UNIVERSITY OF
WESTERN SYDNEY
HAWKESBURY
Business Plan
for
for June 1997 to June 1999
Prepared by:
H.K. Balachandra
B. D’Souza
P. Kishor
R. Wadlow
M. Khan
K. Anand Arora
For:
MBA Entrepreneurship Assignment
Faculty of Management
Lecturer:
SmartPlan
ESRI Australia
DOLA
Antoine Hermens
Contents
List of Figures
List of Tables
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© 2008 State of Western Australia
EXECUTIVE SUMMARY
The Richmond Cornucopia Café (RCC) is a new café, that has opened recently in the ‘Marketplace’
shopping centre at Richmond, NSW. The café has a strong management and entrepreneurial vision to
make the venture a success. The café offers above average quality food and service provision having
positioned itself in this market niche,and intends to continue to be consistent with it.
RCC is an exclusive small business enterprise, ventured by a dynamic entrepreneur, whose core
competency has been in the field of catering and hospitality management.
The Marketplace concept, developed by Woolworths, has become well known nationally for its quality
and calibre of merchandising, and epitomised a new benchmark in community shopping.This strategic
location of the cafe, is an ideal catchment area, and assures the free flow of customers for its exposure
and trial.
Wide range of products “coffee to curry”, and a pleasant atmosphere and very comfortable seating
arrangemet to relax and consume, especially after the busy and exhaustive shopping.
Products are customsdesigned to buyers taste, firms goals initially are set to satisfy the customers.
Owners philosophy and culture, to fulfil the customers demand at reasonable price, is a competitive edge
to command a good reputation.
The Cafe management has developed its strategic planning to achieve, quality of product and services ,
to focus on marketing segments and to utilise the working capital in its right direction.
The Cafe assets build on its customers, cafe capacity, reputation image and equipment involve in the
shop.The Cafe has the negative cash flow in its first month operation, due to the initial stage of the
business, but the management is hoping the positive cash flow in its future operation.
This report highlights the feasibility features of Cornucopia Cafe in its future position, for the individual
investor.Cornucopia Cafe is in its premature stage, with the life of one month, is build on 100 % debt
financing, with the interest rate of 6.95 % of its first year operation.
The management is targeting the amount of $52,000 net profit after the gross profit, in its first year
generating an average weekly turnover of $10,000. The debttoequity ratio and return on investment
ratios indicates the performance of the Cafe and are able to attract the funds lender to issue further funds
in future without hesitation even also attract the buyer of the business.
Richmond Cornucopia Cafe is fully financed by a bank loan at a competitive variable loan of 6.95%.
The loan was utilised for financing : furniture and fixtures, high tech cooking equipment, and for day to
day working capital requirements. The entrepreneurs did not utilise any of his/her personal finances in
the business. It is the intention of the entrepreneurs to pay off the bank loan within five years if not earlier
if actual and projections match. In addition Cornucopia Cafe has taken adequate insurance coverage for
contingencies.
A:\RCC3.DOC
There are a number of prevailing issues that should be considered in the formative period of the café’s
operations. These should be closely monitored and acted upon to allow the business to consolidate and
become successful. These include;
• Careful attention to Human Resource Management, especially as employees are a significant cost and
the business relies on providing quality service.
• Continuous environmental scanning of the macro and micro environmental factors.
• Consideration of the extension of business hours to include the serving of breakfast
• Continual monitoring of the adjacent competitor in the shopping centre
• Focus on methods of improving cash flow into the business
SUMMARY OF PLAN
Background
This plan provides an assessment of the strategy and operations for. The plan will help shape the future of
the business and contribute to long term viability and growth, it ensures effective coordinated use of
resources, minimises costly mistakes and failures, enables managers to anticipate and identify potential
pitfalls and also identifies company strengths and weaknesses in relation to competitors. This plan has
been prepared as group work by UWS MBA students to assist the owner in his new business venture.
The RCC is a new enterprise that has recently opened within a new shopping centre in Richmond, New
South Wales. The Manager of the RCC has strong skills in many of the domain areas required for the
success of this business including entrepreneurial vision and flair, depth of management skills and a
wealth of a experience in the hospitality and catering industry. The RCC is the result of the owners
expression for independence and freedom in his own business. The entrepreneurial background to the
RCC has been well researched. This plan aims to assist the business in the future implementation of the
venture and provide comment, analysis and guidance for the future.
Approach to the Plan
The approach to the plan was to use a model that analyses the various influences that the RCC operates
within. These are indicated in the following diagram and explored upon in more detail.
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Efficiencies
Labour, Rent etc
Equity Premises
Fair Lease, Personel Richmond ROI
Mgmt, Staff Relations, Cornocopia How will it make the
Supplier Relations, Cafe business prosper?
Customer Service, etc
Unique
Competitive
Advantages
Mission Statement
This mission statement has been developed to reveal the long term vision of the organisation in terms of
what it wants to be and who it wants to serve.
The business vision is to focus on our future goals and objectives, and to achieve them we will
concentrate on strategic planning to achieve them in short term and in long term period.
The business vision is also to become a leader in cafes around the Richmond area through our affinity
with customers in the chosen market. The market strategy is to provide wide range of quality products on
daily basis to satisfy our customers needs, and promises to demonstrate consistently the superior service
and quality to each customer.
The cafe will strive to develop competitive advantage to the value of our product and services, and to
charge current market prices to our products and services. The objectives are to achieve a high standard of
performance and quality of product, and to provide a hygienic, safe and clean environment to our
customers. The cafe will build a good team, working through mutual understanding, and respecting the
aspirations of each employee, to empower them in decision making, in regard to provide excellent
services. The cafe will encourage and reward a high standard of performance from employees.
The business is at the moment in a premature stage, but anticipates for full growth and opportunity to
increase sales from $130000 to $520000. The cafe also expects a return on investment of 10% by next
year.
The business is 100% on debt financing, and will focus more on increasing the sales volume and to
reduce the burden of debtfinancing, In doing this the cafe will establish market position, through
publicity measures and good reputation.
The cafe will support environmental and community objectives, and participate in community services,
through musical entertainment once a month in the premises. The long term goal is to thrive in the
business, being able to pass the venture to the next generation.
