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The Boston market chain of restaurants (went by the name Boston Chicken prior to 1995) was founded in Boston, Massachusetts in December 1985. It thereafter grew steadily into the mid-1990s, and then the company’s’ expansion plan slumped, at which point it filed for bankruptcy. In May 2000, this chain of restaurants was bought out by the MacDonald’s corporation, who has since continued to expand and operate the chain (Landwehr 2000).
The Boston market chain of restaurants has had a strong physical presence in the Northeastern side of the United States. By August 2007, the company boosted of 630 restaurants scattered in 28 states. In addition, these chains had a total of 14,000 employees between them. Furthermore, the acquisition of the chain of restaurants by McDonald’s corporation in 2000, one of the largest fast food chains globally with a reputable brand image, is a positive transformation for the Boston market restaurants (Zuber 2001). As a result of the acquisition of the restaurant chain by MacDonald’s, the company’s sales were reported to have risen by 8 percent between 2000 and 2001.
Boston Market Restaurant appeared to have been losing is market share, even as some of the other restaurant chains were seen to have increased their sales remarkably. With a sharp lack of research and development focus for this restaurant chain; it was soon overtaken by a majority of its competitors, notably the Kentucky Fried Chicken (KFC). In the long run, this resulted in the company filing for bankruptcy, leading to its acquisition by the McDonald’s Corporation (Nation’s Restaurant News 1997).
Furthermore, the restaurant chain, due to its failed research and development, had only a sketchy knowledge of its target market, and hence the waning market share.
A lack of a strategic expansion plan in the mid-1990s led to the company filing for bankruptcy. In addition, the company was not in a position to maintain low operation costs and their employees often received poor training. This coupled with a policy of lending to their developer-franchiser proved to be a costly undertaking that eventually led to the company’s demise (Romeo 1994).
As the demand by the consumers changed, slow sales were recorded, and this had a knock-on effect on the stocks of the Boston Market Restaurant, which tumbled by as much as $ 41.50 per every share, to settle at a low of $ 17 for every single share. This was between December 1996 and May 1997 (Waters 1998). Another characteristic that led to the slow growth of the Boston Market Restaurant was the slow service that the patrons received, and this led to a majority of them switching to rival companies.
According to an article that appeared on Nation’s Restaurant News in 1997, the sluggish sales observed at the various outlets of the restaurant were attributed to consumers who were avoiding “the more profitable dinner purchases in favor of heavily promoted and heavily couponed lunchtime sandwiches.” Between January and March of 1998, Boston Market Restaurant made a loss of $ 312.6 million, and this prompted the auditors of the company to predict an imminent bankruptcy status for the restaurant chain.
The fast food industry is already in the mature stage in the United States, meaning that growth and expansion is poised to slowdown in the year to come. For this reason, this could be the perfect opportunity for the Boston Market Restaurants to expand into the merging markets such as Asia, and Africa. Furthermore, there is a rise in the number of health-conscious customers, and so the fast food restaurant chain could make more of these products to cash in on this lifestyle change.
This way, the company shall be seen to be keeping pace with changes in demographics. Besides, the fluctuation in the rates of foreign exchange such as a higher value of the Euro relative to the dollar is a good chance fro the restaurant chain to open up franchises in Europe in order to increase its revenues.
The product development strategies by the competitors of Boston Market Restaurants appear to be more market-driven in comparison with those of the company. In addition, the competitors have had a more focused on an expansive growth in to the international market, while the Boston Market Restaurant seems content with over-expanding in the United States market that is on the verge of becoming saturated (Smith 2000).
Furthermore, the disgruntled franchisees of the Boston Market Restaurants are increasingly showing signs of switching business to the competitors. There seems to be a reduced focus on the core business of the restaurant chain; quality and taste of their products, and this has led to sales plummeting, with the competitors gaining a portion of the company’s market share.
Landwehr, Rebecca. “Boston chicken gets a break,” Business Journal (2000): 32.
Nation’s Restaurant News “Boston chicken needs to keep its ducks in a row as it takes flight,” 1997, p. 31.
Romeo, Peter. (1994). “What’s so special about Boston chicken?” Restaurant Business, p. 92.
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Smith, Rod, “McDonald’s plans to begin expansion of Boston Market,” Feedstuffs,(2000): 8.
Waters, Jennifer, “Boston chicken: flying on broken wings,” Restaurants & Institutions,(1998): 47.
Zuber, Amy, “Boston Market 1 Year Later,” Nation’s Restaurant News, (2001): 1.