Levendary Café: The China Challenge Case Study Solution
This case is about Legendary Café in the US market. It is a fast-food chain business with a worth of $10 billion. The founder of the company was Howard Eleventh. The US restaurant industry is about $600 billion and has geographical locations of about 960,000. This multi-unit restaurant has three segments, including specialty establishments that are famous for snacks and beverages, quick-service restaurants that work in fast food chains and facilitate customers by proving counter and drive-through services, and casual dining that is with fine dining concept or table service. Legendary lies in quick casual restaurant segment, with different services and offerings like wholesome soup, sandwiches and salads. The restaurant uses high-quality ingredients and provides quality services with a friendly and comfortable environment. The CCO, Lucian manages the company in the food development group and marketing team. The upper management of the company shares the culture of Legendary by the slogan “Tasty Food Goodness” also TFG. (HAN, 2013)
The company’s CEO, Mia Foster doesn’t have any experience in management as it is her first job as the CEO. She is a graduate and had a career in a major global accounting firm. Wall Street is worried about the stock as foster has strong track records and Legendary held a promise. The current position of the company is strong and the management of the company also forecaster its future projections. The company offers discount as compared to the competitors operating in the market. The reason for this discount is because the company is near to be tapped out. Another reason is that the CEO doesn’t have previous experience of management and the company is doubtful of her being able to build a multi-national brand. The major concern of the company is the expansion in China. Foster wants to meet Louis Chen: the president of Legendary China to determine the future of the company in China.
Q1: Please evaluate Legendary Cafe’s success in the US market.
A1: Evaluation Legendary Cafe’s success in the US market.
The founder of the company, Howard Eleventh always wanted to satisfy the customers and he always says to his staff that our motive is not the generation of revenues. He said that his staff should not focus on the profit and should forget today’s profit. These words impacted positively on the customers and also resulted in attracting customers in a large number. The company was also offering extra services to the customers, which also contributed to the success of Legendary in the US market. The loyal customers of the company were the professionals with white-collar jobs and upper-middle-class women who visited every week, five or six times.
The strategy of delighting the customers was also adopted by the other local restaurants in the US, like urban, suburban and rural. McDonald’s also introduced a variety in its menu but the way Legendary used its menu, was more impact. The company was successful in the US market and also believed that American customers are different in many ways and also beneficial for the US market. The changes in the menu and additions also proved to be the significant factors contributing to the success of Legendary in the US market as more options of drinks were introduced in the menu. This also had a positive impact on the customers of the US market, but it also created some challenges for other departments of Legendary, such as: operations and marketing.
There were many other strategies that were used by Legendary, such as: menu choices with the healthy and high quality of ingredients. There was also a concept of new products five times in a year, with minor or major varieties in the menu. These changes and variations resulted in the boost for the company’s revenues and brand building. Cheese soup, espresso, beverages, salad were the most famous items on the menu and also in the generation of sales revenue as most of the company’s sales were from these offerings.
As the CCO of the company managed many departments of the company; the overall performance of Legendary was strong in the US markets, because it was differentiated by being in the segment of quick casual. The marketing team of the company was also creative who worked for maintaining the promises of the company by TFG through different promotional strategies.
Q2 (i): What are rationales for expansion into China?
A2 (i): Rationales for Expansion into China
The Legendary has numerous reasons for the expansion in China, some of which are as follows:
The company was facing some issues related to the geographical expansion in 2008. The reason of these issues was the slow or zero progress of the company, to overcome which the company wanted to have a global expansion, mainly in China. The concepts and objectives of the company were not going well in the local market so the board of directors wanted to expand the business in China.
Legendary saw many opportunities in China as the population was around 1.4 billion and its annual GDP was growing with 14.5%. China had an urban population and there was an increase in the urban population by 36.2%. This was an opportunity for the company to serve the urban population of China as they are also increasing and are expected to respond well.
The success of external fast food brands urged Legendary to make an entrance in the Chinese business. There was a significant increase in the quantity of ladies workforce and white-collar class populace. Remote financial specialists considered China as the best spot to have an expansion in, because of the lower labor cost.
Q2 (ii): Which entry mode has the company used?A2 (ii): Entry Mode
The entry in China was challenging and created many issues as well. Levendary Cafe required to implement a well-developed plan. The company entered China with different strategies. The business model was different and operating models were also different from the US market. Licensing and franchising entry mode was used by the company to enter in the Chinese market……………….
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