Introduction
Description of the company
Porcini’s Inc. is an organization established in 1969 to provide food services to its clients within North End of Boston. It is therefore an organization which belongs to the restaurant industry of the U.S. Based on industry segmentation, the restaurant industry have been segmented into three segmentations including fast foods, single location full-service restaurants and full service chain restaurants.
Porcini’s Inc. is specifically grouped together with other companies in the category of full service chain restaurants, which means it business activities involves provision of food services to seated clients who visit their business and pays after eating. As an organization in the food industry, it offers a range of food types, and through the years, it has served customers in Hyannis, Massachusetts, Providence and Newport, Rhode Island, Hartford and Connecticut.
Evidence shows that the organization has grown and expanded since its establishment in 1969. Porcini’s Inc. growth and expansion is confirmed by having 23 locations from where it operates the business presently.
The organization has operated its business in sites within downtown and major strategic places such as shopping malls located mostly in the northeastern region of the U.S. It has employed almost a thousand individuals for it to carry out all the daily tasks in all these sites, and through their efforts, the organization has realized profit margin increase of 4%.
Currently, Porcini’s Inc. organization overall performance is more improved as compared to that of its competitors such as Uno Chicago Grill, Bertucci’s, Olive Garden, Buca di Beppo and Maggiano’s. The improved performance and rise to being a high competitor is linked to the adoption of the strategy of offering high-quality food and services in all of their business point of operation.
This organization’s great performance is thus under the basis of quality, which is set right from selection of the organization’s personnel and employees including executives like managers, supervisors, to subordinate staff such as chefs and others included in the general workforce.
The quality of food is also closely linked to the fresh food they used and the procedures of preparations which are done according to the original pure procedures of “flash cooking” techniques and menu requirements. The organization’s history shows that its entry to the market costs it an estimate of not more than three dollars as compared to the cost of its closest competitors, Olive Garden’s.
In short, Porcini’s Inc. has depended on the single and simple factor of quality to compete with its opponent in the business, and by differentiating the quality of food and services of the organization with those of its competitors, Porcini’s has not been made a powerful regional brand, but it has also dominated in the region.
Current situation /Conditions
Porcini’s Inc
Porcini’s Inc. an organization that has been in restaurant business operation for decades wants business expansion. Through the thought and reasoning of the organization’s senior marketing officer, Tom Alessio, the vice president at Boston, the organization has a potential of expanding its business.
The marketing vice president of the organization takes the initiative of assessing and evaluating any possible opportunity through which the organization can expand.
In his course of assessment and evaluation, a number of things are clear: the big chains, mostly organizations in the category of fast-foods are searching for international markets and his organization is restrained from doing so due to limitation of resources, its present size, and a brand to use at the international arena; the domestic market for full-chain restaurants, where Porcini’s Inc. belongs is almost becoming saturated.
That is market for full-chain restaurant located within cities and shopping malls is close to saturation point, which are the mainly sites through which the organization has operated in the past.
Under such circumstances and consideration of different facts and factors, the vice president believes that organization needs a way for domestic growth and expansion. At the end of it, the organization has identified “Porcini’s Pronto” as a possible line project line through which it can grow and offer its services to new markets within the region. Currently, Porcini’s Inc. is thus struggling to assess its financial issue of costs or stability for the different possibility options of adopting and implementing this new of service production.
Restaurant Industry
As revealed from the analysis of the three major segments, the restaurant industry is experiencing stiff competition, especially in areas of growth and expansion due to most segments having already been saturated or nearing their saturation point. For instance, the fast food segment is viewed to have low chances of growth due to the fact that it has reached its maturity and saturation point.
Following such factor considerations, different rates of growth are expected for each segment, whereby about 2 %, 2.8 % and 2.5% growth rates per annum for fast food, single location full-service restaurants and full-service chain restaurants, are respectively expected until 2015.
Brief financial assessment
The financial record of the Porcini’s Inc. are expected to shows last reported revenue of more than $ 7214 millions, net earning of $ 371.8 millions and a net profit margin of 5.1 %. This indicates that the organization is well performing than all of its competitors in full-service restaurant chains category.
This amount will only be enough for financing at one or two site per annum. According to the estimates given by the various experts, the cost for a site range from $ 2.1 millions and 4.3 millions, which is in accordance to the data from the organization’s experts and those of real estate officer. On average, the organization estimates that it may have revenue generation of $ 2.4 millions on a seating of 85 situated on an averaged of 4200 square footage.
In short, looking at the investment costs of the various options, Porcini’s will have to part with $ 2.1 million, $2.5 millions and $ 1. Million by using company owned/operated, syndicated and franchised approaches, respectively. On the other side, this will lead to generation of profit margins estimated at 6%, 4% and 2% respectively. The pricing of the Porcini’s Pronto project is seen a bit lower as compared to that of its parent Porcini’s, therefore, the profit margin per unit is expected to be less that generated at Porcini’s.
Recommendations
In order to adopt and implement Porcini’s pronto project, the following are the recommendations for the Porcini’s company
Following the diverse factors and facts revealed from the research already accomplished by the organization’s selected team, the adoption and implement of the Porcini’s Pronto project requires that the team to make its final decision following its assessment and evaluation of the different factors.
Since the organization has established that quality is the key driving factor of its growth strategy, it is important that it stops focusing on those options that have a potential of creating an environment or conditions leading to the compromising of the organizations quality of food and services.
As the organization has the ability to fund and finance the organization without need of loan service, we recommend that the organization focuses mostly in those options which give them overall managerial control over the quality of whatever they are offering without paying much attention on the requirement of initial layout and the subsequent expansions which bears 50-50 chances.
With these considerations of the diverse investment factors, we recommend the organization to settle on the company owned/ operated option which bears much of the characteristic needed for the business success.
By settling it decision on this particular option, the organization set on an option which they are really experienced in, and which they have tested before, hence, the organization is not having high probability of establishing the project, but it also has high chance of operating profitably within the a few locations served with highways within the region of their business operations.