CitySnacks Restaurants Market Oriented Approach - Case Study Example

 CitySnacks Restaurants Case study Contents Situation Analysis: 2 Market-oriented approach 4 Agenda Points 5 Barriers to Implement: 7 Important Factors: 8 Observatory Report: 9 References: 15 Situation Analysis: According to this case study, CitySnacks is a retailing division with the Pleasure Food Restaurant Group. CitySnacks is a fast food chain that operates in many cities of U.K. It is based in Manchester and has been thoroughly successful throughout. Rapid growth and expansion has been seen in the operations and property of the business in the past years. A wide and popular range of fast foods is being offered at CitySnacks. The meals range from breakfast to mid-evening meals. CitySnacks supports all kinds of customers including businessmen, service workers, shoppers, tourists, children’s parties, and families. CitySnacks faces huge competition. Many town centre dining offers pull customers away, and the increasingly demanding customers are to be provided lots to choose from. The growth that CitySnacks has faced along with the future prospects is promising enough. The market sector being expected to grow at 4% over the coming five years, it comprises of a few major competitors and numerous small businesses. Pleasure Foods operates restaurants at U.K. airports, railway stations and motorways. Each has a separate operating division, CitySnacks being the most successful one, as it contributes an amazing 60% to the total PLC income. City analysts expect highly from CitySnacks and Pleasure Foods enjoys the reputation of a successful and growing retailer. We are told about the present organizational structure of CitySnacks through the eyes of Tim Cairns, who is the newly appointed marketing director at CitySnacks. Tim has been told that as a chain of 140 restaurants in U.K, a more professional marketing approach needs to be adopted. It was understood, though, that in order to retain customers, it was needed to be professional in the increasingly competitive market. According to Bill, the company should have adopted a better marketing approach ages ago. Pleasure Foods PLC has been pressurising CitySnacks to achieve high targets, including forecast revenues and budgets. It could once be achieved by expanding the chain of restaurants and building more branches, but CitySnacks had now reached the stage where it wouldn’t help. The main objective of the PLC and CitySnacks is naturally to attain more profits and increase the revenues. This being a little tough time for CitySnacks, the past few months have provided it with less chances of growth. Estate repairs are held, retail staff is recruited and training cutbacks are held. Still, the revenue keeps falling short for the I.T. department for development of its EPoS system. The problem with the I.T. department it seems is their inability to come up with projects that will help in the day-to-day operational requirements of CitySnacks. CitySnacks supports a good staff, including Julia Harris, who is the research manager. CitySnacks is showing a decline in revenues as compared to its last year. Two market analysts have left CitySnacks to join McDonalds, and their posts are empty still. Once handled the Saver Card Loyalty Scheme and the other ran the Mystery Customer Market Research Programme. Their posts need to be filled, as the Saver Card Loyalty Scheme database is being presently handled by the Logical Systems. The only solution to the persisting problems is to develop the market expertise of the departments. The most important is to find out about the customers and their likes and dislikes. Being a fast food chain, CitySnacks needs to know all it can about its customers, the people it is working with. Budget revenues are being providing to Tim’s department, which is the marketing department. CitySnacks will have to work harder this time, as it never felt the need to change itself or work harder on its marketing department before. Some time ago, building new restaurants and new branches brought in money. The revenues could be increased that way, but now the business is at a spot where it is impossible to increase revenues or profits just by building more branches. As the development keeps declining slowly, the marketing department needs a special boost up to ensure proper growth of the firm and to increase its revenues. The best option for CitySnacks would be to know more about its customers. It needs to find out more about the likes and dislikes of customers. It will be a good way to satisfy their requirements. It might pose as a difficult task in the face of all the tough competition, but it is the most necessary thing to pull a firm out of such problems. Attention should be paid to human resource management department. Finance and other departments should also be given a boost. The vacancies should be filled as soon as possible. The schemes being provided by CitySnacks do help in increasing revenue, but more can be achieved through them. Such schemes do help in covering retail costs, but the information provided by these schemes can be used constructively for increasing revenues. Just for an example, a scheme is introduced for its customers by CitySnacks. If