Strength - Broad Product and Service Offerings Broad product and service offerings help the company to serve
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Strength - Broad Product and Service Offerings Broad product and service offerings help the company to serve diverse needs and preferences of customers, thus enhancing its top-line performance. Applebee's offers a comprehensive range of food and beverages. Its product portfolio includes chicken, pork, soup, kids' meal, baked potato, garlicky green beans, fish and chips, grilled items, beef, burgers, steaks and ribs, sandwiches, seafood, appetizers, salads, pasta, and desserts. It also offers wraps and tacos, burgers, lunch combos, extras, and beverages. The company also offers services such as casual dining, franchise services and gift cards.
Robust Operational Network - Strong operational network increases the company's market penetration. Wide operational network not only enables the company to serve a large customer base, but also helps in mitigating risks associated with operating in geographically concentrated area As of December 31, 2019, the company had 1, 718 restaurants in 50 states within the US, 2 United States territories and 12 countries outside of the United States. It also operates 52 franchise groups, which include 33 domestic and 19 internationals.
Parent Backing -The company's association with Dine Brands Global Inc, (Dine Brands) further enhances its brand image and market position. Applebee's is a subsidiary of Dine Brands, one of the leading full-service restaurant companies in the world. Dine Brands franchises restaurant under two brands - Applebee's and IHOP. As of December 31, 2019, the company operated 3,628 franchised restaurants under both brands in the US and 13 international countries. It operated 1,718 franchise restaurants under Applebee brand in the US, two US territories and 12 international countries; and 1,841 IHOP franchise restaurants in the US, three US territories, and 13 international countries. The company operates both the restaurant brands through franchise groups in the US, Brazil, India, Canada, Indonesia, Dominican Republic, Qatar, Mexico, the UAE, Saudi Arabia, and Puerto Rico. The company's support from its parent provides the company's operations with a strategic advantage over its competitors including financial support, superior brand identity and product recognition.
Weakness- Restaurant Closure- The company will be closing twenty restaurants in FY2019. The decrease in the number of operating restaurants was due to the number of franchisees falling into financial crises. This indicates that the closed restaurants were not performing well.
Opportunity Strategic- Initiatives- The company is likely to benefit from the new product launches as a part of its strategic initiatives. For Instance, In January 2020, the company introduced a new Irresistibly to its menu. This new bowl includes items namely southwest lime grilled chicken, tex-mex lime grilled shrimp, homestyle chicken, crispy orange chicken and chicken bacon mac and chesse. In the same month, the company is offering Vodka Rum Frostbite, marked as Neighborhood drink which will be available across its location for a month as a part of winter offerings.
Growing Food service Sector in the US- The company could benefit from the growing foodservice profit sector in the US. According to an in-house report, the US food service profit sector is expected to reach US$803.7 billion by the end of 2022. Growth is expected to be augmented by increasing transactions and growing consumer spending. The number of transactions in the sector is expected to reach 80.8 billion in 2022. The transactions will increase as consumers increasingly rely on eating out due to changing family dynamics and time scarcity and increasing digitalization. Consumer preference to increased snacking will also contribute to growth, as they are likely to eat less, but more frequently. The number of food service outlets in the US is expected to reach 1.1 million in 2022.
Threat- Increasing Labor Wages in the US Increasing workforce costs could increase the company's operating costs and hamper its profits. The tight labor markets, government mandated increases in minimum wages and a higher proportion of full-time employees are resulting in an increase in labor costs. Effective January 2020, 26 states in the US increased their minimum wages. Arizona, California, District of Columbia, New Jersey, and Maine increased their minimum wages by US$1 per hour to US$12, US$13, US$15, US$11, and US$12, respectively. Alaska, Colorado, Florida, and Michigan increased their minimum wages to US$10.19, US$12, US$8.56, and US$9.65, respectively.
Other states such as Ohio and Rhode Island increased their hourly minimum wages to US$8.7, and US$10.5, respectively. Intense Competition The company faces competition from various restaurant operators in the US. The casual dining industry in the US is fragmented with many independent operators. Applebee restaurant competes with restaurants including locally owned restaurants and national and regional chains. The company's main competitors include Buffalo Wild Wings. Chili's Grill & Bar, Olive Garden and Outback Steakhouse LLC. Some of these competitors have an established market presence. Increased marketing and promotional activities by competitors may put pressure on the company to retain its market share.
Describe two ways declining trade and investment barriers have impacted this company's global operations.