Small business management

Robert Rainsford is a twenty-eight-year-old facing a major turning point in his life. He has
found himself unemployed for the first time since he was fifteen years old. Robert holds a BS
degree in marketing from the University of Rhode Island. After graduation, a firm that
specialized in developing web presences for other companies hired him. He worked for that
firm for the last seven years in New York City. Robert rose rapidly through the company’s
ranks, eventually becoming one of the firm’s vice presidents. Unfortunately, during the last
recession, the firm suffered significant losses and engaged in extensive downsizing, so Robert
lost his job. He spent months looking for a comparable position, yet even with an excellent
résumé, nothing seemed to be on the horizon. Not wanting to exhaust his savings and finding
it impossible to maintain a low-cost residence in New York City, he returned to his hometown
in Fairfield, Connecticut, a suburban community not too far from the New York state border.
He found a small apartment near his parents. As a stopgap measure, he went back to work
with his father, who is the owner of a restaurant—Frank’s All-American BarBeQue. His father,
Frank, started the restaurant in 1972. It is a midsize restaurant—with about eighty seats—
that Frank has built up into a relatively successful and locally well-known enterprise. The
restaurant has been at its present location since the early 1980s. It shares a parking lot with
several other stores in the small mall where it is located. The restaurant places an emphasis
on featuring the food and had a highly simplified décor, where tables are covered with
butcher paper rather than linen tablecloths. Robert’s father has won many awards at regional
and national barbecue cook-offs, which is unusual for a business in New England. He has won
for both his barbecue food and his sauces. The restaurant has been repeatedly written up in
the local and New York papers for the quality of its food and the four special Frank’s AllAmerican
BarBeQue sauces. The four sauces correspond to America’s four styles of
barbecue—Texan, Memphis, Kansas City, and Carolina. In the last few years, Frank had sold
small lots of these sauces in the local supermarket.
As a teenager, Robert, along with his older sister Susan, worked in his father’s restaurant.
During summer vacations while attending college, he continued to work in the restaurant.
Robert had never anticipated working full-time in the family business, even though he knew
his father had hoped that he would do so. By the time he returned to his hometown, his
father had accepted that neither Robert nor Susan would be interested in taking over the
family business. In fact, Frank had started to think about selling the business and retiring.
However, Robert concluded that his situation called for what he saw as desperate measures.
Initially, Robert thought his employment at his father’s business was a temporary measure
while he continued his job search. Interestingly, within the first few weeks he returned to the
business, he felt that he could bring his expertise in marketing—particularly his web
marketing focus—to his father’s business. Robert became very enthusiastic about the
possibility of fully participating in the family business. He thought about either expanding the
size of the restaurant, adding a takeout option, or creating other locations outside his
hometown. Robert looked at the possibility of securing a much larger site within his
hometown to expand the restaurant’s operations. He began to scout surrounding
communities for possible locations. He also began to map out a program to effectively use
the web to market Frank’s All-American BarBeQue sauce and, in fact, to build it up to a whole
new level of operational sophistication in marketing.
Robert recognized that the restaurant was as much of a child to his father as he and his
sister were. He knew that if he were to approach his father with his ideas concerning
expanding Frank’s All-American BarBeQue, he would have to think very carefully about the
options and proposals he would present to his father. Frank’s All-American BarBeQue was
one of many restaurants in Fairfield, but it is the only one that specializes in barbecue. Given
the turnover in restaurants, it was amazing that Frank had been able to not only survive but
also prosper. Robert recognized that his father was obviously doing something right. As a
teenager, he would always hear his father saying the restaurant’s success was based on
“giving people great simple food at a reasonable price in a place where they feel
comfortable.” He wanted to make sure that the proposals he would present to his father
would not destroy Frank’s recipe for success.
Case Study Short Answer Questions
Students should answer each question individually. Each question will be submitted separately via
Moodle on completion of the relevant Module. Each question should be a minimum of 1 page in
length

Question 1: Discuss how Robert should explicitly consider the customer value currently
offered by Frank’s All-American BarBeQue. In your discussion, comment on the five value
benefits and the perceived costs.

Question 2: Robert has several possible options for expanding his father’s business—find a
larger location in Fairfield, add a takeout option, open more restaurants in surrounding
communities, incorporate web marketing concepts, and expand the sales of sauces. Review
each in terms of value benefits.

