Small business locates in West L.A. (Asian food restaurant preferred)

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Small Asian Food Restaurant Business Located In West L.A.
Executive Summary
Setting up a restaurant business in West Los Angeles town would require accurate planning beforehand. The plans need to focus on the core operational areas; the startup expenses the industry analysis as well as the market structures. Without a proper plan, the business might fail due to unforeseen challenges. In this regard, this paper explores the economic variant factors that may influence the development of restaurant in West LA, specifically targeting the Asian population living in the place. Notably, the foods industry is one that has surest opportunities for growth in the modern society. It is multi- billion dollar industry whose investments can turn out to be very profitable. The business will thus enter into the market as a medium positioning. It will also analyze the major competitors and compare with its strengths, and opportunities, as well as threats and weaknesses. The pricing models will need to be developed as well as the operational business plan. It would thus be important for the business to have accurate financials that can be used during the start-up. A budget is included to help in making a more focused decision on the accuracy and the value of the business organization. A management structure is given at the end of the document to show how, when and what the business organization needs to have in place regarding personnel before the commencement.

The exit strategy is also given to help the management of the business create proper plans in case their role in the business are likely to come to an end. It is a business plan that is brief but insightful.
The business Industry Analysis
Industry Description
The industry analytical concept is useful in understanding the potential of the Asian food restaurant picking up in the West Los Angeles location. It is also important in showing the competitions possible in the markets as well as how the company can position itself to counter the competition and foster growth.
Industry Trends
The foods industry is influenced by several changes in the market variables, including the health consciousness of the people consuming the foods (Harris et al. 213-7). Other major changes that have a bearing impact on what people would consume include the cultural trends and the living patterns that the people exhibit. In America for example, the location of the business in West LA would be very important considering the number of Asians in the place. The economic factors that encompass the activities that people do, the purchasing ability and the purchasing patterns are all important in the development of the industry variables. The climate, the legal and political conditions are major economic macro variables that can influence setting up the business in the desired location and running it successfully. America remains fairly stable economically and politically, but such variables are fluid, dynamic and can change within a short time to give a different connotation to business success altogether. To some extent, the environmental trends, as well as the technological changes, may also influence the development, distribution and consumption of the foods that people eat, thus significantly influencing the industry.
Two major aspects, the consumption of the unhealthy fast foods and the possible consumption of the GMO foods in the American markets will have to influence the development of the assigned restaurant in West Los Angeles. In China town, up to 70% of the residents are Asians. This means that the rate of consuming the fast foods is comparatively lower in the area. Likewise, the regions majorly inhabited by the Asian have minimal cases of GMO and the fast foods (Schlosser 38). The Asian business set up in the West LA must, therefore, conform to the market needs, and avoid trading in the two variety of foods.
Culturally, Asians prefer to have natural foods that are healthier for their bodies. This means that the restaurant set up in West LA that targets the Asian population and the market in the region must provide quality natural foods that will rhyme with the market demands.
Industry Attractiveness and Industry Size
Most businesses will only thrive in an industry that is likely to bring in long-term returns. According to Ali’s 2016 research data, the restaurant’s industry is valued at $782.7 billion globally, with the US accounting for up to 14.4 million employees in such ventures as of the year 2015. This gives a positive image and picture that many can exploit to have the industry investments. Following the changes in the social order and the growing drop in the popularity of the fast foods in America, the value of the restaurants is likely to increase, thus further making it even attractive (Belasco 71-2).
The restaurant’s industry is one that is fit for investments as it has long-term viability. Notably, people will at no time stop eating as eating is a continuous process that sustains life. Investments made in the industry, therefore, are likely to remain viable for longer periods of time. Moreover, the industry keeps on growing with the increase in the world population as more people need food to sustain their lives. It thus remains one of the most viable industries that are worth investment. A specific location of the restaurant in West LA will present the company with many advantages.
The following chart shows the trends in the foods and restaurants industry

Chart 1: The Restaurants Industry Food Trends
Source: National Restaurant Association. “Restaurant industry forecast.” (2012).
