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Spaghetti House Restaurant Case Study

Executive summary

A British Food Brand, the Spaghetti House, has been the primary focus of the research for the project and development. The food industry stakes are high, and this is especially true in the United Kingdom. The food business needs to develop organisational procedures and strategies for addressing these challenges and succeeding in the market to achieve market share. Only then can the restaurant chain hope to achieve commercial success. This report offers an abundance of details concerning the issues experienced by the restaurants and the challenges that these issues have caused to the restaurant’s operation. The analysis demonstrates how businesses and brands can implement solutions in a manner that is more transparent and easily understood than was previously possible. The Spaghetti House is utilised as a brand for the report based on research to develop findings. This paper has used the Spaghetti House restaurant as a case study and an example. The organisation’s internal environment, external environment, and competitive environment are thoroughly researched to identify and stress the organisation’s issues. The ability of the brand to mitigate the adverse effects of several different challenges is also examined here. In conclusion, the report gives recommendations and conclusions to assist the restaurant in enhancing its overall performance.

Strategic Issues Affecting Spaghetti House

Cost of Living Crisis

The ever-increasing cost of living and ongoing inflation significantly impact consumers and businesses. Restaurants, pubs, and hotels are battling inflation due to a disturbance in the supply chain generated by Ukraine and a labour shortage that has wrecked anarchy. In the hospitality industry, there was a rise of 41 percentage points in the average price, 19 percentage points in the cost of staffing, 17 percentage points in the price of food, and 14 percentage points in the price of drinks. According to the findings of a poll that UK Hospitality carried out, prices are forecasted to increase by an average of 11% this year, contributing further to the cost of living issue affecting the UK (Butler and Hammer, 2020). As an immediate and unavoidable consequence, the prices listed on the menu will likely increase significantly. There is a possibility that fewer people will visit pubs as a result of the increased pricing because many of them will be outside of their financial means to do so. The fact that businesses are still struggling to recover from the epidemic’s effects and have limited cash reserves makes this a huge blow to the industry. Many pubs and eating establishments will struggle to remain in business if the government does not intervene and offer support.

People and families are being hit hard by skyrocketing energy costs and inflation. In contrast, businesses like Spaghetti House have been hit hard by exorbitant energy rates for their high-usage commercial premises. Thankfully, the government has revealed plans to cut the cost of electricity for companies in half, which is a strategy that could save a significant amount of money for many restaurants, bars, and pubs around the country (Nguyen et al., 2018). And yet, despite this, costs continue to grow for restaurants due to inflation, rises in the cost of goods, and a decline in the pound’s value. Food, equipment, interest, and even somewhat inconsequential goods like hand protection for kitchen and cleaning personnel all contribute to rising outgoing and overhead costs. These costs are all mounting up. As a result of these escalating prices, the financial viability of many restaurants is being called into question, and the owners are being forced to carefully navigate the waters to stay in business.

The Office of National Statistics (ONS), which released a separate report on food price inflation in December 2022, highlighted that price increases were particularly significant for some of the most inexpensive necessities for the home, such as bread, pasta, and tea (Cummins et al., 2021). The Office for National Statistics (ONS) observed that the kinds of inflation in food prices that the United Kingdom (UK) had experienced over the previous year had the worst impact on the most vulnerable members of society, with rising prices having a greater impact on those who earned less money. It was reported that 61% of people living in the most impoverished areas of the UK were buying less food than the previous year, while just 44% of people living in the areas with the least poverty were doing so (Spaghetti House Limited, 2021). Hence the rise in inflation is a big issue for the Spaghetti house since it has affected the price of ingredients used for making the dishes they serve in the restaurant.

Percentage in prices of food from December 2021 to December 2022 in the UK

Figure 1: Percentage in prices of food from December 2021 to December 2022 in the UK

Brexit

“Brexit” refers to how the United Kingdom will quit the European Union (EU). It was officially finalised on 31 January 2020, after a referendum in which 52 % of voters in the United Kingdom chose to withdraw from the European Union (Foroudi et al., 2021). Because of this, the United Kingdom became the first country in history to ever leave the union. The Brexit vote severely impacted the United Kingdom’s economy as a whole. The hospitality business was hit particularly hard, and the crisis’s impacts are becoming more apparent as time passes. These difficulties are being met head-on by the London business community. A significant number of employees at onboard eateries were let off as a direct result of the decision made by England to withdraw from the European Union (Parasecoli, 2019). Because of Brexit, the spaghetti house suffered significant losses. The Spaghetti House once recruited chefs, bartenders, and waiters. However, at a certain point, those individuals could not freely move from their respective countries and England. Because of this, the spaghetti company had to lay off the majority of its workforce, in addition to dealing with higher energy costs and increased debt repayment obligations.

