MBSA 2313

New Venture Creation (NVC)

SEMESTER I, 2015/2016

Amandas Restaurants (A)

Lecturer

: Dr. Adriana Mohd Rizal

Student Name

: Teo Yin Cheng

Matric Number : MBS141153

Question 1
(a) Explain how did the business concept of Amandas restaurant first initiated?
Amanda West would like to switch to the consumer services, particular in social and
environment mission after having a six years working experience with Sun Microsystem and
Cisco System. She was interested in the food industry because she think that food was a common
consumer goods which people buy everyday and it was spent by all socio economic levels.
Trader Joe, a food retailer who provide natural unique food at an affordable price had inspired
Amanda to set up her own business. Amanda was a MBA students from Stanford University. She
did her research and networking within the food industry during her first year study of MBA.
She did her internship at the food distributor who distribute high quality natural meal. The
internship period was very important for Amanda to initiate her business concept and build a
strong foundation for her future business concept as she was receiving first hand industry
information and experience.
A book named Fast Food Nation which critiqued Americans unhealthy fast food culture had
inspired Amanda to generate her own business concept. After reading the booking, she was able
to identify that most of the American lived in a fast pace life where this situation could lead to
the fast growing of fast food industry with increasing demand. Besides that, Amanda realized
that American women was re-entering to the workforce and they were no longer cook at home
for the family. In this scenario, fast food had become an affordable and convenient option for
them. However, most of the fast food option was lack of health alternatives. The problem of
limited choices in fast food market had been recognized by Amanda as a business opportunity.
She had started to plan to start a healthy fast food restaurant during her study time.
Amanda had joined an evaluating entrepreneurial opportunities course in her MBA to further
explore her business concept. She team with other classmates who made up from different
background like finance, public relation, and other field from the study course. She was able to
listen to the sharing of others and have a better understanding of the industry from different
perspective by knowing and grouping with them. The earliest business idea of Amandas
Restaurant was emphasizing at the keystone idea of health and natural fast food

(b) Imagine you are a classmate of Amanda Wests in 2005, what do you think of her
concept (Pros and Cons)?
The Pros of Amandas business concept was emphasizing in healthy fast food. She realize that
American culture was highly depending on fast food for their mean during her earlier
observation. The fast food option was also very limited healthy option. Furthermore, she found
out the number of American women to reenter workforce who had no time to cook for family are
increasing. And this is the reason she decide to go for the fast food with healthy option concept.
Food was a daily consumption goods where Amanda had a very big potential market for her
business concept.
Besides that, Amandas business concept matched with the current market trend which the fast
food was highly demanded. Her idea of using healthy ingredient in the fast food was new and
attractive in the market. Customer will be interest for this new business concept. Natural and
healthy concept fulfil Amandas vision who want to contributing to social and environment
responsibility. Amanda could increase the health awareness among the customer in US industry
if her business concept could be launched. This achievement could fulfil the mission that she set.
Whereas for the Cons of her business concept was the public perception for fast food. Amanda
received warning from her school tea, about the perception of healthy and natural food were
difficult to provide great tasting experience where the business concept was too limited in scope.
During the early interview, Amanda also understood that she could be difficult to control the cost
of food for her healthy concept and price the food at a reasonable price. This is because the cost
of healthy ingredients are more expensive than normal ingredient that used in the fast food.
Amanda was trying to relate her business to the social responsibility which could be difficult for
her to incorporate to her business at the early stage.
Moreover, Amanda did not received a good support and received some warning to her business
conept from her school professional and industry professional who had the experience. They
believed the first time restaurant was difficult to success where only 39 percent success rate for
restaurant business. Additionally, business capital which is about 1 million dollar was too high
for her startup capital. She might have difficulty to raise the fund from other investor because
investor do not put high expectation from the food industry. She will need to find a chef who had

experience and knowledge in operation rather than only cook the food to customer for her new
company.
(c) Would you advise her to launch the business?
I will not advise her to launch this new business if I was Amandas friend. She had to ensure she
got enough fund to support her business. The capital fund she need to raise was too high and not
realistic for a new startup company. Most of her expectation was not realistic and it is diffult for
her to find investors who share the same philosophy or passion with Amanda. Furthermore, she
was not emphasized in the rate of return and it tool ten year long term investment which is not
easy and attractive to find the investor who are willing to do so. Although Amandas business
concept was new in the market, but the food industry was very competitive and mature in term of
different or similar business concept. She need to compete with various popular restaurant in the
market who had been gaining the public interest which is very challenging and difficult.

