Marketing Plan

Jennifer Hall

April 3, 2012

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Executive Summary Opening an Atlanta Bread Company franchise in Rhode Island is an enticing business

opportunity that provides an outlet exceed in the local bakery café and fast-casual dining

industries. The following report analyzes all aspects of entering into this market, including

internal, customer, competitor, environmental, and overall market analyses. Followed by these

evaluations, a marketing strategy and recommendations are provided as well.

Although Atlanta Bread Company generated a rapid expansion in its early years of

operation, a drastic downfall in 2004 led to the closure of 44 stores. However, the company has

since been able to rebound from this trend, ultimately using the downtime as a means to improve

within the competitive market.

As the franchise is becoming more popular again, its products and services are constantly

improving, creating a product differentiation among competitors, which serves as a substantial

competitive advantage in the Rhode Island market. The company culture implies a warm and

global environment, incorporating a soothing and comfortable setting with a menu filled with

global flavors.

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Table of Contents

Executive Summary .................................................................................................................... 2

Atlanta Bready Company Background ................................................................................... 4

Franchise Information: ............................................................................................................... 5

Location in Rhode Island: ......................................................................................................... 7

Objectives For the First Year: .................................................................................................... 8

Internal Analysis: ........................................................................................................................ 8 Employee Capability and Performance: ........................................................................................... 8 Appetite for Risk: ................................................................................................................................ 10 Company Culture: ............................................................................................................................... 10 SWOT Analysis (EXHIBIT 5): .......................................................................................................... 11 Financial Performance: ...................................................................................................................... 12

Customer Analysis: ................................................................................................................... 12 Segmentation: ...................................................................................................................................... 12 Customer Motivations: ...................................................................................................................... 14 Unmet Needs: ...................................................................................................................................... 15

Competitor Analysis: ................................................................................................................ 15 Panera Bread: ....................................................................................................................................... 15 Bagelz: ................................................................................................................................................... 16 Shaw’s: .................................................................................................................................................. 17 Burger Shack: ....................................................................................................................................... 17 The URI Dining Halls ........................................................................................................................ 18

Market Analysis: ....................................................................................................................... 18 Trends and Developments: ............................................................................................................... 18 Marketing Risks: ................................................................................................................................. 19 Profitability: ......................................................................................................................................... 20

Environmental Analysis: ......................................................................................................... 21

Marketing Strategy: .................................................................................................................. 23 Product Strategy: ................................................................................................................................. 23 Pricing Strategy: .................................................................................................................................. 25 Distribution Strategy: ........................................................................................................................ 27 Promotion Strategy: ............................................................................................................................ 27 Recommendations: ............................................................................................................................. 27 Marketing Budget: .............................................................................................................................. 30 Schedule of Implementation: ........................................................................................................... 30

Performance Metrics ................................................................................................................. 32

Works Cited ................................................................................................................................ 34

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Atlanta Bready Company Background Atlanta Bread was founded 1993 by two St. Louis natives, brothers Bob and Rick

Auffenburg, in Sandy Springs, Georgia.1 However, in 1994 the Couvaras brothers bought the

Atlanta Bread concept and immediately set out to turn the company into a vast growing chain.

To achieve expansion, the brothers began franchising the concept in 1995. This same year,

Atlanta Bread signed its first franchisee, which then proceeded to create a chain of Atlanta Bread

bakery-café restaurants.

The expansion that the Couvaras brothers strived for occurred at a rapid pace in the

Atlanta area. By the end of 1998, the company was a 47-unit chain with stores along the east

coast up to New York and out west to Texas. By the end of 1999 there were close to 100

restaurants and 70 franchisees. The restaurant then began to experiment with menu changes,

including the addition of brick oven pizzas and pasta dishes, ultimately leading to 164 shops in

25 states by 2003. 2

However, the company’s stream of success took a turn in 2004. Rather than expanding,

stores began closing, due partly to poor locations and problems with franchisees, as well as legal

issues involving the company’s senior management. The struggling economy in 2008 and 2009

also worsened the decline. As a result, there have been forty-four store closures since 2008,

leaving the company with 74 units in 20 states.3

Despite the shrinkage, Atlanta Bread Co. (ABC) has rebounded. Even though there were

a lot of closures, they were paid off with rising sales at the remaining stores that were remodeled.

