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Good Times

Good Times Burgers Strategic Analysis


MGNT 903
Nasrin Rahi

Good Times

2
Executive Summary

In the given report I had discussed the strategic analysis of Good Times Burgers that is operating
in casual dining category in restaurant industry. The report includes contents elucidating the
background and description about the given history, the product and services it offers and the
financial indicators reflected in the financial statements. In the given report, I first assessed the
internal and external environment factors of the company that are highlighting its strengths and
weaknesses. By application of Michael Porter Five Forces Framework, I was able to introspect
the given restaurant industry in the region of North America and how Good Times Burgers could
chose to pursue strategic objectives by altering its strategies. Market segmentation, product
positioning map and potential pitfalls are also highlighted. The report also includes financial
projections and budget for coming years. The recommendations and evaluation are basically the
concluding part to the discussion, which are very critical part of this research work.

Good Times

Table of Contents
Company Background...................................................................5
Vision Statement........................................................................................................ 6
Mission Statement...................................................................................................... 6
Objectives................................................................................................................... 6
Current Strategies...................................................................................................... 7

External Opportunities and Threats (Good Times Burgers)..............9


PESTEL Analysis of Good Times Burgers.....................................................................9
Porter Five Forces Analysis....................................................................................... 10
Threat of New Entrants............................................................................................. 11
Level of Competitive Rivalry..................................................................................... 11
Threat of Substitutes................................................................................................ 11
Bargaining Power of Supplier.................................................................................... 12
Bargaining Power of Buyer....................................................................................... 12

Internal Strengths and Weaknesses (Good Times Burger)..............17


Value Chain of Good Times Burgers..........................................................................17
Analyzing Functional Areas
20
Financial Ratio Analysis of Good Time Burgers.........................................................22
Horizontal Analysis of balance sheet-Good times burgers........................................28
Vertical Analysis of Income Statement.....................................................................28
Internal Factor Evaluation (IFE) Matrix......................................................................30

Michael Porter Generic Strategies................................................31


SWOT Matrix:............................................................................................................ 31
Space Matrix of Good Times Burgers........................................................................33
BCG Matrix for Good Times Burgers.........................................................................35
IE MATRIX................................................................................................................. 36
Grand Strategy Matrix.............................................................................................. 37

Count Summary Analysis.............................................................38


Quantitative Strategic Planning Matrix.....................................................................39

Market and New Product Development.........................................41


Long Term Objectives............................................................................................... 42
R&D department................................................................................................... 43
Marketing department.......................................................................................... 43
Finance Department............................................................................................. 43
Human Resource Management Department.........................................................44
Operation Department.......................................................................................... 44

Strategy Implementation............................................................44
Company Policies..................................................................................................... 44
Allocation of Resources
. ..
45

Good Times

Managing Conflict

. 46
Matching structure and strategy..............................................................................46

Cost of Recommendations...........................................................47
Market Segmentation............................................................................................... 47
Product Positioning Map .......................................................................................... 48
Capital Requirements for Company..........................................................................49
Financial Projections and Budget table for Good Times Burger................................50

Implementation Strategy and Making Possible Strategies to counter


adverse scenarios.......................................................................51
Timeline of Action.......................................................................51
Evaluation of Strategy................................................................52
Expected Unfavorable Scenario................................................................................ 52
Strategies in case of bad events occur.....................................................................52

References.................................................................................54

Good Times

5
Good Times Burgers Strategic Analysis

Company Background
In 1987 in Boulder, Colorado Good times Restaurant commenced their operations. The
Company operates and owns restaurants at other places like Wyoming and North Dakota. At
earlier the company held a small subsidiary named Good Times Drive Thru Incorporation which
has engaged in the business of delivering high quality hamburgers through the drive thru
restaurants in the name of Good Times Burger and Frozen Custard. The use of such
terminologies such as Good times, We, Us, Our are key values that company wants to reflect
while carrying out its operations for its current and prospective Customers. The Company
Currently serves hamburgers, cheeseburgers, chicken sandwiches, fries, and onion rings.
Additionally, it provides custards, lemonades, and shakes. Good Times currently operates and
franchises 37 restaurants. They are currently 450 employees working in all the restaurants
operating in the Country. Good Times has been a public company since 1992 and is traded on
Nasdaq Smallcap GTIM (Sprague, 1987).
GTIM owns and operates Bad Daddys Burger Bar restaurants through its wholly owned
subsidiary, and will franchise Bad Daddys Burger Bar restaurants through its 48% ownership of
Bad Daddys Franchise Development LLC. Bad Daddys Burger Bar is a full service, upscale,
small box restaurant concept featuring a chef driven menu of gourmet signature burgers,
chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft
microbrew beers in a high energy atmosphere that appeals to a broad consumer base. Bad
Daddys burgers was recently named a top 25 burger in the U.S

Good Times

Vision Statement
We seek to establish a brand position in terms of quick service restaurants maintaining quality
and standards for our consumers at large.
Analysis: vision statement must be short, ambitious and ambiguous
this statement is a good statement but can be shorter. It is ambitions by saying establishing
brand position, which indicates their purposes. Provides ambiguity by mentioning quick
service, which leaves room for development.

Mission Statement
Good Times Burgers seek to promote all natural foods that specialize in made to order service
without any use of hormones, antibiotics in order to attract various customers across the globe.
Analysis: mission statement must declare organization reason of being and have certain
components.
This statement is fair but too short. Although it includes key components such as product and
services (all natural food- made to order service), customer, key market (across the globe), and
philosophy (without use of hormones and antibiotic), It lacks many factors such as competitive
advantage, concern for public image, employees, growth and profitability,

Objectives
The Company Objective was to initiate drive through experience for its customer by
delivering high quality food in shape of hamburgers of all variety and kinds incorporating
cheeseburgers, sliders, breakfast burritos, slides or drinks and custards etc. The core strategies of
Company are to maintain positive sales growth and improve the profitability. The Most

Good Times

important drivers of success used by Good Times Burgers are mainly its values, peoples and
excellent systems.

Current Strategies

Good Times Burgers have a good portfolio of products and menu contains all those fresh

products in different categories


Improving Customer Service under the caption of Happiness Made to Order to promote
friendliest service environment in terms of interaction between Employees and

Customers at the Point of Ordering.


They have introduced an online hiring system that seeks to curb the effects of employee

turnover rate.
The company owns 48% of Bad Daddys Franchise Development LLC. And opened its

first Bad Daddys burger bar restaurant recently.


The Company has made a unique system in rewarding employees who give timely

service and that service is measured in minutes.


In order to maintain the customer loyalty, the company is regularly updating its menu and

keep floor clean and clear to make a lasting impression on customers.


The company has strategic marketing policy and developing awareness for brand name of

Good Times Burgers and Frozen Custard.


The Company has developed Brand Equity by producing various tastes with premium

quality in category of hamburgers.


The Company wants to further improve and refine their employees knowledge of the
various processes that enable the firm to operate at its optimum level. In this regard, there

are various programs which are grooming the skills of employees.


Trying to increase in guest counts and increase in average guest check by further
increasing restaurant sales. There was an increase of 3.1% in the year 2012 than previous

Good Times

year. In 2013 by our comprehensive approach we want to push for more sales by

producing a better brand experience for our current and prospective customers.
Improving Operation Income through sales derived through short term capital investment
as they have experienced 35% to 50% in terms of incremental sales.

