Fat Angelo's Case analysis

7/30/2019 Fat Angelo's Case analysis

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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


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


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


DecisionStep 2


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Choices that we have left i


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



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How this framework will w


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


FAD: Demand


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FAD: Investment

PIZZA:

Mediumrequired capitalCAF:

Low requiredcapitalSEAFOOD

High reqcapital



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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



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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



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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



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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

.



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Factors that affect busdecision PIZZA CAFE SEAFOOD

DemandInvestmentBrandingRelationship with suppliers

HRProfitablity



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No Customer Base

Cannibalization w/ FA

Many (38) Competitors Nearby


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


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:


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


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


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%


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


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Fat Angelo's Case analysis