Discuss about the Business Concept for Discovery Bar Cafe.
The Discovery Café bar is a small business modelled after a modern café bar. This is a 24-hour service offering a relaxation joint for meetings, dates, and recreation. Designed with a restaurant and bar sections, the service specializes in offering beverages. Inspired by a fun, relaxed and unique atmosphere, this is a full service café with regular performance on weekends. Situated in Rhodes Italy, its location is a tourist hot spot with a good number of foreign customers seeking leisure and fun. The Café provides a scrumptious menu for its customers. Using pricing and promotional strategies, the company is set to start as a small business with a reliable growth strategy (Zikmund, et al., 2013). The region also has a youth population with young revelers hence it targets the university, employed and business communities.
Using adopted mind mapping tools, the café design develops a market plan, operational strategies, financials and market research. These are critical for creating value propositions and business sustainability (Bocken, Short, Rana, & Evans, 2013). The business adheres to the legal framework in Greece, industry regulations and it has company laws to govern its operations. The product delivery and an employee of 9 the café bar has a mission of providing quality services to its target customers. Driven by passion for service, its vision statement is “ Quality service at the best price”. The value based business is driven by company objectives. The use of business design software was more resourceful.
Figure 1: Small business concept adopted from Jarrard (2018)
Discovery Café Bar is a service-based business that also serves products. Targeting a sizeable audience, it has the following objectives:
- To provide a comfortable place where customers can have a bite and enjoy a drink
- To offer simple entertainment to the target group
- To ensure the success of the business through reduced cost of operation
- Provide quality and reliable customer services
- To offer services that cater for the customer needs
- To provide quality entertainment and marketing for business growth
- To cater for employee needs for business sustainability
- Offer management strategies that enhance quality across its departments
The bar and café business is worth millions. Inspired by global brands like Starbucks, Discovery Café seeks to start a unique service that connects with the customer within the new location (Verhoef & Lemon, 2013). In order to understand the market, it was necessary to design a market research. Using both primary and secondary data, the brand was able to design a concept based on the gaps in the market and consumer demand. The brand location is strategic because it takes advantage of a popular old house next to a museum attraction. The building design takes a green approach with energy efficiency and environment friendly installations (Kats, 2013). Profitability is important but this business takes a value-based approach that incorporates both tangible and non-tangible benefits. The demand for a comfortable coffee house is high in the region and customers are searching for the best experience. The quality of foods and drinks is also critical and the business adopts a sales driven model for profitability. This type of approach helps the company to improve progressively.
Target consumers in the business are wide. The business has an option to choose customers based on their age factor, income levels, occupational and entertainment needs (Ostrom, et al., 2015). In order to ascertain the customer perception the brand carries out a market research based on key segments for value proposition, business growth and customer experience themes. The appendix shows questionnaires used in the development of the business plan. The result shows customers prefer services with a compete p
Discovery café targets two categories of customers-the youthful population in Rhodes and the visitors. From market research, this region is a tourist hub with frequent visitors. These are tourists from different parts of the globe. The café bar is a multilingual operation and it hires workers with cultural diversity skills (Hair, 2015). Most of the customers speak English but a good number are French, Spanish and Italian speaking. The brand targets a customer base of 500 people per week as it starting point with projections for growth. Each customer cliché has preferences for service and product quality and Discovery has a responsibility of meeting this need.
Customer segmentation helps Discovery café to focus on specific customer needs based on their differences (Christopher, 2016). The first segment of youthful clients is the main category classified in:
- Students ( Rhodes college and its affiliates)
- Working class ( Young 20-35 year olds)
- Business communities ( Young business people )
The next group focuses on tourists visiting ancient Greece sites across the region. The two revenue streams form the framework for sales strategies and key business activities that make the company a success.
The 7 Ps of marketing provide a perfect model for Discovery Café Bar approach. These represent the product, place, promotions, process, and the physical evidence of the bar (Lovelock & Patterson, 2015). Products offered at the café include snacks for both vegetarian and meat lovers. The café or coffee segment specializes in different types of hot and cold beverages. The bar section is exclusively designed to target the alcohol drinkers and night revelers. Using digital marketing strategies of social media, Discovery Café captures the target groups in their cliché. Student groups, alumni groups, business and working group sites have direct links for appropriate advertising.