External Opportunities and Threats (Good Times Burgers)


PESTEL Analysis of Good Times Burgers
PESTLE analysis is very helpful tool for conducting the external environment of the
company. the external environment of the company is not in the control, but it is largely affecting
the performance of the company. It encompasses Political, Economic, Social, Technological,
Environmental issues and Legal one that are confronted by the organization (Baron, 1995).
The Good Times Burger PESTEL Analysis is elucidated as mentioned below:

Good Times

Political Factors: Includes factors that look into areas of concern such as tax policy,
labor law and political stability. Good Times Burgers restaurants are subject to
regulations at State and Federal in the areas of safety, health, sanitation and safety. The
Company is subject to Fair Labor Standards which oversees matter in terms of setting
wage rates and Americans with Disabilities Act which promotes use of restaurants to all
the customers whether they are physically able or handicapped must be provided with

equal intention and care while providing service (Bivolaru, 2009).


Economic Factors: Recession at Macroeconomic level which lowers consumer spending
can also affect the sale of Good Times Burger in general. The current economy and
current scene of capital markets may affect the restaurant ability to get debt or equity
financing for working capital in terms of building new restaurants and refinancing. New

regulation related to disclosures to add to expenses for Good Times Burgers.


Social Factors: The spread of various diseases such as bird flu or consumption of beef
products. In society, the products of Times Good are demanding and all people support
restaurants and Dines. However, if the news of any dangerous disease is aired then people

will definitely dislike the restaurants and food from it.


Technological Factors: Finances and control of management is made sure through the
use of automated data and centralized management information systems. Essential Data
in terms of Sales, Labor and Cash Data is measured through point of sale transactions at
various restaurants. The process of order system at each Good Times Burgers Restaurants
is equipped with internal timing device that measure the time each order and the time to
deliver. The usage of secret shopper, telephone surveys, comments on phone and website
makes the company use technology in order to refine various procedures to sustain in

longer run,
Legal Factors: Good Times Burgers are subjected to various laws such Fair Labor Act
containing laws that see the procedure of equitable pay or pay based on the amount of

Good Times

10

work done. Americans Disabilities Act ensure that restaurants caters the need of
physically handicapped by building systems and structures that eliminate any kind of

discrimination in terms of service as well.


Environmental Factors: Many different requirements of local governmental bodies have
emerged with respect to land use and zoning could delay further construction of new
restaurants at locations subject to approval.

Porter Five Forces Analysis


It is a framework for industry analysis and business strategy development. It draws upon
industrial organization (IO) economics to derive five forces that determine the competitive
intensity and therefore attractiveness of a market. Attractiveness in this context refers to the
overall industry profitability. It includes key areas such as threat of New Entrants, Threat of
Substitutes, level of competitive rivalry and bargaining power of suppliers and buyers.

Threat of New Entrants


The restaurant industry in America is highly competitive industry comprising many
giant companies such as McDonalds, KFC, and Burger King to name a few. Barriers to entry is
low, as a result threat of new entrance is high. Good Times Burgers competes with lot of other
restaurants that deliver hamburgers in the area that they basically have their operations. By
increasing same store sales and venturing to open new restaurants the company is adequately
lower threat of new entrants that enter market every now and then. They also have joint ventures
that are currently operating in Denver metropolitan Area.

Good Times

11

Level of Competitive Rivalry


Since the Industry is quite big and contains many big companies in delivering great
service due to large finances and resources and strong brand equity than Good Times Burgers.
The Company has adopted differentiation strategy by promoting and delivering All Natural and
Handcrafted Foods with made to order results in appealing to customers in unique and offers
them a different value than usual competitors (Collis, 1993). Some of its competitors are
McDonalds, Burger King, Wendys,Jack in the Box, stake and shake and sonic.

Threat of Substitutes
Good Times Burgers do have a lot of substitutes in other food industry be it classy
restaurants to cafes or stands offering hot dogs or big supermarkets. By offering natural and
handcraft foods without any added amount of steroid or hormones they will be able to appeal to
different customers across the areas they operate and they want to open they restaurants. It can
go through attracting various segments by increasing customer base (Porter, 1979).

Bargaining Power of Supplier


For Good Times Burger, the Bargaining Power of Supplier in industry is low since they
are many suppliers in the industry who provide food and paper supplies to many restaurants.
They basically rely on sole vendor i.e. Food Services of America will not hamper their supplies
since there are many suppliers in the market therefore they can maintain quantity of food and
paper supplies at premium level (Porter, 2008).

Good Times

12

Bargaining Power of Buyer


Since there are large numbers of customers, they can easily switch to another restaurant
that provide them with lower cost. Bargaining leverage allow customer to set the price and it
doesnt helps Good Times Burgers. However, Since many customers have come to know adverse
effects of hormones and steroid enabled produced meat they may avoid many restaurants which
helps the Company maintaining its base and by offering a healthy, Fresh and Handcraft Foods
fulfill customer expectations without any hassles related to many health implications that
recently capture the attention of many consumers across the country(Huselid,1995).

To conclude, the overall attractiveness of industry is low since most forces are high,
except for bargaining power of supplier, which is low and bargaining power of buyer, which is
medium to high. This is a very competitive industry and requires great strategy and plan before
entering the market.

Threat of
new
Entrance

Rivarly
among
Threat of
existing
substitutes
competato
rs
Power
of
supplie
r

Power of
buyer

Good Times

13

Competitive Profile Matrix (CPM)

Critical Success
Factor

Weight
Rating

Score

Rating

Score

Rating

Score

1. Brand awareness
2. Financial Position

0.13

0.13

0.52

0.39

0.1

0.2

0.1

0.4

3. Global Expansion

0.15

0.15

0.6

0.3

4. Market Share

0.11

0.22

0.11

0.33

5. Product Quality

0.09

0.27

0.18

0.36

0.02

0.04

0.06

0.08

0.08

0.16

0.32

0.24

0.11

0.33

0.22

0.44

0.11

0.44

0.22

0.33

0.1

0.4

0.2

0.3

6. Consumer
Demands
7. Product Price
8. Variety and Taste
of Food
9. Cleanliness and
Efficiency
10. Location
Total

2.34

2.53

3.17

The competitive profile matrix shows Sonic incorporation with ranking of 3.17
performing better than both Stake and shake, and Good times. In general, any companys total
weighted score higher than 2.50 is considered a strong in position. Good Times received total
weighted Average of 2.34 in Competitive Profile Matrix. This indicates, Good Times is
performing the weakest between two competitors, since the company did not manage to stay
above 2.50 and be in a strong position. Stake and Shake with Score of 2.53 stayed slightly above
the average and is safe for now.

Good Times

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Based on CPM the key factors that helped company to get close to strong position are
product quality, variety and taste of food, cleanliness of environment, production efficiency and
convenient locations. In order to achieve competitive advantage and be in strong position in the
future, the company needs to build strong brand awareness and expand globally. External
Factor Evaluation Matrix for Good Times Burgers
Opportunities
Consistently growing
same store sales as trend
showed an increase of
3.1% in fiscal year 2012
Increasing the breakfast
day part which will give
international sales 6%
Competitors (BK &
Wendys) lack Good
Times like option double
drive thru restaurant and
50% higher check ins
More areas and site for
expansion due to 3.8%
industry growth rate
Demand for Food that is
all Natural and organic
and Handcrafted Foods
that contains no hormones
or steroid
Closing low volume
restaurants to increase
operating margin and
greater allocation for
overhead cost
More demand for foods
with low calorie count due
to change in lifestyle
Joint venture with some
restaurant in future due to
increase of food-service
establishments in the
United States which
almost doubled in the last
three decades

Weight
.10

Rating
4

Weighted Score
.40

.02

.06

.03

.09

.10

.20

.15

.45

.05

.20

.01

.30

.03

.06

Threats
Trends in lowering dining
due to increase in obesity
rate and disease such as
bird flu

