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This post refers to the application of the Business Model Canvas (BMC) for food stalls and restaurants. How can we apply the BMC to create a business model for a food stall or restaurant?
This general idea can be adapted to suit the type or concept of the food stall or restaurant being developed. Examples include authentic Malay cuisine, fast food restaurants, Tom Yum stalls, Chinese-style eateries, and others.
First, what is a business model? It refers to how a business organization creates and delivers value to customers. As a reminder, the BMC consists of nine (9) building blocks:
- Customer Segments
- Value Propositions
- Channels
- Customer Relationships
- Revenue Streams
- Key Resources
- Key Activities
- Key Partners, and
- Cost Structure.
Let’s take a look at how the business model with these 9 building blocks can be applied to a food stall and restaurant business. There’s no right or wrong, as long as we know how to utilize each building block!
Customer Segments
Who is the target market for this food stall or restaurant business? The target market or customer segment can refer to their needs, wants, behavior, or even user categories (like income level):
- It could be a mass market with no specific target market.
- A more specific (niche) target market.
- Segmented – distinguishing customers based on their needs or characteristics.
- Diversified – the business model serves two or more customer segments.
- Multi-sided Platform – two or more customer segments that depend on one another.
Target Market
The target market here is more segmented, consisting of nearby residents within a 30 km radius of the food stall/restaurant. It could include:
- The local community
- Nearby factories, offices, and shops
- University and college students
- Food enthusiasts
Value Propositions
Value propositions refer to the value we aim to build for the products and services provided. These value propositions must be specifically targeted at the chosen customer segment.
Some elements that can be used to build value propositions include:
- New products/services
- Performance
- Customization
- Getting the job done
- Design
- Brand/Status
- Price
- Cost reduction
- Risk reduction
- Accessibility
- Convenience
Example Value Propositions for Food Stalls:
A food stall or restaurant needs a strong value proposition! When we go to eat out, what do we want? Simple: delicious food and quick service. Here are some ideas for value propositions, beyond just the above elements:
- Special recipes
- Freshly prepared meals
- A variety of menu options
- Fast order delivery
- Accessibility – location of the food stall
- The ambiance of the food stall
Channels
How does the business communicate or connect with customers to deliver their value propositions? How do they create awareness about the existence of the business, products, and services? How can we let people know about our food stall or restaurant?
We can look at the five (5) channel phases and how we help customers:
- Create awareness about the business and products.
- Evaluate the products (wouldn’t it be great to get good reviews from customers?).
- Purchase the products.
- Delivery; and
- After-sales service.
Channels
- Owned channels (direct – self-owned / indirect – e.g., the stall is run by another business organization) and partner channels:
- Owned channels (direct) – installing banners in the area.
- Owned channels (direct) – promotions/marketing via social media: Facebook, Twitter, Instagram.
- Owned channels (direct) – websites, customer databases: SMS & email.
- Word of mouth – customer experience and perception are crucial!
Customer Relationship
Building and maintaining customer relationships is vital for the business. The main goal could be to acquire and retain customers as well as increase sales through upselling or turning them into repeat/regular customers. This is especially crucial for food stall and restaurant businesses.
Customer Relationships
So, how do we create customer relationships? Retain customers with the following examples:
- Friendly waitstaff – create a standard operating procedure (SOP) for customer service.
- Establish a feedback mechanism (e.g., feedback forms on websites or Facebook).
- Create special programs for regular customers (e.g., birthday discounts).
- Build a community on Facebook/Instagram and engage with them regularly (e.g., likes & comments).
Revenue Streams
Revenue streams refer to the income generated from the products and services targeted at the chosen customer segments.
For food stalls and restaurants, the revenue would typically come from the sale of food and drinks. Pricing mechanisms often depend on the cost of raw materials and portion sizes.
Revenue Streams
Revenue could come from:
- Premium-priced food and beverages.
- Value-end food and beverages suitable for all income levels.
- Additional sales via a food truck.
- Providing catering services.
Key Resources
Key resources are essential assets needed for the business to operate, ensure continuity, and achieve sustainability. These may include:
- Physical assets (store buildings, equipment, systems, vehicles, etc.)
- Intellectual property
- Human resources (employees)
- Financial resources
Key Activities
Key activities describe what the business must do to ensure the success of its business model. Just like key resources, these activities are required to build value propositions, maintain customer relationships, and generate revenue.
Key Activities for a Food Stall or Restaurant
- Preparing food and beverages
- Serving customers
- Cleaning the restaurant
- Managing inventory for food and beverages
- Financial management
Key Partners
Key partners refer to the network of suppliers and business partners essential to the business.
Key Partners for a Food Stall or Restaurant
- Suppliers of raw materials for food preparation
- Beverage suppliers
- Suppliers of equipment and cleaning supplies
- Local authorities & health departments
- Banks
Cost Structure
Cost structure explains all the costs involved in running the business based on the planned business model. All aspects, from building and delivering the value proposition, maintaining customer relationships, and generating revenue, require expenses.
Cost Structure for a Food Stall or Restaurant
Some of the costs involved may include:
- Variable costs for raw materials used in food and drink preparation.
- Store rent and utilities.
- Marketing costs.
- Employee wages.
- Local government permits/licenses.
Summary of BMC for Food Stall and Restaurant
Here’s a summary of the BMC concept for a food stall or restaurant:
This idea can be further developed or adapted based on the type of business or restaurant model you want to build.
