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Fat Angelo's Italian ReThe best family-style Italian restaurant in
Aksiraporn Piamkamol Shinnawa
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Situation Analysis
Decision Rationale
Recommendation
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THE 3 PARTNERS: Andy Chworowsk
Specialized Job: Genera
Dale Willetts: Specialized
>10 years ofexperience
Job: Finance Chris Gallaga:
Italian execu
years in the Job: Food an
Operations.
Wan Chai District Ashley Road Elgin Street, Soho
3,5002 4,0002
200 130175
2,6002
Fat Angelos was the 3 ex-colleagues in a successful chain of American-style resta
Companys Background: Fat Ang
Situation Analysis Decision Rationale Reco
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Fat Angelo's is known for:
Value-for-money Friendly service
Lively atmosphere 2 Portions: Regular and Family Sizes Food Type:
Salad/Soup
Pan Pizza Pasta Main DishesGrill/Roast Dessert
Homely Food & Atmospher
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Wan Chai District Ashley Road Elgin Street, S
Restaurants locations attract both lotourists
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0
0.5
1
1.5
2
2.5
3
3.5
4
0 0.5 1 1.5 2 2.5 3 3.5
STRATEGIC COMPETITIVE GROUP MAP
Price level
Fast food-styled High-end styled
Price level was approximately 60% above that of the lowe
competitors and 50% cheaper than that of the high-end co
HK$150-HK$200
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COGS
28%
Rental expense
12%
Other expenses
60%
Total Expenses
COGS
ope
exp
7
Rental expense
30%
Operating Co
A turnover of more than HK$1 million per month per shop
Good rapport with its suppliers: Benefits GPM: Impressive GPM of 75% and 10% NPM Rental expenses 30% of operating costs
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Critical success factors (C
Corecompetencies
Italian home-styled
experience
MaximumBuying
Leverage
Effectivemarketingprogram
Locations
Quality Foodand Service
Experiencedkey staffs
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Management wants to ut i l ize exist ing arepossiblyexpand ing to new restaurantbus inessto sustainably obta in more prand market share by attracting new custom
and maintaining the old customers.
Problem statement
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Rivalry
Threat of new entra
Threat of suppliersThreat of buyers
Substitutes
RESTAURANT INDUSTRY ANALYSIS USING PORTERS 5
FORCES
Low switching costs Well-informed and value-
cautious Customers Price-sensitive
Weak productdifferentiation
Franchise com
Substantial amrestaurants
Revenues of tdepend on cu
No difference in switchingover equal quality
Customers loyalty
initial difficulties in obtaining credit terms
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Utilize Existing
Area
Utilization
By ourselves
Option 1:
Pizza TakeawayOption 2:
Coffee CafeOption 3:Seafood
RestaurantAlternatives?
By Others
For Rent
Situation Analysis Decision Rationale Reco
Decision Making Rationale:
What are our choices?