Question 2
(a) What are the social trends (observations) that Amanda has found her research on
American Food industry?
Amanda noticed that American were very obsess with fast food because of their fast pace
working life style in her early study from movie and book. She also notice that American women
were reentering workforce and no longer cook for their family in home. When they are working,
they did not have the time to cook for their family so fast food which is affordable and fast
serving time become their preference. Most of the fast food in the market was not healthy for the
people. Amanda also recognized that it was challenging to gain the trust from public at the early
stage. The social responsibility by the company created at the early stage were not convincing.
(b) Explain the real problem(s) found in the industry?
In the early interview by Amanda and her team, they are managed to meet with Greg Walford
who had launched a smoothie business in Houston, Texas. Amanda team was told by Waldorf
that location issue caused his business failure. From Woldorf case, Amanda team realize that the
restaurant could not be successful if the business location was incorrect. Besides that, Amanda

team realize some of expected challenged that they will face. The most challenging part was the
healthy food will be sold at a higher price compared to the unhealthy food. This is because the
cost of healthy food are higher. Thus, it could be difficult to manage the food cost and control a
reasonal selling price.
Moreover, public perception for fast food with healthy food are not common and difficult to link
in American food industry. Feedback of healthy and natural food was difficult to be translated
into a unique and great tasting experience was collected from the focus group during the
interview session. The focus group had mentioned clearly that the perception of how hamburger
should taste like was pretty fixed where people just want an indulgent burger not a healthy one.
Other than food taste, Industry profession and investor did not put high expectation for the food
industry business. Most of them believed the first time restaurant normally failed. The challenge
become obvious when Amanda was trying to find a business location. When Amanda satisfy with
certain place. She found difficulty to get the rental place because most of the retail landlord were
not willing to rent for the first-entrepreneur. The landlord perceived that restaurant were
normally more risky compared to other typical retail tenant.
Besides that, rising capital was difficult for Amanda because of the bad perception among the
people. The investor do not have enough confidence for food industry. People are not willing to
join the higher competition industry like food industry. Although the food are daily consumer
products, but there are many matured company who had been in the market for years.
Furthermore, it was difficult to find a chef who had the operational experience and also equipped
with good cooking skills. The chef needed to know how the similar business ran during the
startup stage. An experienced and reputable chef was needed to ensure Amanda restaurant could
get the sourcing discount equipment and preferred price from the suppliers. From the case,
Amanda was doing interview in Bar area with several chef but only one chef have experience
with chain restaurant and quick service for food industry.

(c) How important are networking and team in setting a firm within the food industry?

Amanda graduated degree in Economic and having six year working experience in Sun
Microsystem and Cisco System according to Amandas resume. She would like to switch to
another working field which she was not familiar with. She joined the MBA in Stanford
University and enrolled in an Evaluating Entrepreneurial Opportunities (356) course. She was
able to team with classmate from different background such as finance, PR, and Journalism from
the course. She was able to receive various feedback from different perspective. For instant, she
received the feedback that the business concept was too limited as she would like to start with
only one unit and relatively fixed food and labor cost.
A good networking allow Amanda to interview with those entrepreneur with rich experience like
Waldorf. He was giving location advice to Amanda based on his past experience. In addition,
Amanda used her networking to find design student Alex Ko to help the team create a logo and
branding material for business plan during 356 course.
Team work had helps Amanda to conduct interview with different industry expect and started the
interview with the target market. Moreover, by going through with the addition project in the
course, Amanda team had determine the restaurants branding strategy, human resources needs,
marketing and pricing plan. Team member from different background was helping to come out a
detailed business plan with economic model, rough timeline and an estimate of the funds have to
be obtained.

