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Good Times
2
Executive Summary
In the given report I had discussed the strategic analysis of Good Times Burgers that is operating
in casual dining category in restaurant industry. The report includes contents elucidating the
background and description about the given history, the product and services it offers and the
financial indicators reflected in the financial statements. In the given report, I first assessed the
internal and external environment factors of the company that are highlighting its strengths and
weaknesses. By application of Michael Porter Five Forces Framework, I was able to introspect
the given restaurant industry in the region of North America and how Good Times Burgers could
chose to pursue strategic objectives by altering its strategies. Market segmentation, product
positioning map and potential pitfalls are also highlighted. The report also includes financial
projections and budget for coming years. The recommendations and evaluation are basically the
concluding part to the discussion, which are very critical part of this research work.
Good Times
Table of Contents
Company Background...................................................................5
Vision Statement........................................................................................................ 6
Mission Statement...................................................................................................... 6
Objectives................................................................................................................... 6
Current Strategies...................................................................................................... 7
Strategy Implementation............................................................44
Company Policies..................................................................................................... 44
Allocation of Resources
. ..
45
Good Times
Managing Conflict
. 46
Matching structure and strategy..............................................................................46
Cost of Recommendations...........................................................47
Market Segmentation............................................................................................... 47
Product Positioning Map .......................................................................................... 48
Capital Requirements for Company..........................................................................49
Financial Projections and Budget table for Good Times Burger................................50
References.................................................................................54
Good Times
5
Good Times Burgers Strategic Analysis
Company Background
In 1987 in Boulder, Colorado Good times Restaurant commenced their operations. The
Company operates and owns restaurants at other places like Wyoming and North Dakota. At
earlier the company held a small subsidiary named Good Times Drive Thru Incorporation which
has engaged in the business of delivering high quality hamburgers through the drive thru
restaurants in the name of Good Times Burger and Frozen Custard. The use of such
terminologies such as Good times, We, Us, Our are key values that company wants to reflect
while carrying out its operations for its current and prospective Customers. The Company
Currently serves hamburgers, cheeseburgers, chicken sandwiches, fries, and onion rings.
Additionally, it provides custards, lemonades, and shakes. Good Times currently operates and
franchises 37 restaurants. They are currently 450 employees working in all the restaurants
operating in the Country. Good Times has been a public company since 1992 and is traded on
Nasdaq Smallcap GTIM (Sprague, 1987).
GTIM owns and operates Bad Daddys Burger Bar restaurants through its wholly owned
subsidiary, and will franchise Bad Daddys Burger Bar restaurants through its 48% ownership of
Bad Daddys Franchise Development LLC. Bad Daddys Burger Bar is a full service, upscale,
small box restaurant concept featuring a chef driven menu of gourmet signature burgers,
chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft
microbrew beers in a high energy atmosphere that appeals to a broad consumer base. Bad
Daddys burgers was recently named a top 25 burger in the U.S
Good Times
Vision Statement
We seek to establish a brand position in terms of quick service restaurants maintaining quality
and standards for our consumers at large.
Analysis: vision statement must be short, ambitious and ambiguous
this statement is a good statement but can be shorter. It is ambitions by saying establishing
brand position, which indicates their purposes. Provides ambiguity by mentioning quick
service, which leaves room for development.
Mission Statement
Good Times Burgers seek to promote all natural foods that specialize in made to order service
without any use of hormones, antibiotics in order to attract various customers across the globe.
Analysis: mission statement must declare organization reason of being and have certain
components.
This statement is fair but too short. Although it includes key components such as product and
services (all natural food- made to order service), customer, key market (across the globe), and
philosophy (without use of hormones and antibiotic), It lacks many factors such as competitive
advantage, concern for public image, employees, growth and profitability,
Objectives
The Company Objective was to initiate drive through experience for its customer by
delivering high quality food in shape of hamburgers of all variety and kinds incorporating
cheeseburgers, sliders, breakfast burritos, slides or drinks and custards etc. The core strategies of
Company are to maintain positive sales growth and improve the profitability. The Most
Good Times
important drivers of success used by Good Times Burgers are mainly its values, peoples and
excellent systems.
Current Strategies
Good Times Burgers have a good portfolio of products and menu contains all those fresh
turnover rate.
The company owns 48% of Bad Daddys Franchise Development LLC. And opened its
Good Times
year. In 2013 by our comprehensive approach we want to push for more sales by
producing a better brand experience for our current and prospective customers.
Improving Operation Income through sales derived through short term capital investment
as they have experienced 35% to 50% in terms of incremental sales.
Good Times
Political Factors: Includes factors that look into areas of concern such as tax policy,
labor law and political stability. Good Times Burgers restaurants are subject to
regulations at State and Federal in the areas of safety, health, sanitation and safety. The
Company is subject to Fair Labor Standards which oversees matter in terms of setting
wage rates and Americans with Disabilities Act which promotes use of restaurants to all
the customers whether they are physically able or handicapped must be provided with
longer run,
Legal Factors: Good Times Burgers are subjected to various laws such Fair Labor Act
containing laws that see the procedure of equitable pay or pay based on the amount of
Good Times
10
work done. Americans Disabilities Act ensure that restaurants caters the need of
physically handicapped by building systems and structures that eliminate any kind of
Good Times
11
Threat of Substitutes
Good Times Burgers do have a lot of substitutes in other food industry be it classy
restaurants to cafes or stands offering hot dogs or big supermarkets. By offering natural and
handcraft foods without any added amount of steroid or hormones they will be able to appeal to
different customers across the areas they operate and they want to open they restaurants. It can
go through attracting various segments by increasing customer base (Porter, 1979).