Profit Potential
The industry remains fairly profitable over the long run. A review of the industry based on the profit potential as presented by the porters five forces shows positive trends in the industry. According to porters, the industry capability should be analyzed based on the possibility of new entrants. This category includes restaurants that would set up businesses in the West Los Angeles dealing with Asian foods, the threat of substitutes like the fast foods and the possible rivalry among the existing competitors. To some extent, the possibility of the supplier bargaining power and the level of the bargaining power that the buyers possess can also have significant impacts on the value of the business in the industry. The following table underscores the extent to which each of the identified profit threat can influence the restaurant business.
Table 1: Porter’s analysis of the West LA restaurants industry
Item Threat in the industry
Level of threat High Medium Low
Threat of new entrants √ Threat of competitor rivalry √ Threat of new substitutes √ The suppliers bargaining power √ The buyers bargaining power √
The restaurant’s Market Analysis
Market positioning
The West LA market would effectively support the small and medium industry restaurants, as the number of Asians in the place may not be sufficient for a big business venture. Therefore, the business will enter the market as a middle-level player, with a possibility of growth to the other areas in LA that have higher Asian population. China Town has up to 70.1% Asians compared to the Unincorporated Santa Susana Mountains, which has an Asian population of 18.8%. This shows that other areas of LA may have higher demand than the western part of LA.
Market segments
To effectively handle the existing potential market, the business would need to create market segments that can target of different kinds of foods and arrangements. Most of the Asians in LA are Chinese, so culturally the restaurant must put in efforts that will include the Chinese foods on the menu. The Pilipinos, Thais, Malaysians, Japanese and other cultural groups also exist, thus making traditional products that would fit into their needs would be very useful for the company. The cultural differentiation of the market and the market variables are important aspects that can create the business organization favorable profits when carried out dutifully and effectively.
The home-based market segment would also offer the business with another viable opportunity to cash in in the parties. These people who are celebrating various events like Diwali among others may get the opportunity to order for their food services from the company. The company can thus prepare the foods according to the event and according to the customer specifications. It would be a way to ensure that the company does not leave any possible new entrant opportunity. This is possible through the identification of segmentations in the market and offering food products that would meet the identified market segments.
Product differentiation
The restaurants should be able to provide products that would rhyme with the people’s way of life. The reason why fast foods are so common in the America society’s s because it offers people food that they need. Jakle and Keith note that the fast foods offer efficiency, portability, and satisfaction (276). On the same note, the business must strive to offer the same product features but change the core product from the fast foods to the Asian traditional foods. The company would also consider providing foods at a different time of the day including breakfast, lunch and evening meal for the customers who would be around the restaurant at the specified times.
Pricing Models
The food product price will be based on the production. The company will calculate the value used in the production of any food, including the cost of the raw materials, the service requirements the expenses incurred including electricity, fuel, and marketing, and thus charge the products at a markup price. The markup price can thus be set to be 1.3%- 5.2% above the production cost base on the food product affordability to the customers
The Competition in the Markets
There are several competitors in the market. However, the presence of the competition cannot deter the business set up in the location as the success of the restaurant will not be wholly pegged on the presence of the competition, but on the unique product offer. The West Los Angeles has various Asian restaurants like;
Takami Sushi & Robata: evening joint that is good for the panoramic view of the downtown, but offers exclusively Japanese dishes. Its main disadvantage is the late opening and early closing of a business that may create opportunities for new entry restaurants situated near its locations.
WP24 by Wolfgang Puck; that offers modern fusing of the Chinese cocktails and foods within the Hollywood area. The restaurant is purely Chinese, with some foods being tradition and others modern. The main disadvantage of the restaurant is that it only opens in the evening between 5 p.m. and 12 am, thus leaving out many people who might need food during the time it is closed.
The RockSugar Restaurant that offers a variety of the Asian foods, but concentrating much on the Thai traditional foods is another significant industry player. Its major advantages are the provisions of the serene eatery that is highly decorated, and the ability to open up early enough for the customers, and still close relatively late in the evening.
