Executive Summary
This paper includes a brief analysis of Checkers & Rally’s, one of the leading fast-food chains in the USA. The company’s major competitive advantages are low prices and fast service through the double drive-thru. However, the company should consider such steps as vertical integration, innovation in the sphere of services and products provided, the system of control mechanisms, expansion to other markets to remain competitive.
External Analysis
Checkers & Rally’s is operating in the mature market that is highly competitive. It is possible to carry out an external analysis based on Porter’s model. According to Porter, five major forces affect any company: the threat of entry, supplier power, buyer power, threat of substitutes and competitive rivalry (Hill & Jones, 2012). It is necessary to note that the threat of entry is quite serious as many entrepreneurs, as well as well-established businesses, are eager to enter the market and expand. Checkers & Rally’s has quite a conventional menu for a fast-food restaurant, and, hence, it may face considerable competition in the future.
As far as the bargaining power of suppliers is concerned, it is necessary to note that the company has a reliable partner in this respect. Checkers & Rally’s collaborates with McLane Food Service, which is one of the leading supply chain services in the country (Checkers/Rally’s selects McLane for food distribution, 2009). Clearly, McLane totally satisfies the needs of the fast-food chain as it leads to a significant reduction of costs. At the same time, reliance on one supplier can be associated with certain risks as in case the supplier fails to provide its services (bankruptcy, force major, misunderstanding between the partners and so on), Checkers & Rally’s can fail to provide its services properly.
The position of the fast-food chain seems more secure when it comes to the bargaining power of buyers. The USA fast food industry is well-established, and Americans have developed the culture of dining out (Turenne, 2009). They see it natural to spend some amount of money to dine at a restaurant rather than cook the meal at home. At that, low prices of Checkers & Rally’s ensure that customers will afford the food provided.
It is necessary to note that the threat of substitute is quite serious as the chain does not have any special item. Checkers & Rally’s provides conventional fast food items that are also offered in other places. This poses some threats of substitution. It is also noteworthy that people tend to change their eating habits and try to consume healthier food (Turenne, 2009). There are chances that soon people will stop buying hamburgers and will order salads and green tea.
As has been mentioned above the foodservice market is saturated and very competitive and, hence, Checkers & Rally’s has to face stiff competition (Turenne, 2009). Such well-established brands as McDonalds, Burger King, Wendy’s and many others are known worldwide and have become a part of the American life. These fast food chains have better coverage in the USA, and they have an extensive network of restaurants worldwide.
When considering external factors affecting a company, it is also essential to take into account the macroenvironment. Many sectors of the US economy are suffering from certain constraints, and many Americans have financial difficulties. However, the low prices of Checkers & Rally’s remains its competitive advantage. Innovation is also a characteristic feature of the industry. Fast food chains offer a variety of items in their menus including salads, tea, coffee and so on. They also offer various services such as children’s playground, outdoor area and so on. Checkers & Rally’s has an innovative approach to the provision of services and has developed a “double drive-thru concept” (Our story, 2015). However, McDonalds have already adopted the concept and is moving in this direction as well.
Internal Analysis
The internal analysis can reveal efficiency of the company’s operations and its competitiveness. To implement the internal analysis, it is necessary to focus on the competitive advantage, distinctive competencies, and profitability. The company has two major competitive advantages. These are the price and the quality of the services provided. The prices are kept low to attract new customers and retain old ones. New items offered are also consistent with this policy (Stramm, 2014).
As for the quality, Checkers & Rally’s is famous for its fast service as the time from placing the order and receiving the food is only 59 seconds. The double drive-thru minimizes the time of order processing. Furthermore, the company has many restaurants across the USA and keeps opening new facilities (Boone, 2015). Notably, these two advantages are also the chain’s distinctive competencies that differentiate them from the rest of the competitors. Finally, Checkers & Rally’s is a well-known brand as the fast food chain has been in the market for two decades. As for the company’s profitability, it is achieved through the reliance on the supplier and absence of the inside restaurant/playground.
Functional-Level Strategy
Hill and Jones (2012) state that functional level strategies enable the company to improve its operations’ efficiency, quality, customer responsiveness as well as innovation. Importantly, the company’s top management pays significant attention to the quality of services provided. For instance, the chain’s CEO Rick Silva checked the quality at one of the restaurants as a participant of the show ‘Undercover Boss’ (Daily Mail Reporter, 2012). It is also clear that the management uses such strategies as training, empowerment, and reward. For instance, instead of firing an abusive manager, Silva enlisted him to a training course. This is an effective strategy that increases employees’ loyalty and satisfaction. Clearly, it also leads to improved quality of services provided, which, in its turn, results in increased customer’s responsiveness.
When it comes to innovation, the company have used an innovative concept of double drive-thru, which has become one of the chain’s competitive advantages. However, the concept has been adopted by some of the company’s rivals and, hence, the chain has to come up with new ideas and innovations. One of the possible directions is the innovations in the menu. It is noteworthy that the development of new types of hamburgers is inefficient. McDonalds as well as other fast food chains have added such healthy foods as salads, tea, juices into their menus. This can be seen as an innovation in the fast food industry, which has proved to be effective as many people are becoming more concerned about their health.
Business-Level Strategy
When it comes to the business-level strategy, it is essential to consider such issues as expansion, collaboration with various companies and so on. As has been mentioned above, Checkers & Rally’s continues expanding, and new restaurants are opened in different states of the USA (Boone, 2015). However, it is not enough to remain competitive in the industry, which is becoming global. The company’s competitors such as McDonalds or Burger King have opened restaurants worldwide, which enables them to improve the efficiency of their operations. Nonetheless, Checkers & Rally’s remains a ‘domestic’, so to speak, fast food chain. At that, the company may lose its customers since more fast food chains with innovative approaches may appear in the USA.