Weight
.06

Rating
3

Weighted Score
.18

Good Times
Negative media campaigns
highlighting potential
adverse effect
Franchise could take
action in cause loss to
business
Rising cost of packaging
and food items in year
2013
Recession and Economical
factors such as decrease in
value of dollar and
increase in price of fuel
The hamburger industry is
highly competitive
Changing in consumer
tastes and switching to
generic brands
Labor shortages could
slow business
Total

15
.06

.24

.03

.06

.05

.10

.05

.10

.05

.20

.10

.30

.02

.04

1.0

2.98

Above is overview of Good Times Burgers External Factor Evaluation Matrix (EFE) in
order to analyze the given set of opportunities and threats confronting the restaurants in longer
run The National Research consultants have predicted a 3.8 percent increase in restaurant sales
over 2012, to $660 billion. That would be the fourth consecutive year of sales growth for the
industry. The quick-service sectors sales should jump 4.9 percent to $188.1 billion in
prospective year. The another offering is the introduction enticing customer towards lower
calorie items thus imparting lifestyles in customers with menus like 5280 lifestyle menu list like
Sweet Potatoes. Summer and Holiday Shakes, Hatch Valley New Mexico Green Chile Burritos,
Fresh Grilled, Honey Cured Bacon Burgers and Loaded Fries. Third
Key factor is Good Times Burgers initiative to close down the restaurants that are low
volume in order to have more allocation for overhead resources and improving operating margin.
Key Threats include negative media campaign that circle with respect to the consumption of beef
that have added preservatives that have adverse effects on consumers in publications. There has
been trend of recently low levels of dining in. The other key threat the size of various
competitors have large resources and there discounted prices could have severe impact on the

Good Times

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Good Times Burger Business. The ranking of 2.98 means that the company is responding
moderately to challenges, despite being in competitive market.

Internal Strengths and Weaknesses (Good Times Burger)

Value Chain of Good Times Burgers


PROFIT MARGIN

FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGICAL DEVELOPMENT
PROCUREEMENT
Outboun
d
Logisitc

Opera
tions

Inbound
Logistic

Marketing
And Sales

Service

PROFIT MARGIN

Firm Infrastructure: The Company has in total thirty-seven restaurants that cater in areas of
Colorado, Wyoming and North Dakota. Good Times Burgers signed with a company called the
Heathcote Capital LLC (Heathcote) to provide the Company with financial suggestions based
on possible strategic transactions which includes identifying and contacting potential acquisition
or to find various sources of financing in terms of future needs. They basically assist them in
financial aspects in terms of getting transactions on behalf of the Company (Collins, 1998).

Good Times

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Human Resource: Good Times Burgers holds approximately 430 employees as per recent date
taken from many credible sources. They believe in continuous improvement since they have
system that requires optimum efficiency. They seek to hire competent employees with Operating
Partners Program. They provide various benefits such medical insurance, incentives or bonuses
that are tied to Key Performance Indicators formulated by the Company (Kaplinsky, 2000).
Technological Developments: In terms of technology the firm is technically and professionally
apt to withstand rigors that come with competing with Restaurant Industry. Basically, they have
implemented to measure time each order takes to be delivered by Taking Order Software that is
there for further to quickly address areas of concern and quickly increase efficiency. All the cash
transactions are measured by management back office system that gathers sale volume occurred
on point of sale transactions. All employees are imparted with training based on train, test, certify
and retrain in order to increase efficiency at all levels at the organization. The use of having a
library of video tools also elucidates the use of technology in order to strive for further
consistency and be sustainable in longer.

Procurement: All their supplies come from one vendor that is Food Services of America. All
that includes food and Paper supplies

Inbound Logistics: The source of all their supplies come from sole vendor i.e. Food Services of
America and that result in their smooth continuation on operational front. Product packing is
convenient to customers, for example Its fries will sit comfortably in the cup holder and its top is
adjusted with fries length.

Good Times

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Operations: The Company gives adequate training to employees in terms of generating quality
control. They inspect their manufacturers and then work closely with them to provide and map
specifications and quality checks. National Restaurant Association provides courses to the
employees on ways to maintain adequate hygiene and cleanliness within parameters of the
restaurants.

Outbound Logistics: Since Good Times Burgers basically operates quick service restaurant or
drive thru one. It has software for order taking to set a particular benchmarks how much time or
measure time it takes to deliver a given order. The person that takes the order is responsible for
delivering that order to the customer as well.

Marketing and Sales: The Company basically serves its most expenditure in radio media and
they intend make focus on funds on store level and trade area campaigns with help of Social
Media. They also market new schemes of products through on site merchandizing in order to
attract and retain more customers.
After Sale Service: feedback and returns are considered to be an important factor. Good Times
accepts any complains and returns for exchange of an order. They use several sources of
customer feedback to evaluate each restaurant services and quality performance. Website
comments, telephone surveys, computerized secret shopping program are some examples.

Good Times

19
Analyzing Functional Areas Of Good Times Burgers

Management: Good Times continuously capitalizing on its management skills and trying
to improve weak areas by planning and organizing ahead of time. Recently, Good Times hired a
Vice President to be in charge of franchise development of their newly opened Bad Daddys
burger bar. Moreover, the company is planning to expand and open four more Bad Daddys
small box restaurants by the end of 2014. According to business week article, management
actually "walks the walk" when it comes to maximizing shareholder value, unlike a more visible
peer who continues to resist activist pressure.
Marketing: Good times marketing efforts on anticipating and fulfilling customer needs is
satisfying. The company was able to achieve successful result by commercials and image of
happiness made to order, with Hand-Breaded chicken tenders and Freshly cut fries. Also,
by using cartoon commercials the company targets different age groups from children, teenagers
to adults. Moreover, the company participates in local community events, and charitable
activities to supports neighbors during their time of need.
Finance/Accounting: Good times sales and profit are increasing, GTIM has a strong
balance sheet to support growth with a minimal amount of debt and ~$5.2 million in cash.
More details about Finance will be discussed during the next step

Good Times

20

Production/Operation: Good Times restaurants sales increased 14.1% for the month of
November on top of an 8.4% same store sales increase in the prior year. Good Times same-store
sales are increasing continually as a result of strong operation and production strategies. The
company is trying to be a low-cost and high quality products with great customer service
Moreover, the company put efforts into training the employees, process, and quality of how the
burgers are made. However, the companys Inventory decisions are to be reconsidered. Last
years inventory turn over rate displayed poor performance in inventory system.
Research and Development: Since the company should continuously develop new
products on the menu, research and development is a critical factor. The company nearly spends
1% of sale on research and development, but there is no relationship between R&D expenditure
and successful product line. Therefore, in developing new menu and product peoples
preferences and consumer research are important factors that should be considered.

Good Times

21

Management Information system: Good Times is no different than its competitors in


managing information system and information technology. Financial and management control is
done through automated systems. Sales and cash are collected using restaurants back office
systems, which gathers data from point of sale. In order to stay ahead of competitors Good Times
should develop online ordering system and online inventory system to keep record of orders. A
new system can help managers to make better decision.Financial Ratio Analysis of Good Time
Burgers
* For the purpose of project the ratios are calculated with given formula to observe the change from
year 1 to 2 with accuracy of what item in formula has changed.

