Mom and Pops Restaurants

Mom & Pop’s Restaurants, Inc. Facts – Pop Westerfields had entered the restaurant business by taking over family restaurant at the corner of Halsted Avenue and Third Street, operating the first restaurant in in Homewood, Illinois, in 1982 – The initial “Strategy” was to serve very good meals in traditional American style at reasonable prices. – In early 1990, the Westerfields owned six restaurants in Illinois, Indiana, Southern Michigan using Mom&Pop name, and employed 9 full-timed salaried staff members, and about 40 wage-earning waiters, cooks, and other helps. Problems: The Westerfield faced a highly competitive for restaurant business in his territory of Illinois, Indiana, and South Michigan, for example, Burger King restaurant had introduced stuffed potatoes and a new salad bar and McDonald’s was expanding its menu to compete more and more traditional restaurants. – So , the Westerfields try to look into alternative markets that were not as highly competitive for restaurant business such as nearby Canada. – Pop’s main concern was choosing a method of dealing with one or several restaurants that were so distant from the existing businesses and, another nontrivial factor, so expensive to open and operate.

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Solutions : • The range of possibilities included a new restaurant , set up in the new location 1. A green field ( or de novo) investment. ? It requires site selection, major financial, legal assistance to comply with local law, and employment of basically all new staff ? The start-up cost would be in neighborhood of $150,000. ? None of the current employees was willing to move to the Windsor, Canada. ? (advantage) There appeared to be no significant limitations on importing any needed equipment or food into Canada 2. An acquisition of an existing Canadian restaurant. (advantage) It costed less than the new venture and the lower financial cost and the potential availability of existing staff were very attractive. ? The purchase of an existing facility would 3. A joint venture ? (advantage) Finding a local partner, the Westerfields can reduce all the costs of doing business in Canada. ? The drawbacks of this strategy are that there is a real risk that the partner may not be a good businessperson or a reliable one and that earnings from the venture have to be shared with the partner. ? Management of the joint venture could be a troubling issue. ???????? ???????? joint venture ?????? ????????????? ) 4. Franchise out the name Mom&Pop’s. ? The least costly possibility for entering the Canadian market. ? Mom&Pop’s would allow the franchisee to use the restaurant name and would also help the franchisee to set up and operate the facility. ? The full set of responsibilities(and sharing of revenues) would be determined in negotiations with the franchisee. 5. Combinaton of the other strategies , for example, they set up a joint venture and sell some of the proprietary food preparations to it on fee basis. The number of combinations is limited only by the imagination of the Westerfields ( of course, to some extent by Canadian laws) (????????????? ????? ) Our group’s solution ? We determine to solve problem by using franchise. ? This is the first abroad investment and they were not familiar with Canadian laws ? Type 1 and 2 seems too risk because we have to start up the business and cost too much. ? We choose franchise for our first step in Canada because it is quite a low risk and cost the least investment because Pop is concerned about his investment cost. ?????????????????????? ) ? We can sell a lot of franchises to franchisees at the same time. ? We can gain certain income by distributing proprietary food preparation to franchisees. ? We don’t have to take care of our business because franchisees are taking care of the restaurants. ? We can negotiate sharing of revenues with our franchisees ? Regarding table income, we have enough income a year for establishing franchises. ( ?????????????? joint venture)[pic]

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