Ruth's Crisis

Ruth’s Chris: The High Stakes of International Expansion

A. Defining the Issue

Ruth’s Chris needs to develop a strategy to increase revenue growth to meet stakeholder expectations, by expanding internationally their company-owned and franchisee-owned fine dining restaurants. The challenge is to decide which markets would be best?

B. Analyzing Case Data

-would be franchisees face strict criteria; net worth of $1 million dollars, $100,000.00 franchise fee, 5% gross sales royalty fee, and 2% gross sales fee to the national advertising campaign.

-Ruth’s Chris has grown to be the largest fine dining steakhouse in the United States. It’s success due the focus on customer satisfaction and a wide selection of USDA Prime steak cuts.

-in 2005 Ruth’s Chris successfully completed Initial Public Offerings that generated 154 million dollars. In 2005 sales grew to 415.8 million dollars with company-owned and franchisee-owned restaurants. All 10 international restaurants are franchisee-owned restaurants.

-all of the management is committed to the market development model, putting more restaurants in new markets.

-Insufficient market data makes it difficult to gather relevant data but a there is criteria that must be met when deciding which market to enter. The market must contain these criteria; beef eater, legal to import US beef, high population and high disposable income.

C. Generating Alternatives

I. Continue to grow in existing markets but diversifying the menu offering a lower price for a meal.

i. The existing markets have already proven to be successful for the Ruth’s Chris.

ii. Little risk means slower revenue growth in an already saturated market and offering a lower price for a meal would mean changing the fine dining experience competing with a different market all-together.

II. Modify franchisee criteria to make it more appealing and viable for prospects to own their own Ruth’s Chris franchise....