Steers brand growth post Covid-19

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.