ENTR4130 - Vera\'s Burger Shack Consulting Report - Final[ 2069] PDF

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Vera’s Burger Shack - a little bit different! March 24, 2017 Submitted To: Gerald Tritt, Shannon Washbrook Aman Badesha and Mal Badesha Submitted By: Kyle MacPherson, Sean Rackett, Sunil Gill, Palek Trehan and Ziyao Zhou

Statement of Academic Honesty We, as a group, declare that this proposal is entirely our own work and free from plagiarism. Any work that has been quoted or included from outside sources will be properly cited and referenced throughout the report. We understand that any Act of Academic Dishonesty will result in a severe penalty

March 24, 2017 Gerald Tritt, Shannon Washbrook, Aman Badesha and Mal Badesha Vera’s Burger Shack 18660 Fraser Hwy Surrey, BC V3S 7Y4

Dear Franchisor and Franchisee, We are pleased to submit a strategic analysis of the service operations management for Vera’s Burger Shack, specifically the Hillcrest location. This report provides an in-depth analysis of the industry it is operating in, the service concept that it is trying to deliver, the gaps in the delivery of the service experience, and recommendations to improve its ability to deliver the service experience. Lastly, the information that has been analyzed was retrieved through interviews with the franchisors and franchisees, online research, and relevant tools learned throughout the class curriculum. Thank you for the opportunity to participate in this process.

Sincerely,

KPU Consulting Group cc: Dean Ritchey, Kwantlen Polytechnic University

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Executive Summary This report provides a strategic analysis of the service operations management for Vera’s Burger Shack, specifically the Hillcrest location. For the Hillcrest location, the primary issue with the customer experience was the inconsistency in which the three essential traits of Vera’s are exhibited throughout the customer journey rooted in burnt-out primary staff. For the corporate chain, the primary issues included the increasing threat from the competitive landscape as well as communication and control issues between corporate and the franchise network. In order to address these issues, we recommend that Vera’s take a balanced approach and implement the following recommendations:     

Streamlining the communication processes by implementing an internal employee portal website throughout the franchisee network. Enhancing the dine-in customer engagement experience by implementing Ziosks. Creating a restaurant culture and a recruitment plan. Increasing brand awareness by informing clients about its top tier ingredients. Developing existing social media strategies by introducing social media applications.

By implementing a balanced set of recommendations, it will provide benefit to the internal and external factors impacting the organization as well as allow the company to strategically position itself for continuous improvement as the chain expands. To conclude, by maximizing customer engagement and the customer buying experience, we will in turn be maximizing revenue.

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Table of Contents Executive Summary.........................................................................................................................3 Situational Analysis.........................................................................................................................5 Company Overview................................................................................................................................. 5 Key Issues and Opportunity.....................................................................................................................5 Driving need for change.......................................................................................................................... 5

Industry Analysis.............................................................................................................................6 Industry Overview................................................................................................................................... 6 Structure and Performance.......................................................................................................................6 Consumer Food Trend Analysis............................................................................................................... 6 Social Media Trend Analysis................................................................................................................... 7 Competitive Analysis...............................................................................................................................8

Service Concept...............................................................................................................................9 Service Concept - Compiled Conclusion.................................................................................................9

Client Analysis...............................................................................................................................10 Connect..................................................................................................................................................10 Deliver................................................................................................................................................... 11 Improve................................................................................................................................................. 13 Implement..............................................................................................................................................15

Recommendations..........................................................................................................................16 Key Recommendations..........................................................................................................................16 Detailed Recommendations...................................................................................................................17

Implementation Plan......................................................................................................................23 References......................................................................................................................................25 Appendices....................................................................................................................................28 Appendix 1 – SWOT Analysis...............................................................................................................28 Appendix 2 – Porter’s Five Forces.........................................................................................................29 Appendix 3 – Consumer Food Trends and Implications........................................................................30 Appendix 4 – Social Media Trends and Implications.............................................................................32 Appendix 5 – PESTEL Analysis............................................................................................................33 Appendix 6 – Competitive Analysis......................................................................................................34 Appendix 7 – Service Concept Analysis: Mystery Shopping Experiences.............................................36 Appendix 8 – Customer Experience Analysis (3 scenarios)...................................................................41 Appendix 9 – Customer Journey Mapping............................................................................................45 Appendix 10 – Value Chain Analysis.....................................................................................................47 Appendix 11 – VRIO Analysis..............................................................................................................49 Appendix 12 – Social Media Audit........................................................................................................50 Appendix 13 – Recommendation Matrix...............................................................................................51 Appendix 14 – Implementation Plan......................................................................................................52

