Business proposal for Papadeaux

Pudenda is a successful upscale casual restaurant concept with a loyal following. But no restaurant is immune to the highly competitive climate of the industry. Recent studies have shown the upscale casual segment losing market share to both fast and traditional casual restaurants. They also show that consumers find value in upscale casual dining by weighing the food quality and the overall experience against the relatively higher price (Techno, Inc. 2013). We analyzed customer reviews to discern what Pederasty's guests are responding to In terms of value. Based on this analysis, customers respond overwhelmingly positively to food quality, and food quality Is the most critical factor In their value calculation. Price Is still an issue, even those delighted by food quality comment on high prices. Customer comments also suggest that portion sizes may be overly large, and that the investment in large portions is out of step with its importance to the guests.Pudenda may benefit from feat uring new menu items with reduced portion and price. Such offerings at other restaurants have led to increased traffic, revenue, and per person average (APP) (Jennings 2008). . Industry background Casual dining has grown over the last thirty years along with tremendous growth in American's restaurant spending. Half of every food dollar In this country is spent in restaurants, which Is double the spending level In the ass's (Pocket Fastback, 2013). The recession has made a competitive Industry even more competitive.A recent Techno survey on casual dining revealed a three tiered system divided Into fast casual, traditional casual, and upscale casual, with consumers trading up and down between these levels based on their needs and perceptions of value. 5% of those surveyed reported visiting a fast casual restaurant in the past month, 80% had visited a traditional casual restaurant, and 40% reported eating at an upscale casual restaurant. 41% of those surveyed reported finding value in upscale casual when weighing food quality and overall experience against the relatively higher price (Techno, Inc. 2013). The issue for operators in upscale casual is getting consumers to trade up, and to trade up more frequently. 3. Pudenda Seafood Kitchen Pappas Restaurants began In 1 966, when brothers Chris and Harris Pappas opened Dot's Coffee Shop In Houston. Today they operate over eighty restaurants across an array of concepts Including BBC, Tex-Meg, and fine dining. All Pappas restaurants are guided by the Standards of Excellence: Providing superior quality food, providing Kitchen, founded in 1986, is an upscale casual dining restaurant featuring gulf coast seafood and Cajun dishes.It has become the company's largest concept, and is set to absorb Pappas Seafood House, the company's first upscale casual seafood concept, growing its size in the Houston area by five stores. 4. Review Analysis 4. 1 . Methodology One of the most influential ways information is transmitted is wor d-of-mouth (Manikin & Goods, 2002). Word-of-month has an effect on not only potential customers, but also the satisfaction level of current guests. One of the most powerful methods to generate word-of-mouth is online customer review (Dollars, 2003). A total of 441 postings from Yelp. Mom made between September 2012 and September 2013 for all Pudenda locations, were reviewed for this analysis. Chin et al. (2004) found that recommendations have a positive relationship with sales, while consumer ratings were shown to be unrelated. Therefore our analysis focused on content rather than ratings. Content was divided into four main categories: food, service, value and environment/atmosphere. Each of these was further divided into subcategories, which were then coded positive or negative based on comment content. 4. 2. Food Food was the most commented on of the major categories.As displayed in Figure 2, the response to food quality was overwhelmingly positive. Comments such as, â€Å"the co cktail shrimp is well seasoned and super fresh,† â€Å"Just about everything on the menu is delicious,† and â€Å"the crayfish fondue is amazing as well as everything on the menu,† indicate that the customers are not only satisfied but also highly delighted. There were more positive comments on food than comments in any of the other categories. 4. 3. Service Restaurants always receive both positive and negative comments and Pudenda is not an exception.A calculation of the number of positive and negative comments on service, however, shows customers are mostly satisfied by the service. Over 75 percent of comments are positive (see Figure 3). Based on the graph and actual comments, we concluded that the gap between expectation and service delivery is mall in Pudenda case. 4. 4. Environment When commenting on environment and atmosphere, guests tended to be less specific when they were positive. Negative comments focused on noise level, crowding complaints, and wait time.The number of these complaints is relatively high compared with the number of positive comments (see Figure 4). This suggests that the atmosphere of Pudenda is more crowded and noisy than guests expect. 4. 5. Value determined by factors such as price and food quality. As seen in Figure 5, roughly half of all comments in this category stated that Pudenda is expensive. Only 37% recent of comments relate that the price is worth the overall experience, however, the percentage of comments stating that the experience is â€Å"not worth it† is much lower.While the latter two categories are mutually exclusive, significant overlap exists between both and the former category. This suggests that while guests' subjective view of value is affected by the service delivery, their objective view of price is left unaltered. 5. SOOT Analysis 5. 1 . Strengths Pederasty's greatest strength is consistently providing high quality food and service. Doing so is a stated goal of the company, and guest reviews confirm that Pudenda succeeds in following through on that goal. This achievement has garnered the concept a strong reputation.Many reviewers mentioned being repeat customers, or called the experience, â€Å"excellent as always. † This again speaks for the consistency many strive for in this industry, but few are able to attain. 