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Smashburger Strategic Plan, Case Study Example

Pages: 11

Words: 3162

Case Study

Executive Summary

Smashburger developed this strategic plan with the intent of streamlining and updating implementation strategies, strategic controls, and contingency plans for the organization.

Plan Objective

This strategic plan consists of defining the company’s strategy and also defining available resources to implement the strategies. In order to understand these strategies and the available resources we shall evaluate external and internal environmental factors. Information on external factors relating to the company will be attained from U.S Environmental Protection Agency records, the U.S. Securities and Exchange Commission journal, and from the Oxford Companion to American Food and Drink. Information on internal factors for the company will be attained from the company website and other financial records.

Company Focus

Smashburger’s focus over the next five years is expansion. Based on Smashburger’s current success in the states in the U.S. it operates, it is projected that national and also international expansion is on the horizon. Most of Smashburger’s competitors operate around the globe. In fact, at least 78 percent of the overall players in the fast food industry are playing for the top position in several key regions in the world. Smashburger is ready for to expand its operations in this manner as well.

Company Background

Smashburger is an American restaurant chain company with multiple locations throughout the United States. Smashburger originated Denver, Colorado where the first restaurant was established in 2007 by Tom Ryan. The company has since opened several restaurants with burgers as the main dishes. Tom Ryan is a successful veteran in the foods industry and well known for his success in McDonald’s chain restaurants. Initially Smashburger was a single restaurant, operating with minimum resources until 2009, when it received $15 million in investment capital from Consumer Capital Partners to assist in its expansion. This reward came after the company topped in a fast food competition when it was able to perfectly explain how Smashburger burgers are made. After this opportunity, the company increased its target market and managed to open branches in 100 other locations in the United States. However, David Prokupek, the company chairman, stated in a 2012 annual review meeting that the company aims at expanding its services to Calgary, Alberta and also to other locations outside of United States, such as British Columbia and Edmonton.

Organizational Mission and Vision

Smashburger’s vision includes expanding its target market to every state nationally, and also to different areas outside the United States. The company mission is to maximize resources though attaining customer satisfaction. For a long time, since the initial stages of the company, customer satisfaction was the main focus and produced excellent results, according to its founder.

Value Statement

Smashburger is committed to adhering to the highest standards in the industry by providing the highest quality menu items and the best customer service possible. We value our customers and we continually monitor and improve processes to ensure our customers are completely satisfied. In addition, we endeavor to expand our quality products and services on a global scale with the same level of commitment and responsibility.

Environmental Scan

Smashburger’s strategic plan includes attention to both external environmental and internal environmental factors. The company’s external factors center around political, social, technological, economic and legal factors relating to the company. Political factors in strategic analysis require evaluation of the degree at which the government intervenes in the economy. In most cases, this includes taxes, labor laws, tariffs, trade restrictions and besides political stability. Economic factors focus on interest rates, inflation and the exchange rate. These rates dictate how the company effectively exports and imports goods and how products are priced. Social factors, in this analysis, are basically cultural factors that influence market changes such as growth rates and market demographic factors. Technological factors call for a detailed analysis of technology-related incentives. Finally, external environmental factors require analysis of legal factors that will likely influence the company’s decisions.

Smashburger’s strategic plan further focuses on the internal environmental aspects of the company. At this stage, Smashburger identifies general operations of the company, internal decisions and a mission. The most common operations monitored include marketing strategies, production and company vision, and decision making channels. All these aspects act as an eye-opener on the strengths, weaknesses, opportunities and threats of the company. By clearly understanding these sectors of a company, it becomes possible to eliminate risks and exploit opportunities in any given company, irrespective of the industry. An internal environmental analysis can be based from reviews conducted by top management and also from other company records such as financial records, marketing portfolios and web-maintained profiles such as the company website. Continuous analysis of company environmental factors assists in ensuring the company sets achievable goals in a macro-business environment by ensuring the maximization of all available resources.

