This report is written form the perspective of an external international marketing consultant for Chili’s chain of restaurants. The contents of this reports include an in depth industry analysis, company analysis, environment analysis, competitor analysis as well as customer analysis of the company both domestic and the international market. All these attributes that will be discussed will give an idea about the company’s opportunities in the international market. It is important for a company to assess the international market before expansion so as to determine the target market and the demand for the product or service that is being offered by the company (Stromquist & Monkman, 2014). Depending on the advantages of the company the opportunities follow, for example if a company has low employee turnover and goodwill it will help the company gather resources in the foreign lands as well. The company can evaluate the cost-effectiveness of the operation of the business, a restaurant business Chili’s have to understand the suppliers market and the customer market. International market analysis also helps the company prioritize its resources and use it in the most effective way. This report will help the company take appropriate decision for expansion in New Zealand (Home Page, 2017).
Industry overview
Chilli’s is a restaurant chain and the industry that restaurant business is categorized in is hospitality, in the US the hospitality sector is has seen a cut in the spending of the people especially in travel and tourism department owing to the recession that the economy is going through. But the companies are optimistic in the current financial year regarding the consumer spending. Food safety and cyber attacks are some of the areas of concern for the business organizations that deal with food and beverage.
Growth in the industry sector
Technology is going to play an important role in the development of the hospitality industry as the companies will invest in technological innovations to facilitate the objectives of the business. To be specific mobile applications, and the Internet of Things (IoT) is used to enhance the customer’s experience as well as record the feedbacks. Some of the direct competitions of chilli’s in the domestic market are: Applebee’s international Inc, TGIF, Ruby Tuesday (Travel and Hospitality Industry Outlook 2017, 2017).
Competition in the Industry sector in the International market
With globalization and advent of social media the world has shrunk in its size, international market of the hospitality industry has also received a boost from these factors. Chilli’s is an established brand and the popularity of the brand is spread world-wide with the help of social media specially. The international market the opportunities are immense owing to the fact that the reach of target customers increase. People are aware and choose to experiment with different cuisine and this is one of the biggest opportunities of the international market for a restaurant. This also means that there is immense competition in the international market. The cuisine served by Chilli’s is tex-mex but the consumers in the international market will not focus on a particular cuisine when they think of experimenting, there is Middle Eastern cuisine, Greek cuisine, Italian cuisine etc (Gilpin, 2016).
Summary of differences in the international and domestic market
The hospitality industry of any country depends on the cultural perspective and the traditions of the company and hence there is a change in target market for each country of expansion for an organization. An established brand in the domestic market has a set goodwill but internationally it has to build its footprints from the starch.
Characteristics
The slogan of the company is “we’re focused on one thing burgers, ribs and fajitas”. The company runs 1,580 branches all over the majority of which are franchise. Norman E. Brinker took over the company and had first laid down the idea of expansion, he had seen the potential of Tex-mex cuisine and used this opportunity to build the brand and expand the branches in the domestic market. The global expansion started only in the 1990s. The vision of the company is to offer the customers comfort food and cozy ambience to hang out with friends. The target market of the company is characterized by people who want to spend quality time with friends or family. Brightness and positivity is the essence of the brand, and is also the image that has been created by the company.
Market share
The company has expanded in 32 countries with the same image and same positing strategy. The domestic market share of the company is approximately estimated to be around 39.87%. The company is focused on global expansion, the resources of the company is channelized in the expansion in Asian countries as well as in the New Zealand as well.
Significance of international expansion
The cuisine is a mixture of American and Mexican which has gained popularity among the expansion location owing to the technological advances and social media influence in the lifestyle of people. The US market is saturated with restaurants like Chilli’s and the cuisine they offer hence it is a better option for the company to expand beyond the boundaries. In the US street food is also a tough competition for restaurants (Deresky, 2017).
Strength: The assortment of dishes in the menu are the main strength for the restaurant along with the regular menu the restaurant also provides a nutritional menu, allergen menu, and vegetarian menu. The brand image and the brand positioning of the company in the minds of the customers are strong, the company has come up with several jingles which are very catchy help the company retain the recall value. The internal resource of the company is enough to deal with the global expansion. There are more than 30 outlets in the domestic market and more than 1600 in the international market. The locations of the restaurants are always very convenient it has been noticed that they position the sites near movie theaters and shopping malls. The company also adopted the concept of triple bottom line during the 2000s and have involved in several societal developmental policies. Fun and outgoing place for people looking for variety
Weakness: The Company has very inadequate distinguishing factors form its competitors which makes the companies’ brand image weak as well. The expansion of the company also works on the franchise theory, in this as there are chances of losing out on quality as the control on the brand decreases in a franchise (Glasson et al., 2013).
Political: The government of a company is responsible for the political scenario of that state, for any multinational company to keep up with the dynamics of the business. The policies of the government should be at par with the idea of the company so that the business can run in a smooth way. For Chili’s, the most significant aspect are the health regulations and restrictions in the food and beverage sector by the government of the company. Much like other business in other industries restaurant business is also affected by labor laws, tax laws etc.
Economic: Restaurants are considered as a luxury service sector, hence the disposable income of the people of the country are also very important aspect while expanding in the global market. The analysis of the economic growth in order to understand the disposable income is crucial. The inflation rate or the recession rate of the country affects the suppliers and distribution in hence as a restaurant Chili’s also have to consider these aspects of an economy (Ho, 2014).
