bsns 7454 strategic brand strategy report b … · the business will reach break-even point in the...

Assignment Four | Diego Romero, Paul McLaughlin

BSNS 7454

STRATEGIC

BRAND

MANAGEMENT

BRAND STRATEGY REPORT

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Brand strategy presentation Diego Romero and Paul McLaughlin

Executive Summary

This report is a presentation on the brand strategy for Sabor and Salud, a healthy great

tasting Mexican themed restaurant.

The recommendations for the brand are to deliver clear marketing communications to

the target market on a business delivering;

i) A fast, consistent healthy Mexican lunch taste

ii) Creating a great tasting healthy Mexican dining experience

Using a strategy of differentiation for the business model will create a two prong

business that requires décor transformations on a daily basis not seen in New Zealand

before.

The lunch offering must follow the market leader’s model but differentiate through a

new and exciting choice to the consumer. The dine-in experience must compete with

large volumes of competition both direct and indirect yet deliver the brand promise of

a great tasting healthy experience.

The report outlines barriers to the strategy implementation and recommends tactics to

help overcome using an action planning process.

The business will reach break-even point in the first year of operations exceeding a

sales target of $760,000. The calculated figures are low by industry standard and

exceeding this expectation is well within the business capabilities. By the end of

financial year two the investors will be paid back initial investment and have an

approximate figure of $40,000 to reinvest into the business or expand through

additional store locations.

Being part of this new and exciting business is a chance to be a market leader through

brand innovation and opportunity to grow significantly through the franchisee of the

business in the future. The strategic direction outlined within this report will lead the

brand to ultimate success.

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Contents Page

Executive summary......................................................................................................1

Contents page...............................................................................................................2

Introduction..................................................................................................................3

Industry category ………………………...….............................................................4

Competitive analysis…................................................................................................7

Brand strategic plan...................................................................................................11

Target customer & segmentation analysis...............................................................12

Customer insight…………........................................................................................14

Brand objectives………….........................................................................................15

Equity elements..........................................................................................................16

Brand positioning………….......................................................................................17

Brand concept maps..................................................................................................19

Brand attractiveness..................................................................................................20

Strategic brand promotional mix.............................................................................21

Implementation plan.................................................................................................26

Strategy measurement...............................................................................................27

Strategy evaluation………………............................................................................28

Business financials.....................................................................................................29

Recommendations......................................................................................................33

References..................................................................................................................34

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Introduction

This report has been commissioned to analyse the feasibility of strategically

implementing a strategy plan to launch the restaurant brand Sabor & Salud.

The restaurant idea is new because of its two-pronged approach in an attempt to

capture as much market as possible. Given that the new dimension of the industry

category type has not been attempted before, this report describes in detail plans to

overcome barriers identified in a previous qualitative research project.

The success of this business will see the two separate offerings of fast service lunch

and dine-in dinner have defined brand positioning translating the brand idea early on

into consumer knowledge.

By the end of the first financial year the restaurant will reach a breakeven point and

will continue to provide a return on investment for the stakeholders. The end of

financial year two will see a return on investment that can be divided amongst the

stakeholders, reinvested into the business or used to start another Sabor & Salud to

further grow the brand.

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Industry category

Sabor & Salud will operate within a very diverse environment whereby lots of large

share global brands, local business and indirect or direct competitors may be found in

every corner of the city all competing within the food industry. Exisiting competitors

tend to adopt singular type of business definition which can be represented by either:

TAKE-

AWAY

FAST

CASUAL

CASUAL

DINING

FINE DINING

(Mealey, 2010)

Features such as cheap price, meals served very promptly, limited menu, high

volume, low cost are likely all elements of the ‘take-away’ approach.

When dining people expect more therefore aspects such as non-disposable plates and

cutlery, more casual atmosphere and food quality make prices higher than those of a

conventional fast food restaurant. These types can be defined as ‘fast casual’ or

‘casual dining’. The last segment is fine dining and is a more formal service restaurant

where high emphasis is placed on all the business elements including higher end meal

courses, high levels of service and total attention towards creating atmosphere.

Using this analysis of the food industry we see that although the choice related to food

consumption affects us as consumers, business’s might not be competing for the same

target market if consumers have different goals when deciding to have a meal out of

their homes. For example if they are rushing during their break time they would

probably not consider an eat-in place which might lead them to a fast-food restaurant.

