Modernizing the family-owned restaurant
: a business model innovation approach

David Eros Margarito (Student)

Student thesis: Master's Thesis

Abstract

This thesis examines how a traditional family-owned restaurant can adapt within an increasingly competitive dining market without losing its identity. The study centers on El Huarachito, a Mexican breakfast establishment in Los Angeles, United States and evaluates how modernization through targeted strategic adaptations can enhance competitiveness while preserving authenticity. Primary data were collected through two surveys: one conducted in-house with existing patrons and another targeting the broader Los Angeles dining market. These surveys, complemented by clustering analysis and a competitive landscape review, identified customer segments and strategic opportunities. Drawing on four theoretical frameworks, the study develops a strategy that applies the Resource-Based View to anchor differentiation, Porter’s Competitive Advantage Theory to define positioning, Business Model Innovation to structure six actionable initiatives, and Stewardship Theory to frame long-term succession. The proposed initiatives include implementing online ordering with delivery options, launching a social media campaign, extending operating hours, introducing small-scale catering, developing a Mexican coffee program, and adding new chicken-based offering to manage short-term cost pressures. Together, these measures connect cultural strengths to operational adaptations, providing a coherent blueprint that addresses short-term cost pressures, expands market reach, and enhances brand visibility, while ensuring intergenerational continuity.