Enterprise in the Hospitality and Catering Industry Module

Enterprise in the Hospitality and Catering Industry Module 5

Contents Introduction - Enterprise in the Hospitality and Catering Industry Aims Page Number 3 -5 Glossary 6 Enterprise in the Hospitality Industry 7 Planning and Participate in the organisation of a Function / Event Task 1: Finding information 8 Task 2: Size of Hospitality and Catering business type Hospitality and Catering 9 -11 Task 3: Factors to consider in the current business environment that may affect businesses in the Hospitality and Catering industry. 12 -16 Task 4: Trends affecting Hospitality and Catering Businesses 17 -18 Task 5: Plan an idea for a new Hospitality and Catering Business 19 -20 Task 6: Establishing Hospitality and Catering business ideas. 21 -25 Task 7: Assessing the suitability of an idea for a Hospitality and Catering business star-up. 26 -30 Task 8: Present a business model for a Hospitality and Catering business startup. 31 -33 Task 9: Sources of help and support in developing a new Hospitality and Catering business. 34 -36 Task 10: Business Plan 37 -40 Enterprise in the Hospitality and Catering Industry Workbook Content

Enterprise in the Hospitality and Catering Industry Aims The aim of this unit / module is to give you the opportunity to explore different format of business ownership in Hospitality and Catering from small local business to a large catering company such as the Hilton International. You will need to look at what makes a Hospitality business successful by looking at real-life examples and identifying, innovative businesses within the Hospitality industry. Then look at the people behind these business and concept and finding out why they are successful. You will have the opportunity to plan an idea for a practical and realistic Hospitality business start-up in your local area. This will be based on your research, selecting a business and then presenting the business plan. How? Look in to and understand how trends and current business influence may impact on a new Hospitality business startup. Plan an idea for a new Hospitality and Catering business. Present the business plan model for a Hospitality and Catering business start-up. Enterprise in the Hospitality and Catering Industry

Enterprise in the Hospitality and Catering Industry Aims When planning a new Enterprise in the Hospitality and Catering Industry such as: Understand how current trends such as social trends e. g. population and the current environmental trends may impact on a new Hospitality and Catering business start-up. • How Hospitality and Catering business ideas can be successful. • How to gain Hospitality and Catering business ideas. • How to assess the suitability of an idea for the Hospitality and Catering industry business start-up. • How to produce an initial plan for a new business idea. • Deciding on what format to select e. g. sole trader, partnership or a limited company. • Identifying the source of help e. g. finance, advice and support networks. • Developing a Business Model and providing evidence to justify why the idea will succeed. Enterprise in the Hospitality and Catering Industry

Enterprise in the Hospitality and Catering Industry Aims Tasks: 1. You need to investigate what are the current trends and business environment that may impact on a Hospitality and Catering business start-up. 2. Participate in planning a new Hospitality and Catering business. 3. Present a business model for a successful Hospitality and Catering business start-up. All tasks in this workbook will be carried out with each learner completing each task within the book as an individual. But the individual may work as part of a Enterprise in the Hospitality and Catering business-start-up team. The team should be no more than three or four learners. Enterprise in the Hospitality and Catering Industry

Glossary Terms Definitions Discuss Share thoughts about something Choose Come to a decision Factors Thinks that contribute to results Current Most recent or up-to-date Innovation Impact Ownership Something new / New ideas The effect Own something Concept General ideas Realistic Something that is real Stakeholder Research Identify Opportunities Prospective Evidence A person or group not owing shares in an enterprise but having an interest in the business e. g. staff, customers or the local community. Collect information or carry out investigation Determine the identity Favourable circumstances Expected or likely Something that provides ground for belief Enterprise in the Hospitality and Catering Industry

