Business Strategy

        According to the textbook, Using MIS, 2021 by David M. Kroenke and Randall Boyle, there is a cause and effect to creating a profitable and sustainable business. Each aspect of the business will determine another segment of the organization and they build upon each other. This concept is illustrated within the Business Strategy of a company. Building a competitive strategy for a business begins with determining the structure of the industry they are in. The structure of that industry determines a competitive strategy which determines the different steps of the value chains. All of which will affect the structure of the business processes to ultimately determine the design of the information systems that support the business.

        Economist Michael E. Porter indicates that industry structure is a set of economic and technical characteristics. Those characteristics give rise to factors that can become a barrier to a company’s ability to grow and be profitable. Those factors are what is known as competitive forces in the industry. Porter’s Five Forces Model states there are five competitive forces that will determine a company’s profitability within an industry. The Five Forces Model as applied to Chef’s International, Inc., is illustrated in the table below.

Force	Chef’s Int’l Example	Force Strength	Chef’s Int’l Response
Bargaining Power of Customers	The restaurant industry is an overcrowded marketplace and customers have the upper hand. Patrons may go elsewhere if their experience is not up to their standards or they deem the prices too steep.	High	Heavily train staff in order to provide exceptional customer service. Keep prices of the dining experience competitive with surrounding restaurants. Create a unique dining experience which customers will want to choose.
Threat of Substitutes	Due to inflation and an increase in the cost of living, people may opt to stay home and cook or choose less expensive, fast-food options.	Medium	Happy hour menus, affordable specials and weekly discounts can appeal to customers and keep them dining out. Create a loyalty reward system to earn discounted or free items.
Bargaining Power of Suppliers	Suppliers may try to raise their rates or add additional charges such as delivery fees.	Low	With fourteen restaurants within the company, Chef’s Int’l is a large part of the supplier’s revenue. There are many restaurant suppliers to choose from and they can easily switch to another supplier. There are also other options such as farm-to-table and direct supply chains which also lowers a supplier’s bargaining power.
Threat of New Entrants	New restaurants opening up in the area	Medium	Reinforce bonds with regular customers. Focus on making each dining experience unique, maybe a loyalty app which tracks returning customer’s drink/food orders to help personalize the visit. Set up events to run concurrent with the new restaurant’s opening.
Rivalry	Pre-existing restaurants which offer similar pricing and similar menu choices.	Medium	Continue to stay competitive in pricing and experience. Since Chef’s Int’l has fourteen restaurants, they have bargaining power with the suppliers and can use that to bring costs down and pass the savings onto the customer. Each restaurant has a different theme so regardless of what type of food/drinks customers are looking for, you can find it. Keep the menu fresh with new seasonal dishes and specials.

    The restaurant industry is profitable, but they generally have low profit margins and the profitability of individual restaurants can depend on many factors such as size, location, etc. Where Chef’s International has a competitive advantage in this regard, they have fourteen restaurants in the Jersey Shore area as opposed to an individual owner with one restaurant. The bargaining power of customers in this industry is high, however, many of the restaurants acquired by Chef’s International have been local institutions in these Jersey Shore towns and have built up a loyal following. Wharfside Seafood and Patio Bar opened in 1963, Rod’s Tavern was opened in 1981 and they have loyal customers who continue to make the restaurants profitable. If one of the restaurants finds themselves struggling, the general manager for that restaurant along with one of three area supervisors work together to address the struggling restaurant. They will work with the executive chef to deliver new recipes or dishes to try to turn the restaurant around. 

        The competitive strategy that this company follows is a service differentiation across a particular industry segment. Many of the restaurants the company owns are former family-owned restaurants which were staples in their towns with a lot of history and high customer loyalty among locals and visitors to the Jersey Shore area. Chef’s International has purchased many of these family-owned restaurants in danger of closing and breathing new life into them. 

        As a result, they are a restaurant group similar to a chain restaurant parent company but they give their customers a local feel and experience with their restaurants. In addition, each restaurant has a different food theme, for example Baker’s American features BBQ and smoked meats, The Lobster Shanty is a Jersey Shore location and features seafood. The competitive advantage this provides Chef’s International is, regardless of what type of food someone is craving, they can find it within the Chef’s International family of restaurants. 

        This is an attractive advantage for Chef’s International because they stand out among chain restaurants. Customers who want an individualized experience will choose to go to one of the restaurants within the Chef’s International family as opposed to patronizing a cookie-cutter chain restaurant. This allows Chef’s International to combat the rivalry segment of Porter’s Five Forces. Additionally, the restaurants are all moderately priced, with many of them offering happy hour, special events and menu specials. This sets Chef’s International apart from other restaurants and helps them fight off the threat of new entrants and the bargaining power of customers segments of the five forces. 