Liquidity Ratio: liquidity ratio measures how quickly a companys asset can be
converted to cash. It also measures the company's ability to collect on debts and accounts owed
to them in order to purchase additional asset. A high number indicates that the company collects
cash more frequently which leads to a better liquidity position In this Category we have taken
current ratio and cash ratio are as follows

Financial Ratio
current ratio =

Formulae
current
assets
current
liabilities

Industry
Avg

Competitor
Sonic inc
(2012)

2011

2012

1.2

3.9

107.2

1.7
0.7

3
1.3

80.5
1.33

1.10

Source: Businessweek
Current ratio analysis represent Good Times Burger is 0.7% for 2011 and 1.3% for 2012. Since
firm current asset increased by 2.25% , current ratio of good times increased .This means is firm
is adequate in meeting its future obligations. But Sonic Restaurants have current ratio of 1.33%
which means it is better than the Good Times. Comparing both companies to industry average it
is clear both Good times and Sonic inc are doing well and slightly above the average.

Good Times

Financial Ratio

Quick ratio =

22

Formulae
Cash and
cash
equivalents
+account
receivables
(total)
Current
liabilities

Competitor
Sonic inc
(2012)

Industry
Avg

2011

2012

0.8+0.1=0.9

0.6+1.7=2.3

52.6+27.1=79.7

1.7
0.52

3
0.77

80.5
0.99

1.12

Source: Businessweek

Quick ratio is basically another measure of firm being able to meet its obligations in short term.
The Quick ratio for Good Times Burgers for Year 2011 is 0.52%% and 0.77% is 2012.If we
compare with industry analysis its way too behind. Current ratio of the Company is greater than
this ratio it means company current assets are dependent on inventory. Sonic Corporation has
greater quick ratio of 0.99 in comparison to latter in 2012.
Leverage Ratio: indicates the extend to which a firm has been financed by debt. In this
we shall take Debt to Equity and Debt to Capital ratio

Financial Ratio
Debt to equity
ratio =

Formulae
Total
liabilities
Total equity

2011

2012

4.5
2.5
1.8

3.8
3.3
1.15

Industry
Avg

Competitor
Sonic inc
(2012)

0.64

621.5
59.2
10.49

Source: Businessweek
Debt to Equity ratio for Good Times Burger is 1.8 in year 2011 and 1.15 in year 2012. Good
times equity increased by 0.32% during 2012, which is a good sign for the company. The
competitor Sonic corporation ratio is 10.49%. both companies are performing higher than
industry average which is a remarkable sign of progress.
Financial

Formulae

2011

2012

Industry

Competitor

Good Times

Ratio
Debt to Capital
ratio =

23
Sonic inc
(2012)

Avg
Total
liabilities
Total equity
+total
liabilities

4.5
2.5+4.5=7
0.64

3.8

621.5

3.3+3.8=7.1
0.53

59.2+621.5=680
.7
0.91

0.86

Source: Businessweek

Debt to Capital ratio for Good Times Burger is 0.64 in year 2011 and 0.53 in year 2012.The
competitor Sonic corporation ratio is 0.91. A higher debt to capital indicates a higher default risk
for the company. Good times has financial strength by having low cost of debt whereas Sonic inc
has higher cost of debt.
Activity Ratios: Measures how effectively firm is using its resources. I analyzed total
asset turnover and Account Receivable Turnover ratio

Financial Ratio
Total asset
turnover =

Formulae
Total Net
Sales
Total Assets

2011

2012

20.6
7
2.94

19.71
7.06
2.79

Industry
Avg

Competitor
Sonic inc
(2012)

1.39

543/7
680.8
0.79

Source: Businessweek

The asset turnover measures a firm's efficiency at using its assets in generating sales or revenue the higher the number the better for the company. The asset turn over was 2.94 in 2011 and 2.79
in 2012. the companys asset turnover decreased by 0.051% during 2012. This is due to the fact
that the companys total asset increased and gross profit margin decreased.
Whereas the competitors stand on 0.79 and the industry average is 1.39.

Good Times

Financial Ratio
Receivable
turnover =

24

Industry
Avg:

Competito
r
Sonic inc
(2012)

Formulae

2011

2012

Net Sales
Avg
Receivable

20.6

19.71

543.7

0.1
206

0.1
197.1

14.8
36.73

28.8

Source: Businessweek
The account receivable turnover for Good Times Burgers is 206 in year 2011 and 197.1 in year
2012.The competitor has lower account receivable turnover of 36.73 which is quite better. Good
times burger has high account receivable it means it takes them a lot of time to get back their
receivables.
ProfitabilityRatio: profitability ratio gives us an idea of how likely it is that a
company will have a profit, as well as how that profit relates to other important information
about the company. Some of the profitability ratios that I have looked at are Gross Profit Margin
and Return on Assets

Financial Ratio
Return on Asset
=

Formulae

2011

2012

Net Income
Total Assets

-1.0
7.0
-.142

-0.8
7.1
-.112

Industry
Avg

Competito
r
Sonic inc
(2012)

10.2

36.1
680.8
0.05

The Return on assets ratio for Good Times Burger is -14.2% and -11.2% in year 2011 and 2012
respectively. Its competitors have better returns on their assets than good times burger. Good
times is performing worst comparing to industry average and competitor.

Financial Ratio

Formulae

2011

2012

Industry
Avg

Competito
r

Good Times

25
Sonic inc
(2012)

Gross Profit
Margin =

Gross Profit
Revenue

1.3
20.6
0.06

1.6
19.7
0.812

34.22

285.4
543.7
0.524

Source: Businessweek
Gross profit margin of the company is .06 in 2011 and .812 in 2012.the competitor has .524
ratio. Gross Profit Margin is the percentage of gross profit for every dollar of revenue. In other
words, the amount of gross profit generated for each dollar of revenue. The gross profit for 2012
was higher than in 2011 even though the sales revenue dropped in the current year. However, the
cost of sales also decreased in 2012 by 0.69%, which was the reason behind the increase of gross
profit margin in 2012.
Overall, two profitability ratios have increased. Since the company is facing rising expenses and
the competition in the market is increasing the change is not drastic. None of the companies are
close to industry average however; Sonic Inc is performing better than Good times.
Growth ratios:

Financial Ratio
Earnings per
share =

Financial Ratio
Net income

Formulae
Net
earnings to
common
stockholder
Number of
shares

Formulae
Annual
percentage

2011

2012

1.04

0.07

2.44
0.42

2.40
0.29

2011

2012

Industry
Avg

Competito
r
Sonic inc
(2012)

-0.4

0.32

Industry
Avg

Competito
r
Sonic inc
(2012)

Good Times

26
in profits

%
-1.25

-4.35

0.10

-.041

Analyzing financial ratios help us determine how efficient and effective the company is in
meeting its obligation. Effectiveness is the degree to which a purpose or goal is accomplished.
This is where problems are resolved and the intended or expected result is produced.
Effectiveness is determined without any reference to cost. In simpler terms, it is defined as
doing the right thing. For example, a company is effective when it accomplishes its annual
sales target even if it incurred high costs in order to achieve the assigned target. It can be
determined by looking at receivable turnover, return on asset and inventory turn over. Good
times effectiveness is relatively decreasing. Even though ROA increased by 0.21% in 2012, both
receivable turnover and inventory turnover have been decreasing (inventory turn over was 98.69
in 2011, and 98.41 in 2012)
Efficiency refers to the ability to accomplish a job with a minimum expenditure of time and
effort. It is said to be efficient when resources are used in such a way that production of goods
and services are maximized. In simpler terms it is defined as doing the thing right. For
instance, continuing the example mentioned in the previous paragraph, a company would be
efficient when it achieves its annual sales target and minimized its costs. It can be determined by
looking at ROA, ROE, and gross profit margin. Return on Asset increased by 0.21%, ROA gives
an idea as to how efficient management is at using its assets to generate earnings. Return on
equity measures a corporation's profitability by revealing how much profit a company
generates with the money shareholders have invested it changed %-54.39 in 2011 to % -28.99
2012. This implies that profits are increasing by a large scale, which can result in the

