1. Golden Tee
Restaurant & Bar
Strategic Business Analysis
Courtney Dunn, Daniel Klein, Jessica Porter,
Alexis Pressas, & Ryan Rusca
California State University, Monterey Bay
Spring 2015
5. i
PREFACE
ACKNOWLEDGEMENTS
We would like to thank everyone who has been involved with the creation of our strategic
business analysis of the Golden Tee Restaurant & Bar. First, we would like to thank owners
Michael Reta and Melinda Scardina for giving us their knowledge, time, and commitment in
order to help us accurately analyze the restaurant. We would also like to thank the executive
chef of the restaurant, Chef Christopher Bardeau and bookkeeper Lee Rowand for their time and
data in order to accurately convey the information necessary for this report. Lastly, we would
like to thank Dr. Sharon Kurtz for her instruction, time, and feedback throughout the
semester. Without the help of these individuals, this project could not have happened.
7. 1
EXECUTIVE SUMMARY
This report is a complete strategic business analysis on Golden Tee Restaurant and Bar
(GTRB). There are four main sections of this detailed business analysis, including the history
and overview, external analysis, internal analysis, and recommendations. The history and
overview section describes the overall background of the company, the external analysis focuses
on the opportunities and threats, while the internal analysis concentrates on the strengths and
weaknesses of the organization, and the recommendations section proposes possible changes the
firm could make in order to potentially be more successful.
HISTORY AND OVERVIEW
GTRB is a full-service restaurant and bar that is located on the second floor of the Monterey
Regional Airport. The restaurant was founded by George Reta and Louis Menendez in 1966 and
is currently owned by Michael Reta, son of George Reta, and Melinda Scardina. The mission of
GTRB is to “maintain the quality of the food and service, and to be consistent in the delivery of
both. Keeping customers happy is the ultimate goal each and every day” (M. Reta, personal
communication, February 17, 2015).
EXTERNAL ANALYSIS
The external analysis identifies the opportunities that GTRB can capitalize on as well as the
recognized threats. The specific opportunities that have been identified are to improve customer
service management and increase in supplier exclusivity. The recognized threats are the increase
in supplier pricing, new restaurants in close proximity, and vendor changes.
INTERNAL ANALYSIS
The internal analysis identifies the strengths that GTRB could build upon as well as the
weaknesses that can be improved. Some of the strengths recognized were: strong inventory
management, fast deliveries, and smart purchasing tactics. Having no businesses near the
restaurant, the airport does not bring in many tourists, and minimal marketing efforts are some of
the recognized weaknesses.
RECOMMENDATIONS
Recommendations are developed from the analyses of the external and internal forces. In
regards to its corporate-level strategy, it is recommended that GTRB continue with its current
strategy of stable operations. As with its corporate-level strategy, it is recommended that GTRB
maintains its current business-level strategy of a focused multipoint differentiation of its products
and services. In order to enhance its competitive advantage, it is recommended the firm
completely redesign its company website, gather customer feedback, and hire a social media
marketing intern. In order to improve its operational efficiencies, it is recommended that GTRB
provides servers and bussers with standardized serving guidelines, and enhance the atmosphere
of the waiting area.
9. 2
HISTORY AND OVERVIEW
INTRODUCTION
This section of the strategic business analysis focuses on the history and overview of the Golden
Tee Restaurant & Bar (GTRB).
HISTORY
Founding
GTRB was founded by George Reta and Louis Menendez in November 1966. The restaurant is
located on the second floor of the Monterey Regional Airport. GTRB is a full-service restaurant
and bar that offers breakfast, lunch, dinner, and to-go options. The restaurant has a dining room
located upstairs, a bar and lounge downstairs, and an outside eating area that overlooks the entire
landing strip (M. Reta, personal communication, February 17, 2015).
Louis Menendez, a Monterey local postal worker, ran the mail between the airport and the
Monterey Post Office as part of his daily route. After becoming aware that the airport had a
space for lease, Louis Menendez informed George Reta that there was an opportunity to open a
restaurant. George Reta, a Sacramento local, was interested in opening a restaurant due to his
previous experiences within the hospitality industry. After George Reta served in the Navy, he
had opened multiple bars, constructed houses, and built a golf course. The airport board went to
Sacramento to meet with George Reta and Louis Menendez to review the proposal for the space
in the airport. After the board reviewed the proposal, they offered George Reta and Louis
Menendez a five year lease, their first of many leases (M. Reta, personal communication,
February 17, 2015).
For the next 40 years, Louis Menendez and
George Reta accumulated many loyal customers
who are responsible for the success of the
restaurant to this day. Louis Menendez and
George Reta both retired from GTRB in
2006. Melinda Scardina bought out half of the
ownership of GTRB from Louis Menendez,
while Michael Reta inherited the other half of the
ownership from his father, George Reta. Figure
1-1: Michael Reta, is a photograph of co-owner,
Michael Reta, at the GTRB bar (M. Reta,
personal communication, February 17, 2015).
Figure 1-1: Michael Reta
Milestones
The important milestones of GTRB are separated into key dates. These dates are shown in
Figure 1-2: Key Milestones.
10. 3
Figure 1-2: Key Milestones
1966: First Day of Operation. Partners George Reta and Louis Menendez signed a lease
from the Monterey Regional Airport and opened for its inaugural day of operation in November
1966. GTRB introduced the “Champagne Dinner for Two,” which included two individual
champagne bottles with the purchase of prime rib or filet of sole.
1970: First Renovation. In 1970, GTRB had its first renovation since its opening. The
purpose of this renovation was to update the dining room appearance.
1995: Second Renovation. In 1995, GTRB constructed its second renovation since its
opening. This was the first complete renovation for the restaurant. The focus of the renovation
was to update the lounge and bar area.
2001: Terrorist Attack. The U.S. experienced one of the most devastating terrorist
attacks in its history on September 11, 2001. After 9/11, security at airports became highly
regulated with more intensified flying restrictions. Because of this, GTRB’s sales suffered
following the attack because of the fear of airports and the inconvenient security precautions
imposed on consumers.
2006: New Ownership, Final Renovation. In 2006, GTRB experienced an
ownership change with the addition of Melinda Scardina and Michael Reta taking over the now
retired George Reta and Louis Menendez. The most recent renovation consisted of a complete
bar, dining room, and kitchen remodel.
1966: First day of operation
1970: First renovation
1995: Second renovation
2001: Terrorist attack
2006: New ownership, final renovation
2015: GTRB today
11. 4
2015: GTRB Today. GTRB has had major structural changes; however, there have been
minor changes in its offerings since it opened in 1966. Most of GTRB’s employees are tenured,
which gives customers comfort that they will be served by a familiar staff members.
OVERVIEW
The overview of GTRB includes its vision, mission, goals, guiding principles, organizational
structure, products, services, markets, and industry introduction.
Vision
The vision of the GTRB is to keeps its traditions in all aspects of the restaurant and bar. By
keeping the look and feel of the atmosphere unaltered, it maintains the vision of originality that
local and returning traveling customers have come to appreciate over the years. The owners of
GTRB envision added space in the outside dining area to accommodate the seating capacity for
customers. This would allow more tables with a view and less wait time for customers. The
owners also hope to be granted permission by the airport to construct a banquet room that holds
50-60 people for private parties. By adding these two spaces to the restaurant, it would allow for
a higher revenue stream, while maintaining its traditional service offerings to customers (M.
Reta, personal communication, February 17, 2015).
Mission
The mission of GTRB is to maintain the quality of food and service, and to be consistent in the
delivery of both qualities. Keeping customers happy is the ultimate goal each and every
day. The local customers and returning travelers make up a majority of its clientele; GTRB will
go to any length in making sure that any and all needs are met. Michael Reta stated, “85 percent
of our business consists of returning customers” (M. Reta, personal communication, February 17,
2015). All members of GTRB staff provide quality service and food, and those qualities drive
the experience for customer’s intent on returning (M. Reta, personal communication, February
17, 2015).
Goals
The primary goal of GTRB is very simple: To be successful. The owners’ daily objective is to
succeed in every area of the restaurant, including cleanliness, service, quality of food, and
atmosphere. By succeeding in all areas, it allows the restaurant to succeed as a whole. The staff
gathers every day before opening and review the daily objectives, specifically the menu and its
specials. Another goal of GTRB is to welcome customers upon arrival and provide excellent
service in order to give the customers a memorable experience. The menu consists of a variety
of food options, including prime rib, sand dabs, and calamari; GTRB strives to be the industry
leader in these specific menu items (M. Reta, personal communication, February 17, 2015).
Guiding Principles
By being knowledgeable of daily goals, staff members operate as a team in order to deliver the
best quality service and food possible. The principle structure of GTRB is to have empowered
employees and to keep the management team small, in order to increase efficiency and to
12. 5
decrease ambiguity, which is a reason it has been in business for nearly 50 years. (M. Reta,
personal communication, February 17, 2015).
