Case Study III – General Management
COMM 1007 EL - 02
Friday, March 21st, 2014
Executive Summary: Cameron McCormick, vice-president and CFO for Patterson – Erie Corporation (PEC) must decide on a strategy and direction for the future of one of the companies restaurants who’s performance is lacking, Hamburger Haven in Windham, Ohio. The restaurant is struggling with several factors, most importantly customer service and efficiency, while continuing to be unprofitable. McCormick must analyze all aspects of the company and the surrounding environment, along with the fast food industry in order to decide on the most effective strategy for the future of the restaurant. Upon analysis of the fast food industry it is clear, the industry will continue to grow. It is also apparent that consumers are beginning to demand healthier products as part of the menu, which must be adjusted to consumer’s requests. Additionally when exploring the consumer target segments, Hamburger Havens Windham location has the potential to reach all of them due to their location by a highway. Competition also remains a factor, but not in the immediate area, as there is only one other competitor “mom and pop” shop in the area. However due to the large debt PEC has with the bank on the restaurant and the restrictions by Hamburger Havens head office that don’t allow the restaurant to be sold to other fast food brands, buyers will be very limited. The alternatives that McCormick must consider in the short term are to shut down the restaurant and look for a buyer, continue running the restaurant while looking for a buyer, search for a new store manager, or to improve marketing initiatives. In the medium term the alternatives McCormick must consider are to either partner with a brand or remain by themselves at their current location. In the long term, McCormick must decide whether the restaurant should focus marketing to all three-consumer groups. Ultimately the best recommendation McCormick can make is to continue operating the restaurant, improve marketing initiatives, and hire a new store manager to improve motive and service quality, while looking for a brand to collaborate with. Targeting all 3 consumer groups in the long run is also a smart option PEC should do, as they have the resources and opportunities to do so.
Problem Statement: Cameron McCormick, vice-president and CFO for Patterson – Erie Corporation (PEC) must decide on a strategy and direction for the future of one of the companies’ restaurants, Hamburger Haven in Windham, Ohio, who’s performance is lacking. The restaurant is struggling with several factors, most importantly customer service and efficiency, and continues to be unprofitable. McCormick must analyze all aspects of the company and the surrounding environment, along with the fast food industry in order to decide on the most effective strategy for the future of the restaurant.
Sub Issues: Customer service is a significant problem at Hamburger Haven. The restaurant has consistently presented poorly within tests such as, mystery shops, resulting in a poor reputation among locals, which represent around 75% of their annual sales. The struggles of Hamburger Haven will undoubtedly continue if this issue is not addressed. Employee training must be improved in order to increase speed of service, and motive within the restaurant must be improved in order to increase customer friendliness, resulting in a better reputation and word of mouth from the locals. The companies strained relationship with the bank must also be considered a major sub issue. The company has tied up a large amount of money in a loan for the restaurant, and have maxed its line of credit due to Hamburger Havens unprofitability. By harming their relationship it will have negative implications for PEC in the future, which may hinder expansion and growth. Competition has also increased