Dillema 1: Outsourcing or innovating

Sam and Katie own a small restaurant in a tourism district in a coastal area. Over the years they have developed their business concept to accommodate for their personal needs and achievements. They work very hard during the summer, and they allow themselves a long break in the winter. To be able to keep up earnings, they need a strong very consistent cost control. Their strategy is to purchase precooked items with a range of suppliers, so as to be able to save on the labour costs in the kitchen. In this particular concept Sam is most often able to work alone as the chef with help in weekends and peak season, while Katie is responsible for the service in the restaurant, also with a few helpers.

After the introduction of a film event and the opening of a film museum, the area is attracting more wealthy customers. Sam and Katie increasingly receive comments that their food is too traditional and uninspiring. A local review in the newspaper gave them only two stars out of five possible. Last year, the turnover went down a little, and that has upset Katie who fears an end to their lifestyle. If the turnover decreases further, they will not be able to afford the winter break.

Sam believes that it is just a passing trend, that people forget newspaper articles rapidly, and after all, many of the regular customers like the atmosphere in the restaurant. Katie is however more concerned, and she is trying to think of alternatives. Katie and Sam do not have the means for large investments in modernization and expansion of their premises. Growth is not an alternative for them due to financial and lifestyle reason.

Poll

POLL: What would you do if you were in Katies position?

Start an intensive search for new suppliers of precooked items. Attend trade fairs and browse through catalogues and the internet. Order a test selection of items that you are interested in and assess the quality, price, delivery conditions etc. From this information you would compose a new menu for the next season.

Contact your existing suppliers seeking price reductions, for example by purchasing larger amounts and accepting shorter payment terms

Change the kitchen concept moving away from the precooked items and into self-production with a higher quality. Investigate menus and undertake calculations and experiments with film related food items. In order to obtain a balance between turnover and labour, you recognize that the restaurant will have to work with a set daily menu and there will be more limited choice for the customers

Look for a franchising concept that fits the restaurant's location and size. Change the restaurant into a sushi or taco place.

Sell the restaurant to the neighbouring restaurant owner who wants to expand, and then find another job for yourself and Sam


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