Roy Rogers Essay Example

of net income per year it would need roughly 20 to 28 years in order for 100% return on investment. 49,975/976,000=5. 12% 49,975/1,374,000=3. 64% 976,000/49,975=19. 52yrs 1,374,000/49,975=27. 49yrs Before any monetary commitment to any investment it is best to have a good estimate on the expected return.

Unlike investments with real estate or stocks, the decision to buy a franchise not only needs substantial financial commitment, but also demands a great deal of time and energy. Any estimated return of investment should account not only for the amount of money invested into the business, but also include for any time spent establishing and running the restaurant. For the Roy Rogers franchise their expected competitive advantage for their ability to react quickly to trends, exploit relationships with local real estate developers, and develop niche strategies well-suited to geographically limited markets.

For a fast food franchise to be viewed as potentially successful the expected earnings from the business should be significantly higher than the returns from a similar financial investment to a passive investment. When purchasing a franchise, higher initial investment does not necessarily translate into higher returns. A great deal comes down to the ability of the owner to effectively manage the franchise and the marketability of the franchise in the purposed area of business. In the Roy Rogers case it seemed harder to attract investors with their low return on investment ratio.

The management team of Roy Rogers Restaurants decides to keep the salad bar and convinces Jack Towle, who is an important franchisor, after we did cost benefit analyze and overview the strategy. The following reasons may be the good points to support our decision. The strategy

of Roy Rogers Restaurants focuses on quality, variety, and choice targeted primarily for an adult audience. Variety is a critical point for company’s success. Roy Rogers is trying to developing the new product, while they emphasize hamburger and chicken products.

Salad, as a major dish with higher price, not only provides more choice to our customer, but also achieves the strategic mission, which is high price/high value perception. In addition, Roy Rogers’ mission addresses providing the high quality of food, service and atmosphere and extraordinarily friendly service. As a high price fast food restaurant, our customers expected more than food. A good atmosphere is significant important to our customer. If we get rid of the salad bar and replace it with six additional seats that may make our restaurants more crowd.

We do not believe our customer prefer to eat in a place like that. Additionally, two of the Roy Rogers system’s unique features were its salad bar and its Fixin’s bar. It is a condiment bar located in the middle of the store at which customers could add different vegetables to their sandwiches. Roy Rogers is the only one to provide this service to the customer in fast food industry. The salad bar also is a value added item in our system. According to research and survey results, American consumers remained health conscious, they would require product offerings that were both convenient and nutritious.

As we all known, salad is less calories and low fat. The vegetables in salad supplies different vitamins, which not only cooperate with each other in the nutritive processes, but they also cooperate with the minerals in the body. Therefore, there is an

unavoidable trend about more and more consumers will choose salad as their meal. We believe the sales of salads will increase. Furthermore, salad bar helps us to provide customized products to satisfy individual needs by self service of adding vegetable in sandwiches.

The major franchising developer pointed out the idea about removing salad bar because of financial reason. He believes that will bring more profit base on his calculation, since salads typically accounted for only 5% of sales. But theoretically, we will make more money with salad bar customer, because the average customer check is $. 51 more for a salad bar customer. Besides that, as his estimation, the customer turnover is approximately 12 minutes, when additional seats are added in. He ignores two critical points.

One is whether there are enough customers to come in the restaurant; and whether new customers prefer the salads. Without answering those two questions, we are not sure we could generate more profits without a salad bar. The standardize system is critical point to franchising. It helps company to build customer recognition and customer reputation. If salad bar will be removed in specific locations, the company need to remove salad bar in all location, otherwise, the customers will not recognize Roy Rogers.

In the Franchise agreement, we stated “Franchisee agrees to serve the menu items specified by Franchisor, and to follow all specifications and formulas of Franchisor as to contents and weight of products served. ” After we sign the franchise agreement, franchisee needs to obey the regulations. Standardization among Roy Rogers restaurants, as well as any franchise, represents value to its customers. Consumers have confidence in knowing their favorite food item

will be available no matter what location they choose to visit.

Eliminating this important factor is a huge risk for the franchise because the customer may stop visiting all of the restaurants due to an experience where they are unable to get the service they expect. The complicated part of all of this lies in the customer’s perception of value. Controlling how the customer responds is extremely difficult. By keeping each restaurant similar, at least some control can be placed over the environment. In this way, the customer’s reaction to atmosphere and availability of products may not be controlled, but reasonably predictable because they have certain expectations when they return.

For this case, more specifically, salad is generally viewed as a healthy food option and removing it may damage the reputation of Roy Rogers as a provider of health food choices. With the growing concern on health in the U. S. today, losing the reputation of providing healthy choices could definitely change financial success. Take for example, Kentucky Fried Chicken; they have “renamed” themselves KFC, to put less emphasis on the fried selection of foods they offer. Alos, they have recently come out with grilled chicken as a choice and most of their marketing advertises this new “side” of KFC.