Good Times
12
To conclude, the overall attractiveness of industry is low since most forces are high,
except for bargaining power of supplier, which is low and bargaining power of buyer, which is
medium to high. This is a very competitive industry and requires great strategy and plan before
entering the market.
Threat of
new
Entrance
Rivarly
among
Threat of
existing
substitutes
competato
rs
Power
of
supplie
r
Power of
buyer
Good Times
13
Critical Success
Factor
Weight
Rating
Score
Rating
Score
Rating
Score
1. Brand awareness
2. Financial Position
0.13
0.13
0.52
0.39
0.1
0.2
0.1
0.4
3. Global Expansion
0.15
0.15
0.6
0.3
4. Market Share
0.11
0.22
0.11
0.33
5. Product Quality
0.09
0.27
0.18
0.36
0.02
0.04
0.06
0.08
0.08
0.16
0.32
0.24
0.11
0.33
0.22
0.44
0.11
0.44
0.22
0.33
0.1
0.4
0.2
0.3
6. Consumer
Demands
7. Product Price
8. Variety and Taste
of Food
9. Cleanliness and
Efficiency
10. Location
Total
2.34
2.53
3.17
The competitive profile matrix shows Sonic incorporation with ranking of 3.17
performing better than both Stake and shake, and Good times. In general, any companys total
weighted score higher than 2.50 is considered a strong in position. Good Times received total
weighted Average of 2.34 in Competitive Profile Matrix. This indicates, Good Times is
performing the weakest between two competitors, since the company did not manage to stay
above 2.50 and be in a strong position. Stake and Shake with Score of 2.53 stayed slightly above
the average and is safe for now.
Good Times
14
Based on CPM the key factors that helped company to get close to strong position are
product quality, variety and taste of food, cleanliness of environment, production efficiency and
convenient locations. In order to achieve competitive advantage and be in strong position in the
future, the company needs to build strong brand awareness and expand globally. External
Factor Evaluation Matrix for Good Times Burgers
Opportunities
Consistently growing
same store sales as trend
showed an increase of
3.1% in fiscal year 2012
Increasing the breakfast
day part which will give
international sales 6%
Competitors (BK &
Wendys) lack Good
Times like option double
drive thru restaurant and
50% higher check ins
More areas and site for
expansion due to 3.8%
industry growth rate
Demand for Food that is
all Natural and organic
and Handcrafted Foods
that contains no hormones
or steroid
Closing low volume
restaurants to increase
operating margin and
greater allocation for
overhead cost
More demand for foods
with low calorie count due
to change in lifestyle
Joint venture with some
restaurant in future due to
increase of food-service
establishments in the
United States which
almost doubled in the last
three decades
Weight
.10
Rating
4
Weighted Score
.40
.02
.06
.03
.09
.10
.20
.15
.45
.05
.20
.01
.30
.03
.06
Threats
Trends in lowering dining
due to increase in obesity
rate and disease such as
bird flu
Weight
.06
Rating
3
Weighted Score
.18
Good Times
Negative media campaigns
highlighting potential
adverse effect
Franchise could take
action in cause loss to
business
Rising cost of packaging
and food items in year
2013
Recession and Economical
factors such as decrease in
value of dollar and
increase in price of fuel
The hamburger industry is
highly competitive
Changing in consumer
tastes and switching to
generic brands
Labor shortages could
slow business
Total
15
.06
.24
.03
.06
.05
.10
.05
.10
.05
.20
.10
.30
.02
.04
1.0
2.98
Above is overview of Good Times Burgers External Factor Evaluation Matrix (EFE) in
order to analyze the given set of opportunities and threats confronting the restaurants in longer
run The National Research consultants have predicted a 3.8 percent increase in restaurant sales
over 2012, to $660 billion. That would be the fourth consecutive year of sales growth for the
industry. The quick-service sectors sales should jump 4.9 percent to $188.1 billion in
prospective year. The another offering is the introduction enticing customer towards lower
calorie items thus imparting lifestyles in customers with menus like 5280 lifestyle menu list like
Sweet Potatoes. Summer and Holiday Shakes, Hatch Valley New Mexico Green Chile Burritos,
Fresh Grilled, Honey Cured Bacon Burgers and Loaded Fries. Third
Key factor is Good Times Burgers initiative to close down the restaurants that are low
volume in order to have more allocation for overhead resources and improving operating margin.
Key Threats include negative media campaign that circle with respect to the consumption of beef
that have added preservatives that have adverse effects on consumers in publications. There has
been trend of recently low levels of dining in. The other key threat the size of various
competitors have large resources and there discounted prices could have severe impact on the
Good Times
16
Good Times Burger Business. The ranking of 2.98 means that the company is responding
moderately to challenges, despite being in competitive market.
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGICAL DEVELOPMENT
PROCUREEMENT
Outboun
d
Logisitc
Opera
tions
Inbound
Logistic
Marketing
And Sales
Service
PROFIT MARGIN
Firm Infrastructure: The Company has in total thirty-seven restaurants that cater in areas of
Colorado, Wyoming and North Dakota. Good Times Burgers signed with a company called the
Heathcote Capital LLC (Heathcote) to provide the Company with financial suggestions based
on possible strategic transactions which includes identifying and contacting potential acquisition
or to find various sources of financing in terms of future needs. They basically assist them in
financial aspects in terms of getting transactions on behalf of the Company (Collins, 1998).
