The Olive TreeCase Study
LO1 Assess operational systems for their effectiveness and critically appraise operational
planning and implementation within hospitality units.
LO2 Analyse performance and make recommendations through developing performance
indicators
.
Assignment 2– The Olive TreeCase Study
Individual report
Weighting 50%
Length 1500 words
On the following pages you will find The Olive Tree’s case study.
Please read the case study carefully and answer the following questions.
You have been appointed as the Catering Consultant to review The Olive Tree’s operation. You have received the account after interviewing the owner Angelo Valdambrini. You have a copy of the first year’s trading account and a copy of the current menu.
You have been asked to do the following
1. Identify 6 key strengths and 6 key weaknesses of the restaurant.
2. Critically evaluate the restaurant. Has Angelo made any money?
Comment on the following:
• Trading position
• Sales
• Average spend per head
• Food gross profit
• Wages
• Summary of the restaurant’s position
3. How do the facts (figures) compare to the interview? Discuss the budgeting position
4. Make future recommendation for the restaurant.
5. Advise Angelo about opening another restaurant.
Use models and theories as well as academic references to support your findings.
The Olive Tree Case Study
The Olive Treeis sited on the fringes of Ealing’s prime shopping and entertainment area in a corner building which was previously a bank.
On entering the restaurant one is immediately met with a most cheerful greeting, escorted to a suitable table and handed a menu. The immediate impression is one of efficiency and high morale amongst the staff. The service is swift and the pizzas are of a high quality and generous in size with little left over by the satisfied customer. The decor is cool green pastel shades although the level of noise and bustle from the serving staff and kitchen may not be to everyone’s taste.
The owner and manager, Angelo Valdambrini appears to have succeeded in imbuing his staff with his own enthusiasm and concern in maintaining a high level of service and cuisine.
Before setting up his own business as an independent operator Angelo worked for seven years with Pizza Express. This experience according to Angelo had been very challenging since it had been a period of rapid growth for Pizza Express, with Angelo being responsible for opening up new units in different areas. Angelo felt this background contributed considerably to his present level of success with The Olive Tree.
The temptation to start his own business proved irresistible to Angelo given his entrepreneurial spirit. He saw a financial advantage in being on the edge of the entertainment and business centre, with the property’s rent assessment being considerably lower than if it had been situated on the other side of the busy crossroads which separated the business from the main shopping and entertainment area.
Angelo felt that with more experience in rent negotiations he could have obtained a lower rental than the £143,000 a year. For this price he has 230 square metres on street level, plus a basement space for storage, offices and staff room.
To turn the bank into a restaurant cost £445,000. Some £350,000 was borrowed from Lloyds Bank, and the rest was obtained by realising the equity on his house. He is now living in rented accommodation near the restaurant.
In the first quarter of trading, business remained stable at about £12,000 a week. Angelo expected an initial increase, and then a fall as the novelty value of a new restaurant wore off, but sales were remarkably consistent with customers remaining loyal. He has set a target increase of 15% on sales for the year of operation (2013 – 2014) with price increases of 5%.
Angelo says, ‘my experience in catering tells me there are two very different periods during the day which constitute different markets for us: lunches and evening meals. The customers in the evening tend to be couples with a high average spend compared with office workers of whom some 60% are women meeting for lunch. I felt it was not absolutely essential to be right in the centre of activity in the city because I believe good food and service will attract destination trade’.
The name of the restaurant “The Olive Tree” was chosen as appropriate for the cool restful theme which the decor projects with its carefully positioned plants, green carpeting, dark wood-stained tables for 104 customers, and generally clean pastel colours harmoniously arranged with a lack of clutter. At the same time lively and bustling.
Angelo’s policy on the range and variety of menu offerings has varied even in the early stages of the development of his business. His early menus were cautious with a careful selection of popular and well-known items, for example: standard pizzas, corn-on-the-cob, and banana splits, although he did include a special range of ten sweet course items much wider than most of the pubs and restaurants within a half mile distance, which Angelo felt had been a special success in increasing custom initially. Later in the year he became more adventurous with special items such as chilli-con-carne, spare ribs, pasta, steaks and burgers (see appendices B).
Recently Angelo has become more careful in selecting the range of items on the menu because of a sharp increase in competition in the area from a variety of restaurants; Pizza Express for example has recently opened a new outlet in the city centre and Subway is only 400 metres away across the main road. Bel Piatoo is a new restaurant that is just opening and seems to be aiming at a similar market to Angelo’s. He has how narrowed his range of pizzas. He is now thinking of borrowing ideas from his competitors including the idea of ‘create your own pizza’ for adventurous customers. He believes that the messages of quality and freshness are very important as a selling point which he is trying to incorporate in his operation. He has introduced an excellent salad bar and a reasonable selection of wine and mineral water.