Question 3
(a) What are the early assumptions that Amanda and her team have in term of the value
proposition and target market?
The early assumption for the Amandas business believed that more and more American were
relied on the fast food as a convenient and affordable dining option. But most of the fast food
was not healthy. Besides that, she believed that the increasing of female in the workforce had
contributed to the rising number of people consuming on fast foods as they seldom cook for
family. Amanda contemplated starting a healthy fast food restaurant and targets those working
women family between ages 20-50. They would like to have a restaurant which provide fast food

with healthy and natural choices. The fast food restaurant was ran by Amanda with a social
mission.

(b) After they conducted a focus group, what were the critiques given by the participants
regarding the two elements above?
During conducting in focus group, the team was concentrated on Amandas concept of healthy
and natural fast food. They were trying to attract customer to the restaurant by distinguish itself
from other typical fast food. Focus group participants reacted strongly against the idea and they
believed that food with healthy and natural was not providing good taste experience. The food
with healthy and natural was no unique for them. Additionally, they criticize the bland menu will
only know by the people who had health conscious and distrust for a company running on a
social responsibility. Besides that, the focus group respondents also stated that the perception
regarding the fast food. They mentioned that hamburger taste was pretty fixed and they prefer
indulgent burger but not healthy and less tasty burger.

(c) What are the validated value proposition and target customer?
Amanda had decided to adjust her positioning to emphasize the quality of the product and
services and less prominent in social mission after series interview. The new tagline was feel
good and fast food. In order to maintain the tastiness of the fast food, Amanda and her team
plan to provide low-fat soyinfused hamburger and decided to serve 100% all natural beef patties
instead.
The value proposition of the Amanda restaurants food must be tasty but healthy and set in the
reasonable price. By achieving the healthy and tasty food, Amanda worked with the chef
Noveshen to create custom sauces for the customer. Chef Noveshen had decided to do housemade allnatural sodas. Amanda was look for the hormone-free and sustainable-farmed meat as
well as organic produce as an ingredient in order to maintain the food taste. Amanda also
prepared cookies as a treat for customer to feel comfortable indulging everyday.

Amanda found another value proposition which the target people wanted to eat nutritious,
convenient foods in portion sizes that are satisfying but not overly-filling after a series of
interview. They would like to mix and match menu items to create several different meals that
will not only taste good but also complement their healthy lifestyles.
Moreover, Amanda build a menu with healthy guidelines which providing calories, right balance
of protein, carbohydrates and fat, and suggested fruit and vegetable option information to her
customer for the social responsibility value proposition. She care about the people health but not
only concern about the benefit or selling of the foods.

Question 4
Evaluate the job west has done on the following:
(a) Validating her idea
Amanda realized that American people relied on fast food as their dining option but most of the
option was unhealthy. Amanda was inspired by Trader Joe who provide natural unique food at
affordable price. Thus, Amanda would like to have a healthy fast food restaurant.
By starting this business idea, Amanda had formed a team with her 356 classmate. By discussing
with her teammate, Amanda had widen her idea and different scope of thinking. In order to valid
her idea, Amanda and her team did the interview with industry professional and people with
related experience. From early interview, Amanda and her team had better understanding about
the financial related issue of the food industry and the cost of the ingredient. The interviews was
able to help the team to refine business plan.
To further validate this idea in the market, Amanda and her team had prepared ten minute
interview with their early target market working women between ages 20-50. They went out to
find these women at Whole Foods, Trader Joes and the Dish. The interview helped the team to
understand about the target markets habit and their perspective. Thus, Amada was able to
validate her idea whether the business could be ran in the market or not.
Besides that, it was necessary for Amanda and her team to do more deep interview with people
who relied on the fast food as Amanda was going to provide healthy fast food. From the

interview, Amanda was able to know that social responsibility such bland menu was only for
those who conscious with health. Consumer prefer indulgent fast food but not healthy or less
tasty fast food. From here, Amanda was emphasizing in the taste of food product to ensure the
idea was accepted by consumer.
Amanda was doing good job for validating her as she went to the real market, ask for opinion,
and listen from the interview. Getting real market feedback had helped her to refine a better idea
to match market need. Amanda could see her idea become possible only when the product and
service was accepted by customer.