Good Times
17
Human Resource: Good Times Burgers holds approximately 430 employees as per recent date
taken from many credible sources. They believe in continuous improvement since they have
system that requires optimum efficiency. They seek to hire competent employees with Operating
Partners Program. They provide various benefits such medical insurance, incentives or bonuses
that are tied to Key Performance Indicators formulated by the Company (Kaplinsky, 2000).
Technological Developments: In terms of technology the firm is technically and professionally
apt to withstand rigors that come with competing with Restaurant Industry. Basically, they have
implemented to measure time each order takes to be delivered by Taking Order Software that is
there for further to quickly address areas of concern and quickly increase efficiency. All the cash
transactions are measured by management back office system that gathers sale volume occurred
on point of sale transactions. All employees are imparted with training based on train, test, certify
and retrain in order to increase efficiency at all levels at the organization. The use of having a
library of video tools also elucidates the use of technology in order to strive for further
consistency and be sustainable in longer.
Procurement: All their supplies come from one vendor that is Food Services of America. All
that includes food and Paper supplies
Inbound Logistics: The source of all their supplies come from sole vendor i.e. Food Services of
America and that result in their smooth continuation on operational front. Product packing is
convenient to customers, for example Its fries will sit comfortably in the cup holder and its top is
adjusted with fries length.
Good Times
18
Operations: The Company gives adequate training to employees in terms of generating quality
control. They inspect their manufacturers and then work closely with them to provide and map
specifications and quality checks. National Restaurant Association provides courses to the
employees on ways to maintain adequate hygiene and cleanliness within parameters of the
restaurants.
Outbound Logistics: Since Good Times Burgers basically operates quick service restaurant or
drive thru one. It has software for order taking to set a particular benchmarks how much time or
measure time it takes to deliver a given order. The person that takes the order is responsible for
delivering that order to the customer as well.
Marketing and Sales: The Company basically serves its most expenditure in radio media and
they intend make focus on funds on store level and trade area campaigns with help of Social
Media. They also market new schemes of products through on site merchandizing in order to
attract and retain more customers.
After Sale Service: feedback and returns are considered to be an important factor. Good Times
accepts any complains and returns for exchange of an order. They use several sources of
customer feedback to evaluate each restaurant services and quality performance. Website
comments, telephone surveys, computerized secret shopping program are some examples.
Good Times
19
Analyzing Functional Areas Of Good Times Burgers
Management: Good Times continuously capitalizing on its management skills and trying
to improve weak areas by planning and organizing ahead of time. Recently, Good Times hired a
Vice President to be in charge of franchise development of their newly opened Bad Daddys
burger bar. Moreover, the company is planning to expand and open four more Bad Daddys
small box restaurants by the end of 2014. According to business week article, management
actually "walks the walk" when it comes to maximizing shareholder value, unlike a more visible
peer who continues to resist activist pressure.
Marketing: Good times marketing efforts on anticipating and fulfilling customer needs is
satisfying. The company was able to achieve successful result by commercials and image of
happiness made to order, with Hand-Breaded chicken tenders and Freshly cut fries. Also,
by using cartoon commercials the company targets different age groups from children, teenagers
to adults. Moreover, the company participates in local community events, and charitable
activities to supports neighbors during their time of need.
Finance/Accounting: Good times sales and profit are increasing, GTIM has a strong
balance sheet to support growth with a minimal amount of debt and ~$5.2 million in cash.
More details about Finance will be discussed during the next step
Good Times
20
Production/Operation: Good Times restaurants sales increased 14.1% for the month of
November on top of an 8.4% same store sales increase in the prior year. Good Times same-store
sales are increasing continually as a result of strong operation and production strategies. The
company is trying to be a low-cost and high quality products with great customer service
Moreover, the company put efforts into training the employees, process, and quality of how the
burgers are made. However, the companys Inventory decisions are to be reconsidered. Last
years inventory turn over rate displayed poor performance in inventory system.
Research and Development: Since the company should continuously develop new
products on the menu, research and development is a critical factor. The company nearly spends
1% of sale on research and development, but there is no relationship between R&D expenditure
and successful product line. Therefore, in developing new menu and product peoples
preferences and consumer research are important factors that should be considered.
Good Times
21
Liquidity Ratio: liquidity ratio measures how quickly a companys asset can be
converted to cash. It also measures the company's ability to collect on debts and accounts owed
to them in order to purchase additional asset. A high number indicates that the company collects
cash more frequently which leads to a better liquidity position In this Category we have taken
current ratio and cash ratio are as follows
Financial Ratio
current ratio =
Formulae
current
assets
current
liabilities
Industry
Avg
Competitor
Sonic inc
(2012)
2011
2012
1.2
3.9
107.2
1.7
0.7
3
1.3
80.5
1.33
1.10
Source: Businessweek
Current ratio analysis represent Good Times Burger is 0.7% for 2011 and 1.3% for 2012. Since
firm current asset increased by 2.25% , current ratio of good times increased .This means is firm
is adequate in meeting its future obligations. But Sonic Restaurants have current ratio of 1.33%
which means it is better than the Good Times. Comparing both companies to industry average it
is clear both Good times and Sonic inc are doing well and slightly above the average.