The same occurs if someone has available time to spend dining with friends or

relatives, having a meal where fast food would not be one of the top choice for

providing the experience factor sought for the occasion. As a result, these businesses

are somehow locked up in their main characteristics which has a positive side for

consumer learning curve.

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Utilising a differentiation business approach of competiting in more than one industry

group daily, Sabor & Salud aims to break the rule and go beyond that one-type

restaurant.

The differentiation from industry standards by dissassociating from one unique trend

comes not only from offering a distinctive option to suit consumers, but being able to

balance its level of appropriate service during the day and night. By taking the

Subway example Assignment 3 (Romero, 2012) it is possible to identify that during

the day the business has a flow variation which is directly connected to the time of

day. Using an observation approach on the last report it was understood the business

has its peak during the lunch time and it gradually declines towards its closing with

sporadic busy times but manageable without great effort. The following graph

illustrates the situation viewed in the shop where the example was taken from:

(Romero, 2012)

The graph reflects the number of staff throughout a common day at the shop however,

it is possible to infer that the number of staff allocated is enough to handle the level of

service required. Using this information we see that lunch is the busiest time and the

staff reequired thereafter reduces as it is no longer necessary due to the low volume

of consumers. The black arrow indicates the drop in level of service identified.

2

5 5

3

1

08:00 - 10:00 10:00-12:00 12:00-14:00 14:00-16:00 16:00 - close

Number of staff on a daily-basis

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The conclusion that can be drawn based on this observation is that fast-food

restaurants tend to be a busy place during lunch, taking advantage of the ‘rush’ time.

Using this observation we can predict the staffing levels required for Sabor and

Salud’s lunch service.

As consumers have more time to spend when it comes to dinner, the scenario changes

for consumer food choice and fewer consumers select the cheap, fast and easy option.

Therefore, in order to be an interesting option in both scenarios and considering the

segments of restaurants mentioned before, Sabor & Salud will be positioned casual

dining. Positioning of the company elements within the industry will be defined as;

This means that Sabor & Salud will be offering not only the famous take away option

of fast food but the alternative of having it at the establishment and additionally after

changing its layout through transformation, a more casual dining environment.

The following graph forms a representation of how the level of service is expected if

this business model is applied.

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Consumer service expectations levels

Considering the ups and downs of service requirements throughout the day, the

business model would try to remain stable, loyal to the purpose of offering an

adaptable approach based on the association:

Lunch - "fast, informal, cheap”

Dinner - “environment, atmosphere, formal, experience”

Competitor analysis

As reviewed in the previous brand analysis report the competition creates the major

business issues in regards to the enormous amount of choice available to the target

market.

With a large number of food categories to compete with, the most diverse types of

cuisines found in New Zealand follow Asian trends such as Korean, Japanese, Indian

and Chinese due to the vast number of immigrants in Auckland. The objective is to

elect the ones which have a closer similarity to what our key part of business is

planning to offer for lunch which is cheap fast food. The point of differntiation will

be the type of cuisine the brand will be offering which is Mexican style

.

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Segregating by fast food options we may still find numerous alternatives going from

pizzas, burgers, kebabs to sandwiches in general. Some of the market competitors are

represented by large share international fast food brands such as McDonald’s, Burger

King, KFC, Wendy’s Burger Fuel, Velvet, Wisconsin, Sal’s Pizza, Hell’s Pizza,

Domino’s, Pizza Hut. Other competition can be seen in the form of small and family

operated businesses like kebabs shops, cafes and others. These companies aim at

providing fast food service as well as cheap price offerings, however most do not

specialize in promoting and selling healthy options.

The above competitors may not appeal to consumers who are health conscious and

may perceive them as ‘unhealthy’ even though they might be serving a few ‘light’

alternatives in their menus. This behavior may influence people to search for new and

healthier options in a fast food format.

This fast food tactic based on ‘healthy habits’ is now well-represented by the

company Subway. With more than 36.000 restaurants in 100 countries - 243 of them

located in New Zealand (SiteFinder, 2012), Subway has surpassed McDonald’s at the

end of 2010 as the biggest restaurant chain in the world.