Enterprise in the Hospitality and Catering Industry Name: If working in a team (A) Discuss and choose who will be the team members in your team. You need to agree this with the teacher/tutor. (This is important to make sure that you have the correct mix of skills for the task). (B) List the names of all the team members in your team. Each Enterprise should have a name. Ideally the name of your enterprise should reflect on the service, or product or location. (You may come back to this task following the research). (C) Discuss and choose a name for the enterprise. (D) State the name of the enterprise. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 1: Finding information Know about the planning process for a Hospitality Function / Event. Examples of Enterprises include: café, restaurants, bakery, hotels and food shops. (A) Discuss and research trends and current business environments that may impact on a new Hospitality and Catering business start-up. (B) How? Use broadsheets and local newspapers, professional and trade magazines e. g. Caterer and Hotelkeeper, websites, local business networking organisations. (C) Make sure that the information is from a reliable source and the information is current. (D) Discuss and agree what information sources each team member will gather as well as the type of information to gather. See task 2 below. (E) List in the table below the team, information source and the name of those team members who will gather the information. Sources of information Enterprise in the Hospitality and Catering Industry Team member Name

Research to current trends and business environment Task 2: Size of Hospitality and Catering business type Hospitality and Catering establishments come in all shapes, sizes and locations. (F) Create a mind map Identifying businesses of different size and types as follows: • Micro Hospitality and Catering business – up to 9 staff e. g. Local café or shop. • SMEs (small and medium enterprises: a) Small enterprise between 10 - 49 staff members e. g. small local hotel or a local Bakery. b) Medium enterprise between 50 – 249 staff members e. g. 100 + seat local restaurant. • Large Hospitality and Catering business - more that 250 staff members e. g. Hilton International or Starbucks Coffee. • Start-ups and existing Hospitality businesses. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 2: Size of Hospitality and Catering business type Hospitality and Catering Micro Mind Map SMEs Size of the business Large Enterprise in the Hospitality and Catering Industry Start-ups

Research to current trends and business environment Task 2: Size of Hospitality and Catering business type Hospitality and Catering • Discuss and agree in your Enterprise team what size and type of enterprise you would most likely to go ahead and Plan. Task 1. • State the size and type of enterprise you will plan as a team. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 3: Factors to consider in the current business environment that may affect businesses in the Hospitality and Catering industry. Discuss, Identify and state at least six factors that may affect business in the Hospitality and Catering under each heading in the table. • National Factors - ( political issues, government support e. g. grants, taxation, the economy, e. g. employment level ) • Local Factors - ( location of business, staff available, premises, location of e. g. food suppliers, competitors and customers ) • International Factors - ( competitors, global economy, location and environmental ) Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 3: Factors to consider in the current business environment that may affect businesses in the Hospitality and Catering industry. Location National Factors (political issues, government support e. g. grants, taxation, the economy, e. g. employment level) Local Factors (location of business, staff available, premises, location of e. g. food suppliers, competitors and customers) International Factors (competitors, diets, religion, global economy, location and environmental) Enterprise in the Hospitality and Catering Industry Factors to consider

