CASE STUDY

BALQIS RESTAURANT: HOW TO MOVE ON?

4. (a) Which of the micro-environment elements (i.e., location, employees, suppliers,

products and services, customers) do you think had the greatest impact on the downfall
of Balqis restaurant?
ANSWER:
I think the micro-environment element that had the greatest impact on the downfall of Balqis
restaurant would be “EMPLOYEES”.
Employee turnover had become high for Balqis and the manager had to recruit and train new
employees almost once a month. The immediate repercussions of high turnover rates are
severe: loss of valuable knowledge and experience, loss of morale for those who remain, and
loss of trust in the team's competency and capacity to perform. None of these are simple or
quick to replace. Replacing employees is a costly procedure for organisations. This covers
expenses such as recruiting and hiring, training, and the time it takes for new employees to
reach peak productivity. As a result, the restaurant's expenditures were suffering as a result of
high staff turnover.
Furthermore, customers suffer the consequences of poorly staffed restaurants, which offer
either subpar service and cuisine or fewer dining options. When a restaurant's complete crew
of chefs has been working together for a year or more, they understand the restaurant's flow
and are familiar with all of the stations. For customers, this means faster and more consistent
service. Before they leave the pass, the chefs know how food should taste and can identify
errors. However, because the chefs and staff of Balqis restaurant were leaving on a regular
basis, it had a detrimental influence on the taste of the meals, possibly leading to the restaurant's
demise.
4. (b) Which of the macro-environment elements (i.e., socio-cultural, political,
technological, economic) do you think had the greatest impact on the downfall of Balqis
restaurant?
ANSWER:
I think the macro-environment element that had the greatest impact on the downfall of Balqis
restaurant would be the “ECONOMIC ASPECT”.
The cost of food was borne by all restaurants, and the rising cost of key commodities remained
a challenge for the restaurant sector. The pricing of key components such as rice (Balqis
Restaurant used high-quality rice and a unique variety of rice), beef, lamb, and chicken
fluctuated throughout months and years. The price of complementary ingredients such as
tomatoes, chillies, and carrots fluctuated on a daily basis, making it difficult for the
management to forecast the restaurant's earnings or production expenses. There was a time
when fish dishes could not be sold because the cost of fish was higher than the price it was sold
at.
Customers thought of Balqis Restaurant as having a higher-value food and service offering. As
a result, Balqis restaurant struggled to keep up with the rising costs in order to maintain
customer satisfaction.
The restaurant industry's labour market sensitivity remained high. The Employment Act
mandated that restaurants provide health insurance to their employees, resulting in a
considerable increase in labour expenses. Higher labour expenses (wages and benefits) benefit
employees, but they can lower company profitability, the number of jobs available, and the
number of hours each person works. Any changes in the labour market, such as a rise in the
minimum wage, may have a significant influence on the sector.
Thus, increasing food prices and labour costs increased the overall production costs, due to
which it became difficult for Waleed to manage the restaurant which eventually led to the
downfall of the Balqis restaurant.