the firm does not know what kind of response the customer is giving, it cannot possibly try to increase revenues. It is necessary to know whether the customer is happy with the scheme or not. This can enable the firm to realize whether it needs to continue its scheme or not. Market-oriented approach There seems no harm in postponing the session. Out of box thinking will definitely help management and new director to explore new perspective and find innovative solutions for the current business problems. There are different levels of complexities which are involved in obtaining the trust of customer at CitySnacks. Winston, instead of making abrupt changes in company environment must realize these complexities address these. It will enable a firm to achieve the identification of needs and to tailor its activities according to the needs. There happens when the service provided is promising something else and delivering some thing else as it happens in the mindset of many managers at CitySnacks. This will reduce the level of tolerance of customer and ultimately the trust of the customer will be shattered. The firm will not be a credible one. It is so that the provider should adopt the strategies which are helpful in delivering the promises made. Further analysis of the market problems lead us to decide that who will be measuring the delivery and how it will be done. The service provider should also understand the threshold of services; that is obtaining the answer to the question that if the service provider fails in the delivery of service what will happen? The first and foremost thing that comes to mind is the creation of mistrust in the firm. Thus the firm striving for obtaining the credibility will not be able to achieve the desired goals. The role of technology in delivering the CitySnacks service cannot be over looked. The business managers together with the technology manager with all possible coordinate when they are defining the needs of customer and addressing to those needs. The promises which are made in CitySnacks can be met more effectively when there is a best use of technology.(R. Boreham, 2002) The technology will be able to provide all supports to analyze the problems in a clear way and the identification of the needs of customer. It will provide help in defining the boundaries of the promise made at the initial stage. The best method is to ensure the coordination of business and technology managers. Agenda Points In present business perspective I would like to give a special focus to business development and new customer hunt methods by applying direct selling and promotion campaigns. Whenever it comes to the targeted areas of concern in business meetings and agenda points; I would prefer to focus on the following: 1. Assertiveness 2. Focus on Customers’ Needs 3. Constant improvement in Food quality 4. Improved customer services 5. Direct selling method 6. Promotional campaigns Company’s SWOT is another important area of my interest and I would like to share the conceptual path with my colleagues in the meeting. At a broad level the SWOT analysis for CitySnacks’s would look like: Strengths Strong Market Position Increasing Profitability Differentiated Product Offerings Established rapport with the study customers Weakness Weak performance in the UK Weak returns Lack of Brand Association Uncultivated regional market Opportunities Increase in restaurant industry in the UK New programs and products with special focus on health food ( like salads etc) New restaurants Rise of Restaurant Industry in the UK Demand to develop new regional customer base Growing trend of fast food consumption of clients Threats Competition Rising raw material prices Focus towards health consciousness Competitors expansion to other regional markets Barriers to Implement: Barriers in change are different in various situations. Here we see the old mindset and traditional work style and conventional decision making are the main constraints in business and change development. Communication barriers are also responsible for different business issues. Furthermore, considering the business variables faced by CitySnacks, applying change management is never easy since the beginning of this concept. Most of organizations fail to implement change management and reverse change management process just after the beginning of it. Failure to change organization in to better setup is a dilemma companies pass through as well. (Maira, A. and Scott-Morgan-1996) p435 Important Factors: Many factors are responsible for the failure of change application and main reason is internal resistance for change. Various responsible change resisting factors that must be kept in mind by the senior management of CitySnacks are: Chain of Command: Main disturbance of change in an organization is for those who have their authority and command in organization. People who enjoy good status on chain of command and imply their own will in management decisions are most affected by change management. These people try to create hurdles and make their best to prove new systems wrong, thus implication of change management cannot take place in real sense. Bureaucracy: Bureaucratic forces in a company also have their role in creating resistance against change in company’s policies, environment and strategies. Bureaucrats may not belong to chain of command as such but their role in various procedural and administrative issues is very strong. Such forces also react negatively most of time and try not to leave the control on basic power posts and make their best to fail change management.