Research to current trends and business environment Task 3: Factors to consider in the current business environment that may affect businesses in the Hospitality and Catering industry. Discuss and state the impact of the above factors on a new Hospitality and Catering business start-up. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 3: Factors to consider in the current business environment that may affect businesses in the Hospitality and Catering industry. Each product or service idea will have its strength and weakness. To establish the strength and weakness of any product or service you need to consider the following: • • • The availability of produce, material and equipment. Location. Cost of raw produce, material and equipment. The specific knowledge and skills required to produce a product or service. Availability of skilled staff. Storage area. Health and Safety aspects. Potential competition. Potential demand for the product or service. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 3: Factors to consider in the current business environment that may affect businesses in the Hospitality and Catering industry. Discuss and agree the potential opportunities and risks in the current business environment that could affect a Hospitality and Catering business star-up using the SWOT model below. List the strength, weaknesses, opportunities and threats in the template below. Note: the opportunities box should be generated from the weaknesses and threats. Strengths Weakness Opportunities Threats Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 4: Trends affecting Hospitality and Catering Businesses. There a number of trends that can affect the Hospitality and Catering industry such as: Social trends e. g. a) Population changes in an area, people live longer. b) Households and families e. g. more couples cohabiting therefore less getting married. Couples have fewer children. c) Education and training e. g. more individuals take vocational courses. More apprenticeships. d) Labour market e. g. an increase in flexible working hours. More individuals out of work. e) Increasing travel time to work e. g. due to traffic and longer commuting to work. • • • Technology trends e. g. a great increase in the use of Information Technology, Social Media, telephone and Website. Environmental trends e. g. a great increase in renewable energy and recycling. Ethical trends e. g. carbon footprint, use of child labour, animal welfare, contribution of the business to the local community and culture. Establish values of an organisation and ethical codes to address ethical concerns. e. g. Starbucks Coffee. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 4: Trends affecting Hospitality and Catering Businesses. Carry out research using the web and books based on the above four trends and note any important facts that may affect the Enterprise plan. Agree as a team who will research each trend. Explain what you will consider important based on each trend for the Enterprise start-up. Social Trends: Technology Trends: Environmental Trends: Ethical Trends: Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 5: Plan an idea for a new Hospitality and Catering Business. Before opening a successful Hospitality and Catering business you must produce a Business Plan. The plan needs to look at the advantage and disadvantage of other successful Hospitality and Catering businesses, different ideas and concept, resources, time, finance, location and own personal commitment. • Research using the website and watching video clips to agree what approach you will take to ensure a successful Hospitality and Catering business based on the following headings: • Innovative solutions e. g. Jamie’s Fifteen Restaurant, River Cottage or Café Republic. • How will you meet customer needs e. g. product, service, gaps in the market or providing a better product or service than competitors. • Identifying new needs e. g. using Social media and websites. • Continuing to meet established customer needs e. g. improve standards, reacting to customer feedback. • Having an entrepreneurial approach gain ideas from well known entrepreneurs in the Hospitality and Catering industry e. g. Jamie Oliver, Gordon Ramsey, Hugh Fearnley-Whittingstall. • Creating a strong vision and seeing it through. eg. Disney, or Compass Catering, Starbucks Coffee. • Measure success and look at how companies measure success e. g. financial, social, number of return customers and customer satisfaction. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 5: Plan an idea for a new Hospitality and Catering Business. Discuss in you team the findings. Tasks Success features Innovating solutions e. g. River Cottage using local ingredients that are healthy and are produced using no pesticides and have a low carbon footprint. Explain the features that you will adopt from the research as part of the plan. Meeting Customer Needs Identifying new needs Continuing to meet established customer needs Entrepreneurial approach Developing a strong vision and seeing it through Measuring success Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 6: Establishing Hospitality and Catering business ideas. A Hospitality and Catering provides a product or service. Therefore, to come up with a successful idea you need to find a gap in the market. You need to research the current local market and identify any gaps or opportunities. Discuss in you enterprise Hospitality and Catering team practical and realistic products or services you could offer. Using the ideas you have discussed, create a mind map identifying at least ten ideas. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 6: Establishing Hospitality and Catering business ideas. b) Discuss in your Enterprise team which two products or services you would most likely to go ahead with. c) Describe using the above information looking at strength and weakness of two possible ideas. Product / Service 1 Product / Service 2 Strength Weakness Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 6: Establishing Hospitality and Catering business ideas. Then discuss, choose and state which product or service idea you will establish. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 6: Establishing Hospitality and Catering business ideas. Discuss and agree on an ideal location. State the following four points: Property – new, old and need to be refurbished. Shape – Round, Square, Rectangular. Style – Modern, Traditional, Rustic. Accessibility – Wheelchair, Prams near a Shopping area. Location Property Shape Style Accessibility Enterprise in the Hospitality and Catering Industry Type