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The culture
The RCC embraces developing the best in our services, respecting the aspirations of each employee, to
empower them in decision making in regard to provide good customer service. The culture includes
building worthy team work through mutual understanding and maintaining the highest standard of service
whilst supporting environmental protection and other community objectives.
The Values
The RCC strives to achieve the goals and objectives with equitable means. To focus on customerneeds to
serve and cater them in the best possible way to their satisfaction. Simplicity and consistency will be the
long term objective to gain unique competitive advantage. The cafe is optimistic in the investments in
business being capable of meeting the criteria.
The Goals
The goals include being the best on measures of customers perception maintaining the profitability in
future, and to grow, develop, and seek geographic expansion to attract our customers on our long term
plans. The goals include making a respectable living and prosperous future of our business.
Planned results
Sales
The RCC has planned sales of $10000 per week
Gross Profit
See tables in Section 11
Net Profit
See tables in Section 11
Cash flow
Key features of planned financial position at of year geared towards relationship between shareholders
funds and outside borrowing’s
Income & Expenditure Statement
The income and expenditure statement has been worked out with projected sales of $10,000 per week; a
contingency plan has also been made with projected sales of $ 7,000 per week in either case the venture
is still profitable and the income more than matches the expenses leaving a surplus.
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BUSINESS BACKGROUND
Overview
The Richmond Cornucopia Cafe was established on 5th May 1997 to provide a full scale a la Carte
cooked and well garnished food services outlet. It provides a wide range of food including light meals
such as gourmet sandwiches focaccia, to hot meals , desserts and hot cold beverages.
Location
The cafe is located in Richmond, which is a north western suburb of greater Sydney located 60 kilometres
from the Sydney GPO, 20 Kilometres from Penrith and 39 Kilometres from Parramatta. Currently the
business employs 2 fulltime and 4 parttime personnel. It falls within the NorthWestern Sydney Region
as defined by the North Western Sydney Regional Development Organisation NWSRDO (1997).
The centre is the largest retail centre in the Richmond/Windsor area, servicing the needs of a growing
population base in excess of 60,000 people. The centre will include a 4500 m2. Woolworths supermarket,
a 6,500 m2 Big W Discount Department Store plus approximately 48 specialty retailers.
Richmond Market place will be the focal point for the commercial heart of the Hawkesbury local
Government area. The centre will be aesthetically adapted to blend in with the historic appeal of the area.
Incorporated into the Richmond Marketplace development are 9 heritage buildings as well as
approximately 1,800 sq.m of professional office space. These sites offer fabulous opportunities for
peripheral retail usages, such as an outdoor restaurant, arts and crafts and professional suites. Undercover
parking will be provided for about 925 vehicles.
Demographics
The total population in a 10 kilometres primary catchment of the Richmond CBD IS 42,200 people. 67%
of these people are aged between 15 and 64 years. 57% of the overall population are married, with 85% of
couples having dependent children. 82% of the catchment were born in Australia with the balance of the
population primarily born in the UK and Ireland. 27% of people aged 15 years and over have tertiary
qualifications. The UK and Irish like to go out to restaurants and coffee shops.
The regional population is more youthful than that of Australia as a whole, particularly in the 519 and
4049 year age groups. Although there are population gaps in the 2034 and 6069 year age brackets, the
NWS Region has a relatively young and growing population compared to an ageing national one.
At 5.55, unemployment in the catchment area is significantly lower than the New South Wales state
average. 24% of the people employed work parttime. 19% of the people employed are managers and
administrators. 30% are tradespeople and labourers. A significant advantage of the Region's workforce is
that people working within the various core employment sectors, hold aboveaverage qualification levels
for those sectors. For instance the Hawkesbury subregion has an aboveaverage proportion of its
workforce qualified in the education, engineering (Defence related), agricultural and architecture fields.
In combination, the employment mix and qualifications of the total workforce in the NWS Region is a
potent force for economic development and diversification of the Region's economy, (NWSRDO, 1997)
31% of the households in the Richmond primary trade area are owned outright by their occupants. 35%
are currently being purchased and of the balance of the dwellings, 60% are rented privately, 92% of all
dwellings, 60% are rented privately. 92% of all dwellings have one or more vehicles with over 50%
having two or more vehicles at their disposal.
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Planning for the Rouse Hill Development area is well advanced with some 70,000 new homesites being
possible in this recently rezoned rural land sector of Baulkham Hills.
The business structures within the Region are predominantly SMEs with some notable exceptions in each
of the subregions, such as Defence (RAAF: 2950 employees) and Education (UWS Hawkesbury and
TAFE: 1391 employees) within the Hawkesbury region. Furthermore, significant percentages of people
are either selfemployed or employ 15 additional persons. Thus, a considerable and growing number of
business enterprises within the Region are microbusinesses seeking to maintain their employment to add
value and to grow with expanding opportunities. The spirit of entrepreneurship is clearly a significant
factor in the Region. This is further borne out by the well belowaverage (National and State)
unemployment rates for the Region. These rates remained fairly constant from May 1984 to June 1992,
rose briefly in June 1993 to 5.92% and has since declined to 5.1% (June 1994).
The Gross Regional Product (GRP) is ahead of its neighbouring regions. In addition in a 1995 survey of
economic activity the Baulkham Hills and Hornsby ‘economic engines' or 'hot spots' were identified that
have spectacular growth in: housing starts, population, employment, workforce numbers, retail sales,
shopping floor space and commercial developments, both within and bordering these two subregions,
has created employment opportunities in the other two subregions of Hawkesbury and Blue Mountains.
They do however create major pressures as people travel to where the jobs are. It has been estimated that
more than 160,000 people travel daily to work opportunities within and outside the Region. Such large
daily commuter movements require costly transport services, impose social costs and increase
environmental stresses.
