The document analyzes the market share and financial performance of several restaurant chains, finding that Darden Restaurants has the largest share at 62% and the top four companies combine for 28.8% market share. It also compares the business models and financial metrics of Red Robin and Buffalo Wild Wings, noting that Buffalo Wild Wings has a higher profit margin at 5.69% of sales compared to Red Robin's 2.09% due to its focus on alcohol sales. Finally, it discusses strategies these companies could employ related to marketing, operations, and financial management to improve their competitive positions.
7. -Several locations & fluctuations in target market
-Advertising costs would stabilize and be more
effective
- By stabilizing brand reputation
-lose some customers
-new guests from the desired target market
-increasing revenue
8. Cost slightly increase
Original decrease in
revenue outweighed by
increase in revenue due to
the nature of the
repurchasing cycle
Revenue increase at
higher rate than
costs, increasing profit
margin
Financial Connection Loading Oriented Strategy
9.
10. Red Robin Buffalo Wild Wings
6% Food & Non Food & Non
Alcoholic 24% Alcholic
Beverages Beverages
Alcoholic
Beverages
Alcoholic
Beverages 76%
94%
11. Red Robin Buffalo Wild Wings
2009 2008 2007 2009 2008 2007
Profit Profit
margin % 2.09% 3.12% 4.01% margin % 5.69% 5.78% 5.96%
of sales of sales
Asset Asset
1.40 1.43 1.39 1.74 1.73 1.67
turnover turnover
Return on Return on
assets 2.93% 4.45% 5.59% assets 9.92% 10.02% 9.97%
(ROA) (ROA)
Equity Equity
2.08 2.27 1.93 1.47 1.42 1.39
multiplier multiplier
Return on Return on
equity 6.10% 10.09% 10.78% equity 14.62% 14.24% 13.87%
(ROE) (ROE)
12. Red Robin Buffalo Wild Wings
COGS % of sales COGS % of sales
‘09: 23.68% ‘09: 27.40%
Profit Margin % of Profit Margin % of
sales ‘09: 2.09% sales ‘09: 5.69%
Alcohol costs more to purchase, but more money is made off of
selling alcohol, thus profit margin increases
13.
14. Red Robin’s internal structure
•Employees
•Guests
•Shareholders
15. The Operating cost of Red Robin is higher
than that of Buffalo Wild Wings
◦ Red Robin values their employees first
◦ RR labor costs 34.78%
◦ BWW labor costs 29.99%
◦ RR’s lower profit margin percent of sales of 2.09%
compared to BWW 5.69%
16. Marketing Microeconomics
◦ Targeting the right market ◦ Red Robin is going to
◦ Red Robin Revenue ‘08-’09: return to television ads
-3.24% in 2010 but fear they
◦ Buffalo Wild Wings Revenue may not be able to
‘08-’09: +27.6% compete with
competitors
2009 2008 2007 ◦ An unnecessary
Advertising expense
Costs ◦ Successfully compete
Red 17.2 mil 24.4 mil 16.5 mil against competitors
Robin with established
programs
Buffalo 17.5 mil 13.5 mil 10.5 mil
Wild
◦ Promotions to keep up
with competitors
Wings
17. Cohesive Brand
Reputation
Returning Guest
Incentives
Utilize Late Night
Maximize profit
margin
Increase ROE
Editor's Notes
-monopolistic competition-a few large firms and many small firms with small market share-industry worth $54 billion-4 C ratio low concentration, below 50%-HHI below 1000 = low concentration
-fresh ingredients: sustainable farming, animal welfare -service: rigorous employee training , refer to customers as guest, each diner last 47 min-promotions: made to order
Lack of control of price
some locations may loose some customersbut they will attract new guests from the desired target market, increasing revenue
MODEL after CPKcost would increase slightly because of buying rewards to give away revenue may be lost when percentage discounts are given as rewards, but the hope is that it will bring in many new customers and bring enough customers back to increase revenue at a greater rate than cost to raise profit margin percentages.
We realize…
RR labor costs are 34.78% of total revenueContributing factor
Going out to eat is elastic. Economy is getting better so back to tv ads