The Olive Tree opens at 11.00am each day, (7 days), with a full meals service until 3.00pm, latecomers between 3.00pm and 4.00pm can be coped with by available staff. Dinners start around 6.00pm with office workers not returning directly home, and others enjoying an early evening meal before going to the cinema or meeting friends. Late evening trade varies but can be buoyant with large social groups seeking food and drink. The restaurant closes at 11.00pm. Angelo does not consider a market exists for cooked breakfasts, although no systematic market research has been done.
Angelo believes he has got the right balance for both the quick business lunch and the more prolonged and pleasant evening meal. He puts great emphases upon the quality of the food making almost everything in-house apart from the 100% pure beef burgers which are bought in.
Angelo said, ‘In developing the business we had become aware that perhaps we were catering a bit too much for the business person, so we set out to attract the office worker. By offering low-cost good quality lunches we found an almost instant increase in lunchtime trade, which led to a corresponding increase in evening meals’.
Angelo feels his ability to institute fast change to meet changing customer needs was one of his main strengths compared to the chain restaurants… ‘here we were able to try out many new ideas very quickly and take advantage of the opportunities, for example at Christmas we offered special menus, including turkey, which were a great success with our customers. Large chains who want to introduce new products are tied down by the operational problems of getting all their outlets to adopt new menu items’.
Angelo stressed he regarded himself as a professional caterer with hands-on expertise in every aspect of the business. His staff know that he can ‘roll up his sleeves’ and do any of the jobs in the restaurant with absolute confidence. Angelo intimated that he felt less confident on the ‘business side’ and relied considerably on his accountant for advice.
Angelo puts great emphasis on staff development and maintaining good personal relationships with customers. ‘Even when we are extremely busy at lunch times we stay as friendly as possible’, Angelo stressed. ‘Our waiting staff know most if not all of our regular customers by first name which really helps with their loyalty’. Angelo feels that it is this attention to customer relationships and service which makes The Olive Tree different from the big chains which can be impersonal and cold. ‘Of course’, he stressed, ‘good customer relations by itself will not bring success, what is also important is management-staff relationships’. Angelo pays great attention to staff training and morale. Special training sessions are held for staff, especially with changes in menu, to continually maintain and upgrade the level of service.
Customer loyalty pays off in a number of ways according to Angelo. His lunchtime trade frequently returns in the evenings, and for The Olive Tree’s Party Packages, Christmas dinners and special events, which often involve full function facilities, a market segment not covered by his competitors. Angelo’s engaging style has helped him to obtain good press coverage for his special events and The Olive Tree’s image is one of being a lively and interesting place for good, value for money food.
Angelo believes he has a very acute sense of cost control awareness and states he is always reviewing the operational side of the business for ways to save money. Angelo gave the example of reducing costs of the three-decker pizza oven, which is very heavy on electricity, through careful control of the settings. He gave another example on portion control, saying, ‘Our portions are notably substantial, but they are in fact gauged to match the clientele and there is little wastage.
Angelo sees the future growth potential in terms of developing a specific destination trade built on a unique level of food quality and personal service. The constant innovations in menus to keep ahead of competition will continue but with more emphasis on freshness and quality rather than the range of items on offer. As Angelo says, ‘Increasing numbers of local competitors makes it difficult to compete on variety alone and be successful’. Angelo has great faith in the restaurant business as more people become oriented to eating out. The problem is finding market gaps in which the independent operator can compete successfully against the resources of big companies dominating the High Street struggle for customers in a recessionary period. Angelo concludes that an independent operator who can attract substantial trade to an off-centre location through unique good quality and service will remain successful.
Angelo feels very optimistic about the future and is bubbling with new ideas about expanding the business. He is thinking about introducing a home/office delivery of pizzas giving better utilisation of the kitchen equipment. He has not done any market research or business planning as yet, but is impressed by the success of similar operations. He is exploring the possibility of setting up a city centre pizza restaurant with a healthy eating image using natural ingredients and providing vegetarian items on the menu. Angelo opened The Olive Tree on 1 April 2013. The restaurants trading results are detailed in table appendices A.