Good Times

27

shareholders confidence. Gross profit margin increased by 12.6%. Therefore, Good times
efficiency is relatively increasing

Horizontal Analysis of balance sheet-Good times burgers


Currency
As of:
in
Millions of
US Dollars
Cash and Cash
Equivalents
Account receivable
Inventory
Total Current Assets
Net property plant
Total Assets
Account Payable
Total Current
Liabilities
Total Liabilities
Total Equity
Total Liabilities and
Equity

Sep 30
2011

Sep 30
2012

Increase
Or
decrease

VERTICAL
ANALYSIS
2011 2012

$847,000

$616,000

(231,000)

(27.2)

70.6%

$111,000
$191,000
1,200,00
0
5,720,00
0

$1,650,000
159,000
3,860,000

1539000
(32,000)
2,660,000

1386.4
(16.75)
216%

9.25% 23.8%
15,91% 2.25%
17.41% 54.67

3,080,000

(2,640,000)

(46%)

81.71% 43.62

7,000,00
0
496,000
1,680,00
0
4,480,00
0
2,520,00
0
7,000,00
0

7,060,000

60,000

0.86%

1005

493,000
3,010,000

(3000)
1,330,000

(0.60%)
79.16%

7.08% 6.91%
24.0% 42.63%

3,800,000

(680,000)

15.17%

64.0% 53.82

3,260,000

740,000

29.37%

36%

7,060,0000

----------

----------

15.9%

46.17
100%

Good Times

Currency in
Millions of US Dollars
Revenues

28

Vertical Analysis of Income Statement


As
Sep 30
Sep
Sep
increas
of:
2010
30
30
e
Reclassifie 2011 2012
d
20.9
20.6
19.7
(0.9)

4 Year
Trend
due to
closure of
restaurants

menureengineerin
g result in
lower cgs in
2012

Total revenues
Cost of Goods Sold

20.9
20.2

20.6
19.3

19.7
18.1

(0.9)
(1.2)

Gross profit
Selling general & admin expenses,
total
Depreciation & amortization, total
Other operating expenses, total
Operating income

0.7
1.5

1.3
1.3

1.6
1.4

0.3
0.1

0.9
2.4
(1.7)

0.9
2.2
(0.8)

0.8
2.2
(0.5

(0.1)
0
(0.3)

Interest expense
Interest and Investment Income
Net interest expense
Income (Loss) on Equity
Investments
Other non-operating income
(expenses)
Ebt, excluding unusual items
Gain (Loss) on Sale of Assets
Ebt, including unusual items
Minority Interest in Earnings
Earnings from Continuing
Operations
Earnings from discontinued
operations
Net income

(0.6)
0.0
(0.6)
--

(0.3)
0.0
(0.3)
--

(0.2)
0.0
(0.2)
--

(0.1)
0.0
(0.1)
0

--

0.0

0.0

0.0

(2.3)
-0.2
(2.5)
0.2
(2.5)

(1.1)
0.2
(0.9)
(0.1)
(0.9)

(0.7)
0.1
(0.7)
(0.1)
0.7

(0.4)
0.0
(0.2)
0.0
(0.2)

(0.6)

--

--

--

(2.90

(1.0)

(0.8)

(0.2)

due to
closure of
low
operating
restaurants

due to end
of many
partnership

Good Times

Net income to common including


extra items
Net income to common excluding
extra items

29

(2.9)

(1.0)

(0.8)

(0.2)

(2.3)

(1.0)

(0.8)

(0.2)

and franchise
restaurant

Good Times

30

Internal Factor Evaluation (IFE) Matrix


Strength
Early development of double
drive through concept

Weight
.09

Factor
4

Weighted Score
.36

Menu re-engineering to
reduce the cost of sales
Excellent management and
employee retention
Gain in demand due to
providing natural handcraft
foods without hormones or
steroid
Increase in efficiency due to
12.5% increase in gross
profit margin
Improvement income from
operations due to close of
four restaurants in 2012
Sales increase in 2 to 3 %
gained through lower
advertising expenditures
Increase in Same store sales
of 3.1% in fiscal year 2012
Made to order concept
reduces costs by 1.3% in
terms of packaging cost
Operating partner program
result in 25% of restaurant
improvement in cash flow

.07

.21

.08

.32

.06

.18

.05

.15

.05

.20

.08

.32

.06

.18

.05

.15

.06

.18

Weaknesses
Greater competition such as
Wendys
Non-drive through generate
more 50% average chick-in
Closure of few low operating
restaurant
Lower resources and finances
such as inventory turn over
Statured market and
Competitors provide greater
range
Limited to few areas like
Colorado,Wyonming and
North Dakota
Inflation could result in
variability in food costs
New restaurants may not be
profitable due to little
diversification
Lack of finances to acquire
new sites
Dependence on key
management employees
Total

Weight
.04

factor
1

Weighted score
.04

.03

.03

.03

.06

.03

.03

.03

.06

.03

.06

.03

.03

.04

.08

.05

.10

.04

.04

1.00

2.78

Good Times

31

Since the value of the firm comes at 2.78 means it has decent performance. A lower value than
2.50 makes a company position is weak.

Michael Porter Generic Strategies


Good Times Burger have adopted Differentiation Strategy with concept of drive thru
restaurants enabling customer to get served in no time rather usual large restaurants catering dine
in by promoting All Natural, Fresh and Handcraft Foods without any hormone or steroids or
growth substances that cater to diverse segment of Population. Their Prices are adequate enough
and does not have impact on customer check inns. Through Menu Reengineering the company
was able to reduce cost in terms of bettering their income and reducing cost of Sale.

SWOT Matrix:
An analysis of an organizations strengths and weaknesses alongside the opportunities
and threats present in the external environment
Internal Strengths

Internal Weaknesses

1.Early development of double drive


through concept
2.Menu re-engineering to reduce the
cost of sales
3.Excellent management and
employee retention
4.Gain in demand due to providing
natural handcraft foods without
hormones or steroid
5.Increase in efficiency due to
12.5% increase in gross profit
margin
6.Improvement income from
operations due to close of four
restaurants in 2012
7.Sales increase in 2 to 3 % gained
through lower advertising
expenditures
8.Increase in Same store sales of
3.1% in fiscal year 2012
9.Made to order concept reduces
costs by 1.3% in terms of packaging
cost

1.Greater competition such as


Wendys
2.Non-drive through generate more
than 50% average chick-ins
3.Closure of few low operating
restaurant
4.Lower resources and finances such
as inventory turn over
5.Statured market and Competitors
provide greater range
6.Limited to few areas like
Colorado,Wyonming and North
Dakota
7.Inflation could result in variability
in food costs
8.New restaurants may not be
profitable due to little diversification
9.Lack of finances to acquire new
sites
10.Dependence on key management
employees

Good Times

32
10.Operating partner program result
in 25% of restaurant improvement in
cash flow

External Opportunities

SO Strategies

WO Strategies

1.Consistently growing same store


sales as trend showed an increase of
3.1% in fiscal year 2012
2.Increasing the breakfast day part
which will give international sales 6%
3.Competitors (BK & Wendys) lack
Good Times like option double drive
thru restaurant and 50% higher check
ins
4.More areas and site for expansion
due to 3.8% industry growth rate
5.Demand for Food that is all Natural,
organic and Handcrafted Foods that
contains no hormones or steroid
6.Closing low volume restaurants to
increase operating margin and greater
allocation for overhead cost
7.More demand for foods with low
calorie count due to change in lifestyle
8.Joint venture with some restaurant in
future due to increase of food-service
establishments in the United States
which almost doubled in the last three
decades

