Essay Sample on Pablo's Pizzeria Analysis

Introduction

Pablo's Pizzeria Inc. is a new business in the restaurant industry. It will be located in Downtown Phoenix, Arizona. Bolstered by the rapid growth in the demand for pizza and other food offerings, Pablo's will be well-positioned to serve Phoenix residents. The company will start with one restaurant with plans to expand into other areas around the US.

Mission of the Company

Pablo's mission is to be to the favorite pizzeria place by offering reasonably priced and best quality pizza and customer service to customers.

Business Goals

To achieve 80% overall customer satisfaction by the end of year one.

This goal will support the company's mission of providing the best quality pizza and customer service. High levels of customer satisfaction will help the company to attract and retain customers thereby enhancing its profitability. The company will conduct weekly customer surveys through which customers will rate the products and customer service. The goal is to ensure that satisfaction scores exceed the set goal.

To attain 2% reduction in monthly expenses by the end of year one

One of the aspects of the company's mission is to provide reasonably priced pizza. To attain this goal, the company must reduce its production and operating expenses. Lower costs allow the company to charge competitive prices. The company will prepare monthly management accounting reports that detail all production costs and operating expenses. The management will monitor the monthly changes in expenses and identify measures to achieve the 2% reduction goal by the end of the first year of operation.

Key Success Factors

High quality products: the company must offer high-quality and healthy pizzas among other product offerings. The quality must also be consistent to build and maintain customer loyalty. This will be achieved by using high-quality ingredients and employing highly experienced chefs.

Effective marketing: The pizza industry is highly competitive hence the company's marketing strategy must be effective to ensure it penetrates and grows its market share. It should provide multiple product offerings, home delivery services, online sales, among other marketing initiatives.

Managerial competence: effective management will ensure that the company maintains its quality standards, controls costs, and establish appropriate strategies to promote the profitability of the company.

Company Summary

Industry History

Pizza is a popular delicacy in the US. According to PMQ Magazine, 93% of Americans eat pizza at least once every month (as cited in Estes, 2017). The pizza industry has existed since 1905 when the first commercial pizzeria opened. The national industry's total revenue is estimated at $44 billion as of 2017 (Estes, 2017). Over the years, Arizona has become one of the most popular pizza markets. According to Travel & Leisure, Phoenix ranks as the best pizza city (as cited in Gallen, 2017). It is a popular market consisting of both established pizza chains and independent stores.

Legal Form

Pablo's will be operated as a limited liability company with two shareholders. The company will issue 10,000 shares with a par value of $100. The shares will be divided equally between the two shareholders. This legal form will be beneficial since the company will become a pass-through entity implying that the firm's earnings will not be subjected to double taxation. The owners will also have limited liability protection as their personal assets are protected from the company's creditors. The company plans to make the switch to an S corporation in two years when it starts making significant earnings to gain self-employment tax benefits.

Location and Type of Facilities Required

The business will be located at the Downtown Core, 200 meters from the junction of Van Buren Street and Central Avenue. It is easily accessible through a network of roads such as the 7th Street, McDowell Road and Dunlap Avenue. The area is also served by a light trail (Pacific Railroad). The facility is a 2,000 square feet room in the ground floor of a five-storey building hosting various offices with ample parking space.

The business will need a kitchen with equipment such as pizza oven, dough docker, pizza pans, among other equipment. It also requires utilities such as reliable water, proper sanitation, electricity, internet connectivity, among other services. The identified facility has reliable water supply, sanitation, and internet. The business will use 30% of the room (600 square feet) as a kitchen where all the products sold, apart from the soft drinks, will be made in the kitchen at the facility. The dining area will occupy 1,400 square feet with an expected seating capacity of 100.

The company will need to obtain a registration certificate from the Arizona Department of Revenue. Other license and permits required include Food Service License, Food Handler's Permit, and Employee Identification Number, among other permits. The licenses and permits are required by the federal government, Arizona State departments, as well as Maricopa County Government. Pablo's will also comply the 2013 FDA Food Code Regulations, Maricopa County Environmental Health Code requirements, among other regulations.

Management Structure

The company's management structure will consist of two directors (shareholders), general manager, and finance, marketing, and kitchen managers as shown in Figure 1 below. The directors (two shareholders) will be responsible for the strategic direction of the restaurant. They will be responsible for strategic decisions such as expansion and other investment as well as financing decisions. The general manager will oversee the restaurant's daily operations and will be answerable to the directors. Under the general manager will be finance, marketing, and kitchen managers. The finance manager will be responsible for budgeting, preparing the restaurant's financial reports, and the day-to-day management of the company's finances. The marketing manager will establish and implement marketing programs to help Pablo's penetrate the market. Lastly, the kitchen manager will be in charge of managing the chefs and other kitchen employees, as well as maintaining the quality of pizza and other food offerings.

