Shake-shack-marketing-ref 4 Shake shack reference for marketing case study PDF

Preview

Summary

Shake shack reference for marketing case study Shake shack reference for marketing case study Shake shack reference for marketing case study...

Description

MKTG 5007 OLB - Major Group Assignment Report

Marketing Plan for Launching

In Toronto, Canada

Report Prepared By: Harmandeep Singh | Paramveer Singh | Devam Hirpara | Varnika Kochar | Savneet Singh | Chandni Patel N01192238 | N01191897 | N01165287 | N01131374 | N01196266 | N01186185

1

Table of Contents

Executive Summary................................................................................................ 3 Overview of the Company....................................................................................... 4 Market Overview..................................................................................................... 6 Situation Analysis.................................................................................................. 11 Product Offering.................................................................................................... 13 Channel Strategy................................................................................................... 15 Marketing Objective.............................................................................................. 19 Marketing Strategy................................................................................................ 19 Mission Statement................................................................................................. 21 Marketing Mix........................................................................................................ 23 Communications Mix............................................................................................. 24 Sales Promotions................................................................................................... 25 Financial Analysis.................................................................................................. 26 References........................................................................................................... 29

2

Executive Summary This report highlights how the objective of entering Canada is going to be a beneficial step for Shake Shack Inc. and how they can leverage upon their identity and offerings to capture a sizeable part of the Canadian market especially in the category of fats casual. The report draws attention towards the current scenario in the fast food market in Canada and how the major competitors for Shake Shack are performing in the sense of the market share each of them acquire. The report also throws light on what strategies Shake Shack can adopt to emerge as a major player in the market and to present itself to the target market as well as the potential targets. In the light of above mentioned, the critical success factor for Shake Shack Inc. in the Canadian market would be to leverage on the product line it has to offer as it differentiates them from the competitors in a significant way. Furthermore the business conduct and the ethical procedures followed by the company gives them a huge advantage vis-à-vis how they can immediately make place in the hearts of the Canadian consumers. The proposed implementation is to expand in the Canadian market by opening a store in the heart of downtown Toronto as it has high population density making it easier for the brand to penetrate the market.

3

Overview of the Company 

About Shake Shack

Shake Shack is a popular American fast casual restaurant chain which is based in New York City. It was founded by Danny Meyer Chief Executive Officer of the Union Square Hospitality Group (USHG). From, its humble beginning in 2001 in a hot dog cart located in the heart of Madison Square Park in New York City, Shake Shack today has grown to over 100 locations and over half a dozen countries worldwide (SHAKE SHACK, 2016). Shake Shack is known to serve the modern day “Roadside” burgers, the menu apart from delicious burgers also include hot dogs, frozen custards, shakes, in-house beer & wine and more (SHAKE SHACK, 2016). 

History

It all began in 2000 when, New York City began the process of rebuilding of Madison Square Park. Danny Meyer was involved in the creation of the Madison Square Park Conservancy to redevelop it. The first project which the redeveloped conservancy did was to host an art exhibit. To cater to the visitors of the art exhibit, Danny set up a hot dog cart, which was operated out of the kitchen of one of Danny's Union Square Hospitality Group (USHG) operations, ‘Eleven Madison’. The idea of the cart was hugely successful and it stayed in operation for over 3 years (SHAKE SHACK, 2016). The next step came in 2004, when the city decided to invite for a kiosk-style restaurant inside the park. Danny saw this as a great business opportunity and thus began the first Shake Shack (SHAKE SHACK, 2016).