Organizational Structure
The organizational structure of GTRB consists of Michael Reta, president and treasurer, and
Melinda Scardina, vice president and secretary. Mr. Reta and Mrs. Scardina are involved with
all the decision making regarding the organization. GTRB does not operate with a management
team; therefore, all employees report to Mr. Reta and Mrs. Scardina if they have any issues,
questions, and/or concerns. This structure helps keep communication consistent by eliminating
multiple levels of management (M. Reta, personal communication, February 17, 2015). Figure
1-3: Organizational Structure, illustrates the organizational structure for GTRB.
Figure 1-3: Organizational Structure
GTRB has maintained low employee turnover throughout its years of operation and has upheld a
strong work force through employee loyalty. Mr. Reta emphasizes how important these
relationships are by stating, “Having this strong work force says a lot about our small
organization, and allows Melinda and me to build full trusting relationships with our entire staff”
(M. Reta, personal communication, February 17, 2015).
Products
GTRB currently has a breakfast, all-day a la carte, lunch, dinner, and dessert menu. GTRB
serves breakfast on Mondays through Wednesdays starting at 9:00 a.m., and on Thursdays
through Sundays starting at 8:30 a.m. Breakfast is served until 11:00 a.m. every day. It offers a
full breakfast menu which includes omelets, eggs, pancakes, French toast, eggs benedict, and a
wide variety of sides. Customers can order sandwiches, burgers, soups, and salads any time of
the day from the all-day a la carte menu. The restaurant offers 13 appetizers, as well as 8 salads
to give the customer an option to have a small meal before their main course. GTRB offers four
Michael Reta
President and Treasurer
Executive chef
Kitchen staff
Bartenders Servers and bussers
Melinda Scardina
Vice President and
Secretary
13. 6
lunch specials, as well as 15 different sandwiches until 5:00 p.m. For dinner, GTRB offers a
variety of seafood, as well as American and Italian food options. The restaurant takes pride in its
signature calamari, sand dabs, and prime rib dishes. Finally, for dessert, GTRB offers a small
and simple menu which features ice creams and pies (Menus, 2015). Appendix A: Products and
Services, shows the products and services offerings in GTRB.
Services
GTRB’s objective is to deliver high-quality food with fast and efficient service. The restaurant
has a dining room, lounge, outside seating area, and a bar for customers to enjoy the various
menu options. It carries out its service goals through a personable, friendly serving staff. GTRB
prides itself on the strong workforce it employs who help carry out the mission to deliver quality
food efficiently to its customers.
Target Market
GTRB is a family-owned and -operated business within the Monterey Peninsula, and its clientele
focuses largely on locals within the area. The organization is in the process of shifting its efforts
to attract younger generations by providing menu options that the youth is interested in. GTRB’s
core clientele is based around families and friends who have grown up dining at the
restaurant. Approximately 85 percent of GTRB’s customers are local to the Monterey Peninsula,
while the remaining 15 percent consist of airline travelers, pilots, and airline staff who fly with
the Monterey Regional Airport.
Industry Introduction
The North American Industry Classification System (NAICS) assigns businesses to categories
based on what businesses offer to the public. NAICS collects, analyzes, and publishes statistical
data relating to businesses within the U.S. economy. GTRB is classified under the industry code
722511 - Restaurants, Full-Service. The standard for code 722511, according to NAICS,
requires restaurants to provide full-service to customers throughout the entire dining
experience. A restaurant is classified as full-service when the establishment provides carryout
services, provides alcoholic and non-alcoholic beverages, has customers who are seated while
ordering and being served, and pays for the experience at the end (North American Industry
Classification System, 2013).
GTRB has consistent growth within the industry in which it participates. Some significant trends
include tourist-based events throughout the Monterey Peninsula. These high-traffic events
include golf tournaments, races, concerts, and various other popular events that are hosted in the
area throughout the year. GTRB experiences a significant decline in traffic and revenue during
the month of June, since the restaurant heavily relies on the local population; regular customers
of GTRB tend to travel most often during this particular month. Restaurants have experienced
slow business during the recession. Currently, the restaurant industry is a growing, and
potentially prosperous industry. Because of the recent economic downturn, consumers are still
hesitant to spend their disposable income due to concerns of economic instability (“Single
Location,” 2014). Although the full-service restaurant industry is the growth stage of the
industry life cycle, GTRB is currently in the maturity stage. Appendix B: Industry Life Cycle,
represents GTRB’s location in the industry life cycle.
14. 7
Summary of Findings
The strengths, weaknesses, opportunities, and threats for GTRB are identified in Appendix C:
Summary of Findings, History and Overview.
Strengths
This restaurant relies strongly on its regulars and its quality signature dishes in order to be
competitive. Because GTRB is the only restaurant in the Monterey Regional Airport, it has
immediate exposure to airline passengers. GTRB has employees who work in teams and
establish a comfortable, traditional environment for all of its customers. There is currently no
management other than the owners in the restaurant which creates a flatter organizational
structure.
Weaknesses
GTRB has weaknesses with its menu, leadership, menu uniqueness and its target market. The
menu has had minor changes since its establishment and does offer unique products to the
consumers of the Monterey Peninsula. GTRB focuses its efforts to target regular consumers,
which according to Mr. Reta, make up 85 percent of sales. While regular customers make up a
large portion of its clientele, the restaurant does not reach out to new, potential clients. Though
having owners acting as managers is a strength to GTRB, it could also be a potential weakness
should they both be unavailable at the same time. If both managers are busy, or both not at the
restaurant at all, employees do not have a superior in which they can report to.
Opportunities
GTRB has the opportunity to attract new consumers through marketing efforts. These efforts
include a stronger online presence. Currently, GTRB only has a company website and is inactive
on its Facebook page. The restaurant has the opportunity to implement more promotions to its
regular consumers and potential new customers. GTRB currently has a newsletter sign-up for
informing the customer of new items but does not offer any promotional deals.
Threats
Recently, GTRB has had changes to its menu. GTRB’s menu changes could be a potential threat
to the restaurant since items that have been removed or replaced could disappoint regular
customers. Portion sizes have also been reduced since the changes in the menu, making this
noticeable by its regulars. Another threat to GTRB is the loss of regular customers; according to
Mr. Reta, this would be the most significant threat to the restaurant.
CONCLUSION
As shown in Appendix D: History and Overview Conclusion, the significance level of the
strengths, weaknesses, opportunities, and threats is identified.
Significant Strengths
Traditional and Comfortable. The significant strengths of GTRB is its ability to make
the customer feel comfortable and keep its traditions. For generations, families from Monterey
15. 8
have dined regularly at the restaurant; these families depend on this establishment to keep things
how they have always been. According to Mr. Reta, customers at GTRB do not adjust easily to
change, especially when it comes to changing the way one of its traditional meals is prepared.
Quality. Mrs. Scardina and Mr. Reta have emphasized the importance of quality of products
and services. They have stressed that customers will receive the same quality, preparation, and
portion sizes, no matter the time of day and no matter which cook is in the kitchen.
Signature Dishes. The restaurant is known for its signature dishes, such as prime rib, sand
dabs, and calamari. Having signature dishes in a restaurant is crucial, because specializing in a
particular dish can be a reason why a customer goes to GTRB.
Breakfast, Lunch, Dinner, and Meals-to-Go. The restaurant is open for all three
meals of the day and customers can enjoy great meals for breakfast, lunch, dinner, or even have
the convenience of meals to-go.
Regulars. Because GTRB has an incredibly warm and welcoming staff with friendly service,
customers visit the restaurant recurrently. GTRB wants customers to feel like they are at home
with family, when dining in the restaurant. Since Monterey is such a small town, the servers
have the opportunity to memorize drink and meal orders for many regulars, which makes them
feel important, thus creating a devoted clientele.
Moderate Strengths
Unique Products. GTRB offers unique products to its customers making this a moderate
strength. Though the actual dish itself is common, especially in the Monterey Bay area, GTRB
prepares calamari like no other restaurant in the area. The restaurant makes it a point that even
though seafood, Italian food, and American food are all known and common types of food, the
way food is prepared gives food its uniqueness.
Insignificant Strengths
Only Owners, No Manager(s). One of the strengths, though insignificant, is the fact
that there is no management reporting to the owners at GTRB. The servers at the restaurant
expressed that they can do their job without a manager since they have been working there for
years and knows how the restaurant operates.
Airplane Passengers. Even though GTRB relies heavily on its regulars to keep the
business in good standing, the restaurant also caters to the airline passengers who are arriving at
and departing from Monterey.
16. 9
Significant Weaknesses
Limited Focus on Menu items. GTRB focuses primarily on its three signature dishes; its
prime rib, calamari, and sand dabs have given the restaurant well-deserved recognition. The
restaurant puts more emphasis on these items which causes customers to not try other, less
popular product offerings.
Insignificant Weaknesses
Minimal/No Changes. Regulars at GTRB do not adapt well to change. Customers expect
GTRB to be the same restaurant that it was from when they first dined at the establishment.
GTRB has not made significant changes to its menu since the day it first opened for business.
Some individuals who could be new, potential customers, may be looking to eat trendy foods at
modern style restaurants and will not find that at GTRB. Keeping up with trends is a way to
ensure that the restaurant remains fresh and modern; however this is only an insignificant
weakness because regulars of GTRB expect little to no changes in the menu and to the restaurant
as a whole.