(Dixon, N.-1994) p33 Guardians of Statuesque: Other than chain of command and bureaucracy, there are many employees especially old ones and well wishers of authoritative management who resist at their level best to stop changes from taking place in organization. Such factors are called as protectors of status and they don’t like any changes. Critics of Change: From semi external forces or other type of stake holders critical observations, denial of new rules and rejection of policies may create problems in implementing change in a company. Such factors can be suppliers, media, government agencies or NGOs in certain situations. Norms and Culture: Somehow the culture and norms of organization also repel new thoughts and create a barbarian front for controversial changes specially. Norms which hinder the performance of company or employees or that reduce profitability are mainly responsible for negation of change. (Factor, D. (1994) Observatory Report: Recommendation for the improvement of fast food business Factors determining this line of business would be:- Competing with around the corner quick service restaurants. Mushroom growth of such fast food outlets. Exploring other markets for growth. Improving sales at the existing outlets. Strict enforcement of regulations. Optimal cultivation of skilled staff Retention and loyalty of staff. Evolving a healthy service culture within. General market trends Constant evaluation of market trends and factors of growth. Further points related to situation analysis are explained here: Increasing profitability: CitySnacks profitability has increased markedly in recent years. The company’s operating profit increased significantly in 2008. Increasing profitability provides a strong platform for the company’s future growth. Differentiated product offering: CitySnacks restaurant chain is based on various formats catering to different customer segments. Through CitySnacks restaurants, the company caters to the quick-service burger segment. CitySnacks can synergies with other brands like Tim Horton’s restaurants provide coffee and fresh baked products such as pastries and donuts. Baja Fresh restaurant provides Mexican fast food items such as burritos, tacos and nachos. The Pasta Pomodoro chain provides Italian fast-food cuisines. Through its differentiated products offering, the company effectively caters to many fast food sub-segments, providing the company with a large consumer base and reduced business risks as a result of wide product offerings. Established Rapport with the study customers:- CitySnacks have an edge of having a study customer base with faith in its products. These customers prefer CitySnacks over the rest of the brands. WEAKNESS Weak returns: The Company has recorded weak returns in the last few years. Its return on average assets, return on investment and return on average equity for the period 2002-2006 were 6.7%, 8.1% and 12.3%, respectively, considerably lower than corresponding industry averages of 8.7%, 11% and 14.9% for the same period. Weak returns indicate the inability of the management to deploy assets profitably and adversely affects investor confidence. However the management has recently gone for a restructuring exercise. This may help improve the current scenario Weak performance in the UK: The Company’s performance in the UK was weak in fiscal 2006. The revenues from UK declined by 1.4% from $2,475.3 million in 2008 to $2,441.1 million in 2006. The UK is the largest geographical market for the company, accounting for 64.5% of the total revenues. Lack of product association: Similar to CitySnacks, rivals such as McDonalds and Burger King are household names. In contrast to its competitors CitySnacks does not have a branded product that is easily associated with the company. The names "Big Mac", "Whopper" and "Zinger" are extremely well known global brands which are easily identifiable with their respective companies. CitySnacks needs to market and position a core product that can be used as a platform for the company’s image in order to expand market share. Uncultivated regional market:- CitySnacks image would have grown with its growth to the other regional markets outside UK. It also reflects on the enlarged image of the company. OPPURTUNITIES Increase in restaurant industry in the UK: Consumer food expenditure on away-from-home dining is on a rise in the UK. Demographic changes have been pushing consumers towards fewer meals, a preference for less meal preparation time, and more frequent snacking in lieu of sit-down meals. The Fast Food Hamburger Restaurant (FFHR) business in the UK is expected to grow at an annual rate of 4% per annum during 2006-2011. This spells an opportunity for CitySnacks. New programs and products: The Company launched several new products including Fresh Fruit Bowls and Cups, Mediterranean Chicken Salad, Strawberry