Marketing Research Paper

Food consumption is the most important and basic activity undertaken by everyone. As the U.S economy is experiencing more growth and more people become employed there is an increase in personal income which translate to more disposable income. Since the consumer confidence is growing, people are using more of their income on food prepared in restaurants than at their homes.  Opening Daily Serve Restaurant will require planning that will tap into this growth in the market and target the potential consumers.  The new restaurant will utilize the fast-casual restaurant concept where there will be a combination of full-service and fast food dining.  In this market, the restaurant aim is to take advantage of a restaurant culture that has become a component of everyday lifestyle for the residents of League City and the overall Texas. In addition, the restaurant be started a limited company to protect the owner from any personal liability. Restaurants usually have a big number of employees involved in a lot of physical work increasing the possibility that one can get injuries or their property damaged where the business would take liability and not the owner. For this restaurant location means a lot since customers prefer an easily accessible location and League City with a huge traffic of people would form a good location for this restaurant.

In the restaurant industry, fast casual restaurants accounts for over 50 percent of the sales in the whole sector and continue to gain market share with time. There is a steady growth in the U.S economy, with the house consumption rising at about 3 percent (National Restaurant Association, 1). The changing spending habits for consumers especially among the millennials has brought about a shift from the  conventional retail spending towards a more experiential spending and this present positive news to the restaurant sector. In fact, over 192 million consumers in the United States visited a full service restaurant as per the spring of 2015 (National Restaurant Association, 1). In the same period, more than 214 million consumers bought food stuffs at a fast food eatery. This shows that a fast – casual restaurant combination is an excellent investment option in the industry. The trend in the restaurant industry includes increased consumer spending, changing consumer preferences and increased competition.   With increased disposable income and thus spending among consumers, there is also a change in their preferences (RSM International, 1). These changes are driven by the rising demand for menu options that are healthier and originally produced more so in the fast-casual-space.  This also involves an improved demand for international and ethnic cuisines as the population is shifting to a generation that is more adventures and seeking new experiences (RSM International, 1). The competition in this industry is increasing due to the changing demographics and consumer preferences. New concepts are arising to exploit the increasingly active lifestyles and changing tastes and investment community having growth strategies and who are well funded are being attracted to this industry. The results is a highly competitive business environment for the owners with marginal improvement being seen among the customer base which means that  growth will have to come from competing on market-share front(RSM International, 1).

 Consumers are also sharing experiences in various restaurants using the technology to their peers and more so the social media which means that operators have to utilize these platforms to reach out to them (RSM International, 1).  In addition, management of unit-level costs is becoming a challenge in the industry which if passed on to the menu can impact heavily on customer traffic. This means that operators focused on managing or minimizing cost will attract consumers looking for value (RSM International, 1). Another issue is the adoption of farm-to-table strategy informed by food safety concerns and the need to meet the food safety standards. It calls for more responsibility in ensuring programs for food safety can support this trend.   The restaurant industry has also witnessed active mergers and acquisitions as regional and local operators are seeking for capital to invest into new geographical markets (RSM International, 1).

The full service restaurant in the U .S market generated a lot of revenue, nearing about 247 billion dollars in the sales of both food and drinks. The industry is quite big in the United States including the Mexican City and is worthy nearly $683 billion and is also very fragmented (National Restaurant Association, 1). The major players in the League City market include the Red River Barbecue Company, Main Street Bistro, Kelley’s County Cookin’ and Jimmy Changas. These represents the major restaurants that have managed to cut a market niche for themselves in the city. 

Daily Serve Restaurant market segmentation

Market segmentation refers to the process of dividing the market into various subgroups based on particular shared characteristics (McDonald, Malcolm& Dunbar, 22). So as to serve to provide sustainable food services to customers, the company uses segments the market to enable targeting and offering solutions that are cost effective. The basis of Daily Serve Restaurant market segmentation includes the demographic, age and psychological aspects. For the demographic aspect, age group. One segment involves customers aged between 18-40 years who are more concerned about their attractiveness. Low calories’ menu will be prepared for this segment given their concern on health and nutrition. Another segment includes the kids, where menus are prepared to align with the demands of small kids whose tastes are likely to be influenced by the older people. These tend to be less choosy as compared to the older consumers. The segmentation is also done on the basis of psychological aspects, and the target in this segment includes those persons who are less concerned about taste but always observe a strictly healthy lifestyle and normally prefer healthy and nutritious foods rather than the fast foods.

The full services provided by the restaurant will mainly target this segment. Given that Texas State and more so the League City has people from various backgrounds and cultures, a cuisine type will target the segment of customers who prefer the traditional and cultural foods based on their backgrounds.   Given that the restaurant is a fast-casual one, various customers would prefer to have the meal prepared immediately after placing the order and even while they are watching. Customization options will thus be put in place to target this segment who mostly wants quick services.  To serve the fast food market segment, various stand vendors will be included for providing the customers with the services.  The restaurant will also target the office workers who eat out regularly and pay little money for the food. To target this segment the restaurant will include in the menu low price but less quantity foods for such customers who want small portions. The restaurant will also have an eatery place for the segment that involves customers who want a complete experience.  Therefore, marketing segmentation will form a big part in the marketing strategies to be adopted by the restaurant in order to attract a big traffic of customers and therefore a bigger market share. This will be possible after dividing the market into different group with common needs, priorities and interests.

With a population of about 96,000 as per the current estimations by the authorities, the League City provides a large customer base which can be targeted for the restaurant business. The population in the city tends to be highly educated and family oriented which is a good prediction of the habits of the, spending patterns and interests of this market (Paulisse, 2). The population has a high a relatively high disposable income level averaging at $82,513 as per 2014 report. With about 33,168 households and most of the people working in the urban areas, the restaurant will target about 5000 customers initially and move forward to attaining about 30 percent of the market share by the end of the second financial year.  In addition the restaurant will extend the food and drinks services to various business organizations that may require catering services in the area (Paulisse, 2). With about 6,140 businesses located in the city, the firm will extend marketing efforts to the businesses that are holding functions and would like to contract professional food service providers.

References

RSM International.9 trends in the restaurant industry to watch in 2016. 2016. Available at: http://rsmus.com/what-we-do/industries/consumer-products/restaurant/9-trends-in-the-restaurant-industry-to-watch-in-2016.html

Paulisse,Tim.League City, Texas. Community profile.2015.1-3.Available at: http://www.leaguecityedc.com/DocumentCenter/View/33

National Restaurant Association. News & Research.Restaurant Industry. 2016. Available at: http://www.restaurant.org/Downloads/PDFs/News-Research/PocketFactbook2016_LetterSize-FINAL.pdf