Business decision in the modern world should be based on relevant information to avoid mistakes that can cost a business loss in resources, time and money.  A restaurant intends to open a second outlet in London, and the board of directors wants to understand the customer preferences in order to make informed decision. To assist the board of directors with the knowledge, data collection and analysis about customer preferences are required, to form the bases upon which the business report is compiled.

The primary data is collected from the participants using a number the survey o observation methods. The primary data plays a role in collecting current situation about the topic under the investigation. The secondly data involves the data and information compiled by previously conducted research.  A combination of both the two methods of data collection is preferred because of the complementary effect realized. The primary data collection will involve the questionnaire compiled in advance before collecting data from the selected sample of the population. Secondly, data collection will involve the literature research about the problem under the study.

A two- parts questionnaire; the first part the background information and second part the close – ended statement s. The background information requires the respondent to provide information such as age and gender. Second part constitutes of 8 statements upon which the respondents are required to select either of the five options. The purpose of the background information is primarily to ensure that only   participants have reached the adulthood plays a role as respondents. The 8 statements in the close – ended questionnaire are considered adequate to compile information on consumer preferences. The five options include Strongly Agree, Agree, Neutral, Disagree and Strongly Disagree awarded 5, 4, 3, 2 and 1 points respectively. The numerical representation is important because it is the gateway to the quantitative research using the representative values.

The statements

1. I prefer buying food from a restaurant at least ones per day
2. I prefer restaurants whose quality of food is highly
3. I am price sensitive when it come to making purchase decision on restaurant products
4. I prefer restaurant the offer a variety of products in the menu
5. I prefer restaurants whose staff are highly motivate and offer high quality service
6. Cleanliness and hygiene in the interior and exterior are important attributes I look for in a restaurant
7. I prefer fresh and natural food because of their high nutritional value
8. The time taken before receiving a service in a restaurant is an important determinant of the next visit to the hotel.

The number of respondents per statement in the 5 options

In this category of analysis, the raw data is used to compute measures of central tendency such as frequency, percentage, mean, mode and median. Moreover, measures of dispersion such as range, variance, standard deviation, and correlation.    In order to understand how various preference factors were valued, MS Excel was used to compute how the responses were represented in each factor using percent (%).

Analysis of Individual Factors for Customer preferences

Frequency of Purchase (At least once per day)-Q3

It can inferred from the frequencies of individual responses that customer have high tendency of buying food from restaurants with estimate 73%  agreeing and strongly agreeing. Precisely, 33% strongly agreed whereas 40% did not agree. Only 23% indicated not to buy food at least once per day.

Preference of Fresh Food –Q4

Overall, most of the customers prefer fresh and natural food for their nutrients with 71% both agreeing and strongly agreeing. Precisely, an estimate 39% of the customers strongly preferred fresh and natural food whereas 32% agreed and 195 were neutral. Only 9% disagreed and strongly disagreed.

Price Sensitivity –Q5

Pricing was another factor valued by clients.  Nearly 70% of the population indicated to agree and strongly agree to observing prices when making purchase decisions. When 20% were neutral, only 10% did not regard pricing as factor to influence purchase decisions.

Product Diversity –Q6

60% of the population prefer to go to restaurants with product diversity. Only 20% disagreed and strongly with this while the other 20% was neutral.

Preference for motivated by Staff and quality service – Q7

80% of the customers indicated to agree and strongly agree to like restaurants with highly motivated staff and where the service offered is of high quality.  Only 10% disagreed and strongly disagreed whereas 10% were neutral.

Cleanliness and Hygiene –Q8

It is also evident that most customers like clean and hygiene environment in restaurants with 80% agreeing and strongly agree to this preference factor.  Only 6% disagreed and strongly disagreed not to observe cleanliness and hygiene.

High Quality food –Q9

This was the highly observed factor as there was no one disagreeing or strongly disagreeing. As a matter of fact, 93% agreed and strongly agreed to prefer restaurants with high quality foods. Only7% were neutral on this issue.

Timeliness of service -Q10

The customers also largely value timeliness of service. 70% prefer restaurants with timely service out of which 30% agreed and 40% strongly agreed.  Only 10% disagreed and 7% strongly   disagreed with factor while 13% were neutral.