The success in recent years lies in a more personalized approach introducing

‘healthier’ options on the menu such as salads in an attempt to attract health concious

customers (Bates, 2011). As reference of model for our business, this chain of

restaurants also features as one of our biggest threats because its various locations.

The following map shows the distribution and location of some of the Subway shops

in the Auckland area which ensures their strategic presence in important parts of the

area contributing to their success. The main concern with Subway’s competition is not

just the ‘healthy approach’ but the accessibility to consumers from the large number

of Subway shops available.

Picture 1: Subway stores location

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Using the tagline of “Fresh Thinking – Healthy Eating”, another similar company has

achieved success with its brand so much so that it is about to open five new shops in

the Auckland region. The company Pita Pit (Pita Pit, 2012) is also another quick-

service restaurant franchise that was founded in Canada in 1995. In New Zealand

their first restaurant was opened in August 2007 in Takapuna Beach, Auckland (NZ

Herald, 2011). The business structure is similar to Subway with the goal of offering

quality, healthy, fresh food and fast food with the only differentiation of serving pita

bread sandwiches instead of submarine shaped bread.

The above examples of competitors can defy any kind of establishment that tries to

get in this ‘healthy trend’ industry with their exisiting market dominance. For Sabor

and Salud, the point of differentiation in this lunch time catagory will be the product

offering and atomsphere of Mexican theme that will be strongly attached to the

business idea and marketing communications.

Embracing the healthy Mexican food style approach does not mean the company will

avoid the existing market competition. By analyzing in depth our competitors through

qualitatitive research it was identified that there is a company which has been working

with the same structure and mentality and ultimately will feature as our biggest food

style rival. The company is called Mexicali Fresh. This original family business

established in New Zealand 2006 now has three restaurants located in Auckland,

New Market, Princess’ Wharf and Botany town center (MexiCali website, 2012).

Mexicalicali Fresh really explores the freshness and Mexican elements as its core

offerings which are the same pillars of Sabor and Salud with the exception of healthy.

The companies website provides information about menu, locations and has the ease

of online order for pick-up. Another positive and attractive aspect is the interaction

they create via social media. The company regularly uploads content about its new

food options, promotions, food curiosity and their online store that sells souvenirs as

T-shirts and hoodies. All of these features have created an engagement of 4,000 fans

on its Facebook page plus 1,065 followers on Twitter.

http://en.wikipedia.org/wiki/Pita

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This has consequently helped the company to expand awareness and customer

relationship by retaining and making consumers loyal to them.

Apart from being healthy, fresh and cheap, the following features summarize the

competitors most noticeable assets.

Canadian franchise in expansion through the NZ

market

Similar format of Subway in a much smaller scale of

awareness but serving meals on pita bread (considered

healthier than regular bread)

Great awareness towards the fresh/healthy approach

Strong location asset, with stores well-distributed

throughout the city

Mexican themed restaurant based on fast food;

Invest in engagement through the social media environment

which generates curiosity, create awareness and position the

brand as communicative with consumers.

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Brand strategic plan

The companies mission statement stated is;

“To provide great-tasting Mexican food along with an outstanding service adjusted

to consumers’ expectations in order to suit them best during lunch and dinner”

Strategic objectives

Today the health-conscious approach is no longer considered a new trend but it is

becoming a must for companies in order to not to lose sight of desired consumers

state. Large share brands such as McDonalds and others are adopting consumer

health and widening its range of products to including light options.

Sabor and Salud will apply a two pronged restaurant strategy with its lunch and

dinner offerings with the objective to grab attention and curiosity to this new kind of

business. In doing so the brand will be perceived as a revolutionary and an innovative

model by performing on two different approaches grounded on consumers’ needs and

wants.

It will be important to keep the lunch time business at the same level of service equal

to the custom, generating profit equally throughout the day. The dine-in service level

because of its walk in policy will cope for the maximum amount of consumers of 60

at any one time, since people can choose to dine between the hours of 6-11pm the

business will be able to cope with constant turnover of custom.

The company will be positioned under the theme of a Mexican restaurant which is a

popular type of cuisine worldwide and one which satisfies a lot of tastes by being

traditional. According to a poll done by Oxfam, Mexican food was ranked number 10

on a poll of over 8,000 participants across 17 countries from a variety of social and

economic backgrounds to summarize attitudes towards foods. (Sedghi, 2011).

