RightFoods, Inc. is a large corporation that has recently purchased a problematic but still large-scale and competitive franchise, Arnie’s. Unfortunately, the latter company’s sales at the time of the purchase were dwindling as many customers abandoned Arnie’s for their competitors. Understandably, the new owners want to give Arnie’s new life and return their investments. The first option to do that is to offer discounts, update its menu, and pricing options along with offering smartphone apps for better customer convenience. The second variant presupposes full scale rebranding into a combination of a gastropub and fast-casual restaurants. The first plan appears to better serve the goals of RightFoods Inc. and can restore Arnie’s profitability more effectively.
According to the case, problems of Arnie’s chain and their competitors began largely due to a shift of public interest towards cheaper meals and eating at home. The first resurrection plan makes the food and alcohol visually cheaper and more attractive. With free appetizers during sporting events, the offers would look more substantial while the price would stay reasonable. Since the restaurants profit the best from selling alcohol, it is only logical to enhance this part of the menu by making it more attractive. The usage of smartphone apps and virtually free delivery will also be a competitive advantage that will increase user convenience, and hence, improve customer retention. This part of the plan would succeed because app-based delivery services gained in popularity and it follows the trend of eating at home. In addition, two major competitors still do not offer such an option, and Arnie’s would look more innovative in comparison to them, which addresses the issue of distinguishing the chain from Bartleby’s and Blue Crab.
The second plan has vague potential due to multiple factors. Firstly, an eight-month period of no profit for each of the locations is a rather substantial loss. Closing all locations at once or doing it proportionately is a huge risk because the plan does not offer a valid strategy for keeping the remaining 20% of the customers in the dying franchise for eight more months. Additionally, a rebranding plan does not address a trend for eating at home, as it does not offer a delivery service that has become popular. Housing not too many people as the seating becomes more scarce will unlikely contribute to the fast return on investments. Moreover, food and drinks will not become cheaper. Instead, the goal is to attract high-end clients while the general trend is to eat and drink cheaper.
Arnie’s restaurants are most popular in suburban areas while from the case information, it is evident that gastropubs are booming mostly in urban zones. No statistics are offered in that regard for suburbs, which makes a plan to establish a network of gastropubs at the old locations a risky venture. Above that, becoming a gastropub and continuing to be a fast casual restaurant would mean that along with retaining old competitors, Arnie’s would face new rivals on the market. This scenario does not inspire optimism because except for the renovated interior and menu positions for high-end customers it has practically nothing new to offer. In combination with a 4-year long rebuild, the plan would likely suffocate due to the absence of new ideas.
All in all, the first plan appears to be more reasonable to implement rather than the second one. It addresses the popular trends of eating at home and spending less money on food. Also, it effectively fulfills the goal of becoming distinct from its competitors by adding a free delivery service. The rebranding option seems like a very risky venture that follows only one urban trend while not taking into account the suburban locations of Arnie’s restaurants. Therefore, it is in the RightFoods, Inc.’s best interest to opt for the first plan.