OCR Document

Case: Danny's Place Restaurant

For Danny Agnelli, having his own restaurant had always been a dream. Now, with an inheritance from his grandparents and a very promising location not too far from his home, he felt set to live out his dream. As he sat down to make his plans more definite, he found himself concerned at some advice he got from a family friend.

Opportunity Knocks

As he drove past the plaza near his house, Danny was surprised to see that a Greek restaurant which had operated there for several years was now closed. He discovered that illness and other issues had made the Greek couple who ran it decide to retire and close the operation. Before long, Danny was in touch with the landlord, who was delighted at the prospect of someone else running a restaurant there, as it would reduce the renovations he would have to make. Danny was able to negotiate a deal with the Greek couple to buy their equipment at a good price.

It had been three years since he had completed a college program in culinary arts, and he had enjoyed his experience working at a restaurant owned by a cousin. He had gained tremendous experience there working on everything from the grill through to pasta, sauces and more. He even spent time waiting on tables, although he was quick to acknowledge that the kitchen is where he loved to be. He was very creative with the food he made and knew just the right touch with herbs and spices and unusual combinations. Although he would not be considered a gourmet chef, he received many compliments for his cooking from customers, especially those who shared his Italian background. His cousin, Guiseppe Tarantino, would often drag Danny out of the kitchen and present him to diners that he was regaling with stories.

The Mediterranean Diet

For many years, Danny had been intrigued with the idea of the Mediterranean diet. Research had shown that people living around the Mediterranean had lower rates of chronic diseases, and the good health was attributed largely to the diet. There were several factors in this:

The diet centered on high intakes of cereals, grains, vegetables, dried beans, olive oil, garlic, fresh herbs, seafood, and fruit. Think pasta with tomato sauce.

Olive oil was the main source of fat, but it is relatively healthy monounsaturated fats, rather than the saturated fats associated with disease. Many people in that region actually had diets with 40 percent fat, well above the 30 percent recommended by health authorities. However, the high quality of the fat made a real difference.

Most dairy products were consumed as cheese or yoghurt, and consumption was limited. In many diets, dairy products represent a major source of fat, but this was not the case with the Mediterranean diet.

Diets were rich in fish, but low in red meats, which have been associated with disease. One week's worth of red meat in the typical Mediterranean menu is about the size of the single steaks served at many restaurants.

Mediterranean People's also were generally more physically active and drank wine in moderation with their meals, two factors associated with good health.

Knowing that people were more concerned about their health and what they ate, Danny felt he could focus on these types of foods and thus give people what they wanted n tasty, healthy, fresh food. As he pointed out, hardly a day seemed to go by when he didn't read something in the paper about the links between diet and health. Marketing Advice

One of Danny's high school friends, Alessandra Rizzuto, had graduated in marketing, and she shared his enthusiasm for the idea. She pointed out that demographics were on his side. Canada's population was aging and his people got older, there were more concerned about the food they were eating. Another factor was that as people enter their 40s and '50s, many receive warnings from their doctors about their health and made an extra effort to eat well.

She added that people were becoming more adventurous in the foods they would eat, and pasta-based foods were popular with many different age and ethnic groups. Further, as people had less time available in their hectic lives, they often chose to eat out at restaurants. For many double-income couples, a good restaurant meal for their family was not considered a luxury.

Danny felt he had few competitors in the area. There was a small pizzeria in the plaza where his restaurant was located, and there was a McDonald's about 15 minutes down the road. A Swiss Chalet restaurant was also located about 15 minutes away, with a Chinese restaurant and a "hamburger joint" a little closer. The closest restaurant, just half a block away, was a roadhouse-style operation with a reputation for mediocre food.

Danny's Plans

Danny felt that his restaurant would be distinguished by its focus on healthy Mediterranean-style food. His prices would be mid-range, but he believed a family of four could get a good meal, including pasta, salad and a meat item, for $50, including wine and tax.

He pointed out he would save money on advertising, because he wouldn't need to do any. "People want healthy, tasty food. I make healthy, tasty food. Get the connection? People will flock to a place like this," he said. While he didn't have an exact name for it yet, Danny was playing with names that would get a sense of Mediterranean, fresh, healthy and Italian..

He felt the operation was financially viable, and was aware that staff expenses were a surprisingly large part of restaurant operations. He pointed out there were all kinds of high school students who would work for minimum wage, and even if there was turnover, it would be easy to find replacement workers. He planned to do most of the cooking himself, although he would hire a woman he knew who could handle some cooking duties as well as the cash register. "What I won't skimp on is the quality of my food," Danny remarked.

Restaurant Research

Tom Morrison, a friend of the family, was quite interested in Danny's ideas during a dinner party at his house. He worked with a market research firm that had compiled a report for the industry a couple of years ago. He said there were several key points from the research that were striking to him:

Location Matters

When it comes to fast food restaurants, 78 percent of people don't want to drive more than 15 minutes from their homes. For fine dining that goes up to drives of a half hour or more. More than half of diners recommended favorite places to their friends, especially for fine dining establishments.Consumers don't like adventures in eating. They know what they want, and they want it fast. It can cost five times as much to bring in a new customer as it does to rely on regulars visiting more often.

People Issues

Tom observed that one key finding of the survey was the importance of the people working in these eateries. Fewer than half felt "proud" of their workplace, and most felt their talents were not being used properly. Few looked forward to going to work, and did not think of themselves as essential. Two-thirds say their advice is never sought. Rarely did they learn about promotional events and other activities within their workplace; customers were usually the ones who informed them.

One of the recommendations that flowed from the research was the value of giving incentives to restaurant staff. Indeed, it would seem to be that the closer to home you spent your marketing money, the better, starting right inside your restaurant. For example, employees could pass out guest certificates with a promotional offer. They would sign their names on the back of the offers and whoever had the most turned in won a cash prize.

Even major chains were shifting their budgets from national campaigns to those within neighborhoods. This created opportunities to work with groups in the local community, and focus on local issues.

An Appetizer

Tom also pointed out that not all diners were concerned about health. Even while such chains as McDonald's introduced a number of healthy items, their mainstay is still a traditional fat-laden stuff. Further, many families were concerned about finding places to eat where the kids would enjoy the food, and that were not too strict in terms of how they behaved. For sit down restaurants, a prime group was the double-income no-kids set, who typically dined at twice a week at least and had a rotation of five favorite restaurants that they patronized.

While Danny listened politely to all these comments, he was thinking that this was advice coming from someone who didn't even work in the restaurant industry. How much would he know?

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