The Lodge Bistro Chain case study Part A The Lodge Bistro is a chain of restaurants established in 1989 by Joyce Lodge. It has grown into a group of 25 restaurants. Uniform approach that worked in the early stages of the business stumbled across several external factors influencing the environment in which chain is operating and it has resulted in a numerous internal problems at the chain.
Introduction of a less informal management structure created inconsistency in a service and quality of the food, training new personnel and appraisal forms.These falling standards are detracting new/potential customers looking for a value. Modification in a culture of The Lodge Bistro created division between old and new managers who do not share the same vision and principles of the business anymore. Falling revenue and market share together with high staff turnover put more pressure on Patricia, new CEO, who already had to respond to new challenges such as economic recession and competition. Part BTo understand The Lodge Bistro problem we need to appreciate ‘the external environment’ (Preston, D, Fryer, M, Watson, G, 2006, p.
17) as a world in which the business operates that is influenced by five named factors (STEEP model): sociological, technological, economic, environmental and political. These elements affect the stakeholders’ behavior and actions. Dated concept of a bistro depends on an older clientele with lower budget to spend. Consumers’ spending patterns during the recession are primarily driven by money to value ratio hence fast food chains flourish.
The idea of a bistro with its current rules has constrained the business by not allowing any alterations according to technological changes. Economic downturn is seen as a factor changing not only the structure of a business and its culture but as well adds to financial uncertainties for businesses and customers. New competitors entering the market have stronger customer base and structure (bigger chains with marketing, human resources and IT departments like Costa Coffee).Growing environmental concerns of a public influence its purchasing decisions.
Some of The Lodge Bistro managers recognised this problem and reacted to it by reducing packaging. Increasing pressure from The Lodge Bistro stakeholders to act now is impacting on a chief executive’s decisions and its inconsistency (moving away from established strict rules and structures and introducing more informal ones only to go back to the old rules when standards of the service fall). Part CTo face present and future threats, The Lodge Bistro chief executive and management need to perform SWOT analysis (Preston, D, Fryer, M, Watson, G, 2006, p. 17) of its weaknesses (formal structures and rules, inconsistency, small customer base, falling standards) and strengths (with 25 branches it offers good access, long established name/reputation, some of the most experienced staff, CEO with management experience and understanding of the business culture). Based on this The Lodge Bistro should build a new concept of a restaurant that will innovate the market and threaten competition.
Opportunities created by the change (customer base expansion, market leadership and expansion) should be recognised by all company actors. They will create new business culture of high-quality performance, as planned by Patricia, only when some formal structures and rules are applied with a level of flexibility allowing adaptation to ‘external environment’ (Preston, D, Fryer, M, Watson, G, 2006, p. 17). Reference: Preston, D, Fryer, M, Watson, G (2006), What is a business? Milton Keynes, The Open University.