5. 2. Weaknesses Pederasty's main competitive weakness is it's comparatively high prices. Providing high quality food requires an investment in quality products and labor. Seafood is often associated with high costs, because freshness is key to its quality. Additionally, he review analysis found complaints about the atmosphere.Its prices are more similar to lower end fine dining restaurants than its casual dining peers. Pudenda' more family friendly atmosphere may be at odds with what some expect from the environment when they look at the menu prices. 5. 3. Opportunities Despite high prices, Pudenda receives higher average ratings than its competitors. Its greatest opportunity lies in leveraging its high quality against competitors. Strategies that focus on attracting new customers to trade up from lower priced competitors so that they can experience the difference in quality may rove successful.Based on the high rating and positive comments from the Albuquerque and Phoenix locations, further expansion in the Southwest may be worthwhile. 5. 4. Threats Pederasty's faces threats from lower priced competitors. High price is a major component leading consumers to dine at upscale casual restaurants less frequently. Large competitors in this group, like Red Lobster, use nationwide promotions offering greater value to increase traffic at their stores. More similarly priced restaurants tend to have a different market focus, and provide a more elegant and less family oriented atmosphere. Guest Perception of Value Figure 6 GAP Analysis A GAP analysis revealed that there was little mismatch between guest expectations and per ceptions. The only area for concern was the atmosphere. As stated, complaints in this category were relatively high in proportion to positive comments, suggested the atmosphere is louder and more crowded than many guests expect. Relation to value based comments than any type of complaint about atmosphere. Further, price is important factor driving consumers to trade down in the casual dining spectrum. As recommendations are related to sales, comments about price would be taken seriously.While reviews indicate that guests are satisfied, these may not be enough. Oh (2000) found that customers' perceived value has a greater effect on their intention to return, and, more importantly has a greater effect on their long term patronage. In order to further analyze guests' perception of value, we returned to online customer reviews. This time, we focused our research on the Houston area locations. Houston was selected because it has more locations than any other area, and, as the place of it s founding, the area has the greatest familiarity with both Pudenda and the Pappas brand.We analyzed reviews from both Yelp. Com and Trip Advisor from the same time period, September 2012 through September 2013, a total of 490. Two methods were employed. First, the same coding method as before was used to compare against the early data in order to check for differences. Second, quotes relating to value were pulled from the reviews in order to better understand the range of guest attitudes and determine possible trends. The data from the content analysis was similar to what we saw previously. Roughly half of all value related comments referenced high prices.No new issues turned up in any of the other disagrees, so we proceeded to review quotes pulled from the article. 6. 1 . General Perceptions Guests tended to have a favorable impression of value while also acknowledging the high price, for example, â€Å"Pudenda is a little pricey but very good,† â€Å"The price is not low but it is worth the price for good food and service,† and â€Å"The prices are high but the food is excellent. † These responses are in line with the results from the Techno survey (2013) discussed earlier.It is important to note that over 70% of these quotes specifically mentioned food quality and linked it with a positive impression of value. 6. 2. Price and Negative Behavioral Intention Guests with a negative impression of value tended to express their view in terms of price. Quotes such as, â€Å"Overpriced but okay I guess†¦ â€Å", â€Å"†¦ Over priced mediocre food†, and â€Å"†¦ A little overpriced for what you get,† were typical of this group. In addition, negative comments about price were frequently linked with a negative behavioral intention to return.Most interesting was a subgroup of almost 30%, who specifically expressed that while satisfied, they would return less frequently due to price. Typical quotes in this range includ ed, â€Å"I'll be back but Rajah Cajun is definitely more affordable and so will be a more frequent stop for me! † and â€Å"The prices have increased steadily and I don't go as often†¦ â€Å". These quotes are representative of consumers who find value in the quality of the experience, and do trade up to upscale casual, but do so less frequently based solely on price. . 3. Food Quality as the Most Critical Factor Whether guests express a positive or negative perception of value they most frequently link value with their perception of food quality. 70% of positive value impression quotes mentioned food quality, as did 44% of the negative value laity (â€Å"WITH happened to good quality food†¦ â€Å") to those underwhelming with the quality based on price (â€Å"Decent seafood but overpriced†, â€Å"Food was fine, but the prices are nuts†), the latter being the most common.Guest comments also suggest that food quality may trump other aspects of the experience in terms of value: â€Å"Great service! Food was okay†¦ Wasn't worth the $30†, and â€Å"The waiter was nice though†¦ But that still doesn't make up for the lack in quality. † Combined with the results from the content analysis, it appears that food quality is the most critical factor for these viewers, and by extension Pederasty's guests. 6. 