The most important external environmental factors in Smashburger involve political, social, technological, economic as well as legal factors that affect the business. Political factors involve the intervention of the government with particular interest to issues of taxes, labor laws, tariffs, trade restrictions and political stability.

Economic factors involve the interest rates, the rates of inflation as well as exchange rates which will dictate how Smashburger will effectively conduct its business to gain a market share in the industry. Social factors will include the cultural factors that have significant influence on changes in the market including growth rate together with market demographic factors. Smashburger is also confronted by technological and environmental factors that will potentially influence decisions making process in the business (Armstrong. 2006).

The significant challenges that Smashburger faces involve guarantee a consistent and enjoyable experience for the customers in all locations, cleanliness of the store and unified services to the customers. Smashburger is also concerned about increasing the level of customer satisfaction that is an important precursor in maximizing success in their marketing.

Smashburger has been using survey feedback from the customers in the determination of their unique differentiation and the most important factors that affect their customers. This is followed by creation of scorecards that are used by the store managers for tracking the progress of improvement and performance in the stores. Smashburger has been able to produce the best practices that ensure that the local operators are able to attend comprehensively to the needs and desires of the entire customer population (Armstrong. 2006).

The competitive position at Smashburger is based on their guest experience which has been a significant differentiator in brands in perspective of the restaurant industry. Much of the emphasis of Smashburger is placed on the “Customer Experience Management”, CEM, due to its significant contribution as a vital differentiator. CEM program is an important executive commitment for engaging the guests at Smashburger. The business invites guest to participate in surveys concerning their food quality, the effectiveness of the service staff and the entire dining experience.

Engagement of employees is another important tool applicable for improving the competitive position and possibilities at Smashburger. Smashburger has been committed to hiring the most appropriate employees and this has facilitated in enhancing their engagement, proper representation of their brand and commitment to offering excellent experience to their guests. The business appreciates the employees as the face of their brand since they usually interact with the customers on a daily routine (Armstrong. 2006).

Smashburger has also implemented a policy of responding to the emails from their clients on 48 hour basis while utilizing the web to give comments. The management at Smashburger appreciates the importance of addressing the positive and the negative feedbacks as well and reaching every individual customer at the right time.

Smashburger also makes use of mobile strategies such as employee applications, online ordering, text message, and e-mail communication with guests.

The social media has also enhanced service delivery to the customers due to its cost-effectiveness and impactifulness in reaching directly to the customers (Fahey & Narayman, 1986). Smashburger appreciates the need for consumer empowerment by offering vital tools that facilitate in sharing of experiences with their family members, co-workers as well as friends. Smashburger has made use of social media as one of the most preferred channels in the creation and fostering of a community feeling among the clients.

Risks and Opportunities

Implementation of Smashburger’s strategic plan includes defined risks and opportunities in the marketplace as follows:

Strength – Opportunities: Given that the company is aiming to change the setup of modern fast food chain companies, it is obvious how it is making a great impact on how the modern society accepts their product offerings. At this point, it is the company’s asset that they are able to respond to customer needs depending on the current trend in the industry.

Weakness – Opportunities: Competition is always a part of the business industry, nevertheless, with the cutting edge food offering of the company, it is expected that it would continue to specifically affect the market’s thinking through making sure that it offers something new and something acceptable to the taste buds of its wide array of customers.

Strength – Threats: While it offers several new food offering to the market, losing control of such approach may invoke a part of the company’s losing game in the competition. Strategically balancing the food the company offer to its diverse customers in the market should then be carefully handled.

Weakness – Threats: Given that the company has not gone global yet, its possibility of being secluded in America alone could mean a stagnation of growth. Hence, plans of going global should be established now.

