Student:

  • Category:
    Management
  • Document type:
    Case Study
  • Level:
    Undergraduate
  • Page:
    4
  • Words:
    2275

3Frank’s All-American Barbeque Restaurant Case Analysis Questions

Frank’s All-American Barbeque Restaurant Case Analysis Questions

Student:

Question 1: Discuss how Robert should explicitly consider the customer value currently offered by Frank’s All-American Barbeque.

According to Verhoef and Lemon (2013), customer value may be regarded as the perceived benefits that a consumer expects to gain by buying and consuming a product or a service. A consumer considers a product/service to be valuable if the benefits derived from it justify its cost of acquisition (Whan et al, 2010).

Frank’s All-American Barbeque’s success is credited to the founder’s insistence on “giving people great simple food at a reasonable price in a place they feel comfortable”. This statement sums up the customer value that the restaurant has offered to its market successfully. Firstly, the restaurant makes high-quality, exceptional food that has been recognized in regional barbeque cook-offs. Frank also developed four special sauces to accompany his barbeque menu. Secondly, the food is served in a comfortable place within a mall with adequate parking space. Frank’s All-American Barbeque customers always enjoy their means in the simple restaurant with tables covered with butcher paper. Lastly, the food prices at Frank’s All-American Barbeque are reasonable enough to ensure consumers always feel that the value is equal to what they pay for.

For Robert to be successful in expanding the restaurant business, he must consider all the three factors highlighted from the founder’s statement as they have successfully delivered customer value to his father business over the years. Indeed, several restaurants have been closed down due to stiff competition but Frank’s All-American Barbeque has survived by offering quality and understanding its customers.

Question 2: Robert has several possible options for expanding his father’s business-find a larger location in Fairfield, add a takeout option, open more restaurants in surrounding communities, incorporate web marketing concepts, and expand the sales of sauces. Review each in terms of value benefits.

Robert’s first option is to start operating a larger restaurant in Fairfield. This option ensures the restaurant has a larger space to accommodate growing numbers of customers. This will increase the business’s profitability. However, the new operations may reduce supervisory efficiency that has been important in upholding high-quality foods and service in the original restaurant. The new location should not be expensive since high overhead costs will increase the prices of the menu items.

The second option is to add a takeout option. This option is ideal for consumers who want to have their meals at home, work or any other location apart from the restaurant. This is ideal for busy people and families who want to have their meals at home. However, Robert should ensure the quality of such meals is the same as of those served in the restaurant to sustain the value of the brand.

Robert also considers opening similar restaurants in the shrouding community. While such an option will increase the brands visibility and market share within the locality, it may limit growth to a small location of people who are familiar with the restaurant.

Robert’s experience in digital marketing will be highly effective in expanding the business through online advertisements and ordering option. This option may be ideal for the business given the growth in online retail of goods and services in the world today.

The four sauces that correspond to America’s four styles of sauces have already proved to be popular with the restaurant’s customers. Robert can expand their sales by engaging major retailers. This option will be an additional source of revenue to the business and offer consumers a quality product associated with the restaurant.

Question 3: Given that Robert had not expressed any interest in the management of the business, how should he go about approaching his father with his ideas? If the company expands, should Robert approach his sister and her husband about taking a more active role in the business? What should their roles be?

The option of expanding the business to a new location will grow the restaurant into a major regional player in the restaurant industry. Robert should focus on putting measures to ensure that the same quality and customer experience in the original restaurant is not lost. Setting up several other restaurants in the neighbourhood would be a great idea to consolidate the market share and increase brand visibility despite the fact that growth will be limited to single location. The defining factor that Robert should stress is replicating the successful business model of affordable, quality food served in a friendly environment.

Robert has extensive experience in web applications. He should leverage this advantage in convincing his father that the internet offers a great opportunity for the business to expand and increase its market share. Once his father understand how web-applications can strengthen his successful business model, he is likely to support the idea as it increases the brand value and responds to consumer trends and needs.

The barbeque and the sauce prepared by the restaurant have won several regional awards. Robert should highlight such a factor in wooing his father to the idea of expanding the sauce to a regional market. The sauce may be a significant source of additional revenue to support operations and expansion of the restaurant business.

Robert should approach his sister and her husband to manage the business as she has experience running the business and understands the values and strategies that have made the business successful during their father’s tenure.

Question 4: How should frank allocate responsibilities to management staff in the chosen expansion plan?

The most significant contributor to the fall of small businesses is the usually managerial decision-making [ CITATION Dav12 l 1033 ]. Bad decisions often lead to misplaced priorities and loss of vision (Vosikis et al , 2014). In light of this realization, it is imperative that Frank allows his son Robert to manage the new restaurant since he has crafted the expansion plan and appears to have a solid plan to grow the business by opening up new operations. He should be given a chance to implement his new ideas at the new restaurant. However, his father should be extensively consulted whenever major decisions are to be made in the new restaurant. Robert should be also be made the vice president of marketing since he has extensive experience in marketing and web applications. Robert should be able to learn how to run the daily operations of the business as soon as reasonably possible before his father retires and leaves him to manage the business on his own.

Ed Tobor has acquired valuable experience running the original restaurant business with frank. He will be better placed to take over the business since he understands its operations and the sustained focus on customer value creation. The original restaurant will experience minimal disruptions since Ed has been part of the management team for a long period of time. However, Frank’s daughter should deputize Ed to ensure her father’s vision for the business is retained. Frank’s daughter will be able to gain valuable experience and expertise running the business and probably take over from ED incase a third restaurant is part of the expansion plan.

