Joe’s Enterprises for fast food Inc is a small food service company commenced its business operations in the year 2001 in Illionois to supply tasty fast food through company-owned portable carts. The food brand sells hotdogs under the name Joe’s Redhots. Apart from hotdogs, Joe enterprises also sells ready-to-eat-lunch packs, curry dishes and salads apart from juices and beverages. The company is successful with its sales touched $3million, and opening of Joe outlets and supply on contracts is also increasing by each year. Apart from this the pricing of food is moderately low, wherein each hotdog is costing only $2.00 and provision of discount coupons, repeated buyer tariffs and many other gift schemes that increase the customer base for the business. In a span of 7 years Joe’s Redhot has established its business in the market and also recorded a good turnover. For any business expansion is a step-ahead for improving the turnover of the business and also to meet the growing demand of customers.
Joe’s Redhot plans to open outlets in other parts of U.S which is why, the company has applied for a loan of $1 million to be obtained from ABC Bank. From the point view of a Bank lender, Joe’s Redhot is performing extremely well in the market and the company’s future plans of expansion are also quite impressive and above all the company is meeting the needs of busy and regular office-goers, skilled workers and technicians and even professionals who find no time to prepare meals at home and choose Joe’s Redhot as a best place either for breakfast, lunch, snack or for dinner. This paper clearly takes a closer look at the present business of Joe’s Redhot from financial perspective, marketing and advertising perspective and how best the loan can be utilized to maximize profits for the company.
For the past three years Joe’s Redhot has been recording profits apart from earning a good reputation in the market and also has been identified as “best place to have a quick lunch”. The food is also known for its high quality, hygiene and fresh taste which is why the customers visit Joe’s Redhot repeatedly. The company which is named after its President, Joe Hirasawa, who is the founder is a graduate from University of Wisconsin and has a good experience as Chef and Restaurant Manager in several Chicago top restaurants. Joe and Joe’s family collectively manages the restaurant business. Joe traveled extensively to take a survey of the food market, service techniques and about nutritive food. Joe is fluent in Spanish and Italian which is again an advantage that restaurant can include multi-cuisines and intercontinental cuisine to invite customers from other parts of the world.
Joe has also been the recipient of Entrepreneur-of-the-year award from the Chicago Restaurant Owners Association and is also an active member of Food Industry Advisory Board for the Pan-American Restaurant Association. With the collection of work experience of Joe, the restaurant business is presently running very smooth while the operating skills, strategy in pricing of recipes, marketing strategy, financial statements have all been in order while meeting the need of customer by supply high-quality and hygienic lunch packs. It is now required to take a careful analysis about the loan which is being invested for expansion and these funds must reap good profits for the company and also must sponsor and promote company’s products in more outlets meeting the food needs of urban population.
Total assets of Joe’s Redhot is amounted to $19,000 whereas total current liabilities for the year 2004 amounted to $29,350. The company has long-term assets to an extent of $355375 and total long-term liabilities to an extent of $203,450. There are long-term liabilities on vending cart loans and mobile storage vehicle and there is also a mortgage liability to an extent of $144,700. While real property, ownership on vehicles, food preparation equipment, food storage equipment are all necessary, mobile vehicles can be taken on lease or on a contract which reduces the burden of liability for the company and also mortgage must also be avoided. It is important to take note here that liabilities must always be close to the operations of business and not beyond with the fact that paying liabilities would be a long-term burden to the company and also a hindrance to the growth of company. Liabilities may include long-term loan, employee related liabilities or any other that enables company to achieve a set target of growth. The company’s five year forecast indicates a 100 percent growth in sales for the year 2008 and 2009 which is $15,000 and $12,000 respectively. Joe’s Redhot is also evincing interest in mergers, joint-ventures to increase the confidence of shareholder. Presently the company valuation is $7.7 million – $12.8 million which indicates 6-10 times net earnings in the next five years.
In strategic management and business analysis, there is importance for image of a product, pricing, availability, value for money, rapid response to enquiries and customers which work to the evaluation of financial performance of every business. Financial statements of every year, clearly indicate and provide a complete overall performance of a business and especially in restaurant business, especially where there is scope for wastage and early spoilage of inventory, resulting in excessive expenditure and inventory management. Rapid growth is possible only when there is a reduce in cost of operations and there is an increased level for customer satisfaction.
