Description

Textbook Case: KIMBALL’S RESTAURANT

Management Information Systems, 7th edition By Kenneth J. Sousa & Effy OzPublisher CengageISBN 978-1-285-18613-9

Liz and Michael Kimball dreamed about opening their own restaurant. They believed that they could use their talents and experience to operate a successful restaurant. Liz was a great cook and had accumulated many family recipes for appetizers, entrees, and bakery desserts. Michael had a degree in business and several years of experience in business management. They believed that it was the right time to think about new careers and realize their dream.

Michael began his career in the human resources department of a local manufacturing business. Over the course of his 20 years in human resources, he was responsible for recruiting, compensation evaluation, and employee orientation. He also managed employees’ performance evaluations for the production departments. While he has some accounting and budgeting experience, it was specific only to human resources, not for an entire business organization.

Liz started work as a customer service rep for a financial services company right after high school. Her 15 years of customer service experience has given her some ability to manage people. She does not have a formal culinary education, but she has an excellent sense of food preparation, ingredient selection, and meal planning. These skills should provide a foundation for the menu development and food preparation that a restaurant will require. However, her lack of a formal culinary education and experience

in commercial kitchen operations might require some additional training.

The Kimballs live in Lakeside Heights, a suburb of a metropolitan city. Their community and the adjacent towns consist of primarily middle-income households. Many of the adults in the community are college-educated and have professional jobs in business and manufacturing. The population of the town and surrounding communities is approximately 40,000 people. The city, about 12 miles from Lakeside Heights, has a population of 110,000.

Michael and Liz believe that a restaurant serving Liz’s specialties of “home style” American, Italian, and seafood dishes would be a good choice for their location. They are excited about the possibility of providing quality food at a reasonable cost. The same family and friends that enjoy Liz’s cooking would match their expected customers. They want to offer a quiet, relaxed dining environment offering mid-priced meals.

n Researching the Business

As they talked about the details, their dream gathered momentum. However, they both knew that they couldn’t build their business on dreams alone. They would need additional business advice and perspective to ensure that their business concept was realistic. First, they checked out the numbers Liz and Michael, along with their advisors and friends, assessed the capital required for starting a restaurant. They agreed that Liz and Michael had sufficient funds to use as start-up capital for the new venture.

Tom, a family friend employed as a marketing consultant, felt that their business model would be well suited for their location. They had their eye on a strip mall location that was vacant and could be suitable for a small family restaurant. They contacted the local real estate agent, Anne Marie Sim- mons, to ask about its rental cost, availability, and size. Liz and Michael visited the location with Anne Marie. The agent said that the store housed a diner for three years before it closed. She speculated that the diner might not have been able to compete against the fast-food franchises in the area. The agent also believed that the owners did not have the proper financial and marketing plan to be successful.

Liz studied the store’s floor plan and dimensions. The store had floor space to accommodate about 50 diners as well as a full kitchen operation and storage areas. The strip mall location had plenty of parking as well as access on a major road. The gas, plumbing, and electrical infrastructure were in good working order. The décor and kitchen appliances need to be purchased as well as all restaurant fixtures (pans, dishes, flatware, etc.) if they signed a lease to occupy the restaurant.

In order to be efficient and leverage their individual skills, Liz and Michael segregated the various research tasks necessary to compile business projections and forecasts. Michael focused his attention on the front-house operations, sales, and marketing plan while Liz analyzed the kitchen operations, inventory, and menu planning. Each of them com- piled forecasts for the startup and operational costs in their areas of specialty. These costs included the labor, materials, food, utilities, rent, and other necessary costs. These forecasts would be the foundation of their business, financial, and operations plan.

Creating the Business Plan

Michael continued to work with Tom on the marketing and promotion of the restaurant. Their first thought was to gather sales, customer, and meal data from the previous owner. To protect the anonymity of the new owners, Michael asked Anne Marie to contact the previous owner. She provided three years of weekly data on the number of meals and tables served. Unfortunately, the previous owner could not or did not want to provide any

The Information Age

sales data. Michael entered 164 weeks of data into a simple Excel spreadsheet to review. The spread- sheet contained three data points: week ending date (Sunday), total checks, and total meals served. Michael and Tom reviewed the spreadsheet to attempt to find some relevant information for their marketing and forecasting projections.

The diner had been open seven days a week. However, the data Michael received was not broken down by the day of the week. Therefore, the data could not be used to analyze daily traffic and sales, but only to analyze weekly trends without information on daily traffic and sales.