4

   

Management Team Danny Meyer, Chairman of the Board of Directors Randy Garutti, Chief Executive Officer Zach Koff, Vice President, Operations

(SHAKE SHACK, 2016) 

Tag Line

“Stand for something good” 

Product Line

Shake Shack product line includes the following products:  Burgers: 100% all natural angus beef, 100% all natural cage free chicken  Flat Top Dogs: 100% all natural Vienna beef  Fries: Crinkle cut Yukon fries and cheese fries  Frozen Yogurt: Rich and dense frozen custard  Drinks: Shack-made lemonade, fresh brewed iced tea, Fifty/Fifty (Half lemonade-Half Iced tea), in-house beer wine  Dog Food: Shake Shack has a special menu which includes biscuits and creams (SHAKE SHACK, 2016) (Kramer, 2010)

5

Market Overview Our research and study concludes that Tim Hortons and McDonald’s currently have a major share of the Canadian Fast Food Market in Canada. Tim Hortons leads all charts with over 26.8% of market share in 2015. It is closely followed by McDonald’s with a market share of around 14.6%. The next category of brands with a significant share are Subway with 6.8%, A&W with 4.4% and KFC with 2.6%.

Tim Hortons had a yearly sale of 6,667.20 (CAD Million) in 2015. McDonald’s recoded the second highest sales in terms of CAD Million in Canada in 2015. Its sales were almost half of the leader Tim Hortons with sales of 3,627.10 (CAD Million). This shows us the huge lead Tim Hortons enjoys when it comes to sales in Canada. Reports suggest that Canadians spent almost 8398.1 (CAD Million) in 2015 on Burger fast food chains in Canada. 1064.0 (CAD Million) was also spent the same year on independent burger fast food joints in Canada

6



Current Market Share of Fast Food Chains in Canada

S. No 1 2 3 4 5 6 7 8

Brand

2010

2011

2012

2013

2014

2015

Tim Hortons McDonal d's Subway A&W KFC Wendy's Burger King Harvey's

-

-

-

-

26.50

26.80

15.50

15.10

15.00

15.10

14.60

14.60

6.20 3.90 3.30 -

6.30 3.80 2.80 2.50 -

6.40 3.90 2.80 2.50 -

6.60 4.00 2.70 2.40 -

6.80 4.10 2.60 2.40 1.40

6.80 4.40 2.60 2.30 1.40

0.90

0.80

0.80

0.80

0.80

0.80

7

Canada Current Market Share of Fast Food Chains in Canada (In Percentage) 30 25 20 15 10 5 0

2010

2011

2012

2013

2014

2015

(Passport GMID)



Yearly sales of popular fast food chains (In CAD MN)

S.N Brand o 1 Tim Hortons 2 McDonal d's 3 Subway 4

A&W

5

KFC

6

Wendy's

7

Burger King

2010

2011

2012

2013

-

-

-

-

2014

6,339. 40 3,153.6 3,242. 3,324. 3,463. 3,502. 0 00 90 40 90 1,262.8 1,352. 1,420. 1,518. 1,626. 0 20 50 70 90 804.70 823.90 867.7 913.30 985.6 0 0 669.10 604.70 613.7 613.30 621.4 0 0 539.40 551.0 558.10 571.9 0 0 340.1 0

2015 6,667. 20 3,627. 10 1,684. 60 1,081. 80 637.5 0 583.7 0 341.6 0

8

8

Harvey's

184.70

179.90 179.2 0

178.80 182.2 0

190.8 0

Yearly Sales (In CAD MN) 8000 7000 6000 5000 4000 3000 2000 1000 0

2010

2011

2012

2013

2014

2015

(Passport GMID)



Average spending on American fast food in Canada

CATEGOR Y Asian Fast Food Bakery Product Fast Food Independ ent Bakery Burger Fast Food

Sales In Fast Food By Category (In CAD Millions) 2010 2011 2012 2013 2014 2015 599.4

644.5

667.3

702.3

750.0

773.9

8057.2

8721.0

9139.1

9573.7

9949.0

10335.0

863.6

912.6

949.4

961.6

987.9

993.9

6758.9

7045.9

7281.7

7569.4

7980.9

8398.1

9

Independ ent Burger Chicken Fast Food Convenie nce Store Fast Food Asian Fast Food Bakery Product Fast Food Independ ent Bakery