A multimedia approach to marketing is ideal because the target group is techno savvy and delights in the visual elements. Word of mouth advertising is effective through special service promotions to engage the new customer and maintain loyal customers. Pricing strategies include a cost structure for each segment and quality products and service segments (Osterwalder & Pigneur, 2010). The marketing process considers a sales forecast and Discovery identifies key areas of focus for customer segments, and optimization of key resources. The design of the location gives the physical evidence of the business for appropriate.
The figure below shows the structure for a business model for a human resource management plan. Headed by the manager, there are two supervisors, a customer service head, a bar tender and waiter for the restaurant and bar segment (Martin, et al., 2013). The HR strategy used revolve around the global strategic human resource management. This is a contemporary HR model for its functions and practices, which advocates for human capital management approaches (Armstrong, 2006). Since the café targets a culturally diverse consumer group.
Figure 2: HR structure for Discovery café
Operations – Using the Business Model Canvas
The business canvas below gives a summary of Discovery’s business model. The key partners are the business owners who have shares and capital investments in the company. This have a passive management role in the business. Operations cover key business activities featuring the café and bar service functions. The value proposition in this case is has a focus on people hence customer experience is critical. Pricing strategies and quality direct the delivery process. The target customer needs features the need for the following:
- Convenience of location
- Quality products
- Comfortable seats
- Timely services
- Customer care
- Friendly customer experience
- Environment friendly designs
· Bar services
· Coffee and tea suppliers
· Banking services
· Marketing points
· Customer experience
· Timely services
· Demand focused
· Target segments
· Express services
· Bar location
· Café store
· College students
· Working group ( Young age)
· Business community
· On location store
· Online service delivery ( events based)
In order to ensure smooth services the brand follows the appropriate procedures in business registration and operations. Legal services include legal processes for hiring staff, business advice and alcohol distribution laws. It is expected that Discovery Café complies with the labour Laws in Greece as well as the special business regulations for alcohol distribution (White & Hingson, 2013). Business law on both then online and on location operations are important. Discovery needs to gain stakeholder confidence by sticking to the state and industry regulations. The government has stipulated measures for equality in employment laws, corporate tax, human rights and business regulations. Bribery is an anti-legal in the country and the brand needs to follow patenting laws in line with the legal framework (Foreign & Commonwealth Office, 2017).
The cost structure shows the business startup funding with as shown below.
At the start up level, the business requires a registration fee of $120.
Each of the two business owners puts in $ 100,000 and each has a share capital of 40%. The bank loan caters for additional costs including running capital.
Loans and Grants
A loan of $150000 from Barclays Bank in Rhodes. Most of it caters for $9000 for expenses. The business does not have any grants but has plans for future grants from small business support services.
Discovery has plans to boost its income through events. College students have occasional events and hiring the bar and cafeteria for events provides a window of opportunity. Charges range from $800 for a full day and $ 400 for half day. Other target consumers may also take advantage of this offer for group and corporate events.
The company has $606000 in assets and the non-cash assets amount to $600,000 and cash in hand required is at $20000 as shown in the Appendix. Fixed assets also include a second hand van purchased at $4000 and an office space of $250 per month.
Table 2 in the Appendix shows a breakdown of the expenses required at the start. This includes marketing cost of $2000 for the launch and operational costs.
In addition, a list of the company startup assets is as follows. This shall grow as the company grows to maturity.
Long term Assets
Figure 6: Asset Plan
Other costs include the cost of building renovations and casual labour costs. The design is affordable because it builds on an old design with slight changes to the building for its new use. The entertainment section will cost more because of additional features including lighting and soundproof effects. The seating design takes an old design but considers the customer target for a youthful and cozy experience.
In order to reach a break even, the company needs 500 customers on a weekly basis. Entry at the café is free but price charges for services include VAT, product costs, and profits. The expected cash flow is expected to cater for the expenses and provide returns for business management (Rios, et al., 2013).
Risks, Contingency and Exit Strategies
Risk management is critical when setting up a café and bar business. These are situations beyond control or sudden occurrences. Among the risks to consider are:
- Strategic risks of operations like industry collapsing
- Compliance risks like legal suits of non-compliance
- Financial risks of bankruptcy and mistakes at transactions
- Operational risks like fire breakouts and poor administration plans
- Environmental challenges of unexpected weather disasters
At the start of the business, there are numerous risks especially the risk of business failure. This call for exit strategies for leaving the business includes (McGrath, 2013). Since the business starts with a loan, it has in place strategies to prevent bad credit. This includes forming mergers, liquidation and closure. The café business also has in place a legal team of consultants to advice on critical issues of managing the business in order to prevent conflicts of interest. There are challenges managing a café area and the alcohol segment of the bar section.
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