Good Times
Financial Ratio
Quick ratio =
22
Formulae
Cash and
cash
equivalents
+account
receivables
(total)
Current
liabilities
Competitor
Sonic inc
(2012)
Industry
Avg
2011
2012
0.8+0.1=0.9
0.6+1.7=2.3
52.6+27.1=79.7
1.7
0.52
3
0.77
80.5
0.99
1.12
Source: Businessweek
Quick ratio is basically another measure of firm being able to meet its obligations in short term.
The Quick ratio for Good Times Burgers for Year 2011 is 0.52%% and 0.77% is 2012.If we
compare with industry analysis its way too behind. Current ratio of the Company is greater than
this ratio it means company current assets are dependent on inventory. Sonic Corporation has
greater quick ratio of 0.99 in comparison to latter in 2012.
Leverage Ratio: indicates the extend to which a firm has been financed by debt. In this
we shall take Debt to Equity and Debt to Capital ratio
Financial Ratio
Debt to equity
ratio =
Formulae
Total
liabilities
Total equity
2011
2012
4.5
2.5
1.8
3.8
3.3
1.15
Industry
Avg
Competitor
Sonic inc
(2012)
0.64
621.5
59.2
10.49
Source: Businessweek
Debt to Equity ratio for Good Times Burger is 1.8 in year 2011 and 1.15 in year 2012. Good
times equity increased by 0.32% during 2012, which is a good sign for the company. The
competitor Sonic corporation ratio is 10.49%. both companies are performing higher than
industry average which is a remarkable sign of progress.
Financial
Formulae
2011
2012
Industry
Competitor
Good Times
Ratio
Debt to Capital
ratio =
23
Sonic inc
(2012)
Avg
Total
liabilities
Total equity
+total
liabilities
4.5
2.5+4.5=7
0.64
3.8
621.5
3.3+3.8=7.1
0.53
59.2+621.5=680
.7
0.91
0.86
Source: Businessweek
Debt to Capital ratio for Good Times Burger is 0.64 in year 2011 and 0.53 in year 2012.The
competitor Sonic corporation ratio is 0.91. A higher debt to capital indicates a higher default risk
for the company. Good times has financial strength by having low cost of debt whereas Sonic inc
has higher cost of debt.
Activity Ratios: Measures how effectively firm is using its resources. I analyzed total
asset turnover and Account Receivable Turnover ratio
Financial Ratio
Total asset
turnover =
Formulae
Total Net
Sales
Total Assets
2011
2012
20.6
7
2.94
19.71
7.06
2.79
Industry
Avg
Competitor
Sonic inc
(2012)
1.39
543/7
680.8
0.79
Source: Businessweek
The asset turnover measures a firm's efficiency at using its assets in generating sales or revenue the higher the number the better for the company. The asset turn over was 2.94 in 2011 and 2.79
in 2012. the companys asset turnover decreased by 0.051% during 2012. This is due to the fact
that the companys total asset increased and gross profit margin decreased.
Whereas the competitors stand on 0.79 and the industry average is 1.39.
Good Times
Financial Ratio
Receivable
turnover =
24
Industry
Avg:
Competito
r
Sonic inc
(2012)
Formulae
2011
2012
Net Sales
Avg
Receivable
20.6
19.71
543.7
0.1
206
0.1
197.1
14.8
36.73
28.8
Source: Businessweek
The account receivable turnover for Good Times Burgers is 206 in year 2011 and 197.1 in year
2012.The competitor has lower account receivable turnover of 36.73 which is quite better. Good
times burger has high account receivable it means it takes them a lot of time to get back their
receivables.
ProfitabilityRatio: profitability ratio gives us an idea of how likely it is that a
company will have a profit, as well as how that profit relates to other important information
about the company. Some of the profitability ratios that I have looked at are Gross Profit Margin
and Return on Assets
Financial Ratio
Return on Asset
=
Formulae
2011
2012
Net Income
Total Assets
-1.0
7.0
-.142
-0.8
7.1
-.112
Industry
Avg
Competito
r
Sonic inc
(2012)
10.2
36.1
680.8
0.05
The Return on assets ratio for Good Times Burger is -14.2% and -11.2% in year 2011 and 2012
respectively. Its competitors have better returns on their assets than good times burger. Good
times is performing worst comparing to industry average and competitor.
Financial Ratio
Formulae
2011
2012
Industry
Avg
Competito
r
Good Times
25
Sonic inc
(2012)
Gross Profit
Margin =
Gross Profit
Revenue
1.3
20.6
0.06
1.6
19.7
0.812
34.22
285.4
543.7
0.524
Source: Businessweek
Gross profit margin of the company is .06 in 2011 and .812 in 2012.the competitor has .524
ratio. Gross Profit Margin is the percentage of gross profit for every dollar of revenue. In other
words, the amount of gross profit generated for each dollar of revenue. The gross profit for 2012
was higher than in 2011 even though the sales revenue dropped in the current year. However, the
cost of sales also decreased in 2012 by 0.69%, which was the reason behind the increase of gross
profit margin in 2012.
Overall, two profitability ratios have increased. Since the company is facing rising expenses and
the competition in the market is increasing the change is not drastic. None of the companies are
close to industry average however; Sonic Inc is performing better than Good times.
Growth ratios:
Financial Ratio
Earnings per
share =
Financial Ratio
Net income
Formulae
Net
earnings to
common
stockholder
Number of
shares
Formulae
Annual
percentage
2011
2012
1.04
0.07
2.44
0.42
2.40
0.29
2011
2012
Industry
Avg
Competito
r
Sonic inc
(2012)
-0.4
0.32
Industry
Avg
Competito
r
Sonic inc
(2012)
Good Times
26
in profits
%
-1.25
-4.35
0.10
-.041
Analyzing financial ratios help us determine how efficient and effective the company is in
meeting its obligation. Effectiveness is the degree to which a purpose or goal is accomplished.
