Rapid development of economy and the uprise of middle income class has resulted in dramatic growth of the Western fast food industry in Thailand. When walking along the streets of Bangkok, one will see many familiar brands such as McDonald's, Pizza Hut, Burger King, Domino Pizza, Shakey's Pizza, Dunkin Donuts, Kentucky Fried Chicken, and many others. All these fast food restaurants are normally located in prime area on the ground floor of shopping centers, with access from street, and are crowded with people, lining up for their fashionable favorites. 

 

Among all fast foods, hamburger, fried chicken, donuts, and pizza are major segments. Total fast food market size in Thailand was found to be:  Market share of major fast food brands in 1994 was reported to be:  

The World of Pizza in Thailand

 Consumer surveys in Thailand revealed that pizza is perceived as a more superior fast food, on par with fried and grilled chicken, compared with hamburgers. This is attributed to the familiarity of fried and grilled chicken to consumers in Thailand, while hamburgers are perceived as junk food, due to the spillover of image from other developed countries. Pizza, originated in Italy, formally served only in high class Italian restaurants, is perceived by the Thais as savory Western food. Of course, pizza is well accepted mostly for lunch and dinner. 

To enjoy pizza, Thai consumers can select from many possible types of restaurants: 

1. Pizza in higher class Italian and Western restaurants. (Sara Jane's, Paesano, restaurants in hotels)

 2. Pizza in lower priced, more mass oriented restaurants. (13 Coins restaurants chain and the like). 

3. Chain restaurants specializing in pizza, divided into international brands (Pizza Hut, Domino Pizza, Shakey's Pizza), and local chain restaurants (Narai Pizzeria as example)

  Regardless to type of restaurants, pizza is prepared in conventional and manual fashion. Dough for pizza bread is prepared in advanced, and be kept refrigerated or frozen to maintain freshness. Dough must be thawed before a pizza bread can be rolled and baked. When an order is received, kitchen staffs will take out the thawed dough, roll it to form a circular sheet to the size ordered (personal pan, medium, family size), placed in a metal pan for baking and serving. After baked for a period of time, toppings (onion, olives, vegetable, meat, sea food) will be added, and baking is continued, until pizza is ready to serve. Time required to prepare a pizza is in the range of 15-30 minutes. In terms of marketing mix strategies, it was found that Pizza Hut is the only pizza chain that advertise regularly in all media, including television, magazines, newspaper and FM radio. Narai Pizzeria advertise only in newspaper, and occasionally in FM radio in Bangkok. Shakey, Domino and 13 Coins do not advertise on regular basis. For prices, Narai Pizzeria set highest price, follow by Pizza Hut/ Shakey/ Domino (which charge similar price for the same size of pizza), while 13 Coins charge lowest price. (In 1994, The Pizza Factory is still not in Thai market. Minor Group, the present owner of The Pizza Company still operate The Pizza Hut franchised restaurants at that time) 

 The Story of Pizza By The Feet 

Narisa Praiwana, a BBA graduate from a university in the United States, used to work part time as an assistant manager in a Pizza Hut outlet while studying, has come back to Thailand. She had continued her study at ABAC MBA program, and graduated in 1989.

  With business knowledge learned and her past experience with Pizza Hut, she has generated a product concept for her pizza. In her idea, the ideal pizza must be served hot and fresh, with much faster serving time compared to the conventional 15-30 minutes waiting time for customers. She envisaged that the maximum waiting time shall be between 5-7 minutes after an order is given. Also, pizza must be adjusted to match the taste buds of Thai consumers as well. 

 With all these in mind, Narisa has work more than 12 months with a group of engineers and nutritionists, then come up with a pizza restaurant chain named Pizza By The Feet. Unlike conventional pizza, Pizza By The Feet is sold by length, starting at 0.5 foot, 1 foot, 1.5 feet, 2 feet, and up to 3 feet long. Pizza By The Feet is square or rectangular in shape, 1 foot wide. 