Only Owners, No Manager(s). GTRB has a successful staff that is knowledgeable on
daily operations. As a result of not having managers, employees can become too comfortable in
their job and never go beyond their current skillset. Managers can give employees new insight
on tasks, communicate with customers, and help the restaurant perform at a higher level. Even
though it was previously stated that having only two leaders can be an insignificant strength, it
could also be an insignificant weakness.
Significant Opportunities
Promotions. GTRB has the opportunity to reach out to customers that dine at the restaurant
once a week or once every couple weeks. The restaurant could offer a free appetizer with an
entrée purchase, or with two entrée purchases. GTRB could promote new items so it gives
regulars who typically order the same meals a reason to try new items. The restaurant can offer
promotions on slow days or slow hours in order to increase sales.
Marketing to Attract New Customers. Like a lot of restaurants in the Monterey Bay
area, GTRB depends on word-of-mouth marketing in order to gain new customers. Word-of-
mouth marketing is an effective form of advertising; however, GTRB could benefit from having
an online presence. This is because people do not use the yellow pages to find what they are
looking for; instead, they use the internet. GTRB could use online reservation methods on its
current website for its customers to easily make or cancel reservations. GTRB could also
strengthen its business with an interesting, interactive presence in various social media.
17. 10
Moderate Threats
Employees Leaving for Management Positions. Because GTRB does not have
managers other than Mr. Reta and Mrs. Scardina, there is no room for employees to advance in
the restaurant. A busser moving up to a server and a server moving up to a bartender represent
the only promotions available at GTRB. This is a moderate threat since employees were already
aware of the minimal advancement opportunities upon being hired.
Significant Threats
Regulars Not Coming. Losing regulars would be the most significant threat to GTRB’s
business. A way for the restaurant to maintain its customers is to listen and implement ideas and
concerns. GTRB management will never know if a customer is unhappy with their meals,
service, or price changes if there is no communication. The restaurant can keep its customers
satisfied by remembering its regulars, their meals and drinks, and inviting them back next time.
19. EXTERNAL ANALYSIS
INTRODUCTION
This section of the strategic business analysis concentrates on the external analysis of the Golden
Tee Restaurant & Bar (GTRB).
GENERAL ENVIRONMENT
The following section describes the general environment of the external analysis that highlights
the driving forces which influence GTRB’s business along with its external stakeholders.
Driving Forces
This section analyzes the political, environmental, sociocultural, technological, economic, and
legal forces which affect GTRB. Appendix E: Driving Forces, illustrates the six most important
forces within the general environment. Each force is evaluated based on the impact it has on
GTRB, where a rating of significant has the greatest impact, moderate has a medium impact, and
insignificant has the lowest impact.
Political. Political forces evaluate government regulations within a business and the degree to
which the government intervenes ("External environment factors,” n.d.). The political forces
that affect GTRB are: policies regarding the relationship between the restaurant, Monterey
Regional Airport, and Transportation Security Administration (TSA) regulations. The policies
GTRB must follow are mandated in its contract with the airport. The restaurant must be open
every day of the year, with the exception Christmas and Thanksgiving, and its hours of operation
must provide breakfast, lunch, and dinner. Because GTRB is located inside an airport, it must
follow strict security procedures. The airport allows GTRB to operate as a stand-alone
restaurant; however, it requires the business to be aware of and report suspicious activity. An
abandoned bag or piece of luggage, or unusual behavior from patrons constitutes suspicious
activity. GTRB teaches its staff to be aware of suspicious activity using The First Observer
Program, which trains professionals and businesses that are associated with the transportation
industry (TSA, n.d.). An additional political force that GTRB experienced was its 2006
complete remodel. The airport made it mandatory for GTRB to retrofit its structure in order to
comply with earthquake safety regulations in airports (M. Reta, personal communication, March
3, 2015). The political forces for GTRB have a moderate significance rating. This rating was
given in regards to the regulations from the airport that can affect the restaurant’s operation;
however, since GTRB abides by those regulations, there are minimal, if any, challenges with the
airport.
Environmental. The environmental forces focuses on how businesses are affected by
environmental issues, such as a lack of natural resources, waste disposal, and procedures for
20. recycling products and waste. Environmental forces also include air and water pollution, as well
as weather and climate change (Oxford Learning Lab, 2012). Business operators have the
opportunity to play an important role in the reduction of environmental impact. There are many
factors within the environment that businesses are unable to control. Businesses, for example,
cannot control the weather or changes in climate. There are, conversely, aspects within
environmental forces that businesses can regulate in order to ease the burden on the environment.
Organizations must follow laws that regulate environmental pollution; two of the more serious
types of pollution that businesses need to be aware of are air and water pollution. Some
businesses, especially restaurants, produce a lot of waste (Jurevicius, 2013). In foodservice,
there is waste that ranges from pre-consumer waste to post-consumer waste. Some restaurants
have implemented waste management programs that responsibly dispose of waste, such as
recycling and compost programs (Hatz, 2013).
GTRB has made efforts to benefit the environment in order to show its customers that it cares
about the Monterey Bay community. GTRB follows the recommended fish and other seafood to
either buy or avoid according the Monterey Bay Aquariums’ Seafood Watch (Monterey Bay
Aquarium Seafood Watch, 2015). According to Mr. Reta, the restaurant recycles in all
departments, with the exception of its food scraps. Ironically, rainy and foggy weather is an
environmental factor that can potentially benefit the business. When flights are unexpectedly
delayed due to weather or mechanical issues, travelers are forced to wait in the airport.
Postponed travelers have an extended opportunity to dine at GTRB due to its convenience. In
contrast, delayed flights coming in to the Monterey Regional Airport and cancelled flights could
be a missed opportunity for the restaurant (M. Reta, personal communication, March 3, 2015).
The environmental forces have an insignificant impact on GTRB because airline passengers are
not GTRB’s main target market and GTRB implements an effective recycling and waste disposal
program.
Sociocultural. The sociocultural forces relate to the cultural aspects of society pertaining to
the exterior forces of an organization. The exterior forces include: demographics, health
consciousness, age, population growth rate, level of education, distribution of wealth and social
class, living conditions, and lifestyle (Oxford Learning Lab, 2012). Most of GTRB’s customers
are age 40 and above; the children of this age demographic grew up dining at GTRB with their
families. GTRB’s goal is to have families dine at the restaurant for successive generations.
According to Rasmussen Reports, a national telephone survey of 1000 Americans conducted in
July 2013, 58 percent eat out at restaurants at least once per week. Broken down, 40 percent
dine out once per week, while 14 percent dine out 2-3 times per week, and 4 percent dine out
more than 3 times per week. While 58 percent eat out, 39 percent say they never eat out and 3
percent could not recall how often they eat out. These results could relate to multiple
factors. Health-conscious trends are widespread in America, resulting in an increase in home-
cooked and pre-prepared meals and a decrease in dining out (Rasmussen Reports,
2013). Lifestyle and disposable income are other social factors that affect GTRB. According to
Mr. Reta, many customers who frequently dine at GTRB have a high level of disposable income.
It is estimated that 85 percent of GTRB’s customers are return customers. The atmosphere
21. provided by GTRB and its staff along with the reputation built by the restaurant over the last 49
years has resulted in a high percentage of returning customers (M. Reta, personal
communication, March 3, 2015). The sociocultural forces have a significant rating because of
their relationship with GTRB’s customers.
Technological. A business’ rate of technological change, access to new technology, and
Internet penetration are key aspects concerning technological forces (Jurevicius, 2013).
POS Systems. In 2006, when GTRB was closed for nine months for its complete remodel, the
owners of GTRB demoed point-of-sale (POS) software systems at Salinas Cash Register, located
in Salinas, California. POS systems give restaurants and other businesses access to information
in a more efficient way than any manual system. One of the features of a POS system that
GTRB appreciates is the sales tracking ability. By installing POS software, GTRB better
manages inventory, identifies its biggest-selling food items, and removes the food options that
have low sales volume and are not profitable (Scholten, 2014). The POS software cost GTRB
approximately $23,000 and, according to Mr. Reta, “it is incredibly difficult to be in the
restaurant business without it” (M. Reta, personal communication, March 3, 2015).
Kitchen Equipment. In addition to the POS system, in 2006, GTRB bought all new state-of-
the-art kitchen equipment: stoves, deep fryers, a grill, microwaves, refrigeration, and an Ansul
restaurant fire suppression system (M. Reta, personal communication, March 3, 2015).
Internet Presence. GTRB has made minimal efforts in establishing an Internet presence. The
restaurant has a company webpage which contains menus, pictures, and a newsletter sign-up
which updates customers on menu changes and occasional promotions. GTRB is inactive in all
social media and does not pay Yelp to advertise (M. Reta, personal communication, March 3,
2015). Technological forces have a significant rating since GTRB relies on its POS system, and
having updated, quality kitchen equipment is vital to a restaurant.
