There is an opportunity for a separate menu that should be developed; the plates should be identified on the main menu. It is very difficult for those with celiac disease to eat out when there are not many options for gluten free restaurants; this gives an opportunity to The Cheesecake Factory to increase their consumer market. 2. Shift away from fine dining (T) The shift in the market away from fine dining experienced in 2012 will continue in the upcoming years as consumers remain cost conscious.
There is still no clear indication as to where the economy in general is heading. Until a change comes consumers will be focused on “Perceived Value”. This shift has helped the Quick Serve Market which has led to an opportunity for them to introduce a higher end product to their menus. Taco Bell and McDonalds, for instance, have reaped the benefit of this market shift; consumers see a greater value for their money. The Cheesecake Factory can continue with a more creative, reasonable priced or multiple portion sizes menu and more attention to the hospitality of their aspects.
The company is shifting away from fine dining by placing the restaurants near malls making it more casual to eat there; this can be seen as a threat, as The Cheesecake Factory has been seen as a place to dine on special events, this is slowly deteriorating. 3. The economy will be in focus (T) The last three quarters of 2012 have been rough for a number of restaurants. The only bright spot has been Quick Serves.
2013 will provide much of the same, especially during the first six months of the year. We still see the industry segment growing, but only 1. 3% over inflation.
Energy prices and food inflation will be the wild card on how the industry performs. If we see a spike in energy costs due to continued turmoil in the Middle East, fewer discretionary spending dollars will be available for eating out. The effects of the 2012 drought will continue to be seen during the first half of 2013. This will drive the cost of protein and other staples to new heights. This is a threat to The Cheesecake Factory since their biggest problem is comparable store sales- the company reported a comp increase of 2. 7% and although this figure is above many of its competitors, the 2. 7% is composed of a 1. % increase in traffic and 1% in checks; but the company had increased menu prices b 1. 9% during the final quarter of 2012 which indicates that the average check declined . 9%. This is due to the inflation- management stated a continued increase in prices to keep up with inflation. 4. Effort in taking care of the kids (O) For the last six years, we have stressed the importance of taking care of the kids and improving the menu options for this important age group. The “Gen Y” group is starting to mature and have children. They will not stop eating out because of this. It will be even more important to cater to this group.
American Demographics Magazine states that married couples with children spend an average of 44% more at restaurants than those without children. Happy kids mean happy parents. This is an opportunity for The Cheesecake Factory to provide a fun and unique selection of foods for the kids. The company is targeting a female audience that shops at the mall, these consumers will bring along their kids who will want something healthy yet fun for the children. 5. Commodity Prices will result in food inflation (T) The severe drought of 2012 will continue to affect almost all food costs, especially beef, well into 2013.
Customers will want to see lower to flat prices due to the stagnant economy. Vendors will pass higher costs along. Restaurants will be stuck in middle. True food inflation will be over 10% higher in January 2013 than it was at the beginning of 2012. Price increases are inevitable. Communication with The Cheesecake Factory’s guests will be key. This will require a hard look at their menu and design it to draw the customers to higher gross profit items. Menus will need to be updated and revised more frequently than in years past to take advantage of guest expectations. 6. The Use of Social Marketing will continue to grow eyond Facebook and Twitter (O) Social media is quickly becoming the communication of choice for many of the guests. In 2012, forty-nine percent (49%) of guests under the age of 44 have used Twitter or something similar. The number of unique visitors to Twitter has increased 1,382% year after year. During the same period, Facebook usage increased 228%. These will only continue to grow and expand to alternative social sites. There is an opportunity to reduce the amount of resources the company is spending on conventional print and TV advertising, and get closer to guests by using these highly effective social marketing tools.
Although The Cheesecake Factory has a Facebook and Twitter, they are yet to create an app- this app can be used for consumers to check in while they are shopping at the mall (where the company is placing its restaurants); not only will this capture all types of demographic and marketing information but will improve customer satisfaction. The consumer will be able to check in prior to going into a Cheesecake Factory location and reserve a seat and even order their food so there is no waiting in long lines; becoming more effective. 7. An Evolving Palate (O)
According to the research firm Techmomic, consumers are increasingly driven to try new flavors. This will expand into the fast casual segment with an emphasis on Asian flavors. The Cheesecake Factory needs to take advantage of this trend- keeping items on the menu that are specialties while enhancing the brand. There is an opportunity to offer unique tastes through seasonal menus or daily/weekly specials. A great place to start will be desserts which The Cheesecake Factory is very well known for. Marketing for these items should be often through social media sites.
Encouraging The Cheesecake Factory’s guest to not only try the item, but follow the company and look for the new adventurous flavors. 8. Bargaining Power of Suppliers low High levels of competition among suppliers acts to reduce prices to producers, similar critical production, large number of substitute inputs, low cost inputs and switching suppliers. (O) 9. Bargaining Power of Consumers low- Large number of consumers, diverse buyer choice, and product is important for consumer they end up paying more for the product. (O) 10.
Intensity of Existing Rivalry high- Large industry size (T) 11. Threat of Substitutes high- High level of substitutes, low level of food innovation, substitute is inferior in quality. (T) 12. Threat of New Competitors low- Economies of scale is low, new entrants have higher cost of production. (O) V. Analysis of Strategic Factors 1. Strengths a. Strong name and popularity b. Extensive menu and bakery product offering Its menu offers around 200 items, including appetizers, pizza, pasta, seafood, steaks, salads, sandwiches, and more.
The chain is best known for its 40 varieties of cheesecake and other desserts, which account for an impressive 15% of sales. Management has proved quite adept at anticipating consumers’ dining and taste preferences. The company updates its menu every six months, replacing 5-15 items. c. Strong Management 2. Weaknesses a. Increasing prices b. Unhealthy choices in their menu 3. Opportunities a. Ability to expand internationally b. Trend to social media marketing c. Location near or in malls Management reckons that it has not fully penetrated its existing markets.
Developers also appear very eager to involve the restaurant in their projects, with some offering anchor positions in shopping malls and contributions to help fund construction. In our opinion, Cheesecake is in an excellent position to capitalize on these growth opportunities. d. Ability to broaden selection of menu- not only cakes 4. Threats a. Food inflation- raising menu prices b. Natural disasters- Storms took a hit on the company’s first quarter- decrease in traffic. c. Intense industry competition The restaurant business is fiercely competitive, and the success of upscale casual dining chains like Cheesecake Factory, P.
F. Chang’s PFCB, and McCormick & Schmick’s MSSR will not go unnoticed by other restaurateurs I was not sure if we needed to analyze the SWOT or just states S W O ;amp; T according to the info found throughout the paper. Let me know I will continue the analysis if I have to do it and have it done by Monday morning or tonight if I can get home early from work. B. Recommended Strategy 1. We recommend our client that they precede with the growth of the company through international expansion. (The volumes in the company’s Middle East stores exceed the United States. )