The Chairman restaurant that offers dishes for most Asians but specializes more in the Chinese foods and cocktails forms a very important market player. Its major attribute is the ability to open up relatively early, as early as 11 am and others open as early as 5 pm. Moreover, it is still able to operate late, giving it a long customer exposure enough to win more customers
The business would best operate in a model that will offer a variety of the Asian products and operated on a 24-hour basis. This will uniquely differentiate it from the other industry players, thus making it a choice destination for many travelers who may reach the town late, or earlier than the competitor’s operational times.
The business Operational Plan
Method of Product Delivery
The business will target two forms of product delivery, onsite service, and packed food services. Both services, however, will begin with the customer reaching out to the company, either through physical presence or online booking and phone calls. Once the call is made, the money will be requested, and the business will make the transaction. The customer will then need to specify if they are using the food product on site or they are planning to have a packed food under the “Takeaway” service. The choice of the customer will then define the type of packaging that their order will receive. Those who will prefer onsite will have a floor space that can carry up to 200 people at a time to enjoy their food. These who would like the foods to take home will have a special package that can be carried away with many conveniences.
Resources Availability; Labor
West LA has a large number of people, any who are qualified to work in the restaurant. The restaurant will require one administrator, three head chefs, one in each special racial group. This means that there will be a head chef for the Japanese, and the Chinese foods and a general head chef. In each category, there will be at least four cooks and four servicemen.
Quality Control Needs
Quality control in the food industry is very important. The business will thus work harder to ensure that all their foods are of higher quality at all time. The quality assurance will make use of benchmarking and checklist analysis that will ensure that all the core requirements of the food products are met before it’s given out for packaging to the customers. Hygiene, cleanliness, and quality of the foods will not be taken for granted. Health check for all the cooks and the service men will be carried out quarterly, to ensure that the food they handle remains above board.
Customer support plans
There will always be a customer care desk where the customer can have their grievances addressed. Moreover, the customers can have the feedback filed from the same place. The customers will have the restaurant’s hotline links that will be toll-free to allow them air out their concerns with much ease. Communication between the restaurant and the customers will be conducted with modesty, and with much respect.
Startup Costs Development
Main Expenses Areas
To set up a restaurant, the business organization will need to organize for the startup expenses that will total to slightly above 350000 dollars. Initially, the business must determine the location that they need for setting up and rent it out. The place location improvement costs Sub Total is approximated to be $178,000 and the first-month rent projected to consume as much as $26,500. The business will also need to set up a provision for the miscellaneous opening expenses whose subtotal is projected to be $36,000. The projected initial marketing costs subTotal is pegged at $40,500 with advertising costs being projected at $21,000. Also, the business will need to have operational cash for sundry, and other miscellaneous expenses given under the name of “Cash in hand for miscellaneous expenses” and projected to be $50,000.00
The Business Startup Budget
Table 2: Opening Budget
Item Cost
Location improvement costs Construction and renovations $ 50,000.00
Restaurant tables and furniture $ 40,000.00
Tableware, utensils, dishes, kitchen, and bar equipment $ 80,000.00
Initial supply of food and beverages $ 8,000.00
Location improvement costs Sub Total $ 178,000.00
Rent/operating costs First-month rent $ 12,000.00
First-month utilities, including Internet and phone service $ 2,500.00
Security deposit  $ 12,000.00
Rent/operating costs Subtotal $ 26,500.00
Miscellaneous opening expenses Insurance $ 6,000.00
Permits and licenses $ 6,000.00
Accounting costs $ 4,000.00
Ordering and payment technology $ 20,000.00
Miscellaneous opening expenses Subtotal $ 36,000.00
Marketing Costs Signage $ 15,000.00
Menus $ 15,000.00
Fliers/coupons $ 10,000.00
Business cards $ 500.00
Marketing Costs Sub Total $ 40,500.00
Advertising Public relations services $ 6,000.00
Restaurant-opening event $ 15,000.00
Advertising Sub Total $ 21,000.00
Cash in hand for Miscellaneous expenses $ 50,000.00
Total $ 352,000.00
Milestones & Exit strategy sections
The Business Milestones
Preparation and planning; the business operations will begin after the core operation areas are identified. It will include the development of the business plan and the marketing plan. The operations that will last for three months will form the foundation of the business organization. Costs, as well as planning for any emergency, will take place at this stage. The business will also plan for the commencement, the management models, the mode of operations and the exit strategies right from the beginning of the period.
