Old Shanghai Restaurant, Term Paper Example

The Chinese restaurant known as the Old Shanghai Restaurant is a contemporary small business restaurant based in San Francisco, California. The dishes that they serve are not of the same sort as the typical “Americanized” Chinese restaurants filled with grease and oil. For many San Francisco residents, the Old Shanghai Restaurant is considered the primary attraction for authentic Chinese cuisine. Being that the restaurant was just newly renovated in 2012, the Old Shanghai Restaurant is still considered to be in the developmental phases. Management does not invest very much on marketing measures such as advertisements. Most of their advertisements are done simply through their reputation and word of mouth. The purpose of this study is to ascertain how effective the Old Shanghai Restaurant’s advertisement strategies, if any presently exist, are in regards to expanding their reputation. (Yelp, 2015)

Description of the Problem

This research study is intended to measure the effects of the Old Shanghai Restaurant’s marketing and advertising methods, which presently appear to be at a minimum. The problem which this report surrounds is that the Old Shanghai Restaurant lacks the necessary advertisement ploys in order for their small business to grow. These measures may be quantified into different sets of data such as the number of customers generated per day, which days generate the most customers, and service and food ratings. The survey questionnaire used in this study however, might not be as quantitative. (Hamlett, 2015)

Methodology

This research study was conducted using quantitative, primary research by measuring the number of customers generated per day, which days generate the most customers, and service and food ratings. A survey questionnaire was also a used method as a part of this research study, though it may not be as quantified as the other data collected but more of a measurement for the effectiveness and methods of advertising for the Old Shanghai Restaurant.

Summary of Findings and Conclusion

After the research was conducted, it was discovered that the reputation of the Old Shanghai Restaurant, although in well standing with the majority of customers from the survey questionnaire, has generally plateaued and is rendered not marketable in its present state. The findings of the study also discovered that the highest head count of customers on a daily basis occurred on weekends for the Old Shanghai Restaurant. Although the highest head count was founded to be on weekends at dinner time, the regular weekdays projected higher head counts for lunch. This is most likely due to the Old Shanghai Restaurant’s lunch special at a reduced price.

Recommendations

Based on the findings from our study, we strongly recommend that management of the Old Shanghai Restaurant in San Francisco invest more time and money into their advertisements and target market if they expect to expand their business. If management at the Old Shanghai Restaurant is content with remaining the home town crown jewel of Chinese restaurants in San Francisco, then they should continue their operations as usual as they have been for the past few years. However, this recommendation is also based on the assumption that the Old shanghai restaurant desires to drive up their sales revenue.

Section I- Introduction and Background

The topic that is being researched which concerns the future of the Old Shanghai Restaurant is the marketing topic of advertisements. Presently, our findings from the study demonstrate that the Old Shanghai Restaurant lacks advertisements towards their target market. The concept of advertising is an imperative strategy for any business as it allows them to compete with rival businesses within the same industry. It does matter if a business’s products or services serve as a luxury or a necessity for their target market, advertising is necessary if they want to make prospective customers aware of whatever it is that they are selling. Most effective advertising strategies require time, money, and some opportunity costs. There is such a concept as free marketing or free advertising however. (Hamlett, 2015)

This free form of advertising is usually done executed through a business’s reputation or word of mouth. As a business continues to satisfy their customers, these customers will start to build the businesses reputation by crediting it through compliments and positive remarks as they communicate with people within their personal and professional networks. As compliments about the business are made to other people who have never heard of it before, they may decide to try out the business for themselves on the recommendation of a friend or colleague. Due to this word of mouth process, the business has just gained an extra customer through their reputation acting as a free form of advertisement. Also, a satisfied customer may decide to compliment the given business through use of social media. A compliment regarding the business posted on social media allows many others to view it and this can have the same effect as a simple word of mouth but on a larger scale. (Hamlett, 2015)

Unfortunately, this concept of free advertising can have a terminal effect depending on the industry. If a new invention or new idea is created and shows to be popular, it will most likely expand on a nationwide or even global scale. The invention of the social network Facebook is a perfect example of such an effect as it started in a Harvard college dorm and blew up into what is now a publically traded company. In this scenario, the free advertisements concept did not have a terminal effect. (Guide, 2015)

A small business restaurant in the food service industry such as the Old Shanghai restaurant in this case, simply will not have that same effect regardless of how delicious their food may be. This is because the food service industry does not operate on the same scale that a social media site can operate in. So, for the Old Shanghai Restaurant, free advertisements may have launched them off from the start to become the city of San Francisco’s favored Chinese restaurant, but it has had a terminal effect and will not expand them any further than where they currently are in the food service industry.