Research to current trends and business environment Task 6: Establishing Hospitality and Catering business ideas. Target Customer - Profiling Discuss in your team the likely demand for your enterprise product or service. Think how many potential customers you may have per day. Estimate the likely demand for your enterprise product or service. How many customers per day will visit and spend. e. g: a Cupcake Shop with 120 per day customers spending £ 3. 50 each. Per day. = 120 x £ 3. 50 = £ 420. 00. Open 5 days a week = 120 cup cakes x 5 days = 600 x £ 3. 50 send person = total sales a week £ 2, 100. Number of customers per day = Spend per customer on average £ Number of days open = Total number of customers per day x days open = x spend person £ Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 7: Assessing the suitability of an idea for a Hospitality and Catering business start-up.

Research to current trends and business environment Task 7: Assessing the suitability of an idea for a Hospitality and Catering business start-up. Discuss the projected customers and spend person. Agree as a team the projected number of customers and spend person. Calculate the projected customers and revenue per year. Number of Customers per day = Number of Customers per week = Number of Customers per 12 months = Total Spend person e. g. Food £ 3. 50 Beverage £ 1. 10 Number of Customers x Spend = £ Food £ Beverage £ Total Food & Beverage £ Enterprise in the Hospitality and Catering Industry To estimate the cost within the Hospitality and Catering industry you will need to apply a % cost on the total revenue as follows: e. g. If you have made a revenue of £ 31, 200. 00 in a year the wage cost would estimate at 25% = £ 7, 800. 00 per year. Total Food Cost = 25% Total Beverage Cost = 13% Total Sales (Food, Beverage and Others) Wages = 25%. Promotional Cost = 1% Utility = 5% Rent 1% Other Cost = 2% Materials = 5% Estimated Profit = 23% The most practical method of projecting profit and loss in the Hospitality and Catering industry is working on a % cost of sales. The % cost of total revenue is practical for three main reasons. These are: • Is it a practical method to use in assessing the suitability of an idea for a Hospitality and Catering in working out profit and loss. • It increases the chance on an enterprise covering its costs and • Increases the chance on an enterprise being able to control the costs once started.

Research to current trends and business environment Task 7: Assessing the suitability of an idea for a Hospitality and Catering business start-up. To calculate the cost of running the enterprise you will need to insert each cost % in each column below. Note: Any equipment that you purchase will go under Capital Spend. (As this is an investment to the company this will not appear in the annual Profit and Loss) Any profit made Profit and Loss Costs Record a) b) c) Type of Cost Food Cost Beverage Cost Wages % to apply 25% 13% 25% d) Promotion 1% e) Utility 5% f) Other Costs 2% g) Materials 5% h) Rent 1% Estimated / Projected Profitability Enterprise in the Hospitality and Catering Industry Total Cost £ £ £ £ Note: Any equipment that you purchase will go under Capital Spend. (As this is an investment to the company this will not appear in the annual Profit and Loss) Any profit made can be kept to purchasing e. g. new equipment in the future.

