Economics And Finance For Business

Table of Contents

Introduction:

Cost-saving proposal

Proposal of cost-saving:

Growth, pricing and non-pricing proposals:

Proposals for growth applying the 6N-

Pricing and non-pricing proposals.

Proposals based on non-pricing.

Conclusion.

Reference.

Introduction to Ho Jiak Restaurant

The report is to investigate the restaurant Ho Jiaak, 92 Hay Street, and Haymarket suburb of Sydney. This is a restaurant that introduces authentic Malaysian dishes with their amazing culinary skills honed through generations (Baldacchino, 2016). This award-winning Malaysian restaurant was opened by Junda Khoo who is the head chef and his business partner William Xie. They were doing good business until the outbreak of the Coronavirus which put them under pressure.

The purpose of the report is to propose strategies to cope up with the crisis and improve its financial health. The proposal will be based on background research carried out on the nature of this restaurant Ho Jiak's outlet at Haymarket. The necessary data and information has been collected from the website of the restaurant and the article written on this restaurant, during the outbreak of the Coronavirus. The nature of information is related to the experience of the owner regarding the management of their business in the crisis.

The structure of the report is as follows:

Section 2 analyses how Ho Jiak restaurant can improve the condition of its investment in terms of its fixed cost. Here the strategies of operations will be discussed to manage the cost.

Section 3 will discuss how Ho Jiak can survive in this pandemic crisis and strategies will be formulated to identify the opportunity out of this threat and can have an edge over its competitors.

Section 4 addresses the scope of the business growth of Ho Jiak.

The conclusion part contains a summary of my proposal and how it adds value to the business of Ho Jiak.

Cost-Saving Proposal

To understand the scenario of business Ho Jiak during the crisis let us refer the excerpts of the interview of Junda Khoo, the co-owner of Ho Jiak restaurant, given to the Huff Post Australia, where he mentioned that during the first week the business dropped 30% in terms of sales and in the next week it was down by 40%, after that a little in the recent week but the overall the business is down by 30%. This shows that how the business of Ho Jiak has been affected.

Then they have two options either to close the restaurant temporarily and incur a loss of $ 10,000 on rental income or to continue running the show and incur a loss of 17000 dollars a week.

They have chosen to keep it open as they want to retain the loyal customer and the staff who are responsible for the growth of Ho Jiak.

So the summary of the business is as follows:

  • The business has experienced de-growth by an average of 30% in terms of sales, which means the revenue generation is negative.
  • The average loss per week is $ 17000 which means the fixed cost and variable cost are more than the revenue earned.
  • Some of the staff are leaving the company and some of them are shortening their shift timing.

Proposal of Cost-Saving:

Focus on the food an item which takes less time to prepare and promote them-

  • Focus on preparing the food items which are high on nutritional value but takes a short time to cook which saves overhead cost. To do this the restaurant has to apply lean methodology, where the concept of zero inventories is practiced. By promoting these food items, which is prepared and catered based on lean methodology, the turnaround time of serving this food will be less, when there will be an increase in footfall, which again saves the inventory cost. Hence the menu of this restaurant has to be redesigned to meet the purpose and getting aligned with the revival strategy.

Customized the timing of restaurant to save overhead cost-

  • In this crisis due to the outbreak of Corona Virus the footfall of the customer has been decreased to a great extent. Now keeping the shop open as per normal schedule will lead to underutilization of the overheads thus increasing the loss. So the restaurant needs to be kept open during that time of the day when the footfall will happen. For example, let’s say there is a footfall of only 5 customers on an average every day. Now if the restaurant is kept open for that particular time slot then the overheads can be saved.

Start the takeaway service and focus more on it-

  • The takeaway service has to be introduced and continuous focus has to be given to promote it. By doing this the customer who avoids sitting and eat can be catered, thus the loyal customer can be served. It again saves the overhead cost and increase the revenue.

Start home delivery facility and engage some staff to deliver the food-

  • Instead of waiting for the customer to visit them let them go to the customer who is quarantined themselves or limit their mobility. If the food of their choice is delivered at their home then the revenue will be increased and the wages for the cook and other staff can be covered to minimize the loss or to move up to the breakeven point (Chang, 2017). The non-cooking staff can be engaged for delivery. This step will help to retain the employee and still managing to pay their wages from the revenue earned.

Sharing and partial sacrifice of the wages among the employees-

  • This is an exercise during the crisis-situation where the employees can sacrifice their salary as per their salary bracket. The employee who is earning more can sacrifice more and the one earning at the lower bracket will sacrifice less. Thus there will be saving of recurring expenditure.