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The barriers to achieve the business objective lie in the communication and consumer

education used to clarify differentiation of Sabor and Salud’s new business model

with the catagory and the companies unique healthy brand offering.

The channels chosen to communicate this differentiation will perform a key part to

measure the effectiveness of how catchy the idea might be in consumers opinion.

As a new entrant in the market not relying on enormous marketing budgets, the option

of creating an interface with consumers within the social media is crucial. Once

established the brand will rely on the resonance and brand awareness to create a

referral by word of mouth factor, assuming that the new model will bring a curious

crowd.

To sum up, the set of objectives for the brand are to;

- Create awareness of the new two pronged business strategy

- Communicate brand differentiation through awareness

- Be perceived as innovative, utilizing website and engagement via social media

- Deliver the brand vision of

i) Providing a fast, consistent healthy Mexican lunch taste

ii) Generate a great tasting healthy Mexican dining experience

Target customer & segmentation analysis

Using one specific type of food Mexican but providing it into two distinctive sorts of

service, fast food and casual dining ensures the company has a broad target audience.

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The graph below defines the age group of these consumers.

(Quality of Life In NZ's

cities, 2012)

The brand will communicate with both male and females aged from 15 to 54 which

according to the graph represents more than 60% of the population in Auckland. By

having the brand only operating in Auckland Centre, the target market numbers will

be less due to the distance from East, West, South and North Auckland to our

business location. It is not recommended to include these people who do not come

into the city with the exception of those who travel into the city for work.

Considering this fact, the target segment includes an intense concentration of people

who live and work in the central city location with high foot traffic volumes daily.

By offering two different approaches, it is possible that the target audience can be

segmented into the below types of service Sabor and Salud will provide. The

following characteristics will be used as a guide to identify and map out which kind of

consumers would be willing to try our brand and in which circumstances it would

happen.

LUNCH DINNER High school / college students Families

Businessmen and women that are after

a quick meal

Businessmen and women that looking

for a nice environment and happy hour

after work

Tourist and travelers Couples and people in social occasions

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The channels of communication used might be different and selective in order to

reach all of those mentioned above to maintain the same level of understanding about

the brand.

Sepearting brand images because of the offering is important to identify and

assimilate with our consumers as they may not agree with the differentiated approach.

For instance, an individual who could be regular customer during lunch time may not

like the approach used during the night and vice-versa. Communicating the two prong

approach of the brand strategy to this target segment would culminate in waste of

resources when trying to educate them about the purpose of the business.

As an alternative, it is essential for the business to find commonalities between the

target audiences of these two different scenarios and work on the development of a

relationship with them in an effective and sustainable way.

One example of these commonalities in the businessmen and women segment who

are really the target audience desired by our company and meet the requirement of

having a ‘rush’ during lunch but also in search of a good ‘atmosphere’ for dinner.

Among our target audiences, this group would receive special attention and would be

the focus of marketing campaigns for the business.

Customer insight

The qualitative research undertaken previously analysed the results of six individual

one on one interviews in depth on the following three subjects;

1) Consumer habits and behaviour

2) Consumer attitudes and needs

3) The brand idea

The research was undertaken to undestand what the target market potential is and

feelings towards the brand idea with the overall idea of establishing a restaurant

themed as Mexican is positive conitations.

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As a result of the consumer insight taken from the research some important points not

already considered must now be accounted for when designing the business model.

One of the important factors realised is to relate the Mexican traditional model to

what is effective and attractive to New Zealand consumers. It is clear from the

research that more important than following Mexican trends is to create something

appealing to the target market delivering the companies value proposition in an area

centrally located.

One of the points to address is the education of cultural awareness. It is known that

Latin America has the fame of being very outgoing and liberal and it is extended to

many aspects, including the eating out. For example In Latin American casual

restaurants often depict the figure of a band illustrated by the Mariachis. This is

common and well accepted in order to create a harmonic environment and atmosphere

to guests. However, as described by some of the interviewees, this can be considered

‘cheesy’ and instead of providing an outstanding service it will actually be annoying

and upsetting people who prefer a quieter environment. Therefore, finding a middle

ground, adapting and adjusting the brand to a model that is loyal to the traditions yet

relevant and pleasant to consumers is essential. For that reason the company will

count on reviews and feedbacks of consumers.

