Spanish Franchise in Lebanon - Term Paper Example

Spanish Franchise in Lebanon Table of Contents Table of Contents 2 Current Marketing Situation 2 Market Segment 4 Segment 4 Segment 2 4 Segment 3 4Target Market 5 Product Review 6 Works Cited 8 Current Marketing Situation The dynamics of restaurant industry in Lebanon is greatly influenced by tourism perspective of the country. Growth of restaurant industry is halted by two critical issues such as war and closure of Central Business District (BCD) caused by Hezbollah-led opposition (“Lebanon—no business as usual”). Paul Ariss (President of the Syndicate of Restaurant and Café owners) has pointed out that there might be hardly 20 restaurants left after the closure of BCD. The country is incurring annual loss of $30 million from the restaurant industry. Restaurant business in Beirut has performed badly for last few years due to slow growth of tourism in the country. In high profile restaurants in Beirut, majority of customers are complemented by Lebanese expatriates and Arab tourists. It has been observed that restaurant business in the city is governed by the seasonality. Summer is the peak season for restaurant owners and during this season restaurant owners try to offer Mediterranean and special Lebanese dishes to lure patrons. The market is highly fragmented due to presence of small numbers of standard restaurant. Restaurant owners have incurred a loss of 65% in sales volume in last five years and this can be cited as the reason for high degree of fragmentation (London 420-425). It has been observed that major portion of customers prefer to take lunch in restaurants (Amin, “Security crisis takes toll on Beirut’s restaurants”). The study has selected Achrafieh (this district is located in East Beirut, Lebanon) hence the report will exclusively focus on food preference of customers that belong to Achrafieh. The district is consisting of more than twenty seven restaurants but only nineteen of them offer Mediterranean dishes. Ta3mini has pointed out that almost 50% of customers prefer pizzas, sandwiches while 20% prefer other Mediterranean dishes (“Restaurants in Ashrafieh around 18$”. Majority of the customers in Ashrafieh are Christian hence there is natural tendency among them to take European cuisine in comparison to traditional Lebanese dishes during lunch time. 100 Montaditos has the opportunity to cater the demand for Mediterranean dishes in the district by opening up restaurant franchisee chain (“100 MONTADITOS”). Customers in the district can be segmented in accordance to their spending capacity on per person meal. Post Hoc segmentation strategy can be used to define the target market (Zoltners, Sinha and Lorimer 66). Market Segment Segment 1 Many restaurants in Ashrafieh target those customers who do not want to spend more than $20 on doing lunch in restaurants. Ta3min has pointed out that customers with low disposable income prefer to eat foods in these restaurants (“Restaurants in Ashrafieh around 18$”). Segment 2 It has been observed that foreigners, Lebanese expatriates and tourists from Arab Emirates spend an average of $20-$40 in mid tier restaurants in the district. Restaurants in this category offer various Italian, Lebanese, Mediterranean, Continental and Asian dishes. Customers complented with high spending capacity prefer to eat food in these restaurants (“Restaurants in Ashrafieh around 18$”). Segment 3 This is the premium segment and in this segment customers do not hesitate to spend $40-$75 on dining in the restaurants. Restaurants offer Lebanese and international cuisine to lure customers and many of them have introduced the concept of theme restaurant to create a niche position in the market (“Restaurants in Ashrafieh around 18$”). 100-montaditos needs to cater demand of the various segments in order to expand in the district. It has been already mentioned that Ashrafieh is complemented with almost twenty seven restaurants while 70% of them serve foods like sandwiches, burgers, pizza, egg beckons etc. The fact is that the market is fragmented and there is no clear market leader hence 100-montaditos has the opportunity to establish market leadership by using tactful marketing strategy (Kenneth 469). 100 montaditos is complemented with strong brand presence internationally while majority of their competitors are local level players. The Spanish giant has the resource capability to outdo local players present in Ashrafieh. 