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Eleonora Escalante, MBA - MEngStrategic Corporate Advisory Services
Creating Corporate Integral Value (CIV)
The Cheesecake Factory (III)
Uniqueness Analysis using the Value Chain
7 March 2018
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
When in Auckland: Uniqueness Analysis using the Value Chain
25March2018
Wh
o T
he
Real
Bu
yer
is?
Iden
tify
th
e
bu
yer´
s va
lue
chain
an
d t
he
firm
´s im
pact
on
it.
Dete
rmin
e r
an
ked
bu
yer
pu
rch
asi
ng
crit
eri
a
Ass
ess
th
e e
xist
ing
an
d
po
ten
tial so
urc
es
of
un
iqu
en
ess
in
a f
irm
´s
valu
e c
hain
Iden
tify
th
e c
ost
of
exi
stin
g a
nd
po
ten
tial so
urc
es
of
dif
fere
nti
ati
on
Ch
oo
se t
he c
on
fig
ura
tio
n o
f va
lue
act
ivit
ies
that
create
s th
e m
ost
valu
ab
le d
iffe
ren
tiati
on
fo
r th
e b
uyer
rela
tive t
o c
ost
of
dif
fere
nti
ati
ng
.
Test
th
e c
ho
sen
dif
fere
nti
ati
on
str
ate
gy f
or
sust
ain
ab
ilit
y
Red
uce
co
st in
act
ivit
ies
that
do
no
t aff
ect
th
e
cho
sen
fo
rms
of
dif
fere
nti
ati
on
.
• Today we will cover steps 5 to 8. Please take your last set
of slides (steps 1 to 4) in your hands, because we will use
some of that information for today´s analysis.
Step 1
Step 3
Step 4
Step 5
Step 6
Step 7
Step 8
Step 2
Done previously!
Value Chain
Analysis as a
tool for
Competitive
Advantage
1. Cost Analysis
and
Performance
Improvement
2. Competitive
Differentiation
Analysis
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 5 march 2018 3
Uniqueness Analysis
PROFIT = Price - Cost VALUE = Utility - Price
For the Firm,
we focus on
cost drivers
For the Customer,
we focus in utility
drivers
Maxi
miz
e
Pro
fit
Maxi
miz
e
Valu
e
Remember we will perform a Competitive Differentiation Analysis or Uniqueness Analysis:
When in Auckland: Uniqueness Analysis using the Value Chain
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 6March2018 4
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
Maxi
miz
e
Valu
e Buyer´s Value = Utility – Total Price
STEP 5. Identify the cost of existing and potential sources of differentiation
• In assessing the cost of differentiation, then, a firm must compare the cost of
being unique in an activity with the cost of being equal to competitors.Use Criteria
En
d B
uyer
• Diverse menu – with international
and local meals• Yummy and delicious offer• Finest cuisine with high quality• Over the top customer service• Freshness and Natural • Cheesecakes quality is over the top,
even as an indulgence
The use criteria “Freshness and Natural Ingredients” is related to five value
activities at the buyer´s value chain (The Millennial Household)
Inbound Logistics
(Inputs needed for having a home well)
•Food for consumption (groceries)
Operations
(What has to be done, or produced at home)
•Cooking for each meal time
•Cleaning and Washing dishes
Outbound Logistics (whatleaves home)
•Prepared dishes– take out food from home
Procurement Supplying management of every item needed at a home, Managing on-line accounts ,
Ensuring good deals for services and insurances, Subcontracting au pairs, or help for
home chores
Marg
in
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 6March2018 5
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 5. Identify the cost of existing and potential sources of differentiation
• CCF has decided to analyze the
attribute “Freshness and Natural” from
step 4.
• First question CCF has to ask to
themselves: Do we have “fresh and
natural look” dishes in our menu? How
many dishes look “fresh and natural”?
Just the salads, which appetizers, which
specialties, which desserts?
• Second: What do we have to do to offer
more “freshness and natural perception”
value to our “millennial mom”?
• Third: If the issue is lack of elements
which “look fresh and natural” in our
dishes, can we re-design existing meals,
or design new few dishes in each
category of the menu which can look
fresh and natural?
• Fourth: If all the dishes are fresh and
natural? Why does “the millennial
mom” perceive the menu with lack of
them?
