Applying the Business Model Canvas on Haji Yahya’s Restaurant in Ipoh
Mohd. Afandi Abu Bakar1*, Aw Yang Huey1, Mohd. Fareh Majid2, Normala Ismail3
1 Faculty of Business and Management, Universiti Teknologi MARA, Perak Branch, Seri Iskandar Campus, Seri Iskandar, 32610 Perak, MALAYSIA.
2Faculty of Architecture, Planning and Surveying, Universiti Teknologi MARA, Perak Branch, Seri Iskandar Campus, Seri Iskandar, 32610 Perak, MALAYSIA.
3 Faculty of Business and Management, Universiti Teknologi MARA, Pahang Branch, Jengka Campus, Bandar Tun Abdul Razak, 26400 Pahang, MALAYSIA.
*Corresponding Authors: [email protected], [email protected] Accepted: 15 June 2022 | Published: 30 June 2022
DOI:https://doi.org/10.55057/ajrbm.2022.4.2.8
__________________________________________________________________________________________
Abstract: The purpose of this research was to evaluate a business model for Haji Yahya’s restaurant in Ipoh. It is a traditional restaurant situated at one of the busiest roads in the new town. The Business Model Canvas (BMC) applied here consists of customer segments, value propositions, channels, customer relationship, revenue streams, key resources, key activities, key partnership, and cost structure. A qualitative descriptive analysis was used to analyse the data that was collected through focus group discussions and observation. A TOWS analysis was conducted for strategy creation. From the TOWS matrix, alternative strategies in business development of this restaurant were chosen. The authors have suggested several ways to promote the restaurant, such as running happy hour deals, offering video tutorials on how to cook signature dishes, such as rendang tok and chicken rendang, bundling and loyalty offerings, franchising, collaborations with more third-party deliverers, and improving parking by providing parking information to restaurant-goers.
Keywords: business model, TOWS analysis, loyalty offerings
___________________________________________________________________________
1. Introduction
BMC consists of nine (9) building blocks, namely, customer segments, value propositions, channels, customer relationship, revenue streams, key resources, key activities, key partners, and cost structure. This study was conducted to determine how this 9-block business model can be applied to Haji Yahya’s restaurant, which serves a variety of authentic and mouth- watering Perakian cuisines that can be eaten with rice. As an introduction, we will start with the target market, which can refer to the needs, wants, behaviours, or categories of consumers according to their income level. The target market usually refers to the residents living within 30 km from the restaurant. However, customers may also come from further away to enjoy the special cuisine offer there. Thus, the target market for this case can be divided into four categories: those from the surrounding community; those who work in factories, offices, and shops nearby; those in schools, colleges, and universities; and those who love the cuisine being offered.
2. Why do customers turn to this restaurant and how does it communicate?
The second building block is value propositions, which refers to the value that can be built around the products and services provided. Among the elements that can be used to build value propositions for the customers of Haji Yahya’s restaurant are the special menu being offered since the ‘70s. The restaurant has been serving delicious and freshly cooked dishes from the kitchen, the best selection of different menus, such as grilled chicken, goat korma, lontong, and curry noodles. Other dishes are also available at affordable prices, and orders are served quickly, in an accessible and comfortable dining atmosphere. The methods used by the restaurant to communicate its offerings to individual customers are known as channels. This term refers to the ways this restaurant creates customer awareness of their business, as well as help customers buy their products, followed by making deliveries and offering after-sales service. News about this restaurant spread by word of mouth and large signboards, while the restaurant owners make advertisements and marketing through social media, such as Facebook.
Customers can also easily contact the owners through various apps on their smartphone, such as WhatsApp dan Messenger.
Strong customer relationship
This restaurant maintains a good relationship with its customers in order to retain them and for the sustainability of the business. With a strong customer relationship, they can increase their sales, in addition to fulfilling several goals, such as upselling or repeat customers. We recommend this restaurant to do more upselling activities, as it is a common strategy used by restaurant owners to increase their profits. Haji Yahya’s restaurant employs friendly staff and waiters, who follow the SOP provided. They have also attended courses and received additional training to provide the best service to their clients. The restaurant owners have created a mechanism on their website for customers to give feedback that allows corrective action to be taken immediately. The restaurant owners have also created a community on Facebook and always interacts with the customers. This strong customer relationship will determine the restaurant’s revenue stream, which consists of the sale of food and beverages, as well as catering services. In terms of the price mechanism, it is often subject to the price of raw materials and the portion of the food being served.
