Bus 499 Strategic Analysis Tarpys Final-Done

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TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................4
HISTORY AND OVERVIEW.........................................................................................................6
HISTORY.....................................................................................................................................6
OVERVIEW.................................................................................................................................8
Vision........................................................................................................................................8
Mission.....................................................................................................................................8
Organization Structure..............................................................................................................8
Products and Services.............................................................................................................10
INDUSTRY................................................................................................................................10
Significant Trends...................................................................................................................10
Industry Life Cycle.................................................................................................................11
CONCLUSION..........................................................................................................................12
EXTERNAL ANALYSIS..............................................................................................................13
GENERAL ENVIRONMENT...................................................................................................13
Driving Forces........................................................................................................................13
External Stakeholders.............................................................................................................19
Summary of Findings.............................................................................................................21
COMPETITIVE ENVIRONMENT...........................................................................................22
Competitor Classifications.....................................................................................................22
Strategic Group Positioning...................................................................................................24
Key Success Factors...............................................................................................................25
Competitive Forces.................................................................................................................27
CONCLUSION..........................................................................................................................30
INTERNAL ANALYSIS...............................................................................................................31
RESOURCES AND CAPABILITIES........................................................................................31
Resources................................................................................................................................31
Capabilities.............................................................................................................................34
VALUE-ADDING ACTIVITIES...............................................................................................36
Primary Activities...................................................................................................................36
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Secondary Activities...............................................................................................................38
PERFORMANCE MEASURES................................................................................................41
Financial Performance Analysis.............................................................................................41
Non-Financial Performance Analysis.....................................................................................47
STRATEGIES............................................................................................................................50
Corporate-Level Strategies.....................................................................................................50
Business-Level Strategy.........................................................................................................51
Alignment Analysis................................................................................................................52
CONCLUSION..........................................................................................................................54
POSSIBILITIES AND RECOMMENDATIONS..........................................................................55
POSSIBILITIES FOR IMPROVING STRATEGIES................................................................55
Corporate Level Strategy........................................................................................................55
Business-Level Strategy.........................................................................................................55
POSSIBILITIES FOR IMPROVING STRATEGIC COMPETITIVE ADVANTAGE.............55
Possibility One: Create a Marketing Strategy........................................................................56
Recommendation....................................................................................................................57
POSSIBILITIES FOR IMPROVING OPERATIONAL EFFICIENCIES................................58
Possibility One: Develop and Implement New Management Strategy..................................58
Recommendation....................................................................................................................59
Possibility Two: Identify and Eliminate Excess Operational Costs.......................................59
Recommendation....................................................................................................................60
CONCLUSION..........................................................................................................................60
Improved Competitive Positioning........................................................................................61
Increased Value-Added...........................................................................................................62
Improved Alignment...............................................................................................................63
REFERENCES..............................................................................................................................64
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EXECUTIVE SUMMARY
This report offers a strategic analysis of Tarpys Roadhouse, one of three full service restaurants
that together form Downtown Dining Restaurant Group, LLC. The report provides Tarpys with
an in-depth analysis of its current strengths, weaknesses, opportunities, and threats. It then
provides several possibilities for Tarpys to capitalize on its strengths and opportunities, followed
by recommendations for implementation.
Tarpys is a four-star restaurant located in Monterey, CA. The establishment was founded in
1991, as a joint venture by Tony Tollner and business partner Bill Cox. Tarpys is a full-service
restaurant and bar that seats 300 patrons in its inside and outside historic building. It has seven
banquet areas, and in 1999, the restaurant expanded its operations to include a catering
department. In April 2014, the restaurant added local celebrity chef Todd Fischer to the team.
Tarpys offers a variety of services that highlight its unique ambiance and well-trained staff,
including fine dining, wine and liquor sales, catering, and large party banquets. While Tarpys
does not currently have a vision statement, it has established its mission statement of: To
provide an unforgettable guest experience.
The organizational structure of Tarpys includes a general manager, who oversees front-of-house
restaurant operations; and an executive chef, who manages the kitchen staff. The next level in the
organizational structure includes a wine manager and a bar manager, who oversee the staff and
keep track of wine and liquor inventory. The restaurants vital internal stakeholders are its owner
and managers while its essential external stakeholder is its customers.
The external environment of Tarpys is examined in this report with a PESTEL analysis.
Political, economic, social, technological, environmental, and legal factors are analyzed and
rated on level of influence. Social, environmental, and technological were determined the most
significant factors affecting the restaurant. These three factors include important aspects such as
sustainability, local farmer support, and social media use.
Tarpys has several key success factors that include: location, customer satisfaction, product mix,
support of local community, and marketing.
Tarpys faces a moderate amount of competition. Its direct competitors include The Whaling
Station, Sardine Factory, and its own sister restaurants, Montrio Bistro and Rio Grill. Due to its
size, reputation, location, and comparable product offerings; Sardine Factory is considered
Tarpys most significant competitor.
The competitive forces for Tarpys is analyzed and it is found that its suppliers and customers
have a low level of bargaining power while there is a medium level threat of substitutes and new
entrants. This leads to a medium level of intensity of rivalry in the restaurants industry.
Included is a strategic group map which compares the number of social media reviews with
average ratings for Tarpys along with its competitors. This shows where Tarpys fits amongst its
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competition in regards to customer satisfaction and it is found that Tarpys is currently aligned
evenly with its competition.
Tarpys uses its extraordinary resources, location, atmosphere, and well-known reputation, to
deliver a unique dining experience.
Financially, Tarpys is covering all of its costs and making a profit which has been gradually
increasing over the past three years. At the end of 2014, Tarpys had a profit margin of 0.07. This
is slightly above the industry average.
Tarpys is well positioned because of its corporate restaurant groups financial strength, its
extraordinary resources and unique capabilities. The restaurants business-level strategy is
focused differentiation within a narrow market scope and its corporate-level strategy is market
penetration, market development, and related diversification.
Tarpys internal weaknesses include its limited marketing strategy, uneven management tasks,
and high operational costs.
Tarpys opportunities and threats are discovered in the External Analysis sections of this report.
The opportunities include:
Expanding new technologies

Growing social media marketing
Increasing awareness of sustainability
Tarpys external threats include:
Rising minimum wages for restaurants
Many substitutions available
Low bargaining power of suppliers
Based on the strengths, weaknesses, opportunities, and threats identified above, several
possibilities were identified for Tarpys. Of these possibilities three recommendations are made,
including:
Creating a marketing strategy

Implementing new management structure and techniques
Identifying and eliminating excess operational costs
Implementation techniques for each of these recommendations are provided in this report. If
Tarpys implements these recommendations, it will capitalize on the opportunity to increase its
sustainable competitive advantage.
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HISTORY AND OVERVIEW
This section discusses the history of Tarpys Roadhouse Restaurant and provides an overview of
the company and the restaurant industry. The overview gives information regarding Tarpys
mission and vision statements, organizational structure, and products and services; and finishes
with a look at the industry as a whole.
HISTORY
The history of Tarpys begins with Tony Tollner, owner and operator. Tollner was active in the
restaurant industry throughout his lifetime, starting off with his first restaurant role as a
dishwasher, and eventually working his way through every restaurant position until finally
reaching management level. From there it was a natural transition for him to switch into the role
of restaurateur.
The Rio Grill was opened in the Crossroads Shopping Center of Carmel, CA. in 1983. The
restaurant was owned by Real Restaurants Incorporated, a group that operated many successful
and highly acclaimed restaurants throughout San Francisco and Napa Valley. Tollner was
appointed to manage the restaurant, and in 1989, he purchased the restaurant from Real
Restaurants. After the acquisition and continued success of Rio Grill, Tollner was interested in
expanding to another restaurant.
In 1991, Tollner and his partner Bill Cox purchased the Ryan Ranch Homestead, a historic
building at the corner of Highway 68 and Del Rey Oaks Boulevard. The home had been built in
1851 by Matt Tarpy, for whom the restaurant was named. Tarpy was an Irish Immigrant who was
extremely active in the community. In 1863 he started the Pajaro Property Preservation Society, a
group of individuals who aided the police in keeping the peace and preventing lawless behavior.
After a year of construction and remodeling, Tollner and Cox were able to officially open the
doors of Tarpys in 1992. From its inception, Tarpys operates as a full-service sit down
restaurant, featuring a full bar and kitchen with both indoor and outdoor seating. After seeing
great success in his first two restaurant concepts, Tollner saw an opportunity to bring his
restaurant savvy to downtown Monterey. Tollner converted the old Monterey firehouse into the
groups third restaurant, named Montrio as a combination of Monterey and Trio. Together
Rio Grill, Tarpys Roadhouse, and Montrio Bistro form Downtown Dining Restaurant Group,
LLC. The Cox family maintains their shares in the company as a silent partner, and Tollner acts
as managing partner.
Tarpys has reached several important milestones over its history, which is shown below in
Figure 1.1: Milestones.
2014
2001
1999
1992
BANQUETS
DEPARTMENT
INTRODUCED
CATERING
DEPARTMENT
EXPANDED
CHEF TODD
FISCHER
HIRED
TARPY'S
ROADHOUSE
OPENS
Figure 1.1 - Milestones
Tarpys was founded in 1992 by Tony Tollner and Bill Cox, and began as a full service
restaurant. While the spacious and beautiful property proves to be an asset for the restaurant, it
can also be considered a slight constraint. Tarpys is located off of the Monterey-Salinas
Highway 68 behind tall trees and a parking lot, which can be difficult for passing traffic to see at
highway speeds.
Due to the large spacious property, Tollner started to see the potential for expanding Tarpys.
Three new additions were made to the restaurant between 1994-1999, including an upstairs
private banquet hall known as The Library, featuring a large terrace and covered dining room
with a capacity of 100 seated guests, as well as a separate kitchen. Since the restaurant was
expanding, there was a need for more organization when dealing with large parties and events.
Banquets and events was established in 1999, and Alethea Cusiano was hired as the manager to
oversee this department.
Over the years, Tarpys has repeatedly been hired to cater events throughout Monterey. As a
result of this, there was a need to acquire catering equipment and vehicles. The catering
department of Tarpys was officially established in 2001, and has since steadily expanded to
serve the entire peninsula.
A more recent milestone for Tarpys is the hiring of celebrity chef Todd Fischer in April of 2014.
Fischer was born in San Francisco, and is an accomplished chef from the past 20 years in the
culinary profession. In addition, he worked part-time as a host of Discovery Networks United
States of Bacon for several years. He joined the Downtown Dining team to assume the position
of executive chef for Tarpys. The addition of an established local celebrity chef to the Tarpys
team has had a positive impact on the restaurants popularity over the past year.
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Under Tony Tollner and the Cox family, Downtown Dining will continue to expand, develop, and
maintain its reputation as the best group of restaurants on the Monterey Peninsula (D. Edwards,
personal communication, February 18, 2015).
OVERVIEW
This section introduces information about Tarpy's vision, mission, organizational structure, and
products and services. It provides a brief overview of the industry in which Tarpy's competes and
finishes with a summary of findings.
Vision
A vision is what a company hopes to become and is how a company can inspire its employees to
carry out the purpose for being in business according to the text, Mastering Strategic
Management (Ketchen and Short, 2013). Currently, Tarpys does not have a written vision. It is
important for a business to have a vision because it motivates and provides clarity for its
employees. In addition, a vision allows a companys customers the opportunity to further
understand what its purpose for being in existence. It is crucial for businesses to have a vision
because it is the written recipe for the companys future success.
Mission
A mission provides the reason(s) for why a company is in existence and answers the question,
who are we (Ketchen and Short, 2013). Tarpys current mission is, to provide an unforgettable
guest experience. When asked how Tarpys provides an unforgettable guest experience, the
general manager replied with a quick story, When customers order take out; they do not just
come and go quickly. We make sure they are walked to their cars (D. Edwards, personal
communication, February 25, 2015).
Organization Structure
Tarpys organization employs a working structure. The organization divides its employees into
specific departments of diverse functions including management, human resources, marketing,
accounting, hostess, cooks, catering, beverage, sales, and the waiting staff. Figure 1.2:
Organizational Structure of Tarpys displays Tarpys first vertical tier of the executive
management and its level of authority in the organization. The last vertical tier provides the
operational work force in the organization.
Tarpys organizational structure consists of:
Co-Owner Tony Tollner, oversees all operations

