Swanand Bhave is at the forefront of initiating critical change towards the way his family business is run. Bahve has a full backing from his father and uncle and needs to come up with a concrete plan as the old plan is not up to the standard for taking the business towards achieving new heights.
The family business consists of 2 restaurants in Pune branded as Wadeshwar, a highway restaurant named Smilestone and a catering company called Kalpak Caterers.
After taking into account the financial and management model of the current enterprise, a way to expand into a larger venture is to be looked at.
The original strategy of Wadeshwar Group was focused more towards running just a single restaurant but with a steady generation of revenue, they were able to establish more outlets and diversify.
Wadeshwar Restaurants: Strategies for Growth – Case Solution & Answers
Does the industry offer attractive opportunities for growth?
The industry offers excellent opportunities for potential growth as the Indian food industry is expected to grow by 11% till 2018 and with the rise of a large consumer demand for different types of cuisine, Swanand Bhave has a chance to make his business grow and expand rapidly. Globalization has deeply impacted the way business runs globally and with many fast food franchises expanding into different international territories, the future looks good for Restaurant and Catering companies.
What kinds of competitive forces are industry members facing, and how strong is each force?
Competition is a key part of attaining success. Swanand Bhave faces big competition to his business from various factors.
For his restaurant Shree Wasedshwar Bhuvan (SWD), Bhave faces threat from multinational franchises such as McDonalds and Café Coffee Day amongst others as they continue to vie for the younger customers. The other and the larger restaurant, Wadeshwar Restaurant Deccan (WRD) faces opposition from other local restaurant such as Vaishali, who have a stronger brand and Roopali, who have a better coffee. These Restaurants might prove to be a strong force in bringing down the business but other factors such as parking and waiting time might also jeopardize the plan.
The Catering business, Kalpak Caterers needs a better marketing strategy in order to get signed on by potential customers for different parties and corporate events as the other catering establishments might benefit otherwise. This might be a big factor to keep in mind for Bhave.
What factors are driving changes in the industry, and what impact will these changes have on competitive intensity and industry profitability?
Different factors are contributing towards change in the industry. As restaurants continue to expand they need a suitable location, which requires a large sum of capital. As real estate continues to boom in India, buying a new real estate is an expensive task which would reduce profitability as all the capital would be spent on acquiring the land and land leasing have different clauses attached, which might hamper the restaurant if the land lord decides to put in an unfavourable clause.
Other different factors like seating, ambience, and quality of service, the menu and specially the food contribute a lot towards the profitability and give a distinct edge in the competition.
What market positions do industry rivals occupy—who is strongly positioned and who is not?
The current market for the restaurant business is filled with a strong competition. International franchises such as McDonalds and Café Coffee Day have larger funds and resources and they continue to attract the younger generation. Perhaps they along with other multinational food chains are very strongly positioned.
Vaishali,is a very big threat to WRD as it Vaishali is considered a bigger brand while Roopali does not enjoy the same level as WRD.
What strategic moves are rivals likely to make next?
The rivals might continue to make strategic moves in order to gather more revenue in the future. They might try to improve their facilities even further with the addition of better interior and kitchen facilities. They might acquire land in the more attractive commercial hubs of the city to further promote their brand and might resort to better marketing tactics to further enhance their image. Other moves might be to make a better management model with the help of better technology.
What are the key factors for competitive success in the industry?
The factors responsible for competitive success includes a better organizational framework, a better brand image, a better product in terms of the cuisine on offer, a really comfortable establishment and a prime location setup in the middle of a commercial district or a place with plenty of potential customers and also having a large parking space. On the other hand a business plan focused on attaining a larger level of commercial success in the future is a must.
Does the industry offer good prospects for attractive profits?
The industry has tremendous prospects for attracting a large share of the profits as the consumer demand and the middle class increases the profits will increase.
How well is the firm’s present strategy working?
The firm’s present day strategy is efficient but needs some changes to maximize revenue and achieve a higher growth. Mr. Bhave needs to make full use of his current restaurants, which continually loses out on revenue due to limited capacity and not a stronger enough brand image. On the other hand newer restaurants or expansion is urgently required in order to get a stronger share of the market as the current market share continually loses out due to the higher consumer influx.
What are the firm’s competitively important resources and capabilities?
The firm continues to have a brand presence which is a key tool in the future expansion while they also continue to have important real estate properties too. As the real estate 90 km outside of Pune where Smilestone Highway Restaurant is located might attract more shops and other businesses, it is very important for maximizing profits. Mr. Bhave also has some real estate which he can sell in order to facilitate opening of another restaurant. Since the firm is set up from a while back, they have a lot of local knowledge on acquiring permits and dealing with smaller problems too.
Is the firm able to take advantage of market opportunities and overcome external threats to its external well-being?
The firm is placed well in the composition of things in order to generate a greater advantage and gain larger opportunities which it previously hasn’t utilized to a greater extent. The firm has shown a greater desire to expand and acquire a new place for its restaurant and is paying a lot of attention on how to make its product by using newer technology and improving their infrastructure.
Are the firm’s prices and costs competitive with those of key rivals, and does it have an appealing customer value proposition?
The firm continues to exhibit a fierce competition with the other major restaurants. One thing for sure is that Mr. Bhave does not have a higher range of prices for his products as some an average customer at SWB cost 65.Rs at an average for a single customer which is a lot less than some of the major franchises while WRD averages about 130 per customer which is also lesser than others. The firm has an appealing enough customer value proposition since it continues to attract them as it has shown over the years that it has improved its facilities and has served its loyal customer base with a lot of dignity.
Is the firm competitively stronger or weaker than key rivals?
The firm might be considered generally weaker to the large multinational franchises as they have the funds, the know-how of effectively managing a large chain of restaurants and well-oiled machine but the firm still is considered on par with the local food establishments since it continues to directly compete with them and still attract a large chunk of the market to them.
What strategic issues and problems merit front-burner managerial attention?
The management needs to pay special attention towards opening of a new restaurant and need to construct feasibility study for it as soon as possible on which choosing which site might be a better option. Swanand Bhave should focus himself on getting The Coffee House place to open up a restaurant similar to WRD as this restaurant will be in a more commercially attractive place and hence get more customers than the other place on offer. Doing this might be more expensive since the coffee house costs Rs.1 million on lease but it would be better to get since larger revenue can be generated.
Swanand Bhave has his family business is placed in a very good position for a sharp rise to the top. The business can be expanded by well thought out course of action like by first focusing on the expanding the restaurant business both throughout the city and other parts of India and then highway restaurants can be opened up.