According to a recent survey of the business, the hospitality sector in the United Kingdom has approximately 11 % of unfilled job positions, which compares to only 4% for the economy (Lock, 2020). In addition, 40% of restaurants, including the Spaghetti House, have reduced the number of hours they are open, and a different survey found that more than a third of the hotels, pubs, and restaurants in the area are expected to be facing financial difficulties by the beginning of 2023 (Spaghetti House Limited 2022). On the Spaghetti House and, more generally, on all eateries in the UK, the repercussions of Brexit were much more severe than those of the COVID-19 pandemic (Spaghetti House Limited, 2021). The hospitality industry is facing enormous challenges, which has prompted emergency warnings to be issued because of Brexit; a total of £700 million worth of business rates have not been paid, even though only half of England contributes to the support funds (Nguyen et al., 2018). The planning for the spaghetti home faces a significant obstacle because the issues still provide discrepancies.

The Spaghetti house is currently in an absent condition, during which it is cultivating internal tensions among its various components. The impending economic downturn and the fact that the restaurant has had to deal with higher energy prices due to Brexit show that the business is losing money. The spaghetti house has been making an effort to attract the neighbourhood residents to work additional shifts for them so that they may maintain their business (Spaghetti House, 2020). In contrast to their counterparts in the Mediterranean region, however, a greater proportion of Londoners have either less experience working in the restaurant industry or a stigmatising attitude toward employment, such as waiting on tables. Because of this, the Spaghetti restaurant is under pressure to pay competitive wages and provide other enticements to attract new employees (Spaghetti House Limited 2022). Although the employees and their families, who previously had trouble making ends meet, regard this as a benefit, the restaurants themselves are directly affected by the high cost of labour, and the government does nothing to assist in making things easier. There was an anticipated recovery in profits after the epidemic; however, this has been hampered by the rising cost of food and a drop in the confidence of consumers as a result of an increase in interest rates.

Challenges experienced by Spaghetti House

The issues facing the Spaghetti Industry cases a challenge to its operation in the long run. First, the increasing inflation and the cost of living cause a decrease in the average individual or person’s disposable income. Therefore, people reduce luxury spending, like eating out at restaurants or ordering takeaways. This is one of the biggest challenges that Spaghetti Restaurant has faced due to the increased cost of living. The spaghetti restaurant will be forced to increase the menu prices further to increase realised revenue (Laborde et al., 2021). The cost of buying ingredients increases as the cost-of-living increases. Hence fewer people will go out to eat with the rise in inflation. It will also cause the restaurant to change its menu and pricing. This makes it difficult for the waiting staff to do their jobs since they cannot keep track of menu changes to ensure that the customers are satisfied with the menu alterations and the rising cost of living.

Restaurants in the UK are facing a shortage of workers after Brexit and the COVID-19 pandemic. The potential talent pool has received a heavy restriction as returned to their countries as the EU hospitality workers have returned to their countries during the pandemic. According to Kelso (2021), due to the effects of Brexit and the coronavirus pandemic, the labour market in the UK has become more competitive, leading to the loss of over 200,000 international workers in the hospitality industry since the end of 2019. According to data compiled by the recruiter Caterer.com, the pool of available labour coming from the EU has dropped at the fastest rate possible (Occhiogrosso, 2022). The most recent estimates place the number of EU citizens employed in the hospitality industry at approximately 172,000. This represents a decrease of approximately 41% compared to the total number of workers in this sector before the pandemic (Nicola et al., 2020). Over the past two years, the number of international workers on every continent has decreased, and almost 76,000 workers from foreign nations outside of the EU have also left their jobs. According to the research findings based on a survey of 250 senior hospitality hiring managers conducted in July, approximately 197,000 foreign staff members have left the industry since 2019 (Nellist, J., 2021).