General Manager Deborah Edwards manages the daily operations within the facility by
overseeing the human resources, accounting, quality assurance and compliance issues.
Executive chef Todd Fischer manages and supervises the dining and kitchen staff.
Wine Manager Rory Filbin oversees the wine program.
Banquets and Catering Manager Alethea Cuismano provides services for event
coordinating.
Bar and Spirits Manager Colleen Balzano oversees bar operations and inventory of
spirits and specialty drinks
Kitchen Staff oversees the daily operation for cooking and preparing meals
Waiting Staff educates customers on the menu and serves meals
Each of these individuals contribute to the daily operations and functionality of Tarpys.
Executive chef Todd Fischer manages and supervises the kitchen staff. Managers Alethea
Cusiano, Rory Filbin, and Colleen Balzano oversee banquet and catering, wine, and liquor
departments; respectively. All other duties fall to general manager Deborah Edwards. With this
current organizational structure, there is an uneven distribution of responsibilities amongst the
management team.
Figure 1.2: Organizational Structure of Tarpys
Although Tony Tollner is the co-owner of Tarpys restaurant, he still shares the responsibility and
functional operations with other staffing personnel discussed on the organizational chart. Tarpys
organizational structure allows for growth amongst the employees and staff. The restaurant
management educates and trains its employees which provides value to the organization and
maintains a high employee retention rate.
Products and Services
Tarpys offers three major services to guests, each complemented with a highly knowledgeable
and professional staff.
Fine Dining Restaurant - Tarpy's is a full service restaurant and bar with lunch served Monday
through Saturday, dinner served every night, and brunch offered on Sundays. Tarpy's takes pride
in consistently delivering perfectly prepared meat and seafood from their wood-burning grill.
Offering a different atmospheric approach to the many coastal restaurants in Monterey, Tarpy's
sits on five acres of landscaped land in a country setting (Tarpys Roadhouse, 2014).
Banquet Venue - Tarpy's serves as a reputable venue for banquet events ranging from small
luncheons to luxurious weddings with a variety of both inside and outside destinations. The
venue's rugged stone walls and vibrant greenery provide a beautiful location for a special
wedding celebration, while private rooms, such as the Vintner's Room, and allows for a small
secluded banquet setting (Tarpys Roadhouse, 2014).
Catering Service - In addition to the restaurant, the company provides full service catering to
local venues. The catering staff specializes in handling all of the arrangements such as flower
and photography contracts, and bringing everything together into a cohesive final product
(Tarpys Roadhouse, 2014).
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In addition to these services, Tarpys has products including a gourmet menu, a variety of foreign
and domestic wines, specialty cocktails; and Tarpys merchandise.
INDUSTRY
A universal way for Federal statistical agencies to categorize businesses in order to gather,
evaluate, and publish statistical data that is relevant to the U.S. business economy is The North
American Industry Classification System (NAICS) (Introduction to NAICS, 2014). A full-service
restaurant offers fine dining with a wide selection of foods and beverages, and table service
(Web Finance Inc., 2015). Tarpys offers a full-service bar, an extensive wine list, and a full
menu; therefore it falls under the NAICS Code 722511 entitled full-service restaurant
(Industry Statistics Portal, 2012).
Significant Trends
Paying attention to trends in the industry can lead to increased success. Significant trends in the
restaurant industry include:
Environmental sustainability
o Reducing waste
o Recycling
o Donating
Items made from scratch and in-house
Ethnic food dishes
o More flavor and variety (National Restaurant Association, 2014)
Another significant trend in the restaurant industry is customer loyalty. Repeat customers
account for about 15% of restaurants customer base, but they are accountable for more than onethird of the revenue (Frisch, 2015).
Industry Life Cycle
Figure 1.3: National Full-Service Restaurant Industry Sales illustrates the steadily rising sales
since 2009 that are expected to increase again this year (Food and drinks sales, 2014). However,
the number of meals purchased per person in the United States at a restaurant steadily decreased
from 2006 to 2011. An average of 209 meals per year were purchased in 2006 which decreased
to 207 meals in 2007 and 2008, 204 meals in 2009, 198 meals in 2010, and 194 meals in 2011
(Statistica Inc., 2011). Even though fewer meals are being purchased due to the recent recession,
more money is being spent when families and individuals actually do go out to eat.
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U.S. SALES IN BILLIONS

250
200
150
202.33
206.98
213.5
181.99
196.17
219.69
189.46
2009
2010
2011
2012
2013
2014
2015
100
50
0
Figure 1.3: National Full-Service Restaurant Industry Sales
Figure 1.4: Industry Life Cycle illustrates that the full-service restaurant is still in the growth
cycle due to the continuous rise in sales.
Figure 1.4: Industry Life Cycle
CONCLUSION
Figure 1.5: History and Overview Conclusion below summarizes the major strengths and
weaknesses noted throughout the History and Overview portion of this report.
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Figure 1.5: History and Overview Conclusion
EXTERNAL ANALYSIS
The external analysis investigates opportunities and threats that exist in the general environment
and among competitors within the industry. The general environment analysis consists of
examining general developments and outcomes that impact all business operations in the
restaurant industry. The industry analysis examines competitive forces and positioning of
multiple organizations that compete with one another for brand recognition, growth and profits.
Understanding the market and its forces ensures firms strategic direction.
GENERAL ENVIRONMENT
This section describes the driving forces of the restaurant industry in which Tarpys exists and
operates. Driving forces are major factors that have an influence on the success of an industry
and the firms within it.
Driving Forces
The restaurant industry is affected by six major driving forces. A PESTEL analysis is an
important tool that executives can rely on to organize factors within the general environment and
to identify how these factors influence industries and the firms within them (Ketchen and Short,
2013). Figure 2.1: Driving Forces Analysis illustrates a PESTEL analysis that impacts Tarpys.
The chart depicts the level of influence each force has on the restaurant industry using low,
medium, and high
Policy
POLITICAL
Regulation
Unemployment
ECONOMIC
Inflation
{MEDIUM}
Taxes
{MEDIUM}
Sustainability
SOCIAL
Demographics
Social responsibilty
{HIGH}
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Reservation Systems
TECHNOLOGICA
iPads
L
Waste Reduction
ENVIRONMENTA
Green Movement
L
Wage and Law
{HIGH}
{HIGH}
{MEDIUM}
Smart Apps
Support Farmers
LEGAL
Figure 2.1: Driving Forces Analysis

Political Medium
The political factors are centered on the role of government intervention, which
influences business (Ketchen and Short, 2013). The political factors that affect the
restaurant industry are policy, minimum wage, and regulation. The restaurant
industry in the U.S. is the second-largest private sector employer estimating 14
million in the labor force (National Restaurant Association, 2015).
Policy
The restaurant industry operates under strict policies and regulatory guidelines from the
government. These policies and guidelines have been established to maintain the safety of
consumers, the integrity of businesses, and to make sure business owners within the
industry compete fairly.
The California Restaurant Association has promoted aggressive lobbying practices to
protect the restaurant industry (California Restaurant Association, 2014). It has been
establish by CRA, eliminating public policy before its voted by the government and made
into laws have saved the restaurant industry hundreds of millions of dollars (CRA, 2014).
The CRAs continuing efforts to fight for pro-restaurant legislation and policies are
present in the state capital of Sacramento CA. Key issues affecting the restaurant industry
are ADA accessibility, energy saving programs, food safety, employment, and health care
(CRA, 2014).
Economic Medium
Economic factors include the conditions that impact the economy, and how well it thrives with
those factors taken into consideration (Ketchen and Short, 2013). The success of restaurants is
contingent on the condition of the U.S. economy as a whole. The economic factors that affect the
industry are unemployment, consumer spending, inflation, and tax.
Unemployment
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The U.S. unemployment rate has increased to 5.7% as of January 2015 from its previous
low of 5.6% since December 2014 (Taborda, 2015). Although the economy has recently
improved in the U.S. and the current unemployment rate proposes a downward spiral
since the last recession; labor force participation for the U.S. has risen by 62.9%, total
employment increased by 435,000 people (Taborda, 2015). The national level of
influences within the restaurant industry accounts for 12.8 million jobs with predictions
estimated to reach an additional 1.3 million jobs the next decade (CRA, 2015).
The California region is the second largest employer with restaurants employing
approximately 1.4 million workers (CRA, 2015). The unemployment rate in Monterey
County has also decreased since the last recession and expected rates are to remain
moderate. As of December of 2014, Montereys seasonal unemployment rate is 4.1%;
which is 2.2% lower than the U.S. unemployment rate (Sperlings, 2014). The low
unemployment rate in Monterey County accounts for more output within the business
industry and economy, which results in less poverty and more consumption. Regional
restaurants industry benefit from increased consumer activity overall.
Inflation
The current inflation rate in the United States is -0.1%. This rate is based on an
unadjusted Consumer Price Index for all urban consumers pricing of the food markets,
energy markets, commodities market, services market, medical care market, and the
transportation industry (Taborda, 2015). Recent forecasts had inflation rates increasing in
2014 between 1.9% and 2.2%; however, as of July 2014 the inflation rate has decreased
from 2.0% to 0.8% in December of 2014 (U.S. Inflation Calculator, 2015). The reduction
in inflation has the means to increase future profits and reduce interest rates; as a result,
benefiting the market (Stanford GSB Staff, 2001). This allows for a reduction in price for
products and service, which would promote more purchasing power by U.S. consumer.
Taxes
The state of California has approximately tens of thousands restaurants, bars, caterers,
and mobile food vendors; to include, fast food service business (California State Board of
Equalization, 2015). Many industry owners in the region must comply with complicated
tax issues. Food and beverage sold for consumption at restaurants are generally taxable,
especially if they are served for consumption at a restaurant. (California State Board of
Equalization, 2015).
Economic factors also have a moderate level of influences on the California restaurant
industry. Unemployment rates, inflation and sales tax all have a direct impact on
customers abilities to spend money. Due to decreasing inflation rates at -0.1% consumer
buying power will increase because goods and service prices are increasing at a slower
rate.
Social High
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The social factors within the region and industry entail demographics and cultural trends. The
social factors that affect the success for the restaurant industry are sustainable practices,
demographic changes, and social responsibility culture.
Demographics
Demographics impact the restaurant industry significantly through population age