Competitive Strategy Proposal

Haymarket area is mainly constituted by the Asian population. The food joints and restaurants are normally run and maintained by the Chinese and Malaysian people. So the food and drinks offered are almost similar. We also have to remember that the outbreak of the Coronavirus has made it even more difficult to thrive in this market and this outbreak has become a crucial factor of competition.

In this scenario I would suggest the following methods to get competitive advantages:

Relevance of business and to increase it-

  • Ho Jiak was doing quite well before the crisis. Because the area where they are operating the business was mainly the resident of Asian people. Since they are serving the Asian dish it was relevant to the locals.
  • In this scenario the restaurant can increase its relevance by making its service more customers friendly.
  • I suggest introducing a takeaway service and home delivery service. By doing this customer's convenience will increase as they find this practice quite relevant considering the current scenario.
  • Introduce food items on the menu which will have high nutritional value helping to boost their health. This will act as value addition to the services offered by Ho Jiak and at this pandemic situation, where health is a major concern, this relevant step will certainly boost the confidence of the customer leads to a stronger attachment with the restaurant (Khalilzadeh and Wang, 2018)
  • Apply lean methodology to deliver the food to the customer at a minimum possible lead time, in other words, starting the practice of “delivery on demand”. By doing this Ho Jiak will not only lower its overhead cost but it saves time of the customer

Preference of Customers-

  • We have observed that the restaurant enjoys a certain level of preference from a group of customers because of the authenticity of the food, the culinary expertise, and the service.
  • Now in this scenario along with the variation of the food items the service will make the difference. More convenience the restaurant offers at this dire condition to their customer more preference they can earn. So I suggest bringing changes in service focussing more on customer convenience. They should emphasize more on the availability of their food items to their customer as per the demand. Then based on the order pattern they can identify their preferred customer who prefers Ho Jiak. Now approach this preferred customer to refer customers and reward them by providing certain incentives in the form of discount or free lunch or dinner at the restaurant (Kotoua and Ilkan, 2017). This is how you can retain the customer and increase the customer base and have an edge over your competitor. So if we see in diagrammatic form the above-mentioned discussion will be as follows;
  • Differentiate the Ho Jiak in the competitive arena

The differentiators are Product, Services, and Relationship which is explained as follows:

  • Product- Here product is the cooked food as per the order. This food will be designed based on the nutrition value and health-oriented keeping in mind the pandemic situation due to the Coronavirus outbreak. The customer should be intimated about the hygiene the company is maintaining while cooking. This will boost the confidence of the customer.
  • Services- The customer focussed service consist of two new services: I) Takeaway Service and ii) Home delivery service. The services of Ho Jiak will be based on Lean methodology which practices ‘Delivery on Demand” or “Zero inventories” This will reduce inventory maintenance cost and turnaround time which in turn increases customer satisfaction and confidence (Makkonen, 2016).
  • Relationship- The services that have been proposed will play a significant role to develop the relationship with the customer. Efforts are to be given to serve the customer proactively and To act proactively the demand of the regular customers are to be noted and preparation to be done to cater them at the minimum possible time. By being empathetic the requirements and problems of the customer can properly be addressed, which leads to the strengthening of the relationship which will be long-term and mutually beneficial.

Growth, Pricing and Non-Pricing Proposals:

Considering the pandemic situation by courtesy of the Coronavirus, the strategy for survival of the business is the main concern. In this situation reversing decreasing growth and maintaining the break-even is the main challenge (Mariani et al. 2016). However we will use several growth strategies to reverse the decreasing growth and maintain the progression steadily.

Proposals for Growth Applying The 6N-

The primary focus is to reverse the degrowth and to do that I have two proposals

Introducing a new model of business by collaborating with the existing one. In this model along-with the conventional way of waiting for the customer, we will reach to the customer to deliver our service.

Hence we introduce a home delivery system which caters to the customers even when they are at home.

We also introduce a takeaway service, where the customer can take the food from the restaurant instead of dining there. This also saves the overhead of the restaurant and the customer enjoys the same item at a lower price.

  • This new model is based on a Lean methodology that offers delivery on demand that helps to cater to the customer at the minimum possible time. This gives a gainful experience to the customer and the service provider. Now there can be a challenge in implementing the lean methodology in terms of demand forecasting. As without proper demand forecasting it is difficult to practice this method. That is where developing the network of preferred customer comes into the picture (Morrison, 2018). These customers are listed with the restaurant we can call them as a registered customer, whose purchasing behavior and order frequency is well known to us. They will place their order in advance so that we can jolly well purchase the raw material and deliver quickly. These preferred customers when referring to some new customers they also inform about their demand pattern which makes it conducive to implement lean methods.

2). in this proposal we focus on strengthening the relationship with the customer and employee.