In many important ways the NWS Region is 'lumped in' with the stereotyped images of the 'West':
uneducated, uncultured, disadvantaged, criminal, isolated, threatened and polluted. The fact that the
Region: is the birthplace of agriculture; is replete with historical architectural sites, rivers, national
parks, botanical gardens, galleries and aboriginal sites; has extensive high quality educational institutions,
sport and recreation facilities; has multicultural diversity; has a young, affluent, vibrant, highly
skilled/educated and entrepreneurial workforce; and is economically outperforming most other regions in
Australia
Infrastructure
The road infrastructure throughout the Region, although extensive, is congested and needs considerable
upgrading, especially in the Hawkesbury and Blue Mountains subregions. Windsor Road, one of the key
arterials into the Hawkesbury subregion, is a severe constraint on future growth in that area. The
pressures are typified by traffic congestion, poor bus networks, high dependency on private cars, and
poor access to interstate rail and arterial link roads to airports and ports. The lack of adequate water and
sewerage to support the growth needs in some subregions will cap the rate of growth in the region.
The Hawkesbury and the Blue Mountains subregions are however particularly prone to major bushfires
and floods.
Tourism Structures and Processes
The NWS Region is being presented with numerous tourism opportunities: Sydney 2000 Olympics; world
heritage listing of the Blue Mountains National Parks by the UN; staggering growth rates in international
and national visitors seeking authentic ecotourism experiences in the Region's unique and vast National
Parks and forests; growth in farm tourism; and National Celebrations during the year of the Centenary of
Federation in 2001. These events will underpin continued and expanded growth in this sector.
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The tourist dollar is important to the Region and, as a consumer of tourism products and services, the
modern tourist is becoming very discerning. Not only do average tourists travel more and further to reach
quality and authentic experiences, but they have more disposable income and 'free' time to enjoy their
travelling. To ensure that the Region continues to cater for such discerning customers, it must ensure that
the soft infrastructure so essential for support of tourism products is well structured to meet customer
expectations and that the tourism processes are meeting best practice and worldclass standards. The
philosophy of the restaurant will be welcomed by the anticipated increase in tourism as identified by
NWSRDO, (1997).
Retail provision
The traditional retail provision in Richmond was based on the strip retail along the main road. The
Richmond marketplace will provide a much needed modern retail facility, as well as a real community
focus, for the expanding population of this wellestablished but underserviced area. Refer Appendix 1.
Richmond Income Distribution.
BUSINESS STRUCTURE AND ORGANISATION
Structure of the business
The drive behind this project “CoffeeShop”, is Mr Ram Kishor. He is the sole proprietor and owner and
possesses extensive knowledge and skill. He has a sound academic background in the field of “Catering
and Hospitality management”, qualified from various countries from reputed institutions. He has travelled
widely and has a proven track record in the past. With his dynamism, and the multidimensional
approach, accomplished the goal and objective of the organisation and his mission wherever he has
served.
He happens to be a versatile person, apart from Hospitalitymanagement ability, has a great love and
commitment for music. As rhythm, harmony and music are great asset to a service industry, such as
catering and hospitality.
He has a vision of a purpose, to develop a unique type of cuisinewhere the customer could choose from
wide varieties of delicacies to suit taste. For example, cuisine from Chinese, Italian, French, Indian, and
offcourse to suit the native Australian and English.
Management and administrative capability have given a competitive edge in implementation of the
structural component of the organisation and its internal activities, selecting the right people for the key
positions, developing and nurturing the skills and distinctive competencies upon which the whole vision
and mission is grounded. The resource allocation effectively, and to measure the individual performances
as well as organisational performance.
Brief Resume of Ram Kishor
Educational Qualifications:
• Diploma in Hotel & Catering Management, Fiji
• Higher National DiplomaHotel & Restaurant Management, U.K.
• PostGraduate Diploma in Tourism Management, UTS, Sydney, Australia
Experience:
• 8 years of teaching in Restaurant Management, Fiji
• 4 years of management of a Island resort, a multinational 5 star rated, with capacity of 300 suite, Fiji
• One year in a large 5 star Hotel & Restaurant, London, U.K.
• 21/2 years as Catering Manager for Catering Company, Sydney
• 5 1/2 years of teaching in Hospitality management, UWSHawkesbury
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• Consultancy works in Hotels and restaurants in Sydney
Travel & Tourism:
Widely travelled in U.K., U.S.A., Canada, France, Belgium, Holland, NewZealand, besides Australia.
O r g a n iz a t io n a l C h a r t
O wner
&
P r o p r ie t o r
H ead C hef C a s h ie r
8 a m to 4 p m &
G e n e ra l W o rk
8 a m to 4 p m
K it c h e n H a n d S a n d w ic h M a k e r C a p p u c c in o
A p p r e n t ic e C h e f m aker
&
8 a m to 4 p m W eekend C hef 1 1 a m to 2 p m 1 1 a m to 2 p m
Brief Resume of Head Chef:
Educational qualifications
• Chef Apprenticeship 5 years
Experience
• Chief cook in 4 star Hotel, 78 years, Sydney
• Specialises in PizzaGourmet and Chinese culinary.
Staffs and employees and their titles:
• Total number 10
• Proprietor
• Head Chef
• Restaurant Supervisor
• Cashier & General worker
• Kitchen hand
• Sandwich maker
• Cappuccino maker
• Apprentice chef
• 2 Wait persons
Tasks and Job descriptions of staffs and employees
Proprietor:
• to under take all the policy decisions and implementation of those programs
• to undertake all the major decisions, planing to execution level
• to control and organise finance, inventory, and all the logistics
• to develop a better understanding the norms and principles amongst the staff
• to develop the employees morale, ethics, and skill levels
• to implement HRM strategies, such as EEO and OH practices, Employee Empowerment etc.
• to develop the Employee Retention programs
• to design and develop the ongoing training programs internally for the employees
• to equip and update the firm with sophisticated machines and their utilities
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Head Chef - A full time employee:
• to organise and to get prepared with the help of assistants and kitchenhand, all the dishes and meals
for the day
• to cook fresh and serve hot delicacies, as when they are being ordered by the customer.
• to establish an inventory and its control
• to train the apprentices
Restaurant Supervisor - A full time employee:
• to supervise the external front office, customer needs and demands, and control the internal staffs
• to manage the cashregister, prepare invoices, and payrolls
• to record the inventory and its control
• to establish a customer rapport and public relations in and around the premises
• to guide and train the wait persons and assistants to the policy and philosophy of the mission of the
firm
The rest of the employees are selfexplanatory.