distribution. Shifts in age distribution among the population will impact consumer
demand, spending for products and services, and marketing concepts within social media
networks for the restaurant industry (Oches, 2012).
The population age distribution in the region has recognized that the millennial consumer
group will increase the demand for culinary trends. The millennial group consists of
consumers born from 1981 to 1997 which equates to approximately 22% of the
population according to the U.S. Census Bureau (Oches, 2012). This age group will
spend more on average for food away from home. Individuals within the millennial age
group have growing spending potential and will spend approximately $400 billion
dollars, unlike Generation X and Baby Boomers who enjoy classic ethnic dishes they
were raised on (Oches, 2012).
Social Responsibility
The mutual benefits that correspond with social responsibility in the restaurant industry
provide rewards for business owners. According to Technomic 2010 Market Brief,
roughly 19% of consumers indicate they will eat at restaurants that are socially
responsible, while 45% will do so if the restaurant is convenient (Fransmart, 2015). The
demand for social responsibility in the restaurant industry is growing significantly.
Social Media
Social networks are an important part of the millennials digital lives because they can
expand the users ability to connect via internet or smart phones with online marketing
networks, entertainment networks, gaming networks, and marketing websites. Social
media sites such as Facebook, Twitter, Instagram and Pinterest provide pictures and
articles for news, sports, sales and other media sources that assist with marketing specific
groups of individuals. It is estimated that 88% of Millennials get news from Facebook,
36% from Pinterest, and 33% from Twitter (American press Institute, 2015).
Millennials use hashtags as an easy way for individuals to categorize, find, and join
conversations on a specific topic. The hashtag is used to highlight key words and topics
within a post, making the post easier for users to find. Twitter recommends the use of
hashtags because hashtags can increase conversations and awareness of a post by 100%
(double) for individuals and 50% for brands (Hillebrand, 2014).
When marketing teams use social media, they outperform those who arent using it by
78.6%. In 2012, social media users were 23% more successful than their competitors who
were not using it. These social media users exceeded their sales quota by 10%.
(Fidelman, 2013).
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Technological - High
Technological factors are those that deal with improvements in the organizations products and
services that are provided by advancements in science (Ketchen and Short, 2013). Technological
advances are slowly beginning to show in the restaurant industry. Current technological trends
for this industry have grown to include online reservation systems, menu software on iPads and
other tablets, and smart phone applications for ordering and making payments.
Reservation System
There are a variety of reservation systems to choose from, such as RezOvation Web,
Checkfront, Resmanager, Rezcu, OpenTable, and more. The most commonly known
reservation system is OpenTable. While it is a more expensive option for a restaurant; it
is compatible, user-friendly, and well-known. The fixed cost of the software is $199 per
month and the fee includes: software, upgrades, a touch screen computer system, and
customer support. On top of this monthly payment, restaurants pay a fee for each
reservation made ranging from $0.25 - $1.00 per person.
While this may seem like an expensive fee, it takes only three incremental reservations
to break even on the complete monthly OpenTable cost for the average restaurant
(Potter, 2010). By comparison, Rezcu offers a completely free reservation book with no
monthly fees or cover charges, with the option to upgrade (Rezcu, 2015).
iPad Menu
iPad menus are becoming popular because they are eco-friendly. Instead of printing a
hundred new menus every time there is a small change, restaurant managers can simply
update the information on the computer and sync the menus to display the changes. One
example is the iPad app called Tastevin, which is used to for wine and cocktail lists.
Applications like Tastevin can be extremely helpful because it organizes lengthy wine
lists and extensive cocktail menus, keeps wine and liquor inventories, and gives
descriptions to the guest for each item. An issue with the utilization of iPads is that older
clientele can be averse to using technology that might be intimidating or unfamiliar for
them to use.
Smart Phone Applications
An area for growth and opportunity for restaurants is utilizing smart phone applications
for menus, ordering, payments, etc. The most well-known smartphone application of this
type is called QikServe. The app is free to download on both Google Play and iTunes,
and has many functions. Through the app, guests can check in for reservations, browse
the menu, add items to the order, pay the bill, and leave a tip (Qikserve, 2014).
Environmental High
The environmental factors include natural disasters and other factors in the macro environment
general region as well as the local micro environment that affects the firm (Ketchen and Short,
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2013). The restaurant industry and regional market are highly affected by environmental trends.
These trends include food waste reduction, going green, and locally grown ingredients.
Food Waste Reduction
The national restaurant industry is taking steps to reduce food waste and packaging
waste. These steps provide programs that feed the hungry, support the communities
health issues, and reduce the quantity of waste that impacts the environment (NRA,
2015). The reduction of food waste is the objective; and some restaurants are providing
efficient food donations, better using of products with less waste, and utilizing
composting methods to reduce food waste. Approximately 13% of restaurants participate
in some type of composting program (NRA, 2015).
Green Movement
The statement going green is defined as the ability of a firm to resourcefully provide
sustainability measures within their operations to alleviate cost and reduce the impact on
the environment for short-term and long-term goals.
Restaurants are finding that going green will reduce environmental conditions, and save
money for the future. The restaurant industry has determined a variety of ways to apply
the term, going green. One example is technologies that include recycling paper products
within the daily operations for menu usage. Another example is using solar panels which
has made a major impact on energy costs within most organizations while contributing to
saving money on energy bills. Furthermore, environmentally friendly cleaning products
are important in the industry because they do not contribute chemical base cleaners that
affect our water source and the wild life once poured down drains. Lastly, energy saving
lamps and light sensors in restrooms can conserve energy, and businesses are becoming
more conscious of water conservation (Roennevig, 2015).
Support of Local Farmers
Business owners find that using locally grown produce and livestock is an advantage to
the success of the organization (Roennevig, 2015). Buying from local farmers reduces
costs and has contributed to reducing the carbon footprint of transporting products. Part
of the initiative in the restaurant industry to remain environmentally aware is defining the
quality of food that is prepared and served.
The most significant criteria to be considered certified organic is eliminating the use of
pesticides and hormones. Pesticides can damage not only the land used that grows
produce, but also contribute to long term health exposure and illness such as cancer risk
(Cancer Research UK, 2014). The same can be said about injecting hormones into meat
products. Hormones have been used in the meat industry to insure that livestock and
dairy are well maintained and profitable (Hoffman, MD. 2008). However, cancer risk has
been proven when providing hormone treatment to the meat industry.
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Sustainability and Recycling
Sustainability is very common amongst modern business cultures. Environmental

practices across the restaurant industry suggest that recycling, waste reduction, water
conservation and energy conservation benefit business and the planet (NRA, 2015).
Recycling within the restaurant industry operations accounts for 65% of restaurants
nationally; furthermore, it is estimated that 74% of restaurant operators use some method
of back-of-house recycling program, while the other 43% uses a standard recycling
programs within their local communities (NRA, 2015).
The reduction of food waste is the objective; and some restaurants are providing efficient
food donations, better using of products with less waste, and utilizing composting
methods to reduce food waste. Approximately 13% of restaurants participate in some
type of composting program (NRA, 2015).
Legal Medium
Legal factors are those associated with the law (Ketchen and Short, 2013). There are constant
legal issues arising which can have different effects on different industries. Most legal issues that
impact restaurants are simple issues, such as compliance with food safety regulations, fire
marshal restrictions, and employment laws. Obtaining the proper permits for operating a
restaurant can be the most difficult part of opening a restaurant, especially when trying to acquire
a liquor license. However, once the proper permits are obtained, maintaining them is typically
very easy to do.
Wage Laws
One legal issue that has had a more significant impact on restaurants over the last year
has been the increased minimum wage, which began in January of 2014. It is thought by
many that the increase in minimum wage will hurt businesses, increase unemployment
rates, and negatively impact the bottom line for small businesses. According to studies
done by the United States Department of Labor, none of these claims are accurate.
Increasing the national minimum wage to $10.10, which is projected to occur by 2016,
would increase consumer purchasing power, benefit the economy, and reduce turnover
rates. By reducing turnover, firms will save time and money that would have been spent
on interviewing and training costs (U.S. Department of Labor, 2014).
External Stakeholders
External stakeholders are people or groups that are affected by the decisions made by the
business. Business owners decision making process is, to a certain extent, influenced by the
understanding that these parties may be affected by decisions made. This section analyzes the
different stakeholders for Tarpys and their level of influence on the company. Figure 2.2: Level
of Influence, shown below, displays each stakeholder of the company and the level of influence
they have.
18
STAKEHOLDER
L E V E L of I N F L U E N C E
Low
Medium
High
CUSTOMERS
SUPPLIERS
ENVIRONMENT
F I N AN C I AL
ADVISOR
BUSINESS
COMMUNITY
B AN K
Figure 2.2: Level of Influence
Customers - High
In the restaurant industry, customers are extremely influential stakeholders. Through their
purchasing habits they are able to influence things such as prices and menu changes. Ensuring
customer satisfaction is what keeps a restaurant in business. In addition, customers can bring in
new clientele for the company through word-of-mouth advertising. As Tarpys does not invest in
extensive media advertising, this word-of-mouth is especially critical to its success.
Suppliers - High
Tarpys are stakeholders for suppliers because suppliers depends on restaurants ordering products
in volume. Likewise, Tarpys depends on these suppliers for the opportunity to purchase these
items in volume. In most cases, it is easy for restaurants to simply choose another supplier for
19
most products. However, Tarpys buys high quality products which narrows its choices to choose
from making Tarpys supplier highly important.
Environment - Medium
The environment is a moderate external stakeholder for all businesses, as it is impacted in some
way through all operations. A current trend in many industries, the restaurant industry included,
is the movement towards sustainability. Restaurants are being influenced by the environment to
align with the Green movement by eliminating plastic waste, increasing recycling efforts, and
switching to bio-degradable food packaging.
Financial Advisor Medium
Advisor Terri Belly is a moderate external stakeholder in the restaurant. She is responsible for
overseeing the finances, as well as operating the Restaurant Solutions Inc. (RSI) software, which
the restaurant uses to pay bills, track payroll, and track finances. Her influence on the restaurant
is focused on ensuring that management is keeping track of day-to-day expenditures.
Business Community Low
The community of businesses surrounding Tarpys is considered a stakeholder with low

influence. As an interlaced micro economy, each business is affected by the successes and
failures of competition. For example if Tarpys were to close down, business for other restaurants
in the area would increase. Tarpys currently serves as the primary lunch spot for employees of
surrounding offices. If the company were to go out of business, these diners would need to
search for a substitute within a close proximity. In the same sense, Tarpys may benefit if a
neighboring business were to default, depending on the type of business.
Wells Fargo Bank Low
Although it is a nationwide chain, Wells Fargo is considered a stakeholder as a result of the

volume of business Tarpys brings them. The bank is a low-impact stakeholder, however, it
would suffer slightly regionally if Tarpys were to take its business elsewhere. As a result of the
banks close proximity to the restaurant, there is slight influence present. Tarpys management
could choose to bank elsewhere, but nothing is as close and convenient as the Wells Fargo
located right next door in the Stone Creek Shopping Center.
Summary of Findings
From this section opportunities and threats were discussed. The following outlines the industrys
opportunities and threats.
Opportunities
Pro restaurant legislation
Economy growth
20
Social responsibility trend
Sustainability awareness
Social media marketing
Threats
Policy changes
Customer needs and wants
Minimum wage
Sales tax
COMPETITIVE ENVIRONMENT
Tarpys competitive environment is highlighted through the next three sections. The first section
discusses its direct and indirect competition while the second section discusses its success factors
and competitive positioning. After, Tarpys is ranked through a competitive forces analysis.
Lastly, a summary of findings is given.
Competitor Classifications
In analyzing the competitive environment of Tarpys, three types of competitors are addressed:
direct, indirect, and substitutes.
Direct
Direct competitors are businesses offering similar products and services (Oman, 2011). Tarpys
has four major direct competitors including the Whaling Station Steakhouse, Sardine Factory,
and the sister restaurants of Downtown Dining: Montrio Bistro and Rio Grill.
Whaling Station
Located two streets above Cannery Row, Whaling Station has been named Monterey
Countys #1 steakhouse for over 40 years. The restaurant takes pride in its USDA prime
cut dry-aged beef, an award winning wine list, and full bar. There is an on-site dry-aging
room where the meat is stored and monitored in a controlled environment until the flavor
profiles are sufficient and the meat is served. Banquet service is available for private
parties in both private and semi-private dining areas for groups up to 50 people.
Sardine Factory
Sardine Factory is a local favorite with its extensive menu, fresh local seafood, and
Master Sommelier, Fred Dame. The restaurant carries over 1,800 wine labels and 32,000
21
bottles. Located just above Cannery Row, Sardine Factory can accommodate catering
events.
Montrio Bistro
The three restaurants of Downtown Dining maintain a friendly competitive rivalry.