• Fifth: Is it the menu design? Can we
add pictures of the dishes inside the
menu?
• Sixth: What do we have to do to
differentiate ourselves in our menu
by adding “freshness and natural”
attributes to our dishes.
• Seventh: How well can we fit with the
Buyer´s value chain of the “Millennial
Mother”? Is this new “fresh and
natural” offer a good enough option
to attract “the millennial mother” to
come more often to our CCF
restaurants?
• Eighth: Is this new “fresh and natural”
offer a good enough option to attract
her to use our sales online platforms?
Has she buy similar products with
competitors on line?
• Ninth: Can we help “the millennial
mom” in her cooking habits? Will she
buy our dishes if we deliver to her
house?
• Tenth: Using our own applications or
other third party internet platforms?
Which platform is the best?
• Eleventh: Once we have decided what
to do, it is time to analyze the cost of
differentiation for each of the
alternatives selected. After we have to
compare the costs with the
competitors similar offers.
The use criteria “Freshness and Natural Ingredients” is related to five value activities at the buyer´s value
chain (The Millennial Mom´s client Household)
Marg
in
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 6March2018 6
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 5. Identify the cost of existing and potential sources of differentiation
As CCF we wish to understand the existing and potential sources of uniqueness by understanding the client.
The use criteria “Freshness and Natural Ingredients” is related to five value activities at the buyer´s value
chain (The Millennial Mom´s client Household)
Marg
in
In addition CCF has gathered more detailed information about the Millennial
Mom at her Facebook and Instagram posts:
• The Millennial Mom loves pasta in all forms and flavors (she shares pasta
pictures in Facebook)
• She likes the Louisiana Chicken pasta served at CCF “very much”. In addition
she likes “this specific meal” because her mother prepared it often.
• She also likes to cook and can do it by herself for less than 4 dollars-meal for
her family.
• Nevertheless she is all the time busy with her internet business and taking
kids to school and different activities. She is a sporty lady who swims and
runs every day, with almost no time for doing grocery shopping and cooking.
• Why would she go to CCF to pay $16.95 plus TIP ($2.00)?
• Why would she visit CCF with her family, instead of cooking at home or
getting a home meal kit in advance which will reduce her cost per meal to
$9.99/serving with Home Fresh or Sun Basket or Plated or Blue Apron?Louisiana Chicken Pasta
Ware
housin
gR
edis
trib
ution
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 7
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 5. Identify the
cost of existing and
potential sources of
differentiation
• We need to understand which
items of the value chain drive
total cost of the favorite dish for
the Millennial Mommy.
• We have selected one typical dish
from the CCF: The Louisiana
Chicken Pasta because this is the
favorite of our Millennial Mom in
study.
Marg
in
100%
80%
60%
40%
20%
0%
Pe
rcen
t o
f To
tal
Others:
Spices,
onion,
veggies.
Alfredo
Sauce
Crunchy
breaded
Mushrooms
Pasta
Chicken
Other
Variable manufacturing
Depreciation
Maintenance
Labor
overhead
Direct
labor
Oth
er
Ba
gR
ecip
ien
t
Gro
up
ad
min
istr
atio
nR
&D
Div
isio
n a
dm
in.
HQ
and
sys
tem
s
$2.00 $4.00 $6.00Cost per
dish
$11.00
Price to
consumer
$16.95
Raw
Packaging to go
Overh
ead
Profit
Ou
tbo
un
d fre
igh
t to
re
sta
ura
nts
Period d
istr
ibution
Manufacturing
Lo
sse
s a
nd
bre
aka
ge
s
Dis
trib
utio
n
Allo
ca
tio
ns
Sale
s
TIP
S
Sa
les
Sp
oila
ge
Raw
In
pu
tsT
he
ft-
Mis
fire
s
Spoilage
Waste
Pre
op
en
ing
exp
en
se
s
$8.00
Re
nt-
lea
se
s
Insurances
Licensees
Utilities
Ta
xe
s
Bread and
butter
Oth
er
Op.
Costs
Oth
er
Pro
mo
tio
nC
on
su
me
r
Me
dia
TV
So
cia
l M
ed
iaM
ark
eting
Common
Area expenses
Ware
housin
gR
edis
trib
ution
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 8
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 5. Identify the
cost of existing and
potential sources of
differentiation
• In assessing the cost of
differentiation, then, a firm
must compare the cost of
being unique in an activity with
the cost of being equal to
competitors.