Economic. Economic forces describe the factors involved with economic growth,
unemployment levels, exchange rates, inflation and deflation, and stages of the business cycle
(Haughey, n.d.). Recently, GTRB experienced significant fluctuation in the business cycle. In
2007, GTRB had a successful year due to a peak in the economic boom; however, the 2008
recession caused a significant decrease in sales. Consumers’ disposable income reduced
dramatically, causing GTRB to cut back employee hours in order to better match its expenses
with a decrease in revenue. During the next four years, business at GTRB was slow, but
steady. The restaurant depends only partially on airline passengers to dine at the
establishment. GTRB’s sales suffered over the course of four years, throughout the recession,
due to the lack of airline travelers and those dining out. In 2013, as the economy was in the
recovery stage of the business life cycle, the restaurant noticed its first solid increase in customer
volume and sales (M. Reta, personal communication, March 3, 2015). Another economic force
that is currently relevant to the restaurant is deflation. Due to a dramatic decrease in gas prices
in 2015, the cost of goods has declined 0.1 percent from January of 2014. Coincidentally, this is
the first time the U.S. has experienced deflation since 2009 (“It's Official,” 2015). Although the
22. deflation will most likely be short-lived, GTRB is having a successful year to date, due to the
increased disposable income of its customers. Economic forces have a significant rating because
it could affect GTRB by increasing costs and reducing revenue, depending on the state of the
business life cycle.
Legal. Legal forces affect businesses by creating various requirements, rules, and regulations
that businesses must follow (“Marketing Theories,” n.d.). GTRB carries unique legal
requirements because it is classified under the restaurant industry. These regulations include:
food safety regulations, ServSafe certification, and licensing from the Alcoholic Beverage
Control (ABC), as well as an additional unique legal stipulation due to its placement within the
Monterey Regional Airport (M. Reta, personal communication, March 3, 2015).
Alcoholic Beverage Control. ABC is a state government program that regulates businesses that
are involved in the manufacturing, distribution, or sale of alcoholic beverages. GTRB has a full-
bar that requires it to hold a Restaurant Liquor License, sometimes referred to as an “All Liquor
License” (Mealey, n.d.) ABC continually changes laws and regulations, that require GTRB staff
to be up to date with changing guidelines in order to avoid fines and liquor license suspension
("List of license," 2015).
Food Safety Certification. California requires a minimum of one employee within a retail food
establishment to be trained and certified with knowledge of food safety. The certification should
be held by an owner, chef, or manager; the certification holder is required to renew it every five
years. All servers within a restaurant are required to have a food handler’s card, titled ServSafe
certification, which can be obtained online through a training program ("Food safety training,"
2015).
Location. GTRB is located inside of the Monterey Regional Airport and because of its location,
any incoming provisions made to the restaurant must be delivered by a badge-certified individual
upon approval of the airport security. GTRB is also required to keep all doors and windows
closed since the location overlooks the tarmac (M. Reta, personal communication, March 3,
2015). The legal forces have a significant rating due to the importance of regulations GTRB
must follow in order to operate.
External Stakeholders
External stakeholders are groups of people or other parties that do not work directly with a
business. These groups are affected by the decisions relating to a business, even if those
associated stakeholders do not work directly with the business itself (“Business Stakeholders”,
2014). Figure 2-1: External Stakeholders and Level of Influence, shows two types of
stakeholders: primary and secondary.
23. 15
Figure 2-1: External Stakeholders and Level of Influence
Primary Stakeholders. Primary Stakeholders are people or groups who are directly
affected by the actions of a business (Hill, n.d.). GTRB’s external primary stakeholders are
described and rated in this section.
Regulars (High). GTRB’s regular customers are among the highest degree of significant
stakeholders. Out of these customers, it is estimated that 85 percent are locals within the
Monterey Peninsula. When the restaurant makes decisions regarding its menu, pricing, or hours
of service, it directly affects GTRB’s customers.
Suppliers (High). The suppliers are ranked at a high level of significance due to the
relationship they have with GTRB. Suppliers are responsible for providing GTRB with food,
beverages, and other items for the restaurant to use in its operations.
Monterey Airport (High). The Monterey Airport has a high level of significance associated
with GTRB since this is where the restaurant is located. The airport receives 6.5 percent of the
revenue that GTRB generates, as well as a set rate for each vehicle that is validated by the
restaurant.
Secondary Stakeholders. Secondary stakeholders consists of people or groups who are
indirectly affected by an organization (Gomez, 2015). The indirect stakeholders associated with
GTRB are described as follows.
Monterey Community (Medium). GTRB has a moderate effect on the Monterey Community.
GTRB’s business decisions and actions could potentially affect Monterey Bay Peninsula and its
population.
Airline Passengers (Low). The airline passengers who visit Monterey have a lower
significance to the restaurant than regular local customers, because they only make up 15 percent
of its clientele. Tourists coming to and from the Monterey area through the airport, may not
always choose to eat at GTRB (M. Reta, personal communication, March 3, 2015).
24. 16
Summary of Findings
The opportunities and threats of GTRB have been identified by analyzing the general
environment. Appendix F: Summary of Findings, General Environment shows the opportunities
and threats within each of the driving forces.
There are many opportunities that have been identified in GTRB’s general environment. Food
waste is unfortunately inevitable; however, GTRB has the opportunity to implement a food scrap
recycling program. The restaurant has the chance to recycle its food scraps and food-soiled
paper composting, resulting in a city with less waste in the landfills. GTRB has the opportunity
to socialize with its current and potential customers through social media. It could add social
media to its marketing efforts in order to increase awareness of the restaurant. In order to
encourage regulars to try new menu items, GTRB could offer incentives such as a particular
percentage off their meal or a complimentary dessert. GTRB currently has exclusivity with its
sand dabs. GTRB could potentially offer more products that are unavailable in other restaurants
in the area. The restaurant’s staff and owners have the opportunity to show the community that it
cares about the Monterey area by participating in various types of community involvement.
Finally, GTRB could incentivize airline travelers to eat or have a drink at the restaurant by
offering them a discount on their bill.
Existing within the five forces model are several threats pertaining to GTRB. The threat of the
political forces involves regulations of operation imposed by the airport towards the
restaurant. Within the sociocultural forces exists a lack of appeal towards the younger customers
in the area. Consumer disposable income is another threat to GTRB which results in fewer
customers frequenting the restaurant. The legal force involves a threat to contractual changes
during lease renewals for the restaurant. Threats also exist with the stakeholders of the
restaurant. The primary stakeholders are regulars, suppliers, and the Monterey Regional
Airport. A threat to the regular customers is an elimination of favored menu items that they rely
on to be available. Threats involving suppliers include, a lack of product availability, and an
increase in costs which leads to higher prices to consumers. Increases in parking fees and rent
imposed by the Monterey Regional airport is another threat to GTRB. Threats by secondary
stakeholders include a reduction in commercial airline traffic through the airport. This could
decrease the amount of passengers exposed to the restaurant.
COMPETITIVE ENVIRONMENT
The competitive environment section focuses on GTRB’s competitive classifications,
competitive positioning, and its competitive forces.
Competitor Classifications
Competitors to a business can be classified as direct competitors, indirect competitors, or as a
substitute to the business.
Direct Competitors. Direct competitors are competitors that offer the same type of service,
similar products, and similar pricing to other businesses ("Direct competition," 2015). GTRB
25. 17
has identified four direct competitors, which include Tarpy’s Roadhouse, Monterey Cookhouse,
Monterey Fish House, and London Bridge Pub. All direct competitor establishments are located
within a four mile radius and offer comparable menu items at similar prices to GTRB. In
Appendix G: Direct Competitors Comparison, the offerings for each direct competitor compared
to GTRB are featured.
Indirect Competitors. An indirect competitor is a supplier who satisfies the same needs
for customers, but does so by offering different products and services ("Indirect competition,"
2015). GTRB has identified three indirect competitors, including Sapporo, Chef Lee’s, and
Chili’s. GTRB’s indirect competitors offer full-dining experiences to the market, but with
different products. Sapporo is a Japanese restaurant offering cooktop table dining “teppanyaki”,
sushi, and a full-bar. Chef Lee’s, also a full dining restaurant, is a Chinese restaurant that has
banquet rooms available, a dining space for up to 300 customers, and full-bar service. Chili’s is
a fast-casual restaurant offering a Tex-Mex menu to its consumers along with a full-bar.
Substitutes. A substitute satisfies the same need or want for a consumer, but does so by
replacing the good or service provided by an organization ("Competitor assessor,"
2015). Substitutes for GTRB, includes home cooking, take-out, and fast-food. Consumers can
choose to cook at home as opposed to eating out with their family. Take-out is a substitute to
dining-in, and thus can be a threat since consumers are less likely to order more than an entrée
when ordering take-out. As opposed to full-service restaurants, fast-food allows for consumers
to order quickly and for a lesser price than full-service restaurants.
Competitive Positioning
Competitive positioning refers to how businesses in similar markets differentiate their products
and services from their competitors in order to create value in a market (“Competitive
Positioning,” n.d.). GTRB uses many unique factors in order to separate its business from its
direct competitors. These unique factors are explained in further detail in the key success factors
and strategic group analysis sections.
Key Success Factors. Key success factors are the functions and activities that a business
carries out each day to accomplish its business goals. Key success factors can help set an
organization apart from its direct competitors ("Definition: Key success," 2015).
GTRB has four identifying success factors that align with its direct competitors within the
surrounding area. These factors include: friendliness, consistency, quality, and service delivery.
