Introduction
Porcini Incorporation is a family owned restaurant chain and the operations of the restaurant chain began in the year 1969 in the city of Boston. The core differentiating factors of the company were the ownership, branding, location, quality of the food and the outclass service of the restaurant which has always satisfied its customers. The profit margin percentage of the company has risen significantly over the years and the revenue generated by the restaurant by the end of the year 2010 is $ 94.3 million. The company has now reached the point of saturation by the end of the year 2011.
In order to move out of this phase and grow the restaurant business, the management of the restaurant has been looking out for expansion opportunities. The brand image of the company had been established in its local market, however, now the management of the retail chain was considering the options for entering the international market and develop the brand image in the international market. In order to achieve this, the owners of the retail chain have considered three options which are either to establish a company owned restaurant with the strategy of low cost, franchising or syndication.
Problem Diagnosis
The successful hotel chain, Porcini Incorporation has entered the maturity stage of its life cycle by serving Italian food to its customers. The growth and the revenues of the company have become stagnant and now the management of the company has been considering to enter the international market in order to resolve the problem of the stagnant growth of the company. However, the main constraint which was hindering the expansion idea was the capital investment required for the global expansion.
Furthermore, the access of the company to the price real estate sites was limited and the threat of the competitors in the international market was also high. The marketing vice president of the company, Tom Alessio has to meet the challenge of finding out the best option for the company in order to maintain the hurdle rate of 6%. A range of options are available to the management of the company, however, all of these need to be analyzed before a final decision is made.
Analysis
The mission of Porcini Incorporation is to provide the best quality of the food to the customers and maintain the high quality service level. Although, the brand recognition of the company was quite low in comparison to some of the competitors such as the Olive Garden and Denny, however, the management of the company had more discretion to manage its brand image and brand awareness since the business was family owned.
The main idea through which the management of the company wants to resolve the problem is to set up a low cost restaurant called as the Porcini’s Pronto which would provide a limited set of the menu to the customers. The competition in this area is quite low, however, the threat of the indirect competition coming from full service chain restaurants such as Denny and other fast food restaurants is still there. Furthermore, under the concept of this low cost restaurant service, more emphasis would be paid to the quality and the level of the service that is provided by the employees of the restaurant. In order to monitor the performance of the employees, customer questionnaire system had been developed by the management of the company so that all the visiting customers could provide their feedback regarding the quality of the service they receive.
Along with this, the customers would be provided with discount cards if they take the time out to fill out the questionnaires. This incentive is going to instill motivation among the customers and the ratio for questionnaire completion would increase from 38% to 78%.However, the main purpose of the questionnaire is to evaluate the performance of the employees. It does not evaluate other important things such as the time for taking the orders, food servings, ambience, cleanliness and the pay bills. Therefore, these elements should also be included in the questionnaire so the level of service could become more efficient.
Porcini’s Pronto “Great Italian Cuisine without the Wait!” Case Solution
Sustainable Competitive Advantage
Competitive advantage is the core competency of a firm or an organization that given it an edge over its competitors. When that competitive advantage becomes relevant to the target market and not imitable then it is transformed into a sustainable competitive advantage which continues in the long term. The competitive advantage could be in the form of the business strategy or product. The sustainable competitive advantage of Porcini Pronto is its high quality service level. In order to sustain this competitive advantage the management of the company will have to expand globally. The company will have to emphasize more on its food quality and high quality service. In order to sustain the growth of the company a range of options are available to the management of the company which have been evaluated below...................
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