• We can understand which value
activities drive the overall cost:
Raw Inputs, Manufacturing-
Operations and Operating
costs (Rent, insurances,
licensees, utilities, etc.)
• In addition we can identify new
value activities which can help
us to differentiate for this
specific client.
Marg
in
100%
80%
60%
40%
20%
0%
Pe
rcen
t o
f To
tal
Others:
Spices,
onion,
veggies.
Alfredo
Sauce
Crunchy
breaded
Mushrooms
Pasta
Chicken
Other
Variable manufacturing
Depreciation
Maintenance
Labor
overhead
Direct
labor
Oth
er
Ba
gR
ecip
ien
t
Gro
up
ad
min
istr
atio
nR
&D
Div
isio
n a
dm
in.
HQ
and
sys
tem
s
$2.00 $4.00 $6.00Cost per
dish
$11.00
Price to
consumer
$16.95
Raw
Packaging to go
Overh
ead
Profit
Ou
tbo
un
d fre
igh
t to
re
sta
ura
nts
Period d
istr
ibution
Manufacturing
Losse
s a
nd
bre
aka
ge
s
Dis
trib
utio
n
Allo
ca
tio
ns
Sale
s
TIP
S
Sa
les
Sp
oila
ge R
aw
In
pu
tsT
heft
-
Mis
fire
s
Spoilage
Waste
Pre
op
en
ing
exp
en
se
s
$8.00
Re
nt-
lea
se
s
Insurances
Licensees
Utilities
Ta
xe
s
Bread and
butter
Oth
er
Op.
Costs
Oth
er
Pro
mo
tio
nC
on
su
me
r
Me
dia
TV
So
cia
l M
ed
iaM
ark
eting
Common
Area expenses
❶❷❸
Marketing and Sales
Spoilage
Cost:
$11.0
per
Dish.
Allocations and others
Manufacturing
Raw Inputs
Distribution
$0.00
$2.00
$4.00
$6.00
$8.00
$100.0
$12.00
Co
st t
o s
erv
e a
Lo
uis
ian
a C
hic
ken
Past
a a
t a t
yp
ical
Ch
eese
cak
e F
acto
ry R
est
au
ran
t U
SA
. (d
oll
ars
)
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 9
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 5. Identify the cost of existing and potential sources of differentiation
• For the preferred dish of
the Millennial Mom:
Louisiana Chicken Pasta we
have to consolidate the
detailed cost analysis in the
following “cost tower” by
value activities in order to
find out which are value
activities that drive the
costs of producing this
meal: Raw Inputs,
Manufacturing and Other
Operational.
Marg
in
Other Operational
Activities(Rent-Insur-
Utilities,etc)
❶
❷
❸
Potential Sources of
Differentiation from
the “Cost Analysis
Stacked Column”
Location near to the
house
Emphasis in Social
Media
Advertising-fresh and
natural
Promotions to create
frequency visits to
restaurant
Reduce spoilage
Commodity markets
Pricing Inputs
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 10
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
Ranked Buyer Purchase Criteria for The Cheesecake Factory Restaurants
Ch
an
nels
Use Criteria Signaling Criteria (subjective)
En
d B
uyer
• Appearance, design and architecture-
size of the restaurants
• Waiting time to be served is minimum
• Reputation or image
• Professionalism and personality of
restaurant employees
• Word of mouth
• Diverse menu – with international
and local meals• Yummy and delicious offer• Finest cuisine with high quality• Over the top customer service• Freshness and Natural • Cheesecakes quality is over the top,
even as an indulgence
• In Step 4 we created the
uniqueness criteria (use
and signaling) for the
Millennial Mom.
• Our Millennial Mom has
ranked her top purchase
criteria features in order of
importance for “HER”.
