General Description of Business
My potential business will be a restaurant called “Ricky’s Sandwich Shop.” The location of the shop will be determined based on surrounding business, as discussed later in the paper. The sandwich shop will be designed to provide a variety of sandwiches at competitive prices. Diners will be able to take their orders to go, but they will also have the option of dining in a casual setting. A theme for the restaurant may be selected in the future, although this may be unnecessary, depending on surrounding restaurant competition.
To further attract business, and depending on local laws, Ricky’s Sandwich Shop will feature a full service bar. Additionally, based on the amount of to-go orders versus dining in orders received, a delivery service may be implemented.
Branding will be important to the sandwich shop. In order to create customer loyalty and to entice new customers, the sandwich shop will have an online presence. This, in addition to a friendly and well-trained staff and high quality sandwiches at competitive prices, will ensure repeat customers.
What and How Much to Produce
The sandwich shop will of course produce sandwiches. I chose this product because sandwiches are relatively simple to assemble and are a consistently popular food. To produce sandwiches, the employees of the shop will take ingredients, which have been ordered ahead of time, and assemble sandwiches.
The amount of sandwiches that the shop produces will depend upon the demand for sandwiches. By strategically choosing a location for the sandwich shop, I can avoid selling sandwiches in an area that is oversaturated with sandwiches.
Because sandwiches will be made to order, production will always meet demand. The problem lies in the ingredients. If I fail to supply enough ingredients to the sandwich shop, I will be unable to meet demand and I will lose potential customers. If I stock too many ingredients, I will meet demand, but I will lose money as the ingredients spoil.
The trouble comes in determining just how much of each ingredient I will need. By standardizing certain common ingredients (i.e. each sandwich gets three leaves of lettuce, two tablespoons of mayo, etc.) I can order ingredients based on how popular sandwiches in which they are featured are. I assume trial and error is the only way of finding the perfect amount of ingredients to order.
Additionally, demand for specific ingredients and sandwiches may change based on the time of year. To combat this, I will have several standard ingredients that are featured on most sandwiches, ensuring that a drop in demand for one sandwich does not lead to a loss on spoiled or unused ingredients.
The prices of each sandwich will be determined by a number of factors. I have to ensure that the price of each sandwich covers the cost of its ingredients, the cost of the labor put into creating the sandwich, with room left over for a profit.
My fixed expenses, such as payroll and rent will be consistent, and so must be considered when pricing the sandwiches, my variable expense will fluctuate, and so I must have room in my overall budget to account for this.
Inputs and Technology Used
The inputs for the sandwich shop will include raw and pre-prepared ingredients and employees. Ingredients will be sourced from different suppliers, and will be chosen based on cost and quality. Employees will be trained to create sandwiches that are consistent and that use reasonable amounts of ingredients. Consistency in the product ensures repeat customers and ensures that my fixed cost are consistent.
Technology at the sandwich shop will include the standard cash registers and credit card readers. Additional technology could be implemented in the kitchen and storage areas of the restaurant. To ensure that ingredients do not expire, the temperature of the storage units will be controlled and monitored using appropriate technology. I may also implement technology, such as a point of sale system, to quickly transfer sandwich orders from the front of the restaurant to the kitchen.
Technology can also be used in the form of social media. In order to market the restaurant, I will likely hire a staff member to engage in social media. This ensures that people are familiar with my sandwich shop. Additionally, announcing specials online can drive business to the store. I may also use technology in the form of customer evaluations. By emailing or texting customers a short survey, I can receive valuable feedback which I can use to further improve the dining experience. Coupons or other means of saving money can be offered to customers as a way to motivate them to complete surveys or otherwise provide feedback and opinions about the restaurant.
Impact of Global Economy, Government Policies, and other Economic Issues
Having competing sandwich shops in close proximity to my sandwich shop will likely hurt my business. Sandwiches are basically all the same, so in order to thrive, I need to choose a location that is not already serviced by another sandwich shop. That is not to say, however, that my sandwich shop should not be around other food-based businesses. If the shop is located in an area designated for restaurants then I may benefit from their traffic. Additionally, if the sandwich shop is located by bars which do not serve food, I stand to gain even more business. I could also choose a location that is in or near a shopping area. The convenience of the sandwich shop location stands to affect my overall sales drastically.
If I am forced to compete with other sandwich shops, I would have to set my sandwich shop apart. This can be achieved by choosing a fun theme for the shop, or by providing specials and coupons. I could also differentiate Ricky’s Sandwich Shop by providing food other than sandwiches, but this would only need to be done if I am competing with restaurants that are similar to mine.
The global economy can have an effect on my sandwich shop. Global fluctuations in the prices of my ingredients could either harm or help me. If any of my ingredients are imported, then I will have to pay close attention to tariffs and other such trade policies. I will not be affected, however, by global trends in sandwich prices. My prices will likely be set based on local markets.
There are many government regulations that will affect my business, but not necessarily in a bad way. The sandwich shop will be subjected to all the standard health and safety regulations, and while meeting these regulations may cost resources, it also reassures the customers that they are eating in a safe environment. The sandwich shop will also deal with regulations regarding the fair compensation and treatment of employees. Minimum wage should not be an issue, as I plan to pay employees more than minimum in a bid to ensure maximum effort on their part.
If the shop decides to implement a full-service bar, I will face further regulations. Alcohol licenses will be required, and I will have to train employees regarding the responsible distribution of alcohol. The addition of a bar may also affect the hours of operation under which the sandwich shop can operate.
Further regulation will likely be enforced if I choose to provide delivery service. Once again, I will have to ensure that delivery employees are properly trained in safety and that they have all the proper licensing.
I doubt that there will be any consumer groups that take issue with the sandwich shop or its business practices. Some may have a problem with alcohol being served, but this is common enough and I don’t see my individual store being singled out.
Sources:
https://www.entrepreneur.com/encyclopedia/pricing-a-product
American Economic Journal: Microeconomics
The American Economic Review, May 2014, Vol.104(5), pp.654-656
https://www.investopedia.com/terms/e/economics.asp