Overall Analysis of Customer Preference

SPSS statistical program was used to determine measures of central tendencies and dispersion to illustrate how various factors compared with each other. Generally, it can be seen that for every 30 people, 11 people (11.63) corresponding to 39% of population strongly agreed to observe all the factors (Q3, Q4, Q5, Q6, Q7, Q8, Q9, Q10). Another 11 people (10.88) corresponding to 36% agreed to observe them too.  9 people was the mode or common number that was noted to strongly agree to the factors. The most common for agree was 12 whereas as disagree and strongly disagree had 2 and 1 as common number of people selecting options. On the other hand, only 2 people (2.13) corresponding to 7% of population and 2 people (1.5) corresponding to 5% of the population disagree and disagreed to observe the population respectively.

Dispersion of Data

As it be observed from the table below, a standard deviation of 2.669 for an average of 11.96 is an indication that customers between 9 (30%) and 12 (40%) in number will be settling for the strongly agree option for every factor. For agree, a standard deviation of 1.692 for an average of 10.88 indicate that customers between 9 (30%) and 11 (38%) in number will be settling for the strongly agree option for every factor. Generally, there are higher chances of customers settling for agree and strongly agree for the predefined preferences.

Table 1: Statistics calculated from SPSS

In this category, the total points per opinion, the sum of the total scores per statement, the average, percentiles, quartile and correlation are involved.

The total points per statement (Option point * number of respondents)

The total point per options is the first step in the statistical analysis in that it assists in converting the findings into numerical representation. The total score for the strongly agree and agreed options seems to be significantly higher compared to other options. This is the first indication that the board of directors should consider the points in the statements because they are highly supported by the potential customers.

The total and average score

The total score and the average show how strong or weak the respondents support the statement poses. The average score is a more defined mean of measuring the performance. The aspects that seems to be of the greatest concern is the quality of the food items offered in terms of health because the respondents were largely in support of fresh and natural food. The averages score in this case was about 4.47. Price was of less concern, but at an average of 3.67, it is also clear that it is also a strong attribute to put into consideration.

The Percentiles (100)

The percentiles of the results can be determined by categorizing the options into three parts are shown below:

The percentiles assist in understanding the strength or the weakness on to which the potential customers are concerned about the attributes of a restaurant posed in the research statements. The greatest concern to the potential customers is the quality of the food item offered. When asked whether they prefer fresh and natural products, 93 % of the respondents indicated that they either agreed or strongly agreed. In this case, only 7 % were neutral, while the 0 % of those not concerned about the attribute. The attributed that was less supported among the 8 involved concerned the price of the food items.  However, at 60 %, it is also implies that price charged may not be ignored by an organization. The management should however strive to offer high quality products before considering the appropriate price. This is because the failure to offer quality products may send away about 93 % of the customers. Cleanliness and hygiene in the interior and exterior, as well as, the motivation of the employees are also important attributes because they are both supported by 80 % of the respondents.

Quartile

There are 5 possible average scores for each of the statements. A first quartile is there a score of 5/4 = 1.25; the 2^nd quartile =2 * 1.25 = 2.5; 3^rd quartile = 1.25 * 3 = 3.75 and the 4^th quartile = 1.25 * 4 = 5. Statements whose average score lies in the first quartile are considered weak and less supported by the respondents, while those at the 2nd quartile they are considered average. Additionally, statements whose average fall at the 3^rd quartile they are considered strong, while those in the 4^th quartile are exceptionally strong.

The average results for each of the percentiles can therefore be classified into the following percentiles

The average score for all the statements fall either in the 3^rd or 4^th quartile respectively. This is an indication that the respondents were largely concerned with the factors presented in the statements.

The Correlation

The correlation tries to find out the relationship between two variables to establish whether they are likely to influence each other. The average score can be used to determine whether the attribute in the statement can affect the performance of the restaurant. Assuming that the average score represents the potential performance, we can correlate it with the Agreed (agreed + strongly agreed), neutral and disagree (disagree and strongly disagree)

Correlation:  (Agreed (agreed + strongly agreed)

Correlation: Neutral

Correlation: disagree

The correlation co-efficient 0.902 reveals that the number agreeing with important of the attributes in the statement is likely to affect the performance of the restaurant. That at above 90 % and hence the management should be ready to incorporate their views while making the business decisions. The correlation of the average by those that are neutral and those disagreeing with the overall performance is negligible because the correlation co-efficient for both were negative in number.

