Wendy’s Restaurant Expansion Strategy

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Table of Contents

Background Study
Problem Statement
Literature Review
Objectives
List of References

Background Study

A business enterprise is highly affected by its environment that includes economical, marketing, social, and locality factors. All these factors are collectively regarded as the business environment. Business environment is considered as all the external factors that affect the performance of an enterprise in one way or the other.

The economical factors include the economical status of the region where the business is to be located. Other economical factors that are imperative to factor in while considering an appropriate niche to start up a business enterprise are the capital market as well as the social-economical factors.

It is important for a businessman to visualize the economic factors that will affect the business and anticipate appropriate market situations. This will help the business to receive maximum returns with minimal costs. The social environmental factors are also very significant for the success of any business.

The social aspects of a region determine the values of the society that in turn affect the business enterprise greatly. The most vibrant sociological considerations include cultural orientations, customs as well as mobility of labor. Sociological factors affects the work culture, team work as well as the goods and service to be produced that are highly affected by peoples attitudes customs and cultural values fashions.

The social cultural factors determine the code of conduct the business should adapt, the trade unions to follow. Failure to observe the right code of ethics may lead to poor performance of a business enterprise. In some cases, unethical practices such as paying unfair wages or black market may result to intervention measures being taken against such a business enterprise by some government agencies.

The marketing environment is also a very important factor to consider in order succeed in any business venture. The company should adapt appropriate marketing strategies in order to establish a strong brand in the targeted region. Good position of a firm’s products and services is imperative for the success of the business enterprise.

This can be ensured by appropriate differentiation of products and hiring highly skilled workforce that is regularly equipped with appropriate knowledge and skills (Lopez, 2006).Similarly, the shareholders should invest in strategic locations in order to realize returns from their investments.

Densely populated areas and areas that are situated along busy highways are appropriate locations for restaurants investments (Chen, 2003). Therefore, the Wendy’s restaurants should identify such a niche to extend its operations to.

Problem Statement

The Wendy’s Restaurant is facing a lot of competition from its rival brands such as McDonald and Barger King Restaurants among others. The restaurant is therefore in a process of opening new restaurants as an expansion strategy to help it enjoy the benefit of economies of volume.

This will help it cut down its costs of operations in order to help it reduce the prices of its menus which are slightly higher than the prices that are charged by McDonald and Burger King Restaurants.

Literature Review

Effective marketing process is very important for the success of any company. The branding process helps people to form a positive perception towards a company’s products and services. The marketing process helps a business enterprise to close up the gap between what a firm promises and what it delivers (Treacy & Wiersema, 1997).

A strong brand is the brand that is successful in delivering what it promises its customers. One important factor that a firm should consider while branding is establishing a competitive edge over its rival brands. The only way that a company can be able to establish a competitive advantage over its competing brands is by strategically positioning its brands (Sharp & Dawes, 2001).

A sure method of positioning the products of a company is by the use of differentiation process. The differentiation process helps an organization to differentiate its products or services from the others in order for them to be in a position to stand out more effectively. The company can differentiate its products/services by the use of Unique Selling Proposition (Piana, 2003).

This strategy involves the use of advertisement to relay a product’s/service differentiation. The differentiation process is known to cause monopolistic competition. This gives such a company a competitive advantage since monopolistic competition requires the substitute products from the rival brands to be perfect substitutes.

A company can differentiate its products through unique packaging or an advertizing theme. Through this process, the company does not necessarily require to alter its product.

Thus, the differentiation process occurs as a result of the buyer’s perception of a difference. In some other cases the differentiation process is functional. Through this process differentiation results to a change in the quality that is often accompanied by a rise in the price, a change in functional features or design (Wilsons, 2007).

The differentiation helps a brand to enhance its sales by overcoming direct competition. This is because as a product/service becomes more unique, categorization decreases and thus draws fewer comparisons with substitute products from competing brands.

An effective product differentiation helps a brand not to compete with substitute products based on the prices, but on other factors such as distribution and promotional strategies (Porter, 1998). The differentiation process is a very effective strategy in the restaurant industry which is very competitive.

The use of effective differentiation is the reason that has helped restaurants such as McDonald, Burger King and Wendy’s flourish well despite the thriving stiff competition (Treacy & Wiersema, 1997).

The success of any business is highly determined by its location. The successes of restaurants are highly affected by the location of the restaurants. The location of a restaurant determines many aspects of the hotel. For instance, the location of the restaurant will determine the type of menu to be offered.

Customers from various cultural backgrounds differ in their dieting habits. The Asian, white and blacks differ greatly in type of foods that they like. While the Asian prefer a lot of spices in their foods, the white and especially the Americans prefers fasts foods, while the African likes heavy foods.

Therefore, identifying strategic locations will determine the type of menu to offer to your customers depending on their cultural orientations. The location of the restaurant will also influence the number of customers who will visit the restaurant. The restaurant should be located in those areas that are densely populated in order to attract many customers.

