Current Marketing Situation & Environmental Analysis March 2010

Lauren Izard, Eric Leiberman, Angela Puleo, Jordan Friedman, Andrew Kenner

Current Marketing SituationI. Company Analysis

1. What are the core competencies of Zumi Sushi?i. Service Format (1)

Fast casual service Zumi employees remain after food delivery to explain products to customer

ii. High Quality, Healthy Food (1,2)iii. Uniqueness of Experience (2)

2. What is the value proposition of Zumi Sushi catering?o High quality of product and service for the low-mid range price

3. What are Patrick Burke’s marketing and financial goals for the catering business of Zumi Sushi?o Brand catering separately from rest of business, establish trust with brand (1)o Accessibility, Reliability, Unexpected (1)o Make a “wow” impression that helps expand the entire business, create a unique experience for

customer (1)o Get at least one marketing customer on the books every day (1)o Customization of different events (1)o Use catering business as marketing tool (1)o Track customers with free open-source Customer Relations Management (1)o Engage more with Belmont, Lipscomb, Vanderbilt students (1)

Market OverviewI. Customer analysis

1. Who are the customers?a. Please refer to Figure 1.0: Catering Industry Products and Service Segmentation Graph (5)b. Student groups

i. Currently second most profitable group in terms of volume for Zumi(6)ii. Potential for expansion of both catering and restaurant business in high volumes

iii. In the Customer Survey, 70% of respondents said they had a student event caterediv. In the US Catering Industry, this group is in the Other Parties segment that only

comprises 15% of the market v. However, with its location near Vanderbilt with 11,847 students, Belmont: 4,742

students Lipscomb: 2,744 students, they comprise a large potential customer base (4)c. Corporate Functions

i. Currently largest volume customers for Zumiii. Potential for expansion with marketing to more companies in Davidson County

Davidson County population in 2008: 626,144 (7)o Total number of firms 2002: 54,257 (7)

iii. Also potential for profit from Seminars/Conferences, Corporate Functions/Product Launches, and Retirement Parties which combined offer 36% market share (5)

d. Weddings & Special Events i. Currently most profitable group in terms of cost per event, however not a high volume

of this type of event requestii. Within the industry Weddings have the greatest market segment at 22% (5)

iii. More high-end requests and greater customization needed for these events2. What are their needs? What experiences do customers seek?

Figure 2.0: Primarily Quality Food, Service, Uniqueness of Experience in addition to: Fair Price for Value of Products & Services Customization of events (6) “Wow” experience, “non-embarrassment” (6) Reliability & Accessibility (6) Healthy, innovative, flavorful food with artistic presentation (6)

3. Who are the driest tinder?o Corporate women ages 25-50

Student Events were 70% of reported events on Survey however only 10 people responded, students do not have same buying power as corporate, older generation

22% of National Catering Industry market is in Corporate Functions

More women than men eat sushi (3) Young adults 25-34 are more likely to dine at Asian restaurants and consider sushi a

trendy food (3) II. Marketing Demographics & Growth

1. What is the size and growth of the market for Zumi Catering?a. Fast Casual Industry

i. 14% Annual growth each of the past two years among fast- casual concepts (8)ii. In a recent consumer survey, respondents said they are eating at fast casual

restaurants 2.5 times more than at Quick Service Restaurants on a weekly basis. The study also showed that the two most powerful buying demographics, 35-49 year olds and 50-62 year olds, frequent fast casual restaurants more often than any other restaurant type (1)

iii. Implications: The demographics that contribute to growth in Fast Casual Industry are the same as those in the corporate group that Zumi targets for catering - these customers are easiest to access for catering because they will come to restaurant

b. Japanese Cuisine, Sushi Industryi. Core target market is family-oriented consumers 35-54 years old with high income

levels. (3) This data, combined with age groups that frequent fast casuals suggests Zumi attracts the strongest age demographic from 25-62.

