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Zara Restaurant and Lounge: Business Plan Evaluation Essay


General Overview

Business plans are essential for business startups. A well-designed plan describes the strategies the owners will employ to achieve efficiency and cost-effectiveness in the business venture. For a restaurant, a business plan discloses the firm’s history, marketing strategies, leadership structure, financial performance, market niche, and risk management strategies. Zara Restaurant & Lounge, a business venture located in Midtown Atlanta, provides “a tapas lounge, a cosmopolitan bar, and a full service dining” under one establishment (Bplans, 2010, Para. 4).

It offers a broad range of ethnic foods and entertainment that appeal to both young and elderly clients. This paper evaluates Zara’s business plan, including its financial plan, management team, and marketing strategies in order to determine the restaurant’s internal strengths and potential to attract investors.

Major Components of the Plan

A good business plan for a new restaurant describes how the owner(s) intends to run the business. It details the firm’s key features, including its services/products, target market, financial position, and industry. The major components of Zara’s business plan include “executive summary, company summary, services, market analysis summary, strategy and implementation summary, management summary and financial plan” (Bplans, 2010).

The executive summary of Zara’s business plan is well organized. It describes the restaurant’s mission, keys to success, and objectives. Zara’s mission statements, immediate goals, and competitive strategies are written in a formal and detailed manner that can appeal to investors. Moreover, this section describes in detail Zara’s products, which include “eclectic menu featuring regional specialties, Spanish ceviche, Thai and Indian curries, and local crab cakes” (Bplans, 2010, Para. 6).

It also describes Zara’s financial highlights, and competitive strategies. Among the major strengths of this plan is its description of the current and future sales and profitability estimates. The details will help potential investors to know the scheduled time for dividends. The section also includes cost estimates of labor, revenue, and projected sales. However, Zara’s executive summary does not catalogue the characteristics of its target market and the identities of the management (start-up) team.

Ideally, the ‘company summary’ section should describe the firm and the management team. In this section, Zara’s business plan gives the company background, ownership, restaurant location and design, operating criteria, and start-up capital. The inclusion of the summary of Zara’s start-up capital lends credence to this business plan. In the ownership section, the plan depicts Zara’s founders (Zander Hunte and Peter Smith) as qualified individuals with vast experience in the restaurant industry. The section also includes diagrams (start-up chart and table), which allow potential investors to visualize Zara’s start-up capital that currently stands at $690,119 (Bplans, 2010).

The next section of Zara’s business plan is the “services” section. It details Zara’s services, including menus (Spanish, Thai, and Chinese cuisines), tapas, salads, appetizers, and desserts. The descriptions help customers to understand Zara’s product/service offerings and play a role in brand development.

The marketing section of Zara’s business plan provides an analysis of the market, competition, and market entry strategies, which are grounded on detailed industry analysis. It helps readers to know Zara’s target customers and competitors as well as the strategies the restaurant will use to grow its market share. However, the demographics of the target market, such as gender, age, and income, are conspicuously missing in the plan. Customer demographics are useful in market segmentation.

The other key element in Zara’s business plan is the ‘strategy and the implementation’ section. It outlines the strategies (sales and marketing) that Zara will use to gain a competitive advantage in the restaurant industry. It analyzes Zara’s direct and indirect competitors (the Cheesecake factory, the Kitchen, and Lunaci, among others) in the industry.

This information will help Zara’s management to identify the restaurant’s competitive strengths and weaknesses and devise a long-term marketing plan for maintaining a competitive advantage. Zara’s strategic plan has two major weaknesses; first, it does not elaborate on the restaurant’s distribution channels or strategies, and second, it does not say whether Zara will use patents to prevent competitors from offering similar products/services.

The ‘management’ section outlines the identities and expertise of the management team. It describes the key personnel that will drive the business forward. It is clear that Zara has a highly competent management team. This section also outlines Zara’s personnel needs, tasks and responsibilities, and remunerations for each position. However, the plan does not mention the related service providers or the company directors, who may have a lot of influence in the decision-making process.

The financial section covers the investors’ payback plan, projected business growth (sales and revenue), cost-control strategies, and break-even analysis, among others. Zara’s five-year financial forecast, which includes income statements, assumptions, and balance sheets, will help investors estimate the expected returns from the investment. Moreover, the major milestones included in Zara’s financial plan will help investors know the restaurant’s past performance.