Factors of Influence

As mentioned, Smashburger will evaluate internal and external environmental factors that will have an impact on the implementation of its strategic plan. These factors are as follows:

Political Factors: Notably, competition in the market is tough. With so many different food chain companies to choose from, the market is left to find themselves overwhelmed with the overflowing menus that the businesses offer them with. In facing this challenge, Smashburger intended to create something different through making a menu that is their own and a whole new tweaked taste that would seemingly attract customers who are already tired of the same-old oily food products from fast food. Serving something halfway of a fast food and ala ’carte restaurant, the company is able to reach out to a larger group of customers in the market.

Environmental Factors: Now on its way to promoting earth-friendly packaging, the company is able to make sure that it follows the campaign for green operations that protects not only the environment but also the organization’s reputation in the society as advocates of environmental protection.

Social Factors: Healthy food, as food critics say, cannot be found in fast food chains. This however is being aimed by Smashburger to be separated from their reputation. To do so, producing health wise recipes for salads and healthy veggie-burgers have been established as part of the company’s menu. Continuously researching on other food choices that could be added in the current menu of the company should then be pursued.

Technological Factors: What makes the burgers and other food choices in the menu? Offering more food requires more hands to work in the kitchen and the counter of the stores. Installing high-end IT assistance systems that keeps the operation on the flow even in the midst of peak hours makes it easier for organizations such as Smashburger to reach the customers’ expectations.

Best Strategic Recommendation

Based on analysis of Smashburger’s company history, success in the marketplace, environmental scan and mission, values and goals, the best strategy for growth is to move forward with global expansion.

Internationalization of the business should be considered. With the growing market, more local food industries sprout in every country and if Smashburger does not seize the opportunity now, then it may have a difficult time entering international markets in the future. Understandably, marketing franchise opportunities outside of the American region through the Internet will help in pursuing this initiative. Establishing easy-to-follow payment schemes and profit sharing agendas could best create a more welcoming environment for the international expansion approach. Nevertheless, the company should expect that, along with this desire to grow, comes the challenge of creating new menus and food selections that would be delectable to local population tastes. Balancing the changes in the menu with the overall reputation of the company should be given proper attention in the process of expansion. In reference to this, an implementation plan is included.

Implementation Plan

Smashburger’s expansion objectives are outlined below and include addressing added benefits and challenges associated with global expansion. Knowing that Smashburger is a hit in several states of America, it is safe to say that the organization is ready to branch out. Although the acceptance of the menu is still centralized to provide satisfaction to the American taste bud, it is realized that the company is already geared up to take on more challenges, in exchange for better recognition and a greater possibility of gaining higher profits from an globally expanded operation. The primary problem of this approach would be that the entire implementation of a new plan would be dependent on the desire to expand. This means that the business would be involved in more complications involving political issues, such as legal clearances with international boards or customs and trade policies, cultural differences among workers and menu-choices, along with a whole set of distinctive management issues that may facilitate changing the entire setup of the organization’s local operation.

Objectives

  • To create an internationally-defined business strategy that would bring the Smashburger fever in America towards the different regions of the world
  • To establish a reputation that is well-defined and is easily recognizable in the face of international market operations
  • To make a distinctive condition of operation that would unite all international locations when outside operations have already been set
  • To create a unified culture among workers and authorities of Smashburger which is dedicated to 100% customer satisfaction worldwide

Functional Tactics

The primary functional tactic used in this plan is based on the desire to ensure local markets are served and grow to love what Smashburger has to offer. To this aspect, there are three conditions of focus. One is the establishment of a ground basis of what Smashburger offers, another is the consideration over the society’s established norms, and thethird is the recognition of the organization’s responsibility towards the environment.

These three conditions of operation are expected to make a great impact on how the business and its food is accepted in the other regions of the world. It is then suggested that management be careful enough in providing a good source of competence for their franchisers that no matter how new their name is, they are accepted by the public in any country, thus making profits a lot easier to earn.

