DAD'S ROOT BEER CO.

Dad's Root Beer Co., LLC



Dad's Root Beer Co., LLC

Statement of the Problem

Mr. Ed Drayson must prepare a set of recommendations for Mr. Harry Braithwaite about the Dad's Root Beer Drive Ins in North Eastern Canada. The drive-ins are facing the challenge of rising costs at the same time as increasing competition. The McDonald's Corporation appears to be targeting Dad's Root Beer specifically by opening restaurants in close proximity to Dad's Root Beer drive-ins. Furthermore, the cost of meat is rising approximately 40 percent. Not every restaurant is facing the same price increases. The meat cost increase may be temporary but the labor costs will be permanent. The decisions that have to be made are very serious are require careful analysis with long-term consequences in mind.

Analysis

The fast food industry is growing rapidly. In the area of New Brunswick, Nova Scotia and Prince Edward Island, the growth of fast food restaurants has more than doubled in a few years. The introduction of new restaurants has only had a temporary negative impact on existing restaurants indicating a general increase in the numbers of people eating outside the home.

The characteristics of the industry are to provide food that is fast and reasonably inexpensive to the customer. The food is packaged so that the customer may eat the food in their car or take home to eat. They may also eat at the restaurant but the food is still expected in a very short period of time. The foods are generally food that can be eaten with the hands. The industry is also characterized by a growing number of national chains challenging local restaurants.

The national chains have a predetermined menu which does not vary from store to store throughout the chain to provide consistency and continuity so people know what to expect no matter where the restaurant is geographically. The service is fast which means people on their lunch breaks can go get a meal from outside their place of business and have time to eat it and get back to work. This convenience is one of the success factors and also a driving force behind the industry.

Dad's Root Beer Company Analysis shows strong distinguishing factors that create a specialized niche for the company in the industry. First, Dad's Root Beer is known for its root beer. This root beer is identifiable by its taste and texture from other brands. Second, the Dad's Root Beer drive-ins have car hops that come to the car instead of having a drive through window. The root beer is served in iced mugs in various sizes. The food can be eaten in the car or taken home. The Dad's Root Beer company requires the franchises to use the main menu but does allow some flexibility for local tastes. For example, in the northeastern Canadian locations the menus include a local favorite of fried clams, something not offered at other chain restaurants.

The primary driving force behind the fast food industry is the mobility of ...