Case study 2: Read the case study and solve the questions mentioned at the end of the case study. Maries Ristorante Marie Trevia, the owner and manager of Maries Ristorante, is reviewing the slow growth of her restaurant. Shes also thinking about the future and wondering if she should change her strategy. In particular, she is wondering if she should join a fast-food or family restaurant franchise chain. Several are located near her, but there are many franchisors without local restaurants. After doing some research on the Internet, she has learned that with help from the franchisors, some of these places gross $500,000 to $1 million a year. Of course, she would have to follow someone elses strategy and thereby lose her independence, which she doesnt like to think about. But those sales figures do sound good, and she has also heard that the return to the owner-manager (including salary) can be over $150,000 per year. She has also considered putting a Web page for Maries Ristorante on the Internet but is not sure how that will help. Maries Ristorante is a fairly large restaurantabout 836 square metreslocated in the centre of a small shopping centre completed early in 2002. Maries sells mainly full-course home-cooked Italian-style dinners (no bar) at moderate prices. In addition to Maries restaurant, other businesses in the shopping centre include a supermarket, a hair salon, a liquor store, a video rental store, and a vacant space that used to be a hardware store. The hardware store failed when a Home Depot located nearby. Marie has learned that a pizzeria is considering locating there soon. She wonders how that competition will affect her. Ample parking space is available at the shopping centre, which is located in a residential section of a growing suburb in the East, along a heavily travelled major traffic route. Marie graduated from a local high school and a nearby university and has lived in this town with her husband and two children for many years. She has been self-employed in the restaurant business since her graduation from college in 1985. Her most recent venture before opening Maries was a large restaurant that she operated successfully with her brother from 1993 to 1999. In 1999, Marie sold out her share because of illness. Following her recovery, she was anxious for something to do and opened the present restaurant in April 2002. Marie feels her plans for the business and her opening were well thought out. When she was ready to start her new restaurant, she looked at several possible locations before finally deciding on the present one. Marie explained: I looked everywhere, but here I particularly noticed the heavy traffic when I first looked at it. This is the crossroads for three major highways. So obviously the potential is here. Having decided on the location, Marie signed a 10-year lease with option to renew for 10 more years, and then eagerly attacked the problem of outfitting the almost empty store space in the newly constructed building. She tiled the floor, put in walls of surfwood, installed plumbing and electrical fixtures and an extra washroom, and purchased the necessary restaurant equipment. All this cost $120,000which came from her own cash savings. She then spent an additional $1,500 for glassware, $2,000 for an initial food stock, and $2,125 to advertise Maries Ristorantes opening in the local newspaper. The paper serves the whole metro area, so the $2,125 bought only three quarter-page ads. These expenditures also came from her own personal savings. Next she hired five waitresses at $275 a week and one chef at $550 a week. Then, with $24,000 cash reserve for the business, she was ready to open. Reflecting her sound business sense, Marie knew she would need a substantial cash reserve to fall back on until the business got on its feet. She expected this to take about one year. She had no expectations of getting rich overnight. (Her husband, a high school teacher, was willing to support the family until the restaurant caught on.) The restaurant opened in April and by August had a weekly gross revenue of only $2,400. Marie was a little discouraged with this, but she was still able to meet all her operating expenses without investing any new money in the business. By September business was still slow, and Marie had to invest an additional $3,000 in the business just to survive. Business had not improved in November, and Marie stepped up her advertisinghoping this would help. In December, she spent $1,200 of her cash reserve for radio advertising10 late-evening spots on a news program at a station that aims at middle-income earners. Marie also spent $1,600 more during the next several weeks for some metro newspaper ads. By April 2003, the situation had begun to improve, and by June her weekly gross was up to between $3,100 and $3,300. By March 2004, the weekly gross had risen to about $4,200. Marie increased the working hours of her staff six to seven hours a week and added another cook to handle the increasing number of customers. Marie was more optimistic for the future because she was finally doing a little better than breaking even. Her full-time involvement seemed to be paying off. She had not put any new money into the business since summer 2003 and expected business to continue to rise. She had not yet taken any salary for herself, even though she had built up a small surplus of about $9,000. Instead, she planned to put in a bigger air-conditioning system at a cost of $5,000 and was also planning to use what salary she might have taken for herself to hire two new waitresses to handle the growing volume of business. And she saw that if business increased much more she would have to add another cook.

Question Number 6: Evaluate Maries past and present marketing strategy. What should she do now? How product development strategies can play role for this company? Justify with example. Question Number 7: Should she seriously consider joining some franchise chain or something else for business relationship? Justify Question Number 8: Suggest Maries best customer relationship strategies development and explanation from your perspectives?