Customer Preferences for Restaurant in London

Business Report

Presented to Board of Directors of Restaurant ABC

Table of Contents

SECTION 2: BUSINESS REPORT. 17

1.0 Background. 19

1.2 Factors Affecting Success of Restaurants in London. 19

1.2.1 The Popularity of Restaurants. 19

1.2 Quality of Food. 20

1.3 Concerns on the freshness and natural aspect of food: 21

1.4 Price Sensitive. 21

1.5 Cleanliness and Hygiene in the Interior and Exterior. 22

1.7 The time takes before service delivery. 23

1.8 Variety of products in the menu. 24

2.0 Recommendations. 25

Opening a new restaurant in London is a noble idea that the board of directors should support. However, before supporting the business idea it is important to understand some of the key factors and attributes, which should be considered. The business report prepared in this case is based on the ideas collected from research undertaking, as well as other aspects such as capital requirements, the target and growth in revenue and income in the future.

Restaurants are largely dependent on the food items sold to the customers. The success of a restaurant would depend largely on how popular are the restaurants to the people in the target market (Jin-kyung,  Choi, & Zhao, 2009, 1-9). In a society where restaurants are popular, people are likely to consume food from the existing outlets making it easy for the restaurants t earn revenue and make profits. The results from the research show that about 74 % of the responds agrees to have the tendency of buying restaurant food at least ones per day. 3 % of the respondents were neutral to imply that they buy their food from the restaurants occasionally. Holding other factors constant, it is clear that restaurants are popular and serve a large population in London. The following chart demonstrates the popularity level of the food from the restaurants as far as the respondents are concerned.

Consumers have increasingly become aware of the importance of the quality of food offered. Food intake is an ingredient to health living which has made is a great concern to many consumers. A restaurant should be aware of the quality attributes that the target market is likely to uphold. According to Ruggless (2003), more Americans are concern about healthy food in relation to their physical well- being. The situation is no different in London as the research conducted is concerned. The quality issue in the research was raised in two aspects; one of the nutrients and the other on the freshness and natural aspects. The following chart reveals that quality concerns on both aspects are of great importance and hence the board of directors should ensure that the new restaurant meets the quality expectation.

The quality in terms of nutrients

Price charged should match the value that the consumer gets from the products consumed. Effective setting of a price charged to consumers is a major step in attracting and retaining customers in a hotel. This is because if a majority of the customers do not value the products and services offered to match with the money charged, they are not likely to return to the restaurant concerned Cullen (2004). The finding from the research conducted is in agreement with the ideas. About 30 % strongly agreed to have a concern on prices, while 40 % agreed implying that about 70 % of the respondents are price sensitive.

Providing quality food at the preferred price is important strategic step that a restaurant can undertake. However, observation of these aspects may be in vain if there is the failure to observe high levels of cleanliness and hygiene.  According to Cullen (2004), consumer can decide not to dine in their usual restaurants once an issue in cleanliness and hygiene is raised or identified. The reason for the consumer behavior in this case is that lack of cleanliness and hygiene is associated with potential contamination of the items. The current research concurs with Cullen’s finding because about 70 % of the respondents agreed to consider aspects in cleanliness and hygiene.

Time management is an important aspect that many people not only on London, but across the world are striving to undertaking (Jin-kyung, Choi, & Zhao, 2009, 1-9). This is because of the large number of activities to attend to within the limited time. Eating from restaurants is considered to have been driven due to limited time upon which one can rush home to cook for a meal. It would be of great concern if a customer takes a lot of time after arriving to a restaurant to be served. Timely services to customers are a powerful strategy that an organization can use to attract and retain customers holding other factors such as quality and price at the preferred levels.

The objective of every business is to ensure that every customers coming in to the business gets to spend some money to add to the revenue and profits earned. To realize the objective, an organization should offer a variety of products that serves customers with different preferences and tastes. In addition, customers visiting a restaurant in a group would like to have every member gets the best food items by selecting their preferred categories from the menu. The current research reveals that in London 60 % of the customers expect restaurants to offer a variety of items in their menu.

