King

Case 6

Juan Carlos’ Mexican Restaurant

Bruce C. Walker Robert E. Stevens David L. Loudon

Juan Carlos Garcia, owner of Juan Carlos’ Mexican Restaurant (JC), faced the same problem as many other small business owners. His idea of successfully operating a Mexican restaurant in a small- to medium-sized community had been largely successful up until six months ago. Since that time, he noticed a small drop in the average weekly number of customers and that profits were suffering from that drop. He had made it a point to spend more time on the restaurant floor during peak-hours, to observe how well and how effectively his employees were meeting the needs of the restaurant patrons. He also would visit with diners during their meal to make sure their needs were being satisfied. Not only did he not find any issues or problems, it seemed that his employees were exceeding his service expectations, a point that customers generally verified. It also appeared that the food quality was at the same level that it had been during the preceding three years. He also scanned the overall environment to try to determine if recently opened restaurants were hurting his business. One new Mexican restaurant had opened about a year before, but he concluded that the proximity of the restaurant did not negatively affect his business, at least during the first six months of the new restaurant’s existence. The answer appeared to lie somewhere other than in the quality of food, quality of service, and outside competition. He was at a loss to figure out what it might be. Juan Carlos Garcia had opened his restaurant seven years before on a shoestring budget in a house that had been left to him through the estate of his uncle, Jose Gonzales Garcia. The house originally had been a singlefamily structure located in a residential neighborhood. Beginning in the mid 1970s, the neighborhood began to see zoning conversions from single-family dwellings to zoning allowing for small commercial ventures....