Located in downtown Monterey, Montrio Bistro offers sustainable seafood, prime steaks,
and organic produce. Its wood-burning grill and oven greatly contribute to being named
Best Restaurant in Monterey for over ten years. The European-inspired restaurant
operates in a historical firehouse, and prides itself on great service and a welcoming
atmosphere. Montrio offers a venue for banquets as well as off-site catering.
Rio Grill
Rio Grill is another sister restaurant in Downtown Dining, located at the mouth of Carmel
Valley. Rio utilizes a wood-burning grill and oak wood burner to create a variety of
dishes from fresh fish, to pasta, salads, and sandwiches. Rio Grill also offers its location
as a banquet venue, but does not cater off-site.
Indirect
Indirect competitors are businesses that offer slightly different products and services, but target
the same group of customers with intentions of satisfying the same need (Oman, 2011). Tarpys
has many indirect competitors, but the two most prominent in the area that patrons often choose
for lunch are the Golden Tee Restaurant and Bar and Lalla Grill.
Golden Tee Restaurant and Bar
With a view of the airport and the Monterey Bay, Golden Tee can be found on the second
floor of the Monterey Regional Airport. It serves breakfast, lunch, and dinner. It offers
banquet service as a venue, and off-site catering for business or personal events. Golden
Tee is recognized by locals for its excellent prime rib.
Lalla Grill
Located in the Del Monte shopping center five miles away from Tarpys, this restaurant
provides quality food for a reasonable price and has good ambiance with heated outdoor
seating. It serves lunch, and dinner and stays open late. Lalla Grill offers group seating
but does not offer banquet services or catering.
Substitutes
Substitutes do not necessarily have to be restaurants. Any food consumption option may be
considered a substitute for a sit down restaurant. This report identifies fast casual dining and
cooking at home as the two most likely substitutes.
Fast-Casual Dining
Although many customers go to Tarpys for its ambiance and quality, the fast casual
market currently holds 27.25% of total foodservice sales (Nations Restaurant News,
22
2015). With typical meal prices ranging between $8 and $15 these restaurants offer a
healthy affordable alternative to fine dining, posing a threat to Tarpys especially during
slow seasons or during the lunch hour (Forbes.com, 2014).
Cooking at Home
Cooking a meal at home offers an affordable alternative to going out and experiencing
the fine dining atmosphere. The consumer has the power to make their own food. This is
an alternative that regained favorability after the market crashed in 2008.
Competitive Ranking
Figure 2.3: Level of Competition demonstrates competitive attributes of Tarpys various

competitors. Five criteria were established in regards to the significance of the restaurants
success rates. Food and beverage represents the quality of the food and beverage services each
competitor provides. Banquets and catering determines the strength and reach of each
organizations banquet and catering departments as applicable. Location represents how
advantageous the companys locations are to their success. Tarpys relies on loyalty from
returning local customers instead of tourism. Location and customer loyalty are important factors
in the evaluation because Tarpys relies heavily on loyal customers. Each criterion is rated High
(H), Medium (M), or Low (L).
LEVEL OF COMPETITION
FOOD/BEVERAGE
BANQUET/CATERING
LOCATION
LOYALTY
MONTRIO
BISTRO
RIO
GRILL
WHALING
STATION
SARDINE
FACTORY
H
H
H
M
H
M
L
L
H
M
H
M
H
M
H
H
Figure 2.3: Level of Competition

Strategic Group Positioning
Strategic Group Map
In order to determine a strategic group map for Tarpys, this report identifies four social media
sites which include Yelp, TripAdvisor, Google, and Facebook. Figure 2.4: Strategic Group Map,
depicts Tarpys and its competition based upon the following:
The Y axis is the average satisfaction rating given from social media. The X axis are the total
number of reviews for each restaurant from these social media sites. The size of each restaurant
on the map is based on average menu price. Tarpys is located evenly with its competition as it
has an average amount of reviews as well as an average rating in comparison to its competition.
23
Figure 2.4: Strategic Group Map

Key Success Factors
Competitive positioning has to do with how a company differentiates itself from its competitors
in a strategic way (Moderandi Inc., 2015). Tarpys differentiates itself by focusing on customer
satisfaction and product mix. Figure 2.5: Key Success Factors displays the important aspects of
an industry that contribute to success.
24
Customer
Satisfaction
Location
Marketing
Product Mix
KEY
SUCCESS
FACTORS
Support of
Local
Commmunity
Figure 2.5: Key Success Factors

Location
Tarpys is located on Highway 68 in Monterey. The majority of Tarpys customers are locals due
to its remote and specific location. The manager of Tarpys referred to the restaurant as being
off the beaten path, bringing an element of uniqueness to the atmosphere. The location of a
business is important when it comes to successful operations and company growth (Smith,
2015).
Customer Satisfaction
Tarpys pays close attention to consistency in order to maintain customer satisfaction. The
company prides itself on remembering repeat customers by name, and remembering what they
ordered during their previous visit. Tarpys also focuses on the little things such as opening the
door for older customers, picking up fallen napkins, hanging up customers coats, bringing
phone-in orders out to cars, and taking unsatisfactory items off the bill based on customer
feedback. The manager of Tarpys values customers opinions and often replies to reviews on
Yelp whether they are positive or negative.
Product Mix
The product mix, refers to the total number of product lines that a company offers to its
customers as well as width, depth, length, and consistency (Suttle, 2015). Tarpys offers a wide
selection of food and beverages including beer, wine, and spirits while maintaining a reasonable
price compared to its competitors. It has a variety of services including banquets, weddings,
catering. The restaurant itself has over 90 tables to accommodate its customers, and is the only
25
restaurant in the area with an open table policy; meaning customers do not need to call ahead of
time to get a table if they have more than 20 people in their group.
Community Support
It is important for businesses to be involved in the community because it promotes awareness

throughout the community through networking and marketing, in addition to providing a good
deed (Hendricks, 2013). Tarpys is involved with Peacock Acres and the Special Kid Crusade.
Events are held on site with the sponsored charity receiving 100% of the profits. Tarpys also
donates a dinner for two during charity silent auctions.
Marketing
Debbie stated Tarpys does not currently have a marketing strategy. The restaurant is currently
working on developing an in-house marketing strategy which will create awareness for special
dinners and events. Businesses heavily rely on its marketing strategy because it is a major factor
that contributes to its success (Lorette, 2015).
Competitive Forces
The competitive forces section assesses the amount of competition in an industry, otherwise
known as Porters Five Forces. The main goal of this analysis is for managers to be able to
accurately set its profitability expectations for its company. This is achieved through measuring
the level of competition in the industry. The amount of competition is important to know
because as competition increases for a company, profitability decreases (Investopedia.com,
2015). Figure 2.6: Competitive Forces, ranks Tarpys competitive forces from low to high.
26
Threat
of
substitu
tes:
MEDIUM
Bargain
ing
power
of
supplier
s: LOW
Intensi
ty of
Rivalry
:
Mediu
m
Bargain
ing
power
of
custom
ers:
LOW
Threat
of new
entrant
s:
MEDIUM
Figure 2.6: Competitive Forces

Threat of Substitutions - Medium
The threat of substitutes assesses the possibility of a new product or service entering the market
and taking sales from Tarpys (Investopedia.com, 2015). One possible substitute is the
emergence of food trucks entering the market and competing with Tarpys. Another possible
substitute consumers have is the small eateries in the Stone Creek center located right next to
Tarpys. The possible substitutable options consumers have, or may have, are fast casual dining,
cooking at home, and food trucks. This leads to a medium level threat of substitution for Tarpys.
Bargaining Power of Customers - Low
If the customer has bargaining power over the price of a good or service then the price will
decrease, leading to lower profits (Investopedia.com, 2015). Customers have bargaining power
when a business needs that one customer (e.g. a large contract) or a group of customers (e.g. a
banquet). Consumer bargaining power is low for Tarpys as the restaurant has many customers
and has set prices.
Since Tarpys has many customers, the potential loss of one customer will not affect the
restaurant; this gives customers little power over Tarpys.
According to Debbie, there is one indirect way customers can assert their small bargaining power
to Tarpys. It is shown through a concept of voting with your money. If customers do not agree
27
with a products price, for example a New York steak dinner, then they will not buy it. When
sales are down for the product, it becomes evident that we need to reevaluate the product and its
price (D. Edwards, personal communication, February 25, 2015).
Threat of New Entrants Low
If it is easy for competition to enter the market then there will be a high amount of competition
(Investopedia.com, 2015). The threat of new entrants is low as it would be really hard for
someone to enter the market because it is a serious commitment according to Debbie.
However, if Billy Quans restaurant in the Ryan Ranch area re-opened, there could be a possible
threat of a new entrant. In addition, there is not much property around Tarpys that would allow
competition to enter the market (D. Edwards, personal communication, February 25, 2015).
There is a low level of competition which leads to a greater chance a customer has in dining at
Tarpys.
Bargaining Power of Suppliers Low
Suppliers have bargaining power when they are supplying a scarce resource with little
competition amongst other suppliers. This can lead to limited options, forcing the buyer to accept
the suppliers pricing (Investopedia.com, 2015). The bargaining power of suppliers is low for
Tarpys because there are many suppliers Tarpys can choose from. Tarpys chooses to buy from
U.S. Foods because the quality is in line with Tarpys high standards, and the price is right.
Although Tarpys repeatedly chooses the same suppliers, it still maintains control of the
transaction. If U.S. Foods were to raise its prices, Tarpys would have ample choices for another
supplier without taking a huge loss on quality (D. Edwards, personal communication, February
25, 2015).
Intensity of Rivalry Medium
The fifth and final component for competitive forces leads to the intensity of rivalry within an
industry. The more rivals a company has results with a higher level of competition and vice
versa. More competition leads to the potential of fewer profits for a business because there are
more places for consumers to buy from (Investopedia.com, 2015).
The intensity of rivalry for Tarpys is medium because there are two aspects rated as medium,
and two rated as low.
Summary of Findings
For this section, opportunities and threats were discussed. The following highlights the
opportunities and threats:
Opportunities:
Expansion of marketing program