Building a capable organisation
Successful strategy execution depends greatly on good internal organisation and competent personnel.
Building a capable organisation is thus always a top general management priority. From the standpoint of
implementation and administering strategy, three organisational issues stand out as dominant:
1. Core competency of the OwnerProprietor in the field of Hospitality and catering management
2. adequate internal organisational structure to suit the needs of the firm to meet its objective
3. the environment of the ‘Richmond Market Place’, is an ideal catchment area in itself to promote and
establish the coffee shop
Matching Organisation Structure to Strategy
Every firm’s internal organisation has different pattern of structure to employ for each and every strategy.
Invariably it is grounded on own set of key success factors and critical tasks. Eventually it is the part of
the top management to design the internal organisation structure around the key success factors and
critical tasks to execute the strategy. In this case the following points serve as a useful hints:
• detailed and clear job description will enable each employee to perform their task efficiently
• flat structure (not very vertical) for the flow of easy communication and information
• flexibility for the change, as when required
• employee empowerment will enable the staffs to take quick decision and suitable action
Human Resource Management
Every industry unique in its own way. Every technological process and each type of service does present
different problems to its HR managers.
In the case of hotel and catering industry, uniqueness is lot more conspicuous. With all those uniforms,
strange sounding job titles, tipping, and unsocial hours, not to mention the high levels of entrepreneurship
and labour mobility. The unsocial hours factors alone suggests that at least as ‘a life’ hotel and catering
management is out of the ordinary.
Hotel and catering industry like any other business, have to make profits and maintain cash flow and,
therefore, can be run on business principles. Unlike usual and routine manufacturing industry, managers
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in these types of service industry requires to anticipate, adjust or react in a time span for the following
features:
• constant fluctuations in shortterm customer demand
Business fluctuates by the week, the day, the hour. For the worker, this means is that his or her job has an
irregular work flow. For the business, this means a problem of adjusting labour supply to demand and
hence the use of part time and casual labour and a pay system which alters earnings by customer demand,
ie. tipping or some appropriate surrogate.
• The demand for labour is direct
In the hotel and catering industry labour is demanded for what it can produce, people are not machine
minders. This means that productivity is based on personal ability and effort. Consequently, there are
great individual differences between worker’s output. Concepts of productivity are therefore, about
judgements of human capacity.
• The subjective nature of standards
Concepts like ‘hospitality’, ‘service’, ‘cleanliness’ are all matters of subjective judgement. This means
that every worker’s output is judged subjectively. This has the effect of making the actual relationships
between managers and workers crucial to standards.
• Transferability of skills
The kind of skills that workers in the hotel and catering industry possess are generally confined to that
industry. This makes for an efficient labour market between the various sectors of the industry. This,
together with the relatively unskilled nature of some of the work, encourages the high labour mobility
pattern which is often such a conspicuous feature of the industry.1
Organisational commitment
Commitment is a conscious affirmation of loyalty to something or somebody. Organisational
commitment is to draw a picture of the behaviour that is likely to be found in an employee who is
specifically committed to an organisation. Besides the obvious likelihood of punctuality, reliability and
cooperativeness, three deeper aspects of commitment may be present and visible. These are:
1. An emotional attachment to the aims and values of the organisation. This attachment is often
expressed through pride in the name of the company.
2. A willingness that goes beyond normative expectations.
3. Being prepared to push instrumentality into the background
In a sense, commitment has one advantage for management over motivation, in that while motivation has
to be demonstrated to be acknowledged, commitment actually has to be openly declared in some way by
both parties. Commitment implies going public.
The main point for HR manager is that, given that they want a stable workforce, job satisfaction must be
a goal. However, the strategy must be to encourage satisfaction at the outset through a good induction
process, but more importantly to have an early appraisal at between four and six months to see if
satisfaction has been maintained.
If commitment is a desired aim, then it can be reinforced by policies which make the employee a
stakeholder in the firm. Profitsharing and shareholding schemes work well in the context of
commitment. In a sense they are the ‘public’ commitment of management to the committed employee.
Campbell, (1997)2 indicates the careless hiring can be hazardous to your company's health, offering the
cure of genuine goodwill, courtesy, mutual respect, common sense and a little planning create happy
1
Michael Riley, 1996, HRM in the hospitality and tourism industry, 2nd ed., p 2, Butterworth-Heinemann, Oxford
2
Campbell, M., (1997), Luring the Best Hiring and Inspiring, ABCNEWS.com,
http://www.abcnews.com/sections/business/incwell/hiringatoi.html.
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employees and good business. In addition the business should be willing to pay well and to train and
develop current and new employees as the firm grows. Sherman in Campbell (1997) 3 indicates that the
most crucial elements in a startup company are the people and the culture. The founders have to clearly
define a culture and transfer it to the employees."
Empowerment
It is a new form of organisational behaviour and structure which has come about because of a perceived
need for organisational responsiveness and which is itself the mechanism that enables organisations to be
responsive.
Empowerment is incorporating into an employee’s role the authority and means to be responsive to
customer requirements. It enables the employees to be responsive by ensuring that the necessary rules of
order within the organisation do not interfere with the performance of a task which the customer requires.
SWOT ANALYSIS
Strengths
Work force
• The strength of the work force is underpinned by the strong management and ownership of the café
• Local staff who are familiar to local community
Market share
• It is very early in the life of the RCC, but initial indications and sales show that the business will
achieve significant market share.
Reputation
• Although the café has recently opened it has already assumed a good reputation, significantly due to
the reputation of the manager who is known locally as a community player.
Management Skills
• There prevails confident management skills with entrepreneurial spirit, having a vision of where he
wants to get to
• The owner had undertaken a feasibility study, including environmental analysis
• The owner had the length of experience entered industry in 1975, had had a string of successful
businesses
Quality of Service
• Guests welcomed and receive personalised table service
• Quality is emphasised and delivered in the café products and services.
• Quality of food fresh and cooked to order, quality coffee.