The company realized that they needed a larger core of corporate stores, so they now own

1 “News” Atlanta Bread Company Website. Retrieved from http://www.atlantabread.com/news.php?sec=2. 2012. 2 “Atlanta Bread Company International, Inc.” Funding Universe. 2012. 3 Kaufman, Miller & Forman, P.C. Business and Commercial Law. Georgia Bread Franchise Retreats to "Rise" Above the Competition. Atlanta: Kaufman, Miller & Forman, P.C., 2011.

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thirteen and they also expect to open up to nine new company and franchisee-owned stores in the

next year. Fortunately, sales have been up these past few years, where 2011 is said to be one of

their most profitable years thus far. 4

The restaurant maintains a hybrid breakfast, lunch, and dinner concept, featuring wood

floors, open fireplaces, and an all around soothing atmosphere.

Franchise Information:

EXHIBIT 1: Financial Information5

Minimum Cash Investment $400,000

Total Investment/Capital Requirements $629,700-$831,300

Franchise Fee $40,000

Average and On-going Royalty Fee 5% of Gross Sales

Advertising Fee 2% of Gross Sales

Minimum Net Worth Required $1MM

Liquid Cash Available $400,000

EXHIBIT 2: Other Requirements6

Space Needed 4,000-4,500 sq. feet

Employees Needed 18-34

4 Grantham, Russel. "Atlanta Bread Company Franchisees Among Worst-Performing SBA Borrowers." Atlanta Journal-Constitution [Atlanta] 24 Oct. 2011. 5 “Atlanta Bread Company: Franchisor Background.” World Franchising. 2012. http://www.worldfranchising.com/franchises/Atlanta-Bread-Company.html. 6 “Atlanta Bread Company: Franchisor Background.” World Franchising. 2012. http://www.worldfranchising.com/franchises/Atlanta-Bread-Company.html.

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Term of Franchise Agreement 10 years, renewable

Preferred Sites Free-standing building or Storefront

EXHIBIT 3: Services Offered by Franchisor7

Real Estate

The corporate Real Estate Department helps during the site selection process. They are also available to assist in the negotiation process with the landlord and recommend seasoned real estate counsel that have a proven track record, including experience with the franchise.

Construction

The Construction Department provides a list of approved architects, contractors, manufacturers, and vendors during the building of the new store. They are also available throughout design and construction to answer any questions and advise accordingly.

Training

Atlanta Bread U has a comprehensive, hands-on training curriculum with extensive initial training sessions followed by continuing educational programs. Typically 10 days at headquarters, and 5 weeks on site.8

Operations

The Operations Department will assist with opening the Bakery Café according to the ABC System specifications. There is hands-on support, regular evaluations, and ongoing consultations.

Marketing

The Marketing Department helps grow and sustain the business by advising franchisee’s on their marketing strategy, planning, and execution. They also offer an array of sales-building materials for product promotion and program support. Advertising, public relations,

7 “Franchise Opportunities.” Atlanta Bread Company Website. Retrieved from http://www.atlantabread.com/franchise.php?sec=2. 8 “Atlanta Bread Company Int’l, Inc.” Retrieved from http://www.entrepreneur.com/franchises/atlantabreadcointlinc/282104-0.html

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creative development and point-of sale materials are available through the marketing team as well. There are brand managers and filed managers assigned to each store. Does not provide co-op, national, regional, or local advertising.

Products

Most products are prepared by ABC’s affiliate, and then delivered to the store ready to be prepped and baked. Through a national purchasing plan, ABC can buy inventory in bulk and monitor excess, providing a better value for the franchisee’s dollar.

Location in Rhode Island: This franchise of ABC will open in the University of Rhode Island (URI) Emporium or

close to the URI Campus in Kingston, RI. Although there is a Panera Bread five miles away, an

Atlanta Bread Company on or near campus would be very attractive to students for numerous

reasons, as explained further in the marketing strategy below.