3. Key resources, key activities, key partners and cost structure
The sixth building block is key resources. It includes having a restaurant building that has been renovated by the owners, with improved workstations, kitchen and cooking equipment, point- of-sale and utility systems, intellectual resources, such as special recipes that have been passed down for generations, human resources that include reliable cooks, as well as the owners’
capital. Family recipes are invaluable, thus, we recommend that the owners protect these recipes to prevent intellectual property theft.
The key activities of this restaurant include preparing food and beverages, serving customers, cleaning and sanitising the restaurant according to the guidelines set by the Ministry of Health Malaysia, as well as inventory management and finance. The restaurant has several key partners that help run their business. These partners include the numerous suppliers of raw materials for food preparation, beverages, equipment for preparing food, cleaning supplies, etc.
The local authority and the delivery company are also part of their key partners. In this case, Haji Yahya’s restaurant has registered for the GrabFood food delivery service.
The cost structure of this restaurant includes the variable cost of raw materials for food and beverage preparation, shop rental and utility costs, marketing costs, employee cost, and licensing cost. The restaurant owners need to manage the rising production costs with specific strategies to maximise value and reduce cost. For example, they need to manage their production properly and efficiently, develop work automation, and nurture cooperation with suppliers who can supply raw materials at lower prices.
Haji Yahya’s Restaurant Business Model Canvas Key partners:
1. suppliers of raw materials (food and beverage ingredients) 2. suppliers of equipment for preparing food 3. cleaning supplies 4. the local authority and the delivery
company
(GrabFood food delivery service) 5. mobile
applications for delivery orders
Key activities:
1. preparing food and beverages 2. serving customers 3. cleaning and sanitising the restaurant 4. inventory management and finance 5. experiment on new recipes to provide customers with new dishes 6. training the staff members
Value
propositions:
1. special menu 2. delicious and freshly cooked dishes
3. the best selection of different menus to meet the needs of customers 4. affordable price
5. comfortable dining
atmosphere
Customer Relationships:
1. friendly staff and waiters
2. provide the best service to their clients
3. trust, politeness, honesty
4. website for customers to give feedback
5. create a
community of fans on social media platforms
Customer Segments:
1. customers from the surrounding community 2. those who love the cuisine being offered.
Key resources:
1. a restaurant building with improved workstations 2. kitchen and cooking equipment 3. special recipes
4. a well trained workforce 5. owners’
capital
Channels:
1. advertisements and marketing through social media
2. word of mouth
Cost Structure:
1. the variable cost of raw materials for food
Revenue Streams:
1. the sale of food and beverages
2. shop rental 3. utility costs 4. marketing costs 5. employee cost 6. licensing cost 7. equipment cost
4. Identification of SWOT, Maxi-maxi strategy, Mini-maxi strategy
▪ Strengths: reasonable food price, a variety of food, delectable dishes freshly delivered from the kitchen, a loyal customer base, and a great location in the centre of the town.
▪ Weaknesses: lack of upselling activities, lack of labour, most work requires hands-on labour, and not offering cooking classes.
▪ Opportunities: franchising for expansion, use affordable machinery to reduce labour shortage, ready worker market and higher priced food at other restaurants.
▪ Threats: other restaurants nearby, the younger generations prefer fast food, increasing demands for food delivery, and lack of parking spaces.
The aim of Maxi-maxi strategy is to utilise internal strengths to make optimum use of the external opportunities available to the restaurant. The restaurant owners need to maintain the deliciousness and freshness of their cuisines to attract more customers. Studies have shown that tasty and delicious food at an affordable price is among the aspects considered by customers in choosing a restaurant to dine in. The location of the restaurant in the new town is strategic and close to private and government offices, as well as other shops. The owners should also focus on people who work in factories, offices, and nearby shops, and cater to them as regular customers by offering restaurant loyalty programs. The owners can also grow their business by franchising and conducting collaborations with more third-party deliverers.