ii. See Figure 3.0 Sushi Restaurant Sales 2000-2013 iii. Sushi sales have grown at a steady rate for ten years and are expected to continue to

rise until 2013 with annual growth rates from 9.1-11.1% in the period 2000-2013 despite the poor economic conditions (3)

iv. Implications: Zumi began in recession and has been able to thrive and its main food item is expected to resisted the downturned economy, indicating future growth

c. Catering Industryi. U.S. Catering Industry: 10,000 companies, combined annual revenues of $5 billion (5)

ii. Restaurant Industry sales projected to reach $580 billion in 2010, a 2.5% increase over 2009 sales and the eating-and-drinking place segment expected to show the strongest growth in 2010 is social caterers, whose sales are expected to increase by 4.5% (9).

iii. Estimated 75% of industry revenue from special events for households, 25% from lavish businesses events with more guests and larger budget per person (5)

o Zumi currently sees the opposite trend - this data could represent an opportunity to market more to household events

iv. Figure 4.0: Historical Performance of Industry v. Figure 5.0: Historical Revenue Size and Revenue Growth Rate

vi. Implications: Zumi has opportunity to capitalize on this stable industry by targeting small specialized events because unique but not overly extravagant or expensive

III. Market Trends1. What market trends will affect the catering business of Zumi Sushi?

a. Fast Casual Industryi. Fast Casual Restaurant customers want meal customization, restaurants with

entertainment, sophisticated themed décor, special event menus, and chatty waiters, all of which Zumi catering provides though lacking in entertainment (1)

ii. For fast casual the new targets are dinner and between-meal occasion (1)iii. Implications: Sushi is already aimed at lunch, dinner, and between meals and given

projected growth and popularity of fast casuals, with its unique Japanese twist, and service format Zumi could be very competitive

b. Japanese Cuisine, Sushi Industryi. Ethnic cuisines and flavors are hot menu trends this year, including regional ethnic

cuisine and fusion cuisine. Consumers are interested in trying French, Spanish, Japanese (other than sushi), Thai, Cajun/Creole, soul food and sushi (9)

ii. Growth in specialty foods market due to globalization, greater interest in high-quality ingredients, more disposable income available for non-discretionary food purchases, and education on foreign food traditions (2)

iii. Sushi among fastest growing menu items in all types of restaurants across the U.S. (3)iv. Implications: Sushi Industry growth historically has been strong and is projected to

resist downturn of economy due to cultural and social factors Zumi can capitalize on. c. Catering Industry

i. Since recession in 2008 trend toward hosting fewer events, particularly extravagant ones, and cutting guest lists due to lower disposable income (5)

ii. Off-site catering orders from businesses and pharmaceutical reps represented $18.5 billion market opportunity in 2007, larger than the $17 billion estimated size of the entire fast casual market (11).

iii. See Figure 6.0 Projected Revenues and Revenue Growth for US Catering Industry iv. Implications: Though recession has cut events, industry volatility is low (5) Zumi has

potential to grow within stable industry and seize opportunities beyond fast casual.

SWOT AnalysisPositive Negative

Internal Strengths:

- Menu offers combination of customizability and straightforward menu options

- Quick and efficient fast-casual service - True to Value Proposition: Low prices

for high-quality food: of all items on the menu only two entrees cost over $10

- Inclusion of a kid’s menu is a strong differentiator

- Location in Hillsboro Village: proximity to corporate businesses and college students

- Strong touchpoint: website efficient with clear image of restaurant, quality of food, price-points, and service format

- Brand recognition and value: Excellent color scheme in the logo itself and the images of food on the website utilize orange and red (brain perceives colors along the yellow red spectrum as appetizing with respect to food) (7)

- Company is selling understanding of new cuisine, caters to art of experiences

- Stresses individual lifestyle compatibility, demonstrates accessibility and respect

Weaknesses:

- Lack of exposure because new business: superpages.com doesn’t list Zumi Sushi when searching for Japanese Sushi Restaurants. (5)