According to the Office for National Statistics (2022), approximately seven per cent of the labour force in the United Kingdom is employed in the hotel industry. Over 40 per cent of employees have been drawn from other countries throughout the hospitality industry’s history. The vacancy rate in the hotel industry is 7.9%, making it the highest of any other industry (Office of National Statistics, 2022). This is even though no industry has been impacted harder by the tight labour market that has resulted from the aftermath of Brexit and the pandemic. Based on its performance, the Spaghetti House Restaurant has been hugely affected by Brexit and COVID-19. The percentage of the number of employees per year is portrayed in the following graph for the past ten years consecutively.

Spaghetti House Restaurant Ltd Employment Growth

Figure 2: Spaghetti House Restaurant Ltd Employment Growth

This has made it hard for restaurants, including Spaghetti House, to hire more staff since the market is cut off from a whole host of skilled individuals. Therefore, the restaurant has to provide high wage rates and incentives to entice employees to work with them. The rise in employment costs hits the restaurants hard since there is no help from the government to make it possible. The revenue made by the Spaghetti restaurant is even less to sustain high pay to the customers; hence it ends up using more money meant for profits to retain the available employees (Goffe et al.,2020). The spaghetti restaurant also has to invest more in training the new staff, which is costly and time-consuming. The increased inflation has also caused high competition from other employers for the Spaghetti House restaurant. Restaurant employers can find it hard to attract and retain top-talent staff since their competition offers better offers. Hence, they may opt to go there. Hence Brexit and the high cost of living have had various significant challenges for the Spaghetti house restaurant and others in the UK.

Solutions

The SWOT analysis theory will be used to discuss the solutions Spaghetti House can take to mitigate the challenges it faces in service production to its customers. Below is the table showing the restaurant’s SWOT analysis.

Strengths

· This company uses machine learning, automation, and bots to their full potential.

· The organisation aims to help young people get jobs and go to school.

· The products are of high quality.

· The customers are the most important thing to the company.

· Strong and well-established web channels like Google make interacting with customers on social media sites like Facebook and Twitter possible.

Weaknesses

· Strategies for marketing and sales that are insufficient.

· The absence of even one worker’s education and efforts to get ahead that are both useful and well-planned is a big problem.

· Talking between the brand’s investors and vendors is very lacking.

· The pace of change is glacial.

· Opportunities

· The company marketing uses digital to improve its place in the market and bring in more customers.

· People know about the products of the company and other things.

· There is a lot of room for improvement and growth in more markets.

· Use the help of influential people and bloggers who can help you with marketing efforts.

Threats

· There are a lot of competitors and

a lot of new people.

· Customers’ needs change constantly, and expectations and preferences are thought about.

Table 1: SWOT Analysis of the Spaghetti House

Below is the application of the solutions using the SWOT analysis above to tackle the challenges faced by Spaghetti House.

Adapting to Rising Food Prices

A restaurant manager’s job is to keep up-to-date records of the cost of ingredients, how much food is used, and how much is made from each recipe. Owners of eating establishments would do well to maintain tabs on the difference between their real food costs and theoretical food prices and the difference between the two (Foroudi et al., 2020). Restaurant owners can calculate the cost of each component down to the penny, but if their staff is inexperienced, they could spend a lot more. It is feasible to speed up operations and quickly adjust to changes in food prices by using technologies like smart prep to reduce food waste and automating tasks like pricing recipes. Finding outliers in reports on food waste trends, production numbers, and recipe costs by region or time is possible with the study.

Hiring Both Permanent and Seasonal Staff.

A restaurant may achieve its goals if the appropriate people are in place. The company faces a significant challenge when it hires full-time workers. Keeping people interested and motivated in their work. Costs like pensions and paid holidays eat away at profit margins. Seasonal workers are more reliable than full-time workers since they sign one-time contracts with no hidden costs. Nicola et al. (2020) state that the restaurant needs a systematic approach to seasonal staffing to succeed. Businesses highly seek permanent workers because they quickly adapt to the company culture and enjoy widespread support from coworkers. The restaurant industry, like Spaghetti House, must invest heavily in training its staff and managers to improve customer service and cut costs.

