Two years ago, Shawna Phiri graduated from a large hospitality school with a diploma in restaurant management.
Question:
Two years ago, Shawna Phiri graduated from a large hospitality school with a diploma in restaurant management. Even before graduating Shawna had a long-term plan of eventually owning a string of sandwich shops. Her vision was pretty complete: high quality, fresh, nutritious fast food, with each meal controlled for calories, fat content, vitamins, minerals, proteins, fiber and with a minimum of additives.
For the past two years, Shawna has been working in different small fast-food restaurants, learning everything she can about the business while working on a business plan for her own start up. She feels that she will need a downtown location with a high-traffic site, close to lot of the traditional junk food take out places. Here, she will be able to offer a clear alternative, since everything she will sell will be healthy: not just one or two healthy options in a sea of fat and sugar.
Most recently, Shawna has been working in a small suburban cafe in a fairly large outdoor mall. Bud's Cafe has a health food store on one side of it and a fresh fruit and vegetable store on the other. The cafe has several healthy choices on the menu, but the most popular item it sells is "Bud's Famous Beef Pot Pie". Shawna has described this to her friends as "gravy and fat lumps, lard pie with a few peas and bits of carrot in it". But many of the customers love it and some travel a long distance just to get this treat. Most of Bud's clientele consists of downscale blue and white-collar workers.
Bud, who is well past retirement age, knows of Shawna's aspirations to own a restaurant and he has come to her with an offer. He would be willing to sell the Cafe to her with an arrangement whereby she would be able to pay him over time from the profits of the business. He would require only a small down payment, which she could just afford. He reminded her that the deal would even include the recipe for "Bud's Famous Beef Pot Pie".
Shawna is both intrigued and appalled. She knows that it would be several years before she would have enough money to open her ideal sandwich shop. As the owner of Bud's Cafe, she would be able to introduce many of her own ideas, but...
1. What are the advantages to Shawna of taking Bud's offer?
2. What are the clear drawbacks?
3. What will likely happen if she attempts to move Bud's towards her own vision for a restaurant.
Shawna turned down Bud's offer. She is now relieved to have made that decision, since she recently came into an inheritance that has given her the finances to start her own place. She has been looking for a downtown location with a high-traffic site, close to lot of the traditional junk food take-out places. Here, she feels that she would be able to offer a clear alternative.
Even though she now has the money, she is starting to feel a little discouraged by the huge amount of work needed to research and plan her business. She is especially worried about risking her inheritance knowing that with a bad site, she could lose everything. And matters have become even more complicated since Shawna's recent visit to a local Franchise Show.
She spent some time talking to the rep for the "Wicked Witch Sandwich" chain. Of all of the fast food places, Shawna knows that this one has the healthiest menu and is growing quickly because of that. It offers a variety of whole grain breads and lean meat and veggie combinations. Unfortunately, it also has potato chips and sugared soft drinks on the menu.
The Wicked Witch franchise rep pointed out to Shawna that their in-depth site research reduces the risk for her investment. He also said that she would be able to grow her own business by purchasing additional franchises in the future. Her inheritance would give her enough for the franchise fee and some of the other costs and the company would help her arrange financing for the rest. The rep assured Shawna that Wicked Witch protects its great reputation by making sure that all franchisees strictly adhere to the company's standards.
4. What are the advantages of buying the Wicked Witch franchise?
5. What are the disadvantages to Shawna?
6. What course would you recommend that Shawna take? Why? What other information would Shawna need before making a decision?