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


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

  1. 1. Group A<br />MGMT-62200<br />Bold<br />Strategies<br />Consulting<br />Group<br />BSCG<br />Divya<br />Mishra<br />Hanish<br />Pahwa<br />Hemakumar <br />Vadlamudi<br />Qian<br />Yan<br />Shubhang<br />Sharma<br />
  2. 2. AGENDA<br /><ul><li>INTRODUCTION
  7. 7. RECOMMENDATION & IMPLEMENTATION</li></li></ul><li>INTRODUCTION<br /><ul><li>In-N-Out
  8. 8. Leading fast-food retail chain with 171 locations in California, Nevada and Arizona
  9. 9. A private, family-run, non-franchised company
  10. 10. Known for its made-to-order hamburgers, fresh ingredients and efficient service
  11. 11. Maintained the steady rate of expansion with traditional menu and a simple, customer-friendly philosophy
  12. 12. Developed the idea of a drive-thru hamburger restaurant </li></li></ul><li>IN-N-OUT’S MISSION<br /><ul><li>Provide freshest, highest-quality foods and services
  13. 13. Provide team-oriented atmosphere whereby goal-setting and communications exist
  14. 14. Assists all communities in its marketplace to become stronger, safer, and better places to live</li></li></ul><li>CURRENT SITUATION<br />Revenues had averaged from 8% to 10% growth with $1.2 million per store was estimated by 2003<br />Extremely loyal base of customers<br />Corporate strategy is controlled expansion and growth<br />Consistent in its traditional offering of its menu to customers<br />Maintained an opposition to franchising<br />
  15. 15. KEY ISSUE<br />The key issue is if and how the company should expand its operations?<br />Established the line of succession in leading and controlling all the operations with out franchising<br />
  17. 17. Target Market<br />Generational Customers<br />Young singles<br />Tourists<br />College/School Students<br />
  18. 18. Company Analysis<br />In-N-Out<br />
  19. 19. Company Analysis Contd..<br />The fast food industry is at the maturity stage of the life cycle graph.<br />The growth rate of In-N-Out is currently 8-10% which is way higher than the industry average of 4 %.<br />The store average revenue is estimated to be $1.2 million per store by 2003.<br />The company has a loyal customer base; it is applying controlled expansion strategy to retain the traditional taste.<br />
  20. 20. The company has opposed franchising.<br />The company considers employees as the heart of the company.<br />The company is paying more than the industry average to the employees and thus enjoys higher employee retention ratio.<br />The employees are paid 8.25$ to 9.25$ per hour almost 1.50$ to 2.50$ more than California’s minimum wage. <br />The employee receives benefits that include paid vacations ,401(k),retirement plan with matching company contributions and discounted medical, dental and vision coverage.<br />Company Analysis Contd..<br />
  21. 21. CPEST<br />
  22. 22. Competitive<br /><ul><li>Fierce competition in product, price, promotion and place at three levels
  23. 23. International: Competition among big players like McDonald & Burger king
  24. 24. National
  25. 25. McDonald is largest food chain
  26. 26. Burger king on second spot
  27. 27. Wendy occupies the third spot
  28. 28. Price war: Wendy($4.75), McDonald ($ 4.25), Burger king ( $3.50)
  29. 29. Product: variety in menu and meal options
  30. 30. Promotion: remodeling the restaurants, new store format
  31. 31. Place: ubiquity; airport, shopping area, tourists places</li></li></ul><li>Competitive Contd..<br /><ul><li>Local : Competition among local players like In-N-Out, fat burger, Johnny Rocket
  32. 32. Competition at local level is more in quality of food and themes of the restaurant
  33. 33. Competition among fast food burger chains as well as casual dining restaurants like Panera bread, Subway is increasing.
  34. 34. As a result of rivalry, profit margin and unit sales volume is lowering.</li></li></ul><li>Political<br /><ul><li>State /regional regulation to train staff before they begin work restaurants on all aspects of food quality, food safety and hygiene.
  35. 35. Food handling
  36. 36. Staff must wear special aprons /hats to maintain hygiene
  37. 37. 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.</li></li></ul><li>Economic<br /><ul><li>Economy is healthy
  38. 38. Disposable income of consumers is high
  39. 39. Restaurants in the fast casual segments experiencing unit sale volume growth of up to 40%
  40. 40. Cost of material is rising
  41. 41. Oil prices rising
  42. 42. 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</li></li></ul><li>Social<br /><ul><li>Increased health and fitness trend
  43. 43. Increased focus on the nutrient content of food
  44. 44. Increased demand for casual dining theme restaurants
  45. 45. 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.</li></li></ul><li>Technological<br /><ul><li>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.
  46. 46. Drive through option
  47. 47. Online placement of the orders as a result of increased used of internet.
  48. 48. Increasing use of technology for inventory management
  49. 49. Touch screen computers at the point-of- purchase to provide quick service
  50. 50. Restaurants are introducing wireless networking, internet terminals into the stores.</li></ul> <br /> <br /> <br /> <br />
  51. 51. SWOT ANALYSIS<br />
  52. 52. SWOT Analysis<br />
  53. 53. SWOT Analysis Contd..<br />
  54. 54. FIVE FORCES<br />
  55. 55. Five Forces<br />
  56. 56. Five Forces Contd..<br /><ul><li>The intensity of competitive rivalry: High</li></ul>Competition among local players like In-N-Out, Fat burger, Johnny rocket<br />Competition from global fast food chain Wendy, McDonald and Burger King<br />Competition among fast food burger chains as well as casual dining restaurants like Panera bread and subway<br /><ul><li>Bargaining power of buyers: High</li></li></ul><li>Five Forces Contd..<br /><ul><li>Bargaining power of suppliers: Low</li></ul>The company has close relationship with its suppliers, minimizing supplier conflict<br />The company has access to a variety of suppliers through the open market<br /><ul><li>Threat of substitutes: High</li></ul>Healthy food choices like Lean Cuisine, alternative menu items at competing fast food locations, and homemade meals made with fresh ingredients. <br /><ul><li>Barriers to entry: High</li></ul>Strict health regulations and high start-up costs<br />
  58. 58. Alternative Recommendations<br />Expand regionally in a slow, controlled manner: This would include expansion of the In-N-Out’s operations within the current operating states<br />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.<br />Expand the company by pursuing new target markets: Increase the product line by offering more varieties to the menus. <br />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.<br />
  59. 59. Recommended Alternative<br /><ul><li>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</li></ul> Mission Statement:<br /><ul><li>Mission of In-N-Out will serve as the driving strategy
  60. 60. Provide results-oriented advertising, public relations, and bold marketing strategies </li></li></ul><li>Impact on Marketing Mix<br />Price: Price remains the same and is not affected due to expansion because the core product remains the same.<br />Place: Increase in the distribution channel by expanding more stores to the current operational area and developing new stores in the neighboring state.<br />Product: Traditional products from the existing menus, customizable options and secret menus will be the same. <br />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.<br />
  61. 61. Questions<br />