HUNGRY HOGS: THE HOT DOGS FROM INDIA Harvard Case Solution & Analysis

HUNGRY HOGS: THE HOT DOGS FROM INDIA Case Study Solution

Opportunities

The QSR segment was expected to grow from $48 billion in 2013 to $ 92 billion in 2020 with an annual compound growth of 10%. Annually each middle class family spend significant amount on QSR, due to which the future growth of the QSR segment seems to be very promising because of the high growth of the middle income sector in both tier 1 and tier 2 cities. The QSR has a significance presence in the metropolitan cities due to which the growth is not only restricted to the multinational companies but it also has a chance to grow itself and its reach in the domestic chains.

Threat

The number of QSR being owned by the competitors are significantly more than what the company currently owns. The prices of Hungry Hogs are also higher than its competitors due to which the company has the risk to face difficulty in attracting a large number of consumers towards its new QSR which the company is planning to have in the mall. Large players operating in the QSR possess more monetary resources having standardized supply chains and are much more established. On the other hand the company is still lacking in terms of monetary resources.

Quantitative analysis

Part A

Part B

Strategic analysis conclusion

Advantages and disadvantages of each of the expansion strategy being considered by the company are as follows:

Company owned outlet

If the company chooses to open its own outlet instead of franchising than following are the advantages and disadvantages, the company may face in the future along with the decision:

Advantages  

In case if HHPL decided to open its QSR outlet in the mall, it will provide the company with an immense traffic which will ultimately lead to higher amount of profits contributing positively in the overall sales of the company. Moreover it will also benefit the company by increasing the overall visibility of the brand, making it more popular amongst the consumers. As the company is still in its growing phase, the outlet will help the company to increase its customer base by making the brand more familiar and popular among its targeted audience. Apart from this, it will also provide the company with a financial support to fund its future projects through increased margins. It will eliminate the risk aligned with maintaining the quality standards.

Disadvantages

In order to open another outlet; the company will require additional funding because the rent of the new outlet that the company is planning to open in the mall is much higher than its current outlet. The company is currently unsure regarding the profitability of the outlet and fears that the major part of the profits being generated through the outlet will be covered to pay the monthly rent for this outlet.

Franchises

The advantages and disadvantages associated with this option are as follows:

Advantages

If the company adopts the franchise route; it will help the company in accelerating the expansion process and will enable it to create an immediate brand value across India. In addition, it will speed up the growth and the visibility of the brand rapidly. Apart from this; it is the fastest way for an easy expansion capital as well as the access to the individuals who are ready to own the business. It will also shift the expenses related to the outlet location to the franchisee and will reduce the risk for HHPL

Disadvantages

The cost related to managing the logistic cost, manpower training and audit system will be the major concern associated with franchising. A huge sum of money will be required to invest in comprehensive training systems to prepare the HR with the modern retail operations. Another critical issue will be the quality assurance that will play a very critical role in maintaining the value of the brand.

Recommendation

Analyzing the company’s performance both qualitatively and quantitatively, it is recommended that the company should continue to expand itself with the company owned outlets. It is mainly because of the fact that the Indian retail food industry has great potentials to grow in the upcoming years. As per the report presented by Technopak, QSR segment is expected to increase at the rate of 10% annually, clearly stating that the sales of Hungry Hogs are expected to grow by a sufficient margin mainly because of the increased population in the middle class which spends a huge amount of money in QSR. Looking at the company’s financial position, which is equally sound, showcases the efficiency of the company to effectively manage the cost associated with outlets. The company is still able to generate positive incomes which reflect the potentials of the company to grow in future. The launch of the fourth outlet will benefit the company by making the brand recognized amongst the consumers as more traffic is expected at the new outlet due to its location that will eventually help the company in financing their future projects. The company is at its growing phase therefore it should not risk its brand image by franchising, as it will become difficult for the company to maintain its quality and innovation throughout.........

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