The information from the research and the insight about the findings are important in assisting the board of directors in deciding whether to open the new restaurant or not. First it is clear that the population in London comprises of a large market opportunity to exploit. Secondly, the findings would assist the management to decide on the attributes to put into consideration and incorporate in the restaurant. Before deciding to open the new restaurant, it is expected that the board should determine whether the business can afford to incorporate the attributes identified. As a chain of restaurants, and having a first restaurant in London, it would be easy for the company to incorporate the attributes. The experience that the management has acquired over the years in the operations of other restaurants is a significant tool upon which the attributes will be incorporated.

From the survey conducted in London to determine the preference of customers towards restaurant business, it is evident that customers value all the attributes that add value to the services and products they seek from restaurants. As such, the board of directors is advised to consider implementing the following recommendations upon deciding to start an outlet in London;

1. The company should create brand awareness through marketing and advertising through various media that include; paid internet advertising such as good AdSense, social  networks, restaurant portals, and many others.
2. The company should focus on quality of product and service as a competitive advantage
3. The company should always ensure the foods are natural and ever fresh. This can be achieved through proper inventory managed to ensure only demanded foods are prepared.
4. The company should set prices that reflect market standards or otherwise offer extremely competitive services and products that may match high prices
5. The company is also advised to observe on cleanliness and hygiene of in and out of the Hotel
6. The company should ensure timely service is offered to clients. Customers hate waiting.
7. The company should ensure wide diversity in products and services offered to customers

The ability to incorporate the attributes and start up the restaurant may not be in question for the chain of restaurants. It is clear that there is capability and resources to realize the objective (TJIA, 2009). However, it would be important to forecast the financial performance of the new restaurant to determine whether it would be worthy to invest in the idea. The forecast in this case incorporates the initial capital and the projected income over the next three years. Opening the new restaurant would require the following items alongside their cost.

The capital required in this case should be paid back within the shortest time possible. This implies that the restaurant must operate at a profit to have the capital repaid and the restaurant reports profits in the future. For the purpose of projection is it expected that the restaurant will make a profit of $ 15, 000 in the first years by the situation will improve from the second year onwards by 20 %.

The net income trend

The payback period

The payback period is the point in which the initial capital will be fully repaid through the profits earned. Comparing the accumulated income with the initial cost it is clear that the capital will be repaid during the 5^th year. The payback period may sound unpleasant, but the performance of the restraint in terms of profitability and growth makes it’s a worth investment. Apart from the profit earned, opening a second outlet in London will improve the economies of scale and diversification unlike when only one outlet is operational in the city.   The board of directors should therefore take up the idea to open a new restaurant and facilitate its application.

Profit and Losses Analysis

From the table below, it is clear that the business the business has higher chances of making profits in the first 5 year. This is a clear indication that the business is profitable and that the board of directors should consider making an investment.

Table 2: Profits and Losses Analysis

Business Rations

From the table, below is evident that restaurant will register growth in every year for the first 5 years, which is an indication of continuously improving business. The gross margin of sales will range between 68% and 72% indicating good performance.

Table 3: Business Rations

The asset to liability ratio is a creditworthiness or solvency ratio that indicates the volume of companies assets comprise of liabilities. From the table above, it is evident that restaurant will likely have assets that are more than one and half times the liabilities the company will have. It is thus recommendable that the company’s assets are valuable than the liabilities.

The equity to liability ration indicates that the company will have relatively low debts for the first 3 years and thus low risks. Moreover, the 4^th and 5^th year, the company may have much less debts indicating that the businesses will performance better in the future.

Cullen, F, 2004, Factors influencing restaurant selection in Dublin. Journal of Foodservice            Business Research, Vol. 7, No. 2, pp. 53-84.

Ruggless, R, 2003, Nutritional sea change leads Americans to chart weight loss course, Nation’s   Restaurant News.

Sulek, M, J, & Hensley, L, R, 2004, The relative importance of food, atmosphere, and fairness of             wait. Cornel lHotel and Restaurant Administration Quarterly, Vol. 45, No. 3, pp. 235-    247.

Jin-kyung Choi, Ji-eun Lee, &  Jinlin Zhao, 2009, A Comparison of the Restaurant Selection         Preferences between Residents and Visitors ofSouth Florida, International CHRIE       Conference-Refereed Track.Paper 14. pp. 1- 9.

TJIA, J, 2009, A financial projection model: a selection from Building financial models. McGraw-Hill:       New York.