Brand objectives

The essence of the Sabor & Salud brand will be to provide our customers with the

experience they expect with a healthy taste in exchange for their hard earned money.

In order to do so the brand needs to be approachable for the consumer but still carry

differentiation to;

a) Set itself apart from the competition

b) Offer a unique yet consistent choice to the consumer

Using the qualitative research from the previous brand value analysis there was

conflicting views on how a Mexican themed restaurant should look.

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Analysing the results of the research 50% of the respondents viewed Sabor & Salud

as staying true to stereotypical Mexican themes such as sombrero hats, mariachi’s.

The other 50% viewed this as negative and commented that it may end up feeling

‘cheesy’ (Interview 2, Interview 3 2012).

It will be essential for the brand to have the correct balance of existing consumer

knowledge with our brand and exceeding expectations by delivering more to enhance

the experience both with our lunch and dinner offerings.

The resulting effects mean brand differentiation from the lunch time and dine in

experience. The research also showed that lunchtime consumers want a clean and fast

service for their meals, for dinner the consumers expect more. Therefore the

communication of the brand will be simple for lunch and more sophisticated for

dinner.

Equity elements

The brand equity of Sabor & Salud will be unique as no restaurant identified through

secondary research has two elements defined as the brand concept of Sabor & Salud.

The daily transformations required to complete the two elements of the brand equity

will be exciting for the consumer. It will be the uniqueness of this concept that will

attract the interest and buzz from the food industry with resulting positive PR to

further promote the brand (Meng, 2012).

As the concept is new to the consumer a difficulty needed to overcome is awareness

of the brand. The name Sabor & Salud did not test well in the previous brand value

analysis report with none of the respondents able to understand what the name meant.

Creating the brand identity and communicating this to the target markets will help the

consumer to understand who we are and what we do (Charbonneau, Chitty, & Stuart,

2009).

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Using Keller’s (2008) theory on the brand equity pyramid the Sabor & Salud brand

elements will focus on generating brand salience. The brand will rely on the

relationship built by experiencing the brand to both continue the developing and refer

friends and family as demonstrated below;

The brands success will depend on both brand elements delivering on consumers’

expectations and meeting the sales targets set by management to reach the breakeven

point for the stakeholders within the first year of operation.

Brand positioning

Since the market for food choice in New Zealand is becoming increasingly saturated,

it is important to have a unique point of difference from the competitors.

The following diagram illustrates the brand positioning for the lunch time meals and

the dine-in experience.

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Using the positioning maps we see that the lunchtime offering is already in a

competitive market space. With three similar types of food styles, self-image will be

an important factor for consumers when choosing a meal. The key point of difference

from the competitors is the unique theme of Mexican healthy food.

The dinner offering for Sabor & Salud will experience more direct competition with

the brand idea.

Secondary research identifies four similarly styled Mexican restaurants directly

competing. The choice of different food styles such as Thai or Japanese will compete

with similarly priced themed restaurants.

The unique brand positioning with the brand concept is focussed on health and this

will be strongly emphasised in the brand’s marketing communications.

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Brand concept maps

Cutting through the noise in the marketplace will be essential for the brand. As there

is already many choices for food out there vying for the customer relationship a brand

that can clearly deliver its message keeping it simple for the consumer to understand

will be successful (Parikshat, 2010), (Charbonneau, Chitty, & Stuart, 2009).

The Sabor & Salud brand will utilise cognitive brand concept maps to associate the

brand with the desired consumer brand knowledge. Using the BCM maps below we

can see that the lunch offering’s desired consumer knowledge will be healthy, fast and

convenient. For dinner the desired knowledge will be healthy food, good atmosphere

and great experience.

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Brand attractiveness

The essential element required for the success of the Sabor & Salud brand will be to

create a buzz around the new concept idea.

The marketing communications will reflect these efforts and ensure that the smaller

advertising budget of Sabor & Salud compared to its competition will be targeted and

effective. According to Jantsch (2010) creating an atmosphere with positive

perceptions will promote the brand itself through the experience consumers have

when interacting with the brand and sharing through referrals. For the dine-in

restaurant a no-bookings strategy will help to create a buzz where walk in people can

be seated but only if there is space. The recent success of Depot restaurant (Depot,

2012) won the Metro restaurant of the year 2012 using the same no bookings strategy

in a high foot traffic area.