Macro Locational Factors
There are a number of strengths in the physical location including;
• The only shopping centre in Richmond
• Close to university population of 8,000
• Close to RAAF Richmond 3000 employees
• Located in identified strategic growth area
3
Campbell, M., (1997), How to Keep Employees Happy through Rewarding Work, ABCNEWS.com,
http://www.abcnews.com/sections/business/incwell/hiringjtoz.html.
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Micro Locational Factors
• Location in community based shopping centre
• Ergonomic environment for successful retailing
• One level shopping court
• Friendly atmosphere and bright building design
• Focal point for commercial heart of Hawkesbury
• Blends in with historic sites
• Undercover parking for 925 motor vehicles
• Well serviced by public transport
Product/Delivery
• The café offers an extensive menu including cuisine of “East and West”
• The café provides good quality in food preparation and presentation with most food cooked to order
• The food is fresh, not frozen
• Only full range eating place offering a la Carte service and including meals for children
• Casual and relaxed atmosphere
• Service full table service provided
• Design theme liaises with heritage concept of Richmond town
• Modern, well designed congenial surrounding cafe.
• Private seating
• Competitive pricing
• Can sell previous days dishes following day eg specials
Infrastructure
• The RCC is a new premise in a modern recently opened shopping centre. It had $10 spent on the
design providing an appealing layout.
• New equipment installed, which is well laid out
• The design of the café was based on an open principle so people can see product (and what they will
get). This was learnt from McDonalds, where the product sells the product.
Advertising
• Promotional activity by shopping centre including ongoing marketing programme
Weaknesses
Facilities
Initial start up problems due to centre not being open . Short term hitch that does not appear to have
influenced business.
Limited in its location within the shopping centre, in terms of opening hours.
Undercapitalised
The café is undercapitalised
Workforce
Staffing structure new to everyone
• Poor work culture, especially from Australian employees unethical, arrogant, lazy
• Little motivation/initiative in work force have to be told minute details/hand holding
• Do not follow the ideals of the manager eg “clean as you go”
• The employees have not looked after the assets
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Customer relations
Customer relations sometime suffer due to absent staff
Production methods
Being " cook to order" menu it is time consuming.
Production fluctuation
Not industrialised procedures/processes
Location
Away from food court. Loosing out on takeaway food.
Variability
Limited hours of business ie peaks at lunchtime
simultaneous production and consumption.
Restricted Hours
Being in a shopping complex the cafe is faced restricted opening hours
Accessibility
accessibility to some extent PK elaborate
Initial interest with long term waning?
Taking on too much on own without outside help?
Little research on current small business finance
Opportunities
New and changing customer needs
Distinctive image strategy the approach being unique and distinctive in way that are highly visible to
customers. This can take a variety of forms depending to the changing environment and to suit the needs
of the customers: lower prices achieved through cost reductions, prestige quality at a good price, superior
customer services, unique product attributes, or unusually creative and novel way of advertising.
Changing economic factors
• Better road system
Development of new products or services
• Use coupons / vouchers for café products
• Home delivery
• Conference catering
• Take aways
• Dinner on Sundays
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New technologies
Government policies
Weak competition
Capacity:
65 seater.
Longer Hours
• Extending hours could open till late evening in line with the trading hours of Woolworths
Location
• Unique selling proposition.
Product Standardisation
• Standardise product and service by restricted menu items. To adopt “Oursisbetterthantheirs”
strategy, by using a combination of focusdifferentiation strategy keyed to product quality. Sales and
marketing efforts are focused on the individual customer basis, to suit their requirements and taste, to
develop the superiority perception in customer’s view.
Takeaway Prospects
• Opportunity for takeaway food
Catering opportunities
• Offices within the shopping mall
• University
• RAAF.
Indoor functions
eg. birthdays, Office luncheon
Special functions
eg catering for bus trips that arrive in Richmond such as pensioner trips to the Hawkesbury Heritage
Towns.
BYO opportunity.
• Possible future BYO opportunity attracting evening customers
Discounting prospects
• Market penetration through offer discounts eg
• 10% discount to UWS students
• Discount to pensioners
Regional Demographics
Neighbouring community, university and RAAF an assessment of the our potential customers find
their needs.
New communications infrastructure
Proposed M2 freeway will attract travellers, change in gravity model
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Threats
Competitors
Adjacent Take way offering coffee, pies, cakes etc
Food court cheaper and fast food.
Loyalty of community to old Richmond town.
Future tenants Could be new tenants that come in.
Pricing
Food court cheaper and fast food.
Special Offers
Discounting
Not applicable
Promotions
Strategic Alliances
eg with butcher
Product enhancement
sandwich competition
Legal Issues
• Legislation national and state
• by laws (local)
• Contract Law
• Other legal issues
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Customer preferences and trends
• Novelty value of centre. Customers may be trying once and going elsewhere
• There is a reported return to strip, “High Street’ shopping away from noisy and in personal shopping
centres
• People only using the café for coffee, especially if they occupy the tables in peak times for a
significant period.
Economic factors
Shortage of resources staff
Unskilled staff
Infrastructure changes
• Government plan to close RAAF base which means 3,000 to 5,000 people will be dispersing.
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UNIQUE COMPETITIVE ADVANTAGE
A background for this unique adavantage is, the closure of an Indian restaurant ‘GeetMahal’ in early
1996, which ran successfully for about 45 years, and provided the novel taste of “Indian Curries” to the
Richmond community, since than, no one is existing in Richmond to provide and cater to the lingering
taste of the “Curry”. RCC has formulated series of strategies to gain and sustain the competitive
advantages:
* In time delivery of product and services.
* Quality delivery or moneyback.
* Product meet the customers needs.
* Satisfactory delivery of services.
* Dynamic team work.
* Recognition and reward for the team.
* Never say no.
* Never giveup.
* Culture of the Cafe.
* Customer option available in food choice East and West.
* Noncompetitive product offering.
* Free publicity generation to reduce advertising expendetures.
* Less wastage of material.
Management Strength
The management team plays an important role, in the failure or success of the business future. The
Cornucopia Cafe management consist on its manager and assistant manager to carry out the major
business decision, as to controlling working capital, define marketing strategies and company policies,
and reconcile other issues relates to employees and business.
