Comparative Analysis Of Caffe Nero And Starbucks: Improving Business Operations (Essay).

On successful completion of this module, students will be able to:

1. Present a persuasive and coherent theoretical overview of key issues within innovation and entrepreneurship, and how these inter-relate, in various organisational settings;
2. Understand the innovation and entrepreneurship process, and analyse how these processes may be different in various contexts (e.g. social entrepreneurship, sustainability innovation, the third sector, innovation in established companies, emerging markets…);
3. Critically evaluate business decisions around innovation and entrepreneurship;
4. Integrate, question and suggest extensions to theoretical frameworks in this area;
5. Present the results of a strategic analysis of a given innovation/entrepreneurship scenario.

Analysis of Caffe Nero

The report will be discussing the comparative analysis of two cafes; Caffe Nero and Starbucks, Various aspects  of the Café marketing strategy, It will maintain a discussed on relevant grounds such as Price, offering , Inventory and customers. Each aspect at Caffe Nero will be briefly explained which will then be followed by certain examples and suggestions as to how the performance need to be increased the main purpose of the report is to provide a business improvement plan which will help the CEO to improve the business operations.

Last month, we team members visited the Firth Street branch of Caffe Nero in London and then made a visit to the Starbucks caffe at Upper Street (Caffe Nero 2018). After the research on the two companies on the various aspects, it could be noted that the Caffe Nero shop has been performing poorly due to a wide variety of reasons which range from stale food, poor management, no employee reaction and inadequate display. Hence, the given report seeks to summarize the findings of the visit to Caffe Nero and shows how Starbucks is performing better. Following that it provides recommendations for Caffe Nero to improve its performance. These aspects which will be discussed include product offering, price, inventory, Customers and the staff.

Caffe Nero

At Caffe Nero, Firth Street branch there were 15 staff members resent out of which only 4 were female. A two shift component is not present and the same set of staff has to work for the whole time. The lack of task decision among the employees made the whole system unorganized. Due to this, my visit witnessed lack of smooth service to the customers and I witnessed a case of double order taken from the customer, which made him agitated at the staff members. Furthermore, the staffs members present at the branch are not courteous.  When approached about the double order, the staff showed their frustration and did not apologize for the same. As they area covered by the outlet is small, the number of staff members present is too many.

What Starbucks is doing better?

The staff members at Starbucks work in shifts and this automatically makes the service twice as efficient as Caffe Nero as the staff is in a stable stated during the whole time. The tasks are divided in the beginning of the day so as to ensure rotational shifts for all and to ensure the work is distributed equally (Starbucks Coffee Company. 2018. This helped the members to handle the customer orders efficiently and to make sure that the staff handles each customer well. The manager at the branch was active and personally looked over the operations. The staff was quite courteous.

1. Develop a training program for the staff and teach them the importance customer communication.

What Starbucks is doing better

The employees at Caffe Nero need to be provided with adequate training in order to help them to understand the importance of communicating with the consumers in a polite manner (Bratton and Gold 2017).  This is because the caffe is a hospitality industry based unit and customer satisfaction is the base for success.

2. Divide tasks equally among members and starting the double shift concept

The lack of task division and rotational shifts for the staff must be a reason of frustration among the staff as they have to work for longer shifts if the shift is divided into two stages, the given problem could be solved.

Caffe Nero

During our visit, the number of customers present in the Caffe was 10. The place was small and congested. The toilets were unhygienic and two customers complaint about it. The seats are not adequate enough to handle larger foot fall. The lack of staff courtesy and double orders was successful in making the customers angry at the service.

The prices of the products were quite low at a mere amount of $5 and on an average 150 customers visit every day. This means that the caffe is serving 150 customers in a day and earns revenues of around $750 daily. The unhealthy conditions at the caffe and bad ratings put the Cafe’s name down.  

What is Starbucks doing better?

At Starbucks there was a large footfall which immediately created a perception in our minds, that it is a more popular place then Caffe Nero. On a daily bases, around 250 customers would be visiting the café. Hence the average revenue daily would be 2000$ which is much better than its competitors. As the spacing is enough, a large number of customers can be served at the given time. Furthermore the presence of well trained staff, is the unique selling point of Starbucks

Improvement for Caffe Nero:

It is recommended that the firm that it notes and implements the following:

• Increase the seating facility- As witnessed the seating facility at Caffe Nero is in adequate and more seating area should be provided as the location of the particular outlet is a tourist area. Increasing the seating facility would ensure that the caffe can cater to more staff.
• Maintain hygienic conditions in the caffe will play a great role in making Caffe Nero at the top of the market. They can employ external cleaning staff which would then assist the café in keeping clean at all times and keeping the toilets clean is a major sign the extent to which the caffe can go to keep its customer happy (Ludwig et al. 2014).
• Train staff- As stated in the earlier aspect, training the employees would further improve the customer relations

Caffe Nero

During our visit to Caffe Nero, I witnessed that the Caffe has a large menu offering for the customers and that this strategy is quite similar to that of Starbucks. The offerings made ranged from sandwiches, cookies and all kinds of beverages. However, the presentation of the items was not that accurate and the firm could have done better to display the items in an appropriate manner to ensure that the customers who were visiting the outlets for the first time had a clear idea. Secondly, displaying adequately enhances sales opportunities. The staff behind the counter was unresponsive and made no effort to sell an item.

