When fierce competition requires a new go-to-market strategy
For decades, business had simmered along nicely for a multiconcept restaurant chain. But the company’s success had started to sour. Customer traffic had slowed, and operational costs had climbed. The company had recorded positive cash flow for several years, but the flow was now dwindling. Rising commodity prices and stiffening competition made turning a profit more challenging.
Management set out to revamp the chain’s marketing strategy to more sharply differentiate the company from rivals. Management decided to bring AlixPartners on board to take stock of the new strategy and asked us to define and implement cost reduction initiatives so that the company could free up resources to fund future marketing efforts.
A disciplined improvement program lays the foundation for success
We designed a comprehensive improvement program focused on helping the company better manage costs and bring back growth. The program involved executing a full slate of change initiatives, such as enhancing growth through remodeling and controlling cost by closing some units. Another component of the plan spelled out ideas for improving the margins of such products as beverages, appetizers, and desserts by way of smarter pricing. The plan also called for eliminating underperforming menu items, setting up competitive bidding among suppliers for noncore categories, defining process improvement initiatives jointly with top-tier suppliers, and outsourcing facilities repair and maintenance work.
As for the marketing strategy, we developed a more effective segmentation scheme for the chain’s restaurant units. The scheme was based on analysis of consumer demographics so that the company could craft tailor-made marketing campaigns for each segment. Then we helped management design those new campaigns. A special focal point involved the development and testing of media platforms such as television and social networking. The chain had lagged behind in social-media marketing in particular, which has become increasingly important in its industry.
When it really matters
The improvement program delivered as promised. Our client achieved more than $50 million in annualized benefits (including beefed-up margins)—a figure that exceeded board members’ initial expectations. New strategies for beer, liquor, and wine delivered millions of dollars in benefits alone, thanks to revenue increases, reductions in waste, and standardization of processes for those products across the company’s diverse restaurant concepts. Facilities outsourcing is expected to further reduce costs—for example, by improving preventive maintenance and enhancing visibility into those costs. The CEO was pleased and openly praised the changes in front of shareholders and financial analysts.