Increased levels of disposable income
Increase social responsibility
Increase sustainability
28
Threats:
Competition
Substitutes
New entrants
CONCLUSION
After examining the external environment, the following opportunities and threats are
summarized in Figure 2.7: External Analysis Conclusion below.
Figure 2.7 External Analysis Conclusion
29
INTERNAL ANALYSIS
This section determines the extraordinary resources and capabilities for Tarpys and rates the
internal stakeholders by level of influence. Following, the value-adding activities are discovered
and rated by the level of value that is added to primary and secondary activities. Next a financial
and non-financial analysis is conducted in order to measure performance. Lastly, the corporateand business-level strategies are analyzed to discover whether or not they are aligned with
Tarpys mission and vision. All sections of the internal analysis are used to discover Tarpys
strengths and weaknesses.
RESOURCES AND CAPABILITIES
Strategic resources are assets which allow an organization to acquire competitive advantages
over its competition. Tarpys resources and capabilities are analyzed through a VRIST model.
Each letter identifies resources as value, rare, inimitable, non-substitutable, and non-tradable.
The criteria that falls under VRIST analysis are assets that make up strategic resources (Ketchen
and Short, 2013).
Resources
A resource is anything a business uses as support and is valuable to the degree that it helps a
company produce strategies that take advantage of opportunities and eliminates threats. A
resource is rare when it is considered unique in comparison to the resource of competition. A
resource is imitable when it is not easily duplicable. A resource is non-substitutable when
competitors cannot find another way to obtain the benefits a resource offers. A resource is nontradable when it cannot be sold, or when it cannot yield something in return (Ketchen and Short,
2013). There are two types of resources a business uses to be successful. The first type of
resource used is known as a tangible resource and the second type of resource used is known as
intangible. Both are described below.
Tangible Resources
Tangible resources are items that can be seen or touched. Tarpys tangible resources are its
location, banquet rooms, staff, and courtyard. Figure 3.1: Tangible Resources, shows Tarpys
resources using the VRIST analysis, followed by explanations. These resources are divided into
two sections, ordinary and extraordinary, where ordinary resources have less than three of the
criteria used in the VRIST analysis and extraordinary resources have three or more of the
criteria.
30
RESOURCE
V R I S T AN ALYS I S
Valuable
Rare
Inimitable
Non-Substitutable
Non-Tradable
L O C AT I O N
B AN Q U E T
ROOMS
FOOD
EQUIPMENT
S TAF F
Figure 3.1: Tangible Resources
Ordinary Tangible Resources
Tarpys ordinary tangible resources are its:
Food
Equipment
Staff
Although these are ordinary, it still provides important significance for Tarpys. Its food is
valuable and non-substitutable because head chef Todd Fischer is a part of Tarpys team.
The equipment is valuable and non-substitutable because it allows the restaurant to offer
catering, banquets, and weddings. Its staff is valuable and non-substitutable as it aids in
providing an unforgettable guest experience. Each of these ordinary tangible resources
adds value for customers.
Extraordinary Tangible Resources
Tarpys extraordinary tangible resources are its:
Location
Banquet rooms
The location is valuable, rare, non-substitutable, and non-tradable. There is rich history
that has transcended into a company culture that cannot be repeated or duplicated by any
other restaurant. Additionally, its location is unique with warmer weather in contrast to
the coastal location of direct competitors. The second extraordinary resource is Tarpys
banquet rooms as it is valuable, non-substitutable, and non-tradable. The banquet rooms
31
allows the restaurant to provide its customers with enough space to host large gatherings,
weddings, and charity events.
Intangible Resources
Intangible resources are resources that cannot be seen or touched, such as a persons knowledge
or a companys reputation (Ketchen and Short, 2013). Figure 3.2: Intangible Resources, uses the
VRIST analysis to assess Tarpys intangible resources.
RESOURCE
V R I S T AN ALYS I S
Valuable
Rare
Inimitable
Non-Substitutable
Non-Tradable
ATM O S PH E R E
R E P U TAT I O N
CUSTOMER
SERVICE
FOOD
Q U AL I TY
Figure 3.2: Intangible Resources
Ordinary Intangible Resources
Tarpys ordinary intangible resources are its:
Customer service
Food quality
Even though these are considered to be ordinary resources, it is still a significant part of
Tarpys success. Without its great customer service and its consistent high food quality,
Tarpys would be viewed less significantly by its customers.
Extraordinary Intangible Resources
Tarpys extraordinary intangible resources are its:
Atmosphere
Reputation
Tarpys atmosphere and reputation are an extraordinary intangible resource because it has
all five of the criteria used in the VRIST analysis. No other restaurant can duplicate
Tarpys atmosphere or reputation as it is one of a kind.
32
Capabilities
A companys resources are the things it owns, while capabilities are the things it can do with
those resources. Businesses take the resources and turn them into capabilities. Consumers do not
pay for the things a company owns; they pay for the things the company can offer. Firms need to
be able to acquire resources, turn them into capabilities, and create value. Figure 3.3: Resources
and Capabilities illustrates Tarpys resources and capabilities.
Banquet Rooms
RESOURCES
Equpment
Food
CAPABILITITES
Banquets, Catering, and

Weddings
Staff
Atmosphere
RESOURCES
Food Quality
Location
CAPABILITITES
Unforgetable Guest
Experience
Reputation
Figure 3.3 Resources and Capabilities
Tarpys uses its resources to create capabilities. Its banquet rooms, equipment, food, and staff
allows the restaurant to have the capability of offering banquets, catering, and weddings. In
addition, Tarpys is able to use its atmosphere, food quality, location, and reputation to fulfill its
mission of providing an unforgettable guest experience.
Internal Stakeholders
Internal stakeholders are essential resources within an organization or firm that are directly
affected by the outcome of the business, while having a stake in the firms success. Primary
stakeholders are people or business activities, such as distribution of a product or change to a
service agreement, which can directly affect the outcome of the organization (Business
33
Dictionary, 2015). It is critical to classify Tarpys stakeholders because they have a major interest
within the organization and impact organizational performance and success. Figure 3.4: Internal
Stakeholders Analysis shows the primary internal stakeholders of Tarpys and the level of
influence in the organization.
STAKEHOLDER
L E V E L of I N F L U E N C E
Low
Medium
High
OWNER
E MPLOYE ES
M AN AG E R S
SUPPLIERS
Figure 3.4: Internal Stakeholders Analysis
The analysis above demonstrates that all stakeholders share a medium or high level of influence.
Owner Tony Tollner has stake within the organization and would benefit from many of
the incoming proceeds, meaning Tonys level of influence is extremely high in the
business.
Employees Provide customer service expertise, which creates reliable relationships with
customers. The employees have a medium level of influences in the organization.
Management Tarpys has a high level of influence because of its ability to plan, lead,
organize, and control the restaurants operations. Management makes decisions regarding
accounting, finance, marketing, scheduling and operations, which influence the mission
of the restaurant and the use of its resources (Reference for Business, 2015).
Suppliers Tarpys suppliers have a medium level of influence. It is important for Tarpys
management, as buyers, to build and maintain effective relationships with its suppliers to
gain competitive advantage.
Summary of Findings
For this section, strengths were discussed. The following highlights those strengths.
Strengths:
Tarpys accumulated a number of great resources:

o Banquet Rooms
34
o Equpment
o Food
o Staff
o Atmosphere
o Food Quality
o Location
o Reputation
Resources are used to create crucial capabilities which adds value:
o Banquets, Catering, and Weddings
o Unforgettable guest experience
Passionate owner with a great attention to detail is a high influencing stakeholder
VALUE-ADDING ACTIVITIES
This section provides an analysis of the value chain and divides it into two parts: primary
activities and secondary activities. A value chain outlines the course that products and services
take to be fully prepared for consumers, and portrays the value that is added each step (Ketchen
and Short, 2013). In the restaurant business, value is added to the food when it is prepared into a
meal that can be sold at a higher price than the cost of all of the ingredients. Figure 3.5: ValueAdding Activities shows the value-adding primary and secondary activities that contribute to
overall profit. Each value-adding activity is rated low to high where high is the activity that adds
the most value.
35
IT
Procurement S
LOW
MEDIUM
36
Figure 3.5: Value-Adding Activities
Primary Activities
The primary activities of the value chain entail the actions required for the distribution of
products and services (Ketchen and Short, 2013). These activities include inputs, operations,
outbound logistics, marketing and sales, and service.
Inputs Medium
Inbound logistics (inputs) signify the influx of raw materials that are necessary for conducting
business (Ketchen and Short, 2013). The inbound logistics for Tarpys include the high quality
staff, the necessary food items, and the reservations.
Employees Medium
Tarpys hires employees that genuinely care about the work they are doing, which adds to
the customer experience. These employees take the time to remember repeat customers
by name and go above and beyond to increase customer satisfaction.
Food High
The executive chef Todd Fisher is a fan favorite all around the country and his passion for
food is portrayed in the quality. The quality is also enhanced by the ingredients that are
selectively chosen from suppliers and Tarpys on-site garden to maximize use of organics.
Reservations Medium
Tarpys is the only restaurant in the area that has an open table policy where customers
with more than twenty people in a group do not need to make a reservation in advance in
order to receive a table (personal communication, D. Edwards, 2015). This small factor
increases customer satisfaction.
Operations High
Tarpys operations include restaurant preparation, budgeting, and forecasting. Operations refer to
the production process of a good or service (Ketchen and Short, 2013).
Restaurant Prep High
The daily operation for Tarpys includes setting up the tables properly and preparing the
food for the day. Employees are expected to be consistent to preserve the quality of the
service which guarantees value for the company.
Forecasting High
Tarpys uses Restaurant Service Inc. (RSI) systems to forecast the sales for any particular
day. RSI records the most popular menu items for each month in order to maintain the
necessary inventory. It is also used to predict the number of reservations for each day and
company sales by looking at historical data.
Budgeting Medium
37
After forecasting is complete, budgeting shows the expenditures that can be expected
throughout a specific period of time. Tarpys uses the RSI system to create a budget, but
management moderately values the data.
Outbound Logistics Medium
Outbound logistics track the path of goods and services to the final product available for
consumers (Ketchen and Short, 2013). The outbound logistics for Tarpys is the prepared food
and beverages that are served along with the overall customer experience. Even though these
services are intangible, the quality of the food and service provided, adds value to the overall
experience.
Marketing and Sales Low
Marketing and sales is the process of attracting potential consumers to purchase the companys
goods and services (Ketchen and Short, 2013). The marketing and sales implemented for Tarpys
are its fair prices and advertising.
Fair Prices Medium
For the quality of the overall dining experience at Tarpys, the high food prices are
considered to be fair. Customers are willing to pay higher prices because it meets the high
quality of food and service that is received.
Advertising Low
Tarpys advertises on Google and Yelp so customers can read about other customers
dining experience. Tarpys advertises in magazines and newspapers, but the reputation
and brand image Tarpys has established amongst the locals serves as advertising through
word-of-mouth.
Service High
Service refers to the magnitude to which a company provides assistance to customers (Ketchen
and Short, 2013). This refers to the activities and interactions that occur during a customers
dining experience. Tarpys handles customer complaints in a professional and accommodating
manner. Customer satisfaction is a huge part of this primary activity, and Tarpys prides itself on
the little things that contribute to the overall experience.
Tarpys provides iPads on every table and it offers descriptions of the beer and wine. This helps
customers make a decision on what they want to order. It gives customers a visual on the
available items, giving specific details such as the alcohol content and bitterness of beers, and the
aroma and location of the wines on the menu.
Secondary Activities
38
The secondary activities are not directly involved in the value chain, but do provide support for
the primary activities (Ketchen and Short, 2013). These activities include firm infrastructure,
human resources management, research and development, and procurement.
Firm Infrastructure High
Firm infrastructure discusses the organization and leadership of a company and its effects on the
business (Ketchen and Short, 2013). The firm infrastructure for Tarpys is organized using the
RSI system. All of the financial data is organized using this system in order to increase
efficiency. The accounting, such as payroll is completed on a periodic basis using this system.
Management is able to focus on other important aspects of running the business because all the
necessary data is organized on one system.
Human Resources Management Medium
Human Resource (HR) management consists of recruiting, training, and compensating

employees (Ketchen and Short, 2013). The knowledge, skills, and abilities of the employees can
be a strategic resource that can influence company performance (Ketchen and Short, 2013).
Tarpys HR management includes recruitment and hiring, training, and performance evaluation.
Recruitment and Hiring Low
Tarpys does very little recruitment, but most of its employees are students in the area and
local residents. When a position becomes available, the general manager will post an ad
on Craigslist in order to attract people to the restaurant. Every potential employee must
complete an extensive application. Additionally, the potential new employee needs to be
personally interviewed and approved by each of the three managers before being hired.
Training High
Tarpys makes sure that every employee is thoroughly cross-trained in each area of
service. The following shows the level of intensity for server training.
One day in the kitchen