The Old Shanghai Restaurant already has an advantage over their competitors consisting of other small business Chinese restaurants because the Old Shanghai Restaurant has its reputation for authentic Chinese cuisine. Our study does not contain direct data of competitors of the Old Shanghai Restaurant, but our survey questionnaire does contain information on what customers of the Old Shanghai Restaurant know about other Chinese restaurants in the San Francisco area. If such advertisement issues are not addressed to the Old Shanghai Restaurant, then they will most likely sustain at a constant level being carried by their strong reputation, but they still risk being over shadowed by the threat of new or existing entrants into the Chinese restaurant market.

Section II- Statement of the Problem and Research Project

The primary goal of this research study is to evaluate how well the free advertising concept is currently working for the Old Shanghai Restaurant in San Francisco and determine based on the findings what their next marketing strategy should be. The problem is that for a small business such as the Old Shanghai Restaurant, the free advertising concept and its ploys such as reputation have a terminal effect to their marketing status.  Such an effect will impair the Old Shanghai Restaurant from any further expansion. Competing Chinese restaurants in the San Francisco area may take advantage of this opportunity by growing their small businesses while the Old Shanghai Restaurant remains at a constant in regards to marketing. This is an important problem to consider because it may limit the Old Shanghai Restaurants sales revenue.

This problem may be worth the attention of the Old Shanghai Restaurant management because it explores new marketing possibilities for the small business for them to prospectively expand and more importantly drive up their sales revenue. This problem is popular among most small to medium sized businesses in the food service industry because like the Old Shanghai Restaurant, they grow dependent simply on their reputation alone. Because of this dependency, the Old Shanghai Restaurant has demonstrated a lack of time and money invested into advertisements. Our research study of the Old Shanghai Restaurant can surely lead to useful changes for the small food service business in their desire for increased sales revenue and expansion.

In addressing this problem with advertisement, the Shanghai Restaurant can then reassess their current strategies and employ new methods of advertisement. It becomes necessary to conduct primary research in order to assess how management of the Old Shanghai Restaurant should go about taking such actions. With the necessary research and collected data, management can determine their current standing in the measure of advertising, what is limiting the restaurant’s advertising status, and what new strategies can most effectively minimize or even eliminate the problem.

Section III- Methodology

The methodology of this research study was conducted using quantitative, primary research by measuring the number of customers generated per day, which days generate the most customers, and service and food ratings. A survey questionnaire was also a used method as a part of this research study, though it may not be as quantified as the other data collected but more of a measurement for the effectiveness and methods of advertising for the Old Shanghai Restaurant.

In measuring the number of customers flowing through the Old Shanghai Restaurant on a daily basis, we set out a single standard operating week as the time frame for which we would conduct our study. The standard operating week indicates that there were no holidays or special events that would skew the data in one direction. Throughout this time frame from which we conducted this part of the study in measuring the number of customers flowing through the Old Shanghai restaurant per day, we extracted the head count for the day from the cash register at the close of business for each of the seven days.

The next part of this research study methodology involved a survey questionnaire. In order to collect this data from the survey questionnaire, we left optional survey cards for each of the customers to fill out after their meal. This study includes customers who made orders to-go as they were presented with survey cards while they were waiting on their order. Although the take out customers may not have been able to rate their food at the time they were presented with the survey card, there were still given the opportunity to fill out the rest of the survey as the questions applied to them as well. In order to increase the rate of return of the survey cards, we handed the cards to each individual person upon finishing their meal. This means that even in a customer party of four, we still handed out survey cards to each of the four members of the party. The survey cards consisted of a series of questions. Some of the questions were based on rating the food and service while other questions requested a written response. The following are the questions used on the survey cards in the same order which they were distributed to customer. The stars represent the rating with 1 star carrying the lowest rating and 5 stars bearing the highest possible rating. (Survey, 2015)

Section IV- Findings

Our findings from the methodology of data collected generally demonstrated that the Old Shanghai Restaurant, while it carries a strong reputation in the city of San Francisco, lacks in advertisements.

The Old Shanghai Restaurant is open on seven days a week with the same operating hours for each day. Their operating hours are for lunch from 11am to 2:30pm and for dinner time from 5pm to 9:30pm. The restaurant has a holding capacity of 45 customers at any given time based on their size and number of tables. The data collected from the number of customers flowing through the restaurant per day represent the total number of customers that flowed through the restaurant from the 11am opening to the last customer checked out after the close of business for that day. (Restaraunt, 2015)