Question 5: How should Robert alleviate his father’s concern for the viability of the new restaurant?

Frank is concerned that the new business may suffer from low customer traffic given the competitive nature of the restaurant industry. Frank’s concerns are valid since restaurants have to break even in order to sustain operations and generate revenue. However, frank seems to underestimate the value of the strong brand that he has built over time. In addition to the brand, frank has also developed a quality menu that adds to the customer value. If these factors are replicated in the new enterprise, there is a high likelihood that the new business will be able to attract and retain customers. This is the case that Robert should present to his father in order to convince him that the success of the original restaurant can be replicated much faster since all the best practices will be implemented in the new business.

Robert will settle for an area that will support the growth of the business due to factors such as high population density, higher disposable incomes and higher uptake of B2C ecommerce. For example, the house value at Darien is $1,430,589 while at Fairfield the value is at $589,179. The income level at Darien is $72265 than that of Fairfield. Given these indicators, it is clearly evident that a new restaurant at Darien is likely to record impressive growth within a shorter period.

The choice of location has also been carefully selected by factoring in aspects such as population size and density, family size, and income levels. It is expected that the demographic composition of Darien will support Frank’s all American Barbeque as it is the case in Fairfield. Statistics in the business plan indicate that Americans have spent at least five percent of their disposable income on eating out. In addition the projected 1.7% growth in GDP and 4% growth in disposable income in the coming will increase the purchasing power of the target market. This means the new restaurant will not find it difficult to attract customer provided the food and service quality is exceptionally high, while the prices are low.

Frank’s Barbeque sauce is a premium product that has proved successful in Fairfield. The quality and uniqueness of the sauce can be relied on to attract new customers for the product in the region. Robert has extensive experience marketing businesses and products. Robert should convince his father to trust his expertise and knowledge to grow the product into a valuable brand through professional advertisement campaigns and packaging innovation.

Question 6: How should Frank’s and Robert’s meal suggestions for the new restaurant be priced?

Pricing can be used a competitive tool in business. Price decisions are based on factors such as the nature and intensity of competition, customer’s buying power and revenue targets [ CITATION Rob l 1033 ]. This means that both meals should enable the business compete effectively, deliver value for money to consumers and ensure the breakeven point is achieved. Frank’s meals assume that there is a ready market in the evening for standard meals. Customers can order from the menu and get their food prepared. While this method is successful at eliminating the rush to prepare food quickly, it may result in losses incase supply outstrips supply. Pricing should be based on the level of demand. Higher demand enables the business to achieve economies of scale. Therefore, price will be set by the market demand whereby higher demand translates into lower prices while low demand may necessitate a rise in price. However, it is important to consider the competitors’ prices in order to offer competitive prices.

Robert suggests a highly customized ordering system where customers order a meal and wait for it to be prepared. This approach offers customers a wider variety and greater control on what is included in the menu. However, it creates a rush to prepare the orders thus increasing the cost. The price of meals in this model should be determined strictly by the cost of ingredients since there is minimal wastage. A focus on lowering the costs and prices might lower quality and the appeal of meals ordered through this approach. The price should be sustained at a level where the quality of ingredients is guaranteed and the perceived value-for-money to consumers is consistent with market trends.

Question 7: How appropriate is the choice to locate the new restaurant in Darien, Connecticut?

The choice of Darien as the ideal location for setting up a new restaurant is a prudent decision, given the favorable demographics. Darien has a higher level of income compared to other localities considered by Robert and Frank. Darien’s average travel time for commuters is at 36.4 minutes meaning prepackaged meals may be ideal for the market. Darien has 81.7% family households that average 3.0 in size. Frank’s business model is very favorable to family eat-outs. The real estate tax rate in Darien is the lowest at 0.8%, meaning the new business will not be strangled by tax obligation at the growth stage. While some towns such as Weston have higher household income, its population size and density may not enable the new restaurant to generate enough sales to break even.

The highlighted demographic factors support Robert’s expansion plans for his father’s restaurant, however, other factors such as the level and nature of competition in the new location should determine the appropriate choice of strategy for the new business. Robert and Frank should also consider the cost of material and labor inputs as they have an impact on their strategic plan and business model.

Questions 8, 9 & 10 in the spreadsheet

References

Butler, D., 2012. Business Development: A Guide to Small Business Strategy. Routledge.

Cadden, D., & Leuder, S., 2013. Small Business Management in the 21st Century. Flat World Knowledge, L.L.C.

Hastings, R. D., 2011. Managing a Small Business: A Guide to Successful Small Business Management. Businessman 101.

Statista Inc ., 2016. Annual change in restaurant industry sales in the United States from 1990 to 2016*. Retrieved June 16, 2016, from statista: http://www.statista.com/statistics/383987/annual-change-in-restaurant-industry-sales-us/

Vosikis, G., Mescon, T., Feldman, H., & Liguori, E., 2014. Entrepreneurship: Venture Initiation, Management and Development. Routledge.

Whan, P., Maclnnis, D., Priester, J., Eisingerich, A., & Lacobucci, D., 2010. Brand Attachment and Brand Attitude: Conceptual and Empirical Diffrentiation of Two critical Brand Equity Drivers. journal of Marketing 74 , 1-17.

Verhoef, P.C. and Lemon, K.N., 2013. Successful customer value management: Key lessons and emerging trends. European Management Journal, 31(1), pp.1-15.