One day bussing
Two days behind the bar
Two days hosting
Five days serving
After completion of all eleven training shifts, the employee is allowed to start taking their
own tables. This high-intensity training program gives the employee a full understanding
of each aspect of the restaurant so as to provide the best possible service.
Performance Evaluation - High
In order to maintain knowledgeable employees and keep them on their feet at all times,
management requires all employees to complete monthly tests where they are asked to
memorize all the details regarding one food item, one type of liquor, and one type of
39
wine. Any employee who does not complete this evaluation will not be scheduled until
they pass the evaluation.
Research and Development Medium
Research and development examines the roles of computerization and telecommunication in a

company (Ketchen and Short, 2013). Tarpys research and development includes competitor
research, direct evaluation, and new product selection.
Competitor Research Medium
Research on the competitors is completed to maintain a competitive edge and to see if

anything within the business itself can be improved. Tarpys management makes sure that
the best possible performance is being achieved and adapted to meet customer needs.
Direct Evaluation High
The owner, head chef, and managers recently took a trip to southern California where
they visited many of the top rated restaurants in the area. One of their goals was to
analyze food quality and presentation. They took pictures and gained many useful tips to
bring back to Tarpys to improve business strategies.
New Product Selection Medium
Tarpys alcohol selection changes on a monthly basis. The wine selection is carefully
hand chosen by Rory Filbin, the wine manager. The liqueur and spirit collection is
maintained by Colleen Balzano, the bar and spirits manager.
Procurement High
Procurement is the acquisition and negotiation for goods and services from an outside source
(Ketchen and Short, 2013). Tarpys carefully selects suppliers based on extensive criteria and
assures quality through its products and services.
Supplier Selection High
Suppliers are evaluated first based on cost and availability. In order to guarantee and
assure the quality of the ingredients in the food, the availability of organic food options is
a high priority. Tarpys tries to be as sustainable as possible by purchasing line caught
seafood and free range poultry to attain high quality standards.
Quality Assurance High
The quality of the products and services offered by Tarpys is maintained by employees
handling customer complaints in a professional manner. If a guest is not satisfied with
their meal, the manager removes it from their bill. Opening doors for customers, picking
up fallen items, and bringing call-in orders out to cars are just a few ways Tarpys assures
quality service.
Summary of Findings
40
From this section strengths and weaknesses were discussed. The following outlines Tarpys
strengths and weaknesses.
Strengths:
Firm Infrastructure is high value adding with the RSI software
Procurement is a high value adding activity with rigorous supplier selection
Tarpys provides high-quality service
Human resources is value adding with in-depth training programs for

employees
Weaknesses:
Low value is added to marketing and sales with a lack of marketing strategy
Human resources value is limited by its minimal staff recruitment efforts
PERFORMANCE MEASURES
A companys financial ratios indicate where the companys profits and investments are being
allocated, in addition to pointing out inefficient spending (Bamford, C. and West, G.P., 2010).
Non-financial metrics are a way to measure performance indicators that do not include the
companys finances. The financial analysis can be used to understand how a company is doing in
its market or industry, and make predictions for future financial trends. The following section
explores the financial aspects of Tarpys by focusing on three major areas: profitability, liquidity,
and leverage ratios. Next, non-financial performance measurements that are important
benchmarks for Tarpys are reviewed.
Financial Performance Analysis
The financial performance analysis section identifies Tarpys financial strengths and weaknesses
regarding profitability, liquidity, and leverage ratios (Ebstudies, 2012). Industry averages are
provided in order to establish standards within the restaurant industry. Industry information is
provided throughout from Bizstats.com (BizStats, 2013).
Profitability Ratios
Profitability ratios are a set of financial metrics utilized to assess a businesss ability to generate
revenue compared with expenses. Having a higher value than competitors or keeping the number
steady over multiple years is indicative that the company is maintaining profitability
(Investopedia, 2015). Shown in Figure 3.6: Tarpys Profitability Ratios are the actual ratios for
Tarpys versus the industry averages.
P R O F I TAB I L I T Y R AT I O S
2012
Profit Margin
2013
0.76% 4.39%
2014
Industry Average
6.77%
5.82%
41
Return on
Assets
3.74%
Assets
Turnover
4.91
21.68
%
4.94
30.93
%
4.57
18.25%
Figure 3.6: Tarpys Profitability Ratios
Profit Margin
The profit margin ratio divides the net income by net sales. This shows how much the
company keeps in earnings for every dollar of sales. The profit margin from 2012-2014
ranged from 0.76%-6.77%. This totals approximately $0.07 in profit for every dollar sold
as of 2014. While this figure may seem low, it is actually slightly above the industry
average of $0.06 per dollar of sales.
Return on Assets
The return on assets (ROA) ratio is found by dividing net income by total assets. This
percentage shows how well a company turns its assets into income. The higher the
number, the more efficiently the company is handling assets. In 2012, the ROA for
Tarpys dropped to 3.74% as a result of the companys investment in catering. However,
over the last two years the ROA has grown due to the increase in catering revenue, as
seen in Figure 3.7: Sales Breakdown below. The ROA increased to 21.68% in 2013, and
30.93% by the end of 2014. The companys 2014 year-end ROA exceeds the industry
average by 12.68% (A. Cusiano, personal communication, May 1, 2015).
42
Sales Breakdown
Catering Sales
Banquet Sales
84.20%
80.91%
9.57%
6.23%
10.99%
8.10%
2012
2013
Restaurant Sales
74.15%
12.35%
13.50%
2014
Figure 3.7: Sales Breakdown

Asset Turnover
The asset turnover ratio is calculated by dividing the net sales by the total assets. This
ratio shows the amount of sales generated by each dollar of assets. The asset turnover for
Tarpys has remained fairly consistent, ranging between 4.57-4.94. This means that for
every dollar of Tarpys assets, almost five dollars of sales are produced. Although the
company is generating five times the sales from company inputs, the costs are so high
that it is not reflected by the net income. In order to remedy this, the asset turnover ratio
needs to increase, or operational costs need to decrease.
Profitability Trends
As shown in Figure 3.8: Profitability Trends, the profit margin made a slow but steady
increase between the years 2012-2014. The return on assets drastically increased from
2012-2013 and moderately increased from 2013-2014, and assets turnover remained
constant.
43
P R O F I T AB I LI T Y T R E N D S
35
30
25
20
15
10
5
0
2012
2013
Profit Margin
2014
Return on Assets
Assets Turnover
Figure 3.8: Profitability Trends Graph

Liquidity Ratios
Liquidity ratios are utilized to measure a companys ability to pay off short-term obligations with
current assets. Liquidity is a good indicator of a companys financial stability, because it shows
how well a company covers its debts. However, having limited or low liquidity does not
necessarily mean that a company is financially unstable. This varies depending on the industry
and the type of good or service provided. Figure 3.9: Tarpys Liquidity Ratios, depicts Tarpys
current and quick ratios.
L I Q U I D I TY R AT I O S
2012
2013
2014
Industry Average
Current Ratio
1.47
1.13
1.02
1.04
Quick Ratio
0.99
0.83
0.79
0.76
Figure 3.9: Tarpys Liquidity Ratios
Current Ratios
The current ratio is calculated by dividing current assets by current liabilities, and shows
a companys ability to pay off its short-term debt. If the companys current ratio value is
below 1, the company does not have the means to pay off its short-term obligations in
full. While Tarpys has managed to keep this figure above 1 over the last three years, the
44
companys current ratio is decreasing every year. In 2012, the ratio was 1.47. By the end
of 2014 this figure dropped to a ratio of 1.02. This means that Tarpys barely covered the
full value of its debt, with only $1.02 for every $1.00 of liability. While in previous years
Tarpys has maintained a current ratio above the industry average, it is currently operating
at slightly below average.
Quick Ratios
The quick ratio is similar to the current ratio because it measures a companys ability to
pay off short-term debt. The quick ratio only uses the most-liquid assets of the company,
meaning that it excludes inventory as a liquid asset. The quick ratio for Tarpys is
declining over the years. In 2012, the ratio was 0.99 at the year-end, suggesting that for
every $1.00 of liability, the company has $0.99 in liquid assets. By the end of 2014, this
figure had dropped to $0.79 in assets for every $1.00 of liability. The industry average for
quick ratio is at 0.76, slightly below Tarpys ratio in 2014. Although Tarpys quick ratio is
declining, it is still maintaining an above-average status.
Liquidity Trends Chart
As seen below in Figure 3.10: Liquidity Trends, Tarpys current ratio experienced a
moderate decline from 2012-2013, and a slight decline in the following year. This shows
that Tarpys overall ability to pay its debts is diminishing; however, Tarpys finances are
tied up in non-liquid assets and inventory. Because of the nature of the restaurant
industry, it is reasonable to infer that many of Tarpys major assets (the property, the
catering business, the inventory, and the restaurant supplies) are non-liquid items.
LI Q U I D I T Y T R E N D S
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2012
2013
Current Ratio
2014
Quick Ratio
Figure 3.10 Liquidity Trends Graph

Leverage Ratios
Leverage ratios are used to measure how much of the companys capital is made up of debt.
These ratios may also be used to assess the companys ability to pay debts and other financial
obligations as illustrated by Figure 3.11 Tarpys Leverage Ratios.
45
L E V E R AG E R AT I O S
2012
2013
2014
Debt to Equity
Ratio
0.69
1.72
1.14
Debt Ratio
0.41
0.63
0.53
Annual Inventory
Turnover
12.63
12.35
15.43
Industry Average
31.73
Figure 3.11: Tarpys Leverage Ratios

Debt to Equity Ratio
The debt to equity ratio is figured by dividing the total liabilities by stockholders equity.
This shows the amount of equity and debt the company is using to finance its assets.
Tarpys has a fairly high debt to equity ratio on average. The higher the ratio, the more
aggressive the company has been financing the operations through debt. Tarpys debt to
equity ratio in 2012 was 0.69, meaning that for every dollar of shareholders equity; the
company had $0.69 in debt or loans. The number dropped again in 2014 to 1.14, meaning
that at the end of 2014, the company had just over a dollar in debt for every dollar of
equity.
Debt Ratio
The debt ratio is determined by dividing the total debt by the total assets. Having a high
debt ratio means that the company is highly leveraged and at greater financial risk. If the
ratio is above a value of 1, the company has more debt than assets. Tarpys has
maintained a fairly consistent debt to equity ratio between 0.41 and 0.63 over the last
three years demonstrating that the company has had between $0.41 and $0.63 in debt for
every dollar of assets.
Annual Inventory Turnover
The annual inventory turnover ratio is calculated by dividing the cost of goods sold by
the inventory. This ratio shows how many times a companys inventory is sold and
replaced over a period. If the value is low, it may mean that the company has an
inefficient method of managing their inventory levels. Tarpys has kept a consistent
turnover ratio ranging from 12.35-15.34. On average, it replaces inventory 12-15 times
per year, approximately once per month. The industry average is approximately 31.73,
meaning that inventory is depleted an average of 2.6 times per month. Tarpys lower
inventory rate could be a result of its extensive wine and liquor collection, which can take
longer to deplete than food and other inventory.
46
Leverage Trends
Over the last three years, Tarpys has shown a moderate to high level of debt to equity as
shown in Figure 3.12: Leverage Trends. This ratio spiked in 2013, but decreased by the
end of 2014. The company has maintained a consistent debt ratio between 0.4 and 0.6,
suggesting it has enough assets to cover debts.
L E V E R AG E
TRENDS
2
1.5
1
0.5
0
2012
2013
Debt to Equity Ratio
2014
Debt Ratio
Figure 3.12: Leverage Trends
The inventory turnover for the company has remained between 12 and 15 times per year,
which is sufficient due to the nature of the restaurant industry as shown in Figure 3.13:
Annual Inventory Turnover.
AN N U AL I N V E N T O R Y T U R N O V E R
18
16
14
12
10
8
6
4
2
0
2012
2013
Annual Inventory Turnover
Figure 3.13: Annual Inventory Turnover
2014
47
Non-Financial Performance Analysis
A nonfinancial performance analysis considers the key performance indicators (KPIs) of a

company. KPIs are nonfinancial differentiators that help a company achieve its mission and
future goals. Tarpys has several KPIs that are utilized on a regular basis; including number of
covers (patrons), average number of table turns, percentage of beverage percentage of food and
beverage sales, and number of catering and banquet events. These non-financial performance
indicators are kept on record in the companys RSI system.
Number of Covers
Tarpys keeps track of number of covers per day, meaning the number of customers served per
day. RSI reflects past years numbers for the same date in order, which is helpful when deciding
how many servers to schedule on a given day, and when setting goals for the restaurant. For
example, if a particular day has been exceptionally busy in years past, Tarpys schedules more
staff that day in anticipation of this recurring trend. At the end of that day, the manager inputs the
number of covers served and RSI indicates the percentage of change from years past. This gives
Tarpys an idea of how they are performing each day as compared with previous years. As seen
in Figure 3.14: Number of Covers below; the number of covers in 2012 and 2014 are fairly
consistent, with a slight decrease in 2013. One factor leading to this slight drop in total covers
was that Tarpys was closed for 10 days in September for a full remodel of the bar.
NUMBER OF COVERS
Total
2012
2013
2014
136,451
133,215
136,646
Figure 3.14: Number of Covers