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Utilization Generating profit from existing asset
No financial problem in investing in business [Hav
Non-utilization Doing nothing doesnt generate anything
Situation Analysis Decision Rationale Reco
Decision Step1
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By Others RENT:
Generates Profits Doesnt take the business further
By Ourselves NEW RESTAURANT CONCEPT:
Generates Profits Expand to New Restaurant Business
Situation Analysis Decision Rationale Reco
DecisionStep 2
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Choices that we have left i
Situation Analysis Decision Rationale Reco
WE CLOSES ALTERNATIVE OPTION BECAUSE Not enough information
Making lots of assumption Assumptions can be misleading GIGO- Irrelevant information in irrelevant o
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Factors that effect business d
BUSINESSDECISION
INVESTMENT
HUMANRESOURCES
PROFITABLITYRELATIONSHIP
WITHSUPPLIERS
BRANDING
DEMAND
Situation Analysis Decision Rationale Reco
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How this framework will w
Situation Analysis Decision Rationale Reco
Factorsthat effectbusinessdecision
3 types ofrestaurants
Very suitable
Suitable
Not suitableFilter out as
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PIZZA:
High amount ofcompetitors=> Highlydemanded
Specialized in Italian crusine
Associate with pizza
CAF:
High amount ofcompetitors=> Highlydemanded
No specialty in this field
SEAFOOD:
High amount of=>highly deman
Some specialty
Situation Analysis Decision Rationale Reco
FAD: Demand
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FAD: Investment
PIZZA:
Mediumrequired capitalCAF:
Low requiredcapitalSEAFOOD
High reqcapital
Situation Analysis Decision Rationale Reco
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FAD: Branding
PIZZA:
Good reputation in Italianmedium cost cuisine
Can emphasize familyvalue
CAF:
No reputation in coffeemarket
Individualist culture-cannot encourage familyvalue (our brand value)
SEAFOOD:
Some reputatiseafood
Can emphasizevalue
Situation Analysis Decision Rationale Reco
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FAD: Supply &Supplier
PIZZA:
Gain the advantage of
economies of scaleMedium product lifeinventory
CAF:
Cannot gain economy of
scaleLong product lifeinventory
SEAFOOD:
Can gain some
of economiesShort productinventory
Situation Analysis Decision Rationale Reco
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FAD: Human Resources
PIZZA:
Less procedure
Require mediumamount of workers
CAF:
Simple procedure-
Easy Market EntranceLong product lifeinventory
SEAFOOD:
Lots of proc
preparationRequire manworkers
Situation Analysis Decision Rationale Reco
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FAD: Profitability
PIZZA:
Use existing materials,maintain high GPM
Many customers are willing totry as extension of FA
CAF:
Large profit margin per unit.
Lots of competitors
125 people; too big for cafe
Not expert in cafe
SEAFOOD:
Large profit mar
Little expertise f
.
Situation Analysis Decision Rationale Reco
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Factors that affect busdecision PIZZA CAFE SEAFOOD
DemandInvestmentBrandingRelationship with suppliers
HRProfitablity
Situation Analysis Decision Rationale Reco
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No Customer Base
Cannibalization w/ FA
Many (38) Competitors Nearby
Situation Analysis Decision Rationale Reco
Specific Risk on Pizza Optio
No Base-Customer: Capture Ne
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able to survive
simply bycapturing theoverflow.
For those who are
bored, Serve asExtension of FAspecialized in Pizza
For:
1.Young Lo
2. Tourists
Capture the
Overflow:
Existing
Customers:
New
Custome
Situation Analysis Decision Rationale Reco
No Base-Customer: Capture NeOnes!
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Serve only Pizza
and Pizzas VarietyMaintain the
feeling of Genuine,Homely, WelcomeService &Ambience
Pizza Only:SameExperience:
Situation Analysis Decision Rationale Reco
Cannibalization: New Food Var
38 Competitors Nearby: We are on dif
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38 Competitors Nearby: We are on difstand
Proven Authentic
Experience fromFA will bemaintained andexpected here!
Same Pizza Taste &
Quality but withmore varietyNone of ot
nearby capcustomers
Have StrongBranding:
HaveSpecialization
on Food:
DifferentMarket
Segment
Situation Analysis Decision Rationale Reco
S ifi Ri k Pi O ti
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NoCustomer
Base
CapturingOverflow
from FA
Exisitng FACustomers
NewCustomer
Tourists Young Locals
Cannibalization on FA
DifferentMenu
Specializedon Pizza
Extension ofFA
Many (3Competit
Nearby
Have StrongBranding
SameExperience,
DifferentMenu
S
Situation Analysis Decision Rationale Reco
Specific Risk on Pizza Option
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Use Existing Brand &Specialties to createUnique New Restaurant
Low Competition onSame Market Segment
Maintain ImpressiveGPM of 75%
Situation Analysis Decision Rationale Reco
n:
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Q&A Why no financial forecast?
Lack of information
Create Bias as the future has been foreseen
Why dont you determine new concept instead? Insufficient information; require lots of assumptions and imaginat
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MAPS Italian
Caf Seafood
Situation Analysis Decision Rationale Reco
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