In Appendix H: Key Success Factors, each direct competitor is rated on the various level of each
key success factor.
Strategic Groups Analysis. The strategic groups analysis graph shows consistency and
quality as the two key success factors. Figure 2-2: Strategic Groups Map, shows GTRB, its four
direct competitors, and where they are located on the graph in relation to quality and
consistency. Each restaurant is placed on the graph based on its rating in Appendix H: Key
Success Factors. The pictures on the chart represent each restaurant as the graph provides a
26. 18
visual understanding of how each direct competitor is aligned with its quality and consistency of
its food and service.
Figure 2-2: Strategic Groups Map
Supply Chain Positioning
A supply chain is a network that includes every company that is involved with a specific product;
it comprises of all the steps needed to get a good or service from the supplier to the consumer
(Supply Chain, 2015).
Performance Foodservice, located in Santa Cruz, California, is GTRB’s main purveyor for food
as well as restaurant supplies. GTRB receives shipments from Performance Foodservice twice a
week and gets its products at a discounted rate if it orders a certain number of products. Russo’s
Wholesale Produce, located in Del Rey Oaks, California supplies all of the vegetables for GTRB.
The business is willing to pay more for Russo’s Wholesale Produce because of its convenience
and fast service. Challenge Foodservice, located in Marina, California, is GTRB’s supplier for
butter, cheeses, and dairy liquids. Monterey Fish Company, located on the Wharf in Monterey,
California, is GTRB’s main fish supplier. Palermo Bakery, in Seaside, California, is the supplier
for the various types of breads that GTRB uses for its sandwiches and complimentary bread.
Finally, Del Monte Meat Co. located in Marina, California sells GTRB beef, pork, and deli meat.
Figure 2-3: Supply Chain Positioning, shows the supply chain for GTRB.
There are eight key supply chain processes: customer relationship management, customer service
management, demand management, order fulfillment, manufacturing flow management, supplier
relationship management, product development and commercialization, and returns management
(Kurtz, 2014).
Quality
Strategic Groups Analysis
Consistency
Low High
LowHigh
London Bridge Pub Monterey Cookhouse
GTRB
Monterey Fish House Tarpy’s
27. 19
Customer Relationship Management. The customer relationship management
process identifies key customers and focuses on ways to develop loyalty (Lambert, 2004). In the
restaurant industry, employees often greet regulars by their first name and make them feel
welcomed; the owners or employees should also let the customer know that they look forward to
seeing them when they dine at GTRB again (Frisch, 2014).
Customer Service Management. The customer service management process is a
response system to customer concerns, questions, complaints, and comments (Lambert, 2004).
The simplest way for companies in the restaurant industry to receive free advice regarding
business improvements is by listening to customers. It is extremely important for businesses to
apologize for mistakes and fix any problems before the customers exit the restaurant (Milicevic,
n.d.)
Demand Management. The demand management process, with strong management, can
match supply with consumer demand (Lambert, 2004). To reduce risk of disappointing
customers, GTRB can conveniently analyze higher demand items with its POS system. It is vital
that restaurants monitor product inventory to ensure that the supply of food and beverage items
satisfies consumer demand (“Please,” 2009).
Order Fulfillment. The order fulfillment process is the actual flow of the supply chain.
The goal for management is to create a seamless system from the suppliers to the hands of the
consumer (Lambert, 2014). Because the restaurant is dependent on its suppliers, GTRB has
worked hard to build a strong supplier relationship just as it would with customer relationships
(Reiss, 2010).
Manufacturing Flow Management. The manufacturing flow management process’
main concern is that the firms within the supply chain have the required resources to
manufacture with flexibility (Lambert, 2004). In the foodservice industry, businesses need
suppliers that can respond quickly to unexpected change in demand. GTRB has reliable
suppliers that can deliver just an hour after an order is placed.
Supplier Relationship Management. The supplier relationship management process is
extremely similar to customer service management; instead of ensuring the satisfaction of
customers, businesses is concerned with the satisfaction of the supplier (Lambert, 2004). In the
restaurant industry, it is necessary for owners to connect with their food suppliers (Morell, 2010).
Product Development and Commercialization. The product development and
commercialization process provides a structure of the development of new products with
customers and suppliers (Lambert, 2004). While GTRB has made minimal menu changes since
its opening, it has recently hired a new executive chef and launched an updated menu in order for
regulars to try new menu items.
Returns Management. The returns management process enables businesses to manage
returned product in an efficient way, while minimizing costs (Lambert, 2004). Mr. Reta and
Mrs. Scardina have implemented a process to address customer dissatisfaction. The server or
bartender must immediately approach the dissatisfied customers and inquire about their issue
28. 20
After the problem is identified, the server should offer to replace the dish in a timely manner. As
a final gesture, the server could offer a complimentary dessert or a drink (M. Reta, personal
communication, March 3, 2015).
Figure 2-3: Supply Chain Positioning
Competitive Forces
Competition in an industry can be defined by leading theorist of Harvard University’s Michael
Porter through his five forces model. This model explains the bargaining power among buyers
and suppliers, threat of new entrants, threat of substitute products or services, and competitive
rivalry among the members of a given industry (Keegan & Green, 2013). Appendix I:
Competitive Forces, shows that the bargaining forces and threat forces revolve around the most
important force: rivalry.
Rivalry. Within Porter’s five forces, rivalry can be defined as the intensity between
competitors and is a determinant for many industries (Morrison, 2009). There are two main
restaurants that could be considered rivals to GTRB: Tarpy’s and Monterey Cookhouse. Tarpy’s
is located near GTRB, giving locals an alternative should they consider dining within the
Monterey area. Monterey Cookhouse, is also located near GTRB and provides similar offerings
at similar prices. These rivalries are mildly competitive and the relationship between restaurants
are friendly (M. Reta, personal communication, March 3, 2015). Aside from these two rivals,
the restaurant industry in the Monterey area is dense. Many restaurants compete for customer’s
patronage especially in high traffic areas for tourism, such as the Fisherman’s Wharf, which
includes 14 restaurants alone (Fisherman’s Wharf Monterey, n.d.). GTRB’s advantage is that it is
the only restaurant in the airport, allowing it to be the first and last restaurant available to serve
airline passengers for incoming and outgoing flights. This force has a moderate level of
significance relating to GTRB because of the many restaurants in the entire Monterey area;
29. 16
however the restaurant is located away from high traffic tourist areas which reduces the intensity
of the rivalry.
Bargaining Power of Suppliers. The bargaining power of suppliers analyzes the power
of the supplier in an industry. When fewer suppliers exist, the more power they have to control
quantities and price (Arline, 2015). GTRB does not often change its suppliers for products and
only does so if prices go up and/or quality goes down. GTRB has access to food suppliers and
does not have a problem switching vendors. The bargaining power of food suppliers is low in
accordance to the restaurant, but no vendors are dependent on GTRB’s business. GTRB also
has suppliers for its miscellaneous products, such as machines, chemicals, and linens. Although
it is not the only supplier available, American Supply is GTRB’s sole vendor for machines and
chemicals. Whereas GTRB gets its linens specifically from Mission Linen Supply Inc. Mission
Linen is the only vendor available locally and therefore has a high bargaining power when it
comes to pricing.
GTRB has two main suppliers, Performance Foodservice and Russo’s Wholesale
Produce. While GTRB gets the majority of its products from these two suppliers, it also shops
around for certain products during specific seasons. For example, GTRB shops at Del Monte
Meat Co. if prices are lower for their meats, especially its prime rib. GTRB also has a stipulation
in their contract with Performance Foodservice stating that GTRB is the first to have access to
sand dabs when they are available. Performance Foodservice must store the sand dabs in its
warehouse and not sell them to other retailers before GTRB (M. Reta, personal communication,
March 3, 2015). By having this bargaining power, GTRB is able to shop around for the best
prices and products in order to keep its costs down. This force has a moderate level of
significance relating to GTRB because of suppliers having access to many buyers.
Bargaining Power of Buyers. The bargaining power of buyers relates to consumers
putting pressure on businesses to provide higher quality products and services while driving
down the price (Wilkinson. 2013). The customers in this case are the buyers and they hold a
high level of power within the full-service restaurant industry. This is because dining out is not a
necessity to consumers, especially those with little disposable income. Another factor is home
cooking is relatively inexpensive in comparison to eating out at restaurants. Buyers also have
multiple options to choose from when it comes to dining out. This increases the buyer’s power
because not only do they not need to eat out, but they can dine at one of the 227 restaurants in the
Monterey Peninsula (“Best Restaurants,” 2015) This force has a high level of significance in
relation to GTRB.
Threat of Substitutes. The threat of substitutes is the assessment of products or services
that have superior characteristics relative to the existing products or services in an industry
(“Five Forces,” n.d.). In the Monterey area, there are multiple restaurants from which consumers
can choose to dine. Among these restaurants exist various types of dining options, such as: fast
food, fast casual, take-out food, and home delivery. The restaurant industry is considerably
dense in the Monterey Peninsula, which leads to a threat of substitutes available to consumers.