This is where problems are resolved and the intended or expected result is produced.
Effectiveness is determined without any reference to cost. In simpler terms, it is defined as
doing the right thing. For example, a company is effective when it accomplishes its annual
sales target even if it incurred high costs in order to achieve the assigned target. It can be
determined by looking at receivable turnover, return on asset and inventory turn over. Good
times effectiveness is relatively decreasing. Even though ROA increased by 0.21% in 2012, both
receivable turnover and inventory turnover have been decreasing (inventory turn over was 98.69
in 2011, and 98.41 in 2012)
Efficiency refers to the ability to accomplish a job with a minimum expenditure of time and
effort. It is said to be efficient when resources are used in such a way that production of goods
and services are maximized. In simpler terms it is defined as doing the thing right. For
instance, continuing the example mentioned in the previous paragraph, a company would be
efficient when it achieves its annual sales target and minimized its costs. It can be determined by
looking at ROA, ROE, and gross profit margin. Return on Asset increased by 0.21%, ROA gives
an idea as to how efficient management is at using its assets to generate earnings. Return on
equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested it changed %-54.39 in 2011 to % -28.99
2012. This implies that profits are increasing by a large scale, which can result in the
Good Times
27
shareholders confidence. Gross profit margin increased by 12.6%. Therefore, Good times
efficiency is relatively increasing
Sep 30
2011
Sep 30
2012
Increase
Or
decrease
VERTICAL
ANALYSIS
2011 2012
$847,000
$616,000
(231,000)
(27.2)
70.6%
$111,000
$191,000
1,200,00
0
5,720,00
0
$1,650,000
159,000
3,860,000
1539000
(32,000)
2,660,000
1386.4
(16.75)
216%
9.25% 23.8%
15,91% 2.25%
17.41% 54.67
3,080,000
(2,640,000)
(46%)
81.71% 43.62
7,000,00
0
496,000
1,680,00
0
4,480,00
0
2,520,00
0
7,000,00
0
7,060,000
60,000
0.86%
1005
493,000
3,010,000
(3000)
1,330,000
(0.60%)
79.16%
7.08% 6.91%
24.0% 42.63%
3,800,000
(680,000)
15.17%
64.0% 53.82
3,260,000
740,000
29.37%
36%
7,060,0000
----------
----------
15.9%
46.17
100%
Good Times
Currency in
Millions of US Dollars
Revenues
28
4 Year
Trend
due to
closure of
restaurants
menureengineerin
g result in
lower cgs in
2012
Total revenues
Cost of Goods Sold
20.9
20.2
20.6
19.3
19.7
18.1
(0.9)
(1.2)
Gross profit
Selling general & admin expenses,
total
Depreciation & amortization, total
Other operating expenses, total
Operating income
0.7
1.5
1.3
1.3
1.6
1.4
0.3
0.1
0.9
2.4
(1.7)
0.9
2.2
(0.8)
0.8
2.2
(0.5
(0.1)
0
(0.3)
Interest expense
Interest and Investment Income
Net interest expense
Income (Loss) on Equity
Investments
Other non-operating income
(expenses)
Ebt, excluding unusual items
Gain (Loss) on Sale of Assets
Ebt, including unusual items
Minority Interest in Earnings
Earnings from Continuing
Operations
Earnings from discontinued
operations
Net income
(0.6)
0.0
(0.6)
--
(0.3)
0.0
(0.3)
--
(0.2)
0.0
(0.2)
--
(0.1)
0.0
(0.1)
0
--
0.0
0.0
0.0
(2.3)
-0.2
(2.5)
0.2
(2.5)
(1.1)
0.2
(0.9)
(0.1)
(0.9)
(0.7)
0.1
(0.7)
(0.1)
0.7
(0.4)
0.0
(0.2)
0.0
(0.2)
(0.6)
--
--
--
(2.90
(1.0)
(0.8)
(0.2)
due to
closure of
low
operating
restaurants
due to end
of many
partnership
Good Times
29
(2.9)
(1.0)
(0.8)
(0.2)
(2.3)
(1.0)
(0.8)
(0.2)
and franchise
restaurant
Good Times
30
Weight
.09
Factor
4
Weighted Score
.36
Menu re-engineering to
reduce the cost of sales
Excellent management and
employee retention
Gain in demand due to
providing natural handcraft
foods without hormones or
steroid
Increase in efficiency due to
12.5% increase in gross
profit margin
Improvement income from
operations due to close of
four restaurants in 2012
Sales increase in 2 to 3 %
gained through lower
advertising expenditures
Increase in Same store sales
of 3.1% in fiscal year 2012
Made to order concept
reduces costs by 1.3% in
terms of packaging cost
Operating partner program
result in 25% of restaurant
improvement in cash flow
.07
.21
.08
.32
.06
.18
.05
.15
.05
.20
.08
.32
.06
.18
.05
.15
.06
.18
Weaknesses
Greater competition such as
Wendys
Non-drive through generate
more 50% average chick-in
Closure of few low operating
restaurant
Lower resources and finances
such as inventory turn over
Statured market and
Competitors provide greater
range
Limited to few areas like
Colorado,Wyonming and
North Dakota
Inflation could result in
variability in food costs
New restaurants may not be
profitable due to little
diversification
Lack of finances to acquire
new sites
Dependence on key
management employees
Total
Weight
.04
factor
1
Weighted score
.04
.03
.03
.03
.06
.03
.03
.03
.06
.03
.06
.03
.03
.04
.08
.05
.10
.04
.04
1.00
2.78
Good Times
31
Since the value of the firm comes at 2.78 means it has decent performance. A lower value than
2.50 makes a company position is weak.