Research to current trends and business environment Task 7: Assessing the suitability of an idea for a Hospitality and Catering business start-up. Discuss and estimate the start-up costs for the enterprise. Include: • • • Equipment Deposits for any rent Any Materials you may need to purchase. Include: Cleaning materials, paper, napkins… Promotion Training e. g. Food Safety, Health and Safety. List the start-up costs below: Item Cost Total £ a) b) c) d) e) f) g) h) Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 7: Assessing the suitability of an idea for a Hospitality and Catering business start-up. Discuss and identify any major barriers to set up the Hospitality and Catering enterprise. Consider the following: • • • Large start-up costs Cash flow Licences Competitors No skilled or experienced staff. State the major barriers for setting up the Hospitality and Catering enterprise. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 8: Present a business model for a Hospitality and Catering business start-up. Before you start trading you will need to consider what legal form the enterprise will take. There are four main types: • Sole trader – Most new businesses in the UK choose to be a sole trader. It relatively informality. As a sole trader the business is your asset. If the company fail you will need to pay all the bills. The Capital to start the company must come from you or a loan e. g. the bank. The good part is that you are the boss. • Partnership – Very similar sole trader but with a number of partners (which are a collections of sole traders). By pooling resources you can share ideas, skills, money, and if you are ill the company can still carry on. Some disadvantages are if a partner make a mistake you may need to pay for it. If your partner goes bankrupt in his personal account you may have to pay him/her out of the business. The Partnership Act state: 1. 2. 3. All partners contribute to the set up of the company in capital (money). All partners share the profit and losses equally. All partners have an equal say in managing the business. • Limited Company – A limited company has a legal identity of its own. You can raise capital / money by selling shares to others. A limited company can be set up by two shareholders but one must be a director. The disadvantage is, it costs money for the accounts to be audited. The advantage is that the shareholders / owners will not be liable as individuals for any business debts. • Public Limited Company (plc) Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 8: Present a business model for a Hospitality and Catering business start-up. Discuss at a team the four main different formats / type of business you could set up. Agree what are the main features. Define each format / type below. Discuss the advantage and disadvantage of the four format / type. Note the advantage and disadvantage for each Format / type. At least two in for each. Sole trader: Type / Format Sole trader Partnership: Limited company: Public Limited Company (plc): Partnership Limited Company Public Limited Company (plc) Enterprise in the Hospitality and Catering Industry Advantage 1. Disadvantage 1. 2. 2. 1. 1. 2.

Research to current trends and business environment Task 8: Present a business model for a Hospitality and Catering business start-up. Discuss and chose the format / type of company you will set up. Explain what format / type the team have agreed on and give the reason why? Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 9: Sources of help and support in developing a new Hospitality and Catering business. There a number of different sources of help available to set up a new business. • Sources of help include: finance (bank mangers or advisers grants by local council or projects) start-up capital (selling shares to family members, friends or interested buyers) research ( look at other Hospitality and Catering businesses) Independent advise ( Business Links) as well as Local authority and Local Government. • Support networks include: Chamber of Commerce, Trade Associations, Mentors, Professional Bodies, Family and friends. Social network. Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 9: Sources of help and support in developing a new Hospitality and Catering business. As a team research to see what is available as support in developing a new Hospitality and Catering business. Discuss what you have discovered. Create a mind map to record the findings. Start-up capital Support networks Independent Advice Shares Support Finance Enterprise in the Hospitality and Catering Industry Research

Research to current trends and business environment Task 9: Sources of help and support in developing a new Hospitality and Catering business. Make a list of the possible support that you will access and make a note of who will action this and by when. Support Who and how? Enterprise in the Hospitality and Catering Industry By When? Date Results

Research to current trends and business environment Task 10: Business Plan Business name Location 1/4 Type of Business Produce or Service Feature Sole trader Partnership Limited Company Public Limited Company Profile of Customers Age Range: Gender: Interest: Reasons why the above profiled customers are likely to buy the product or service. List of potential competitors: Enterprise in the Hospitality and Catering Industry

Research to current trends and business environment Task 10: Business Plan 2/4 Reasons why the potential customers will use the new Hospitality and Catering Enterprise. How will the Hospitality and Catering Enterprise deliver the product or service to the customer? e. g. Direct Selling: Franchise: Internet: Business Aims and Objectives: including SMART OBJECTIVES Include: Turnover, number of outlets, number of staff and number of customers. Any development in the product or service. Short Term Enterprise in the Hospitality and Catering Industry Medium Term Long Term

Research to current trends and business environment Task 10: Business Plan State the influence that the stakeholders will have on the business Owners Employees Customers Financiers Suppliers Local Community Enterprise in the Hospitality and Catering Industry 3/4

Research to current trends and business environment Task 10: Business Plan Attach: • Finance and Cost Start up • Evidence to justify why the idea will be successful from the research related to the current local market. Enterprise in the Hospitality and Catering Industry 4/4