100 Montaditos is known for their quick service system and this core competency will also help them to expand business in Ashrafieh (“WHAT IS 100 MONTADITOS?”). Lebanon has one of the most hostile business environments for investors due to its political and economic turbulence. Investors planning to enter in the district will face critical issues like terrorism, political collisions and unequal balance in demand and supply which will definitely affect their business policy. Although there is hospitality industry in the country is suffering but small scale business are performing quite well hence they can be economic growth driver for Achrafieg. It can be assumed that overall consumer spending on restaurant service will increase within next two-three years (“Ashrafieh, a business district with a human face”). Target Market Majority of customers in Achrafieg are Christians hence 100 Montaditos should try to cater demand of this community in order to achieve sustainable business growth. The company should try to integrate supplier’s activity in order to ensure quality in offered service (“Why 100 Montaditos?”). The company should target segment 1 (customers willing to pay lower than $20 for food items. 100 Montaditos should focus on selling their fast-food items to customers in order to attract them. Product Review The restaurant franchisee will face competition from various players in the Achrafieg district hence they need to design product in accordance with customer demand in order to win the competition. A brief competitor analysis for the restaurant franchisee is given in the following table. Restaurant Name Dishes Price Deek Duke Deek Duke offers various food items such as sandwiches (vegetarian and non vegetarian), chicken Burgers, platters and many others to customers (“Menu”). Price range for offered items (whole meal) is 15$ to 28$. They try to maintain gross margin of more than 30% gross margin in operation. L’escroc L’escroc offers sandwiches, burgers, pasta, pizza, platters, continental dishes to customers (“L’escroc”). Price range for offered items (whole meal) is 15$ to 35$. They try to maintain gross margin of 30% gross margin in operation. Casper & Gambini’s Casper & Gambini’s is international franchisee chain and they offer hot cuisine, salads, sandwiches, desserts and continental dishes to customers. Price range for offered item (whole meal) is 18$ to 35$. They try to maintain gross margin of more than 25% gross margin in operation (“Casper & Gambini’s”). It is evident from the comparison that companies planning to enter restaurant business in Achrafieg need to offer food items at a price lower than their competitors in order create a niche segment (Parsa and Kwansa 245-248). Restaurant chains are offering food items at price range of 15$ to 35$ while 100 Montaditos has the opportunity to products at lower price band. Montaditos offers hotdogs and sandwiches at $2.00 to customers in USA hence they need to decrease the price range further to attract Lebanese customers (“100 Montaditos”). In the initial stage they might need to reduce the gross profit margin in order to increase market penetration. The restaurant chain needs to focus more on Mediterranean dishes in order to attract Christian community of Achrafieg. The company can design following product line to enter Lebanese market. Products Prices Sandwiches baked in Mediterranean style Offered price should be few percent lower than the price in USA market Hot Dogs And Burgers Offered price should be few percent lower than the European and American market Lebanese Dishes The restaurant chain should offer Lebanese dishes at competitive price in order to attract local customers Works Cited “100 Montaditos.” All Menus, GrubHub, Inc, 2012. Web. 17 Dec. 2012. “100 MONTADITOS.” Grupo Restalia, Restalia, n.d. Web. 17 Dec. 2012. Amin, Mohamad. “Security crisis takes toll on Beirut’s restaurants.” The Daily Star, The Daily Star, 22 May 2012. Web. 17 Dec. 2012. “Ashrafieh, a business district with a human face.” Live Achrafieh, liveachrafieh.com, 2012. Web. 17 Dec. 2012. “Casper & Gambini’s.” Ta3mini, Ta3mini, 2011. Web. 17 Dec. 2012. Kenneth, Clow. Integrated Advertising Promotion , and Marketing Communication. 3rd ed. New Jersey: Pearson Education, 2007. Print. “L’escroc.” Ta3mini, Ta3mini, 2011. Web. 17 Dec. 2012. “Lebanon—no business as usual.” Arabian Business, Arabian Business Publishing Ltd, 2 September 2007. Web. 17 Dec. 2012. London, Kerry. Construction Supply Chain Economics. London: Routledge, 2007. Print. “Menu.” Deek Duke, n.p, 2012. Web. 17 Dec. 2012. Parsa, H.G, and Francis Kwansa. Quick Service Restaurants, Franchising, and Multi-Unit Chain Management. London: Routledge, 2002. Print. “Restaurants in Ashrafieh Around 18$.” Ta3mini, Ta3mini, 2011. Web. 17 Dec. 2012. “WHAT IS 100 MONTADITOS?” 100 Montaditos, Restalia, n.d. Web. 17 Dec. 2012. “Why 100 Montaditos?” 100 Montaditos, Restalia, n.d. Web. 17 Dec. 2012. Zoltners, Andris, Prabha Sinha, and Sally Lorimer. Sales Force Design for Strategic Advantage. Basingstoke: Palgrave Macmillan, 2004. Print. Read More