom Woldorf case, Amanda team reali*e that the restaurant could not be successful if the business location was incorrect. #esides that, Amanda
team reali*e some of expected challenged that they will face. he most challenging part was the healthy food will be sold at a higher price compared to the unhealthy food. his is because the cost of healthy food are higher. hus, it could be difficult to manage the food cost and control a reasonal selling price. Moreover, public perception for fast food with healthy food are not common and difficult to link in American food industry. &eedback of healthy and natural food was difficult to be translated into a uni"ue and great tasting experience was collected from the focus group during the interview session. he focus group had mentioned clearly that the perception of how hamburger should taste like was pretty fixed where people ust want an indulgent burger not a healthy one. 6ther than food taste, ndustry profession and investor did not put high expectation for the food industry business. Most of them believed the first time restaurant normally failed. he challenge become obvious when Amanda was trying to find a business location. When Amanda satisfy with certain place. She found difficulty to get the rental place because most of the retail landlord were not willing to rent for the first+entrepreneur. he landlord perceived that restaurant were normally more risky compared to other typical retail tenant. #esides that, rising capital was difficult for Amanda because of the bad perception among the people. he investor do not have enough confidence for food industry. 0eople are not willing to oin the higher competition industry like food industry. Although the food are daily consumer products, but there are many matured company who had been in the market for years. &urthermore, it was difficult to find a chef who had the operational experience and also e"uipped with good cooking skills. he chef needed to know how the similar business ran during the startup stage. An experienced and reputable chef was needed to ensure Amanda restaurant could get the sourcing discount e"uipment and preferred price from the suppliers. &rom the case, Amanda was doing interview in #ar area with several chef but only one chef have experience with chain restaurant and "uick service for food industry.
(%) ;ow iortant are networ7in- an! tea in #ettin- a ir witin te oo! in!u#tr4
Amanda graduated degree in 7conomic and having six year working experience in Sun Microsystem and Cisco System according to Amanda)s resume. She would like to switch to another working field which she was not familiar with. She oined the M#A in Stanford $niversity and enrolled in an 7valuating 7ntrepreneurial 6pportunities 829:; course. She was able to team with classmate from different background such as finance, 0/, and !ournalism from the course. She was able to receive various feedback from different perspective. &or instant, she received the feedback that the business concept was too limited as she would like to start with only one unit and relatively fixed food and labor cost. A good networking allow Amanda to interview with those entrepreneur with rich experience like Waldorf. -e was giving location advice to Amanda based on his past experience. n addition, Amanda used her networking to find design student Alex
ue#tion 3 (a) at are te ear+ a##ution# tat Aan!a an! er tea a9e in ter o te 9a+ue roo#ition an! tar-et ar7et4
he early assumption for the Amanda)s business believed that more and more American were relied on the fast food as a convenient and affordable dining option. #ut most of the fast food was not healthy. #esides that, she believed that the increasing of female in the workforce had contributed to the rising number of people consuming on fast foods as they seldom cook for family. Amanda contemplated starting a healthy fast food restaurant and targets those working women family between ages =>+9>. hey would like to have a restaurant which provide fast food
with healthy and natural choices. he fast food restaurant was ran by Amanda with a social mission.
(.) Ater te %on!u%te! a o%u# -rou, wat were te %riti
1uring conducting in focus group, the team was concentrated on Amanda)s concept of healthy and natural fast food. hey were trying to attract customer to the restaurant by distinguish itself from other typical fast food. &ocus group participants reacted strongly against the idea and they believed that food with healthy and natural was not providing good taste experience. he food with healthy and natural was no uni"ue for them. Additionally, they critici*e the bland menu will only know by the people who had health conscious and distrust for a company running on a social responsibility. #esides that, the focus group respondents also stated that the perception regarding the fast food. hey mentioned that hamburger taste was pretty fixed and they prefer indulgent burger but not healthy and less tasty burger.
(%) at are te 9a+i!ate! 9a+ue roo#ition an! tar-et %u#toer4
Amanda had decided to adust her positioning to emphasi*e the "uality of the product and services and less prominent in social mission after series interview. he new tagline was %feel good and fast food(. n order to maintain the tastiness of the fast food, Amanda and her team plan to provide low+fat soy?infused hamburger and decided to serve 4>>@ all natural beef patties instead. he value proposition of the Amanda restaurant)s food must be tasty but healthy and set in the reasonable price. #y achieving the healthy and tasty food, Amanda worked with the chef 'oveshen to create custom sauces for the customer. Chef 'oveshen had decided to do house+ made all?natural sodas. Amanda was look for the hormone+free and sustainable+farmed meat as well as organic produce as an ingredient in order to maintain the food taste. Amanda also prepared cookies as a treat for customer to feel comfortable indulging everyday.
Amanda found another value proposition which the target people wanted to eat nutritious, convenient foods in portion si*es that are satisfying but not overly+filling after a series of interview. hey would like to mix and match menu items to create several different meals that will not only taste good but also complement their healthy lifestyles. Moreover, Amanda build a menu with healthy guidelines which providing calories, right balance of protein, carbohydrates and fat, and suggested fruit and vegetable option information to her customer for the social responsibility value proposition. She care about the people health but not only concern about the benefit or selling of the foods.
