Red Rooster is an Australian fast-food restaurant chain that specializes in roast chicken. It was founded in 1972, and by 2012, had over 360 stores across Australia. Since 2011, the company has been operating through franchises, and since 2018, rumors have been spreading of the company being on the verge of bankruptcy due to several franchisees having closed down their businesses (Chung 2018). A number of factors are thought to cause the company’s decline that can be connected to the failures in its brand value chain.
The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value. The first stage of the brand value chain is marketing product investment. The identified Red Rooster’s mistakes on this stage are primarily connected with its policy towards franchisees. The company has been reported by critics to assume a “poor business model,” forcing franchisees to buy products from suppliers at prices higher than charged by a supermarket (Daily Mail Australia 2019). The reward system and the customer loyalty program were designed poorly and introduced without warning or cost-benefit analysis, making the average store lose over $25,000 (Daily Mail Australia 2019). The company was accused of unfair business practices, and a number of franchisees dropped out and closed their stores, causing a fall in the company’s sales.
In terms of customer mindset, which is the second stage of the brand value chain, Red Rooster has maintained a consistent image throughout its history. Since 2011, it started to promote its restaurants as “healthy, fresh, and quick,” and in 2014, a new brand positioning and an image upgrade centered around the slogan “Tender Loving Chicken” was launched. However, one of the reasons behind the company’s decline was reported to be connected with its brand image. According to Queensland University of Technology retail expert Dr. Gary Mortimer, the company’s problem is that it focuses only on chicken (Carey 2019). He claims that it “makes it difficult for the company to respond quickly to new consumer food trends like vegetarianism and veganism, healthy eating, and better quality fast casual gourmet options” (Carey 2019). For decades, the brand has been associated in the minds of consumers with unhealthy food and has not been taking sufficient efforts to change it.
The third stage of the brand value chain is brand performance that defines how customers react to the brand and is measured in its market share, sales, sales growth, and market penetration. The indicators have dropped in recent years due to the conversion of many of the brand’s stores to franchises, although total sales have increased (Daily Mail Australia 2019). It can be concluded that the drop in the brand performance is connected primarily with the failure of its policy towards franchisees rather than customer dissatisfaction.
References
Carey, Alexis. 2019. “Red Rooster Outlets Shut Up Shop in Queensland After Franchisee Put into Voluntary Administration.” News.com.au. 2020. Web.
Chung, Frank. 2019. “’Constant Harassment’: Red Rooster, Oporto, Chicken Treat Franchisees on Verge of Collapse.” News.com.au. Web.
Daily Mail Australia. 2019. “Chickens Coming Home to Roast: A Renegade Group of Red Rooster Franchisees Cry Fowl as Bankruptcy Claims Rock the Iconic Australian Branch.” Web.