The management strength is also depend on its employees to facilitate the process of achieve business
goals and objectives in future. The Cafe has developed a good culture within the organisation that the
management and employees work side by side to understand the needs of the customers, and developed a
good communication system among the management, employees and customers.
The incentives scheme on good performance would be helpful, to give motivation to drive and sense of
achieving business goals and objectives.
The whole team would be responsible to problem solving, and to maintain Cafe image, also decision
making in certain areas and speciality. Increasingly competitive environment the team would seek the
winning strategies and review them.
The Cafe management and employees are enthusiastic, goals driven and oriented, communicative,
motivated, creative thinking, organised and well behaved in manners. The management also expecting
from its employees to be committed in future, to be working in harmony and serve the community in its
best.
Key Success Factors
Management strength lies in the closely knit family members and their commitment, and dedication of all
the staffs, will prove to be a good team work, to focus on the customer needs and demand. With the
flexible and flat structure of the management and mutual understanding amongst the team will ensure the
changes required to suit and adapt in any demanding circumstances of the restaurant
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Strong leader associated with numerous other qualities, to achieve change and sense and desires of others
for the firms effectiveness. Persuasion is a word which conceals an enormous amount of effort, which not
only clarifies the risks, but also ensure to create credibility.
• Quality of product and services.
• Discount savings available to the shopping centre employees.
• Moderate capital investment.
• Services and product have comparative advantage.
• Cafe environment is comfortable for everyone.
• Choice of food available.
• Recognition and good image.
• Strong customer base relationship.
• Good management team.
• Quality of teamwork and performance.
• Product not recycled.
• Influential marketing.
COMPETITORS ANALYSIS
Some of the catering stalls are existing businesses, who were located in a different shopping complex in
Richmond and moved out to join Woolworths.
The competitors are located on the different wing of the complex where ‘Big W’ is located, and formed a
small “FoodCourt”, which is a threat to our business, as Foodcourt concepts are catching up these days
in several other complexes in city. None of the food stall is geared up to accommodate huge seating
arrangements that we possess.
RISKS
Risk, says Rescher (1983), is the chancing of a negative outcome.To measure risk we must accordingly
measure both of its defining components, the chance and the negativity. Lack of perception of risks
contributes to unexpected systemic failures .It is therefore essential for a business plan to clearly make an
assessment of primary and secondary risks ..The major risks in this business are
Primary risks
• Financial risk;
investment risks; mortaging the only financial asset
owner ‘s labour return
Secondary Risks
• Risk relating to environment
Health hazards being food industry
Fire
complying with legal stipulations
security risks
• Risk Dealing with organizational issues
handling human resources
administrative problems
availability of devoted human resource
• Psychological Factors
• Uncertainties
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The management perceives these risks and is well aware of these risks .They have the capability and
fortitude to tackle various risks facing the cafe.
Risk Management
The Management of RCC has the Entrepreneurial ability to taking the risk and foresee it. In future
operation RCC management has defined clearly the strategy to analyse, assess and manage the all types
of risks.
THE MARKET AND MARKETING STRATEGIES
Overview
In order to maximise the company's present net worth and make satisfactory profit the estimated turnover
looks attractive but in order they provide an orderly and agreed basis on which to conduct its business in
an ever changing competitive market environment any business should have its marketing objectives
stated. For RCC to have successful life cycle could state its marketing objectives as follows:
• Market research survey questionnaire in Richmond catchment area.
• Create awareness of the firm's service among potential users
• Build the firm's image among existing and potential users .
• Advertising by various methods;
• local papers, community radio
• direct mail
• leaflet drop
• discount vouchers and deals
• cafe brochure
• advertising in Richmond catchment area.
Promotional strategy
Build awareness and interest in the service product and the service organisation.
Differentiate the service offer and the service organisation from competitors.
Build and maintain the overall image and reputation of the service organisation.
Promotional tools via :
• Direct mail
• Leaflet drops with a feedback coupon
• Signage in front of the shop
• Local paper advertising. Hawkesbury Gazette, The Courier, Blue Mountains Gazette.
• Office catering
• Develop cafe brochure
• Allowing the display of young budding artists from local university thus attracting university students
into the Cafe.
Distribution strategy:
Due to the nature of the product a great awareness is to be created locally and nearby suburbs of the
existence of the cafe and accessibility.
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Pricing Strategy:
Price level maintain price level in all segments at 10% higher than competitors to reinforce the quality
image with the quality set up of the cafe and the seating provisions which are not available elsewhere.
This gives the cafe exclusiveness and justification of the higher or premium price range. This is based on
perceived value in pricing as well as psychological pricing reinforcing "quality". In addition focus on
standard price and takeaway price which is cheaper through a cash system with no credit provision
Market Definition
Richmond has an expanding population which is wellestablished but under serviced. Hence the
Cornucopia cafe is located in response to the opportunities presented by specific areas of population
growth and changing demographics.
Cornucopia will seek to identify the needs of the customers who are:
• Employees of the shopping complex: The cafe is amongst the Woolworths supermarket and Big W.
Discount department store and plus approximately 48 speciality retailers. Due to the market within
the shopping complex Cornucopia cafe wishes to attract these employees. This will be achieved by
offering 10% discounts to employees working within the complex.
• Working Group consists of parttime workers, administrators, managers, tradespeople and labourers.
• University students approx. (8000 )
• RAAF base. (5000 full time workers)
Present Customers?
Potential Customers?
• People who come to centre
• 500600 people who work in centre(Other shops)
Who are majors customers?
What are their buying motives?
Do they have common characteristics?
Market Size
Main Competitors
What is their share?
How will it be counteracted? ie how will the cafe protect its market share
Customer Needs
Do they buy on price? Sometimes yes. Some go on package.
Do they buy on service? Yes
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Do they buy on quality?
What is their price range? $68
What services do you provide? Wide range from light to heavy meals
Products
See Annex ? Menu
Product advantages
Design
Pricing
Reliability
Versatility
Support/Service
Market testing
Innovation
Time to produce
Marketing strategies
Product features
Level of Customer Service
Be active part of community of shopping centre
eg theme nights
provide birthday cakes
Product Quality
Price which must be profitable
Pricing Strategy:
Price level maintain price level in all segments at 10% higher than competitors to reinforce the quality
image with the quality set up of the cafe and the seating provisions which are not available elsewhere.