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Situational Analysis Company Overview Vera’s Burger Shack is famous for its fresh hand-crafted burgers. Founded in 1977 in West Vancouver, Vera’s now has 13 locations across the Lower Mainland with additional locations now in Edmonton and in Ottawa. Vera’s utilizes a franchise network business model for 14 of 15 current locations1. Currently the corporate staff overseeing the organization include four key team members, including owners Gerald Tritt and Noah Cantor2. The franchise has been the winner of various “Best Burger” and “Best in Dining” awards throughout Vancouver for over 10 years in a row3. Vera’s envisions its customer service experience to portray three essential traits: friendliness, authenticity, and cleanliness. Going forward, the primary goals for the company are to capture the growing demand of the fast-casual segment, and to spread its franchising business into new regions of Canada.

Key Issues and Opportunity4 For the Hillcrest Crossing location, the primary issue with the customer experience was the inconsistency in which the three essential traits were exhibited throughout the customer journey rooted in burnt-out primary staff. Staff at this location did not consistently meet expectations in regards to creating a friendly, knowledgeable environment. Failure to conform to these traits consistently threatened the critical touchpoints with the customer and restricted the location from creating loyal repeat clientele. For the corporate chain, the primary issues identified included the increasing threat from the competitive landscape as well as communication and control issues between corporate and the franchise network. With competitors in the burger industry ranging from full service options to fast casual and quick service options, Vera’s must adapt to trends and environmental changes to compete effectively. Quality control issues are a potential downside to franchisee business models; however, this issue has the potential to become a critical concern if not addressed prior to national expansion as failure to do so could be detrimental to a consistent service experience. A critical opportunity that Vera’s can take advantage of is the growth of the fast-casual segment and the future trends impacting the service experience in restaurant dining. Technological and social media changes provide the opportunity for Vera’s to maximize customer engagement, maximize the customer buying experience, and maximize revenue within the servicescape.

Driving need for change Going forward, trends in the food industry point towards an emergence in healthy living food consumption, a desire for transparency regarding food production, and a stronger value on convenience. Technological advances will be a major contributor to the continuous evolution of the food industry by allowing companies to differentiate the customer experience, streamline processes, and reduce costs. For companies to be successful in an increasingly competitive landscape that is seeing disposable income decreasingly being used for dine-in and take-out food 1 [ CITATION Tri171 \l 4105 ] 2 [ CITATION Tri17 \l 4105 ] 3 [ CITATION Ver17 \l 4105 ] 4 Appendix 1 – SWOT Analysis 5

consumption options, companies will need to be innovative in concepts that drive value for the consumer. Failure to do so will leave Vera’s vulnerable to environmental factors that may negatively impact their revenue and the perception of their customer experience.

Industry Analysis Industry Overview The fast-casual segment emerged in North America to deliver a concept that provided the consumer with a hybrid dining experience that provides a middle ground between quick service (fast food) and full service dining5. An experience that offers the value of limited service, high quality, convenience, and a unique experience. As of 2015, the fast-casual segment in Canada was estimated to grow from 5% to 7% annually until 2020 making it the fastest growing segment6. As a major urban centre, the Greater Vancouver to Fraser Valley is a hotbed for growth in the fast-casual segment. For fast-casual gourmet burger chains, the major players include Fatburger Canada (16 locations), Vera’s Burger Shack (13 locations), Five Guys Burgers and Fries (5 locations) and the emergence of outside players including South Street Burger, CaliBuger, Relish, and Big Smoke Burger (1 location each). Globally, fast-casual grew 10.4% ($3.4 billion) from 2014 to 2015 making it the fastest growing food segment7. In Canada, the food industry produces upwards of $75 billion in sales annually and employs approximately 6.9% of Canada’s workforce8. From 2014 to 2015, Canada was projected to see a 4% growth in food service revenue comparatively with British Columbia at 3.9%. The fast-growing food segments are Alberta and Nova Scotia with Ontario continuing to hold the largest volume in sales9.

Structure and Performance The food service industry provides a multi levelled environment divided between large and medium sized chains as well as individual restaurants that compete for consumers within their target market. While the scope of business operations may vary drastically, due to the nature of the food industry, the competition is intense throughout. This is widely due to the consumer being able to easily switch their food consumption choice between options such as home service, quick service, fast-casual, and full service dining which creates competitive rivalry. Due to the emergence of the fast-casual segment combined with an already competitive landscape, this has saturated the food market with options for the consumer10. This saturation to the market has developed competition to remain relevant with regards to the evolving trends in food industry. Food providers are actively competing on the factors their target market value including: food and beverage selection, unique concept (s), promotional activity, technological additions, service quality and consistency, food quality, convenience, and value for the dollar11.

