Higher Ground is a cafe/restaurant hybrid located at 650 Little Bourke St in the CBD of Melbourne. It has been open for two years operating 7 days and 3 nights a week. The cafe can seat 160 patrons and host functions for up to 300. It employs roughly 60 people including kitchen, floor, bar and administrative roles. Their revenue in their first year of business was $6.4 million. It is owned by The Mulberry Group which is made up of four business units that include; Higher Ground, Top Paddock, Kettle Black and Square One Coffee Roasters with five new venues set to open in 2019 . As a company they have been in business for over ten years and their organisational structure is made up of a team of directors who finance and oversee all operations that are individually run by specialised teams of managers.
LEGAL
Norway has lots of formal institutions that should be well understood as a means of having success in entering its market. The country is a constitutional monarchy and parliamentary democracy (Department of Foreign Affairs and Trade 2017), and as a result of this, Norways legislative powers are in a unicameral parliament known as the Storting (Department of Foreign Affairs and Trade 2017). There is an effective legal system in place, utilising a system which is a mix of civil and common law where the Supreme Court can advise on legislative acts (CIA World Factbook 2018). Should there be a situation where arbitration must take place between parties, there is an arbitral tribunal. This tribunal is traditionally composed of 3 arbitrators, however the parties can agree to more and both of them get to choose who comprises the tribunal. Should they fail to choose, they can choose one each and the chosen arbitrators choose the remaining one. (NEEDS CITATION) To be able to conduct business as a restaurant within Norway, a deep understanding of the laws surrounding the industry is required. The minimum wage for young unskilled workers (like the type who would work at higher ground) sits at NOK 119.3 (Approximately $20 AUD)
ENVIRONMENTAL
Environmental awareness has been practised in Norway since the 1960s with efforts to combat acidification, air pollution, hazardous substances, loss of biodiversity, degradation of he ozone layer and global warming. These efforts have mainly been successful with the environmental state in Norway improving with positive outlooks on air and water quality as well as waste management. There are however some concerns over hazardous substances, such as mercury and arsenic, becoming more widely dispersed within the environment and its species. There are also pressures on biodiversity and both of these issues have the potential to impact our businesses ability to access safe local produce, supporting statistics can be found in Appendix A. Norway has also made a commitment to reduce food waste by fifty percent by 2030. “The agreement is voluntary, but binding for the contracting parties. Both primary producers, manufacturers, wholesalers, retailers, restaurants, households and the authorities must take responsibility for reducing food waste.” (Govt.No ’17). This is something that we should consider when setting up our waste management for the restaurant and is in line with the values of The Mulberry Group who are committed to maintaining sustainable practices.
ECONOMY
Norway currently have a GDP of 398.83 billion, and a GDP per capita of 91218.62. Norway’s GDP increased by 0.60% in the first quarter of the year, until March 2018. This is following a 0.30% decline in the last period (Trading Economics, 2018).The main factor that caused this is a rebound in petroleum activities and ocean transport which rose to 1 percent from -5.1 percent in the last quarter. Another positive contribution to the GDP growth is net trade, exports grew by 0.4% this quarter compared to -2.8% in the last quarter (Trading Economics, 2018) According to current exchange rate for 1 Australian dollar you will receive 6.12409 NOK (XE, 2018).
The consumer price inflation in Norway rose to 3.0% year-on-year in July 2018 from 2.6% in the previous month and above market consensus of 2.6%(Trading Economics, 2018). Norway’s Central Bank uses its monetary policy to keep inflation low because it gets much of its revenue from exported oil. The target was 2% in 2001 and increased to 2.5% this year. This ensures its currency (the krone) does not appreciate too much and make life unaffordable for residents (Norges Bank, 2015.)
The Corporate Tax Rate in Norway stands at 24%. The corporate tax rate in Norway would have a positive impact on Higher Ground as it is currently standing at 6% lower than Australia’s corporate tax rate. This means that they will pay less operating in Norway (Trading Economics, 2018.)
CULTURE
An informal institution and social trend that may affect Higher Ground in Norway is the norm of tipping. Tipping is not compulsory but is expected. The tip should be in the 6-10% range of your total bill (Trip savvy, 2018).
The current health trend in Norway will also impact Higher Ground, Norwegians have increased eating vegetables and decreased their sugar intake. The Norwegian Directorate’s Annual Report on the consumption of food showed a 5% increase in fruit and vegetable intake in 2015 to 2016 (Food navigator, 2017). This will impact operating in Norway as they have to account for the food choices of their customers by offering healthier alternatives.
The main demographics of the industry are young professionals aged from 20-25 and tourists aged from 18-25. A trend of the under 25’s age group is the rising increase in food expenditure. In 2012 to 2013 food spending grew from $4698 to $7000 (Bureau of Labour Statistics, 2015). This increase is likely to be favourable for Higher Ground as it indicates that there is a possibility for success within their demographic in Norway, and there is potential for this number to rise into the future.
Norway has religious freedom, however, the main religion in Norway is the Church of Norway (Evangelical Lutheran – official) with 71.5%, Roman Catholic with 2.8%, other Christian 3.9%, Muslim 2.8%, other 2%, unspecified 7.5% (Index Mundi, 2016).
Norway’s ethnicities are made up of Norwegian 83.2% (includes about 60,000 Sami), other European 8.3% and other 8.5% (Index Mundi, 2018). As a majority of the population is Norwegian and their diets consist of Salmon as a staple for most dishes (Culture Trip, 2018), Higher Ground should incorporate fish into their menus to better cater towards their market.
The current immigration trend is decreasing, Norway faced the largest proportional decrease ever when the number of people who registered as immigrated to Norway dropped to 58,200 which was 8,600 less than 2016 (The Local no, 2018).
TECHNOLOGICAL
Technologies required for customers to access our business include a website including our contact details, menus and access to an online booking system. The online booking system is another technology we would require to set up our business and would need to be simple and easy to use for both the business and customers while still providing all the analytics required. Opentable is one of the many options we could utilise.
Other technologies required to run our business include a point of sales system such as Square which would be used for day to day ordering in the cafe and also provide sales reports and keep track of inventory. We would require a staff management system such as Deputy which would allow us to roster and coordinate staff as well track staff costings. We would also require a payment system as well as internet to connect our point of sales and any tablets or computer used in the day to day running of the business.
As outlined above the key technology infrastructure required to operate our business is a point of sales system, website, online booking system, payment system, internet and computer and tablet for the online staff management system. The point of sales system is the most integral to the day to day running of the business and allows us to properly track sales and stock throughout the day. The staff management system will allow is to create rosters, time sheets and leave requests as well as monitor wage costs. Dependant on our choice of provider most of these systems include a support line available twenty four hours, seven days a week where we would be able to contact them in the event of an issue arising.
RESEARCH
For Higher Ground to properly understand its intended market in Olso, Norway they will need to conduct both primary and secondary research. Primary research techniques that can be used include; Surveys of Olso community, interviews, sample groups, completing a customer journey map within a competitors/ similar organisation in order to see how a successful cafe/restaurant runs in Olso and visiting other competitors. Secondary research techniques that can be used include; research of government data regarding demographics, economics trends (specifically price points per meal within a cafe/restaurant, wages), food regulations, foreign investment regulations and occupation costs. When looking at the product life cycle regarding the cafe/ restaurants sector in Oslo, it is in the growth stage (Refer to Appendix 2). The trend of healthy eating is quickly increasing, therefore, this is something we need to be aware of. To successfully gather all required research we will need 10-12 months (Please refer to Appendix 1 to see a detailed research activity plan with a timeline).