4. Identifying an Aspect for Improvement As mentioned previously, recommendations matter more than ratings, and recommendations are based on perceptions of value.Positive recommendations tend to be based on positive perception of food quality, however, these recommendations also tend to mention high prices. High prices are why many consumers report visiting upscale casual restaurants less frequently (Techno, Inc. , 2013), and our observations from online reviews confirm price can impact guests' stated behavioral intention. Based on this, it seems reasonable to assume that lowering prices while maintaining food quality, should lead to improved behavioral intentions and more positive recommendations.But before we explore the validity of that idea, we need to determine if there is any factor that can be changed to allow such a strategy to be entertained. Once again, we turned to the customer reviews, this time examining portion size. 6. 5. Portion Size Pappas Restaurants are known for large portions. Like food quality, it is factor into which money is invested in order to â€Å"wow† the guest. As we saw in the customer views, being â€Å"wowed† is often the line between finding value in the experience and feeling that it is overpriced.Portion size logically contributes to price; therefore we pulled quotes and analyzed them as we did with value-based quotes above. We aimed to determine if the investment in portion size was having the desired effect on guests. Not surprisingly, the reviewers found the portion size to be large: â€Å"the portions were generous†¦ â€Å", â €Å"Huge portions†, and â€Å"†¦ The baked potato is HUGE†¦ â€Å". 30% of the quotes expressed delight. These referred to portions as â€Å"ample† and â€Å"filling†, or mentioned aging a to-go box home (â€Å"l was very happy to have leftovers from this meal! ). 22% were factual statements such as, â€Å"The portion sizes are big like most restaurants in the states†¦ â€Å", or â€Å"l forgot how big the portions are†¦ â€Å". 48%, while not explicitly negative, did express that portion sizes may be overly large. Quotes like, â€Å"†¦ It was Just too big for me to finish! † suggest that portions are too large for guests to finish. One guest felt that they had â€Å"made the mistake of ordering a side salad†, because he was too full to finish his entree.In addition, guests may be lining like they are wasting food they wished to enjoy, a feeling that may be exacerbated by price (â€Å"l felt bad leaving half my lobs ter on my plate because I was full and it was a bit pricey'). Most of the quotes that fell in this category, and 39% of the overall portion size quotes, dealt with guest behaviors based on large portion have developed ordering behaviors to limit portion size, for example, â€Å"The portions are large, so I always split†, â€Å"l usually have to order a lunch size†, and â€Å"My son and I split a salad and catfish/shrimp plate. Perhaps the most important quote in this roof comes from a review posted on Yelp. Com on January fifteenth, 2013. The guest begins the review by giving background on their relationship with Pudenda: â€Å"As a Native Historian, I've enjoyed one of my family's great traditions of dining at Pudenda to celebrate most any occasion – birthdays, graduations, or Just- because-it's-the-weekends. Over the years, we've gathered at various locations throughout the greater Houston area, but as of lately, this is my frequent location of this chain. T hey go on to give a glowing paragraph long endorsement of food quality, which concludes with this quote: FYI Just about every dish here has monstrous portions so you wouldn't be the first to share a plate with someone. † The person writing this article is a champion for the Pudenda brand. She feels a connection to the concept and actively recommends visiting the restaurant. This is meaningful, because in online reviews, recommendations relate to sales, and her recommendation is to share.Guests did not link portion size to value as strongly as they did with food quality. Additionally, explicit complaints portion size was rare, including comments about portion size being too small. This suggests guests view portion size as an enhancement rather than a critical factor when calculating value. While it may be possible that large portion size contributes more greatly to guest delight and it is obscured by reviewers' choice of language, the fact that almost half of the quotes point t o portions being oversized, suggests that they are, in actuality, oversized. . Conclusion 7. 1 . Recommendation Based on our analysis of customer reviews, the investment placed into providing large portions exceeds its relative importance to guests. Guests also report that while they have a largely favorable perception of value, they still find prices to be gig. Food quality was identified by guests as the most critical factor effecting impressions of value. Figure 7 shows their relative positions in terms of investment from the company versus relative importance to guests.By decreasing portion size and lowering prices proportionally, both can be set at new, more appropriate levels without changing food quality. Figure 7 Performance vs.. Importance to Customers Similar strategies have been shown to increase traffic, revenue, and APP. In 2007, they termed â€Å"right portion, right price. † Within a year, these new items were contributing up to 15% of sales per month. They als o saw an increase in APP, as more customers were ordering appetizer and deserts.Their success led to the adoption of similar strategies by others, such as Cheesecake Factory and Minim's Cafe © Innings, 2008). Research from outside the industry suggests that Pudenda may benefit more greatly than others by the implementation of such a strategy. Studies have shown that it grocery stores, high quality food brands gain the most running a promotion with lower prices (Sparkman, 1997). Pudenda has a reputation for high food quality, and it is possible that consumers would view lower prices as a reason to read up, similarly to how they have been shown to behave in grocery stores. . 2. Implementation As large portions are a part of the Pappas brand, and some guests continue to express delight, we suggest maintaining the current menu. New menu items featuring reduced portion and price should be developed and offered separately as has been done by other companies. Tests should be conducted at select locations, and sales can determine their success. In addition, tickets with the new items should be analyzed to determine if they are contributing to an increase APP. Customer dieback should also be utilized, and can be used to refine the new menu.