This gives the cafe exclusiveness and justification of the higher or premium price range. This is based on
perceived value in pricing as well as psychological pricing reinforcing "quality".
Pricing:
Major focus on standard price and takeaway price which is cheaper.
Cash system no credit provision
Action and implementation program
ACTION AND IMPLEMENTATION PROGRAM
WHO WHEN
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(PERSON (TIME)
RESPONSIBLE)
Promotional
Keep updated competitor profile. EK/PK
Evaluation and control.
After implementing the above action program which covers the different aspects of marketing and which
major concerns this particular type of business a through evaluation should be done in the time period.
On the results attained further action program should be prepared.
Competitor analysis
. Where competition is strong and intense
. Where competition is promoting heavily
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. Where competition is launching new services.
List all the competitors and update information for all the competitors.
Promotional strategy: build awareness and interest in the service product and the service organisation.
Differentiate the service offer and the service organisation from competitors:
Build and maintain the overall image and reputation of the service organisation.
. Promotional tools would be :
direct mail
leaflet drops with a feedback coupon
Signage in front of the shop
Local paper advertising. Hawkesbury Gazette, The Courier, Blue Mountains Gazette.
Office catering
Develop cafe brochure
Allowing the display of young budding artists from local university thus attracting university
students into the Cafe.
• Distribution strategy:
Due to the nature of the product a great awareness is to be created locally and nearby suburbs of the
existence of the cafe and accessibility.
STRATEGIES FOR OTHER KEY AREAS
The core of business lies in formulating an action plan for competing successfully in a given market.
RCCs approach evolves more or less continually in response to changing market and competitive
conditions, consists of whatever combination of offensive, defensive, and functional area support actions
are deemed appropriate to cope with the five competive forces.
A good business strategy particularly depends on the two outcomes: (1) the extent to which the strategy
creates a defendable and attractive longterm competitive position for the firm, and (2) the extent to
which the strategy enables the firm to earn “superior” profits (at least more than the average of other
firms in the market).
However, when one cuts beneath the detail and looks at the basic character of the different strategies that
firms employ, the differences begin to fall away and the amount of fundamental strategy variation
narrows considerably. It is possible to single out three generic approaches to formulate competitive
strategy:
• Striving to be the overall lowcost producer in the market
• Seeking to differentiate RCCs product and service offering in one way or another from rivals’ product
and service
• A focused approach based on catering to a narrow portion of the market rather than going out after
the entire market. This holds true especially for those segment of the market who relished “Indian
Curries”, once provided by the restaurant which ran successfully for few years.
Production
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How to deliver in quality
• The café provides good quality in food preparation and presentation with most food cooked to order
• The food is fresh, not frozen
• Only full range eating place offering a la Carte service and including meals for children
• Casual and relaxed atmosphere
• Service full table service provided
Relationship with suppliers
Currently developing an exclusive network and range of known suppliers from the previous experience
and clientele.
Building up of good rapport amonst the suppliers, by regular and promt payment. never to give a chance
for them to develop a bit of disappointments.
Leasing arrangements
5 year lease
Product Monitoring
Monitor number of product sold per day to obtain break even? Refer to table put up by A. Hermens
PROFIT PERFORMANCE
Profit Target
The profit target is to meet all costs
Planned level of profit for the year
The main objective as with any other business apart from serving the community is a good profit at the
end of the day or the bottom line is profit. In year one RCC plans to make a gross profit of $53,000 on a
weekly sales of $10,000 the profit is slightly higher than 10% of sales or the weekly profit is a little over
$ 1000.
Comparison of target to actual profit
The need for profit target
• To meet interest and principle payable on loan
• Payment of income tax
• Share in the profit for the owners in the business
• Finance future capital expenses
• pay back bank loan the amount borrowed
• Long term plans if this venture is successful as planned the entrepreneur plans to open a
franchise chain and an English pub
• Meet loan repayments
• Pay company tax don't avoids this !
• Remunerate the owners of the business
• Finance purchase of fixed assets
• Finance growth in capital terms stock/debtors
• Plough profit back into company
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Key factors on which profit performance depends
• Customer being more than able to satisfy customers (good food, service and good atmosphere)
• Meet the needs of the community for which extensive market research is being carried out
• Controlling costs always being cost conscious and ensuring that actual expenses do not cross
budgets
• Meet the needs
• No of customers
FINANCIAL PROJECTIONS
Operating Results
Notes
Operating Results
Comment on how these were derived.
Table 2 Estimated Balance Sheet - Cornucopia Cafe
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1997 1998 1999
Capital Expenditure
ITEM 1997
Furniture $11,000
Equipment $73,000
Stock $3,000
Fixtures $70,000
Total $156,000
Business Ratios
Liquidity Ratio
We have looked at RCC`s ability to meet shortterm obligations. RCC`s financial projections show that it
has enough shortterm (or current) resources available to meet obligations. We have looked at the current
ratio (current assets/current liabilities) and the Acidtest (or quick) ratio (current assets
inventories/current liabilities) and we can safely say that RCC has the ability to meet current liabilities
with its most liquid assets.
Return on Investment (ROI)
This ratio relates profits to investments. It is the rate of return on investment. Net Profit/Total Assets
As per industry standards a return of 6% is acceptable. RCC return on investment exceeds industry
standards.
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Net Present Value
If an investment projects net present value is zero or more, the project is accepted; if not it is rejected.
RCC NPV is definitely more than zero. Another way of looking at the acceptance criterion is the project
will be accepted if the present value of cash inflows exceeds the present value of cash outflows.
RCC cash inflow exceeds its outflow.
Cost of Capital
The cost capital is the required rate of return that will satisfy all capital providers. The cost of debt
(capital) is the required rate of return on investment of the lenders of a company. In RCC`s case the
lender is the bank, which has loaned money @ 6.95%. RCC`s earnings from the income and expenditure
statement clearly shows at the end of the day it makes a profit of over 10%.