We introduce a referral system where the preferred customer will refer new customers and enjoy incentives in the form of free meals or a huge discount on their bills. Now in this crisis the customer develops a good feeling about Ho Jiak. These new customers will again refer to other customer and in this way the restaurant can develop a chain of customers registered to them. This certainly enhances the customer base pretty fast leading to the increased revenue generation which reverses the decreasing growth and gradually the growth in this economic slump will be steady.

In this strategy I have identified an opportunity to strengthen the relationship with the employee. The new process decreases overhead but increase the sales. The staff that are in customer service can be engaged in-home delivery process so that their job will be secured and they can get wages as they are participating actively in the revenue generation process. On the other hand, the cooking staff is also engaged to prepare food for takeaway and home delivery service. This is how the relationship with the employee can be strengthened by saving their jobs and wages (Tussyadiah and Sigala, 2018).

Pricing and Non-Pricing Proposals

  • Proposals based on pricing- In this proposal the pricing varies with the mode of purchase of the customers. Since I have suggested the cost-saving measures so the price is not required to lower. Pricing will be done based on the scenarios mentioned below:
  • The customer is dining at the restaurant- then the existing price will be levied.
  • The customer is opting for takeaway- then the price will be charged excluding the service charge.
  • Customer opting for home delivery- then the charges levied include the delivery charges but it will be less than the charges if they dine at the restaurant.
  • Customer referring new customer- then incentives will be offered by giving a substantial discount on the price.

Proposals Based on Non-Pricing

In this proposal, I will discuss on the non-pricing factors promotions

  • Promotions- Promotion will be done on the new menu, new services, and new schemes.
  • The new menu consists of those food items which can be cooked fast and high on nutritional value.
  • New services consist of a takeaway facility and home delivery service.
  • A new scheme consists of a referral scheme for the preferred customers.

Conclusion on Ho Jiak Restaurant

I have analyzed and formulate the strategy which will improve the conditions of Ho Jiak. The strategy is customer-centric and majorly emphasizes on the acquiring and retention of the customer. The main essence of the strategy is to “Go to customers, don't wait for them to visit". That is why I have suggested the new service: Home delivery, which will strengthen the bonding with the customer of Ho Jiak and increase the revenue generation. I have also suggested a customer referral scheme which will increase the base of loyal and registered customer. Then the consumer behavior can be easily traceable.

This will help to forecast the demand conveniently which is the basis of the operation process based on Lean Methodology. I have proposed to introduce Lean Methodology for a substantial reduction of inventory cost, which in turn acts as a cost-saving factor. Then the introduction of takeaway service also reduces overheads. The proposal to increase revenue by introducing a customer referral scheme and home delivery service will certainly help to reverse the business decreasing growth. To conclude I can say that this customer-centric strategy will not only reverse the business decreasing growth but also help the restaurant to grow steadily in the long run.

Reference for Ho Jiak Restaurant

Baldacchino, G., 2016. More than island tourism: Branding, marketing, and logistics in archipelago tourist destinations. In Archipelago tourism (pp. 25-42). Routledge.

Chang, P., 2017. The importance-performance analysis of Taiwan tourism mobile marketing. Journal of Tourism Management Research, 4(1), pp.12-16. Available at: http://www.conscientiabeam.com/pdf-files/bus/31/JTMR-2017-4(1)-12-16.pdf [Accessed on 16th May 2020]

Khalilzadeh, J., and Wang, Y., 2018. The economics of attitudes: A different approach to utility functions of players in tourism marketing coalitional networks. Tourism Management, 65, pp.14-28. Available at: https://www.sciencedirect.com/science/article/pii/S026151771730208X [Accessed on 16th May 2020]

Kotoua, S. and Ilkan, M., 2017. Tourism destination marketing and information technology in Ghana. Journal of destination marketing & management, 6(2), pp.127-135. Available at: https://www.sciencedirect.com/science/article/pii/S2212571X16303183 [Accessed on 16th May 2020]

Makkonen, T., 2016. Cross-border shopping and tourism destination marketing: the case of Southern Jutland, Denmark. Scandinavian journal of hospitality and tourism, 16(sup1), pp.36-50. Available at: https://www.tandfonline.com/doi/abs/10.1080/15022250.2016.1244506 [Accessed on 16th May 2020]

Mariani, M.M., Buhalis, D., Czakon, W. and Vitouladiti, O. eds., 2016. Tourism Management, Marketing, and Development: Performance, Strategies, and Sustainability. Springer. 

Morrison, A.M., 2018. Marketing and managing tourism destinations. Routledge. 

Tussyadiah, I.P., and Sigala, M., 2018. Shareable tourism: tourism marketing in the sharing economy. Available at: https://www.tandfonline.com/doi/full/10.1080/10548408.2018.1410938 [Accessed on 16th May 2020]

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Economics Assignment Help

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