Question 3: In Chapter 2 “Your Business Idea: The Quest for Value”, Robert Rainsford was
introduced in the FRANK’S ALL-AMERICAN BARBEQUE case. He has returned to the family
business and is very enthusiastic about expanding the business. He has identified four
options: (a) expanding the restaurant either at its current site or elsewhere in Fairfield; (b)
opening several similar-sized restaurants in nearby towns; (c) using the Internet to expand
sales; and (d) expanding the sales of Frank’s sauces from a local store to a regional
supermarket chain. Any one of these ideas would represent a change from his father’s
business model. Given that he had not expressed any interest in the management of the
business, how should he go about approaching his father with these ideas? If the company
expands, should Robert approach his sister and her husband about taking a more active role
in the business? What should their roles be?

Question 4: Frank Rainsford has been, in effect, the CEO of Frank’s All-American BarBeQue
since its inception. His major role has been that of restaurant manager, receiving support
from his assistant manager Ed Tobor for the last fourteen years. Frank has two children, a son
and daughter, who both worked in the restaurant as teenagers. His daughter has worked
periodically at the restaurant since she graduated from high school. Frank’s son, who recently
lost his job, has returned to work for his father. The son produced several plans to expand the
business, including the opening of a second restaurant and the extensive use of social media.
After careful consideration, Frank has decided to open a second restaurant, but this has
presented him with a major problem—how to assign responsibilities to personnel. His son
wants to be designated the restaurant manager of the second restaurant and made the vice
president of marketing. Ed Tobor also wants to be the manager of the new restaurant. His
daughter has expressed an interest in being the manager of either restaurant. How should
Frank resolve this problem?

Question 5: One night after the restaurant had closed, Frank Rainsford sat down with his son,
Robert. Frank had finished reading his son’s business plan for a third time. Robert sensed that
his father had some sort of reservations. “What’s the matter, Dad? Didn’t you like the plan?”
Frank paused and said, “Bobby, from a technical standpoint I think you have done a very, very
credible job, but you are right. I do have some concerns.” Disappointed, Robert asked his
father to lay out his concerns.
Frank told him that opening another restaurant was a huge and expensive undertaking. He
knew that Robert understood the financial risks, but he was not sure that his son understood
the problems associated with getting people to come to a new restaurant. Frank was
straightforward and told his son, “I have been at this for thirty-plus years. It took me years to
build up my client base. I really know my customers and what they like. Up until this year the
only marketing I did was flyers and a few ads in the local paper and the church bulletin. How
are we going to understand our customers at the new location? We are going to have to fill it
up quickly if we are to pay the bills. I know I’ve had some good success with selling the sauces
during the last few years, but remember that I’m selling them from Harry’s grocery store. His
customers already know me and my product. Your plans for ramping up sauce sales are great,
but again, how are we going to get people to know who we are and interested enough to by a
six dollar bottle of barbecue sauce?” Frank went on to tell his son that he knew that Robert
was extremely knowledgeable about marketing and the use of the Internet. He reminded
Robert that he had given him a greatly enlarged marketing budget in 2010.
If you were Robert, how would you go about alleviating your father’s concerns? (You may
want to consult Chapter 16 “Appendix: A Sample Business Plan” and review Robert’s business
plan for a new restaurant.) Answer the question from a marketing perspective.

Question 6: Frank’s All-American BarBeQue is planning to significantly expand its takeout
business. Currently, customers come into the restaurant and order from the menu. With the
new Darien facility and website, customers will be able to order online or fax an order to the
restaurant. Frank and Robert have been arguing over how to structure the takeout portion of
their operations. Frank wants to maintain the approach where customers order items from
the menu. Robert believes that in today’s world, it would be more convenient for customers
to order complete prepackaged meals. Father and son have argued about the nature of these
meals. Frank has suggests a limited number of standard meals that could be prepared during
the day and sold in the evening when commuters are returning home. However, this might
mean that excess inventory would be built up on unwanted items. Robert wants to offer
greater variety. These would include a main course, two side dishes, and a dessert. Because
there could be a large number of combinations, most would have to be made after the
receipt of an order. The “rush” to make these meals would drive up costs. How would you go
about pricing these two types of meals?

Question 7: Frank and Robert considered several factors when
evaluating alternative towns as possible locations. Some of these included population size,
average income, travel times, and percentage of population. Based on the data, they selected
Darien, Connecticut. Do you agree with the decision? Why or why not? Do you think other
factors should have been considered? If yes, what would you recommend?

Question 8: In the Appendix (Chapter 16 “Appendix: A Sample Business Plan”), you will find
the income statements and balance sheets for Frank’s All-American BarBeQue for the years
2006 to 2010. Compute some of the key financial ratios for this business and discuss the
meanings of any trends.
Question 9: Locate the average values of these values for the restaurant industry and
comment on how well or poorly Frank’s All-American BarBeQue appears to be doing with
respect to the industry.
Question 10: Frank’s business plan in the Appendix (Chapter 16 “Appendix: A Sample
Business Plan”) provides projected income statements and balance sheets for a five-year