Alternatively, the restaurant should be located in an area where many people pass so that to increase those people that visits it (Matere, 2003). A restaurant should be located in an area that has enough space for parking. Adequate parking space will facilitate the number of customers that will visit the hotel.

If the hotel does not have sufficient parking space, it should ensure that where it is located there is a nearby public parking. Since most restaurants are located along highways and free ways. The restaurants owners should make sure they locate their restaurants in places where they are easily accessible.

Locating hotels in areas where they are concealed hinders the number of people visiting such hotels. New restaurants should also be located in areas where they are highly visible. That is the reason why property prices in down towns and developed places are higher than other areas (Kotler & Kevin, 2006).

The pricing of the Menu is another important factor to put into consideration when designing the menu. This helps to determine the amount of money to charge in order to realize a profit. The costs of food and food proportions are two vital methods that help in the pricing process (Tabby, 1999).

Food cost is the menu price of a certain meal in relation to the cost of the food used to make that dish. The amount of money one uses to pay for the food determines how much you will sell the food. It is advisable for a new restaurant to make sure that it charges its customers a price that relates with the prices charged by other local restaurants (Lin, 2003).

Mostly the prices of menus should be approximately 30-35% above the cost of foods. This pricing is reasonable since one has to consider other factors involved such as paying the employees and paying for other bills such as electricity and water bills. Portion control is another factor that determines the success of any restaurant.

Those restaurants that are successful are experts in handling food portions (Mealey, 2004). Mergers, acquisition and franchise are appropriate strategies that restaurants should adapt to extend their operations in order to maximize their returns (International Franchise Association, 2006).

This study will entailed both primary and secondary research methods. The secondary research involved a review of articles, Journals and books that discuss about running and managements of restaurants. On the other hand, the primary research will be a survey. The survey will include sampling a number of people that will help in realization of the research objective.

The number of those people that will be sampled will be 50. The people that will be interviewed will consist of those people that resided or work close to the region in the United State where the Wendy’s restaurant s aspires to extend its operations. The researcher will use random sampling in order not to be biased.

This will help to increase reliability of the research outcomes. The researcher will first conduct a pilot study prior to the actual research in order to help him/her to eliminate any errors that may be present in the questioners anticipated to be used.

Objectives

The main objective of the research is to establish the viability of the Wendy’s expansion in the desired niche.

Specific Objectives

To find out whether majority of those people that live nearby take their foods from home or restaurants.
To find out whether the people around are comfortable with the quality of meals and services they receive from the local restaurants.
To find out the type of meal those people prefer.
To find out how much money these people spend on their meals daily

Research Questions

Do you prefer taking your meals from home or in restaurants?
Are you happy with the amount of money you pay for your meals?
What type of meal do you take for breakfast, lunch and supper?
How much money do you spend on your meals?

The researchers will use both closed ended and open ended questions as its instrument for collecting the required data. The closed ended questions will help the researcher to limit the respondents to specific questions. On the other hand, the open ended questions will help the researcher to get new insight in the research which he/she could have ignored (Cooper & Schindler, 2003).

Ethical Considerations

The respondents will be assured that the information that they will be given will only be used for the purpose of this research only. In addition, they will be guaranteed about the confidentiality of the information they will give.

Anticipated Results

The researcher is likely to find that approximately 40% of those people that he will interview prefer taking their meals from restaurants. The researcher is also likely to learn that more than 50% of those people that will interview are not happy with the quality of meals and service they receive from the local hotels.

The large number of dissatisfaction is likely to result because the place where Wendy’s intends to extend to is not served by well established restaurants such as Wendy’s, McDonald, or Burger King that have high quality meals and services (McDonald’s Holdings,2006). Because the area is mostly habited by middle class group, the researcher is likely to identify that the respondents spends approximately $ 300 per day for their meal.

List of References

Chen, Y. D., 2003, Food and Beverage Management Theory and Practice, Taipei: Yang-Zhi Culture.

Cooper, D. R. & Schindler, P. S., 2003, Business Research Methods, NY: McGraw-Hill. International Franchise Association. 2006. Web.

Kotler, P. & Kevin, L., 2006, Marketing Management (12 Ed.), New Jersey: Prentice Hall.

Lin, Z. M., 2003, Quality stems from customer’s needs, Journal of quality, 39(9), 51-52.

Lopez, J., 2006, The Importance of Workforce Trainings, New York: Prentice Hall

Matere, J., 2003, Strategic Location for Restaurants, London: Cambridge Press.

McDonald’s Holdings, 2006, Management Strategy. Web.

Mealey, L., 2004, How to Price Your Restaurant Menu, London: Cambridge University Press.

Piana, V., 2003, Product Differentiation, New York: Prentice Hall.

Porter, M. E., 1998, Competitive advantage, NY: The Free Press.

Sharp, B., & Dawes, J., 2001. What is Differentiation and How Does it Work? Journal of Marketing Management, 17, 739-59.

Tabby, M., 1999, Restaurants, New York: Prentice Hall.

Treacy, M. & Wiersema, F., 1997, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, NY: Perseus Books Group.

Wilsons, P., 2007, Strategic Management, New York: Oxford University Press.

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