SWOT Matrix:
An analysis of an organizations strengths and weaknesses alongside the opportunities
and threats present in the external environment
Internal Strengths
Internal Weaknesses
Good Times
32
10.Operating partner program result
in 25% of restaurant improvement in
cash flow
External Opportunities
SO Strategies
WO Strategies
External Threats
ST strategies
WT Strategies
Good Times
33
Financial (FP)
+6 best, +1 worst
+_1_ Return on investment
+_2_ Leverage
+_3_ Liquidity
+__2 Working capital
+_2_ Cash flow
+_3_ Ease of exit from
market
+__4 Risk level of business
+ __2.42_ average
Environmental (SP)
-1 best, -6 worst
-3_ Stage of technological life
cycle
-1_ Rate of inflation
- 2__ Demand variability
-2__ Price range of
competing offerings
-1__ Barriers to entry into
market
-4__ Competitive pressure
-3__ Price elasticity of
demand
-2.28___ average
Industry (IP)
+6 best, +1 worst
+3__ Stage of
industry/alliance evolution
+3__ Growth potential
+4__ Profit potential
+4__ Financial stability
+4__ Technological knowhow
+4__ Resource utilization
+3__ Capital intensity
+3.57___ average
Competitive (CP)
-1 best, -6 worst
- 3__ Market share
-2__ Price/quality ratio
-3__ Product life cycle
-2__ Customer loyalty
-1__ Competition's
capacity utilization
- 2__ Technological knowhow
-1__ Location
-2.00____ average
__0.13__
ycoordinate
(FP +SP)
__1.57__
xcoordinate
(CP + IP)
Good Times
34
-2 -1
+1 +2 +3
Integration,
Intensive
+4
+5
+6
IP
-1
-2
-3
Defensive
Competitive
-4
-5
-6
ES
Since we came with the coordinates of x-axis =1.57 and y-axis =o.13 the company should go for
an aggressive strategy either to go for market development or product development in terms of
introducing low calorie value count menu.
Good Times
35
High +20
Industry
Growth
Rate
-20
Low
1.0
.50
High
0.0
Low
Good Times
36
Since Good times falls under question mark, the suggested strategies are, market
penetration, market development, product development and divestiture. Companies under
question mark category generate low cash; therefore, Good Times must strengths their business
by perusing intensive strategy. IE MATRIX
Internal-External Matrix
IFF Score
(2.78)
Strong
4.0 - 3.0
4.0
Strong
4.0 3.0
EFE
Score
(2.98)
Average
3.0 - 2.0
3.0
Weak
2.0 - 1.0
2.0
1.0
4.
0
3.
Averag 0
e 3.0
- 2.0
2.
0
Weak
2.0 1.0
1.
0
Good Times should maintain and hold their position by using two strategies: market penetration
and product development.
Good Times
37
Weak
Compe
titive
Positio
n
Market development
Market penetration
Product development
Horizontal integration
Divestiture
Quadrant I
Quadrant III
Retrenchment
Related diversification
Unrelated diversification
Divestiture
Liquidation
Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Related diversification
Strong
Compe
titive
Positio
n
Quadrant IV
Related diversification
Unrelated diversification
Joint venture
The Grand Strategy Matrix is based on two evaluative measures, competitive position
and market growth. Good Times Burgers is the strong in areas of Colorado when it comes to the
food industry, and the food processing industry is growing both domestically and internationally.
When we were making the Grand Strategy Matrix we found that because of the market growth
and Good Times Burgers belongs in quadrant 1. The strategies that they could use from being in
that quadrant are market development, market penetration, product development.
Good Times
38
SWOT
IE
X
X
X
X
X
SPACE
X
X
X
X
X
X
X
Grand
X
X
X
X
X
X
X
BCG
X
X
X
Count
2
2
3
4
4
5
3
1
The first strategy that is clear for company to do is product development. Between Market
penetration and Market development I believe the company should seek market development. By
choosing this factor the company can create brand recognition worldwide and not only in
Colorado, Dakota and Wyoming. they could try to target new segments such as customers who
are more health conscious and intend to lead healthy lifestyle. Market Development and Product
Development are appropriate one since considering the size of industry. Moreover, based on ST
strategies the company tried to lower advertising expenditure and focus on increasing sale.
Therefore, market penetration can create internal conflict comparing to what company trying to
achieve.
Good Times
39
Quantitative Strategic Planning Matrix
ENTER NEW
Markets such as
Middle east and Asia
where people prefer
foreign products and
Burger dining is
trending.