Break Even Point
The sales revenue required so that total revenue and total costs are equal and revenue generated beyond
this point is profit. In RCC`s case the BEP in year one will occur between week 46 and 47 when revenue
generated will be equal to total expenses of $466,984. In year two, the BEP will occur between week 51
and 52 when revenue generated will equal to total expenses of $519,820
The business ratios of the business plan of Richmond Cornucopia Cafe shows the following analysis .
• The gross profit of the cafe in the five years is projected to be ranging from 29.93% to 33.20%.
There has been some downfall in the intervening years due to the increase in the advertising
expenditure and the general performance.
• The net profits hover around 21% except in the two years but there has not been much change .The
net profits would ultimately depend on taxation rates also. The projected net profits are quite
reasonable considering the investment ,the location of the cafe ,the range of project and it
catering to niche market .
• The Asset turnover ratio which measures how efficiently assets are being used to measure their
frequency of turnover and how hard the firm’s total asset base is working to generate sales is
more than satisfactory for the cafe considering that a major amount is in the form of fixed assets .
The data reveals that the asset turnover ratio varies from 2.43 to 3.16 times.
• The return on assets is used to assess the profit earning performance of the firm’s assets. A decline
in the return on assests may occur if asset base increases at the faster rate than net profit which
seems to be the case in this business plan when it is declining in the year 1 and year 2. However
the decline is quite marginal.
• The quick ratio of this business plan are quite satisfactory and are an indication of a business ‘s
immediate liquidity situation .
• The contribution margin which shows the difference between a dollar of sales and rate of variable
cost per dollar of sales is quite stable in this business plan .
• The breakeven point is quite achievable and as the business progresses , the percentage increase in
breakeven point is declining .
• The business plan reveals that the management is investing 50 % of their profits in the business
which may be expanded by finding new delivery channels ,opening a pub and providing for outside
catering .
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One of the unique features of this business plan is that the funds have been borrowed from the bank and
the owner ‘s equity in year 0 is nil. Thus this business plan is different from the usual business plans.
Despite the fact that the owner’s equity is not there and he has to pay bank interest, the business financials
are very sound .The Balance sheet results also reveal that the owner is in a capacity to return the bank
loan earlier than stipulated.But the owner should return the bank loan only if he thinks that he is not able
to get a better return of the money than 6.95% that he is repaying which is one of the lowest bank rates in
the world .
Reward for the risk: The profit
The profit incentive is essential part of private enterprise. Adam Smith, the founder of formal economic
study, argued that the right to make a profit is the strongest form of business motivation. In an economic
sense, profit is the reward that an owner receives for assuming the risks of investing capital in an
enterprise.
Since the entrepreneur, the person who initiates and organises a business, risks time, money, and effort,
some argue that he or she should be allowed to make as large a profit as possible. It is generally agreed
that the entrepreneur is entitled to a return on investment, and should enjoy a margin of profit to cover
possible losses in future, and a reward for efficiency and ingenuity in management.
Profit is not an end in itself; it can be just a beginning. Profit can provide seed money for more products,
more plants, more dividends, more tax payments, and more jobs. Profits can advance the wellbeing of
everyonebusinessmen and entrepreneur, consumers and producers, investors and noninvestors.
Cash flow
Short term Weekly Cash flow
ITEM AMOUNT
Wages 2500
Food 1300
Rent 1400
Income 5200
(Based on week 6 trading income)
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Wages
Food
Rent
The short term cash indicates that the there is a short fall
REFERENCES & BIBLIOGRAPHY
Anne Fox., Australia’s New Entrepreneurs:How they succeeded, Enterprise Australia Publications
NSW 2519., (1986).
Campbell, M., (1997), Luring the Best Hiring and Inspiring, ABCNEWS.com,
http://www.abcnews.com/sections/business/incwell/hiringatoi.html.
Campbell, M., (1997), How to Keep Employees Happy through Rewarding Work, ABCNEWS.com,
http://www.abcnews.com/sections/business/incwell/hiringjtoz.html.
Clive Rassam., Secrets of Success: What you can learn from British Entrepreneurs, Sidgwick and
Jackson, London. (1988).
Dollinger M.J., Entrepreneurship strategies and resources, Irwin Boston, Massachusetts, USA., (1995).
Fulop, Liz., Management for Australian business: a critical text., Macmillan Co. Of Australia Pty. Ltd.,
(1992).
Hainsworth D.R., The Sydney Traders, Cassell Australia Ltd., NSW (1972)
Johns, Brian L., Small business in Australia : Problems and Prospects, George Allen & Unwin
Australia Pty Ltd. (1985).
Jones Lang Wootton (NSW) Pty Ltd., (1997), Richmond Marketplace Leasing Information.
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Jones Lang Wootton (NSW) Pty Ltd., (1997), Three Month Marketing and Sales Plan Richmond
Marketplace.
John H.Jackson., and Vernon A. Musselman., Business: Contemporary concepts and practices., Prentice
Hall International, Inc. USA., (1987).
Legge.J. and Hindle. K., Entrepreneurship how innovators create the future. Macmillan Education
Australia, (!997).
Newell M(1985) Secrets of small business success
ANNEXES
Menu
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Perfectionism: an ingredient for building a business.
As a general rule, entrepreneurs do not have much in common. But all are alike in an important way:
They are perfectionists. Obsessed with particulars, the best of the lot will nail down their businesses to
three decimal points even if it means working 80hour weeks and sacrificing what used to be a life.
This is about an obsessive chefentrepreneur in France, Bernard Loiseau, master chef and owner of La
C(te d’Or, a restaurant in the village of Saulieu. His pursuit of three stars holds as many lessons about
business as it does about cooking.
In pursuit of his perfection in choosing the material and personnel is incredible. He would screen
hundreds of job applicants until he found people whose sense of excellence he could live with. For
example, his wine steward, Lyonel Leconte, stored volumes of wine books in his living room. As one of
his colleagues put it: “Lyonel has a one track mind: wine, wine, and wine.” Lyonel was named France’s
best wine taster.4
4
Peter Nulty : Managing:Ideas & Solutions.A Chef’s secret ingredient for building a business: Perfection, Fortune,
August 7, 1995, pp 222.
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