(b) Raising money

Based on the business plan, Amanda calculated that she need one million dollars of startup
capital. She get the feedback from industry experts, classmate and professors, she made an
estimation and her own contribution to own this business. Amanda knew that the restaurant was
not just about the rate of return but she will make sure the business could be successful. She try
to deliver message for the investor that this was a ten year investment and not a quick return
compare to other startup company.
In order to gain the fund from the Angel investor, Amanda pitched her idea widely and used the
word of mouth of people who Amanda approached for her idea to help her to convey the
message. She successful to get connection with different peoples and she was requested to
provide more detail of the plan.
In mu opinion, Amanda was no doing so well in raising money. She had set an extremely high
start-up capital with high risk business. She did not considered that one million investment was
difficult to get from the investor if the return could not be expected and high risk. In addition,
Amanda was putting her focus in the Angel investor where only think about getting fund from
limited sourced. If she had confidence about this business, she should try to apply bank financing
for the business rather than just waiting for the fund from the investor.

(c) Forming a board. Was has she done right? What could she have done better?
As mentioned by the interest investor in the case, they wanted to evaluate who would be on her
team, and also wanted a better sense of what the restaurant would like. From this expectation,
Amanda realized that she need to form a board of advisor, generate renderings of the restaurant
space and partner with a chef. After she found a chef to support her idea, she start to look for the
board of advisor. She looked for people who gave her support and encourage during early days.
She knew she need the board for more tactical advice on operation issue, as well as relevant
industry experience.
In order to get a better board of advisor, Amanda was exploring her ideas to other people and
introduce herself to those people. If Amanda found out a person suitable to become board for her
business, she asked them to involve in her business. However, it is not easy to convince people to
join the business. In my opinion, Amanda did well in forming the board. She introduced herself
to people with experience, she knew what she should do and who should she find to help her
business.

Question 5
Consider the range of outcome that Amanda might face if she successful in finding a
location
(a) The first restaurant fail.
If the restaurant fail, the investment of Amanda and investor will be lost. She should close the
restaurant to cut down any further loss. Then, the idea of the business should be validate again
and more market survey in term of location should be redo again if Amanda want to continue
with this business idea. Amanda should analyze what she did wrong for this business idea and
come out with new amendment to enhance the business idea.
However, the first restaurant failure was helping Amanda to gain another experience or lesson as
an entrepreneur which she could do better for her next idea. She may look for another place and
modify her business plan based on the previous experience. If the restaurant failed and Amanda

decide to close and stop the idea, she could return back to her consultant job and working to
support her life.

(b) The first restaurant succeeds but does not scale.

If the Amanda successful in developing her first restaurant but did not get the scale, Amanda may
not able to start second restaurant according to her plan. Amanda may decide to maintain one
restaurant and stop planning for the second restaurant. Her expectation could not achieved and
the return will be fixed in a certain level. One million capitals from the investors could not get
the expected return after ten year as mentioned by Amanda. Thus, investor will lose the
confidence toward Amanda company and may request to take back the capital. The company
capital and cash flow will be affected and financial tight where Amanda will face difficultly to
manage the restaurant. If she still want to continue her planning, she have to redefine the
business plan and start to look for the capital again from other investor as the first restaurant did
not provide much of return to her.
However, if Amanda could not open her second restaurant according to her plan, this may also
help in positioning the specialty of the restaurant because there was only one Amanda restaurant
in the market. The uniqueness of restaurant could further achieved by applying intellectual
property for Amandas menu. Besides that, Amanda could hire restaurant manager to help in
maintaining the restaurant rather than managing by her own when the business was stable. She
could continue to work as a consultant and Amanda could have a stable income.

(c) The first restaurant is a home run and allows Amanda to expand according to plan.
If Amanda was unable to find a suitable location to start her business and decided to start from a
home run, Amanda could had save the rental fees. She could have more time to seek for the
better and suitable location for her restaurant. Besides that, if the first home run restaurant
successful and this will give the confidence to retail landlord so her successful past track record.

Compare to the previous time when Amanda was facing difficulty to get the rent offer from
landlord because of the lower successful rate for first time restaurant entrepreneur, the successful
of Amandas first restaurant help her to find the location and getting rental place from landlord
for her second restaurant easier.