924.3

979.7

1000.2

1015.8

1046.7

1064.0

988.0

951.4

955.2

941.7

923.5

935.9

874.2

894.9

886.6

903.4

932.7

982.7

599.4

644.5

667.3

702.3

750.0

773.9

8057.2

8721.0

9139.1

9573.7

9949.0

10335.0

863.6

912.6

949.4

961.6

987.9

993.9

10

SALES IN FAST FOOD BY CATEGORY (in CAD Millions) 12000

10000

8000

6000

4000

2000

0

2010

2011

2012

2013

2014

2015

Asian Fast Food

Bakery Product Fast Food

Burger Fast Food

Independent Burger

Independent Bakery Chicken Fast Food

Convenience Store Fast Food

Asian Fast Food

Bakery Product Fast Food

Independent Bakery

11

Situation Analysis SWOT Analysis Strengths  Brand awareness and recognition  Trendsetter in the ‘casual dining’ category  Excellent customer service  Fresh ingredients and food quality of products  Environment friendly brand image Opportunities  Offer more healthier products  Investing more in marketing  Leveraging the existing social media presence  Expanding to developing countries like India and China.

Weakness  Higher prices  Lack of outlets  Lack of outlets leads to long lines and consumer complaints  Associated with fast food industry  Lack of higher marketing budgets Threats  Growing competition in the fast casual category  Increase in commodities pricing gets passed on to the consumers

12

PEST Analysis Political  Change in the government of US  Rapid increase in international trade agreements  Developing public health policies Support from government for globalization  Stability in political environment in major markets Economical  Increase for the importance of sustainable business strategies  Growth in trade agreements  Growth of economy in developing markets

Social  Change in the lifestyle of people  Increasing trends for health consciousness  Growth in the awareness of animal rights  Growth in consumer diversity





Stable US economy

Technological  Boost in the sales by the use of mobile applications  An opportunity of increasing R&D  Growth in the availability of technology  Increase in the operational efficiency with new technological advances

13

Product Offering The Shake Shack Product Line includes the following:

 Burgers Shake Shack is known world over for serving 100% all-natural Angus beef patties. No hormones and no antibiotics ever. Shake Shack has a proprietary Shack blend which is freshly ground. For the Vegetarians 'Shroom Burger’ - A Crisp-fried Portobello mushroom filled with melted Muenster and cheddar cheeses, topped with lettuce, tomato, ShackSauce™.  Flat Top Dogs: This is all where it began from. 100% all natural Vienna beef, these scrumptious hot dogs are hard to ignore.  Fries Crinkle cut Yukon fries. Add hot melting cheese to it to experience the signature Shake Shack cheese fries  Frozen Yogurt The rich and dense frozen custard is made fresh daily. ! Made with zero artificial flavours the fudge sauce and caramel sauce have zero shelf-life lengtheners. Some of the favourites are: o Shack Attack® 14

o Wall-nut Street (BPC) o Jelly’s Last Donut (TD) o Brooklyn Pie oh My (Brooklyn Shacks)

 Drinks Shack-made lemonade, fresh brewed iced tea, Fifty/Fifty (Half lemonade-Half Iced tea), in-house beer and wine  Dog Food

Select Shake Shack outlets have a special menu for man’s best friends which includes biscuits and creams Pooch-ini - ShackBurger® dog biscuits, peanut butter sauce and vanilla custard. Includes dairy, sugar and nut products. Bag O' Bones - 5 ShackBurger® dog biscuits (SHAKE SHACK, 2016)

15

A sample menu from the Madison Square Park New York location.

16

Service Offering 17

As quoted by Rob Brunner at the Fast Company, Shake Shack’s customer service is what makes it stand out as compared to its competitors in the industry. Since is first began operations in 2004, Shake Shack has kept its focus more on quality of the food being served and less on marketing. It has slowly and steadily changed the perceptions associated with traditional fast food with its excellent customer service. Shake Shack food preparation model has changed the opinions of the consumer, that fast food has to be served quickly and has to be precooked, as is the case with many current chains now. Consumers are willing of wait a bit more for their food if they know the food being served comes with excellent quality of ingredients and customer service (LUTZ, 2015) About the Décor

Shake Shack outlets are designed to look edgy. They have flat wooden tables and modern interiors. They offer one of the best dining experience in the category what has now come to be known as ‘fast casual’ (DUA, 2015).