1.By renovating same stores the


company can drive for further sales.
(S1, S2, O1,O3)

1.Training middle management with


view of succession planning to
avoid over dependence on key
personnel at higher level.
(W1,W10,O8)

External Threats

ST strategies

WT Strategies

1.Trends in lowering dining due to


increase in obesity and disease such as
bird flu
2.Negative media campaigns
highlighting potential adverse effect
3.Franchise could take action in cause
loss to business
4.Rising cost of packaging and food
items in year 2013
5. Recession and Economical factors
such as decrease in value of dollar and
increase in price of fuel
6.The hamburger industry is highly
competitive
7.Changing in consumer tastes and
switching to generic brands
8. Labor shortages could slow business

1. Ensuring customer satisfaction by


providing better services and
operations compared to competitors.
(S2, S3, T6, T7)

1.Making better Product Lines or


developing or adding range of
complementary products might help
in stemming the flow of
competition. (W1, W2, W5, W6,
T6, T7)

2.Producing more products in menu


line that project healthy lifestyle
indicating low nutrition count.
(S2,S4,O5,O7)
3. Growth or expansion may happen
in other nearby places from
Colorado.(S5,S8,O4,O8)

2.Must try to cope with price


vitality caused by recession and
shortage of capital due market
scenario (W4, W9, O1)
3. Develop presence in Asia and
middle east. (W6, O1,O3,O4)

4. Focusing on achieve competitive


advantage and economic of scale
(S6, O5, O7)

2. Providing positive image and


building good reputation in how the
food is prepared. (S4,S5, T1,T2)
3.Introdcuction of mobile and online
restaurants might have better result
(S5, S6, T8)
4.Control Costs through closure of
low operating restaurants, menu
reengineering, and reducing
advertising (S2,S7,S9,T3,T4)

Good Times

33

Space Matrix of Good Times Burgers

SPACE Matrix Analysis: Variable


Scores
Internal Strategic
Position

External Strategic Position

Financial (FP)
+6 best, +1 worst
+_1_ Return on investment
+_2_ Leverage
+_3_ Liquidity
+__2 Working capital
+_2_ Cash flow
+_3_ Ease of exit from
market
+__4 Risk level of business
+ __2.42_ average

Environmental (SP)
-1 best, -6 worst
-3_ Stage of technological life
cycle
-1_ Rate of inflation
- 2__ Demand variability
-2__ Price range of
competing offerings
-1__ Barriers to entry into
market
-4__ Competitive pressure
-3__ Price elasticity of
demand
-2.28___ average
Industry (IP)
+6 best, +1 worst
+3__ Stage of
industry/alliance evolution
+3__ Growth potential
+4__ Profit potential
+4__ Financial stability
+4__ Technological knowhow
+4__ Resource utilization
+3__ Capital intensity
+3.57___ average

Competitive (CP)
-1 best, -6 worst
- 3__ Market share
-2__ Price/quality ratio
-3__ Product life cycle
-2__ Customer loyalty
-1__ Competition's
capacity utilization
- 2__ Technological knowhow
-1__ Location
-2.00____ average

__0.13__
ycoordinate
(FP +SP)

__1.57__
xcoordinate
(CP + IP)

Good Times

34

SPACE Matrix Analysis: Graph


FP
Conservative
Aggressive
Intensive
Intensive,
Related diversification
Integration
+6 diversification
+5
+4
+3
+2
+1
0
-6 -5 -4 -3
CP Retrenchment
Liquidation
Divestation

-2 -1

+1 +2 +3
Integration,
Intensive

+4

+5

+6
IP

-1
-2
-3

Defensive

Competitive
-4
-5
-6
ES

Since we came with the coordinates of x-axis =1.57 and y-axis =o.13 the company should go for
an aggressive strategy either to go for market development or product development in terms of
introducing low calorie value count menu.

Good Times

35

BCG Matrix for Good Times Burgers


According to NRA (national restaurant association). The industry growth rate is 3.8% (Ruggless,
2014)
Good times burger relative market share is: Brands Market Share/sales ( Largest competitors
market share/sales) 22.89M/542.59M=0.042186

High +20

Industry
Growth
Rate

-20
Low
1.0

.50

High

0.0
Low

Relative Position (Market Share)

Good Times

36

Since Good times falls under question mark, the suggested strategies are, market
penetration, market development, product development and divestiture. Companies under
question mark category generate low cash; therefore, Good Times must strengths their business
by perusing intensive strategy. IE MATRIX
Internal-External Matrix
IFF Score
(2.78)
Strong
4.0 - 3.0
4.0
Strong
4.0 3.0

EFE
Score
(2.98)

Average
3.0 - 2.0
3.0

Weak
2.0 - 1.0
2.0

1.0

4.
0

3.
Averag 0
e 3.0
- 2.0

2.
0
Weak
2.0 1.0
1.
0

Good Times should maintain and hold their position by using two strategies: market penetration
and product development.

Good Times

37

Grand Strategy Matrix


Grand Strategy Matrix Analysis
Rapid Market Growth
Quadrant II

Weak
Compe
titive
Positio
n

Market development
Market penetration
Product development
Horizontal integration
Divestiture

Quadrant I

Quadrant III

Retrenchment

Related diversification

Unrelated diversification
Divestiture
Liquidation

Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Related diversification

Strong
Compe
titive
Positio
n

Quadrant IV
Related diversification
Unrelated diversification
Joint venture

Slow Market Growth

The Grand Strategy Matrix is based on two evaluative measures, competitive position
and market growth. Good Times Burgers is the strong in areas of Colorado when it comes to the
food industry, and the food processing industry is growing both domestically and internationally.
When we were making the Grand Strategy Matrix we found that because of the market growth
and Good Times Burgers belongs in quadrant 1. The strategies that they could use from being in
that quadrant are market development, market penetration, product development.

Good Times

38

Count Summary Analysis


Strategies
Fwd integration
Back integration
Horizontal integration
Market penetration
Market development
Product development
Concentric diversification
Conglomerate diversification
J.V.
Retrench
Divest
Liquidate
Other

SWOT

IE

X
X
X
X
X

SPACE
X
X
X
X
X
X
X

Grand
X
X
X
X
X
X
X

BCG

X
X
X

Count
2
2
3
4
4
5
3
1

The first strategy that is clear for company to do is product development. Between Market
penetration and Market development I believe the company should seek market development. By
choosing this factor the company can create brand recognition worldwide and not only in
Colorado, Dakota and Wyoming. they could try to target new segments such as customers who
are more health conscious and intend to lead healthy lifestyle. Market Development and Product
Development are appropriate one since considering the size of industry. Moreover, based on ST
strategies the company tried to lower advertising expenditure and focus on increasing sale.
Therefore, market penetration can create internal conflict comparing to what company trying to
achieve.

Good Times

39
Quantitative Strategic Planning Matrix
ENTER NEW
Markets such as
Middle east and Asia
where people prefer
foreign products and
Burger dining is
trending.

