Chapter 2 — Exercises

Thirty-four problems, graduated from recall through applied judgment. Items marked with a dagger (†) have worked solutions in the Answers to Selected Exercises appendix — try them before you look.

Several of these require you to leave the building. Concept work that happens entirely at a desk is the reason so many concepts are wrong; counting covers in a competitor's dining room on a Tuesday is not busywork, it is the research.

A. Recall and definitions (1–8)

1. Define restaurant concept in one sentence, and name three things a concept is commonly confused with.

2. † State any restaurant concept you know well — one you have worked in, or one down the street — in the three sentences from §2.1. Then mark which of your three sentences could be shown to be false, and how.

3. What is a daypart? List the standard American set, and state which two Bellwether operates.

4. Distinguish target guest from guest persona. Why does the chapter argue that occasions produce better personas than demographics?

5. † Define trade area. Give two reasons the chapter prefers drive time to a concentric ring, and name three physical barriers that distort a trade area.

6. What are the three categories of competitor in a competitive set? Which one does the chapter say takes the largest share of the weeknight occasion, and why is it so often left off the list?

7. Define capture rate and write the formula in words.

8. † Define positioning and concept-market fit, and explain in two sentences what a business plan can and cannot establish about the second one.

B. The guest, the occasion, and the check average (9–15)

9. † A concept forecasts three occasions:

Compute the blended check average.

10. Using problem 9: the weekend group segment comes in at 22% rather than 32%, and the ten points shift to the bar/solo occasion. Compute the new blended check. If the restaurant runs 22,000 covers a year, what is the annual revenue difference?

11. † Build a check to a target. A concept wants a \$38 average check at a 75% food / 25% beverage mix.

Solve for the dessert attachment rate required to hit the food subtotal, then verify that the whole table produces \$38.00 at 75/25.

12. Write a seven-field occasion sheet (occasion, party size, frequency, time budget, price tolerance, trigger, alternative) for a guest you have personally served. Then state one operating decision that changes because of what you wrote in the alternative field.

13. † Bellwether's plan assumes cocktail attachment of 0.38 at a \$14.00 average cocktail price. Compute what a rise to 0.50 would add per cover and across 24,700 dinner covers. Then state the two other plan numbers that change as a result, and whether the operator should be pleased.

14. A founder describes their guest as "professionals aged 28–45 with household incomes above \$85,000 who value quality and authenticity." Rewrite that description as two occasion segments with the seven fields filled in. What did you have to invent, and what does that tell you about the original?

15. A concept assumes 12% of its dinner covers come from a destination guest visiting once or twice a year. Explain why a heavy reliance on this segment is structurally expensive, and name the chapter that computes the cost of acquiring a guest.

C. Trade area and capture rate (16–22)

16. † A concept plans 80 seats, 1.25 turns, six dinner services a week. Compute covers per night, per week, and per year.

17. Using problem 16: at an average of four visits per guest per year, how many distinct guests does the concept require? Its ten-minute drive time contains 95,000 people. What capture rate is that?

18. † Using problems 16 and 17: recompute the required guest count and capture rate at three, five, and eight visits per guest per year. Present the four scenarios as a table and write two sentences on what the pattern implies about where a small restaurant should spend its marketing money.

19. Take Bellwether's trade-area sheet (Figure 2.3). Write down five questions the sheet cannot answer that you would need answered before signing a lease, and say where you would go to answer each.

20. † Draw the barrier map (Figure 2.4 style) for a real district you know — your neighborhood, a district you have worked in, or one you are considering. Mark water, rail, highways, arterials, one-way pairs, and bridges. Then estimate, in each of four directions, how far ten minutes actually reaches at 6:30 p.m. State what surprised you.

21. A commercial data service reports 46,000 people within three miles of a site. Write the four follow-up questions you would ask before that number appears anywhere in a forecast.

22. † Find the flaw. A founder's revenue build reads: 90 seats × 2.0 turns × \$52 average check × 7 nights × 52 weeks = \$3,407,040. Verify the arithmetic. Then compute annual sales per seat for this plan and for Bellwether (\$1,410,760 on 68 seats), compare them, and write the three sentences you would say to this founder.