Conclusions Based on Critique

Overall, Zara’s current financial position looks good. Based on its profit and loss account, and projected cash flow, Zara is financially secure. The restaurant has, at its disposal, a sum of $130,000 and $110,000 in grants and owner investment respectively (Bplans, 2010). This amount alone can run Zara for approximately one and half years. Zara seeks an additional $200,000 and $300,000 in investments and loans respectively, for “renovations, working capital, legal fees, marketing, and personnel” (Bplans, 2010, Para. 11). The plan predicts that Zara will break-even within the first 10 months, which implies that potential investors will receive dividends from their investment within a short duration. Moreover, the firm’s financial projections (sales and revenues) are based on in-depth industry analyses, which enhance the credibility of Zara’s financial positioning.

Zara’s management team has a “combined experience of 48 years in food, finance, restaurant and hotel, marketing, and business management” (Bplans, 2010, Para. 14). Given their expertise, the writer believes that Zara’s management team will help the restaurant gain a sustainable competitive edge in the industry. The highly qualified leaders bring into the company a rich skills mix, which will help the restaurant do well in the hotel industry. The top managers (Peter Smith and Alex Hunte) have good credentials and vast experience in their respective area of expertise. Their broad experience and diverse management styles will help the restaurant grow and increase its revenue.

Zara’s business plan outlines the restaurant’s major strengths in the industry, financial position, target market, resources (management and marketing), and competition. Thus, this document will promote internal understanding by making the various aspects of Zara’s mission clear to the employees and the management. The plan focuses on Zara’s present and future position in a highly competitive industry.

Based on the analysis of Zara’s competition and strengths and weaknesses, strategies for achieving a competitive advantage are given. Thus, besides helping to build investor (external) confidence, this document will enable Zara enhance its management processes. For instance, the analysis reveals that Zara needs a start-up capital of $740,000 with a total sales forecast of $371,416 within the first year. These figures are important in managerial decision-making. The document can also be used to benchmark Zara’s performance in the restaurant industry.

The business plan is necessary when seeking external (investor funding). In the writer’s view, the detailed analyses provided in the plan will enhance external legitimacy, which will translate into improved investor confidence in the business venture. The plan is a professionally presented document with details of Zara’s goals, operations, and resources. Furthermore, the restaurant has a solid financial base (130,000 and $110,000 in grants and owner’s investments) and an experienced management team, which will inspire investor confidence.

Its location (Midtown Atlanta) and elaborate marketing strategies, which are based on market and competition analyses, will enable the restaurant to make a successful entry into this market. Moreover, according to the business plan, the investment is expected to break-even within the first ten months. Thus, potential investors and partners may want to invest in Zara because it is less prone to risk and promises good returns within a short time.

Value of this Business Plan Critique

The critique of Zara’s model helped the writer to understand the process of developing and presenting a good business plan. In particular, the review provided important insights into the layout and the key elements of a persuasive business plan. A good plan should promote internal understanding and business planning (present and future). It should also inspire external legitimacy in order to attract investors and business partners.

Reference

Bplans. Ethnic Food Restaurant Business Plan: Zara Restaurant and Lounge. (2010). Web.

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IvyPanda. (2020, July 1). Zara Restaurant and Lounge: Business Plan Evaluation. Retrieved from https://ivypanda.com/essays/zara-restaurant-and-lounge-business-plan-evaluation/

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"Zara Restaurant and Lounge: Business Plan Evaluation." IvyPanda, 1 July 2020, ivypanda.com/essays/zara-restaurant-and-lounge-business-plan-evaluation/.

1. IvyPanda. "Zara Restaurant and Lounge: Business Plan Evaluation." July 1, 2020. https://ivypanda.com/essays/zara-restaurant-and-lounge-business-plan-evaluation/.


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IvyPanda. "Zara Restaurant and Lounge: Business Plan Evaluation." July 1, 2020. https://ivypanda.com/essays/zara-restaurant-and-lounge-business-plan-evaluation/.

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IvyPanda. 2020. "Zara Restaurant and Lounge: Business Plan Evaluation." July 1, 2020. https://ivypanda.com/essays/zara-restaurant-and-lounge-business-plan-evaluation/.

References

IvyPanda. (2020) 'Zara Restaurant and Lounge: Business Plan Evaluation'. 1 July.

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