Average Number of Table Turns
The average number of table turns tells the restaurant how many of the tables are being utilized
and how often. The number provided in Figure 3.15: Number of Table Turns below tells how
many times all of the tables were used per day. On average, Tarpys turns each table
approximately four times per day.
N U M B E R O F TAB LE T U R N S
48
Average per Day
2012
2013
2014
4.15
4.06
4.16
Figure 3.15: Number of Table Turns
Food and Beverage Sales
The food and beverage sales performance indicator shows the percentage of total sales that both
food and beverage sales account for. Figure 3.16: Food and Beverage Sales below shows that
food sales average at just over 20% of sales. Despite Tarpys being known for its extensive
menu, the figure below shows that its wine and liquor programs generates the majority of its
revenue.
F O O D AN D B E V E R AG E S ALE S
2012
2013
2014
Beverage Sales
78.35%
75.23%
79.89%
Food Sales
21.65%
24.77%
20.11%
Figure 3.16: Food and Beverage Sales

Number of Catering and Banquet Events
Figure 3.17: Catering and Banquet Events below shows that the number of catering and banquet
events has been decreasing steadily over the last three years. While this may seem at first glance
to be a weakness, it was actually a deliberate strategy move by banquet and catering manager
Alethea Cusimano. After seeing a vast influx of bookings for both catering and banquets,
Cusimano determined that it was time to raise the bar for Tarpys. She increased the minimum
deposit amount, added room charges, and stopped making expensive concessions for customers.
By implementing this tactic, Cusimano decreased the number of parties while still increasing the
revenue per party, as shown below.
C AT E R I N G E V E N T S
2012
2013
2014
49
Number of Events
487
342
303
Average Sales Per
$715.20
$808.47
$1,248.35
B AN Q U E T E V E N T S
2012
2013
2014
Number of Events
471
414
411
Average Sales Per
$982.55
$1,161.33
$1,218.72
Figure 3.17: Catering and Banquet Events

Summary of Findings
For this financial and non-financial performance measures, strengths and weakness were
assessed. These strengths and weaknesses are outlined below.
Strengths:
Profit margin above industry average
Catering revenue increasing yearly
Quick ratio above industry average
Number of covers each year maintained
High liquor/wine sales
Decreasing number of events, but increase revenue
High ROA compared to industry
Weaknesses:
Current ratio below industry average
Low inventory turnover
STRATEGIES
50
There are two categories of strategies that companies use in order to maintain or improve their
competitive position. Corporate-level strategies relate to which industry or industries a firm will
compete within, while business-level strategies address how a firm will compete in a given
industry (Ketchen and Short, 2013).
Corporate-Level Strategies
Downtown Dining has built strong brand equity since it opened Rio Grill in 1983. The addition
of Montrio Bistro and Tarpys introduced new target markets and growth while the company
culture remained consistent. This culture, centered upon an all-around excellent dining
experience, plays a key role in the success of the firms catering endeavors because the same
detail-oriented service quality in the restaurants is applied to grand scale catering events.
As shown in Figure 3.18: Corporate-Level Strategies below, Downtown Dining maintains three
corporate-level strategies under the categories of concentration and diversification.
Concentration strategies involve trying to compete successfully only within a single industry,
while diversification strategies enter entirely new industries (Ketchen and Short, 2013).
Downtown Dining utilizes market penetration, market development, and related diversification
corporate-level strategies. Market penetration allows the company to grow its sales within the
local market, while market development has influenced the opening of Montrio Bistro and
Tarpys. Finally, Downtown Dining used a related diversification strategy to successfully enter
the catering industry in 2011.
CorporateLevel Strategies
Concentration
Market
Penetration
Market
Development
Diversification
Related
Diversification
Figure 3.18: Corporate-Level Strategies
Business-Level Strategy
Business-level strategies consist of four main strategies:
51
1.
2.
3.
4.
Cost leadership
Differentiation
Focused cost leadership
Focused differentiation (Ketchen, 2013)
Business-level strategies have two competitive dimensions. The first dimension is strategic
advantage and is related to how a firm attempts to compete with its competition. The second
dimension is the scope of operations, which involves how companies focus their operations and
target customers with a broad or narrow range of products and services (Ketchen and Short,
2013). Figure 3.19: Tarpys Business-Level Strategy displays its strategy as focused
differentiation.
Figure 3.19: Tarpys Business-Level Strategy
Narrow Market Scope
A narrow market scope can allow the tailoring of a particular target segment, geographic area or
industry, to achieve lower cost or to serve the target in a unique way (The Business Owner,
52
2015). Tarpys has a narrow market scope that currently targets a particular demographic group
within the local community around the Monterey peninsula. Its targeted cliental is loosely
segmented as affluent, baby boomers who are well established in the Monterey Peninsula.
Focused Differentiation
A focused differentiation strategy requires offering unique features that fulfill the demands of a
narrow market (Ketchen and Short, 2013). Tarpys is using a focused differentiation strategy
because of the high quality unique products and services being offered. Tarpys focused
differentiation entails premium service, a renowned chef, and high quality beverages and food
within a comfortable environment for locals of the Monterey Peninsula. Offering unique
products and services such as these entice customers to return for their next memorable
experience. That said, Tarpys has an advantage over competition and can charge higher prices
for the unique dining experience (Ketchen and Short, 2013).
Alignment Analysis
Figure: 3.20 Current Strategic Alignment represents Tarpys current strategic alignment with its
values and business practices. It is clear that Tarpys current corporate- and business- level
strategies align well with its various ideals, but there is room for improvement in two areas.
Tarpys lack of vision statement is not in alignment with its focused differentiation business-level
strategy. Additionally, competitive positioning has been given a moderate degree of alignment
because there is room for market development and broadening its related diversification strategy
in order to improve positioning.
C U R R E N T S T R AT E G I C
AL I G N M E N T
Corporate
Business
Degree of Alignment
Figure 3.20: Current Strategic Alignment

Summary of Findings
53
For this section, strengths and weakness were discussed. The following highlights the strengths
and weakness.
Strengths:
Maintains its focused differentiation
Develops its related diversification
Strong strategy alignment
Weakness:
Narrow market scope
CONCLUSION
Figure 3.21: Internal Conclusion below shows the strengths and weaknesses identified
throughout the Internal Analysis portion of this report.
54
Figure 3.21: Internal Conclusion
55
POSSIBILITIES AND RECOMMENDATIONS
This section of the report offers possibilities and recommendations for Tarpys. The internal and
external analyses presented the strengths and weaknesses of Tarpys and the opportunities and
threats within its industry. After evaluating these factors, recommendations are presented in
utilizing strengths to overcome threats and capitalize on opportunities.
POSSIBILITIES FOR IMPROVING STRATEGIES
Tarpys presently maintains strong corporate-level and business-level strategies through

diversification and differentiation.
Corporate Level Strategy
Tarpys maintains a strong system of corporate-level strategies. As a result, recommendations for

the corporate-level strategy revolve around the company expanding into other markets. It can
achieve this by expanding into the areas surrounding the Monterey Bay, such as Capitola. This
possibility utilizes Downtown Dinings current corporate-level strategy of market development.
Capitolas luxurious qualities would present an opportunity for Downtown Dining to acquire
business from tourists and vacationers, which would build brand awareness and bring more
traffic to its current three restaurants. Capitolas wide range of restaurant types would provide
Downtown Dining with opportunities to experiment with product development. For example,
instead of opening a restaurant with product and service offerings similar to Tarpys and Montrio
Bistro, the company could open a gourmet burger joint on the beach with catering services.
Business-Level Strategy
Tarpys business-level strategy is categorized through focused differentiation within a narrow

market scope. Its products and services are differentiated because they are unique and of high
quality. The recommended strategy adds features to help further differentiate Tarpys while
gaining competitive advantage over its competition.
It is recommended that Tarpys maintain its focused differentiation strategy. This type of
differentiation incorporates a narrow market scope of an affluent demographic. This strategy
maintains the restaurant focus on uniqueness and quality of products and services.
POSSIBILITIES FOR IMPROVING STRATEGIC COMPETITIVE ADVANTAGE
This section will analyze opportunities to strengthen Tarpys strategic competitive advantage in
the restaurant industry. By applying the alternatives recommended below, Tarpys gains the
potential to increase its competitive advantage, customer base, and sales.
Possibility One: Create a Marketing Strategy
56
Tarpys does not currently have a defined marketing strategy or ongoing marketing programs.
The alternatives for building and growing these include:
Increasing social media presence
Improving location awareness
Introducing promotional offers
Hiring a marketing manager or consultant
Alternative One: Increase Social Media Presence
The use of social media sites as a branding and marketing strategy is cost-efficient and extremely
effective. It is free to sign up for sites such as Facebook and Instagram, meaning that for no
additional cost, Tarpys will have access to a younger generation of consumers, widening its
target market. On Facebook, Tarpys would be able to post about daily specials and wine list
changes. Customers could also post comments about their customer service experience. On
Instagram, customers could post pictures of their food and talk about their experience so new
customers can get a feel what they will encounter if they are to dine at Tarpys. In addition to
creating buzz around new products within the company, social media also has the ability to
cultivate relationships between the business and the consumer.
In March of 2014 Tarpys created an Instagram account, however, the activity on this account has
been sparse. One way to ensure that the account is being used to its full potential is to assign
responsibility and upkeep of the account to one person within the company. By building up a
presence on social media, Tarpys will expand its reach to a younger market and build
relationships with customers.
Alternative Two: Improve Location Awareness
Tarpys is located on highway 68 in Monterey. This unique location attracts many local
customers, but is unfortunately hard to locate for customers that are unfamiliar with the area. In
order to increase location awareness, the company needs to invest in more signage. Highway 68
has an average of 26,000 cars per day which offers Tarpys a great opportunity to increase its
company awareness. There are currently very few signs indicating Tarpys location, and those
that do exist are difficult to spot from the highway. With increased signage, Tarpys will increase
brand awareness and draw in tourists and travelers from Highway 68 as they are passing by.
Alternative Three: Introduce Promotional Offers
Having promotional offers increases perceived value by introducing incentive. For customers
who are considering where they might dine, promotional offers can be extremely persuasive.
Three options for implementing promotional offers include: allowing deals on Groupon, offering
frequent customer cards, and putting together a locals menu. These options use efficient
marketing strategies to increase competitive advantage.
57
Groupon
Groupon is an online marketing service that connects businesses to its consumers through
promotional offers. Implementing a group meal discount on Groupon would increase
company awareness and average number of guests served per day. The discount gets
people in the door, and the level of food and service quality turns them into loyal
customers. By the end of 2014, there were more than 54 million active customers on
Groupon who were utilizing the many deals and discounts.
Frequent Customer Cards
Offering a frequent customer card would create an incentive for customers to come back
and dine at Tarpys in the future. For every appetizer or entre purchased, a stamp could
be given to the customer on their card. The card could allow customers who buy five
appetizers to come in on their next visit and receive their sixth appetizer for free. The
card could also allow customers who purchase ten entrees to receive an eleventh one for
free on their next visit.
Tarpys has a rewards program in place currently, in which customers are given a card
connected to their account. Every time they dine, points are added to the card. One point
is awarded per dollar spent (excluding tax), and for every 250 points, $10 worth of
restaurant credit is added to the card. While this does provide incentive for return visits, it
does not offer quick rewards. By having a program to incentivize short-term repeat
customers, the company is able to potentially turn them into long-term loyal customers.
Locals Menu
In past years, Tarpys offered a local menu exclusively for customers who live in the
Monterey area. Since Todd Fischer joined the Tarpys team in 2014, the local menu has
been put on hold. During a time of transition it can be difficult to hold on to old
traditions. However, since a majority of the customers who dine at Tarpys live locally,
implementing a local menu has the potential to bring in more local customers and boost
sales. It would be beneficial to the company and the community for Tarpys to re-visit the
idea of a local menu, as it would provide locals with incentive to choose Tarpys over its
competitors.
Recommendation
Based on the possibilities described above, it is recommended that Alternative One: Increase
Social Media Presence and Alternative Three: Introduce Promotional Offers be implemented at
this time. Awareness of the company will increase the number of customers who dine at Tarpys.
Introducing promotional offers will attract new customers and increase the satisfaction of the
experience for current customers. These two alternatives will attract new customers to the
restaurant, but will also increase customer loyalty by making it feel like there is a benefit for
dining there more often.
POSSIBILITIES FOR IMPROVING OPERATIONAL EFFICIENCIES
58
In order to ensure the health and continuous growth of a company, it is imperative to practice
efficiency in everyday operations. Making small adjustments in day-to-day operations and
procedures can have a positive impact on the company overtime. By implementing the
recommendations provided below, Tarpys has the ability to eliminate cost inefficiencies and
improve the operational flow of the restaurant.
Possibility One: Develop and Implement New Management Strategy
Tarpys currently has three managers overseeing restaurant operations. Colleen Balzano is in
charge of the bar, Rory Filbin manages the wine program, and Debbie Edwards oversees
restaurant operations as a whole. As general manager, Debbie is in charge of:
Scheduling
Conflict resolution
Decorating the restaurant for major events
Managing inventory
Approving reservations for large parties
Coordinating with the catering and banquet department
Overseeing payroll
By increasing the management staff, or by delegating routine tasks to others within the existing
management team, more time will be allowed for Debbie to focus on overseeing the restaurant
operations as a whole.
Alternative One: Increase Management Staff
By increasing the management staff, Tarpys can disperse everyday operational activities
amongst a larger group. This tactic has the potential to reduce stress for the general manager,
increase operational efficiency, and ensure that each task has an assigned point-person. In order
to increase the management staff, the company would need to spend time and money on
advertising the positions available, conducting interviews, providing training, and paying
additional salaries. Although it is a high cost, it has the potential to provide benefit to the
company by increasing efficiency.
Alternative Two: Introduce a Suggestion Box for Employees
With only one manager in charge of employee relations and human resources, it can be difficult
for employees to feel heard or acknowledged. It can also be hard for people to make
recommendations as there is not currently a forum for this. Every morning there are pre-shift
meetings in which the manager on duty discusses menu additions and other shift-related items.
However, there are no meetings between staff and management to discuss overall operations in
regards to what is working and what is not.
59
By introducing a suggestion box for employees, the company provides a platform from which
the employees can bring operational inefficiencies to their managers. In a restaurant, the best
resources for understanding the operational intricacies are the employees. They are an underutilized resource that the company should capitalize on.
Alternative Three: Re-Assign Management Duties
In order to most efficiently utilize existing resources, Tarpys can re-assign management tasks to
establish a balanced workload amongst each manager. By increasing the productivity of each
manager, the workload for the general manager decreases and the entire restaurant operates more
smoothly as a result. This option is beneficial on all levels because in addition to spreading out
the work and maximizing efficiency, its costs are negligible.
Recommendation
In order to most efficiently develop the management operations at Tarpys, it is recommended

