Restaurant Case Study Analysis
In 1964, James R. Eure, a born entrepreneur and retired Air Force officer, has opened a “Pizza Place” in Stephenville, a small town in Texas with population of 7,000 people. Eure did not know much about the restaurant business, however, he figured he will learn on the way. Despite of Eure’s amateur cooking attempts, the start-up turned out to be popular beyond any expectations.
After several months of constantly increasing demand, Eure was already building a bigger restaurant.Eure’s pizza restaurant was quite an innovation for a little town during the 60s. Eure had a good insight and intuition. For example, he has noticed that people enjoy privacy and introduced privacy booths. He understood quite fast the importance of gimmicks and word-of-mouth advertisement.Out of personal reason Eure had to move to Austin, Texas in 1968 and leave the successful enterprise.
In a short while he has opened a pizza restaurant in Austin, which also turned out to be successful. One year after the first Austin “Pizza Place” the second one was opened, and was followed by the third.In 1971, Eure has opened his fifth Austin-based pizza restaurant in a shopping center, which he believes was the first pizza place in a shopping mall. Eure took very careful approach to business and thoroughly considered every adjustment, including the decision to change the name from “Pizza Place” to “Mr.Gatti’s.”Managing employees turned out to be not an easy task for Eure.
He admitted that he was not an easy person to work for and he has problems delegating authority and trusting his employees, however, he was trying to overcome these problems. Eure did not engage into price wars and described his target audience as “sophisticated, mature crowd.” The product mix in the restaurants was simple. As Eure explains, he wanted to do what he can do best and not take efforts away from selling pizza. Eure described his promotion strategy as “give our name and what we do and then we’re gone.
“To manage the restaurants, Eure came up with two principles, the “commissary principle” and “idiot-proofing,” which meant that most of the stocking and pizza preparation was done in the back of the restaurant.
The Symptoms (factors or indicators of the problems)
Eure alone could not manage the whole pizza empire he has built. As an owner he has problems delegating task and authority to other people, however, he did not have expertise in every field needed to run the business. In order to continue growing, Eure needs to be able to rely on his employees.
The most trusted employee, Wilson, left the company.
In order to continue expanding business Eure needed to restructure the company and hire professionals to work for him. Eure himself is not the best HR manager and he needs more professionals in his team.Eure’s style of doing business is very conservative and the menu offerings are very limited.
Solutions for the problems
Eure can stop expanding his business and continue to manage it the way it was managed for the last 10 years. He can also continue expanding, but that restructuring of the organization and hiring more people would be inevitable.
The conservative style of doing business might have been good for the 60s when there were very few competitors around, but since the number of competitors and their offerings grow, Mr.Gatti’s should adjust to the business environment.Eure should watch closely what competitors are doing and not forget that more competitors appear on the market and it becomes harder to keep the loyal customers and attract the new ones. His original approach of coming up with gimmicks and relying on word-of-mouth worked quite well for him, but he seemed to forget about when he moved to Austin.
The possible solution
It seems that Eure enjoys selling pizza and would like to stay in business.
A person who is a born entrepreneur will not be able to give up his business easily. That is why I believe that Eure should stay in business. Despite of the pressure he gets, he should not continue expansion unless it is financially justified and company is prepared for it.Eure prefers to keep things simple, however, diversification and introducing more varieties to the menu will not hurt. Catering to schools and offices can be a good way to diversify business.