Chicken Coop:An HBR Case

INTRODUCTION
This case is about The Chicken Coop, a quick service restaurant (QSR) chain whose growth has been pretty impressive at about 10% per annum, even during economic downturns. The motto –“We are chicken” reflects their philosophy to provide the best tasting meal around by specializing in the preparation and delivery of chicken. But in 1995 – unprecedentedly, sales were down in 20 of the Coop’s 76 stores. Also, many of the struggling restaurants had long been considered the company’s strongest; together, the 20 restaurants accounted for 32% of retail sales.
Product differentiation strategy has been followed by launching new products like chic pizza and the aim of the company has been to create overall value for the customer. But still the sales have been down. Hence, immediate strategy has to be formulated and the CEO meets his vice-president quality and Vice President marketing in the same pursuit. They analyze the sales slump and suggest various alternatives available. But the CEO is having doubts in the success of all the expensive alternatives being suggested.
PROBLEM DEFINITION
The main problem is that the management is to formulate a strategy in response to the sales slump and immediately implement the corrective measures. Decisions regarding market research and its technique, co-branding, product diversification strategy, focus on the core competencies etc has to be taken meticulously so as to ensure a positive response in the future. Various other issues such as whether to provide home delivery service or not, control on the quality of food and competition from the competitors are also to be addressed.
ANALYSIS
The analysis of the problem basically addresses product differentiation, aggressive marketing, price discounts and the quality of food getting degraded at some of the restaurants. The various alternatives for market research suggested are as follows:
Taste Tests: The purpose of the taste tests would be to gather objective information about eh quality of the coop’s menu items, relative to the competition. A “convenience sample” of loyal customers from nearby stores will visit the kitchens and give their opinions about food items. It will require $6000 for one Taste Test which would involve 8-12 customers. If this is conducted in every 20 problematic coop’s branch, cost of $120000 will be incurred, which is not an economical proposition. Also its not ensured that which food will select for test purpose.
Quality Inspection Program: In this program a quality inspector will visit each of The Coop’s restaurant and note down the measures. But the CEO is skeptic that outsider will not be able to find out whether all the processes & standards are followed in the kitchen or not. Also the quality inspector may be unaware of the various problems of the QSR industry .Hence an internal Quality inspector is suggested.
Brand image Monitoring Surveys: The purpose of this would be to gather quantitative data on The COOP’s brand image as against its competitors and will be done through telephonic interviews. This is an uneconomical and uncontrollable from company’s perspective. Also the customer might not feel good hence may affect the company’s image.
The Customer Experience Study (CES): The purpose of the Customer Experience Study would be to gather information on how customers viewed their visits to the Coop’s restaurants. A questionnaire will be prepared and filled in by dummy customer who will be employed. Though it is more economical, the credibility of this study is in question.
Customer Feedback Cards: The purpose of the customer feedback cards would be to gather information on customer satisfaction. These cards will be placed in stores. Comparatively, this is easier and economical.
RECOMMENDED ACTION
Keeping the analysis and the information provide in the case, the following actions are recommended:
Training to be conducted for the staff where they are told about courtesy towards customers, quality of food and service.
Internal quality inspectors should be employed to conduct quality survey.
The company should stick to its core competencies as product diversification has not fetched good results recently.
Price discounts may be offered on products having substantial margins. Also some promotional offers may be formulated.
Quantified survey using the Customer feedback cards should be done.