ARBY'S RESTAURANT GROUP

Assignment - Arby's Restaurant Group

Table of Contents

Part A1

(1) Analysis of External Environment1

Intense Competition1

Higher Input Cost Could Put Pressure on Margins3

Soft Consumer Spending In the U.K.3

Increasing Labour Costs4

(2) Analysis of Internal Environment5

Strong Market Position and Brand Equity Signifying Customer Acceptance5

Greater Emphasis on Product Quality and Innovation5

(3) Analysis of Organization Value6

Part B7

(4) Strategic Option for Arby's7

BCG Matrix9

Ansoff Grid: Arby's10

McKinsey 7s model11

Value Chain13

(5) Implementation Plan14

Fold Arby's into Wendy's14

Fresh and Healthy Fast Food14

Focus on Drive-Through Business15

International Growth15

Resource Implication16

Structure Requirements17

Time Frame18

Monitoring & Evaluation19

Conclusion20

References21

Assignment - Arby's Restaurant Group

Part A

The Wendy's Company (Wendy's or “the group”) formerly Wendy's / Arby's Group is a quick service restaurant company and franchisor of Wendy's brand of restaurant. Wendy's is the third largest burger fast food player in the world after McDonald's and Burger King. Arby's is the fourth largest bakery fast food chain and second leading sandwich specialist after Subway. Wendy's/Arby's Group consists of over 10,000 outlets and annual sales of US$12 billion. In July 2011, Wendy's/Arby's Group completed the sale of Arby's Restaurant Group to a buyer formed by Roark Capital Group. In connection with the transaction, the group changed its corporate name to The Wendy's Company. Further, the group retained an 18.5% common stock interest in the Arby's business (arbys.com).

(1) Analysis of External Environment

Intense Competition

The quick-service restaurant market in the U.K. is highly competitive. The retail food industry is highly competitive with respect to price and quality of food products, new product development, price, advertising levels and promotional initiatives, customer service, reputation, restaurant location, and attractiveness and maintenance of properties. Also, it must be noted that the competition level within the food industry is very strong because of which customers have an option to switch from one player to another with relatively low switching costs, which is effectively zero and companies within the sector can also increase the capacity without any difficulty (hyderandassociates.com).

As a result, players usually mitigate competition by competing via brand awareness, quality of food and pricing the value. In addition, it is also likely that players relatively have high price elasticity of demand because of the fact that the fast food is not strictly significant to consumers. However, the effect of a consumer on revenues is small to impact the volume of transactions. In addition, heavy investments in building the brand have also driven the loyalty of customers, while the sheer convenience of fast food makes it significant for customers than a simple source of food. The market is fragmented because of top fifty companies that hold around 25% of the industry sales and competition in the industry is intensified (maitredpos.com).

Arby's faces direct and indirect competition from a number of well-established competitors, including national and regional non-burger sandwich chains, such as Panera Bread, Subway and Quiznos, as well as hamburger chains, such as McDonald's, Burger King, and other quick service restaurant chains, such as Taco Bell, Chick-Fill and Kentucky Fried Chicken. In addition, the company faces intense competition from larger players such as McDonald's Corporation ...