QSPM
Opportunities
Consistently growing same store
sales as trend showed an increase
of 3.1% in fiscal year 2012
Increasing the breakfast day part
which will give international sales
6%
Competitors (BK & Wendys)
lack Good Times like option
double drive thru restaurant and
50% higher check ins
More areas and site for expansion
due to 3.8% industry growth rate
Demand for Food that is all
Natural, organic and Handcrafted
Foods that contains no hormones
or steroid
Closing low volume restaurants to
increase operating margin and
greater allocation for overhead
cost
More demand for foods with low
calorie count due to change in
lifestyle
Joint venture with some restaurant
in future due to increase of foodservice establishments in the
United States which almost
doubled in the last three decades
Threats
Trends in lowering dining due to
increase in obesity and disease
such as bird flu
Negative media campaigns
highlighting potential adverse
effect
Franchise could take action in
cause loss to business
Rising cost of packaging and food
items in year 2013
DEVELOP NEW
PRODUCTS on the
menu that can attract
customers with different
taste and regional
preferences such as
Pizza Burger, and 70
calorie Lettuce Burger.
Weight
AS
TAS
AS
TAS
0.1
0.4
0.3
0.02
0.02
0.06
0.03
0.1
0.4
0.2
0.15
0.3
0.6
0.05
0.15
0.05
0.1
0.2
0.4
0.03
0.09
0.03
0.06
0.18
0.24
0.06
0.18
0.24
0.03
0.12
0.03
0.05
Good Times
Recession and Economical factors
such as decrease in value of dollar
and increase in price of fuel
The hamburger industry is highly
competitive
Changing in consumer tastes and
switching to generic brands
Labor shortages could slow
business
40
0.05
0.05
0.2
0.15
0.1
0.2
0.4
0.02
1
Strengths
Early development of double
drive through concept
Menu re-engineering to reduce the
cost of sales
Excellent management and
employee retention
Gain in demand due to providing
natural handcraft foods without
hormones or steroid
Increase in efficiency due to
12.5% increase in gross profit
margin
Improvement income from
operations due to close of four
restaurants in 2012
Sales increase in 2 to 3 % gained
through lower advertising
expenditures
Increase in Same store sales of
3.1% in fiscal year 2012
Made to order concept reduces
costs by 1.3% in terms of
packaging cost
Operating partner program result
in 25% of restaurant improvement
in cash flow
Weaknesses
Greater competition such as
Wendys
Non-drive through generate more
than 50% average chick-ins
Closure of few low operating
restaurant
Lower resources and finances
such as inventory turn over
Statured market and Competitors
provide greater range
Limited to few areas like
Colorado,Wyonming and North
Dakota
2.44
2.7
0.09
0.27
0.18
0.07
0.07
0.28
0.08
0.24
0.16
0.06
0.12
0.24
0.05
0.2
0.15
0.05
0.08
0.06
0.24
0.18
0.05
0.06
0.04
0.08
0.16
0.03
0.03
0.12
0.09
0.03
0.06
0.09
0.03
0.12
0.09
0.03
0.12
0.03
Good Times
41
0.03
0.04
0.12
0.08
0.05
0.2
0.05
0.04
1
TOTAL
1.96
1.78
4.40
4.48
The above analysis of QSPM indicates product development is the way forward for goodtime
than market development
Good Times
Operations
objectives
Reduce losses
from operating
income
Increase in same
store sales by 4%
in coming years
42
Human
resource
objectives
Seeking to hire
more restaurant
managers and
operating
partners
Annual
objective
s
Provide
training to
new manager
Give training
to employees
in order to
Marketin
g
objective
s
More stress
on
advertising
by having
presence in
Annual
objectives
Intensifying
promotional
campaigns and
also increase
focus on site
merchandizing
Finance
objectives
Mastering
finances and
obtaining
$500,000 for
strategies
related to new
product and
R AND D
objectiv
es
Introducing
new Pos
system and
menu reengineering
Annual
objectiv
es
Annual
objective
s
Ensuring
better cash
generation
in order to
curb losses
Develop low
calorie count
menu
Good Times
43
The long term Objectives of Good Times Burgers have given importance in
R&D department
1. The introduction of new system in terms of new Point of Sale system to further improve
recording of transactions.
2. Initiating techniques like menu reengineering in order to curb the rising cost of food
prices.
3. Constantly finding to reinvent and improve processes of quality and service.
4. Launch of new product such as lifestyle 5280 menu
Marketing department
1. It tends to give more importance of social media in gathering more customers and
conducting trade fair (Sprague, 1987).
2. Promoting the new product developed in low calorie category in the most extensive way
3. Increase more on site mechanizing
Finance Department
1. They want to improve their operating margin by managing our incremental sales growth.
2. Reducing cost of sales and better reduces their overhead cost.
Good Times
44
Operation Department
1. They want to same store sales in 2013 since 2012 saw increase from 2011.
2. Aggressively ensuring sales of the new product developed in low calorie category.
Strategy Implementation
The phase is crucial since its alignment of resources with company strengths and opportunities
Company Policies
Increase in Revenue though same store sales, menu-reengineering and minimize losses.
Following are some important policies elements that are necessary for the company;
1. It is imperative for Finance Division to make efforts to reduce additional costs incurred in
form of expenses
2. Operations division must try for the year 2013 to continue same store sales as there was
increase of 3.1 percent in previous year 2012.
Good Times
45
3. Operation division must aggressively work with marketing department to make sure the
new product developed turns out to be successful through on site merchandizing to
increase check in the coming months.
4. By the introducing the low calorie menu, they must try much more other products in
order to increase since current customers trends have seen a decrease in the consumption
of high calorie menu due to adverse effects of health in USA.
5. Must try to improve their supplier strategy, since they are relying on sole vendor might
provide hindrance in the objectives they trying to pursue tin terms product development
strategy in terms of introducing a variety of low calorie menu for its customers
6. Ensuring quicker and better working resources by testing new point of sale system
therefore engaging employees with better training methodologies in order to cope with
rigors of ever increasing demands.