The buzz required for the two meal services will be different because of the two types

of consumers the business is targeting.

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For lunch the buzz will be;

- Fresh and healthy

- Convenient and fun

- What you want

- Ready when you are

The dinner buzz created will be;

- Great healthy taste

- Atmosphere driven

- In-exclusivity, non-pretentious

- Focus on well-priced to encourage repeat business / referral

- Come in for a good time

Strategic brand promotional mix

As a new business, the marketing mix for Sabor & Salud will be based on the creation

of awareness around the brand education that no company has innovated simlarly by

providing this two pronged sort of service in the region. The promotional campaign

will be structured as having two phases; tease and engagement.

Tease

The initial approach begins with teasers in form of ads containing the reproduction of

both environments (lunch and dinner) on billboards and promotion of our offerings on

flyposters. For the billboards, the idea is to present two scenarios in attempt to

develop curiosity around the business with the tagline:

“Quick and healthy tasting during the day...pleasant atmosphere at night”

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The following model gives a hint of how those ads are going to be:

The ads are supposed to be intriguing not giving much information in order to

stimulate people’s curiosity when facing two different approaches. At the bottom of

each ad, consumers will be able to visualize the website and references to Facebook

and YouTube whereby the communication will continue for the second part of the

campaign.

The message is designed to be an attractive and unique option that can provide a

perfect match for different expectations found between lunch and dinner time. It

means a brand that fully understands the ‘rush’ of lunch and the ‘experience’ and

‘atmosphere’ of dinner is able to provide them both at the same level of efficiency.

The locations where these ads are going to be exposed have a significant importance

because of the high investment that will be put on them for that reason the objective is

to reach out as much people as they can during the first phase of the campaign.

Some examples of opportune locations for the business promotions can be seen

following.

“Quick and

healthy tasting

during the day...

...pleasant

atmosphere at

night”

130 Quay Street Britomart – Auckland

www.saborandsalud.co.nz

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Seperately from the billboards, fly posters will be continually used as the brand is

launching products or promoting existing ones. These ads will be in form of bus stop

ads with the purpose of reaching large numbers of consumers. Bus advertisments are

going to be a substantial investment made by the organization, regarding that many of

the centrally located target market consumers including high school and college

students as well as other citizens and travellers who use this kind of transport in their

daily routines.

Examples of those flyposters can be seen below as well as the location and

distribution that will be made on the bus stops throughout city centre

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A large number of people within the target market category including students, non-

car users and people living centrally will use our restaurant as a convienince factor.

For that reason, it would be more convenient and more relevant to communicate with

this public by only promoting the take away and fast casual aspects leaving the two

environment promotion only for the billboards. By doing so, the seperation of the

promotional strategy will communicate with the segment of the target audience our

company aims to have as consumers for the dinner service which is individuals with

higher income who dine out regularly.

Representation of a bus stop ad, whereby the company will be communicating with a segment of the public.

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Association with the deal-of-the-day websites such as Groupon is a valuable way of

creating awareness around the brand as well as measuring the company’s effort

through a daily analysis of the sales in meals. The combination of take away/fast

casual and casual dining will be explored in order to educate consumers about this

innovative approach used by our brand.

Engagement

The engagement phase will be incorporated into the strategy in form of interaction

with consumers via website, Facebook and YouTube.

These tools will be used in order to inform,

explain and educate consumers about our

differentiated approach in services as well

as answering any kind of inquiries coming

from customers. Prompt responses to any consumers’ manifestation towards the brand

are suggested to increase the level of involvement and engagement with our company.

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For example on YouTube, the

initial video to be put up can expose

the layout changing, our main

characteristic showing how a fast

food restaurant becomes a perfect

match for a casual dining within

minutes. Then by creating a

channel, consumers are able to

become subscribers and receive

weekly uploads showing other

aspects of our company.

Implementation plan

Required first is the funding for the project. The directors must raise the capital and

at least one must be directly invested within the project so that money is not spent on

employing an additional employee.