Pablos Management Structure

Products and Services

Pablos restaurant will offer a variety of pizza, salad, wings, sides, and soft drinks. Pizza will be in mini, small, medium and large sizes with different toppings such as garlic powder, red chili pepper, and cheese. Services will include home and office delivery, as well as online purchases.

Market Analysis

Target Market

The company is targeting residents of Downtown Phoenix, tourists as well as those who work in Downtown Phoenix but reside outside the area. A significant percentage of the company's sales will be derived from dine-in customers. It also targets other customers through home and office delivery services.

The primary target market consists of consumers aged between 16 and 64 years especially those with families and are earning at least $30,000 annually. Consumers with families are a critical segment of the target market since pizza is the popular fast food among children. The middle income group earning at least $30,000 can afford pizza more than one every month. However, the company will also offer pizzas and products in sizes and at prices that are affordable to low-income earners. Pizza is consumed by almost everyone irrespective of the education level, race, gender, ethnic background, and occupation hence Pablo's does not segment its market based on these characteristics. 10% of the population is 65 years and above while 26.8% are 18 years and below (U.S Census Bureau, 2018). This implies that about 64% of the population are between 18 and 65 years, which are the largest consumers of pizza. The median household income of Phoenix for 2017 is $52,080 (U.S Census Bureau, 2018).

Industry Analysis

The US pizza market is a large industry with total revenue of $45.1 billion in 2017 (Barrett, 2018). It comprises chain stores, which accounted for about 60% of the total revenue, and independent stores which accounted for $18.5 billion of the overall industry revenue in 2017 (Barrett, 2018). The largest pizza restaurants are Pizza Hut, Domino's, Papa John's, among other firms. The pizza industry in Phoenix is highly competitive with several restaurants such as Pizzeria Bianco, Pizza Hut, Barro's Pizza, Pomo Pizzeria, Cibo Urban Pizzeria, as well as large chains like Domino's and Pizza Hut, among other restaurants. Barro's Pizza is the most popular pizzeria in Phoenix (O'Grady, 2017). The industry is fast growing with the number of pizza restaurants increasing rapidly. More than 50 new pizza places opened in Arizona alone in the 2015 and 2016 (Estes, 2017).

Consumers are increasingly becoming conscious of health and demand healthy options. Pizza restaurants that offer healthy options such as salad have seen rapid growth in demand and revenues. The pizza market has also seen significant growth in the use of websites, social media and online ordering, and delivery innovations. According to Barrett (2018), a study of the fastest-growing pizzerias indicates that they have the highest web rankings. Innovations are reshaping the delivery services. For instance, Dominos is partnering with Ford to test autonomous delivery vehicles (Barrett, 2018). The above trends imply that Pablos must invest in digital platforms and delivery systems.

SWOT Analysis

S (Strengths)

• Suitable location
• Managerial expertise
• Online presence W (Weaknesses)
• Lack of diversification (only one pizzeria)
• Limited pricing flexibility
• Imitable products and business processes

O (Opportunities)

• Increased internet access and technological advancement
• Growing population and industry - an opportunity for growth
• Strategic alliances

T (Threats)

• Stiff competition from established pizza chains and independent stores
• Health concerns are leading to a reduction in the demand for pizza and other fast foods.
• Volatility in input prices

Strengths:

Suitable Location: Pablos will be situated in a suitable location in Downtown Phoenix. The area has large population which includes workers, residents as well as tourists. It is also highly accessible hence it is an ideal location for customers. This will enable it to attract customer traffic thus boosting revenues.

Managerial expertise: The Company's two shareholders are experienced in the industry having worked at Dominos and Papa Johns for a combined period of 30 years. The experience will help in establishing appropriate strategies for success in the market.

Online Presence: The Company has already developed a website to boost online sales and reach a diverse market. Digital platforms are essential for success in the pizza industry.

Weaknesses:

Imitable products and services: The Company's product offerings and business processes can easily be imitated. Thus, any competitive advantage gained will only be temporary as competitors will offer similar products and services.

Limited number of stores: The Company will start with one restaurant in Phoenix. The limited diversification will expose to state-specific risks. Unfavorable economic conditions in Phoenix can lead to its collapse.

Limited pricing flexibility: The Company will not enjoy economies of scale since it will have only one pizzeria. This lowers its ability to charge competitive prices.

Opportunities:

Increased internet access and technological advancement: Increased internet access gives Pablos...