Bel Cibo is a successful, low cost, restaurant at Ogden, Utah, USA. Bel Cibo sells wood-fired pizzas, seafood and Mediterranean dishes in a casual setting

Bel Cibo is a successful, low cost, restaurant at Ogden, Utah, USA. Bel Cibo sells wood-fired pizzas, seafood and Mediterranean dishes in a casual setting. The restaurant has been an Ogden family tradition since 1995.

Bel Cibo’s management believes that the secret of their success lies in their outsourcing of some specialty meal items to a chef training school at a nearby college, The Culinary Arts Academy (CAA). CAA supplies various restaurants in the region in this way and their products are both delicious and of extremely high quality. Fortunately for Bel Cibo, CAA’s close proximity means that there has never been any problem with on-time delivery.

Pride of place in Bel Cibo’s existing menu is the Italian Special Banquet, a set of dishes that includes an entrée called the “Calamari a la Plancha”, a main course called the “Linguine Frutti di Mare Saltimbocca”, and a traditional Italian dessert called “Crema Catalana”. These dishes are purchased from CAA and sold by Bel Cibo as a set combination for $43. The Culinary Arts Academy charges Bel Cibo $25 for the Italian Special Banquet. It costs them $15. Bel Cibo’s management is considering upgrading its menu.

Some of the reasons that The Culinary Arts Academy is so successful are its focus on innovation, its access to market research, and its willingness to help their clients develop their menus. They have offered to improve the Italian Special Banquet by expanding the dishes included in the set combination and have made three suggestions:Required:

• Assume that neither CAA nor Bel Cibo wish to reduce their current markups. Show Bel Cibo’s prices for each of the suggested dishes. (6 marks)
• What additional dishes (if any) do you recommend should be included in the updated Italian Special Banquet? (2 marks)
• Identify the additional information that you would require for better analysis. (2 marks)
•  

q2Accounting and Strategic Analysis

Bel Cibo’s owner Nico Martino has become aware that a competitor restaurant, The Old Spaghetti Factory, is about to open in the near vicinity. This rival restaurant appears to be investing a lot of money into setting up a family-oriented eatery with plush, but old-fashioned décor. The Old Spaghetti Factory is part of a chain of eateries featuring traditional Italian meals. Their first restaurant opened in 1969.

Mr Martino appears to be a little anxious and preoccupied during his regular monthly meeting with you, the company’s management accountant. You express concern over his anxiety and he confides that he is worried about The Old Spaghetti Factory and other industry competitors. He is afraid that Bel Cibo will lose its competitive advantage.

Required:

Explain the tools and techniques for analysing competitive advantage and how they would be of use to Mr Martino.

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