Our findings showed that throughout the entire standard operating week, lunch time was more popular than dinner time. With a total of 705 customers for the entire week, 394 came in for lunch while 311 came in for dinner, giving lunch time a greater popularity percentage by 11.76%. This finding is possibly due to the fact that the Old Shanghai Restaurant sells their dishes at lower prices than what is sold for dinner. The weekends showed to generate the greater number of customers as compared to the regular weekdays. This finding is possibly due to the fact that most customers are off of work on weekends and have more time in their schedules to take the trip to the Old Shanghai Restaurant as opposed to spending lunch time at their jobs. Saturday generate 124 customers while Sunday generated 136 customers. The highest number of customers out of the week days alone was Friday with 116 customers. Saturday and Sunday alone contributed to 36.88% of the total 705 for the week which is just over a third. Here is a table of the total findings of the customer flows for the week from which the data was collected. (Survey, 2015)

The findings from the second part of the survey presented customer feedback in the form of a survey questionnaire. Although there was a total of 705 customers for the week, there was only a return of 430 respondents. This is most likely due to the fact that some customers simply were not interested in taking the time to fill out the survey card as it was optional. (Survey, 2015)

Regarding the quality of the food and cuisine, the majority of respondents gave favorable feedback. Out of the 430 customer feedbacks from the survey, 398 rated the food at 5 stars. 25 rated the quality of food at 4 stars, while 7 gave a 3 star rating. There were zero ratings for the 2 star and 1 star ratings. (Survey, 2015)

The quality of service ratings showed similar results as 417 respondents gave a 5 star rating, while 10 gave a 4 star rating and only 3 gave a 1 star rating. The three respondents giving a 1 star rating is most likely due to unfortunate experiences between the customer and service staff that day. (Survey, 2015)

The number of times each respondent had eaten at the Old Shanghai Restaurant were not as sharply skewed, but still relatively skewed to one direction. Of the 430 respondents, only 28 were first time customers. 70 respondents were 2^nd time customers, 64 were 3^rd time customers, and 268 had eaten at the restaurant 4 times or more. (Survey, 2015)

The next question on the survey card is perhaps the most important part as it relates to advertisement. Of the 430 respondents, 127 were persuaded by the big Old Shanghai Restaurant sign. Only 56 had heard of the Old Shanghai Restaurant via the internet, and 247 had come to the restaurant based on its reputation. There were no responses under the “other” option. (Survey, 2015)

The last question on the survey card did not present anything relevant to the study. Most of the written responses were favorable compliments towards the food and service staff.

Section V- Conclusions

The results from the food quality survey clearly show why the Old Shanghai Restaurant has such a strong reputation regarding their quality of authentic Chinese cuisine. The results from the service rating survey demonstrate how well trained the service staff is at the Old Shanghai Restaurant. The results from the evaluation of return customer findings show that there is a strong rate of return customers. The advertisement evaluation part of the survey shows that their reputation is the Old Shanghai Restaurant’s strongest form of advertisement. It is always necessary for a small business to have a healthy reputation, but the Old Shanghai Restaurant is not at a level where they can depend on this alone as a form of advertisement. To put it simple, the Old Shanghai Restaurant lacks in advertisements in their present marketing position, and this is causing them to lose out on potential sales revenue.

Section VI- Recommendations

The results from the research study show that the Old Shanghai Restaurant is successful in every sector of their business except for advertisements. It is strongly recommended that management puts more focus on advertisements other than their reputation. The manager is taking a step in the right direction by posting a television advertisement for the Old Shanghai Restaurant on the KTSF.26 network. A very effective method of advertising may include hiring temporary contract employees to hand out fliers to people in highly populated public areas throughout San Francisco such as a shopping mall. Another good strategy might be to advertise in newspaper and radio ads. For a small sized business such as the Old Shanghai Restaurant, these strategies are effective in advertising and easily affordable. So, to sum it up, the manager should hire people to pass out fliers in public areas, include some discount coupons when handing out fliers, and perhaps advertise in the newspaper.

Because most customers are present on the weekends, management should consider promotional cuisine dishes to entice consumer interest. This can be advertised through social media as the Old Shanghai Restaurant already operates a website along with a Facebook and Twitter page. To put it simple, each day of the week should have a lunch and dinner special for that day. This will increase consumer interest.

References

Guide, M. S. (2015). Objectives and Importance of Advertising. Retrieved from MSG: http://www.managementstudyguide.com/objectives-importance-of-advertising.htm

Hamlett, C. (2015). Why Is Advertising so Important to Business? Retrieved from Small Business Chron: http://smallbusiness.chron.com/advertising-important-business-3606.html

Restaraunt, O. S. (2015). Old Shanghai Restaraunt. Retrieved from Old Shanghai Restaraunt: http://www.oldshanghaisf.com/

Survey. (2015). Research Study of Old Shanghai Restaraunt.

Yelp. (2015). Old Shanghai. Retrieved from Yelp: http://www.yelp.com/biz/old-shanghai-san-francisco-2