that Alternative Two: Introduce a Suggestion Box for Employees and Alternative Three: ReAssign Management Duties be implemented at this time. By implementing these two
recommendations, Tarpys will more effectively take advantage of its staff and management team
without increasing payroll. The company will learn about the restaurant from the employees
point of view, while providing the opportunity for employees to communicate. By re-assigning
the management duties, the company will reduce job-related stress and increase the efficiency of
everyday operations.
Possibility Two: Identify and Eliminate Excess Operational Costs
Tarpys profit margin is currently at six cents for every dollar sold. By comparing this low
margin with the high sales volume Tarpys has; it is clear that there are inefficiencies in the
budget. By taking a look at different alternatives regarding cost-cutting techniques, it is possible
for Tarpys to reduce its operational costs and see a higher profit margin in the years to come.
Alternative One: Utilize Solar Paneling to Bring Down Energy Costs
Solar power is steadily becoming a staple as a result of the green movement. Renewable energy
has many positive impacts on both the environment and energy costs. Many restaurants are
moving towards solar energy because it cuts costs, has a high return on investment, and can
appeal to energy conscious customers. Although installing solar panels has a high initial cost,
there are several companies that offer unique financing and power leaseback agreements. Solar
panels last many years, require little to no upkeep, and depreciate very slowly as a result of the
large market for used solar panels. The federal government offers a 30% tax credit for installing
solar panels, and many states (including California) offer additional incentives.
Alternative Two: Re-Negotiate Pricing with Suppliers
In order to reduce excess operational costs, monthly evaluations of suppliers should be

implemented. After careful analysis of various suppliers pricing, negotiations can be made with
current suppliers or new suppliers can be arranged. Effectively evaluating suppliers can lead to
competitive advantage because operational costs will be reduced, therefore increasing profits.
60
Alternative Three: Incorporate Family Meal for Employees
Tarpys employees are allowed one free meal per shift. They choose from a limited menu which
includes entrees such as:
Salmon,
Chili-crusted chicken
Meatloaf,
Pasta, salads, and appetizers
The retail list price of these items range from $10-$26 dollars. On an average day, there are 1719 employees (including host, manager, and kitchen staff) working in the morning, and 19-21
employees working at night. In total, this means 36-40 free meals for staff per day. In addition to
these meals, the kitchen also prepares meals for product tasting, which adds another 6 dishes per
day totaling up to 46 free meals per day.
Every day, Tarpys may serve $420 - $1,200 dollars of food to employees at no charge. This
price reflects the retail value of the food, not the actual cost to the restaurant.
A family meal is when a restaurant makes one big meal for all employees to eat. By switching to
a family meal style, the company could save thousands of dollars per month. Additionally, the
kitchen staff will increase efficiency because they will not have to take time away from preparing
meals for guests in order to cook individual employee meals. Family meal can also provide an
opportunity to utilize excess inventory and inventory that is about to expire.
Recommendation
In order to eliminate excess operational expenses, it is recommended that Tarpys utilize two of
the three alternatives listed above. By re-negotiating with suppliers and introducing family
meals; the company can experience a decrease in operational expenditures. Re-negotiating with
suppliers is important because it stimulates more competition amongst competing suppliers and
has the potential to bring down cost. Introducing family meal not only saves the company time
and money, but also gives the employees a chance to bond over a meal before and after shifts.
CONCLUSION
Based upon the previous stated recommendations, Tarpys should implement the following:
Increase social media presence
Introduce promotional offers
Re-assign management duties
Implement solar power
Re-negotiate with suppliers
61
Introduce family meals
With these recommendations, the competitive positioning, value-added, and alignment changes
and is shown in the following sections.
Improved Competitive Positioning
Figure 4.1: Strategic Group Map before Recommendations illustrates Tarpys location on the
map. It has an average amount of reviews as well as an average rating in comparison to its
competition.
Figure 4.1: Strategic Group Map before Recommendations
After the implementation of increasing social media presence and introducing promotional
offers, Tarpys position on the map will improve as shown in Figure 4.2: Strategic Group Map
after Recommendations.
62
Figure 4.2: Strategic Group Map after Recommendations
Increased Value-Added
Figure 4.3: Value-Adding Activities before Recommendations, displays the existing level of
importance with Tarpys value-adding activities. Tarpys HR management is considered to be a
medium level of value. In addition, its marketing and sales is considered to be a low level of
value.
63
IT
Procurement S
LOW
MEDIUM
64
Figure 4.3: Value-Adding Activities before Recommendations
With the implementations of re-assigning management duties, increasing social media presence,
and introducing promotional offers suggested above; Tarpys HR management and marketing
and sales increases to a high level of value as shown in Figure 4.4: Value-Adding Activities after
Recommendations.
65
IT
Procurement S
LOW
MEDIUM
66
Figure 4.4: Value-Adding Activities after Recommendations
Improved Alignment
Figure 4.5: Current Strategic Alignment, represents Corporate and Business strategic alignment
with its values and business practices. It is clear that Tarpys current corporate-and business-level
strategies align well with its ideals, but there is room for some improvement regarding its vision
statement and competitive positioning.
C U R R E N T S T R AT E G I C ALI G N M E N T
Corporate
Business
Degree of Alignment
Figure 4.5: Current Strategic Alignment
Following the completion of a new vision statement; Tarpys business-level alignment increases,
while opening a restaurant in a nearby location enhances its competitive positioning resulting
with an improved corporate alignment as shown in Figure 4.6: Improved Strategic Alignment.
I M P R O V E D S T R A T E G I C A LI G N M E N T
Corporate
Business
Degree of Alignment
Figure 4.6: Improved Strategic Alignment
If Tarpys implements these recommendations, it will capitalize on the opportunity to increase its
sustainable competitive advantage.
67
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S

Expanding new technologies

Tarpys external threats include:

Rising minimum wages for restaurants

Many substitutions available

Low bargaining power of suppliers

Creating a marketing strategy

Co-Owner Tony Tollner, oversees all operations

Wine Manager Rory Filbin oversees the wine program.

Figure 1.2: Organizational Structure of Tarpys

U.S. SALES IN BILLIONS

Figure 1.3: National Full-Service Restaurant Industry Sales

Wage and Law

Figure 2.1: Driving Forces Analysis

Demographics impact the restaurant industry significantly through population age

Sustainability is very common amongst modern business cultures. Environmental

Financial Advisor Medium

The community of businesses surrounding Tarpys is considered a stakeholder with low

Although it is a nationwide chain, Wells Fargo is considered a stakeholder as a result of the

Pro restaurant legislation

Social responsibility trend

Social media marketing

Customer needs and wants

The three restaurants of Downtown Dining maintain a friendly competitive rivalry.

Figure 2.3: Level of Competition demonstrates competitive attributes of Tarpys various

Figure 2.3: Level of Competition

Figure 2.4: Strategic Group Map

Figure 2.5: Key Success Factors

It is important for businesses to be involved in the community because it promotes awareness

Figure 2.6: Competitive Forces

Expansion of marketing program

Figure 2.7 External Analysis Conclusion

Tarpys ordinary tangible resources are its:

Tarpys extraordinary tangible resources are its:

Tarpys ordinary intangible resources are its:

Tarpys extraordinary intangible resources are its:

Banquets, Catering, and

Tarpys accumulated a number of great resources:

Outbound Logistics Medium

Human Resource (HR) management consists of recruiting, training, and compensating

One day in the kitchen

Research and development examines the roles of computerization and telecommunication in a

Research on the competitors is completed to maintain a competitive edge and to see if

Firm Infrastructure is high value adding with the RSI software

Procurement is a high value adding activity with rigorous supplier selection

Tarpys provides high-quality service

Human resources is value adding with in-depth training programs for

Human resources value is limited by its minimal staff recruitment efforts

Figure 3.6: Tarpys Profitability Ratios

Figure 3.7: Sales Breakdown

Figure 3.8: Profitability Trends Graph

Figure 3.9: Tarpys Liquidity Ratios

Figure 3.10 Liquidity Trends Graph

Figure 3.11: Tarpys Leverage Ratios

Figure 3.12: Leverage Trends

Figure 3.13: Annual Inventory Turnover

A nonfinancial performance analysis considers the key performance indicators (KPIs) of a

Figure 3.14: Number of Covers

Average per Day

Food and Beverage Sales

Figure 3.16: Food and Beverage Sales

Average Sales Per

Average Sales Per