April May June July Aug Sept Oct Nov Dec Jan Feb March
Food sales 33,844 35,565 36,090 37,600 38,919 37,188 34,545 33,978 31,957 29,277 29,277 30,493
Drink sales 15,816 15,629 17,114 16,905 16,484 16,003 14,695 14,092 17,089 12,351 12,003 11,584
COS Food 10,729 11,701 11,838 11,957 13,077 12,012 11,020 11,077 11,665 11,633 11,096 10,460
COS drink 4,366 4,595 5,408 5,122 4,022 3,617 4,423 3,890 6,289 4,286 3,589 3,916
Wages 13,110 11,314 12,343 13,408 16,011 16,064 12,900 12,450 12,163 10,932 11,629 11,907
Rent 35,750 35,750 35,750 35,750
Rates 47,500 47,500
Fuel 4,529 4,692 4,721 4,862
Other operating expenses
1,526
1,106
321
2,409
1,001
927
847
1,289
2,421
2,079
1,071
1,032
Interest payments
3,354
3,354
3,354
3,354
3,354
3,354
3,354
3,354
3,354
3,354
3,354
3,354
Marketing 500 500 500 500 500 500 500 500 500 500 500 500
No of customers
5,669
5,898
6,005
6,016
5,951
5,695
5,156
4,893
4,533
4,921
4,707
4,787
Specialities of the house
Evergreen Salad The very best of salads and anchovies,
cheese and Italian sausage £ 5.95
8 oz Sirloin Steak Barley fed beef, cooked to your liking House Wines
with salad and french fried £ 12.00
Red White Rose
Tijuanna T-Bone 1 lb T-bone of finest beef served with
salad and french fries £16.00 By the glass £2.50
By the ½ litre £6.20
By the litre £12.00
Barbeque Baby Ribs Lamb ribs in barbeque sauce with
salad and french fries £ 8.75
Chilli Con-Carne A Platter of hot beef and chilli beans
served with rice £ 8.50
Spaghetti Bolognese Yards and Yards of pasta and sauce
covered mince beef £ 8.80
Ravishing Ravioli Pasta envelopes filled with beef £ 8.50
Lasagne Verdi Layer after layer of spinach pasta
and meat £ 8.50
Cannelloni Vegetable and meat filled pasta in a
cream sauce. £8.50
Bananas in rum and brown sugar
folded into a sugared crepe Banana Float £ 2.75
with whipped cream £ 3.35
Coffee//Tea
Tia crepe
Ice cream and Tia Maria folded into a Coffee – black or with milk£1.95p
sugared crepe with whipped cream £ 3.40 Tea £1.70
Coca Cola/Orange/Lemonade 75p
Crepe Supreme
sliced oranges in brown sugar, marinated Floater coffees Gaelic (Whiskey), Italian
in brandy, folded into a sugared crepe, with Caribbean (Rum), French (Brandy)
whipped cream and ice cream £ 3.70 Russian (Vodka)
Hoots Mon (Drambuie, Tia Maria)
Cheesecake or Gateau Colonial (Southern Comfort) £4.00
with cream or ice cream £ 3.35
Soft ice cream with a selection of toppings – Tipping is encouraged
maple, chocolate, strawberry or raspberry £ 3.00 “If we deserve it”
Have a good meal
Starters The Pizza
Homemade Minestrone soup made Prepared from the finest ingredients and
with fresh vegetables each day £2.95 freshly cooked on a crisp pastry base
Various fruit juices 70p
Chilli Con-Carne £2.75 Pizza Napoletana
Cheese, anchovies, tomato and oregano £7.25
Side Orders
Pizza Pia
Deep fried Onion Rings £1.95 Tomato, oregano, mushroom and cheese £7.25
House Salad £ 3.00
Chilli Con-Carne £3.75 Pizza Gio
Roll and Butter 50p Tomato, Italian sausage, black olives £7.55
Kids Corner Pizza Diana
Tomato, oregano, mushroom, cheese
Minestrone soup and Mini Ravioli and Italian sausage £7.55
or mini Pizza or Spaghetti Bolognese
and Pizza Roma
Ice Cream Pepperoni, cheese, mushroom, tomato,
with a selection of toppings oregano and Italian sausage £8.25
maple, strawberry or chocolate
Pizza Maryland
Everything!!! mushroom, garlic, onion,
all for £3.05 Italian sausage, egg, oregano, tomato
and cheese £8.75
The Burger
Made from freshly ground beef, seasoned and grilled to your liking.
Served in a fresh sesame seeded bun with crisp, golden French Fried
Potatoes
¼ lb ½ lb
No 1 Plain £4.95 £6.95
No 2 With Melted Cheese £4.10 £6.00
No 3 With lettuce, Tomatoes,
Onion and Coleslaw £ 5.35 £7.35
No 4 No 3. but no French fries
or Bun, extra Salad £5.35 £7.35
Beer
Double Diamond Half Pint£1.30
Peroni Larger Half Pint £1.30
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