There are currently over 14,500 undergraduate students and just over 5,000 graduate

students enrolled at URI. There are 3,117 freshmen, of which 90% live in the residence halls

(2,805 students).9 With that in mind, there is a housing capacity of 5,128 students on campus,

with twenty dormitories and two campus-owned apartment complexes.10 Aside from on campus

living, the U.S. Census Bureau states that in 2010 there were 6,974 residents in Kingston, and

8,487 residents in Wakefield-Peacedale.11

9 Pernicone, Brian. “Record Number of Students Apply for Admission to URI.” University of Rhode Island. [Kingston] 14 Mar. 2012. 10“URI Campus Housing” College Prowler. Retrieved from http://collegeprowler.com/university-of-rhode-island/campus-housing/ . 11 “Kingston, CDP, Rhode Island.” U.S. Census Bureau. 2012.

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Objectives For the First Year: • To acquire a 20% market share in the South County region by the end of the first year of

operations.

• To position Atlanta Bread Company as a local business, with strong ties to the community.

• To be perceived as the cleanest, most responsive, and best value quick service restaurant

(QSR) in the South County area.

• To bring in enough sales to break even by the end of year one.

• To produce high quality food and drinks and provide quick, friendly service.

• To establish a loyal and stable customer base within the South County area.

Internal Analysis:

Employee Capability and Performance: One crucial factor to a firm’s long-term prospects is the people who implement its

strategies. A functional organization should contain employees who are motivated, challenged,

and fulfilled. Being in the food service industry, it is important that the employees have the

ability to maintain positive employee performance and attitude. Because ABC employees have a

high level of interaction with customers, it is crucial that they reflect a positive attitude at all

times. Also, ABC prides itself in their quick service and high quality menu items. With that

being said, employees need to work efficiently. However, fast service is worthless if the quality

of the product is subpar, therefore they need to be mindful as well. Overall, employees must be

motivated to provide the customer with a great purchasing experience.

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EXHIBIT 4: Individual Responsibilities:12

Manager/ Shift Manager

Arranges employee schedules. Monitors employees. Customer Service. Collects annual inventory. Opens/closes the store. Counts days’ sales. Works in the areas that need assistance during shifts.

Catering Manager

Work with customers arranging the event through meetings. Arranges the order and works with the staff to include the right amounts of food.

Pizza/Pasta Chef

Hourly associate. Opens the store and helps prepare breakfast food (omelets and potatoes). Hand makes pizzas and pasta dishes.

Line Workers

Hourly associate. Opens the store and prepares food in the morning. Make either sandwiches or salads. Serve food directly to the customers.

Bakery Worker

Hourly associate. Opens the store-makes coffee and prepares breakfast items. Makes warm drinks, frozen drinks, and smoothies. Works with cashiers. Customer Service. Helps prepare catering and large bakery orders. Takes inventory at the end of the day and prepare goods to be donated.

Cashier

Hourly associate. Takes orders from customers. Helps the Bakery. Makes drinks. Customer Service.

12 Interview with Jeanne Temple, manager at Atlanta Bread Company in Lawton, Ok.

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Busboy

Hourly associate. Cleans the eating area, as well as all of the equipment used by the other staff.

Baker Works over night to prepare early morning bakery goods and breads.

Appetite for Risk: Buying a franchise is risky regardless of the company or industry. As an ABC franchisee,

there are numerous things to keep in mind. The most important risk to regards the downfall that

the company faced after 2004. As mentioned before, many stores began to close due to poor

locations. Choosing the right location involves a lot of risk because it is based on a prediction of

how customers will respond. These closings were also a response to legal issues regarding the

Couvaras brothers and franchisees. The first legal conflict occurred when the Couvaras brothers

were charged with criminal charges of securities fraud in their native South Africa. After

pleading guilty, the brothers were forced to pay a fine of $310,000. Not long after, Atlanta Bread

was hit with a $5.5 million settlement as result of a lawsuit with a former Atlanta franchisee.

Although the company has gotten back on it’s feet, there is still the risk of another downfall.

Company Culture: The company’s culture is very warm, modern, and flavorful. The restaurants express this

through wood flooring, open fire places, soothing music and earth tone colors. This inviting

environment attracts a casual clientele looking for a quick, relaxing meal. The

company also incorporates a cultural feel in everything from their menu items to

their kids menus to the “bread man” logo.13 This logo consists of an abstract,

asymmetrical figure carrying a round loaf of bread. The bread man supposedly

13 “153. Atlanta Bread Company Identity.” One Page Magazine. 4 Mar. 2008. Pg 153.