18

19

(Picture Courtesy: Joan Voight, Campaign US, May 19, 2015)

Channel Strategy Shake Shack today has over 100 locations worldwide. It is known for selling fresh, locally sourced food in sustainably operated kitchens. It prides itself on serving products made from all natural ingredients. Shake Shack has been successfully running an international operation sourcing ingredients from local farmers and artisans bakers. A major reason of the same is that it comes its menu small so that the company’s sourcing team can be actively and regularly engaged with local suppliers. The menu consists of 55 to 60 core ingredients items. (Milbergs, 2015) As a part of its current channel strategy Shake Shack only uses 5 different suppliers in the USA for its beef. Out of those 5, one supplier alone contributes 88% ground beef patties used in Shake Shack outlets in the world. The custard and potato bun are sourced from one single supplier each (Kell, 2015).

Suppliers and Vendors

Shake Shack Outlets

Consumers

Recent Update In order to efficiently manage its channel strategy, Shake Shack has licensed ArrowStream, Inc., for its OnDemand software to help it better manage food spend, inventory, limited-time-offer (LTO) tracking, auditing, and contract management with its suppliers and distributors. (QSR Magazine, September, 2016)

20

Marketing Objective The main objective for shake shack to enter the Canadian market is expansion. Currently the company is serving in United States, Japan, Middle East, Russia, Turkey, United Kingdom and South Korea. But is yet to enter the immediate neighbor market of the place where it originated. Furthermore, statistics show that fast food has a good market in Canada. Shake Shack being a high-quality brand with offerings that are different from the competitors’ who are currently present in Canadian market, Shake Shack has good chances of acquiring of a big part of that ever-growing fast casual category. Another objective is to cater to the Canadian market is that many Canadians who have visited United States know about Shake Shack and like it as well, but do not have the means to quench that craving. This step would mark a stepping stone to make the entire Canadian market familiar with what Shake Shack is about and why it is so good.

21

Marketing Strategy The key marketing strategy would be to capitalize on the fact that Shake Shack offers products that are all-natural and no artificial ingredients are used, given how the Canadian market is becoming health conscious with each passing day. Also, the famous curly fries which is one of the best-sellers can be used for effective marketing tool as it is something different which no competitor has to offer. Plus the uniqueness of the menu which also has a dog food segment can prove to be a great strategy to attract dog owners even if they are not fast food lovers themselves. Shake Shack has been amongst the top 10 fastest growing chains in America with 100 branches across the world in 2016. It is extensively known for premium quality burgers and delicious custards. The most interesting aspect about Shake Shack’s marketing is that they spend very little on advertising campaigns. They never had to spend huge amounts to develop brand’s strength through advertising. The company has achieved substantial followers on various social media networks, gathering their positive appraisals from their customers.

22

Shake Shack does ‘No Traditional Marketing’, but has a very solid presence on social media which speaks to its significance amongst the millennials. Shake Shack’s social media game is on fleek. According to analyst, Shake Shack’s overall success is through its expertise in social media. We can follow the same concept at the time of launching shake Shack in Canada as people in Canada are active on social media. Shake shack’s marketing strategies are mainly online related to their social media and networks, online reviews and feedbacks and marketing though emails. Their attractive website having fascinating images of food is very appealing to the visitors. The design and the green color of website represents healthiness and a clean maintainable environment. In addition, it website also has customer winning gifts, coupons for students, keep updated about the latest events etc. All these features attract people to the website. These all factors could be used while getting Shake Shack to Canada. With the constant use of brand graphic, design, images, content and Ecommerce on its website, shake Shack strengthens its marketing message. It is very important to have customers that are satisfied with our food products and services, who will further be our advocates, recommending their family and friends to try them. With a strong social media strategy, Shake Shack 23
...