For Online analytical processing (OLAP), the required financial metrics are viz., orders and sales, delivery vs.carry, food cost, labor hours and cost, cost of delivery, menu, discounts and cash balance. From the end of customer, metrics to be measured are complaints, hold time, number of rings when calling to order, deliveries per cart, and customer service rating.
High-traffic locations and office buildings in Michigan Avenue are expected to give 1000 sales per week. Each cart cost $20,000 carries a load of 200-250 meals per day generating an annual sale of $300,000 per cart. With the proposed loan from ABC Bank, new carts can be purchased, fast food packing equipment and appointment of skilled workers for quick loading and packing of food into the cart and also chefs for mixing ingredients and for decoration of recipes.
Advertising and Marketing Analysis
Advertising and marketing in food business produce excellent results whether it is in the form of brochures, online Internet marketing or flyers. The customer base in food business is vast which includes school going children, collegians and office-goers and others who drop in or collect ready-to-eat packs and orders for a food company never stop. Advertising and marketing brings in many more customers, expansion and growth in business. In case of Joe’s Redhot, as it is an established and reputed fast food center, the company can launch a web site to pick up on line orders and provide door delivery service which is another method to boost sales without spending much on telephone which is the present scenario for Joe’s Redhot. While mobile cart is a direct advertising and marketing method, online sales also increase per day sales and turnover and also enables other urban area population to have access to visit website to place orders for food. Presently Joe’s Redhot provides free salads, free dish as bonus for regular buyers. Innovative and practical technique such as these work to the best advantage of the company and in fact boost sales growth throughout the year.
Operational intelligence in business is essential in order to record maximum growth for the business. The marketing of Joe’s Redhot is already on the takeoff by offering samples, soft drinks and by discount coupons. Launching of a web site and displaying of menus on the website would further facilitate the customers to choose recipes and also check the prices.
A good business plan yields good results for business and a poor business plan yields zero results and as a part of business plan strategic management is of great importance in business for tapping success at every step of management in business. Although there is availability of funds, consumer market, good products, when there is a lack of strategic management, the business does not produce either profits or growth, which reinstates a fact that strategic management in the process of business management is an excellent business tool as well a management tool for CEOs, COOs, CFOs and managers to develop new and innovative strategies to run businesses efficiently. Strategic management is a complete study of business and management strategies which must be implemented as and when the necessity for a strategy arises. Strategic management is also an effective tool for improving efficiency in business, to manage the staff to function efficiently and to review the overall performance of a business.
In order to develop strategic management for a particular organization, it is important to identify what are the strategies available for an organization and in this respect, management of knowledge, SWOT analysis, PEST analysis and financial analysis has to be made for development of strategic management.
Food business is a hot cake or a cake walk industry wherein there is a pool of customer available for every small, medium or a five star caterer. Each business practices its own pricing strategy, cuisine and recipe strategy according to the goals and objectives on which the business is commenced and above all its focus on variety of customers who look for a tasty bite each time when visiting a particular fast food center or a restaurant. Therefore all the emphasis here is on what is being offered to the customer? And how satisfying it is for the customer? Whether the customer wishes to visit the fast food center again or reluctant to visit again.
Joe’s redhot apart from supply of hot dogs, can even supply sandwiches, hot vegetable pies, along with tomato sauce and fresh salad and can even supply fresh fruit and vegetable juices which are excellent health tonic drinks with the fact that very few get opportunity to make fresh water melon juice, apple juice or fresh carrot and spinach juice. Opportunities such as these can prove to be advantageous for Joe’s Redhot in collecting new customers to the business.
As a matter of fact, customers who are busy goers always choose a place where there is fresh, healthy, reliable and reasonably priced fast food centers either pick up or on mobile cart due to lack of time in home cooking. Customers such as these are plenty and can even turn out to be loyal during the long term, when fast food centers offer and supply hygiene food and there can never be less demand from customers.
Strategic management of Joe’s Redhot requires appointment of new employees, launch of a web site and purchase of new equipment apart from purchase of vehicle carts to deliver food packs to customers. The company in a span of another five years shall increase the confidence of shareholder apart from increasing the networth of business to a greater level. It is also important for the management to maintain customer satisfaction, quality of food and to maintain profits for the company while cutting costs and expenses wherever necessary.