You, the City and the Gourmet Burger Business
You live in Simile, a suburb of a large mid-western US city, San Chic. It is a 2-hour drive to the downtown area of the city. It is an urban suburb that combines rural charm in some areas of Simile with many businesses in other areas.
Though it is too far to be a bedroom community, many individuals from the city have their get-away homes in Simile. It is touted as a representative city of the US. Many Market Research projects are conducted here. It is considered an exemplary city of the United States. Its population is about 200K.
You were a part-time short-order cook for 6 years while going through college. Now you work in a white-collar job in the warehousing business. Your friends consider you a master griller and on many weekends you love to cook for them outdoors. You are approaching 50 and are getting tired of working for someone else. Your salary is about $100K ($135K if you include benefits) and you live comfortably in a family-friendly neighborhood.
You have been observing the rise of gourmet burger businesses from articles in food magazines that you read because of your interest.
A bug has gotten in your ear; “Why don’t I start a gourmet burger place?” You can’t help it. You start dreaming of a restaurant and the burgers you will sell. You have about $50K in savings that you can risk.
The big decision that you have to make is, “Should I open a restaurant because of my grilling passion and skills”? (That you will call it BurgerHut, if and when it was launched, was set in your mind.)
Common sense tells you that to run a successful business, more money should flow in than out. This implies that the price at which you will sell a burger should be greater than all the associated costs of a burger, that there will be a demand for the burger at that price, and that the total sales will be more than the total costs.
So to make the primary decision, you need to make several other decisions:
- In what type of area should I locate the restaurant?
- How much rent is affordable?
- How much should I charge for the burger?
- What type of customers should I try to attract as my base to generate enough sales volume?
- What other products do I need to offer?
- What should be the ambiance of my restaurant?
To make all these decisions, you need to begin developing a Business Strategy.
To ensure that your new business will be successful, two questions need to be answered:
- Will there be a demand for the burger that your new business will sell? This implies that there will be enough customers willing to pay the chosen price, that the targeted customers will prefer your burger over competitors’ products, and that the broad environmental conditions will support your business.
- Are you the right one to make and deliver the burgers to the marketplace? In other words, do you have the resources/ strengths/ capabilities to make and deliver the product at cost(s) that will be less than the price(s) your target customers will bear?
- To answer the first question, an external analysis needs to be conducted. An external analysis evaluates prospective customers, competition, and environmental threats and opportunities. To answer the second question, an internal analysis needs to be conducted. An internal analysis evaluates your capabilities – skills, knowledge, assets (tangible or intangible) – in being able to deliver the product and beat the competition.
(Your gut, which nudged you to start a Gourmet Burger business essentially did an external and internal analysis. The fact that gourmet burger businesses are growing was an element of external analysis; that you had the extraordinary skills at grilling burgers and 50K saved for risk-taking were elements of internal analysis.)