Other substitutes include home cooking, pre-prepared meals, or food programs, such as Jenny
30. 16
Craig and Weight Watchers. This force has a high level of significance relating to GTRB
because of a dense restaurant industry.
Threat of New Entrants. The threat of new entrants depends largely upon the existing
barriers to entry within a given industry. According to Porter, there are six major barriers to
entry: economies of scale, product differentiation, capital requirements, switching costs, access
to distribution channels, and cost advantages independent of scale (Childress, n.d.). The barriers
to entry for restaurants are considerably low due to the large quantity of restaurants that exist in
the Monterey Peninsula area. Many distributors are available for restaurants, making it easy to
acquire the necessary products for a menu. The primary threat of a new entrant would be another
restaurant entering the airport. GTRB’s contract with the Monterey Regional Airport states that
no other restaurant is allowed to occupy space within the airport (M. Reta, personal
communication, March 3, 2015). This force has a low level of significance because of over-
saturation of restaurants in the area along with no other restaurants being allowed to operate
within the Monterey Regional Airport.
Summary of Findings
Opportunities and threats for GTRB have been identified through the analysis of the competitive
environment. Appendix J: Summary of Findings, Competitive Environment shows the
opportunities and threats within the competitive environment.
Opportunities. The opportunities that have been identified in the competitive environment
are: customer service management and increase in exclusivity.
Customer Service Management. GTRB has the opportunity to enhance its website and make
it more interactive for its primary customers. This could be done through a web platform in
order for customers to make suggestions about menu items and give reviews on its service
delivery. By implementing a more interactive web platform, GTRB can become aware of
changes that its customers want to see. GTRB could also correct any suggested changes when
possible, in order to better serve its customers.
Increase in Exclusivity. Currently, GTRB has an exclusivity agreement arranged with its
supplier, Performance, Inc. within the Monterey Peninsula. The exclusivity agreement is based
on the delivery and availability of sand dabs. GTRB emphasizes the importance of having
access to this particular fish due to the popularity it holds within GTRB’s menu. GTRB has the
opportunity to create the same exclusivity with its other suppliers for items that hold high
importance on the menu.
Threats. The threats that have been identified in the competitive environment are: increase in
supplier pricing, new restaurants, and vendor changes.
Increase in Supplier Pricing. If GTRB has a supplier that increases the minimum purchase
dollar amount of products ordered, it may have to make a decision on whether or not to look for
a new supplier. Certain suppliers to GTRB may be the only option for products or services that
31. 16
are needed, which could cause GTRB to raise its prices, and putting the restaurant at risk of
upsetting its regular customers.
New Restaurants. GTRB has exclusive rights to its location within the Monterey Regional
Airport, but it still faces the threat of new restaurants entering the market, particularly within a
one-mile radius to GTRB. A new restaurant entering the market can potentially take traffic away
from GTRB. Since Monterey locals are responsible for an estimated 85 percent of GTRB’s
clientele, the threat of a new restaurant is high due to the potential interest of Monterey locals
discovering a new dining place.
Vendor Changes. GTRB faces the threat of suppliers changing their product offerings that
GTRB relies on for its menu items; for example, if Performance, Inc. were to stop carrying sand
dabs, GTRB would need to find a new vendor for sand dabs due to the popularity it has with its
customers. Additionally, if GTRB has a supplier that stops carrying a certain product, it would
have to switch vendors depending on the importance of the item to the menu. This is a potential
threat to GTRB since the vendor may operate differently than GTRB is accustomed
to. Switching vendors may make the delivery and ordering process more difficult or even
impossible for GTRB, leading to a loss of time and products. A supplier going out of business is
another threat to GTRB since there might not be another vendor that supplies a particular item,
which could be detrimental to the menu.
CONCLUSION
The external analysis section revealed the opportunities and threats that could have an impact on
GTRB. As shown in Appendix K: External Analysis Conclusion, the significance level of each
opportunity and threat are identified. A significant opportunity that GTRB can capitalize on is
enhancing its current company website as well as becoming active on social media. Creating a
more modern website could give GTRB the opportunity to offer a website that is more user
friendly and current to restaurant website capabilities, such as online reservations.
A potential significant threat is the change in consumer disposable income. During the economic
recession, GTRB was affected by experiencing a decrease in sales. Currently, GTRB does not
have many positive Yelp reviews, which could potentially discourage a possible customer.
Other potential significant threats to the restaurant could be the supplier change in prices and the
consistency of supplier products.
33. 24
INTERNAL ANALYSIS
INTRODUCTION
The internal analysis section identifies Golden Tee Restaurant & Bar’s (GTRB) strengths and
weaknesses through the assessment of its resources and capabilities, value-adding activities,
performance measures, and strategies.
RESOURCES AND CAPABILITIES
This section identifies GTRB’s tangible and intangible resources and analyzes how these
particular resources create value for its customers.
Resources
It is vital that a company performs analyses on its tangible and intangible resources since
ordinary and extraordinary resources can then be identified. Extraordinary resources give a
business the opportunity to have a competitive advantage over its competitors (Ketchen & Short,
pg. 90). By performing a VRIST analysis, a firm can determine the value, rarity, inimitability,
and substitutability of its extraordinary resources. Value is the worth or usefulness of a resource
of a company; rarity is an item unusual but valuable; inimitability is something that cannot be
imitated, and substitutability is anything that can be interchangeable (Jurevicius, 2013).
Appendix L: Tangible and Intangible VRIST Analysis, each resource is rated and then totaled in
order to determine which resources are extraordinary. GTRB’s extraordinary resources are
discovered through the ratings of each criterion.
Tangible Resources. Tangible resources are characterized by opportunities to earn
economic benefits by producing goods, distributing goods, or providing services. These assets
are not sold to customers, rather they are used in business operations to provide services or
manufacture goods (Nordmeyer, n.d.). GTRB’s current tangible resources are its: building,
location, restaurant furniture, dining and kitchen equipment, parking lot, food and beverages,
staff, website, POS system, and menu. Out of the 11 tangible resources, the location of the
restaurant is the only resource with a rating of 3 which is the only significantly rated tangible
resource.
Intangible Resources. Intangible resources are nonphysical assets, such as franchises,
trademarks, and copyrights (“What is,” 2015). Seven intangible resources have been identified
in this section. The resources are: recipes, partnerships, contracts, culture and atmosphere,
standards, skills of the owners, and skills of the executive chef and cooks. The most significant
resource identified is the skills of the owners.
Ordinary Resources. Not quite extraordinary, but have the potential to be, ordinary
resources are assets that businesses create value for customers. An example of one of GTRB’s
ordinary resources are the skills of the executive chef and its cooks. Though having a talented,
skilled, and knowledgeable executive chef is vital in a restaurant, these traits are not
uncommonly found in the restaurant industry.
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Extraordinary Resources. Unlike ordinary resources, extraordinary resources are the
competitive advantages businesses have over their competitors. The extraordinary tangible and
intangible resources that were discovered using the VRIST analysis are GTRB’s recipes and its
location. Because another restaurant cannot enter the airport and the unique view customers get
to experience, the location itself is an extraordinary resource. The second extraordinary
resource, the skills of the owners, creates value for the customer through knowledge and
experience.
Capabilities
Resources and capabilities are two distinct concepts within the resource-based theory. Resources
are the assets of a company that it owns, and capabilities are what a business can do (Ketchen &
Short, pg. 92). Appendix M: Extraordinary Resources, both of the extraordinary resources
identified are assessed by capability and value against the location and the skills of the owners.
Location. The physical location of the restaurant provides a great amount of value to
GTRB. Its location is central to the surrounding cities within the Monterey Peninsula, making it
convenient for most residents in the area to dine at GTRB. The restaurant offers a great view of
the landing strip, making dining an enjoyable experience, especially for families with
children. GTRB is also located close to its suppliers, which is beneficial for the restaurant when
there is an unexpected demand in certain products, resulting in fewer shortages of food items
ordered by the customers.
Skills of the owners. Both of the owners possess a great amount of skills and knowledge of
the restaurant industry. Mr. Reta has been working at the restaurant since the 1960s, which has
given him many years of experience in the industry and has allowed him to build relationships
with customers over the past four decades. The restaurant strives to add value to the overall
customer experience by building close relationships to its customers (M. Reta, personal
communication, March 23, 2015).
Internal Stakeholders
Internal stakeholders are those that are affected by decisions and outcomes within an
organization. Stakeholders within a company ultimately have a vested interest in the business’
successes and failures (“Internal Stakeholders,” 2015). In Appendix N: Internal Stakeholders,
owners Michael Reta and Melinda Scardina, have the highest level of influence because GTRB’s
performance affects their wealth, reputation, and earnings. Another internal stakeholder with a
high level of influence is the Monterey Regional Airport. Instead of charging a traditional form
of rent, the Monterey Regional Airport receives 6.5 percent of GTRB’s monthly net income. It
also charges the restaurant a percentage of every parking ticket that is validated by the restaurant,
which is approximately $1700 per month. The airport also charges for gas, utilities, and electric;
however, it does not charge GTRB for water (M. Reta, personal communication, March 31,
2015). The airport benefits from GTRB’s strong, profitable business. Employees of GTRB are
medium level stakeholders because though they have a stake in the company, they do not make
important decisions for the restaurant.