• Now it is time to
ensemble step 4 and step
5. See next slide
• Door dash and Harry&David is
available in my state• Reliable of service • Delivery available in my area• Speed of order processing
• Customer Internet friendly environment • Relative price to similar competitors• Take out• Delivery service by third parties • Online Ordering for to go sales
STEP 6. Choose the configuration of value activities that creates the most valuable
differentiation for the buyer relative to cost of differentiating.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 11
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 6. Choose the configuration of value activities that creates the most valuable
differentiation for the buyer relative to cost of differentiating.UNIQUENESS CRITERIA FOR THE MILLENNIAL MOM
USE CRITERIA SIGNALING CRITERIA
Value Activities OF
THE CHEESECAKE
FACTORY (CCF)
Diverse menu –
international
and local meals
Yummy
and
delicious
offer
Finest
cuisine
with high
quality
Over the
top
customer
service
Cheesecake
high quality
Appearance
design and
arch size of
restaurants
Subjective
PERCEPTION
time of
waiting to be
served
Attractiveness
of Facilities
Reputation
of Image
Personality
of
restaurant
employees
Word
of
Mouth
(social
media)
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
After Sales Services
Procurement
Technology
Development
Human Resources
Management
Firm Infrastructure
Relationship of Value Activities of THE CHEESECAKE FACTORY with the Buyer Purchase Criteria
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 12
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 6. Choose the configuration of value activities that creates the
most valuable differentiation for the buyer relative to cost of
differentiating.Value Activities of the CHEESE
CAKE FACTORY
Sources of Uniqueness or Differentiation from the BUYER VALUE CHAIN NEEDS (The millennial Mom)
Inbound Logistics Strategic alliance with local fresh
agriculture products companies
Consistent taste reachable always Commodity Market long
term contracts for inputs
Improve cost inputs
Operations Better and Consistent appearance by
adding an additional fresh garnishing
touch on top of the dishes
Reduce Spoilage Rapid Restocking in store
Display
Improve tasting – control
supervision
Outbound Logistics Delivery included in the price to
households located near the restaurant
Create a “daughter company” or a strategic alliance with a home-meal kit
company. Add the Cheesecake Factory desserts to a Home-meal kit company.
Marketing and Sales Advertising Theme: Reinforce quality
image and the attribute of “fresh and
natural”
Change of the MENU look and feel. The menu
must show pictures of some or many of their
meals. There is no one single picture of the meals
in the menu
Branding for Freshness and
natural beyond the name
Cheesecake.
Digital Strategy and Website-
Social Media Renewal
Digital Promotions to create
frequency visits to restaurant
After Sales Services Digital Follow up - Promotions Birthday at discount price-Club Cheesecake
Clients.
Change the “unsafe to eat
perception” to “fresh and
natural perception”
Use social media constantly
creating awareness of “fresh and
natural branding”.
Procurement Procurement of raw materials is made by each restaurant. Corporate Support can help them
to gain scale.
Technology Development Social Media Data Analysis Website look and feel improvement Social Media for marketing
and sales
Improve IT Systems
Human Resources Management Continuous Training in “CUSTOMER
SERVICE”
Train employees to keep the clients busy and happy when waiting to be served. Use Mobile Applications, cheesecake
factory menu crosswords or tablet cheesecake factory games for kids.
Firm Infrastructure Improve dark-poor ambiance by adding more
light to the restaurants. A new look. Natural
Enlighten!
Improvement of the restaurants design (fresh and natural and light
colors)
NOTE: Uniqueness differentiators originated
from the analysis of the Buyer´s value chain and
the Uniqueness Drivers of CCF Value Chain.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 13
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
The Company´s sources
of uniqueness involve
certain barriers or
exclusive advantages
such as patents, linkages,
interrelationships.
The Company has to
review cost advantage
in differentiating.
The sources of
differentiation are
multiple. The more
uniqueness drivers
applied to several
value activities, the
merrier.
The firm creates
switching costs at the
same time it
differentiates.
STEP 7. Test the chosen differentiation strategy for sustainability.
All what we have done in step 6 has to be reviewed
financially OVER TIME, using prototype models.
Never roll out without testing.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 14
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 8. Reduce cost in activities that do not affect the chosen forms of differentiation
or uniqueness.
Finally, we have to check the overall costs of our value chain, and try to
reduce the activities which do not affect the value activities of
uniqueness.
Marketing and Sales Advertising Theme: Reinforce quality
image and the attribute of “fresh and
natural”
• As an example, for the Value Activity: Marketing
and Sales, one of the uniqueness drivers
(differentiation) is to Reinforce the images and quality
of marketing with the attribute “Fresh and Natural”.
