Table of contents
Table of Contents
We want to open a French restaurant in Berkshire County, Massachusetts, in early 1999. This restaurant would appeal to the region’s growing population of wealthy professionals searching for exquisite food since it would be the only French restaurant within 20 miles in either direction.
Market Opportunity
Pittsfield, Massachusetts is in Berkshire County, which is experiencing substantial change. Pittsfield was formerly a working-class community with substantial manufacturing facilities for General Electric, a global firm based in Schenectady, New York. Manufacturing has plummeted in western Massachusetts in recent years, resulting in severe job losses and population declines in towns like Pittsfield and North Adams. Pittsfield, the county’s largest city, had a population of 42,825 in 1994, according to the city’s annual report.
However, the decrease in population inside Pittsfield’s city boundaries has been offset by a rise in the county’s population. While the number of blue-collar employees has fallen, the number of white-collar professionals has risen dramatically.
The region’s tourist attractions are credited with a large part of this growth. Because of the cool weather and scenic vistas, families like the Vanderbilts and the Westinghouse’s purchased estates in the Berkshires during the Gilded Age. The tourist base has recently increased dramatically due to the region’s cultural attractions. Since it was designated as the summer home of the Boston Symphony Orchestra 60 years ago, Tanglewood, some 10 miles south of Pittsfield, has attracted music lovers from New York and Boston.
Summer shows at the Williamstown Playhouse and the Stockbridge Theater Festival are also well-known. Jacobs Pillow is the country’s biggest summer dance festival, held in Lee, Massachusetts. As a consequence, a flood of new cultural events has sprung up as a result of these large cultural organizations.
Tourism started with summer tourists and has now grown into a year-round industry. There are many ski resorts in the area, including Brody Mountain, Jiminy Peak, and Butternut Basin. In addition, it is a popular vacation in the autumn owing to the changing scenery. According to the Berkshire County Chamber of Commerce, tourism has therefore surpassed agriculture as Berkshire County’s most important business, with total sales of $600,000 in 1994.
Year-round tourism has attracted wealthier visitors from the New York and Boston metropolitan regions. There are two types of migrations among these people: Many individuals who owned second homes in the Berkshires sold their residences in the New York or Boston areas and retired to the Berkshires full time. A large number of working professionals have also moved to the area. Technological improvements like the ubiquitous fax machine, modems, and overnight courier service have enabled these professionals to work while living full-time in the Berkshires.
In addition to Berkshire County’s growing upper-middle-class professional population, there are considerable pockets of middle-class professionals in every direction from Pittsfield. Albany, New York’s capital, is thirty miles to the west and is home to a large number of educated government employees. To the north are the towns of Williamstown, Massachusetts, and Bennington, Vermont, which are home to the Williams and Bennington Colleges. To the east, Smith, Mount Holyoke, and Amherst Colleges, as well as the University of Massachusetts Amherst campus, is located in Northhampton, Holyoke, and Amherst, Massachusetts. To the south, there’s Great Barrington, which is home to the Simon’s Rock campus of Bard College as well as the Hotchkiss School in Lakeville, Connecticut. As a consequence, within a 40-mile radius of Pittsfield, there are many settlements with a substantial population of college professors and other professionals with sophisticated palates. Among the wealthy, fine dining is a favorite activity. They represent a market for what the restaurant industry refers to as “white tablecloth” establishments. According to the Berkshire County Chamber of Commerce, restaurant revenue in Berkshire County was $50,000 million in 1994, up 25% from 1990. Rather than coffee shops or fast-food restaurants, what the restaurant industry refers to as “white table cloth” establishments accounted for over a third of the revenue. In response to the Berkshires’ changing demographics, many upmarket eateries have developed.
However, they seem to be concentrated in southern Berkshire County. Restaurants that provide “gourmet” or “continental” cuisine and have an average dinner price of more than $20 per person (without tax, gratuity, and liquor) would-be rivals for the intended restaurant.
The competitors are Williamstown’s Le Jardin, Great Barrington’s La Tomate, Hillsdale’s Les Hotels Brasserie, and Canaan’s Les Pyrenees. Owner-chefs who have worked in some of New York City’s most prominent restaurants control them all. They’ve all been featured in national gourmet publications. They’re all year-round businesses, not seasonal or hobbyist endeavors. They’re all at least 20 miles from Pittsfield as well.
Taking Advantage of a Market Opportunity
Pierre’s Pittsfield Bistro would open at a distance from its rivals, taking advantage of the region’s evolving dining market. The restaurant would be located just south of downtown on a lovely street on Highway 7, the county’s main north-south route.
Currently, a number of restaurants serve the Pittsfield area. Among them are a variety of economically priced companies, as well as large fast-food franchises and neighborhood coffee shops. For example, Pittsfield is home to the country’s highest-grossing Bonanza, as well as a Red Lobster and a Ground Round. There is a substantial Italian presence in the city, and there are still a few low- to moderate-priced Italian restaurants, however, most are neighborhood establishments with little care for the atmosphere.