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Summary of Findings
It is vital that businesses identify the strengths and weaknesses of its resources in order to
capitalize on them. In Appendix O: Summary of Findings, Resources and Capabilities, the
extraordinary resources and internal stakeholders’ strengths and weaknesses have been
identified.
Extraordinary Resources. In the Monterey Peninsula, locals and tourists alike have the
opportunity to eat at restaurants that are known for its beautiful scenic views and delicious food.
Tourists and locals have the choice to dine in Pacific Grove overlooking Lovers Point Beach,
enjoy a meal on one of the many world-renowned golf courses, or even experience a meal in
Carmel overlooking Point Lobos. GTRB, along with these other restaurants, provide locals and
tourists beautiful views of the ocean and unique sights of airplane takeoff and landing, all while
enjoying a quality meal. GTRB provides its customers the views that locals from the Monterey
area expect. The weaknesses to this extraordinary resource is the fact that GTRB is a destination
restaurant. GTRB is located off of Highway 68 and the only business surrounding it is a
Comfort Inn. Other restaurants have the bonus of being by popular walking, bike riding, or
popular driving spots in town; GTRB does not have that luxury. The second extraordinary
resource that the restaurant possesses are the skills of Michael Reta and Melinda Scardina. The
owners possess skills that benefit the restaurant significantly; however, both of the owners have
narrow skillsets.
Internal Stakeholders. GTRB has changed very little aspects of its menu and restaurant
since 2006; it has hardly changed since it was founded in 1966. Though it is beneficial that both
of the owners have business and extensive restaurant experience, neither of the owners are
adapting to food trends. Desiring more healthful food options is one of the most popular trends
for the new food conscious generation. The restaurant has many benefits from being located at
the airport; however, GTRB could be thriving more from tourists if the airport had more flights
per day. Finally, many of the employees that work at GTRB have been working there for many
years. When new workers get hired, it brings new perspective to the restaurant. Employees
unfortunately do not gain any manager experience or have leadership roles at GTRB because
there is no management other than the owners themselves.
VALUE-ADDING ACTIVITIES
Value-adding activities are actions that businesses make in order to generate a positive return on
its investment of resources (Value-adding Activity, 2014). Porter’s value chain is implemented
or used to find how a company’s inputs are transformed into outputs, which are eventually
purchased by the customer (“Porter’s Value,” n.d.). In Figure 3-1: Value-Adding Activities, the
primary and support activities within the restaurant are identified in order to create a product that
its customers value.
Primary Activities
Primary activities are the formation and distribution of goods and services (Ketchen & Short, pg.
105). The five primary activities involve inbound logistics and inputs, operations, outbound
logistics and distribution, marketing and sales, and after-sales service.
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Inbound Logistics & Inputs. Inbound logistics are the processes related to receiving,
storing, and distributing inputs. GTRB has a flexible schedule when it comes to its inbound
logistics. Instead of ordering certain goods every week on specific days, the restaurant simply
requests its food products whenever it is needed. The executive chef manages the inventory to
prevent shortages and overages. These inbound logistics and inputs have a high level of
significance.
Operations. Operations, the actual production process, transform inputs into outputs that are
then sold to the customer. GTRB performs its operations by delivering food in a timely manner
to its customers and along with its food preparations. These operations have a high level of
significance.
Outbound Logistics & Distribution. Outbound logistics may be internal or external in
a company; these activities deliver the product or service to the customer. This includes the
agreements that GTRB makes with its suppliers and the control it has on the quality from the
weekly shipments it receives. To ensure freshness and maintain quality control, the restaurant
works with suppliers that are convenient and exhibit a reliable cold chain. Outbound logistics
and distribution have a medium level of significance.
Marketing & Sales. Marketing is a process that creates value for customers by companies
in order to build relationships and capture value from those customers in return (Kotler &
Armstrong, pg. 5). GTRB captures its value from customers by providing quality food in
conjunction with superior service. Customers find quality food and superior service imperative
in order for them to consider returning to the restaurant, whether it be once or multiple
times. Other marketing value adding concepts include added special menus for distinctive
occasions and holidays.
Within the value chain exists the marketing mix, better known as the four P’s: product, price,
place, promotion (Freishner, 2014). GTRB adds value by having the freshest products in order
to construct its menu items each day. GTRB’s prices are competitive in relation to its direct
competitors and compares those prices to its multiple suppliers in order to find the lowest cost
(M. Reta, personal communication, March 3, 2015). The placement of the restaurant is a unique
selling point because of its location within the Monterey Regional Airport. GTRB’s promotions
include a website and special menus. The marketing aspect of GTRB has a low level of
significance.
After-Sale Service. After-sale service is the extent to which a business provides service to
its customers. In these activities, GTRB maintains the value of its products and services to its
customers even after purchase. Part of GTRB’s after-sale includes the servers keeping tables
clean, presentable, and cleared of any unused dining ware. Another important factor for after-
sale service is asking the customer how they enjoyed the meal, thanking them for dining at the
restaurant, and finally, inviting the customer back. These after-sale services have a high level of
significance.
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Support Activities
The activities that support GTRB’s primary functions include finance and legal services, human
resources management, research and development, and procurement and purchasing (Ketchen &
Short, pg. 105).
Finance & Legal Services. Finance and legal services refer to the support systems that a
company uses on a daily basis. GTRB uses the bookkeeping services of Lee Rowand, account
manager and consultant, in order to save time and minimize costly financial mistakes. Rowand
has over 30 years of experience in food and beverage bookkeeping and has over 30 clients in the
Monterey Peninsula. Fenton & Keller provide the restaurant with practical advice regarding
employer-employee relationships. These finance and legal services have a high level of
significance.
Human Resource Management. Human resource management refers to how a business
trains and rewards employees. When GTRB hires for a position, the prospective applicant
shadows an experienced employee for the position they are applying for. After two days of
shadowing, the owners and the trainee will determine if that employee is culturally fit for its
work environment. Employees often get praised by the owners and rewarded during the
employee appreciation Christmas party. Human resource management has a low level of
significance.
Research & Development. Research and development refers to the development of new
products, the ability to receive feedback, and overall innovation of a business. GTRB made
recent, minimal changes to its menu in January, 2015. The executive chef provides taste tests for
the employees when introducing new items to the menu, and also observes sales of certain
products to determine the success of the new product. The restaurant receives feedback from the
customer by inquiring the satisfaction of their meal. Research and development has a low level
of significance.
Procurement & Purchasing. Procurement and purchasing refers to the ordering of inputs
and the transformation of these inputs into finished products. Procurement adds value to
customers of the restaurant by purchasing the food items needed at the best price in order to pass
it on to the customer. Procurement and purchasing have a high level of significance.
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Figure 3-1: Value-Adding Activities
Summary of Findings
The strengths and weaknesses for each value-adding activity are identified in Appendix P:
Summary of Findings, Value-Adding Activities. GTRB fortunately has flexible suppliers that
cater to the needs of the restaurant. This enables GTRB to order its various necessities when
they need them, and are able to rely on the items to be at the restaurant in a timely manner.
Using just-in-time inventory, GTRB significantly reduces the possibilities of wasting products.
GTRB makes efforts to purchase the highest quality ingredients from suppliers that offer fair,
low prices. One of the weaknesses in GTRB’s primary activities is the minimal marketing
efforts the restaurant implements. The other weakness is the human resource management
procedures. Currently, GTRB only allows two days for training and does not offer continuous
recognition to its employees.
PERFORMANCE MEASURES
Performance measures, quantitative and qualitative, are the important regular collection of data
that evaluate whether current processes are successful or unsuccessful (Performance Measures,
n.d.). GTRB measures its performance through financial and non-financial analyses.
Financial Performance Analysis
Financial performance analyses are used to measure the overall health of a business over a
particular amount of time. These quantitative measures can be compared to similar firms across
the same industry (“Financial Performance”, n.d.). In Appendix Q: Financial Ratios
Comparison, GTRB’s ratios and the full-service restaurant industry (722511) ratios are shown
for the years 2011 through 2014 (North American Industry Classification System, 2013).
Lee Rowand was unable to provide any financials for the year 2012; furthermore, the industry
ratios were also unavailable in the year 2014. As a result of limited data, ratios are only
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compared for the year 2011 and 2013. GTRB’s bookkeeper does not use any financial ratios to
measure the company’s performance, instead, he analyzes the cost of goods sold for food, liquor,
beer, and wine, as well as examines the costs of labor. Each ratio was calculated in order to
compare the business to the full-service restaurant industry. Lee Rowand uses the calendar year,
which begins on January 1 and ends on December 31, for its accounting reports.
Liquidity Ratios. Liquidity ratios are a form of measurement that a company uses to
determine its ability to pay off short-term debts (“Liquidity Ratios,” n.d.). The two liquidity
ratios that are examined are the current and quick ratios.