A following analysis of the business financial identifies requiring $47,000 start-up

capital before able to open for business. This will allow for the menu to be developed

by the director and head chef, a location to be identified and secured and décor to be

designed and installed. The plan will be to create industry buzz for the dine-in

business through a number of soft openings to industry critics enabling better service

and tweaks before successfully opening to the public.

While this process is going on the lunch offering can be launched and operated on the

six days per week basis to generate revenue before the dinner launch.

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Promotional activity during the day for lunch hours will be via flyers strategically

handed out to consumers in close proximity high foot traffic areas.

The implementation of the two business aspects are separate and the strategies to

implement must reflect so. According to Keller (2008) the brand positioning strategy

of the lunch menu will follow the main competition in the market with the healthy fast

food theme providing another choice for the consumer and competition for the share

of the wallet.

The dine-in offering from Sabor & Salud will be more differentiated in that the

competition already exists for Mexican themed food restaurants. The brand

positioning will emphasise the health aspect of Sabor & Salud over the competition.

Using this analysis the implementation approach for lunchtime will be one of

alignment with the competition, and dine-in will be focus strategy based on

differentiation (Fisher, Romaine, & Zamora, 2009).

Strategy measurement

The ultimate measurement of the strategy success will come at the end of the first

financial year where financial reports show that the company has exceeded the targets

set by the directors. The breakeven goal according to the financial analysis is easily

achievable.

Throughout the financial year however, the directors will meet and incorporate the

staff to get feedback and share thoughts on the business tactics. Involving the staff

will ensure ownership and teamwork values are included in the working environment.

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These meetings can address;

- Strategic issues

- Deliver new initiatives

- Provide training

- Provide praise or corrective measures if required

- Brainstorming on new and creative ideas

These measures will be a direct response from consumer attitudes and needs and

providing a positive direction addressing any strategic issues. The measurement of

the strategy will ensure all the business criteria are being met including staffing and

food costs being the two most costly business expenses. Ratio control will be very

important in maintaining business costs and the brand image of healthy food. The

identified criteria must be closely monitored to maintain control.

By creating an action plan the managing director will have a set of business controls

to monitor the daily operations and the long-term strategic direction.

Strategy evaluation

The overall business strategy of differentiation will be established through the daily

transformations of the business however, the individual strategy evaluations for each

service will require market monitoring of the competition and internal evaluation.

Secondary research using quantitative data will identify the target market size in the

area of which the business will operate. By identifying the target market size the

market potential will be known. An increase in business will be an obvious indicator

that the competitions market share is being eroded.

By evaluating the market and business conditions a control process to gauge the

success will decide whether existing strategies are successful or corrective action is

necessary.

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The evaluation process will incorporate monitoring processes and utilizing the

following steps;

1) Identify the measurements

2) Define the targets of the measurements

3) Evaluate performance

4) Justify results

5) Take corrective action if necessary

For Sabor & Salud, the measurements to be evaluated will be consumer response and

financial based. Since many companies often fail within the first eighteen months of

operations, it will be crucial for the business to reach the desired consumer

relationship while being profitable.

Business Financials

Sabor & Salud will be a director only self-funded restaurant project and no other

investors will be required for the start-up process. Long term this strategy will ensure

ultimate control over the brands direction and success. Retaining this control will

yield substantial return on investment when company’s success leads to potential

franchising of the brand idea.

To begin it is estimated that a breakdown in costs for the first premises start-up is as

follows;

Fixed costs

- Secure premises in high foot traffic central location $12,000 monthly

- Décor suitable for the lunch time fit out and dine-in restaurant $30,000 one off cost

- Managing director $80,000 salary per annum

- Website design $5,000

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Variable costs

- Head chef, designer of meals $80,000 per annum

- Two chefs for diner service $50,000 per annum

- Dinner front of house staff x3 $16 hourly rate 6 hours

- Lunch time casual staff x3 average $16 hourly rate 6 hours

- Marketing efforts, promotional activities $10,000

Totalling all the fixed and variable costs we see that the first year operations costs will

value $570,000. Maintaining the same structure for financial year two the total costs

will be lower because of the décor and website already being established.

Food costs

Using a formula that values the food costs as 1/3 of the selling price of the meals we

will see a total estimation of the all fixed, variable and food costs as below using a

break even method.

