Italian Restaurant Business Plan

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Market Analysis Summary

The Fenton area has 48 restaurants which include:

  • 18 Fast Food/Pizza/Sub Restaurants
  • 11 Sports bars/Up Scale Burger Restaurants
  • 2 Barbecue Restaurants
  • 6 Chinese Restaurants
  • 5 Banquet/Catering Operations
  • 4 Breakfast/Lunch Restaurants
  • 1 Upscale Full Service Restaurant  (O'Charles opened 2002)

Source:  1998/2003 Market Statistics Estimates, Scan/US, Inc. (800)272-2687

The need for another fine dining family restaurant in the Fenton 

The marketing plan is to provide a fine dining, full service, family restaurant, where the entire family can enjoy a great meal, at a reasonable price. The Pasta House Co. restaurant is the perfect neighborhood restaurant, where adults and children can always find their favorite dish, and receive consistent quality and great service.

With the addition of the new Gravois Bluff's shopping complex less than 1/4 of a mile away, this addition will bring more customers and families from all over St. Louis to shop and eat in the area. The market customers for The Pasta House Co. would develop from:

  • Local Neighborhood Marketing Program
  • Customer Frequent Diner Loyalty Program
  • Suggestive Selling Program to increase average check
  • Birthday and Anniversary marketing mailings
  • Market saturation and community outreach programs
  • PHC High Ridge successfully serving customer in the community for over 20 years
  • PHC is known in St. Louis since 1974
  • High shopping in the area
  • Tremendous growth in upper level family income

4.1 Market Segmentation

The market analysis table shows that within a three mile circle 98% are families. This is our customer base which we cater to.

The table below shows the tremendous growth of the Fenton area. Please take note the greater increase in income levels the greater the projected growth levels. The chart shows the potential upper income families who enjoy eating out.

One Mile Ring of Intersection Hwy 141 at Hwy 30, Fenton, Missouri:

Households by Income19982003ChangePercent
$40,000 - $49,9994,7784,297-481-10.1%
$50,000 - $$59,0004,9224,776-146-3.0%
$60,000 - $74,9995,7116,404693+12.1%
$75,000 - $99,9997,2757,941666+9.2%
$100,000 - $124,9994,3415,4711,130+26.0%
$125,000 - $149,9992,1752,865690+31.7%
$150,000 - AND UP2,3973,8561,459+60.9%

Source:  1998/2003 Market Statistics Estimates, Scan/US, Inc. (800)272-2687

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Population in Families 5% 113,793 119,710 125,935 132,484 139,373 5.20%
Population in Non-families 5% 13,698 14,410 15,159 15,947 16,776 5.20%
Population in Group Quarters 5% 1,348 1,415 1,486 1,560 1,638 4.99%
Total 5.20% 128,839 135,535 142,580 149,991 157,787 5.20%

4.2 Target Market Segment Strategy

Our focus is the upper income level families living and shopping in the area. The Pasta House Co. will focus on the income level of at least $60,000 and above, and the 98% families living and shopping in the area.

We focus on these specific groups because these are the types of people who frequent The Pasta House Co. They are the ones that are willing to spend their money on good dining and service at a value price.

4.3 Service Business Analysis

In the St. Louis market the competition for the upper level income business has been intense. national chains that were not here 10 years ago have poured into St. Louis. The number of new restaurants has increased dramatically over the last several years and should continue to expand, all with the intent of capturing a portion of the upper level market. Below is a list of new and expanding restaurants in St. Louis: 

  • Macaroni Grill
  • Dave & Buster's
  • Hard Rock Cafe
  • Hooters
  • Lone Star Steak House
  • Max & Erma's
  • Outback Steak House
  • Ruby Tuesday
  • St. Louis Bread Company
  • Bandana
  • Chevy's
  • Friday's
  • O'Macaroni
  • Olive Garden
  • California Pizza Kitchen
  • Tippins (out of business December 2002)
  • Chili's
  • Crazy Fish (Closed July 2003)
  • Red Robin (Opened July 2002)
  • The Cheese Cake Factory (Opened November 2002)
  • Smoky Bones (Opened January 2003)
  • P. F. Chang's (Opened December 2002)

In the year 2002 McDonald's no longer held the title as having the most locations in the United States. There are now more Subway restaurants in the U.S. than McDonald's. Many of the above restaurant chains will find the St. Louis area a very competitive market. The restaurants that are still standing several years from now will be the ones who provided customers with the best product, at the best price and consistently exceeded their customers expectations. The Pasta House Co. will be a major player in St. Louis no matter what players are still around.

4.3.1 Competition and Buying Patterns

PHC High Ridge: Owned and Operated by Dennis Boldt for 20 years. (Sister Store to Fenton)

Located only four miles away this Pasta House Co. location is in Jefferson County and seems to be outside the normal traffic patterns of the customers who live in the Fenton area. Increases in business have shown a steady growth and should continue. We have found that over 90% of our customers come from west, south and east of the store. Because the store is located in Jefferson County, most customers who live in Fenton do not travel west towards rural Jefferson County. With our Frequent Diner customer base we estimate a loss in business from the customers who would go to the new location would be about 5% of sales. This would be only a short lived loss as the entire area is growing at an tremendous rate.

O'Charles: Opened in 2002, Located 1/4 of a mile away in the new Gravois Bluffs Shopping Center

O'Charles has a better location with a free standing building in the new Gravois Bluff's Shopping Center. They offer a full service fine dining family atmosphere. This national chain offers a complete menu of items, including a children's menu. The inside of the restaurant is very nice, with fine woods and a warm atmosphere. Local community involvent is limited. They seem to market towards adults more than children. Given the choice, kids will choose Pasta House every time. Un-tested long term growth and management abilities.

Red Robin: Opened in 2002, Located 1/4 of a mile away in the new Gravois Bluffs Shopping Center

Red Robin is an up-scale burger restaurant with a big name and big look inside. It took over two years to open this store because of franchise problems. Food items are served in plastic baskets, this concept is more of an up-scale fast food establishment than a fine dining concept. Limited adult menu, lots of noise, high priced drinks, no local marketing, and lack of a long-term track record in St. Louis all limit this restaurant as real competition.

Smoky Bones: To Open in 2003 in the Gravois Bluffs Shopping Center 

This is a new concept restaurant and is backed by the Red Lobster Corporation. Not a lot is known about this restaurant expect they have a big name behind them and a great free standing location. Limited menu, no local marketing, and lack of a long-term track record also limit this restaurant as real competition.