QSPM

Opportunities
Consistently growing same store
sales as trend showed an increase
of 3.1% in fiscal year 2012
Increasing the breakfast day part
which will give international sales
6%
Competitors (BK & Wendys)
lack Good Times like option
double drive thru restaurant and
50% higher check ins
More areas and site for expansion
due to 3.8% industry growth rate
Demand for Food that is all
Natural, organic and Handcrafted
Foods that contains no hormones
or steroid
Closing low volume restaurants to
increase operating margin and
greater allocation for overhead
cost
More demand for foods with low
calorie count due to change in
lifestyle
Joint venture with some restaurant
in future due to increase of foodservice establishments in the
United States which almost
doubled in the last three decades
Threats
Trends in lowering dining due to
increase in obesity and disease
such as bird flu
Negative media campaigns
highlighting potential adverse
effect
Franchise could take action in
cause loss to business
Rising cost of packaging and food
items in year 2013

DEVELOP NEW
PRODUCTS on the
menu that can attract
customers with different
taste and regional
preferences such as
Pizza Burger, and 70
calorie Lettuce Burger.

Weight

AS

TAS

AS

TAS

0.1

0.4

0.3

0.02

0.02

0.06

0.03

0.1

0.4

0.2

0.15

0.3

0.6

0.05

0.15

0.05

0.1

0.2

0.4

0.03

0.09

0.03

0.06

0.18

0.24

0.06

0.18

0.24

0.03

0.12

0.03

0.05

Good Times
Recession and Economical factors
such as decrease in value of dollar
and increase in price of fuel
The hamburger industry is highly
competitive
Changing in consumer tastes and
switching to generic brands
Labor shortages could slow
business

40

0.05

0.05

0.2

0.15

0.1

0.2

0.4

0.02

1
Strengths
Early development of double
drive through concept
Menu re-engineering to reduce the
cost of sales
Excellent management and
employee retention
Gain in demand due to providing
natural handcraft foods without
hormones or steroid
Increase in efficiency due to
12.5% increase in gross profit
margin
Improvement income from
operations due to close of four
restaurants in 2012
Sales increase in 2 to 3 % gained
through lower advertising
expenditures
Increase in Same store sales of
3.1% in fiscal year 2012
Made to order concept reduces
costs by 1.3% in terms of
packaging cost
Operating partner program result
in 25% of restaurant improvement
in cash flow
Weaknesses
Greater competition such as
Wendys
Non-drive through generate more
than 50% average chick-ins
Closure of few low operating
restaurant
Lower resources and finances
such as inventory turn over
Statured market and Competitors
provide greater range
Limited to few areas like
Colorado,Wyonming and North
Dakota

2.44

2.7

0.09

0.27

0.18

0.07

0.07

0.28

0.08

0.24

0.16

0.06

0.12

0.24

0.05

0.2

0.15

0.05

0.08

0.06

0.24

0.18

0.05

0.06

0.04

0.08

0.16

0.03

0.03

0.12

0.09

0.03

0.06

0.09

0.03

0.12

0.09

0.03

0.12

0.03

Good Times

41

Inflation could result in variability


in food costs
New restaurants may not be
profitable due to little
diversification
Lack of finances to acquire new
sites
Dependence on key management
employees

0.03

0.04

0.12

0.08

0.05

0.2

0.05

0.04

1
TOTAL

1.96

1.78

4.40

4.48

The above analysis of QSPM indicates product development is the way forward for goodtime
than market development

Market and New Product Development


Advantages:
- New to the market and fresh opportunities can help the company to be a leader
- Competitors may have reached a declining phase, giving your product an advantage
- Customer satisfaction and loyalty
- Knowing the existing competitors and their overall market share and strategy's
Disadvantages:
- Competitors can copy your strategy that compensate the short comings
- Loosing control over the market such as suppliers and shipping.
- Risks on failing to achieve sales and the product being unsuccessful (Sprague, 1987).

Long Term Objectives

Increase revenue by 20% in coming


three years by launching new product
consists of low calorie count menu.

Good Times

Operations
objectives
Reduce losses
from operating
income
Increase in same
store sales by 4%
in coming years

42

Human
resource
objectives
Seeking to hire
more restaurant
managers and
operating
partners

Annual
objective
s
Provide
training to
new manager
Give training
to employees
in order to

Marketin
g
objective
s
More stress
on
advertising
by having
presence in

Annual
objectives
Intensifying
promotional
campaigns and
also increase
focus on site
merchandizing

Finance
objectives
Mastering
finances and
obtaining
$500,000 for
strategies
related to new
product and

R AND D
objectiv
es
Introducing
new Pos
system and
menu reengineering

Annual
objectiv
es

Annual
objective
s

Ensuring
better cash
generation
in order to
curb losses

Develop low
calorie count
menu

Good Times

43

The long term Objectives of Good Times Burgers have given importance in
R&D department
1. The introduction of new system in terms of new Point of Sale system to further improve
recording of transactions.
2. Initiating techniques like menu reengineering in order to curb the rising cost of food
prices.
3. Constantly finding to reinvent and improve processes of quality and service.
4. Launch of new product such as lifestyle 5280 menu

Marketing department
1. It tends to give more importance of social media in gathering more customers and
conducting trade fair (Sprague, 1987).
2. Promoting the new product developed in low calorie category in the most extensive way
3. Increase more on site mechanizing

Finance Department
1. They want to improve their operating margin by managing our incremental sales growth.
2. Reducing cost of sales and better reduces their overhead cost.

Good Times

44

Human Resource Management Department


1. We want to train more employees for higher roles.
2. To emphasize upon succession planning in order to be not so dependent on some key
management figures.
3. They want to hire apt candidates and operating partners to generate and improve
standards by providing them with effective remuneration packages
4. The implementation of online screening and hiring those results in reduction of employee
turnover rate of 50%.

Operation Department
1. They want to same store sales in 2013 since 2012 saw increase from 2011.
2. Aggressively ensuring sales of the new product developed in low calorie category.

Strategy Implementation
The phase is crucial since its alignment of resources with company strengths and opportunities

Company Policies
Increase in Revenue though same store sales, menu-reengineering and minimize losses.
Following are some important policies elements that are necessary for the company;
1. It is imperative for Finance Division to make efforts to reduce additional costs incurred in
form of expenses
2. Operations division must try for the year 2013 to continue same store sales as there was
increase of 3.1 percent in previous year 2012.

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45

3. Operation division must aggressively work with marketing department to make sure the
new product developed turns out to be successful through on site merchandizing to
increase check in the coming months.
4. By the introducing the low calorie menu, they must try much more other products in
order to increase since current customers trends have seen a decrease in the consumption
of high calorie menu due to adverse effects of health in USA.
5. Must try to improve their supplier strategy, since they are relying on sole vendor might
provide hindrance in the objectives they trying to pursue tin terms product development
strategy in terms of introducing a variety of low calorie menu for its customers
6. Ensuring quicker and better working resources by testing new point of sale system
therefore engaging employees with better training methodologies in order to cope with
rigors of ever increasing demands.
7. Closing non performing restaurants in future might help in generating additional finances
as per information being given by financial figures in the company
8. Implementation of better advertising campaigns in areas of the restaurant in order to
increase customer counts and to make themselves more prominent
9. Conducting market research and frequently conducted feedbacks might depict o tell
whether the strategy is going in right direction or not.
10. The company must keep with control over its finances when it comes to financing various
restaurants with they have done dual branding.
Resource Allocation
Good Times Burgers should require allocating resources by prioritizing them in terms of
developing new products. Large part of resources shall be required on operational front since it
shall require large amount of resources to launch a new product with additional marketing
expenses in terms advertising.

Managing Conflict

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Establishing new strategies will definitely create disagreement between two or more
parties in the organization. Changing menu and adding new items to the menu can create conflict
between chief and managers on whether to restructure or reengineer the menu. Moreover,
implementing strategies such as market development create trade-offs between managers
whether to seek growth or stability or whether to emphasize on profit margin or market share.