- Handwritten Catering Order Forms leave more room for human error and confusion

- Negative Touchpoint: Several customers have stated that the restaurant has a cold, “corporate feel” to it, may deter them in terms of creating an atmosphere for catering event (4)

- Online reviews often mention “mediocre”(9)

- Limited sushi offerings (75-85% of catering menu items are hot Japanese kitchen items) which may hurt ability to draw sushi enthusiasts

- High quantity of fried sushi rolls seem in opposition to healthy mission statement

- Misunderstood brand identity- market as fast casual but slightly higher price and higher quality food

External Opportunities:

- Lower barriers to trial with free sample offerings to reduce raw fish stigma

- Referral system to earn customer rewards for word-of-mouth marketing opportunities, capitalizing on Greg Stielstra’s “Trialogue” concept

- Marketing with meaning trend offers potential for charitable offerings

- Greater outreach to student organizations at Vanderbilt and Belmont

- Advertise health benefits to draw health food enthusiasts and outweigh fish stigma

- Indicate greater customization of menu on website for ordering

- Address unstated needs of customer: reduce response time on orders

- Strengthen integrated marketing: online Catering order forms to make process more efficient and reliable

Threats:

- Economy may not rebound soon means lower available disposable income to spend on risky and more high-end Asian cuisine

- Aversion to raw fish, problem since the Zumi Catering name is tied to “Zumi Sushi” so customers may be wary of how everyone at the event will respond to Japanese food, sushi

- Spike in fuel costs that affect deep-sea fishing and transport of fish (8)

- Fish populations – overfishing may affect supply and availability of fish

- Several major restaurants in the area have pre-established successful catering services, could limit entry into market. (2)

- Incoming sushi business with stronger brand identity (1,3)

Competitive AnalysisPrice Services Touchpoints

Virago ~ $19/ person Delivery, Sushi and Japanese catering

Website, word of mouth, email list

Lemongrass Sushi & Thai

$4.50 / 8 rolls~$12.00/person

Delivery, sushi, Japanese, and Thai catering offers

Website, word of mouth

Chipotle $7.75 / personIncludes delivery, no service, comes with burrito and chips

with salsa, sour cream, and guacamole

Website, word of mouth, social marketing, limited

print and TV ads,

Moe’s$10 / person

$20 delivery for orders over $150

Extra charge for delivery with setup, includes full fajita bar

with 2 fajita’s / person

Website, word of mouth, social marketing, print and

TV ads

P.F. Chang’s $18 / person including delivery and setup

Delivery and setup, includes 1 appetizer, entrée with choice of

chicken, steak, shrimp, or lo mein noodles

Website, word of mouth, coupons and direct mail

offers, catering van, sports sponsorships

Panera Bread$10 / person- individual

sandwiches & drinks

$8.50 / person buffet style

Delivery, includes one sandwich, pickle, chips, and

drinks

Website, word of mouth, social marketing, print and

TV advertising, coupon offers

Jason’s Deli ~$8 / personDeliver, includes half

sandwich/half soup, or choice of other menu options

Website, word of mouth, social marketing, limited TV

advertising

Off the Grill Lunch: ~ $7 / personDinner: ~ $10 / person

Delivery, very customizable menu, online ordering, many

choices including burgers, steaks and grilled chicken

Website, word of mouth, social marketing,

Bread & Co. ~ $9 / person

Delivery, customizable menu, standard box sandwich package, buffet style, platters, and desert

also available

Website, word of mouth, social marketing

Otter’s~$8 / person for boxes or

chicken finger plattersDelivery for orders over $150,

choice or salads, chicken tenders, wrap platters, or box

lunches

Website, word of mouth, social marketing, coupon

offers

Pizza delivery chains

(Papa John’s, Pizza Hut, Domino’s)

~$5 / person

While it does not have a real catering feel, delivery pizza is a true competitor in the catering

industry for it’s reasonable price and easy delivery.

Websites, word of mouth, social marketing, coupons, print and TV advertising.