5 [ CITATION Bos16 \l 4105 ] 6 [ CITATION GEC15 \l 4105 ] 7 [ CITATION QSR161 \l 4105 ] 8 [ CITATION Res162 \l 4105 ] 9 [ CITATION GEC15 \l 4105 ] 10 Appendix 2 – Porter’s Five Forces 11 [ CITATION GEC15 \l 4105 ] [ CITATION Ser05 \l 4105 ] 6

Consumer Food Trend Analysis12 Past trends such as the emergence of the fast-casual dining experience and the growth of gourmet burger establishments are beginning to saturate. While growth in these segments continue so does the competitive landscape as competitors begin to translate their service experiences to match value desired by the consumer. Expectations for Canada’s future include an aging population, a shrinking household size, and increased ethnic diversity. Increasing population of senior and ethnic minority groups will demand different food delivery concepts and cuisine. Shrinking household sizes will decrease average basket sizes for families and increases in single persons will decrease available income for food expenditure. The major trends going forward are the evolving change in food consumption patterns including changing meal patterns, shifting expenditures, and taking into consideration healthy living initiatives. In general, consumers are gradually spending less disposable income on food consumption while eating in more sporadic schedules. Being a fast-casual concept, Vera’s Burger Shack may have an opportunity to continue to capture market from full service; however, more contention may be had with quick service and home service type concepts. In the current state and going forward into the future, the consumer will gradually demand healthier food and lifestyles, which includes monitoring food safety and production regulations, taking into consideration available nutritional information, and educating oneself on food products that have potential of harm to one’s health. These will be significant trends that impact Vera’s Burger Shack going forward as consumers demand set expectations and transparency in what they eat. For further information on the implication of food trends going forward, please refer to Appendix 3 – Consumer Food Trends and Implications.

Social Media Trend Analysis13 With social media becoming an effective, powerful tool for businesses, it is important to understand how technology is evolving and how the consumer is reacting to the trends. For businesses, an effective social media strategy can generate customer insights, increase brand awareness and loyalty, provide promotional ad opportunities, increase sales, enhance the customer experience, drive website traffic, help to improve search engine rankings, be a means to review changes with competitors, share and target content about the company’s services, as well as be a mechanism to build customer relationships14. Some of the common trends applicable to Vera’s Burger Shack going forward include, the development of social messaging platforms to connect to consumers, the rise of live video content, use of social commerce, strength of employee advocacy, and the importance of using paid social media advertising. Social messaging is now the most widely used form of messaging platform with the top four contributors being used more widely used than the top four media platforms. With 62% of millennials preferring businesses that communicate in this method, it provides an interesting opportunity for businesses to differentiate their strategy15. As for the rise of authentic content (live video) on social media platforms, it is emerging with millennials 12 Appendix 3 – Consumer Food Trends and Implications 13 Appendix 4 – Social Media Trends and Implications 14 [ CITATION Cop16 \l 4105 ] 15 [ CITATION Roh17 \l 4105 ] 7

rapidly as they are the highest users of live video content. This allows businesses to differentiate the way in which they highlight their products/services, locations, and events to the consumer. As ecommerce emerges, social media is now being used to generate revenue sources for businesses and drive traffic to websites and additional social platforms. Into the future, this will be increasingly used as consumers look to improve convenience with self-service. With regards to employee advocacy, using employees (or franchise owners) to share branding messages, the concept is being a widely-used to allow businesses to spread brand awareness to new audiences and motivate employees to be more involved in driving revenue. The use of employee advocacy in social media has grown 191% since 2013 and will continue to be widely used going forward16. Finally, organic social traffic is becoming difficult to acquire. With the increasing information on feeds, platforms such as Facebook have changed their algorithm so feeds focus more heavily on friends’ posts rather than liked groups and pages. It is now essential to use paid promotion for success. For further information on social media trends, please refer to Appendix 4 – Social Media Trends and Implications.

Competitive Analysis Vera's have done a good job of differentiating themselves in terms of the value they add to the customer.17 To emphasize, when consumers are deciding where to go for a meal, the concept chosen generally falls into three categories that consist of a low-cost provider strategy, best-cost provider, or a broad differentiation strategy. Red Robin, Boston Pizza, and White Spot occupy that best-cost position in the market. Cactus Club and Brown's occupy a broader differentiation position, and A&W occupies a low cost-provider and convenience area. As Vera’s is considered a fast-casual concept, they fall between White Spot and A&W18. Similar concept restaurants such as Nando's and Barcelo's are effectively us...