Recruiting Alternative Workforce

Alternative workforce recruitment can solve restaurant worker shortages by broadening the candidate pool. It can be through various ways. First, hiring seasonal workers. During busy times, Spaghetti House can hire seasonal workers like students on break or retirees searching for part-time work (Lock, 2020). This can reduce employee stress and guarantee consumers receive high-quality service. Secondly, the restaurant can use ‘gig workers ‘. The food delivery platform gig worker’ can help restaurants with food preparation, delivery, and customer service. It is handy for restaurants with fewer staff during busy hours. Third, with staffing agencies. The restaurant can also work with temp agencies. It can help find labour fast and cheaply without recruiting or training. Finally, by giving flexible work. Restaurants can recruit workers by offering part-time or on-call jobs that fit their schedules and interests. This may appeal to students or others who cannot work full-time. Therefore, recruiting alternative workforces will assist the restaurant in maintaining the service provision and meeting the demand of the customers while at the same time offering flexible job opportunities for wider workers range.

Offering Training

Training is very important to increase the skill set of the staff. An effective staff training program is the key to building a team of proficient and positive employees. The employer should ensure that all the staff receive the required equipment to learn their roles and responsibilities, equipping them with the confidence to perform their roles. This training can be in person or remotely depending on the skill to be learnt. In addition, for example, if there is a staff shortage in a specific skill, then other staff can be trained in that skill to do the job and fill the vacancy (Ntounis et al., 2022). Considering the skill, there might be a need for a certification course or hands-on training, but it might as well be worth the investment and time. Hence appropriate staff training will assist in increasing the number of staff in the restaurant.

Development Of Online Provision

Spaghetti house should consider going online to provide its services to its consumers since that is what its competitors are largely involved in. When we talk about competition, we should mention that in the past few years, the internet marketplace in the food business has developed into a bustling scene. It is extremely unusual to come across a restaurant that does not have an online presence today, especially in more populated locations. This makes the rivalry more intense and compels businesses to sell their wares in a manner that is both more effective and more deliberate (Lock, 2020). It is now possible for online reviews to make or destroy a restaurant, and the decision of whether or not to outsource a restaurant’s delivery service is a significant one that owners must make carefully. As was indicated earlier, the key to surviving the current economic climate may lie in how effectively you utilise your channels. Online service provision makes it easier for consumers to access the restaurant’s services and will increase customer satisfaction.

Capital

Capital, the basic unit of operation in a restaurant, is a big worry for the industry. Many restaurants close after only a few years because they don’t have enough money to cover the costs of running the business. When money is embezzled from a restaurant, it can lead to the business misusing its capital, which can leave it without enough money to run. For the industry to stay alive during the worst fiscal year, the management team must always keep a stable amount of working capital (Gursoy and Chi, 2020). To keep from running out of money, you must ensure your business runs smoothly and efficiently. It is also suggested that business owners use professional financial management to ensure that money is used correctly and that none of it is stolen. When the capital is well-planned, the spaghetti house will expand even more.

Implementations

The hospitality industry faces significant challenges in fostering long-term client relationships built on trust and happiness. According to the National Restaurant Association, customers are more likely to patronise restaurants that have an established track record of offering common meals than they are to patronise businesses that have less such experience. The term “competition” refers to the efforts that restaurants make to better their circumstances to win the choice and taste of their customers while still maintaining their company standards and reputation (Nguyen et al., 2018). Customers will remember a restaurant throughout their lives where they were treated exceptionally well when they dined there because of the transformative power of experience. It is conceivable that the restaurant industry would, at some point, investigate the possibility of providing quick meals that are also high in nutrients as an alternative to conventional dining selections. Companies in the food business, such as the Spaghetti House firm, are being pushed to expand as a direct result of the increased demand for a wide array of items, which includes meats and vegetables (Spaghetti House Limited, 2021). They can produce the most delicious Pasta on the market as a result of the fact that they employ only the highest quality ingredients that are accessible.