Breakeven point = Total fixed / variable + Food costs

$760,000 $570,000 $190,000

In the second year of operation using these figures an approximate $35,000 return on

investment will be available to the directors to be reinvested into growing the sales or

expanding into a new location.

If we suggest that our business turnover will be 55% for lunchtime sales and 45% for

our dinner turn over it means that lunch menus must reach a target of $418,000 and

dine-in must return $342,000, both of these figures are achievable within our business

plan.

Using the average sell price of meals from our quantitative research we can use the

below to see expected results for a break even analysis;

$418,000 / Average lunch selling price $9 = 46,400 meals

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Using a figure of 312 working days a year because of the six days of operation per

week will provide an average of 148 meals per day. In a high foot traffic environment

centrally located this figure will be easily achievable.

$342,000 / Average selling price of a dinner meal $26 = 13153 meals

Using the figure of 312 working days in the year, an average of 42 meals per day is

under the capacity of what the restaurant is resourced to do. This is a relatively low

figure as our estimates for an average covers per night will be approximately 60-80.

Taking into account that the figures for both lunch and dine-in do not include

additions such as expenditure of beverages, the profit of Sabor and Salud is calculated

at a worst case scenario. The figures suggest that a return of investment is available

to the stakeholders two years after start-up operation begins.

Using figures from Statistics New Zealand (2011) the projected market share for the

business will come from the restaurant and food sector. The Auckland share of this

figure is 31% of the national total of 18,000 businesses. Therefore a figure of

approximately 6,000 food outlets shows very high levels of choice for the consumer.

The market following strategy of the lunch menu will place Sabor & Salud in direct

competition from the likes of Subway & Pita Pit.

Since the figures are not known for annual turnover of these businesses we can

highlight the direct competition and its proximity as a market share indicator as

demonstrated in the following grapy.

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This demonstrates that for consumer choice, direct competition will come from two

brands Subway & Pita Pit in similarly located areas. The qualitative research

identified that proximity is one of the main concerns when purchasing lunch.

For dinner travel was identified by Interviewee’s 1, 2, 3 (2012) as less of a concern as

it is seen as more of an experience. It is therefore we can accept that all dine-in

establishments are competition however direct competition comes from the four other

Mexican establishments identified earlier. This equates to a market share of 20% for

this theme of restaurant. The market share of the total market cannot be generated

because of the size however, the projections for the breakeven point of 42 meals per

evening service according to secondary research performed online is below the daily

average for a new restaurant.

Market share in proximity

Subway

Sabor & Salud

Pita Pit

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Recommendations

The strategic recommendations within this report suggest that the proposed business

of Sabor and Salud using the outlined strategy will ultimately be successful within the

first year of operations.

The two pronged strategy business model for Sabor and Salud must deliver on both

business aspects of lunch and dinner and rely heavily on the daily business

transformations needed to do so.

Highlighting the differentiation between the two very different offers of lunch and

dinner will help the consumer to understand the business by communicating the brand

category’s separation by educating the consumer target market on this exciting new

take on a restaurant.

The marketing communications must be clear on the business offerings to;

a) Provide a fast, consistent healthy Mexican lunch taste

b) Produce a great tasting healthy Mexican dining experience

Using a strategy of differentiation for the business model will create a business not

seen in New Zealand before. The lunch offering must follow the market leaders

offering a new and exciting choice to the consumer, while the dine-in experience must

deliver on the brand promise of a great tasting healthy experience.

With fresh business enthusiasm and strategic control, Sabor and Salud is positioned to

become very popular in the food market delivering on the brand promise of offering

‘The Healthy taste of Mexico’.

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References

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Charbonneau, S., Chitty, H., & Stuart, M. (2009). Marketiing - real people, real choices. Auckland: Pearson.

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Insight, Imagination and Innovation. New York: New York University Press.

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Mealey, L. (2010). Types of Restaurants. Retrieved June 07, 2012, from About.com: http://restaurants.about.com/od/glossaryofterms/a/Concepts.htm

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http://pitapit.co.nz/stores# Romero, D. (2012). Customer Based-Brand Value Analysis. Auckland. Sedghi, A. (2011, June 22). What's your favourite food? See how they change from

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