Size and Growth of Zumi Catering Competitors In 2008, fast casual chains led the restaurant industry in growth.

o Mexican segment – led by Chipotle -  20.7% increase in saleso Asian segment – led by Panda Express - 12% increase in saleso Chicken segment – led by Wingstop -23.6% increase in saleso Sandwich segment – led by Panera Bread - 16% increase in sales (1)

Chipotle and Panera Bread posted $1.2 billion and $2.6 billion respectively in revenues in 2008. Chipotle now has over 956 locations trailing Panera’s 1,325 (3,4) Asian fast casual dining recorded record growth in 2008, as led by Pei Wei, a subsidiary of P.F. Changs, that

increased sales to $278 million and made Technomic Incorporated’s top 10 fastest growing chains in their report on the top 500 restaurant chains (1).

Ability of Zumi Catering to meet Identified Customer Needs No competitors satisfy every need, unlike Zumi’s service format (6, 10) As a new company, can use small size by offering more personalized options and services Offers low to mid-range price point of $8-$11 per person in comparison with main competitors and a

greater value for the price because of unique experience and “trendy” factor. Benefits from projected growth of Fast Casual, Japanese Cuisine/Sushi, and Catering Industries

Environmental AnalysisMacroenvironmental Factors

1) Demographic Profilea. Changing demographic: young adults (25-34) are more likely than the average consumer to dine at

Asian or Sushi restaurant – view Sushi as “trendy food”. (1)i. Implications: Zumi can draw in young adults who cannot afford high-end, expensive sushi

and who do not have time for typical sit-down meal.2) Technological Trends

a. Catering companies such as Event Solutions use action stations for food in addition to Sushi (ex. Pizza, chicken, desserts, and coffee). (2)

i. Implications: Opportunity for Zumi to prepare fresh Japanese cuisine at eventsb. Rise of Frozen Sushi

i. One reason Sushi is desirable/expensive is cost/difficulty transporting fresh fish (4)ii. Scientists have found a way to make high quality frozen sushi. (3)

iii. Negative Implications: People may no longer require fresh-made sushi, which would adversely affect Sushi restaurants, and specifically detract from fast-casual concept of sushi

3) Additional Environmental Factorsa. Rising fuel costs and disappearance of world fish population.

i. Implications: Restaurants pay 30% to 50% more for tuna and yellowtail, in comparison to two years ago. (4)

Microenvironmental Factors McDonald’s acquired Chipotle, Jack-in-the-Box acquired Qdoba, Wendy’s purchased Baja Fresh (5) Indicates Quick Service Restaurants emerging as new competitors to Fast Casual Industry and pose threat

to Zumi: In 2008 31.3% of Fast Casual business owners said Quick Service Restaurants were their greatest competition, up from 11.6% in 2007 (5)

Sources

Company Analysis

1. Burke, Patrick. Interview/ Marketing Meeting. 25 February 2010.

2. Marketing Class Survey 2010. http://www.surveymonkey.com/sr.aspx?sm=6H1r_2fXt7buOdh_2bD2EEBERbbfYTWJ5_2b3QnXFNJNlds4k_3d

Market Overview

1. Mintel Academic (2007) . Fast Casual Restaurants Industry Report. http://academic.mintel.com.proxy.library.vanderbilt.edu/sinatra/oxygen_academic/search_results/show&/display/id=236545/display/id=294293#hit1

2. Mintel Academic (2009). National Association for Specialty Food Trade. http://academic.mintel.com.proxy.library.vanderbilt.edu/sinatra/oxygen_academic/search_results/show&/display/id=488643

3. Sundale Research Group (2009). State of the Industry: Sushi Restaurants in the U.S. Sundale. Sundale Research Company, pp.1-8.