Matching structure and strategy


A divisional structure by geographical location shall be most suitable since it caters to
having strategies prepared according to needs of customers in different geographic area. For
example in this case Good Times Burgers are based its restaurants in Colorado, Denver and
Wyoming. This should always allow the local management at any restaurant the leverage to
make decision in better way. Human resource concerns might arise due to increasing demands of
the business they have to train employee to follow procedures in compliance but the various
budgetary constraints might curtail such endeavors. Re-engineering menu is subjected to change
in processes that might affect staff efficiency. The resistance might come from chefs who have
make adjustments in accordance with company vision. Operation concern will be to see that no
there is additional expense incurred during the time of implementation stage.

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47

Cost of Recommendations
Market segmentation
Segmentation is important variable to determine customer preferences and taste to be able
to increase sale. Segmenting markets help managers to determine consumer needs and to match
supply and demand and therefore it is easier to control what types of product and services to
provide. In order to go for product and market development the company must go for mixture of
geographical segmentation since it centers its base around three cities or more with 39
restaurants there in every locale of the cities. The Behavioral Segmentation shall be to attract
more consumers who perceived to be more health conscious and want to lead fitter lifestyle than
the people. The segment has its potential to bring renewed vigor for Good Times Burger in terms
of its financial Prospects and future.
VARIABLES

Market Segmentation
Geographic

Region

Colorado, Wyoming and North Dakota

Density

Rural, urban and suburbs


Demographic

Age

Mostly from 20 to 30

Gender

Male and female

Family size

2+

Education

Christian and Protestants and Jewish

Race

White, Caucasian and Hispanic ,African American

Nationality

Americans
Psychographic

Social class

Middle upper and middle lower class

Personality

Trendy and progressive


Behavioral

Use occasion

Regular

Usage rate

Medium

Benefits sought

Fresh high quality food and service

Attitude readiness

Positive

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48

Product Positioning Map (Before)


High consumer demand
SONIC

Low Brand awareness

High brand awareness


GOOD
TIMES

STAK

Low Consumer demand

Product Positioning Map (After)


High Consumer Demands
SONIC

GOOD
TIMES

Low Brand Awareness

High Brand awareness


STAK

Low Consumer Demands


As you can observe in the diagrams, the key criteria that have been chosen for product
positioning map are Consumer demand and Brand awareness that are chosen from the CPM

Good Times

49

table. After implementing the product development and market development these two areas will
increase significantly leaving company in a very good position.
Capital Requirements for Company
The company has one with long term debt financing in terms of acquiring money from
Wells Fargo Bank. The company entered into contract with PFGI II LLC with net proceeds of
$1,380,000.The deal with SII II also result in SII ownership in 51.3 % of company outstanding
common shares. The company basically is doing 50/50 debt equity financing as elucidate in the
above
Input data
Amount of capital requirement
EBIT Range

lines.
the number
Around 2 million

how determined
Since net loss did decrease to
($668,000) for the year 2012 from

Interest rate
Stock price
Shares outstanding

5 percent
$2.87
2,272,614 outstanding

($895,000) in 2011
No taxes incurred .

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50

Projected Income statement and Budget table for Good Times Burger
ITEMS
YEAR
Rationale for Projection
2012
(amoun
t in
dollars) 2013
2014
Restaurant Sales
Franchise Fee
and Royalty
Total net
Revenues
Restaurant
operating Cost
Food and
Packaging Cost
Payroll and
employees cost
occupancy and
operating cost
Pre-opening cost
depreciation and
amortization
Total Restaurant
operating Cost
Selling and
Administrative
Franchise cost
income from
operations

19,274
432

21,000 22,000
500 515

19,706

21,350 23,450

6,592

7,100 7,800

6,691

7,000 7,400

3,939

3,500 3,200

Restaurant sales might take initial


low after new product launch
franchise fee increase due to more
acquisitions
Revenue to increase 20%
Operating cost shall increase due to
on site marketing and advert.
Food and packaging cost will
increase due to new product launch
payroll will decrease as large part of
allocation shall go to
other expenses

795
18,017

650 590
18,250 19,000

might decrease due to closure of


more joint venture restaurants
will increase due to new product
launch and various other activities

2,154
-51

3,000

increase

(474)

(450) (340)

income from operations in negative


as the previous year 2012

Although company had its strengths in terms of year 2012 by increase in same store sale
and reduce cost of sale through menu-reengineering. The restaurant basically has restaurants in
three areas and there it has been able to being in advantageous position since being first one to
framework the idea of drive thru restaurants. since the hamburger market is competitive for the
last five years. They had to change their strategy. Although they have introduced various menus

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51

with quality service, it was still seen that normal casual dining restaurants had higher check inns.
The trend now is consumers have shifted towards occupying a health conscious lifestyle which
promotes one to indulge in healthy low calorie count menus due to various campaigns being in
media because of consumption of high calorie foods could cause serious issues for consumers.
Since the company had adopted a differentiation strategy because it provides different menus
with ample amount of variety.

Implementation Strategy and Making Possible Strategies to counter adverse scenarios


The implementation strategy can be executed to plans as well unless if there is raising
cost of food prices or inflation reasons to consider. They can gain competitive advantage though
geographical segmentation because most of their restaurants are in three areas so they should
maximize their chances to increase their revenues in coming year. They should go for franchising
and acquisitions in much more conservative way since they had to close many restaurants due to
low operating volumes.

Timeline of Action
Launch of New Product launched in the three respective areas of business.
Aggressive marketing on site and through social media or digital networks.
See the performance of Product in its initial months through customer

June 2014
June-Aug 2014
Sep 2014

feedbacks.
Overseeing the resources and allocation in right areas so that expenses are

Sep-Dec 2014

managed
Refining processes in terms of service and quality of employees in order to

Dec 2014

produce optimum efficiency.

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52
Evaluation of Strategy

Expected Unfavorable Scenario


The first and most important factor that every firm in the food industry is expecting is the
Recession or poor economic performance of the country. It has been observed that when there is
recession, there is low demand of restaurant items in the market (Dorfman, 2013). Many people
prefer to stay at home and prepare own food that is economical and healthy. The professional or
job doing people are also the loyal customers of Good times Burger and they are also poorly
responding in times of recessions. The second expected unfavorable scene may be the failure of
marketing strategy. It must also be kept in mind that in modern times, the advertising campaigns
are less penetrating, because there is floor of advertising in every sphere of life. At the time of
formulating marketing strategy, all the parameters must be kept on the table, particularly modern
tools e.g. social media, smart phones and direct marketing (Ferrell & Hartline, 2012). The third
is the expansion strategy of the company, as company is largely focusing on the franchises. Many
large food companies have signed strategic contracts with other companies to formulate the
convergences in order to get advantage from each others specialization. The fourth is the
increasing number of products in the portfolio. It must be kept in mind that failure of any product
might negative impact the performance of whole organization.
Strategies in case of bad events occur
Some events might curtail their approach because they will need some additional
financing. If they do not get appropriate capital since due to prevailing recession the strategy
they want to implement might get stalled and the rising cost of food prices might add to woes in
case they do launch a new product in the market. Negative Publicity might also hamper their

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53

progress to fully exhibit their activities to launch the product. They might just need individuals to
be trained for the launch in order to execute plans in accordance of the pre-planned strategy.
In order to deal with such situation they must try to keep resources or additional gains
they get due to closures or reduction in production cost. They can further reduce their advertising
to social media so that they dont have to spend a substantial amount. Good Times Burgers must
not go for more franchising since it hasnt worked to their advantage as previous events has seen
the closure of low operating volume. They should focus on their product since that serves them
as a source of strength in terms of offering differentiated and unique value in terms of menu
ranging to hamburgers, custards, 5280 lifestyle menu or other low calorie count foods.

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54

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