Problem
This case is about Soloman’s restaurant Tutti Matti, and the current struggle she is facing is with the budget – build restaurant brand awareness to attract more customers and increase customer base.
With a start up cost of $380,000, Solomon hopes to finish of the fiscal year with gross sales of minimum $500,000. Since November 2002, the first six months Tutti Matti has been open, sales generated $210,000 – which is great as the business is 42% on target to reach it’s goal of $500,000. Solomon notices that most of his customers are nearby workers in the downtown area for lunch and for dinner his clientele mostly is friends and family. To reach the target, Tutti Matti has different price ranges. Tutti Matti offers lunchtime special
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to draw in customers who work in Downtown Toronto. Lunch hour consist of nearby workers and the average cost is $15 before tax and tip. The sales generated during the special lunch hour’s accounts for 80% of its total revenue ($168,000) and 15% of these sales are generated from alcoholic beverages. On the other hand, during dinner hours, Solomon the clientele varies from lunch. Dinner clientele prefers more of a dinning atmosphere (family and friends) and the average Dinner is $50 plus tip and tax and 90% ordered wine. Roughly 90% of these customers are repeat customers. However, the traditional restaurant Tutti Matti is being affected from the outbreak of SARS outbreak 2003, which is affecting the business since the clientele has decreased. In order for the business to expand and survive, Solomon needs better market the restaurant to overcome the problem caused by the SARS outbreak.
In April, World Health Organization declared the intensity of the virus and provided travel caution especially in Toronto. Toronto is one of the cities that are largely affected by the virus and revenues have decreased approximately $39 million since April. The SARS outbreak in Toronto affects the customers of Tutti Matti, as the restaurant is serving only in Toronto Downtown and has affected the tourism sector in Toronto. With the amount of time Solomon has, it is important to address what the business offers and where it …show more content…
stands. Tutti Matti is one of the small cuisines only directed toward traditional Tuscan food.
The restaurant is unable to successfully market itself since competitors like Alice Fazooli’s and Terroni, both competitors have multiple locations with more seating capacity and also has a established brand awareness of their restaurants. Unlike the competitors, Tutti Matti offers one location serving in downtown Toronto (King and Spadina), good location with busy traffic, however despite the amount of customer traffic in downtown Toronto, the restaurant serves 70 seats only. Moreover, Tutti Matti does not offer lunch Saturdays and is not open on Sundays unlike competitors. Business is not consistent like competitors instead it is slower in the summer season along with Mondays and Tuesdays. Furthermore, like abovementioned, Tutti Matti has 2 price strategies - $15 lunch price-fixe or the menu ranges from $6.25 – 28.95, where the average dinner cost is $50 plus tip and tax. The restaurant does not use any middlemen and Solomon saves about $15, 000 from expenses by purchasing ingredients herself. Hence, for the first six months the business did well with a sales $210 000 and 30% of the sales was the cost of food expense. Thus, profit margin first six months is $165 900. The fixed cost of the business adds up to $130 616 which leaves a total profit contribution of $35 284 from operating the six months. In order to build brand awareness and increase customer base, Solomon is willing to
increase the advertising budget from $500 to $2000, which is feasible for Solomon given the finances. Currently, Tutti Matti is in the growth stage, where it is time for Tutti Matti to be establishing a product’s position in a market, increasing sales, and improving profit margins. Therefore, in order for Tutti Matti to continue to strive and run a successful business Solomon must consider the 4P’S and SWOT analysis to determine which opportunities highlight potential options for investment to improve restaurant profits.
Mr. Armetta is a graduate of St. John’s University where he obtained a BS in Accounting. He has held various positions with financial institutions and was last employed by JP Morgan Chase. Upon leaving a successful career at JP Morgan Chase in 2002 as an associate in Chase Auto Finance Financial Management Dept, Mr. Armetta committed his full time efforts to his Retail business, which was fully operational since 2001.
Stephen Boos has worked in the food service industry for over 30 years. He started as a bus person and subsequently trained as a chef’s apprentice. Steve’s mother believed that a college education was something that everyone should receive. She felt that a college degree was a good investment in Steve’s future. In 1976 at his mother’s insistence, Boos moved to Northeastern Ohio to attend Kent State University where he earned a bachelor’s degree in business administration. After graduation, Steve began working for East Park Restaurant as a line cook. Using his education as a foundation, Steve made a point to learn everything he could about running a restaurant, from cutting meat to the bi-weekly food and beverage orders. His versatility, keen business sense, and ability to control costs resulted in Steve’s promotion to General Manager, as role he has held since 1995.
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Editorial. Nations Restaurant News 11 Nov. 2005: n. pag. MasterFILE Premier. Web. 5 Mar. 2013.