Recommendations for Caffe Nero

What is Starbucks doing better?

Just like Caffe Nero, Starbucks offers its customers with a large variety of products. However, the offerings which ranged from salads, cookies, doughnuts, breads and sandwiches were displayed in an attractive manner. Furthermore, the staff behind the counter as well as at other areas made an effort to help the customers with their choices and promote a sales purchase. This changes customer perception as they find employee interest a favorable sign.

• Engage in attractive window display- An attractive window display goes a long way in attracting the employees to buy the selected product of the organization.  If the items are arranged in color synchronization or arranged in a way that it is easily able to capture the attention of the people, then it helps in making extra purchases from the consumers side.
• Provide incentives to employees for sales initiative-The reason why certain employees may not be taking an initiative to promote sales may be due to lack of incentives by the organization to make such an offering (Walker 2016). Hence if the company is able to offer certain incentives to the employees, they may be interested in doing so.
• Offer fresh items- It is advisable to always make offerings of fresh products to avoid consumer dissatisfaction.

Caffé Nero

Caffe Nero`s strongest aspect is its reasonable price offerings. Although the firm is a multinational, the prices offered are pocket friendly. I believe that as the firm offers the good pricing, it should make sure that the quality of products provided to the customers is satisfactory. An average meal at the coffee shop would cost around $5 which is good.

Furthermore, if customers insist on receiving a discount, then the manager does not refuse them and makes an offering of around 5% of the sale price. Providing discounts is an efficient way of retaining customers.

What Starbucks is doing better?

Although the prices at Starbucks are considerably very high when compared to the prices as offered by Caffe Nero, Starbucks makes up on the quality aspect. The company also does not indulge in any kind of bargaining scheme because of its high amount of confidence in its product offering the coffee shop does have a discount for regular customers though.

Recommendations

Caffe Nero could implement the following:

• Pace up its quality- Caffe Nero should stress more on its quality aspect so that it does not have to price its good lower than Starbucks. By pricing low, it is agreed that it is being able to attract the customers but it is losing out on its revenues.
• Bring prices closer to that of Starbucks- Once the quality is bought up to the optimum level, Caffe Nero should revise its pricing system and bring it to a rate similar if not the same as Starbucks. This shall ensure that the coffee shop earns larger revenue.

Caffe Nero

Although the outlet size at Firth Street is too small, Caffe Nero offers a large inventory option similar to that of Starbucks, The menu of Caffe Nero comprises of shakes, coffees, cupcakes, yoghurt and sandwiches. Out of the given items coffees such as Coffee Caramel, Iced Latte, Mocha, Tarts, Muffins and Sandwiches sell the best.

However, during our investigation I noticed that the food was not fresh and some other customers in the branch complained of being offered stale food. The inventory at Caffe Nero is perishable but being located in s tourist spot, the caffe needs to see to it that the inventory is fresh, the condition of the caffe was extremely shabby and the customers avoid visiting it which is the primary reason why the products go stale.

What Starbucks is doing better?

Starbucks has a wide menu which comprises of bagel, tea, coffee, ice cream, patties and protein boxes. All the products offered by Starbucks are fresh and made just after receiving the order. The company sees to it that the conditions within the cafe are not unhygienic so as to ensure adequate footfall. If the items sell fast, it helps to avoid stale products accumulation to avoid wastage.

Although the café industry should engage good practices however in the business world things work in a different manner and the company needs to look after h needs of all.

Recommendations to Improve

• Inventory forecasting- Caffe Nero should engage in an inventory forecasting technique whereby the company forecasts its future requirements and stocks accordingly. With the absenc3 of this many of its items are going waste.
• Target market forecasting – They can even forecast the footfall for the day and prepare the dishes accordingly. Past trend analysis can be done. For example, when we visited the shop for an hour and a half almost 4 new customers visited which means there will be at least 8-10 customers n an hour. Accordingly the product should have been set up for inventory.
• Maintaining hygienic conditions- Maintaining clean and hygienic conditions at the stores would go a long way in determining the footfall of the customers.

Conclusion: 

Therefore from the given analysis it can be stated that there are various aspects with respect to which the company Caffe Nero should prepare itself for the future.  As the company has a well established competitor, its efforts should be double of what is generally expected. The given report analyzed the various aspects of a restaurant that had been visited during the investigation stage. These aspects include Price, Inventory, Product offering, staff and customers. Certain recommendations to improve in the aspect have also been provided.

Any company functioning in the competitive business environment should see to it that the firm harnesses those opportunities easily.

References

Bratton, J. and Gold, J., 2017. Human resource management: theory and practice. Palgrave

Caffe Nero, (n.d.) 2018 . Award Winning Italian Coffee | Caffè Nero US Coffee Stores. [online] Available at: https://caffenero.com/us/en/ [Accessed 19 Mar. 2018].

Ludwig, I.A., Mena, P., Calani, L., Cid, C., Del Rio, D., Lean, M.E. and Crozier, A., 2014. Variations in caffeine and chlorogenic acid contents of coffees: what are we drinking?. Food & function, 5(8), pp.1718-1726

Starbucks Coffee Company. ,2018. Starbucks – The Best Coffee and Espresso Drinks. [online] Available at: https://www.starbucks.com [Accessed 19 Mar. 2018].

Walker, J.R., 2016. Introduction to hospitality. Pearson Higher Ed.