        Furthermore, many of the restaurants offer a separate bar area which is another draw for customers which helps to fight the threat of substitutes. They do this by advertising promotions for special events or sporting events which draw customers out to the restaurant instead of staying at home. Chef’s International also supports local sports teams which gives them access to more exposure and in exchange, these teams receive 10% off cards that can be used at all of their locations.  Baker’s American Bar and Grill and The Cabin are two restaurants that also have teamed up to join the Route 33 Club.  This club offers a card that can be used at any participating restaurant on Route 33 for 10% off all purchases.  The card only costs $20 and is good for an entire year. All this combined allows them to maintain a competitive advantage over others in the heavily populated restaurant marketplace.

        The competitive strategy of Chef’s International is what will determine the steps in its value chain. The value chain is defined as the steps that will go into the final product a company provides. For Chef’s International, the final product includes the whole dining experience for the customer. Each step along the value chain adds value for the company. This is illustrated in the chart below with the primary activities.

Primary Activities of a Value Chain as applied for a random restaurant of Chef’s International

Primary Activity	Description
Inbound Logistics	Receiving, storing and disseminating inputs to the products:  ingredients/supplies to include food, alcohol, cutlery, etc.
Operations/Manufacturing	Transforming inputs into the final product:  Chefs creating dishes from ingredients, bartenders making drinks
Outbound Logistics	Collecting, storing, and physically distributing the products to buyers: Storing the food/drinks until used, servers bringing the food and drinks to the customer in a welcoming environment where customers want to dine.
Sales and Marketing	Inducing buyers to purchase the products and providing a means for them to do so: advertising the restaurants through social media
Service	Assisting customer’s use of the products and thus maintaining and enhancing the product’s value: checking on the customers, making sure they are happy and satisfied with their meals, doing what is necessary if they are not satisfied

Source: Using MIS, 2021 by David M. Kroenke and Randall Boyle

Inbound/Logistics of the value chain deals with receiving and storing the components that go into creating the product. Chef’s International’s holdings are restaurants; therefore, the components of the product consist of ingredients for the food, liquor for the drinks, the supplies involved in the dining experience such as cutlery, plates, glassware, etc. It also includes cleaning supplies, bathroom supplies, etc. which keep the dining experience pleasant. For Chef’s International these components are stored in back rooms, refrigerators and freezers in each of the fourteen restaurants. Additionally, Chef’s International uses the Revel System for inventory management. This is a Point of Sale (POS) system and it is serviced for them through Digital Dining. Revel systems is an iPad-based POS system. However, the software allows each restaurant to keep track of ingredients, food, liquor and supplies to help prevent over ordering and creating food waste. It also helps to ensure each restaurant does not run out of popular food items. 

         With regard to Operations Management, the concept of converting raw materials into a final product is a little different when applied to restaurants. The final product in a restaurant is the meals and drinks that are consumed by the customers. This is done through the use of grills, fryers, and other kitchen appliances. There is also specific cooking equipment at certain restaurants, for example at Baker’s American they also use a smoker since they specialize in BBQ and smoked meats. In addition, since each restaurant is unique with regard to the type of food they specialize in, the recipes are used to convert those raw materials into the final meal.

        Outbound Logistics as applied to Chef's International is also different from a company such as Walmart or Amazon. For those companies’ outbound logistics would deal with storing the product and getting it delivered to the customer by them coming into the store or shipping it out. For a restaurant, the final product is not put together until it is ready to be served. Therefore, inventory management and inventory systems for the company to know what ingredients and food/drinks they have on hand, what they are low on or what needs to be ordered is essential here. That is why the outbound logistics is connected to the inbound logistics with regard to storing the components. Yet, the POS aspect of the Revel system also works to deliver the final product to the customer. Servers enter the food order into the system which then transfers the food order to the kitchen and the drink order to the bar for processing. It also allows the workers to process credit card payments to complete the sales. 

        Although, if the restaurants had a delivery service, this would also play into delivering the product to the customer. However, if customers want food delivered from any of the restaurants, they use outside delivery services such as DoorDash. Some of the restaurants have links to DoorDash on their website to make it easier for the customer and make sure they do not leave the website and change their mind about ordering.

        Another component of the value chain is Sales and Marketing. To promote the restaurants and create sales Chef’s International has to market their restaurants correctly to create a demand. They advertise their restaurants on local radio stations as well as in the Asbury Park Press and on nj.com website. Each restaurant also has their own Facebook and Instagram pages in which they also market the restaurant by advertising special events. Additionally, each restaurant has a website and they market different specials and activities to entice customers to come in and dine.

        Service in the value chain for Chef’s International is the customer service they provide to their customers during their dining experience. For example, Marina Grille offers tips to their customers on the website on the best ways to get to the restaurant which includes by boat, train or car. It also gives parking tips to make it easier for customers to get to the restaurant. There is also a general manager on duty during all shifts at the restaurants in order to attend to any concerns or issues a customer may have. They are also trained to correct the situation so the customer feels satisfied and willing to return.