The Mini-maxi strategy attempts to minimise the weaknesses and to maximise the opportunities. The owners need to increase their upselling activities to increase the revenue stream of the restaurant. For example, they can upsell online orders to increase customer base.
In addition, they can create video tutorials on how to cook some of their signature dishes, such as rendang tok and chicken rendang to increase their revenue stream. To solve their labour shortage, the owners can purchase food/vegetable processing equipment to help them during food preparation and hire senior citizens who are still able to work to help them. Another way to promote the restaurant is to create bundling offerings. The owners can also offer 2 or more items at a lower price than an a la carte purchase to increase their food sales.
5. Conclusion
In this case study, a TOWS analysis was used for strategy creation. Several strategies can be formed in the development of this restaurant business based on the TOWS matrix. The authors have suggested the following methods to promote the restaurant: running happy hour deals;
offering video tutorials on how to cook signature dishes, such as rendang tok and chicken rendang; bundling and loyalty offerings; collaborations with more third-party deliverers; turn to franchising for expansion; and improving parking opportunities by providing parking information to restaurant-goers.
References
Aman Shah, Sarimah Hanim; Soon, Teik Lan Cecilia; Mokhtar, Nurul Syamsida; Shafie, Sharida Zaina; Mohamad, Mastura. (2018). Entrepreneurship. Oxford Fajar Polytechnic series.
Ariffin, Sodri; Hamidon, Syahira (2017). Introduction to Entrepreneurship. Oxford Fajar Sdn.
Bhd.
Ariffin, Sodri; Ab. Wahab, Ismail; Hambali, Zarida (2004). Fundamentals of Entrepreneurship. Oxford Fajar Sdn. Bhd.
Hwei Choo,Teh; Ahmad, Nabila; Zulkhairi, Nisa; Mohd. Ramli, Irlisuhayu; Abd. Ghani, Rosmaiza (2017). Fundamentals of Economics. Oxford University Press.
Muhammad Isa Indrawan, Muhammad Dharma Tuah Putra Nasution, Efrizal Adil, Yossie Rossanty (2016). A Business Model Canvas: Traditional Restaurant “Melayu” in North Sumatra, Indonesia. Business Management and Strategy, 7 (2), 102.
https://doi.org/10.5296/bms.v7i2.10193
Ng, David S. H. (2001). Economics Made Easy. Kumpulan Budiman Sdn. Bhd.
Purwantoro, Purwantoro and Rohmah, Rina Ari (2017). Used the Business Model Canvas (BMC) to create alternative strategies in Business Development of the Micro Small Medium Enterprises. https://doi.org/10.31219/osf.io/7evdj
Purwantoro, Purwantoro (2019). Evaluasi Pengembangan UMKM Kabupaten Rokan Hulu menggunakan Business Model Canvas. Jurnal Nusantara Aplikasi Manajemen Bisnis 4 (2), 165-174. https://doi.org/10.29407/nusamba.v4i2.12977
Salvatore, Dominick; Mohd. Khalili, Jamaliah; Abdul Rashid, Arlinah; Ismail, Ismadi;
Amiruddin, Rosilawati; Narayananet, Suresh (2012). Essentials of Managerial Economics. Oxford Fajar Sdn. Bhd.
Sekaran, U. and Bougie, R. (2013). Research Methods for Business: A skill building approach.
John Wiley & Sons Ltd.
Slavik, Stefan and Bednar, Richard (2014). Analysis of Business Models. Journal of Competitiveness 6(4), 19-40. https://doi.org/10.7441/joc.2014.04.02
Vengedasalam, D.; Madhavan, K. (2013). Principles of Economics. Oxford Fajar Sdn. Bhd.
Yeop Yunus, Nek Kamal (2013). Customer Retention Strategies. Penerbit Universiti Pendidikan Sultan Idris.