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“represents the heart and soul of Atlanta Bread…part global traveler, part old school baker and

part next door neighbor.”14 The company has been going through an extensive rebranding

campaign, shifting its focus to this global mantra. With that, a new line of products is soon to be

released. Such items include baked goods, a chicken salad made with peppadews, a sweet/spicy

pepper from South Africa; and a turkey sandwich with French brie and lingonberries, which

come from Scandinavia. It has also rebranded it’s catering operation, which it now calls Pronti.15

Atlanta Bread also states that serving the community plays a significant role in fostering

their personality and culture.16 The company supports various arts organizations and

philanthropic groups like the Dekalb Medical Center Foundation, with the hope of making a

positive impact on other people. At the end of each business day, each location also offers all

unsold baked products to local charities.

SWOT Analysis (EXHIBIT 5):

STRENGTHS

• Diverse, healthy, and flavorful menu items. • Ranked in Zagat Fast Food Survey as Top

5 large chains Healthy Options and Facilities Categories.

• Parents magazine rates as one of the Top 10 Fast-Casual Restaurants for Families.

• Health magazine rates it as one of the Top 10 Healthiest Fast Food Restaurants.17

• Loyal customer base • Fast service and high quality products

WEAKNESSES

• Downfall from 2004-closing 44 stores. • Rely on franchisees as key to expansion. • Only located in 20 states • Decentralized Distribution • Little corporate store presence

OPPORTUNITIES

• Offers pizza, pasta dishes, calzones, and omelets—different from competitors

THREATS

• Competition: fast food and sit down restaurants, eating at home (76% of meals

14 Hembree, Ryan. “Meet the Bread Man from Down Under.” Underconsideration: Brand New. 26 June, 2008. 15 Stemle, Cary. “Bakery Cafés Lead Segment Growth.” Fast Casual. 24 Jan. 2010. 16 “News” Atlanta Bread Company Website. Retrieved from http://www.atlantabread.com/news.php?sec=2. 2012. 17 “Atlanta Bread Tops in Healthy Options, Facilities.” QSR Magazine. 3 Sept. 2010.

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• Growing number of stores nationwide. • Popular lunch crowd can be used to

generate more breakfast and dinner sales.

are eaten at home), and other fast casual restaurants

• Legal conflicts in senior management from the past.

Financial Performance: In the past year, sales were only $122 million.18 However, this measure is easily affected

by short-term actions, which in this case is the recovery of the recent downfall. In reality, the

company has been increasing in sales over the past few years. Revenues for the company were

about $256 million in 2005.

Customer Analysis: The customer analysis is used to identify who the customers are, why the customers

choose to buy from ABC, and why customers leave the company. The consumer trend of bakery

cafés has increased since 2008. Today, 71% of consumers have visited a bakery café, and of that,

72% visit at least once a month. The patronage for the bakery café industry is in the middle

between full-service and fast food restaurants.19

Segmentation: Segmentation is often the key to developing a sustainable competitive advantage, and

refers to the identification of customer groups that respond differently from other groups to

competitive offerings. The biggest customers are those looking for a fast, high quality meal. The

most profitable consumers are typically those that come during the lunch rush. In this case, this

would be students going up to the Emporium between classes or instead of the dining halls. This 18 Grantham, Russel. "Atlanta Bread Company Franchisees Among Worst-Performing SBA Borrowers." Atlanta Journal-Constitution [Atlanta] 24 Oct. 2011. 19 Noone, Patrick. The Bakery Cafe Consumer Trend Report. Chicago: Technomic, 2011.

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group also includes students that are looking for a warm and inviting environment to get work

done throughout the day as well. Aside from students, professors would be profitable customers

as well. As a relatively older group, they tend to expect higher quality food. They are often just

as pressed for time too, making the fast paced service ideal for meals between classes and office

hours.

The most attractive potential customers would those coming for breakfast. Although there

are other breakfast places in the Emporium, ABC provides an array of breakfast options other

than simply coffee and a bagel. These consumers have numerous coffees, espresso drinks, and

teas to choose from, as well as pastries, muffins, bagels, breakfast sandwiches, and omelets.