Social: For a restaurant societal attributes are the most important to analyze as customers visit a restaurant in order to socialize. Chili’s is aware of the diversity in the cultural background of the places of operation, for instance there are places where pork meat or beef meat is not allowed the restaurant designs the menu accordingly so that the sentiments of the society are unharmed. the approach of the consumers or the potential target market toward restaurants and eating out is also an important aspect for a restaurant; if the people of the area are observed to stay at home and cook for the family rather than spending out on a restaurant the business is not going to flourish in that location.
Technological: Chili’s have installed feedback system form the customers using technology and applications, the company also use internet to order food online. Restaurant industries are not heavily dependent on the technological advances but it depends on the cuisine and scale of operation (Gupta, 2013).
The political scenario in both the countries are liberal, New Zealand government encourages international trade within the geographical territory. The two countries have a developed economy and the disposable incomes of the people are high and they are able to invest in the luxury of eating outside (Ho, 2014).
|
Company |
Food quality and variety |
USP |
Price |
Ambience and location |
|
Chili’s |
High, there is a plethora of options in the menu |
The cuisine which is a mixture of fun American with Mexican spicy twist |
Competitive pricing |
Family and cozy ambience |
|
TGIF |
High quality, limited option in the menu |
The company focuses on the quality of the food and the customer service |
Competitive pricing |
Perfect for a gathering with friends |
|
Applebee’s |
High, 550 calorie menu items |
The unique policies of the company is the main attraction for example: offers for office goers, girls night, karaoke night, etc. |
comprehensive and reasonably priced menu |
family-friendly neighborhood restaurant |
|
Ruby Tuesday |
High quality food, have a different takeout menu |
Freshness and quality |
Value based pricing |
Young and youthful ambience (Leonidou et al., 2013) |
Strength: The goodwill that is associated with the company is the main strength, the unique cuisine and the menu is also the USP and the main strength of chilli’s along with the family friendly cozy ambience. This aspect is both relevant for domestic and international market
Weaknesses: In the domestic market the key weakness of the company is that the brand image of the company has become saturated, the company has to market the brand so as to not only retain customers but also gain new ones. In the international market the weakness is that the company develops a value pricing strategy which makes it expensive.
The Target market described by the company is the people who are looking for a quality time to spend with the friends and family. As the restaurant serves alcoholic beverages as well the target customers of the company are people whose age is beyond the legal alcohol consumption of the specific country. The analysis is based on both the domestic as well as international market.
Domestic market
Demographic: the Age group that the restaurant target is in between the age group of 20-55. These are the people who are independent and have the liberty to choose the preferred cuisine.
Behavioral: People who like to spent time have food and enjoying alcohol with the friends and family. Because the food that is served is comfort food the people who come to Chili’s not looking for healthy food options. The company also has a loyal customer base who come back for the popular taste of the particular dishes that is available in the.
Psychographic: the target market of the restaurant has the lifestyle choice of spending their disposable income in eating out and having good time with friends or family.
Geographical: As a restaurant the geographical reach of the target market is not much as the people will be from in and around the area where the restaurant is situated (Grant, 2016).
International market
The demographic, psychographic and the geographical segmentation remains the same, where as the demographic changes as in the international market the pricing of the food is value base and not competitive hence it caters to the 25-60 age group.
Behavioral: in the international market the behavioral pattern that the company is targeting are the people who are looking for good and experimental cuisine. The cuisine that Chili’s offer is also unique in the international market which helps the restaurant to target people who like to experiment with their food and enjoy global cuisine. For example in India, tex-mex cuisine is a contemporary taste option for the people who are willing to spend on food and the experience.
As the restaurant is operating in more than 32 countries it is very important for the company to keep up with the culture, tradition and the rules of the country of operation. The company is aware of the rules of New Zealand and the cultural background of the country and as we can see in the above graph that US and New Zealand is have more or less similar cultural background the original essence of the company can be maintained without any alterations in the operations owing to the cultural background (Mazanec et al., 2015).
Conclusion
Chili’s is a brand that has established itself and has gained popularity in the past few years. The company goodwill associate with the company is one of the strengths of the company. The exponential growth of the organization in the international market is due to the popularity of the brand in the domestic market. The taste and the quality of food served in the restaurant is premium which adds to the demand and the popularity of the brand. Both America and New Zealand have a developed economy and culture is also similar in nature, the populations of the two places are different hence lowering the per capita income of New Zealand in comparison to US.
Reference list:
Deresky, H. (2017). International management: Managing across borders and cultures. Pearson Education India.
Gilpin, R. (2016). The political economy of international relations. Princeton University Press.
Glasson, J., Therivel, R., & Chadwick, A. (2013). Introduction to environmental impact assessment. Routledge.
Grant, R. M. (2016). Contemporary Strategy Analysis Text Only. John Wiley & Sons.
Gupta, A. (2013). Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.
Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.
Home Page. (2017). chilis.com. Retrieved 4 November 2017, from https://www.chilis.com/chilis-at-home
Leonidou, L. C., Leonidou, C. N., Fotiadis, T. A., & Zeriti, A. (2013). Resources and capabilities as drivers of hotel environmental marketing strategy: Implications for competitive advantage and performance. Tourism Management, 35, 94-110.
Mazanec, J. A., Crotts, J. C., Gursoy, D., & Lu, L. (2015). Homogeneity versus heterogeneity of cultural values: An item-response theoretical approach applying Hofstede’s cultural dimensions in a single nation. Tourism Management, 48, 299-304.
Stromquist, N. P., & Monkman, K. (2014). Defining globalization and assessing its implications for knowledge and education, revisited. Globalization and education: Integration and contestation across cultures, 1.
Travel and Hospitality Industry Outlook 2017. (2017). deloitte.com. Retrieved 4 November 2017, from https://www2.deloitte.com/us/en/pages/consumer-business/articles/travel-hospitality-industry-outlook.html
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