7. Closing non performing restaurants in future might help in generating additional finances
as per information being given by financial figures in the company
8. Implementation of better advertising campaigns in areas of the restaurant in order to
increase customer counts and to make themselves more prominent
9. Conducting market research and frequently conducted feedbacks might depict o tell
whether the strategy is going in right direction or not.
10. The company must keep with control over its finances when it comes to financing various
restaurants with they have done dual branding.
Resource Allocation
Good Times Burgers should require allocating resources by prioritizing them in terms of
developing new products. Large part of resources shall be required on operational front since it
shall require large amount of resources to launch a new product with additional marketing
expenses in terms advertising.
Managing Conflict
Good Times
46
Establishing new strategies will definitely create disagreement between two or more
parties in the organization. Changing menu and adding new items to the menu can create conflict
between chief and managers on whether to restructure or reengineer the menu. Moreover,
implementing strategies such as market development create trade-offs between managers
whether to seek growth or stability or whether to emphasize on profit margin or market share.
Good Times
47
Cost of Recommendations
Market segmentation
Segmentation is important variable to determine customer preferences and taste to be able
to increase sale. Segmenting markets help managers to determine consumer needs and to match
supply and demand and therefore it is easier to control what types of product and services to
provide. In order to go for product and market development the company must go for mixture of
geographical segmentation since it centers its base around three cities or more with 39
restaurants there in every locale of the cities. The Behavioral Segmentation shall be to attract
more consumers who perceived to be more health conscious and want to lead fitter lifestyle than
the people. The segment has its potential to bring renewed vigor for Good Times Burger in terms
of its financial Prospects and future.
VARIABLES
Market Segmentation
Geographic
Region
Density
Age
Mostly from 20 to 30
Gender
Family size
2+
Education
Race
Nationality
Americans
Psychographic
Social class
Personality
Use occasion
Regular
Usage rate
Medium
Benefits sought
Attitude readiness
Positive
Good Times
48
STAK
GOOD
TIMES
Good Times
49
table. After implementing the product development and market development these two areas will
increase significantly leaving company in a very good position.
Capital Requirements for Company
The company has one with long term debt financing in terms of acquiring money from
Wells Fargo Bank. The company entered into contract with PFGI II LLC with net proceeds of
$1,380,000.The deal with SII II also result in SII ownership in 51.3 % of company outstanding
common shares. The company basically is doing 50/50 debt equity financing as elucidate in the
above
Input data
Amount of capital requirement
EBIT Range
lines.
the number
Around 2 million
how determined
Since net loss did decrease to
($668,000) for the year 2012 from
Interest rate
Stock price
Shares outstanding
5 percent
$2.87
2,272,614 outstanding
($895,000) in 2011
No taxes incurred .
Good Times
50
Projected Income statement and Budget table for Good Times Burger
ITEMS
YEAR
Rationale for Projection
2012
(amoun
t in
dollars) 2013
2014
Restaurant Sales
Franchise Fee
and Royalty
Total net
Revenues
Restaurant
operating Cost
Food and
Packaging Cost
Payroll and
employees cost
occupancy and
operating cost
Pre-opening cost
depreciation and
amortization
Total Restaurant
operating Cost
Selling and
Administrative
Franchise cost
income from
operations
19,274
432
21,000 22,000
500 515
19,706
21,350 23,450
6,592
7,100 7,800
6,691
7,000 7,400
3,939
3,500 3,200
795
18,017
650 590
18,250 19,000
2,154
-51
3,000
increase
(474)
(450) (340)
Although company had its strengths in terms of year 2012 by increase in same store sale
and reduce cost of sale through menu-reengineering. The restaurant basically has restaurants in
three areas and there it has been able to being in advantageous position since being first one to
framework the idea of drive thru restaurants. since the hamburger market is competitive for the
last five years. They had to change their strategy. Although they have introduced various menus
Good Times
51
with quality service, it was still seen that normal casual dining restaurants had higher check inns.
The trend now is consumers have shifted towards occupying a health conscious lifestyle which
promotes one to indulge in healthy low calorie count menus due to various campaigns being in
media because of consumption of high calorie foods could cause serious issues for consumers.
Since the company had adopted a differentiation strategy because it provides different menus
with ample amount of variety.
Timeline of Action
Launch of New Product launched in the three respective areas of business.
Aggressive marketing on site and through social media or digital networks.
See the performance of Product in its initial months through customer
June 2014
June-Aug 2014
Sep 2014
feedbacks.
Overseeing the resources and allocation in right areas so that expenses are
Sep-Dec 2014
managed
Refining processes in terms of service and quality of employees in order to
Dec 2014
Good Times
52
Evaluation of Strategy
Good Times
53
progress to fully exhibit their activities to launch the product. They might just need individuals to
be trained for the launch in order to execute plans in accordance of the pre-planned strategy.
In order to deal with such situation they must try to keep resources or additional gains
they get due to closures or reduction in production cost. They can further reduce their advertising
to social media so that they dont have to spend a substantial amount. Good Times Burgers must
not go for more franchising since it hasnt worked to their advantage as previous events has seen
the closure of low operating volume. They should focus on their product since that serves them
as a source of strength in terms of offering differentiated and unique value in terms of menu
ranging to hamburgers, custards, 5280 lifestyle menu or other low calorie count foods.
Good Times
54
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