As a consequence, there would be little competition in the local neighborhood for a good dining restaurant. It would have to draw customers from outside Pittsfield. It is, however, located in a region where going large distances for a wonderful dinner is typical.
Indeed, Pierre’s would be more accessible to residents of northern Berkshire County than other gourmet destinations.
The only regional retail mall between Albany and Springfield, as well as Manchester, Vermont, and northern Connecticut is located in Pittsfield, and it services a market that spreads for miles in all directions.
Pierre’s Berkshire Bistro would cater to a similar clientele.
Taking Care of Business
While a French restaurant in Pittsfield seems to have a lot of promise, operating a restaurant is a challenging endeavor. Pierre, on the other hand, has a promising future since the location provides enticing possibilities for all of the primary drivers of restaurant success: real estate, labor, and food, as well as managerial skills.
Purchasing Real Estate
Because large-scale manufacturing is being replaced by service industries that need less space, real estate expenses in Pittsfield are very low. Pierre’s management has chosen a nice site and has the option of purchasing both the building and the land underneath it. The building was formerly a steakhouse, but it was forced to shut owing to diminishing meat demand. A restaurant would follow all zoning regulations on this property. Due to the building’s previous use as a restaurant, only minor structural repairs would be required. However, large sums of money would be required to create the right atmosphere.
Attachment B shows the total cost of the refurbishing and decoration.
Staff members in the Pittsfield area have a reputation for being dedicated to their jobs. Around a time when unemployment is at 9%, semi-skilled people would be easy to come by. While the General Electric facilities in Pittsfield are heavily unionized, trade unionism has not expanded to other sectors, and the new enterprise is unlikely to be formed by a labor union. The attraction of the Berkshires would also make it easier to find qualified chefs when required. The Culinary Institute of America, one of the country’s most prominent culinary schools, lies about 70 miles north of Pittsfield.
Supplies
The same demographic changes that created a market for the projected restaurant have already had an impact on the food industry. The neighborhood has experienced an inflow of gourmet food vendors in the previous five years.
In addition, all of the establishments in the neighborhood have significant gourmet food sections. As a consequence, the restaurant would have well-developed supply channels for the sorts of things it would need are already in place and ready to go. There are a number of well-established high-quality bakeries that could supply bread and pastries, as well as a number of farm stalls that might provide locally produced food that people would seek out throughout the summer months.
These resources could be appropriately coordinated since the restaurant would be handled by experienced staff.
Pierre Chapeau, a graduate of the Culinary Institute of America, served as an apprentice at Chanticler, a prominent French restaurant in Nice’s historic Hotel Negresco. During his ten years working as a cook in the New York metropolitan area, he spent three years as a sous chef at La Cote Bleu in Manhattan and six years as chef at LaPoulet Rouge in Teaneck, New Jersey. La Poulet Rouge was purchased in 1989 by Mr. Chappeau and a group of businesspeople. Mr. Chappeau, who owns a quarter of La Poulet Rouge, has agreed to sell the restaurant to the other proprietors. He wants to move to Berkshire County for reasons of lifestyle.
Pierre Chapeau, a Culinary Institute of America alumnus, started his career as an apprentice at Chanticler, a renowned French restaurant at the old Hotel Negresco in Nice. He spent three years as a sous chef at La Cote Bleu in Manhattan and six years as chef at LaPoulet Rouge in Teaneck, New Jersey, during his 10 years working as a cook in New York metropolitan region. La Poulet Rouge was bought by Mr. Chappeau and a group of businessmen in 1989.
How to Fund a Company
Pierre’s would cost $320,000 to open, according to Attachment A. The Chapeau want to invest $70,000 of their own cash in the new business. Three sources will provide the remaining funds:
A bank loan will provide the initial $150,000.
Private investors, who will own a minority party in the new company and provide equity funding, will contribute $50,000.
The Economic Development Agency of the City of Pittsfield will provide $50,000 in the form of a low-interest economic development loan.
Even if the restaurant does not earn any money, the initial capital should be sufficient to start and run the company for the first six months. The first year’s loss will be $25,000 if the restaurant is half-full and average sales are $20 per person. In its second year of operation, Pierre’s, on the other hand, will be profitable. (A pro forma income statement is in Attachment C.)
The Next Stage is Being Prepared
Management intends to use its Berkshires brand in a number of ways after the firm has established itself as a Berkshires institution. The restaurant’s size might be increased by adding an addition. The planned location’s size, as well as the zoning laws, would allow for such expansion.
Aside from expanding the restaurant, the management plans to sell carryout items bearing the restaurant’s name. These gourmet items might be made in-house or under a private label by local vendors. These would include things like marmalades and jams, as well as pastries and bread.
They’d be given as gifts and eaten by customers. Because of the cachet, the restaurant’s brand is predicted to achieve in the area, they may be offered at premium prices with exceptionally attractive margins.
Related link