Action Items

The creation of a target map is essential. This particular approach determines what particular regions the business first ventures. The choice of regions is based on three specific categories: (a) location; (b) performance of local and international competitors; and (c) openness of possible menus to offer. The need to consider if the menu the business offers would be suitable to the market it serves is that there are some nations that might not be accustomed to eating meat. For instance, India may have some reservations in eating meat, especially since they are known to be a religious country and that meat for them is holy. Relatively, in cases like this, the company should be able to create a new menu that would not totally change what they are known for (delicious burgers) but would offer the local market with what they would want and would accept, possibly veggie burgers.

Milestones and Deadlines

The creation of a target map could be accomplished within three months, including research and feasibility study reports. The documentation on the target regions should be accomplished along with the legal contract needs, detail on the culture of the people in the area, and a report on the performance of the competing industries and businesses in the country. This would allow the management of Smashburger to see the possibilities of growth and avoid instances of jeopardizing any chances of expansion in the future.

Tasks and Task Ownership

Who would be the franchisers? How would they be connected to the main headquarters? And what would the role of the main headquarters be when it comes to deciding on the international stores’ performance, appearance and marketing? Considering that it aims to be unified organization amidst the distance of the branches aimed to be established, franchisers should know the hierarchical arrangement of operations hence making it easier for them to become one with the decisions of the headquarters. Huge fast food companies have already done such an approach to modern business campaign and are relatively gaining much benefit from the said process. McDonalds for instance is gaining much popularity among people [wherever they go] because of the “I love it” motto that the company uses internationally. The said term is translated in different local languages and is continuously gaining attention and market appreciation at present. Learning from this example could best benefit the goal of Smashburger to establish a global name and a global culture that its branches would recognize.

Resource Allocation

When it comes to opening branches outside the country, a relative amount of investment is expected to be released. It could be realized that it is through this that a beneficial source of confidence when it comes to profit earning shall be established. Considerably, through this, such amount of investment could be easily returned to the board of members of the company.

Success Factors

Founded in 2007, Smashburger started with the desire to develop as one of the most loved burgers in every city in America. Understandably, this idea became a fact when it gradually took every single city in the country one at a time. First targeting the hotspots where people are most likely to accept the product the company offers, it has become one of the top burger store choices in both Las Vegas and New York City. Such a success is expected to grow further as the company aims to expand on other particular locations.

Budget

Projected Expansion Costs
Year 1 Year 2 Year 3
Branding $220,000 $325,000 $405,000
Direct Cost of Branding $127,450 $135,000 $151,500
Other Costs of Branding $1,000 $1,000 $1,000
Total Cost of Sales 128,450 $136,000 $152,500
 

Expenses

Payroll $675,000 $780,000 $990,000
Marketing/Promotion/Advertising $100,000 $100,000 $100,000
Insurance $30,000 $30,000 $30,000
Investor Note $55,200 $55,200 $55,200
Rent $150,000 $155,000 $160,000
Legal/Professional Fees $77,000 $77,000 $77,000
Equipment rent/repair 3,500 $5,000 $6,100
Administrative charges $3,000 $3,000 $3,000
Total Operating Expenses $1,093,700 $1,205,200 $1,421,300

Bplans.com

Break-even Analysis
Monthly Revenue Break-even for each franchise (net sales) $97,000
Assumptions:
Average Percent Variable Cost 20%
Estimated Monthly Fixed Cost $19,400

Bplans.com

The break-even is based on fixed costs including payroll, marketing, promotion, advertising, insurance, investor note, rent, legal and professional fees, equipment rent and repair, and administrative charges.

References

Armstrong. M. (2006). A handbook of Human Resource Management Practice, 10th Ed. London: Kogan Page.

Burkhart, P. and Reuss, S. (2003). Successful Strategic Planning: A Guide for Nonprofit Agencies and Organizations. Newbury Park: Sage Publications.

Fahey, M., and Narayman, K. (1986). Macroenvironmental Analysis for Strategic Management. West Publishing.

Smith, F. (2007). The Oxford companion to American food and drink. Oxford University Press.

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