EXHIBIT 6: CUSTOMER CHARACTERISTICS

Geographic The URI community and surrounding area Type of Organization A warm and inviting restaurant with fast

service and high quality products Lifestyle Maintaining a good level of quality food, while

trying to keep spending down. Sex Both male and female Age Typically 18 and older. (College students, local

residents, and professors) Occupation Students, professors, campus employees, local

business owners and workers.

PRODUCT-RELATED APPROACHES:

User Type Consumers seeking a good quality meal in a short amount of time.

Usage Occasional patrons, typically weekly or monthly. Customers may be daily as well.

Benefits Sought High quality food at a fast pace and reasonable price

Competitor Consumers that enjoy products from competitors such as Panera are apt to come to ABC

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Brand Loyalty Those committed to ABC restaurants

Customer Motivations: This section pertains to the aspects of the restaurant that consumers value the most. The

Technomic Bakery Café Consumer Trend Report conducted a study with 1,500 consumers

regarding how important various characteristics are when determining which bakery café to visit.

The results state that 89% of these consumers deem the quality of the food as the most important

aspect. The next prevalent factor is the overall value, followed by the price. The last two factors

are menu variety and then the use of premium ingredients.

Overall, high-quality food is key at bakery cafes. Significantly more consumers place

high importance on the quality of food than overall value and price when deciding which bakery

café to visit. On the other hand, quality speaks to taste and value is something consumers expect

from bakery cafes. Atlanta Bread Company provides all of these aspects, but at a reasonable

price. 20

Once again, the customer’s objective is to obtain a high-quality meal or product at a good

price and in little time. They are also looking for an inviting environment to enjoy them in,

should they wish to dine in. They are also looking for a comfortable setting to do work, meet

with friends or colleagues, or things of that sort.

The priorities of each segment are relatively similar, however there are some differences

that can be recognized. For instance, students are more focused on the price and the environment,

whereas professors, residents, and business professionals are keener towards the quality of the

products and the speed of the service.

20 Noone, Patrick. The Bakery Cafe Consumer Trend Report. Chicago: Technomic, 2011.

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Unmet Needs: Unmet needs are those that are not being met by the existing product offerings. These

needs are strategically important because they represent opportunities for ABC to break into the

market and eventually increase its market share. They can also represent threats to established

competitors in order to disrupt their current position.

Unmet needs pertaining to ABC are relatively noticeable and typically occur when a

customer is not given what they are promised. In other words, receiving an incorrect order,

having a long wait time, or sitting in an unmaintained dining room are examples of unmet needs

of quality and service.

Competitor Analysis: There are numerous competitors for the ABC franchise, including both direct and

indirect. It is important to remember that Atlanta Bread is essentially a hybrid between fast-food

and full-service restaurants. With that in mind, major competitors consist of the Panera Bread

(direct) in Wakefield, Shaws in Wakefield, and the numerous restaurants in the Emporium,

primarily Bagelz, Burger Shack and the URI Dining Halls (Butterfield and Hope Commons).

Panera Bread: Panera Bread is certainly ABC’s biggest competitor because it provides the same services

and attracts a similar market. According to the Bakery Café Consumer Trend Report, Panera

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Bread is the clear leader in fast-casual dining segment, and has further strengthened its position

in the bakery cafe arena over the past few years. About 69% visit and purchase food from the

chain at least occasionally, and among Panera's visitors, 69 percent go at least monthly.21

Bagelz: Bagelz is located in the Emporium and is a small café that is locally known for their

coffee and bagels. The store also sells sandwiches served on fresh bagels and an array of bakery

items.

STRENGTHS

• Established reputation locally and around campus

• High quality bagels (freshly made in-store) • Strong breakfast crowd • Conveniently in the Emporium • Also sells art pieces

WEAKNESSES

• Limited sitting space and close environment

• Only one or two employees at a time, creating long wait times during rushes

• Limited sandwich options; can only be served on bagels.

21 Noone, Patrick. The Bakery Cafe Consumer Trend Report. Chicago: Technomic, 2011.

STRENGTHS

• Strong and loyal customer base both in Wakefield and throughout New England

• Provides healthy alternatives • Variety of menu options • Located in the Wakefield Mall, making it

convenient for customers in the area • More convenient for students and residents

that live towards Narragansett • Students can use their RAM Account for

purchasing goods.