        Business processes are divided into structured and dynamic processes. The structured process is defined as formal standardized processes that do not change. While dynamic processes are flexible and can change and adapt to a situation. Chef’s International uses several different information systems to accomplish their structured and dynamic processes. Schedulefly software is used to organize employee schedules. Employees are able to download the app and can see the schedules online, the managers are able to text and email the schedule out to the employees as well as send out information. Employees are able to arrange for shift changes and time off through the app as well.  They also use Revel as a point of service system which allows each restaurant to manage and track their food, drinks and supplies as well as enter orders and credit card payments for processing, as described in the Inbound and Outbound Logistics sections above. 

        The company also uses Excel to create spreadsheets to assist with their inventory management. It is used to create shareable documents to use in conjunction with the POS which tracks the inventory. The Excel spreadsheets are shared by individual restaurants with the parent company. It is also used to make hardcopies of schedules for posting at the restaurants. In addition, social media apps and websites are used to market the restaurants and entice customers to patronize the establishments. 

        Chef’s International implements a structured process when it comes to sales. This is accomplished through use of the POS system. It starts when a server goes up to a table to take a customer’s order. The server then takes that order and enters it into the iPad through use of the POS software which allows the server to send the food order directly to the kitchen and the drink order directly to the bar for processing. The orders are received in the kitchen and bar through a ticket system which is printed out. At the end of the dining experience the POS system is used to generate the customer’s bill and to process their credit card payment. This is also done the same way for a take-out order, the only difference is, the customer comes to pick up the order to take home and eat. This process does not change, even when the order comes through DoorDash or another delivery service. There is someone assigned to monitor those orders and send them to the kitchen the same way as a sit down or take-out order.

        The dynamic process used by Chef’s International is their marketing. The way each restaurant advertises and markets themselves differ slightly. The company advertises on local radio stations 105.7 94.3 95.9 as well as in the Asbury Park Press newspaper and on nj.com. The frequency and type of advertising here can change based on the time of year. Those restaurants that are located at the Jersey Shore need less marketing during the summer season. However, during the off season there is more of a need to advertise and draw the customers in. 

        Another aspect of their marketing plan that varies based on the restaurant and the time of year is the social media posts. Each restaurant also has their own Facebook and Instagram pages in which they market their restaurant. Additionally, each restaurant has a website and they use all platforms to market different specials and activities to entice customers. For example, during football season, Anchor Tavern advertises NFL Sunday Ticket allowing customers to watch every NFL game on Sundays. This changes during baseball season. In addition, certain restaurants have special events and live music for different holidays and the marketing around that is different than those restaurants who focus on the food to bring in customers. This gives customers and potential customers insight into ways in which the Chef International restaurants are a better choice than others in the area. 

        A process implementation that gives Chef’s International a competitive advantage based on existing information systems is their email sign up. There is a link on most of the restaurant’s website which allows them to market directly to their customers. The customers fill in their name and email address and it allows the individual restaurants to notify those on the email list of upcoming specials, entertainment, events, or just to send a reminder to come in. For example, Moore’s Tavern and Sports Bar had a Halloween Party and is having a DJ on Thanksgiving Eve. They were able to market this to their customers through this email sign up. However, we believe Chef’s International should expand on this and create a more interactive app which allows the customer to make reservations through it, look up specials and events and earn loyalty points for free or discounted items to increase their competitive advantage.

Another process implementation that gives Chef’s International a competitive advantage is their ability to lock in suppliers as well as reduce costs. There are fourteen restaurants within the Chef’s International family. As a result, they are able to negotiate with suppliers and lock them in since they are supplying all fourteen restaurants with food and supplies. This can also result in bulk purchases which helps to lower prices for Chef’s International.  Whereas an individual restaurant does not have the benefit of buying in bulk. Negotiating lower prices on their supplies due to the ability to buy for fourteen restaurants instead of one allows Chef’s International to pass those savings onto their customers.The illustration below indicates how these competitive techniques are created through the business processes of Chef’s International. 

Chef’s International also gains a competitive technique through product implementation since they are able to differentiate the services they offer. Chef’s International has fourteen restaurants within its company, however, each restaurant has a different theme that focuses on serving food and drinks based on that theme. For example, Baker’s American Bar & Grille is a barbeque restaurant, while The Lobster Shanty is primarily a seafood restaurant. This competitive technique is created through their products and services as illustrated above. Regardless of what type of food cuisine a person wants to eat, they can find most types within the Chef’s International family of restaurants. An individual restaurant is limited in the type of menu it provides. Even a chain restaurant, while they may have a more diverse menu, the options are fewer from each cuisine.