The company has made a very important and beneficial decision to be an official partner of NASCAR (Checkers(R)/Rally’s(R) official drive-thru restaurant and burger of NASCAR(R), 2005). The car auto racing is very popular in the USA. More so, the major concepts of the fast food chain and the races are similar. These are speed and driving. The company managed to communicate their vision and values to millions of fans of NASCAR. Clearly, the publicity associated with such cooperation led to the increase in the chain’s customers. Checkers & Rally’s should consider the partnership with other companies and organizations as well. This will lead to more publicity and brand awareness.
Corporate-Level Strategy
Hill and Jones (2012) state that corporate-level strategy defines the vision of the company and is often concerned with horizontal and vertical integration. Checkers & Rally’s is a result of a successful merger that took place in 1999 (Our story, 2015). The merger of the two competing fast food chains was beneficial as it led to optimization of processes and removal of the unnecessary rivalry. The two chains were able to expand and develop the innovative concept of the double drive-thru. It is necessary to note that the horizontal integration can continue through acquisitions. Although there are no appropriate companies for merger, Checkers & Rally’s can acquire smaller fast food chains or even single restaurants. This can lead to the reduction of competitors and better coverage.
When it comes to the vertical integration, it is one of the most efficient ways to reduce risks and optimize processes (Hill & Jones, 2012). However, it also requires significant investment. Checkers & Rally’s could benefit from the vertical integration and minimize its reliance on the supplier. For instance, it could acquire a number of farms and plants. First, it would minimize costs, in the long run. It would also be beneficial for the image of the company and Checkers & Rally’s could create value. The contemporary consumers are becoming environmentally conscious and prefer buying from companies characterized by sustainable food production (Turenne, 2009). This would require significant funds, but it will become a distinctive competency of Checkers & Rally’s.
Organizational Structure
Checkers & Rally’s can be characterized by the function-based hierarchy. The CEO is on the top of the company’s hierarchy. His subordinates are top managers who focus on particular operations: Chief Marketing Officer, Chief Restaurant Operations & Supply Chain Officer, Chief Financial Officer, General Counsel & Senior Vice President, Vice President Franchise Development, Senior Vice President of Human Resources and Vice President of Operations (Management team, 2015).
The corporate departments of the company are legal, treasury, human resources, accounting, operations services and payroll. Clearly, the restaurant management is also hierarchal, and the team includes the district manager, team member, shift manager and assistant manager. It is necessary to note that this is quite an efficient model as it ensures quick decisions and effective operations. However, the organizational structure could be enhanced by the creation of the department of international development.
Control Mechanisms
It is necessary to note that control mechanisms existing in the company are quite outdated. The case with the ‘Undercover Boss’ shows that performance of managers is hardly controlled and assessed (Daily Mail Reporter, 2012). The control mechanisms are found in the top-to-the-bottom structure. In other words, supervisors control and evaluate subordinates’ performance, which is not very effective, and the quality of services may decrease. Employees’ turnover resulting from dissatisfaction may lead to significant losses of the company. At the same time, the company’s fast serving time reveals the efficiency of the operating system. The procurement of the restaurants of the chain is excellent. Control mechanisms associated with procurement are effective.
Conclusions and Recommendations
On balance, it is possible to note that Checkers & Rally’s is one of the leading fast food chain restaurants in the USA. It is characterized by such distinctive competencies as the speed of service and low prices. Innovation has been another value, which was manifested in the development of the double drive-thru concept. However, the fast food service market is highly competitive, and the company should consider the implementation of certain changes.
First, Checkers & Rally’s should go global. The creation of the department of international growth can be beneficial. The fast food chain should enter such markets as China, India, European countries. Checkers & Rally’s should also become innovative when it comes to the menu. It is time to include such ‘healthier’ items as salads, tea, coffee, juices, low-fat desserts and so on. Such innovations as additional services can be beneficial. These can be toys for children or helpful or entertaining items for drivers.
The company should also consider vertical integration. The development of a number of farms and plants can be a good start. Finally, it is also important to improve control mechanism when it comes to human resources. It is possible to utilize a system that involves performance evaluation based on several channels (self-reporting, supervision, overall performance and achievements, customer’s feedback and so on). The company should be more flexible and innovative so it should change constantly.
Reference List
Boone, T. (2015). Checkers & Rally’s planning to re-enter Baton Rouge, open several new locations at ‘hot spots’. The Advocate. Web.
Checkers(R)/Rally’s(R) official drive-thru restaurant and burger of NASCAR(R); Adds ISC tracks to drive-thru chain’s motor sports sponsorship roster. (2005). Web.
Checkers/Rally’s selects McLane for food distribution. (2009). Web.
Daily Mail Reporter. (2012). ‘Actually, I do know something about this business’: Moment fast food ‘Undercover Boss’ shut down burger restaurant on the spot. Daily Mail. Web.
Hill, C., & Jones, G. (2012). Strategic management theory: An integrated approach. Mason, OH: Cengage Learning.
Management team. (2015). Web.
Our story. (2015). Web.
Stramm, J. (2014). Checkers/Rally’s attracts millennials with comfort food. QSR Magazine. Web.
Turenne, J. (2009). Sustainability in food service. In C.J. Baldwin (Ed.), Sustainability in the food industry (pp. 225-239). Ames, IA: John Wiley & Sons.