WEAKNESSES

• Further from campus, making it harder and inconvenient for people on campus

• Limited presence in the south and west, therefore the brand awareness for students from those locations isn’t as powerful.

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Shaw’s: Although Shaw’s is an indirect competitor for ABC, the competition is still highly

relevant. For instance, 76% of meals are consumed at home22, and the food for these meals is

provided by grocery stores such as Shaw’s. With that in mind, this store sells more than food for

the consumer to prepare, but already prepared products as well.

STRENGTHS

• Wide portfolio of store brands-low prices • Large variety of food options • Consumers always need food, therefore

they will always visit a grocery store. • Offers other businesses such as in-store

pharmacy, bakery, florist, and bank.

WEAKNESSES

• There are numerous businesses that operate in a similar manner

• Consumers have to prepare the meals themselves

• Already prepared food is lower quality

Burger Shack: Burger Shack is a relatively new restaurant in the URI Emporium and an indirect

competitor for the Atlanta Bread franchise. The store prides itself on its “great food, friendly

service, and an atmosphere unmatched by others.”23 Its menu offers a variety of items including

burgers and chicken sandwiches, wraps, and salads.

STRENGTHS

• Established reputation across the URI campus.

• Fresh, never frozen beef. • Popular for longer lunch periods and

dinner. • Delivers to on-campus housing. • Highest rated restaurant in the Emporium.24

WEAKNESSES

• Limited array of healthy food options. • Located in the back corner of the

Emporium, making it hard for consumers to see.

22 http://www.pactiv.com/products_na/foodservice/data/Pizza_Solutions.pdf 23 The Burger Shack Website. Retrieved from http://www.uriemporium.com/directory/burgershack.html 24 URI Emporium Website. Retrieved from http://www.uriemporium.com/.

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The URI Dining Halls Students at URI have the opportunity to purchase meal plans that give them access to the

campus’s dining halls-Butterfield and Hope Commons. Both dining halls offer customized

sandwiches, hot entrée items, and a salad bar and various soups and dessert options. Aside from

that, Hope also offers a pasta and stir-fry station, as well as burgers and hotdogs. In turn,

Butterfield has an omelet waffle stations.

STRENGTHS

• On campus residents and commuters can purchase the meal plan.

• On-campus residents have unlimited uses throughout the day.

• Conveniently located. • Wide variety of food options.

WEAKNESSES

• Cannot take food out of the dining hall. • Hours aren’t always convenient (ex. Hope:

11:30-3:30; 4:30-7:30) • Dining hall food has a reputation for

upsetting consumer’s stomachs. • Served buffet style, which can produce

health concerns. • Lower quality food.

Market Analysis: The primary function of this section is to determine the attractiveness of the market to

current and potential participants. The market’s attractiveness, or its profit potential as measured

by the long-term return on investment achieved by its participants, provides important input into

the product-market investment decision.25

Trends and Developments: Over the past several years, the bakery café segment has become a leader in the fast-

casual dining industry’s growth. As mentioned before, marketing research firm Technomic

25 Aaker, David A. Strategic Marketing Management. 9th ed. Hoboken, NJ: John Wiley & Sons, 2011. Pg. 59.

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released the 2011 Bakery-Café Consumer Trend Report, examining the purchasing behavior,

attitudes, and preferences of 1,500 consumers. The bakery café industry accounts for about $5

billion in annual sales and more than 3,600 units nationwide. It has also been able to successfully

navigate the growing fast-casual segment to overtake the overall restaurant industry sales and

unit growth for the past three years. Over these past three years, total bakery café units increased

4.2%, and bakery café sales increased 12%.26

Technomic also finds consumers fueling growth in this fast-casual submarket by visiting

bakery cafes in larger numbers and by becoming frequent customers once they do visit. Data

from this report also indicates that consumers are looking for more fast-casual breakfast options.