Yogurt with Granola and Fix ’n Mix Frosty with M&M’s, Butterfinger and Oreo cookie toppings. The company also introduced a range of new menu items, including Hearty Vegetable Soup, and hot Chicken Sandwiches. The company launched Combo Choices program, which offers consumers the option of substituting a small chilli, baked potato, side salad or Caesar side salad in place of fries in a combo, at no extra charge. This program was well received by the customers, evidenced by the fact that close to 15% of combos are sold with an alternative side. Double-sided grilling system, which provides restaurants with product quality, faster cooking times and labour savings, was introduced into around 1,350 stores of the company. The company plans to use this system in all of the stores by the end of 2008. New restaurants: The company and its franchisees opened 213 new restaurants in fiscal 2006. It is fast expanding and attracting venturing into new markets. Demand to develop new regional customer base :- With growth in the fast food industry a parallel demand for the regional customer base has cropped up. People from different regions like fast foods which match their taste pallets. There is an opportunity to cultivate this demand and translate it into up selling of the company’s product. THREATS Competition: The quick service restaurant segment of the foodservice industry is intensely competitive regarding price, service, location, personnel and type and quality of food. Other key competitive factors include the number and location of restaurants, quality and speed of service, attractiveness of facilities, effectiveness of advertising and marketing programs, and new product development. Some of the Company’s competitors have substantially larger marketing budgets, which may provide them with a competitive advantage. In addition, the Company’s system competes for management and hourly employees, suitable real estate sites and qualified franchisees. If the Company is unable to maintain its competitive position, it could experience downward pressure on prices, lower demand for products, reduced margins, the inability to take advantage of new business opportunities and the loss of market share. For instance, McDonald’s and Burger King provide stiff competition for CitySnacks in the UK. In the UK alone, there were approximately 550,000 restaurants that generated about $350 billion in annual sales in 2008. Competitors could encroach into CitySnacks market share and adversely affect its margins. Rising raw material prices: The company is facing pressures due to increase in raw material prices. Owing to various import restrictions and higher demand, prices of beef trimmings (hamburger meat) increased by 12% during 2006. Further, the prices are expected to remain high during 2006 as well. Beef is the major raw material for the company’s products. Further hike in beef prices can have a negative impact on company’s profitability. Move towards health consciousness: Over the past few years there has been a newfound emphasis on healthier eating. With a change in lifestyle, people are becoming more aware of the negative effects of fast food. This has a direct effect on the sales of the fast food chains that are associated with unhealthy food. Consumers are showing increased preference for fatfree and healthy food products. Food items containing trans-fats are losing market share as they are linked to cardiovascular diseases. Growing health consciousness might slowdown the revenue growth of the company. UK economy Although the fast food industry is increasing in the UK but according to the Organization for Economic Cooperation and Development (OECD), GDP growth in the UK is expected to slowdown in 2007. The GDP growth of the UK economy is forecast to slow down from an estimated 3.6% in 2006 to 3.1% in 2007. More importantly, the UK has seen 17 successive interest rate hikes over the past few years leading to the current high of 5.25%. A weak economic outlook for the UK would reduce consumer spending and put pressure on the revenues of CitySnacks. Competitors expansion to other regional markets:- By virtue of their strong financial profiles, the competitors have reached Southeast Asia and far east. This gives the company a lag in sales and growth to start with. Company should consider revitalizing its efforts and marketing strategies. References: A. Artikis. Executable Specification of Open Norm-governed Computational Systems. PhD thesis, Imperial College, London, U.K. 2003 A.D.h. Farrell. Logic-based formalisms for the representation of Service Level Agreement for utility Computing. Master’s thesis, Imperial College, London U.K. 2003 A.S. Abrahams. Developing and Executing Electronic Commerce Applications with Occurrences. PhD thesis Cambridge University, 2002 B.S Firozabadi. Using Authority Certificates to Create Management Structures. 9th International Workshop, April 2001 J.J. Lee. Integrating Service Level Agreements: Optimizing your OSS for SLA Delivery. Wiley, New York, 2002 M.Salle. Management by Contract. HP Labs Technical Report: HPL 2003, pp.186 M. Shanahan. Solving the Frame Problem: A Mathematical Investigation of the Common Sense Law of Inertia, MIT Press, 1997 . Read More