ue#tion E9a+uate te =o. we#t a# !one on te o++owin-& (a) Va+i!atin- er i!ea
Amanda reali*ed that American people relied on fast food as their dining option but most of the option was unhealthy. Amanda was inspired by rader !oe who provide natural uni"ue food at affordable price. hus, Amanda would like to have a healthy fast food restaurant. #y starting this business idea, Amanda had formed a team with her 29: classmate. #y discussing with her teammate, Amanda had widen her idea and different scope of thinking. n order to valid her idea, Amanda and her team did the interview with industry professional and people with related experience. &rom early interview, Amanda and her team had better understanding about the financial related issue of the food industry and the cost of the ingredient. he interviews was able to help the team to refine business plan. o further validate this idea in the market, Amanda and her team had prepared ten minute interview with their early target market working women between ages =>+9>. hey went out to find these women at Whole &oods, rader !oe)s and the 1ish. he interview helped the team to understand about the target market)s habit and their perspective. hus, Amada was able to validate her idea whether the business could be ran in the market or not. #esides that, it was necessary for Amanda and her team to do more deep interview with people who relied on the fast food as Amanda was going to provide healthy fast food. &rom the
interview, Amanda was able to know that social responsibility such bland menu was only for those who conscious with health. Consumer prefer indulgent fast food but not healthy or less tasty fast food. &rom here, Amanda was emphasi*ing in the taste of food product to ensure the idea was accepted by consumer. Amanda was doing good ob for validating her as she went to the real market, ask for opinion, and listen from the interview. 5etting real market feedback had helped her to refine a better idea to match market need. Amanda could see her idea become possible only when the product and service was accepted by customer.
(.) Rai#in- one
#ased on the business plan, Amanda calculated that she need one million dollars of startup capital. She get the feedback from industry experts, classmate and professors, she made an estimation and her own contribution to own this business. Amanda knew that the restaurant was not ust about the rate of return but she will make sure the business could be successful. She try to deliver message for the investor that this was a ten year investment and not a "uick return compare to other startup company. n order to gain the fund from the Angel investor, Amanda pitched her idea widely and used the word of mouth of people who Amanda approached for her idea to help her to convey the message. She successful to get connection with different peoples and she was re"uested to provide more detail of the plan. n mu opinion, Amanda was no doing so well in raising money. She had set an extremely high start+up capital with high risk business. She did not considered that one million investment was difficult to get from the investor if the return could not be expected and high risk. n addition, Amanda was putting her focus in the Angel investor where only think about getting fund from limited sourced. f she had confidence about this business, she should try to apply bank financing for the business rather than ust waiting for the fund from the investor.
(%) :orin- a .oar! a# a# #e !one ri-t4 at %ou+! #e a9e !one .etter4
As mentioned by the interest investor in the case, they wanted to evaluate who would be on her team, and also wanted a better sense of what the restaurant would like. &rom this expectation, Amanda reali*ed that she need to form a board of advisor, generate renderings of the restaurant space and partner with a chef. After she found a chef to support her idea, she start to look for the board of advisor. She looked for people who gave her support and encourage during early days. She knew she need the board for more tactical advice on operation issue, as well as relevant industry experience. n order to get a better board of advisor, Amanda was exploring her ideas to other people and introduce herself to those people. f Amanda found out a person suitable to become board for her business, she asked them to involve in her business. -owever, it is not easy to convince people to oin the business. n my opinion, Amanda did well in forming the board. She introduced herself to people with experience, she knew what she should do and who should she find to help her business.
ue#tion 5 Con#i!er te ran-e o out%oe tat Aan!a i-t a%e i #e #u%%e##u+ in in!in- a +o%ation (a) Te ir#t re#taurant ai+
f the restaurant fail, the investment of Amanda and investor will be lost. She should close the restaurant to cut down any further loss. hen, the idea of the business should be validate again and more market survey in term of location should be redo again if Amanda want to continue with this business idea. Amanda should analy*e what she did wrong for this business idea and come out with new amendment to enhance the business idea. -owever, the first restaurant failure was helping Amanda to gain another experience or lesson as an entrepreneur which she could do better for her next idea. She may look for another place and modify her business plan based on the previous experience. f the restaurant failed and Amanda
decide to close and stop the idea, she could return back to her consultant ob and working to support her life.
(.) Te ir#t re#taurant #u%%ee!# .ut !oe# not #%a+e
f the Amanda successful in developing her first restaurant but did not get the scale, Amanda may not able to start second restaurant according to her plan. Amanda may decide to maintain one restaurant and stop planning for the second restaurant. -er expectation could not achieved and the return will be fixed in a certain level. 6ne million capitals from the investors could not get the expected return after ten year as mentioned by Amanda. hus, investor will lose the confidence toward Amanda company and may re"uest to take back the capital. he company capital and cash flow will be affected and financial tight where Amanda will face difficultly to manage the restaurant. f she still want to continue her planning, she have to redefine the business plan and start to look for the capital again from other investor as the first restaurant did not provide much of return to her. -owever, if Amanda could not open her second restaurant according to her plan, this may also help in positioning the specialty of the restaurant because there was only one Amanda restaurant in the market. he uni"ueness of restaurant could further achieved by applying intellectual property for Amanda)s menu. #esides that, Amanda could hire restaurant manager to help in maintaining the restaurant rather than managing by her own when the business was stable. She could continue to work as a consultant and Amanda could have a stable income.
(%) Te ir#t re#taurant i# a oe run an! a++ow# Aan!a to ean! a%%or!in- to +an
f Amanda was unable to find a suitable location to start her business and decided to start from a home run, Amanda could had save the rental fees. She could have more time to seek for the better and suitable location for her restaurant. #esides that, if the first home run restaurant successful and this will give the confidence to retail landlord so her successful past track record.
Compare to the previous time when Amanda was facing difficulty to get the rent offer from landlord because of the lower successful rate for first time restaurant entrepreneur, the successful of Amanda)s first restaurant help her to find the location and getting rental place from landlord for her second restaurant easier.