The successful execution of a marketing strategy designed to raise consumers’ awareness of the Spaghetti House brand is essential to the growth of customer familiarity with the Spaghetti House restaurant chain. According to the company, the message that will be sent to the general public will be that Spaghetti House is more trustworthy and reliable than other restaurants and more convenient than other dining establishments (Panzone et al., 2021). Many communication channels are available for use in the process of keeping clients and commercial associates abreast of market strategy. The objective of the advertising campaign being run by Spaghetti House is to raise the level of knowledge within the media regarding the firm’s presence and its potential to remain economically viable (Sabatini et al., 2021). The campaign’s objective is to improve the company’s economic viability while drawing more attention to the fact that the company does exist. It is also encouraged to attach coupons to flyers and other promotional materials to spread the word about Spaghetti House and cultivate strong customer connections in the local community.

The company states that a restaurant’s sales force may be more effective by implementing a plan prioritising the acquisition and maintenance of repeat customers. Using punch cards in a restaurant’s sales strategy supposedly boosts consumer confidence in the restaurant. It encourages repeat visits by offering a free meal to customers who spend at least 10 meals there. Having clients believe they would receive extra value in exchange for their purchase is a major benefit of these punch cards. One alternative framework for understanding sales strategy focuses on maximising customer satisfaction and repeat business. The organisation has prioritised enhancing customer service training for all staff members to achieve this goal (Parasecoli, 2019). Employees are expected to use the knowledge they gained in training to help clients resolve their problems, and if they need further help, they should approach their managers for guidance. We must adhere to these guidelines to provide our patrons with the highest quality of service.

Due to the high cost of raw materials, businesses in this industry could decide to employ resources sourced from the immediate area to reduce their overall cost of operation. As a consequence of the fact that regional foods may be found close to the eateries at which they are served, the expense of transporting these foods is reduced, which in turn leads to a large increase in the amount of money the business makes (Principato et al., 2022). The inputs for a restaurant that relies on imported raw materials will likely be damaged or spoiled due to the rigorous handling they will experience while being transported to the restaurant. This is especially true when one considers the high cost of the inputs required by a restaurant that relies on importing its raw supplies. When clients can tell the difference between fresh and frozen food, the risk of them leaving a restaurant because of the quality of the food ability increases. Customers can tell the difference between fresh and frozen scallops and corn and its husks throughout a transaction. As a direct consequence, businesses related to scallops suffer significant financial losses.

If the restaurant wants more customers and more people to see its product ads, it should promote its services online. Consumers with access to industry websites via social media platforms, such as restaurants, can buy their products directly. Restaurants are less crowded when customers can order online and get their food fast. Thanks to the internet, the sector has quickly changed and learned new ways to work more efficiently. To ensure restaurants’ longevity, the web market may speed up and adapt as they improve their operations. Platform operators perform most of the work, so the restaurant may warn its staff.

Restaurants that invest in the appropriate technology can function more efficiently while simultaneously cutting expenses and increasing profits in the industry. Because of the availability of trustworthy technology solutions, a company may be run without the owner having to be concerned about the administration of inventories or the maintenance of records. Because computers can process large amounts of data in a relatively short time, a restaurant that relies on technology to keep track of information can access it quickly. This is because computers can process vast volumes of data relatively briefly.

Recommendations

Businesses like the Spaghetti House Restaurant in the United Kingdom can benefit from introducing a takeaway and delivery note because it streamlines operations and reduces the time spent on food preparation and transportation. In addition, curbs outside of eateries can be built cheaply to facilitate the picking up and carrying home of customers who cannot walk. In addition, customers should be able to leave their cars at designated parking areas near their eateries while grocery shopping. Keeping tabs on supplies is a huge help in creating new dishes and expanding existing menu items, so proper inventory management is essential for restaurants. Order fulfilment tracking requires the use of inventory management software. It also needs to determine which products are low and must be restocked.

Conclusions

Finally, it is possible to state that global economic integration has increased corporate size and competitiveness. To keep up with the competition and increase its market share, Spaghetti House must get creative with its business strategies. As a result of changes in personal and cultural norms, businesses face several challenges. Research and development efforts have been prioritised because they have the greatest potential to increase industry performance and, thus, customer satisfaction. For Spaghetti House to succeed in the long run, it must devote energy and resources to thinking outside the box and acting creatively. As a result, it’s crucial to put money into innovation and creativity if the restaurant wants to keep up with the competition and serve its customers well in the United Kingdom.

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Appendices

Hierarchy Sources

Hierarchy Sources Table

Hierarchy Sources Table

Hierarchy Sources Table

Hierarchy Sources Table

Hierarchy Sources Table

 

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