Room for Dessert Case Study

Tags: business markets economics revenue starbucks dessert business model financing target market children investment management

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Room for Dessert

1. How do you rate the business plan for RFD? How do you rate the business idea itself? (Use a 1 to 5 scale, 1 being weak and 5 being very strong.)

The business idea is worth 4/5 for the following reasons: From the introduction part of the proposal it is clear that Room for Dessert is enjoying good business and high customer numbers. The administration has a busy time answering phone calls from people seeking to reserve a table and from people placing orders. On the other hand, many business people from surrounding offices are coming in to place order, pick their previously ordered desserts, and to purchase some liquor or backing ingredients. Tourists and shoppers also find RFD a favorite spot. Customers find this spot better in terms of ambience, and cost effectiveness compared to other famous spots like Starbucks.

This business plan seeks to expand the full services offered by RFD to new stores featuring spirits, wines, take-outs and signature ingredients. The idea is to locate the new stores in metropolitan markets where there is high traffic and on upscale communities’ surroundings. The funds secured will be used for establishing a Boston unit, and 10 units in the Northwest. The goal for RFD is to become a national chain with more than 40 retail units and $50 million worth of sales by the end of year 2002. The business model used will lay emphasis on multiple streams of revenue, high margins, geographical expansion, and low cost of investment. The management seeks to leverage on high capacity and economies of scale with the establishment of more units.

The business idea is worth a 5/5. On paper the future of RFD will be great if the management can replicate what is happening in the Newbury Street unit everywhere else. This idea to include takeout desserts, spirits, signature ingredients and wine seems great.

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The expansion of the restaurant spaces to 70 seats per unit, a private area for private functions and a small bar seems quite convenient and desirable of the target. Young couples without children and singles living in urban areas often have an admiration for cost effectiveness and convenience.

2. Who is the audience for the plan, what are their needs, and how well does the plan meet those needs?

The primary audience to the business plan is the business financiers. What a financier needs to know is whether the business plan is viable and that it will generate cash returns if executed perfectly. The management projects that the business model will generate $ 1 million in sales from the established units and 35% returns. The goal of the management is to prove to the financier that indeed the business plan is worth its value and that the business plan is realistic and workable with $600,000 worth of funding.

Full service restaurants are an industry that is worth $7.2 billion. By targeting professional and college graduate customers aged between 24 years and 54 years with household earning of more than $52,000 the business plan can definitely have a realistic chance of making good returns. Cost effectiveness and good ambiance are some of the factors likely to attract new customers to the restaurant in addition to the full services offered.

3. Evaluate the key strengths and weaknesses of the business idea being proposed. What are the key drivers of the economics of the business?

The major strengths of this business idea are experience, cost effective services, and serenity of the RFD environment. The business plan highlights RFD as having great potential for frequent dining, unpretentious elegance, customized services and a viable social alternative. For customization the management wishes to introduce smart technology to keep customer.....

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