Current Ratio. The current ratio is calculated by dividing the company’s current assets by the
company’s current liabilities (“Current Ratio,” 2015). The current ratio is important for GTRB
because it indicates the company’s ability to pay back its short-term liabilities; the higher the
ratio, typically means the higher ability of a company paying back its debts and payables. In
2011, GTRB’s current ratio is calculated by dividing its $33,088.97 in total current assets by
$103,702.67 in its current liabilities, resulting in a current ratio of .31. In 2013, the restaurant
had $45,917.32 in current assets and $97,577.08 in current liabilities, resulting in a .47 current
ratio. In 2014, GTRB had $50,050.28 in total current assets and $92,073.50 in total current
liabilities; which, after calculation, results in a current ratio of .54. Appendix R: Financial
Ratios Bar Charts, shows that GTRB performed below the industry average in both 2011 and
2013.
Quick Ratio. Quick ratio is calculated by subtracting the company’s inventories from the
company’s current assets, then dividing the total of this sum by the company’s current liabilities
(“Quick Ratio,” 2015). It is significant to determine GTRB’s quick ratio because it shows the
company’s ability to meet its short-term obligations with its liquid assets; the higher the quick
ratio, the better GTRB’s liquidity standing will be. In 2011, GTRB’s quick ratio is calculated by
subtracting its $21,506.81 in total inventories from $33,088.97 in total current assets, then
divided by its $103,702.67 in total current liabilities, resulting in a quick ratio of .11. In 2013,
GTRB had $49,917.32 in current assets, $23,951.56 in inventories, and $97,577.08 in current
liabilities, resulting in a .26 quick ratio. In 2014, GTRB had $50,050.28 in total current assets,
$26,075.59 in total inventories, and $92,073.50 in total current liabilities, resulting in a quick
ratio of .26. Appendix R: Financial Ratios Bar Charts, shows that GTRB performed below the
industry average in both 2011 and 2013.
Efficiency Ratio. Especially meaningful when compared to other businesses of the same
industry, efficiency ratios are used to determine how well a company utilizes its liabilities and
assets (“Efficiency Ratio,” n.d.). The efficiency ratio that is examined is the inventory turnover
ratio.
Inventory Turnover Ratio. Inventory turnover ratios are calculated by dividing the company’s
cost of goods sold by the company’s average inventory (“Inventory Turnover,” 2015). A high
inventory turnover ratio for GTRB can mean that it either has strong sales or ineffective buying
practices; additionally, a low inventory turnover could mean low sales, which could result in
wasted inventory for the restaurant. The ratio ultimately shows the number of times a business’
inventory is sold and replenished. In 2011, GTRB’s inventory turnover ratio is calculated by
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dividing its $1,183,138.91 in sales by its $21,506.81 in total inventories, which equals a ratio of
55.0. By dividing $1,194,607.13 in sales by its $23,951.56, GTRB’s inventory turnover ratio is
49.87. In 2014, GTRB had $1,199,823.25 in total sales and $26,075.59 in total inventories,
resulting in an inventory turnover ratio of 46.0. Appendix R: Financial Ratios Bar Charts,
shows that GTRB performed above the industry average in both 2011 and 2013.
Profitability Ratio. Profitability ratios are vital because they show how effectively
GTRB’s profitability is being managed. The profitability ratio that is examined is the return on
total assets ratio (ROTA).
Return on Total Assets Ratio. Return on total assets ratio is calculated through the sum of the
company’s net income, interest expense and taxes, known as EBIT, and divided by the
company’s total net assets (“Return on”, 2015). GTRB can determine how effectively it uses its
assets to generate earnings before paying its obligations, by assessing its ROTA ratio. A higher
ROTA ratio could be an indication of effective management of assets. ROTA is calculated by
dividing EBIT by total net assets. EBIT is calculated by adding net income, interest expense,
and taxes. In 2011, GTRB had an EBIT of $1,185,438.84 and total assets of $187,468.37,
resulting in a ROTA ratio of 6.32. In 2013, GTRB had an EBIT of $1,195,428.06 and total net
assets of $221,196.84, which, after division, gives GTRB a ROTA ratio of 5.40. In 2014, GTRB
had an EBIT of $1,203,928.89 and $215,097.76 in total assets, resulting in a 5.59 ROTA
ratio. Appendix R: Financial Ratios Bar Charts, shows that GTRB performed above the
industry average in both 2011 and 2013.
Other Performance Analyses
Non-financial performance analyses are measures that are not expressed in monetary units;
however, they are typically quantifiable. Key performance indicators (KPIs) and food cost
analysis methods are other performance analyses used to observe GTRB’s performance.
Key Performance Indicators. KPIs are reflections of the goals in a particular company;
GTRB used KPIs to assess its success in reaching those goals. Three important measures found
through GTRB’s POS system are: number of clients per day, client check average, and table
check average. As seen in Appendix S: Other Performance Analysis, over the last three years
the number of clients coming into the restaurant has been steadily decreasing; however, the client
check average and table check average have been slightly increasing each year.
Food Cost Analysis. When creating the menus, Chef Michael Bardeau, focuses on his food
cost and what profit the restaurant is going to make on pairing various items with others. With
items on the menu like the prime rib dinner, the restaurant receives an estimated $20 profit on
that particular menu item. Items on the menu such as the cheeseburger brings less of a profit to
the restaurant, typically about seven dollars is made on this menu item. Chef Bardeau strives to
make 30% food cost or, 70% contribution to profit, off each food item on the menu. “Keeping
food costs down, provides more profit to the restaurant” (personal communication, Chef
Bardeau, April 6, 2015).
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Summary of Findings
In Appendix T, Summary of Findings Performance Measures, the strengths and weaknesses for
financial and non-financial performance measures are identified. Because the owners are
inexperienced in financial management, Lee Rowand was hired to analyze the financial health of
the business. Bookkeeping is crucial for the growth and survival of businesses. Observing
industry ratios since 2011, the restaurant industry has been steadily growing. This growth
benefits GTRB because more people are dining out each year. The owners and bookkeeper do
not compare itself to the industry; therefore, they are all unaware that GTRB has been
consistently performing below the industry average in most performance ratios.
With POS systems, GTRB is able to track many quantitative KPIs. These statistics greatly
impact the business in a positive way; conversely, the restaurant does not track its non-
quantitative KPIs as successfully as its quantitative KPIs.
STRATEGIES
This section analyzes GTRB’s corporate and business-level strategies in addition to its alignment
strategies. This section also identifies the strengths and weaknesses regarding the restaurant’s
strategies.
Corporate-Level Strategy
This section describes the types of corporate strategies used by businesses and which strategy is
used by GTRB. The three types of corporate-level strategy are: stability, growth, and
retrenchment.
Corporate strategy is when a firm carries out operations over numerous areas of a business across
a single industry or various industries. Corporate strategies involve executives that decide how
to manage these sets of businesses and create efficient functionality throughout the entire
operation (Bamford & West, 2010).
Stability. A stable strategy represents a company that seeks minimal growth or
stagnation. Management can look at three elements of a stable strategy which are: pause,
proceed, and profit. A pause occurs when companies need to scale down and direct its attention
to quality control. Proceed refers to a problem in the microenvironment in which case the
company needs to proceed with formidable growth. Profit exists when the company is a cash
cow and needs to reduce its research and development (Scheper, 2015).
Growth. Within the corporate strategy exists three separate types of growth: vertical,
horizontal, and diversification. Horizontal growth refers to a firm adding new customers,
products, or expanding geographically. Vertical growth represents the supply chain, such as a
firm starting to produce the products that it sells. Diversification growth contains two types:
related diversification and unrelated diversification. Related diversification is the core of
resources and capabilities and unrelated diversification involves lowering the relative risk
(Scheper, 2015). Figure 3-2 Corporate-Level Strategy, indicates the growth strategies for
markets and products and the possible areas that a firm can exist.
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Figure 3-2: Corporate-Level Strategy
Retrenchment. Retrenchment strategy refers to a firm reducing its branches of business
whether it is a singular branch or multiple branches. This can be done by selling off assets or
laying off employees to reduce costs (Ketchen & Short, 2014).
GTRB currently has a stability corporate-level strategy. GTRB contains the profit element of
stability due to their strong loyal customer base along with their significant location within the
Monterey Regional Airport. GTRB has no intentions of expanding in ways of products,
employees, or geographical locations. It does not plan to cut back its costs, such as labor;
therefore, GTRB maintains a stable profitable business.
Business-Level Strategy
Business-level strategies show how a firm competes in particular markets and industries while
developing a generic strategy as a way to position firms in those specific markets and
industries. There are two dimensions for business-level strategies: cost versus differentiation and
broad market scope versus narrow market scope (Ketchen & Short, 2015).
GTRB’s business-level strategy is located in the focused differentiation quadrant as seen in
Appendix U: Business-Level Strategies. By differentiating its menu items from other
restaurants in the Monterey Peninsula, GTRB’s source of competitive advantage comes from
creating awareness for having specialized entrees, such as calamari, prime rib, and sand dabs.
GTRB strives to be different in its service to customers; this is another area GTRB strives to be
different in. By providing excellent customer service from the first customer to the last
customer, GTRB aims for a positive experience that will leave its customers wanting
more. Because of these factors, GTRB has a multipoint differentiation strategy when it comes to
its choice of competitive approach. Also relating to the business-level strategy is the market
scope. The restaurant operates in a narrow market scope due to its focused menu items and
disregard for having the lowest prices.