 Customers can order any length they want, up to 3 feet long (0.5 foot for single serving, and so on). Pizza By The Feet comes in six different tastes: Genuine Italian, Seafood, Panang Kai (Chicken Ragout), Keang Keaw Wan Kai (Chicken Green Curry), Moo Kratiam Prik Thai (Pork with garlic and pepper), and Vegetarian. 

 On the production side, pizza bread sheet would be prepared in the company's central kitchen, each 1 foot width and 3 feet long, refrigerated and transported to each outlet 3 times a day, so that freezer and thawing at each outlet would not be required. In each outlet, an automated pizza making machine is installed. Toppings are also prepared in central kitchen as well. 

 Pizza bread sheet would be taken out from the storage, placed on a conveyer belt that will continuously move the bread sheet into a pre-baking oven. It takes 10 minutes to bake pizza bread sheet on continuous basis. Leaving the pre-bake oven, toppings will be automatically applied on top of pre-baked pizza bread, using a computerized controlled automatic dispensing & application system (comprises of 6 dosing heads for six pizza flavors), controlled by signals from order entering and cash register consoles installed at the front counter of each sales outlet. All orders received (including length of pizza required and taste) will be entered into a computer, which will send signals to the topping dispensing machine, adjusting speed of conveyer belt in the entire pizza making machine (so that pizza will be made at the same speed as the store traffic). Topped pizza will then fed continuously on conveyer belt to the post- baking oven to finish the baking process (another 5 minutes required). Finished pizza is then cut to size by an automatic, computerized machine, linked to the central control computer.  

Benefits of this automated pizza making system are: 

1. Customers are guaranteed to get the ordered pizza, hot and sassy, within 7 minutes (because pizza is prepared automatically on continuous basis)

 2. Pizza production by the automatic, computer controlled system is hygienic, consistent, require very small kitchen space, and only a few kitchen staffs. Metal pans are not required, and hence, no washing operation, and less waste. Kitchen size reduction resulted in the need for significantly smaller outlet space, which is expensive in shopping center. Pizza kitchen and pizza making in Pizza By The Feet outlet is totally visible to customers (the kitchen is so clean and with no mess). 

 3. Pizza can be served faster, resulted in faster store traffic. Reduced kitchen and faster store traffic resulted in the requirement of 300 square meters area per outlet, compared to 500 square meters in conventional pizza restaurant. Saving in space, decoration is more than the cost of automatic system installed. 

 4. More topping flavors can be added later if so required 

 

The Success Story

 The first Pizza By The Feet outlet was opened early in 1993, and become a success, leading to the expansion of another 3 outlets in Bangkok in 1994. Narisa has already signed lease contracts with developers of shopping centers, to expand another 7 outlets in 1995, four in Bangkok, and in Chiengmai, Pattaya, Phuket.

 In the fourth quarter of 1994, Narisa has added breakfast menu Waffles 'n Sausages, coffee, tea, cereal with milk, and fresh fruit juice to the menu, and change the outlets operation time from 10:00-22:30 to 6:30-22:30. Again, Waffles 'n Sausages are prepared by automated and continuous process to save space, labor, and waiting time. 

 

Questions 

1. What is the generic strategy adopted by Pizza By The Feet that leads to it's success ? Justify your answer with marketing and strategic rationales. Also explained why the selected generic strategy make Pizza By The Feet successful. 

2. What are key success factors in the fast food industry, and what are distinctive competences of Pizza By The Feet. 

3. Explain reasons why the breakfast menu has been added to pizza menu of Pizza By The Feet, and how can you call this implementation as a strategy ? 

4. With the above information, how would you decide on pricing strategy, advertising strategy for Pizza By The Feet ?

Transcribed Image Text:

1991 1992 1993 1994 Year Market Size (Mil. Baht) 2,700.00 3,700.00 4,500.00 5,400.00 37.04 21.62 20.00 Growth (%) 1991 1992 1993 1994 Year Market Size (Mil. Baht) 2,700.00 3,700.00 4,500.00 5,400.00 37.04 21.62 20.00 Growth (%)

Answer rating: 100% (QA)

1 Generic Strategy Adopted by Pizza By The Feet The generic strategy adopted by Pizza By The Feet appears to be a combination of cost leadership and d... View the full answer