Paraphrasing Harvard Case Solution & Analysis

The restaurant industry of the United States is among one of the growing industries around the world. However, the local market of the U.S restaurant was near to its saturation point that includes the restaurants that are located both in shopping mall as well as in-city. In addition to this, big chains restaurants at that time looking for the opportunities in foreign markets in order to enhance their growth. While, on the other side, small restaurants do not have much resources as well as they do not have big brand name in order to avail this option to expand their business in other foreign markets.

Moreover, the restaurant industry in U.S consist of three main segments that include fast food, single location full service and also full service chain restaurants. Mid 2000, customers of the industry started moving towards ethnic cuisine restaurant as they were offered more nutritious food than in normal fast food chain, this ultimately decreased the overall growth of the segment.

A diversified atmosphere as well as a widespread variety of foods were offered by full service restaurants, this has attracted the customers towards the segment and the revenue of the entire segment were boosted up to 89 billion dollars in 2010. Pronto has a top priority of providing excellent quality food and services to interstate highway travellers. Pronto has an operating strategy which was entirely focused on the spot on customers as well as growth through technology. Providing food and services to its customers with a widespread variety and excellence in quality is a competitive edge of Pronto, which further led him to become a trail blazer in the entire industry.

Problem Statement:

How the uncertainties regarding food, customer care services as well pricing and profitability could be removed?


In order to address the problems faced by the chain, efficiently and effectively, feasibility operational model should be used and integrated within the operations of Pronto.Projected Sources & Uses of Cash, Capital Budget, Sales Projection,and Labour Cost Projection should be considered in order to enhance the overall effectiveness of the operations of Pronto.

  • Projected Sources and Uses under three approaches

Chain own and operate approach:

The top management of the chain has used go slow approach to their chain which has become hurdle for the chain in the rapid development of the chain. The top management of the chain has now used various strategies in order to ensure rapid growth in the entire chain. The top management of the chain has decided to enhance their development by acquiring and acquisition or leasing perfect locations, and test the site as to its feasibility.

Since the cost associated with the option is 2.1 million dollars, whereas, the estimated benefit to be derived is expected to be 2.4 million dollars therefore, it is estimated that the option would be able to fuel up the overall growth and profitability and would be able to earn a 6% pre-tax profit return for the business.

Franchising Approach

Since the chain has no franchising business, therefore, it would be difficult for the chain to earn a handsome fees and royalty. In order to develop an effective franchising system, it is estimated that it would require an initial investment in legal and staff resources. However, it is estimated that it would give 2% pre tax margin on net income.   


The chain values its customers and shareholders and provide its share holders with a ground return as well as the additional incentive fee. It is estimated that it would be 4% of annual incomes.

Capital budget costs would include, Land and building, leasehold improvements, Kitchen equipment’s, Furniture, Cost of professional services, organisational and development, Interior and exterior finishing, preopening expenses, opening inventories, marketing, working capital expenses, etc.

In addition to this, Opening investments projection model should include, sales and cost of sales, payroll, controllable expenses, Occupancy cost and depreciation. Moreover, break even analysis should include, fixed costs, variable costs as well as contribution margin.Paraphrasing Case Solution

Recommendations and Conclusions:

The top management of the chain does not have enough resources and expertise to exploit the available opportunities efficiently and effectively. The first two approaches discussed in the analysis is not feasible as its cost would exceed the benefits drawn by using such approach at a wide spread scale...........................

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