Reference no: EM132374039 , Length: word count : 2000

Project task:

Scenario:

Cafe Rome is a well-known and established business in Melbourne that operates in food, beverages and external catering. This business opened its first store in 2009 and has expanded its business to three coffee shops since then. The customers are served by well trained, knowledgeable staff. Café Rome has been running successfully and has steadily expanding for last three years. However, the business has recently identified that the expenses incurred for running the business have increased and sales have been declining for the last three months.

The owners of the business have been making a constant effort to address the issue of rising expenses by analysing and updating the procedures and work practices to reduce the incurred costs but have failed to make an impact as the budget and the sales revenue continue to be below sales forecasts. The end of the financial year is approaching, and the owners are utilising their time to assess the business operational and financial status'.

They have asked you to help them to identify the predominant reasons for declining sales. The initial task they have allocated to you is to analyse the business data and information to find out the information required to conduct further analysis that would be helpful in decision making and achieving the business goals and objectives.

Business goals and objectives:

• Reduce direct and indirect operational costs

• Use target market campaigns around the CBD

• Establishing the brand in the market

• Training and motivating staff to provide quality customer service

Initially the owners of the business collectively shared the responsibility to manage all the areas of their business. However, with the expansion of their business, one owner has taken the role of marketing the existing and new stores and the other manager has taken the responsibility of operations across all three stores.

The business has the following number of employees:

• 2 full time managers

• 3 trained baristas

• 2 full time chefs

• 4 full-time and 6 casual food service attendants

The market analysis in which the Café Rome operates is given below:

The internal environment:

• The staff turnover has been high recently and is an issue for the business in this fast-paced environment.

• The menus for all stores have been updated. The company has kept the most popular items on the menu and added new dishes.

• These changes have also been reflected in the external catering menu.

The external environment:

• Coffee Ara bica bean prices have stagnated this year due to lower worldwide production and are expected to rise again.

• The government has increased the minimum wage rate by 15%.

• High staff turnover has forced the company to employee fresh staff and training costs have risen due to this.

• Property rent has increased by 10% annually.

The business has recognised that the overall food sales has declined by 10% and sales of beverages and external catering by 15% respectively. The business is slowly building customers but not performing to the forecasted budgets.

Most of the marketing budget and the owner's efforts are focussed on the recently opened third store. The staff have been performing consistently well. Recent training in an advanced barista course has increased their productivity serving more customers per hour.

Business performance of Store 1:

• Food traffic up marginally by 0.6%.

• The sales of beverages and food is consistently under the projected budget by 7%

• New competitor opened a shop 100 meters away.

Business performance of Store 2:

• Food traffic up marginally by 8%.

• The sales of beverages and food is consistently under the projected budget by 16% and the catering has been under the budget by 17%.

• Food traffic is down by 6%.

• Sales are generally steady but not growing as planned. Income is hovering just under budget while profits are 10-15% below budget due to increased expenses.

• External catering is down significantly especially for the busiest periods of November and December by 15 and 17% respectively.

The budget variance for all the stores are given below for the period of 2012-2016. The positive variance indicates the percentage above budget and negative sales indicates percentage below budget.

[ Financial year	2013-2014		2014-2105		2015-2016		2016-2017
	Jul-Dec	Jan-Jun	Jul-Dec	Jan-Jun	Jul•Dec	Jan-Jun	Jul-Dec
Food sales	6%	5%	7%	12%	1%	- 6%	- 10%
Beverage sales	2%	3%	5%	2%	- 6%	- 4%	- 15%
External catering	6%	8%	7%	3%	- 7%	- 9%	- 15%
Total income	7%	4%	6%	5%	- 3%	- 6%	- 13%
Net profit/loss	6%	3%	6%	4%	- 5%	- 8%	- 17%

The prices of products were also increased due to the average increase in wages and coffee beans. That lead to increase in average customer spending. The following table shows the customer spending variances since 2013 -2017.

Item	Average spending 2013	Average spending 2017	Variance
Coffee	$4	$4.60	15%
Takeaway food	$9	$10.17	13%
Food- sit down	$10	$11.16	16%
Catering	$18	$22	22%

The business uses Facebook to collect customer feedback/comments summary. The summary revealed the following comments:

• Best focaccia ever

• Love that you guys do free trade.

• What an art on this coffee

• Thanks for excellent service and great coffee to start the day.

• Thanks for my birthday coffee. Was looking forward to it all morning.

The business also gives exclusive discounts to its members providing a loyalty card to customers. The business owners have also analysed that the number of loyalty members that are active have decreased by 15% in the recent year.

Market survey results for December 2017:

• Customers are spending less money and are saving for Christmas.

• Many employees are in fear of losing their jobs because of global recession and are saving money.

• Approximately one-third of customers consider the Café Rome to be more expensive than others.

The survey revealed that only one fifth of customers rated the price of food excellent and most of the customers were satisfied with the customer service they received. The quality of products was rated as mixed bag. However, most of the customers agreed on the fact that customer service was quite fast.

This assessment task will require you to demonstrate the skills and knowledge required to identify and analyse the business issues.
using the simulated business information and in response to the scenario, utilise formal and informal networks to identify and analyse business information.

Review the scenario information provided for cafe Rome. Analyse the information, conduct reserach to gather any further required information and evidence to support your views and prepare a report for the owners that must include the following:

RT1. Gather and evaluate the data and information provided in the scenario to identify and analyse Café Rome's potential business problems or issues

RT2. Choose one the business problems and check the reliability of data and information you have used to identify and undertake sensitive analysis on potential business problems or issues. Check sources of information provided and thier credibility and reliability. Determine if any are ambiguous or contradictory.

RT3. Choose one of the business problems and desin, identify test systems and resources required to determine appropriate course of action such as decision making for selected issues or problems according to organizational guidelines and procedures.

RT4. Review the customer and staff feedback and business performance data to identify the rquired actions.

RT5. Gather information from at least two sources and describe how these sources support your decision making.

o Processes used to check the viability and reliability of data and information gathered.

RT6. An explanation of how you reached the conclusion for the required actions including a description of how the gathered data and information supports your conclusion.

RT7. Describe formal and informal networks that:

o Assisted in identification and analysis of the problem

o Helps establish the causes of the problem

RT8. Use appropriate technology that can help to get optimum efficiency and quality and get help from relevant stakeholder or person in related to this case.