Submitted by: Submitted by lauragm
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Words: 1455
Pages: 6
Category: Business and Industry
Date Submitted: 07/20/2012 06:23 AM
RUTH’S CHRIS: THE HIGH STAKES OF INTERNATIONAL EXPANSION
Long Cycle Case Analysis
“Do what you love, love what you do”
--Ruth Fertel
I am the vice-president for business development of Ruth’s Chris Steak House. I am responsible for the development of new business strategy focused on continued growth of franchise and company-operated restaurants. I also oversaw franchisee relations.
Ruth’s Chris Steak House is now a public company. Current stores were seeing consistent incremental revenue growth, but new restaurants were critical. For now Ruth’s Chris Steak House has restaurants in only five countries. It is a need and desire to grow its international business. Have to look for new international franchisee and what countries would be better suited for our business.
A. DEFINING THE ISSUES
The Immediate Issue
• Which international market to choose, which country? Which country to choose first?
• Have to look for new international franchisee
The Basic Issue
• Ruth’s Chris Steak House had to met Wall Street’s expectations for revenue growth
• Need and desire to grow international
• Should franchising continue to be Ruth’s Chris exclusive international mode of entry or company-owned stores or some other forms should be better for certain markets?
• How to select and identify a new potential franchisee?
• It is an expensive business to start:
o Strict criteria for selecting new franchisees : liquid net worth at least $1 million USD, verifiable experience within the hospitality industry, and an ability and desire to develop multiple locations
o Cost of franchise:
✓ $100000 USD/restaurant - franchisee fee
✓ 5% of gross sales - royalty fee
✓ 2% of gross sales – contribution to the national advertising campaign
• Key factors to consider when selecting the market:
o Beef eaters
o Legal to import US beef...