Notional brief
In post-Covid-19
lockdown periods, Steers will need to rebuild its revenue and value chain with brand-oriented growth. The solution
will have to be rapid, affordable with limited impact on tight reserves,
flexible (as there may be more lockdowns), easy to implement, contribute to
employment and take into account physical distancing which may be problematic
in outlets. It must also factor in lower / insecure disposable income.
Like all businesses, particularly in the hospitality trade, Steers will have to apply brand growth strategies to recover market position and revenues after the Covid-19 lockdowns end.
Solution
Market
penetration and development with a combination of Steers-owned or franchised
food trailers, with line extensions based on restricted disposable income.
Product strategies
and extensions
As Steers will
have to reconstruct its value chain and supply may be uncertain, it will not be
secure enough to develop new products with certainty of supply. It should
contract its range to its best-selling items and focus on stockpiling against
future lockdowns. Product brand extensions cannot be considered. Product line
extensions can consist of new, highly affordable menu items. Line extensions
will need to be agile to cope with insecure supply and availability of
stockpiled ingredients. Premium priced products will be doubtful revenue
drivers so the cash cows will shift to budget products.
Market strategies
Steers will need
to recover its volumes with more sales to existing customers and will seek sales
to new customers in new areas. Existing customers will be hesitant to return to
branches due to physical (not social) distancing indoctrination as well as food
health. Steers will also not be able to afford expensive new outlets in many
localities. The financing and operational risk lies in lockdown closures on
national, regional and town and cities.
For the price of one brick and mortar Steers outlet, 30 or more small mobile outlets can be acquired, equipped and branded, enabling Steers to pursue aggressive market development and expansion strategies, provided the company can step away from westernized business models.
The trailer
market strategy
A Steers
franchise costs approximately ZAR 1,7 million. A functional trailer will cost approximately ZAR 50,000 to set up, allowing for fridge/freezer and branding. So, at least
30 new trailer outlets can be set up for the price of a traditional bricks and
mortar outlet. A number of trailers (est. 6 / 7) can be moved around in a small
local area and serviced by one bakkie.
The trailers can
be moved to where demand is highest (market penetration) and to new offtake
areas (market development) on a trial basis.
Branding (identity & performance)
Steers branding
will transfer to the trailers, including the visual identity and the properties
of the burger, though the drawback will be flame grilling. The latter may have
to be modified depending on gas availability and economies of scale. A trailer
will typically handle lower volumes of food in the morningas and afternoons.
Menu strategy
The menu will
have to depend on most
purchased budget items. Although there will be the temptation to have a
fixed menu, this may not always be possible to provide, so a blackboard can
also be put up.
Forms of
ownership
The trailers can
be owned by Steers or franchised with finance organised by Steers, with the risk
mitigated by operational revenues. If finance is provided, it might include operating
capital. Steers can also provide franchises to existing trailer owners, further
reducing costs.
Co-branding
Trailers can be
co-branded with Coca Cola brand portfolios (Coke, Fanta, water, Minute Maid, Monster)
to increase and maintain traffic.
Post-Covid-19
operational considerations
During
intermittent lockdowns, trailers can be moved rapidly or shut down.
As many franchisees
will be new, they should be provided with business models and trainers. If the
trailers use existing Steers staff, these can be provided with additional
training (administration and / or food handling). Steers staff in the bakkie
operation can provide supervision and mentorship to the trailers or a private master
franchisor can act as the supervisor.
The strategy will
also bolster Steers value chain by strengthening consistency of demand.
Health
considerations
As the trailers
will not have sit down areas, physical (not social) distancing will be strengthened.
The trailers will have a smaller area, so will be easier to sanitise.
Stakeholder
considerations
A group of six
trailers will have two people on duty for a total of 12 plus one supervisor /
driver creating 13 employment opportunities. 30 trailers will create income and
employment for 65 people contributing more to employment than the approximately
8 people employed in a ZAR 1,7 million outlet. This will have a small impact on
community income.
Investors and
owners will receive ongoing streams of revenue, additional if existing outlets
are closed or underperform.
Steers might also
use trailers to distribute food on a community basis under corporate social
responsibility and earn loyalty of the community.
Conclusion: brand
vision and business paradigm shift
Trailers may be
seen to superficially devalue the brand in a westernized business model however this can be countered by upkeep
of the trailers and the quality of their operations. This can also be balanced
with bricks and mortar outlets as standard setters for the brand, the UVP and
purpose. Although trailers may appear to be a short-term solution, they can
become a long-term cash cow. Once the period of need for budget consciousness
is past, they can become a valuable point for testing and introducing line
extensions.
Steers vending proves that the brand is able to be mobile and agile, and sets a precedent that can lead to trailer sales.
The business
paradigm shift is not seismic. It entails addition of managing smaller units to
an existing range of management functions. As Steers provides franchised vending
opportunities as a part of its franchise opportunities, the function
already exists, and it just needs to be expanded.
If Steers has not
considered a trailer strategy yet, it should, Subject to testing, it should
improve sustainability without impact on brand cohesion.