D. Competitive set, positioning, and supply (23–27)

23. † Using Figure 2.6, list which establishments are direct competitors for each of Bellwether's four occasions from Figure 2.2. Note that the lists differ. What does that tell you about the phrase "our competitors"?

24. Compute the direct-occasion seat supply in Figure 2.6 before and after Bellwether opens, and express the change as a percentage. Then do the same for the broader set. Which figure would you put in a business plan, and which would a lender rather see?

25. † Build a competitive-set survey for a real district. Visit at least five establishments, record format, approximate seat count, dinner per-person average from the menu, dayparts, and the occasion each one owns. Then draw the price ladder and the positioning map, and mark the empty space. Write one paragraph on whether the empty space is empty because it is an opportunity or because it does not work.

26. A founder benchmarks their prices against a nearby brewery taproom selling dinner at a \$28 per-person average and concludes the district "won't support" a \$45 check. Explain, using the chapter's argument, why this conclusion may be wrong — and name two things you would check to find out.

27. Bellwether's positioning claim is share-taking rather than gap-filling. Write the two-sentence version of that claim you would put in a business plan, and the two-sentence version you would say out loud to a partner. Explain why they differ, if they do.

E. Differentiation, costing, and judgment (28–31)

28. † Cost this. A concept adds three signature dishes requiring five ingredients used nowhere else on the menu.

• Standing inventory: \$52 per unique ingredient.
• Monthly product usage across the five: \$1,450, of which 14% is lost to spoilage because the dishes sell unevenly.
• Added prep: 35 minutes a day, at \$21/hour fully loaded, across 310 operating days.

Compute the annual cost of carrying these three dishes and the working capital they tie up. Then: the dishes sell at \$28 with a plate cost of \$8.40. How many additional plates a year must they generate to justify the added cost, and how many is that per week?

29. Run three differentiators through the three-part test in §2.6: (a) an open kitchen, (b) a no-reservations policy, (c) a house bread program. For each, state whether it passes, and what evidence would settle the case.

30. † Build this week to a target. A 70-seat concept needs \$1,200,000 of annual revenue. Available dayparts and assumed checks: dinner \$42, weekend brunch \$22, weekday lunch \$19. Assume 1.3 turns at dinner, 90 covers per brunch service, 55 covers per lunch service. Construct a shape-of-week grid (Figure 2.5 style) that reaches the target. Then state, for each daypart-day you opened, what fixed labor floor it commits you to and why that matters more than the revenue it adds.

31. Judgment. Bellwether's positioning depends on the Rivermill District continuing to gentrify — and its arrival is itself a gentrifying event that will contribute to rising rents for the fifteen-year-old family-run restaurant three doors down. Write 250 words that you would actually be willing to say to that operator. Do not resolve the tension artificially; the exercise is to state it honestly and say what, if anything, you would do differently.

F. Writing and the Business Plan (32–34)

32. † Write the Concept & Market Analysis section for a concept of your own — yours, or one you invent — in no more than 1,200 words, following the 2a–2g structure in the chapter's Business Plan checkpoint. Include a capture-rate calculation and a competitive-set table. Then hand it to someone who will not be polite and record what they attacked first.

33. Business Plan extension. Run the concept stress-test scorecard (Figure 2.9) on Bellwether yourself, scoring each dimension independently before you look at the chapter's scores. Where do you differ, and why? Then write the one-paragraph pre-mortem — "it is three years from now and Bellwether has closed" — and identify which number in the plan would have shown it first.

34. † Business Plan extension. The chapter identifies a \$139,240 gap between the concept's four-variable revenue estimate (\$1,410,760) and the plan's \$1,550,000, and lists four candidate sources totaling \$171,734. Choose the two you would commit to in the plan. For each, write (a) the arithmetic, (b) the single assumption it depends on, (c) how you would know within ninety days of opening whether it was holding, and (d) what you would do if it were not. Then explain, in two sentences, why the chapter refuses to close the gap itself.