• We have to calculate the costs of doing this.
• Once we calculate them, let´s check how this
incremental cost do not affect the rest of
differentiation sources in other activities.
• We will have to do this over each of the value
activities.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 15
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 8. Reduce cost in activities that do not
affect the chosen forms of differentiation or
uniqueness.
• For the sake of time, I won´t do the cost calculations.
Nevertheless it is easy to do them.
• What requires a lot of observation and multidisciplinary
coordination is to find out which sub-value activities of the
company are related to other internal activities, and check if
by reducing other activities costs, we will not alter our desire
to differentiate from our competitors.
• For the Cheesecake Factory, companies such as Plated, Blue
Apron, Green Chef, Hello Fresh, Home Chef and Sun Basket
have to be included as competitors too.
• If the Millennial Mom of 100K income household, from our
study doesn´t like to cook, or doesn´t have time for it, she will
always choose to eat out at restaurants or ask for “on-
demand restaurant delivery”. In consequence, everything
depends of our “BUYER purchase criteria”.
Graph Source:
http://www.goodwatercap.com/thesis/understanding-blue-apron
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 16
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
STEP 8. Reduce cost in activities that do not
affect the chosen forms of differentiation or
uniqueness.• In addition, The Cheesecake Factory has evolved beyond their name.
The company has more than 250 meals-items in their menu. And
only 70 of them are related to the word “CHEESECAKE”, and the
cheesecake desserts represent the 28% of the menu. The rest of the
items are really fresh and natural, but the company has to “show
it” and coin a reputation and image at the top of mind of the
Millennials.
• Maybe some little changes to the design of the restaurants will
benefit to reinforce the “fresh and natural” menu.
• In addition some dish pictures to the menu won´t hurt it either.
• Fresh and Natural is also linked to a serene and sophisticated
ambiance. At the moment it seems CCF has a bit darker ambiance
for those Millennial clients which do not go to the Cheesecake
Factory.
• The company doesn´t have to make a “brutal design” change, but
can adjust their format design a bit (some little changes), test the
prototype FIRST, and once tested and confirmed, roll it out, to make
it more appealing to the new generations of clients.
The Sketch,
London
Kettle
Black,
LA
11th Madison Park NY
Blue Hills Stone
Barns, NY.
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved 7March2018 17
Uniqueness Analysis
When in Auckland: Uniqueness Analysis using the Value Chain
We have finished today with steps
5 to 8. Thank you!W
ho
Th
e
Real
Bu
yer
is?
Iden
tify
th
e
bu
yer´
s va
lue
chain
an
d t
he
firm
´s im
pact
on
it.
Dete
rmin
e r
an
ked
bu
yer
pu
rch
asi
ng
crit
eri
a
Ass
ess
th
e e
xist
ing
an
d
po
ten
tial so
urc
es
of
un
iqu
en
ess
in
a f
irm
´s
valu
e c
hain
Iden
tify
th
e c
ost
of
exi
stin
g a
nd
po
ten
tial so
urc
es
of
dif
fere
nti
ati
on
Ch
oo
se t
he c
on
fig
ura
tio
n o
f va
lue
act
ivit
ies
that
create
s th
e m
ost
valu
ab
le d
iffe
ren
tiati
on
fo
r th
e b
uyer
rela
tive t
o c
ost
of
dif
fere
nti
ati
ng
.
Test
th
e c
ho
sen
dif
fere
nti
ati
on
str
ate
gy f
or
sust
ain
ab
ilit
y
Red
uce
co
st in
act
ivit
ies
that
do
no
t aff
ect
th
e
cho
sen
fo
rms
of
dif
fere
nti
ati
on
.
Step 1
Step 3
Step 4
Step 5
Step 6
Step 7
Step 2
Done!
Step 8
Done!
Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services
© 2017 Eleonora Escalante-all rights reserved
When in Auckland: Uniqueness Analysis using the Value Chain
187March2018
In my next post we do a summary of this example, and finally we will answer why the
Cheesecake Factory is more than cheesecake…
The Cheesecake Factory has a unique and
highly differentiation strategy:
1. Leader in menu innovation
2. Ambiance, Service and Hospitality
3. Best in Class operational Execution
4. Integrated Bakery
Why do you think the company say this?
We will finally find out in our next post.
Thank you!
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