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In-N-Out burger, Competitive Advantages, CPEST, SWOT
 

In-N-Out burger, Competitive Advantages, CPEST, SWOT

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    In-N-Out burger, Competitive Advantages, CPEST, SWOT In-N-Out burger, Competitive Advantages, CPEST, SWOT Presentation Transcript

    • Group A
      MGMT-62200
      Bold
      Strategies
      Consulting
      Group
      BSCG
      Divya
      Mishra
      Hanish
      Pahwa
      Hemakumar
      Vadlamudi
      Qian
      Yan
      Shubhang
      Sharma
    • AGENDA
      • INTRODUCTION
      • CURRENT SITUATION & KEY ISSUE
      • TARGET MARKET & COMPANY ANALYSIS
      • CPEST & SWOT ANALYSIS
      • PORTER’S FIVE FORCES
      • RECOMMENDATION & IMPLEMENTATION
    • INTRODUCTION
      • In-N-Out
      • Leading fast-food retail chain with 171 locations in California, Nevada and Arizona
      • A private, family-run, non-franchised company
      • Known for its made-to-order hamburgers, fresh ingredients and efficient service
      • Maintained the steady rate of expansion with traditional menu and a simple, customer-friendly philosophy
      • Developed the idea of a drive-thru hamburger restaurant
    • IN-N-OUT’S MISSION
      • Provide freshest, highest-quality foods and services
      • Provide team-oriented atmosphere whereby goal-setting and communications exist
      • Assists all communities in its marketplace to become stronger, safer, and better places to live
    • CURRENT SITUATION
      Revenues had averaged from 8% to 10% growth with $1.2 million per store was estimated by 2003
      Extremely loyal base of customers
      Corporate strategy is controlled expansion and growth
      Consistent in its traditional offering of its menu to customers
      Maintained an opposition to franchising
    • KEY ISSUE
      The key issue is if and how the company should expand its operations?
      Established the line of succession in leading and controlling all the operations with out franchising
    • TARGET MARKET & COMPANY ANALYSIS
    • Target Market
      Generational Customers
      Young singles
      Tourists
      College/School Students
    • Company Analysis
      In-N-Out
    • Company Analysis Contd..
      The fast food industry is at the maturity stage of the life cycle graph.
      The growth rate of In-N-Out is currently 8-10% which is way higher than the industry average of 4 %.
      The store average revenue is estimated to be $1.2 million per store by 2003.
      The company has a loyal customer base; it is applying controlled expansion strategy to retain the traditional taste.
    • The company has opposed franchising.
      The company considers employees as the heart of the company.
      The company is paying more than the industry average to the employees and thus enjoys higher employee retention ratio.
      The employees are paid 8.25$ to 9.25$ per hour almost 1.50$ to 2.50$ more than California’s minimum wage.
      The employee receives benefits that include paid vacations ,401(k),retirement plan with matching company contributions and discounted medical, dental and vision coverage.
      Company Analysis Contd..
    • CPEST
    • Competitive
      • Fierce competition in product, price, promotion and place at three levels
      • International: Competition among big players like McDonald & Burger king
      • National
      • McDonald is largest food chain
      • Burger king on second spot
      • Wendy occupies the third spot
      • Price war: Wendy($4.75), McDonald ($ 4.25), Burger king ( $3.50)
      • Product: variety in menu and meal options
      • Promotion: remodeling the restaurants, new store format
      • Place: ubiquity; airport, shopping area, tourists places
    • Competitive Contd..
      • Local : Competition among local players like In-N-Out, fat burger, Johnny Rocket
      • Competition at local level is more in quality of food and themes of the restaurant
      • Competition among fast food burger chains as well as casual dining restaurants like Panera bread, Subway is increasing.
      • As a result of rivalry, profit margin and unit sales volume is lowering.
    • Political
      • State /regional regulation to train staff before they begin work restaurants on all aspects of food quality, food safety and hygiene.
      • Food handling
      • Staff must wear special aprons /hats to maintain hygiene
      • In some countries there is legislation against child obesity. The government campaigned to young children in order to reverse the trends of obesity by promoting healthy eating.
    • Economic
      • Economy is healthy
      • Disposable income of consumers is high
      • Restaurants in the fast casual segments experiencing unit sale volume growth of up to 40%
      • Cost of material is rising
      • Oil prices rising
      • Restaurants are involved in simplifying operation –streamlining menu selection, limited in-store promotion, focusing more on food rather than additional expenditures on toys or movie tie-ins
    • Social
      • Increased health and fitness trend
      • Increased focus on the nutrient content of food
      • Increased demand for casual dining theme restaurants
      • The importance of child obesity has broadly impacted the fast food industry, as children have a big share on the brand revenue .For e.g. In response of child obesity awareness, McDonald’s has changed its menu, in order to recover from falling sales and profits regarded the growing health consciousness.
    • Technological
      • Technology, such as industrial deep fat fryers and high powered ovens, allow businesses to produce multiple items at fast rate therefore reducing time required per product and becoming more efficient.
      • Drive through option
      • Online placement of the orders as a result of increased used of internet.
      • Increasing use of technology for inventory management
      • Touch screen computers at the point-of- purchase to provide quick service
      • Restaurants are introducing wireless networking, internet terminals into the stores.
       
       
       
       
    • SWOT ANALYSIS
    • SWOT Analysis
    • SWOT Analysis Contd..
    • FIVE FORCES
    • Five Forces
    • Five Forces Contd..
      • The intensity of competitive rivalry: High
      Competition among local players like In-N-Out, Fat burger, Johnny rocket
      Competition from global fast food chain Wendy, McDonald and Burger King
      Competition among fast food burger chains as well as casual dining restaurants like Panera bread and subway
      • Bargaining power of buyers: High
    • Five Forces Contd..
      • Bargaining power of suppliers: Low
      The company has close relationship with its suppliers, minimizing supplier conflict
      The company has access to a variety of suppliers through the open market
      • Threat of substitutes: High
      Healthy food choices like Lean Cuisine, alternative menu items at competing fast food locations, and homemade meals made with fresh ingredients.
      • Barriers to entry: High
      Strict health regulations and high start-up costs
    • ALTERNATIVE RECOMMENDATIONS
    • Alternative Recommendations
      Expand regionally in a slow, controlled manner: This would include expansion of the In-N-Out’s operations within the current operating states
      Expand aggressively by pursuing national growth: Aggressively increase the number of stores in current operational states and develop new stores throughout the country at the same time.
      Expand the company by pursuing new target markets: Increase the product line by offering more varieties to the menus.
      Instead of expansion, focus on maintaining and increasing the profitability of current locations: Keep the operation of the company as is, focusing on the current stores and maintain the current customer base.
    • Recommended Alternative
      • We recommend a geographic expansion that is controlled and regional. This would include expansion of the In-N-Out’s operations within the current operating states and the neighborhood states
      Mission Statement:
      • Mission of In-N-Out will serve as the driving strategy
      • Provide results-oriented advertising, public relations, and bold marketing strategies
    • Impact on Marketing Mix
      Price: Price remains the same and is not affected due to expansion because the core product remains the same.
      Place: Increase in the distribution channel by expanding more stores to the current operational area and developing new stores in the neighboring state.
      Product: Traditional products from the existing menus, customizable options and secret menus will be the same.
      Promotion: Promotion will focus primarily on direct marketing. Existing stores would be used as a method of promotion. Catalogues will be distributed to attract new consumers and billboards on the highway will be used.
    • Questions