Every financial and strategic decision a business owner makes comes with certain risks and opportunities. Both internal and external factors can affect a company’s growth, and when the business invests a large sum of money into new equipment or location, it becomes particularly vulnerable. Thus, the Strength, Weakness, Opportunity, Threat (SWOT) analysis can be implemented to evaluate the feasibility of a decision (Lubis et al., 2019). This case study will utilize a SWOT analysis in assessing the viability of opening a new location for a Swedish sandwich restaurant.
A SWOT analysis evaluates the internal and external factors that can affect a business venture’s growth and development and assesses the practicality of any decision or strategy concerning it. The internal factors include the inner strengths and weaknesses of a company, while external considerations comprise future opportunities and potential threats to the business (Vlados, 2019). The analysis can help determine the viability of the venture itself and how any significant financial or strategic decisions will affect it in the future.
Opening a new restaurant location is a high-risk decision, as the restaurant business is highly volatile. The discussed business strategy selected for the purposes of this paper is opening a new spot for a Swedish sandwich restaurant. The new site is a small one-story building located in the city center, in the middle of a popular shopping street. The potential opening has several strengths that can help ensure the new venue’s profitability. The location is advantageous as the shopping street is characterized by increased foot traffic, particularly during the holiday season. Swedish cuisine is unique to the area, and the restaurant offers vegan options, food-to-go, and eat-in options. In addition, a small outdoor dining area is available to the restaurant. Furthermore, there are opportunities to introduce gluten-free options and new menu items and partner with delivery services and applications.
Weaknesses and threats to the decision to open a new restaurant location should also be considered. The new site will require substantial financial investment due to the necessity to refurbish the new premises, hire staff, and pay rent. In addition, due to the high foot traffic, the noise level on the premises is elevated and can be disruptive. Parking and seating are also limited because the building is relatively small, and motor vehicles are not permitted on the street. Furthermore, the new location faces threats from the competition in the area, including well-established competitors and new entries. In addition, the restaurant should be prepared for the rise of fresh produce and delivery prices and high staff turnover. According to Kim et al. (2021), the financial insecurity of the population can translate into demand for dining out, regardless of the price range of the restaurant. Finally, all businesses need to account for a risk of a new pandemic-related lockdown.
Figure 1. SWOT Matrix
In summary, the SWOT analysis helps to decide against opening a new location for the Swedish sandwich restaurant. Although there are several strengths and potential opportunities for growth, the weaknesses and strengths currently outweigh them. In particular, external threats to a new restaurant play a significant role at the moment due to high competition within the restaurant business and the COVID-19 pandemic-related procedures and restrictions.
References
Kim, J., Kim, J., & Wang, Y. (2021). Uncertainty risks and strategic reaction of restaurant firms amid COVID-19: Evidence from China. International Journal of Hospitality Management, 92, 1–10. Web.
Lubis, T. W., Absah, Y., & Lubis, A. N. (2019). Analysis of restaurant business strategy in developing business using SWOT analysis. In ICEMAB 2018: Proceedings of the 1st International Conference on economics, management, accounting and business, ICEMAB 2018, 8-9 October 2018, Medan, North Sumatra, Indonesia. European Alliance for Innovation.
Vlados, C. (2019). On a correlative and evolutionary SWOT analysis. SSRN Electronic Journal, 1–23. Web.