Fast food restaurant Essay

Category: Foodstuff,
Published: 27.11.2019 | Words: 618 | Views: 209
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Explanation of Great Burger GB is a fourth largest fast food string worldwide, measured by the volume of stores functioning. As most of its opponents do, GIGABYTE offers foodstuff and “combos” for three largest food occasions: lunch break, lunch, and dinner.

Despite the fact that GB is the owner of some of the stores, it operates beneath the franchising business structure with eighty five percent of its shops owned by simply franchisees (individuals own and manage retailers, pay operation fee to GB, although major business decisions (e. g., menu, look of store) handled by GB). McKinsey research As part of its growth approach GB provides analyzed a few potential acquisition targets including Heavenly Doughnuts (HD), an evergrowing doughnut developer with both a U. S i9000. and worldwide store presence. HD operates under the franchising business model as well, though a bit differently than GB. While GIGABYTE franchises restaurants, HD dispenses areas or perhaps regions when the franchisee is needed to open a specific number of stores.

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GB’s CEO has appointed McKinsey to advise him on whether they should get HD or perhaps not. 1 . What areas would you want to explore to ascertain whether GB should get HD? They started thinking of potential synergetic effects that could be achieved by acquiring HD. Here are some key points on GB and HIGH DEFINITION.

Exhibit one particular |Stores |GB |HD | |[pic]Total |5, 000 |1, 020 | |[pic][pic]The united states |3, 500 |1000 | |[pic][pic]The european countries |1, 500 |20 | |[pic][pic]Asia |400 |0 | |[pic][pic]Other |100 |0 | |[pic]Annual development in stores |10% |15% |. |Financials |GB |HD | |[pic]Total shop sales |$5, 500m |$700m | |[pic]Mother or father company income |$1, 900m |$200m | |[pic]Key expenses (% sales) | | | |[pic][pic]Cost of sales |51% |40% | |[pic][pic]Restaurant operating costs |24% |26% | |[pic][pic]Restaurant property & equipment costs |4. 6% |8. five per cent | |[pic][pic]Corporate standard & administrative costs |8% |15% | |[pic]Profit because % of sales |6. 3% |4.

9% | |[pic]Sales/stores |$1. 1m |$0. 7m | |[pic]Industry typical |$0. 9m |$0. 8m | [pic] 2 . What potential synergetic effects can you think about between GIGABITE and HI-DEF?

3. The team thinks that with groupe, it should be possible to twice HD’s U. S. business in the next your five years, and this GB’s use of capital allows it to expand the quantity of HD retailers by installment payments on your 5 times. What sales every store will certainly HD need in 5 years in order for GB to attain these goals? Does this seem to be reasonable?

Employ any data from Show 1 you need, additionally , associated with following presumptions: • Doughnut consumption/capita in the U. S i9000. is $10/year today, and it is projected to grow to $20/year in 5 years. • Intended for ease of calculation, assume U. S. human population is 300m. 4. One of many synergies that the team feels might have a huge potential is definitely the idea of elevating the businesses’ overall success by selling doughnuts in GB stores. Just how would you measure the profitability impact of this synergy? 5. What would be the pregressive profit every store whenever we think we intend to sell 40, 000 doughnuts per retail outlet at a price of $2 per doughnut at a 60 percent margin with a cannibalization charge of 10 % of GB’s sales?

Demonstrate 2 |Sales and success per retail outlet | | |Units of GB marketed per store |300 1, 000 | |Sales price per unit |$3 per product | |Margin |50 percent | | | |Units of HIGH DEFINITION sold in GIGABYTE stores |50 thousand | |Sales price per device |$2 every unit | |Margin |60 percent | |Cannibalization charge of HIGH-DEFINITION products to GB products |10 percent | six. You come across the CEO of GB in the lounge. He asks you to sum up McKinsey’s point of view so far about whether GIGABITE should get HD.

Pretend that the interviewer is the CEO–what would you claim?