Locations Security; the business will need to secure a location in the West LA area where many Asians stay. The house will need not to be bought but acquired on the rental and leasing terms. The business will plan to pay the initial rents and agree with the owner on the subsequent payment methods. The location should be accessible from the people residences and the major towns exit routes. This will allow the users who would like to have the “carry away” menus to do so with much ease. The people who would need location based services, the business, will have the flexible team to reach out to them at their desired homes, like house parties, weddings, and religious gatherings.
Renovations and set up; the business will need to carry out renovations that will make the place look like a restaurant. This will include signage, fittings, and partitions within the main area that will separate the cooking Bay and the eating floor. The administrative offices including the accountant office will also need to be set up.
Licenses and permits; the business will need to seek and acquire licenses and permits from the local authorities in Los Angeles to be allowed to begin operations. The documents will include the normal business permit plus the health assurance permit that will give the business the go-ahead to handle food and food materials.
Business launch; a business launch is important in making an impact on the market. It is a time when the company spends to let the business known from the first door open. Therefore, it will need to be organized in the form of a celebration, and the business will use the opportunity to market out its unique menus and other product offers. It is the opportunity for the business manager to share his contacts with others in the process.
The following chart shows the key milestone areas that the business will need to cover from the preparations and planning for the time of launch. It includes approximated milestones that may be carried out together, while others are mutually exclusive.

Chart 2: The Business Development Milestones
Exit Strategies
It is important that the business, during its planning state, develops a well-defined and documented exit strategy. There are various exit strategies that a restaurant business may take including inheritance by the family members. Other people prefer to sell off the business to friends and relatives, while others prefer to sell it out to the shareholders. In other cases, restaurant businesses have also been successfully sold out to the business employees who may pool together to marshal enough money to compensate the owner.
However, to get the most out of the business exit plans, it should be sold to a third party. A third party can be an individual or another business organization that may be interested in running the restaurant. For this restaurant, the buying business will need to pay the present value cost of the business at the time of the purchase to the owner. Also, the purchasing company will need to pay 13% of the value if it is on the profit trends as goodwill or will get a discount of 6.5% from the current calculated cost if it will be in the loss model.
Management of the Business Restaurant
Since the business is still a small startup, there would be no need for an elaborate plan to have a hierarchical and a red-taped management. The business would opt for the flat structure with the lean management plans. Therefore, it will have a cheaper management cost. The manager will work hand in hand with the accounts. It is the accountant who will be taking the customer orders and doing the transactions. The accountant will be placed in them the same office as the manager, and near the entrance to the restaurant so that those who walk in and make personal orders can pay through the accountant before having their seats.
The accounts will then pass the order to the head cook of the concerned customer. This can mean the order being passed to the Chinese head cook, the Japanese/ Asian head cook or the general head cook depending on the order specifications. The cook will then coordinate the packaging of the customer order, and delivery of the order through the service men. The following chart shows the illustrated management hierarchy for the restaurant business. The manager’s overall duty will be to ensure that quality of the food products is maintained all the time.
Chart 3: The Management Structure

Works Cited
Ali, Mohamed Farouk Shehata. “Critical Firm-based Enablers-Mediators-Outcomes (CFEMOs): A New Integrated Model for Product Innovation Performance Drivers in the Context of US Restaurants.” (2016).
Belasco, Warren J. Appetite for a change: How the Counterculture took on the food industry. Cornell University Press, 2014.
Harris, Jennifer L., et al. “A crisis in the marketplace: how food marketing contributes to childhood obesity and what can be done.” Annual review of public health 30 (2009): 211-225.
Jakle, John A., and Keith A. Sculle. Fast Food: Roadside restaurants in the automobile age. JHU Press, 2002.
National Restaurant Association. “Restaurant industry forecast.” (2012).
Schlosser, Eric. Fast food nation: The dark side of the all-American meal. Houghton Mifflin Harcourt, 2012.