Italia Factoria Case Study

Eric Porter Italia Factoria Case Study B283 Case Analysis Introduction: After many years in the limited franchise business of Chick-fil-A, Mr. Nygren and his co-investors sought out a business with more room to expand. After visiting many styles and cultures of restaurants the group decided to venture into the Italian restaurant business. One of the many places with helped inspire them was Tomato Café in Albuquerque NM. Seeing the obvious demand they began making plans for their own Italian restaurant in Farmington, NM. Problem Analysis: -Major problems and challenges facing employees and organization: The first problem encountered was the type of business they wanted to grow. Many of the franchises, such as Applebees required a bar for selling alcoholic beverages. As that was against their morals it narrowed many of the franchises they would be willing to start. With the many requirements and restrictions of a franchise it was apparent that it would be more beneficial, yet more risky, to start the business from scratch. The first several weeks of business were very successful, but as time drew on it began to slow down. It was good that new ideas and concepts were constantly being discussed to make it fresh and keep customers satisfied. Listening to the customer’s requests allowed the business to pivot and change multiple ideas that allowed for more customer satisfaction such as having bread brought to the tables. The next hurdle was from a place that they actually visited for inspiration. Tomato Café sent them multiple letters threatening them to either change their business so it wouldn’t resemble theirs or to accept a settlement of $25,000 to “allow” them to continue using the ideas which made up the entire restaurant. Here it was very wise that close attention was paid to detail concerning where each of the ideas for the restaurant came from. Making dozens of inquiries to various restaurants covered their bases, and in turn broadened their pot of ideas they could have possibly pulled from. A cautious and someone guilty feeling entrepreneur would most likely accept the offer to get the problem out of the way. But Mr. Nygren and his investors went the risky route by replying very frankly that there were too many assumptions about the origin of their restaurant ideas. In the last letter I feel it may have been a nice touch to show confidence in his argument, to have no need to seek out an attorney. But seeing the stubbornness of the others I do believe that it would have been wise to at least seek out legal advice from someone in that field to make sure all bases were covered if indeed things did escalate. -What do “I” think the business is doing right and what do “I” think they need to change: The first big saver was using the available resources of the land instead of buying more property. Designing, building, and accessorizing would already be more than enough. In spite of a less desirable location, the money saved could easily go to advertising, or simply to the restaurant to maintain quality. The drive thru was a good idea to help compete with other fast food companies, though for a business just starting it seems like a lot to take on all at once. It would seem busy enough just to keep up with the people inside, much less the people outside. I even liked the idea of keeping the authentic brick, fire baking pizza oven. It does show a step in quality, but some things are more work than others. For a fresh business things would have to be booming constantly to cover costs and extra work. Recommendations: I would at least go to an attorney and seek council to make sure that there was no case for Tomato Café. I would also try to dumb a few things down, make it simpler rather than adding more things which would most likely require much more capital. Conclusion: As far as legal issues it doesn’t appear to have much to fear. But the biggest concern would be whether the area would sustain a business of that stature for extensive period of time. It would be best to sell the business instead of pouring money in and hoping things pick up.