4. Nashville Area Chamber of Commerce. Educational Statistics 2007. http://www.nashvilleareainfo.com/default.aspx?Page=EducationalBackground

5. IBIS World Inc. Caterers in the US Industry Report. November 10, 2009. P. 1-30

6. Burke, Patrick. Interview/ Marketing Meeting. 25 February 2010.

7. U.S. Census Bureau. 2010. http://quickfacts.census.gov/qfd/states/47/47037.html

8. QSR Magazine. 2008. “Confounded by Fast Casual”. http://www.qsrmagazine.com/articles/features/115/fast-casual-2.phtml

9. National Restaurant Association. Restaurant Industry Forecast 2010. http://washington.bizjournals.com/washington/prnewswire/press_releases/District_of_Columbia/2010/01/20/DC40690

10. Marketing Class Survey 2010. http://www.surveymonkey.com/sr.aspx?sm=6H1r_2fXt7buOdh_2bD2EEBERbbfYTWJ5_2b3QnXFNJNlds4k_3d

11. Fast Casual. “Fast Casuals Build Catering Business”. 16 December 2008. Chttp://www.fastcasual.com/view_article.php?id=12767&na=1

SWOT Analysis

1. "37212 Nashville Neighborhood in Nashville, TN." AOL Real Estate. AOL Inc., 25 Feb. 2010. Web. 25 Feb. 2010. <http://realestate.aol.com/ldp.jsp?pid=37212&t=2 &name=Nashville&loc=37212>.  

2. Bryant, Linda. "Bread & Co. Still Making Dough." Nashville Business Journal. American City Business Journals, Inc., 23 Jan. 2009. Web. 25 Feb. 2010. <http://nashville.bizjournals.com/nashville/stories/2009/01/26/smallb4.html>.  

3. Isle, Ray. "Sushi in America." Food & Wine. American Express Publishing Corporation, Sept. 2005. Web. 23 Feb. 2010. <http://www.foodandwine.com/articles/sushi-in-america>.  

4. "Re: Zumi Sushi Japanese Kitchen." Web Log comment. Yelp: Real People, Real Answers. Yelp, Inc., May 2009. Web. 23 Feb. 2010. <http://www.yelp.com/biz/zumi-sushi-japanese-kitchen-nashville>.  

5. Superpages.com. SuperMedia, LLC, 23 Feb. 2010. Web. 23 Feb. 2010. <http://yellowpages.superpages.com/listings.jsp?SRC=portals&CS=L&MCBP=true&C=Japanese+Sushi+Restaurants&STYPE=S&L=Nashville+TN&search.x=0&search.y=0&search=Find+It&search=Find+It>.  

6. Zumi Sushi Japanese Kitchen. Zumi Sushi Japanese Kitchen, 2009. Web. 23 Feb. 2010. <http://www.zumisushi.com/>.  

7. Campbell, June. "Color Psychology in Marketing". The Blake Project. 03/03/2010 <03/03/2010>. <http://www.brandingstrategyinsider.com/2008/06/color-psycholog.html>

8. McLaughlin, Katy (2008). Sushi Bullies. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB122480233710964683.html

9. Fox, Carrington. "First Bite: Zumi Sushi." Web Log post. Nashville Scene: Nashville Food Blog. City Press, LLC., 13 May 2009. Web. 23 Feb. 2010. <http://blogs.nashvillescene.com/bites/2009/05/first_bite_zumi_sushi.php>

Competitive Analysis

1. "Fast Casual Chains Lead Restaurant-industry Growth | Pre-Cooked Meats | Fast Casual." News & Trends for the Fast Casual Restaurant. Web. 03 Mar. 2010. <http://www.fastcasual.com/article.php?id=13912&prc=157&page=160>

2. State of the Industry: Sushi Restaurants in the U.S. Sundale Research, 2009. www.sundaleresearch.com

3. York, Emily B. "Panera: America's Hottest Brands Case Study." Advertising Age - Ad & Marketing Industry News. Web. 03 Mar. 2010. <http://adage.com/article?article_id=140482>.

4. "CMG - Chipotle Mexican Grill Inc Company Profile - CNNMoney.com." Business, Financial, Personal Finance News - CNNMoney.com. Web. 03 Mar. 2010. <http://money.cnn.com/quote/snapshot/snapshot.html?symb=CMG>.

5. “Catering Business." Access 2000 Small Business Tips Resource Center. Web. 03 Mar. 2010. <http://www.access2000.com.au/Guides/Startup/startup_7.htm>.

6. Research and Markets: The US Catering Industry Includes About 10,000 Companies with Combined Annual Revenue of $5 Billion. (23  February). M2 Presswire. Retrieved March 3, 2010, from ProQuest Newsstand. (Document ID: 1968327421).

7. Restaurant and Deli. Web. 03 Mar. 2010. <http://www.jasonsdeli.com/>.

8. Otters Chicken. Web. 03 Mar. 2010. <http://www.otterschicken.com>.

9. Panera Bread : Home. Web. 03 Mar. 2010. <http://www.panerabread.com>.

10. Lemongrass Sushi & Thai. Web. 03 Mar. 2010. <http://Lemongrasssushithai.com>.

11. Virago. Web. 03 Mar. 2010. <http://viragosushi.com>.

12. Moe's. Web. 03 Mar. 2010. <http://www.moes.com/>.

13. Bread & Company. Web. 03 Mar. 2010. <http://www.breadandcompany.com/>.

14. Chipotle: Gourmet Burritos and Tacos and Barbacoa. Web. 03 Mar. 2010. <http://www.chipotle.com/>.

15. P.F. Changs. Web. 3 Mar. 2010. <http://www.pfchangs.com/index.aspx>.

16. Sagon, Erica. "Marketing New Focus for Chang's." Arizona Local News - Phoenix Arizona News - Breaking News - Azcentral.com. 29 Jan. 2007. Web. 03 Mar. 2010. <http://www.azcentral.com/arizonarepublic/business/articles/0129biz-changs0129.html>.

17. Off The Grill. Web. 03 Mar. 2010. <http://www.offthegrill.com>

Environmental Analysis

1. Sundale Research Group (2009). State of the Industry: Sushi Restaurants in the U.S. Sundale. Sundale Research Company, pp.1-8.

2. Event Solutions (2010). Action Stations. Event Solutions Company. Retrieved from http://www.eventsolutions.com/glossary/action-station.html

3. Simpson, R., Carevic, E., Pinto, M., & Cortes, C. (2008). Development of Frozen Sushi: Optimization and Shelf Life Simulation. Journal of Food Processing and Preservation, 32.4.pp. 681-696.

4. McLaughlin, Katy (2008). Sushi Bullies. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB122480233710964683.html

5. QSR Magazine. 2008. “Confounded by Fast Casual”. http://www.qsrmagazine.com/articles/features/115/fast-casual-2.phtml

Appendix

Figure 1.0: Catering Industry Products & Services Segmentation 2009IBIS World Inc. Caterers in the US Industry Report. November 10, 2009. P. 1-30

Figure 2.0 Customer Needs according to Marketing Class Customer Survey February-March 2010

Graph indicates customers base decision on quality of food but also almost equally value Zumi’s Service and Uniqueness of Experience when considering them for a catering job in comparison to competitors

Figure 3.0: Sushi Restaurant Sales 2000-2013Sundale Research Group (2009). State of the Industry: Sushi Restaurants in the U.S. Sundale. Sundale Research Company, pp.1-8.

Figure 4.0: US Catering Industry Historical Performance to Current Performance IBIS World Inc. Caterers in the US Industry Report. November 10, 2009. P. 1-30

Figure 5.0: Historical Revenue Size & Growth Rate of US Catering Industry IBIS World Inc. Caterers in the US Industry Report. November 10, 2009. P. 1-30

Figure 6.0: Projected Revenue Size and Growth of U.S. Catering IndustryIBIS World Inc. Caterers in the US Industry Report. November 10, 2009. P. 1-30