Roughly 34% of consumers strongly agree that they would visit bakery cafes more often for

breakfast if their menus offered a wider variety of breakfast items. Also, 75% of these consumers

report that the quality of service is very important when deciding which bakery café to visit, and

about 66% consider the speed of service to be very important. Another trend states that wraps

and sandwiches featuring artisanal breads are a primary focus of bakery café’s menu positioning.

The most prevalent bread types for lunch and dinner sandwiches show tortillas as the most-

frequently mentioned sandwich bread, at 11.7%. Focaccia ranks second at 9.1%, and ciabatta,

sourdough, and pumpernickel have all increased significantly on menus since 2008.27

Marketing Risks: Many risks will arise when entering the market, including competitive risk and market

changes. The most prominent risk for the ABC franchise is competitive overcrowding. This

occurs when too many competitors are attracted by a growth situation and enter with unrealistic

26 "Technomic: Strong Growth Continues for Bakery Cafes." Fast Casual. 10 Oct. 2011: Pg. 30-31. 27 Noone, Patrick. The Bakery Cafe Consumer Trend Report. Chicago: Technomic, 2011.

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market share expectations. In other words, the number and commitment of competitors may be

greater than the market can support. For instance, because the surrounding area is relatively

small and Panera has such high brand awareness, there is certainly a risk that consumers will

remain loyal to that competitor. Another risk is the chance of a competitor introducing a low-cost

advantage or superior product. As it stands now, all of the competitors offer relatively similar

products at essentially the same prices, with sandwiches averaging at about $6.50 and coffee

drinks between $2 and $3.

Market changes such as new technology are another risk that the franchise may face. As a

new store, there may not be enough money to adapt to the system, and corporate limitations may

have an effect as well. Another market change involves a failure in the market growth to meet its

expectations, forcing ABC to lack in sales.

Profitability: When determining the profitability of the industry, it is important to consider Porter’s

Five Forces. An analysis of these forces is as follows in EXHIBIT 10:

Factor Analysis Impact

Threat of Substitute Products

• Substitute products are easily accessible (eat at home, convenient stores, etc).

• Economic downturn limits disposable income, making substitute products more appealing.

High

Bargaining Power of Suppliers

• Franchises receive their products from corporate suppliers.

• Atlanta Bread Company has power over the suppliers because they

Low

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have multiple options to source each ingredient they use.

Bargaining Power of Customers

• Economic downturn’s affect on consumer eating behaviors lead to eating a cheaper meal at home.

• Nationally, there are numerous direct competitors that can have an affect on ABC’s brand loyalty.

• The RI competitors such as Bagelz, which is attractive to local customers because they are smaller, businesses.

High

Competition among Existing

Firms

• Differentiation and continuous menu changes in order to appeal to customer preferences.

High

Threat of Potential Entrants

• Barriers to entry, such as required capital investment, economies of scale, distribution channels, and product differentiation, are all significant.

• There is a high investment threshold to enter the market, and the product line is relatively common.

Low

Environmental Analysis: The environmental analysis is typically very broad and involves any trend that can affect

the business strategy. Useful aspects of this analysis are technological, government, economic,

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and social trends. The utilization of a PEST analysis (EXHIBIT 11) is an excellent way of

touching all of these points.

Category Issue Threats/Opportunities

Political

Atlanta Bread Company only offers franchises by means of their Uniform Franchise Offering Circulation (UFOC). Thus, they have to register their UFOC in certain states and in certain other jurisdictions.

Threat for Corporate, not RI based store.

Economic

Economy’s downfall has resulted in numerous employment cuts, makes eat-at-home and low-cost meals more appealing. The restaurant industry is competitive in general.

Threat. Consumers are constantly looking for ways to save money, therefore may be less apt to purchase meals from restaurants. Threat. Consumers have the ability to choose between numerous fast food, fast-casual, and full service restaurants in the area.

Social

Consumers become loyal to the brand when they are satisfied with the experience. Consumers are becoming more cautious of health factors and organic products.

Opportunity. Consumers will come back more frequently and spread positive reviews through word-of-mouth. Neither. Atlanta Bread Company has numerous healthy options for consumers to choose from. Also, most restaurants react quickly to changing consumer tastes.

Technological

With the constant changes in technology, consumers are expecting a bigger Internet presence. This involves stronger Social CRM strategies such as an interactive Facebook page and Twitter account.

Both. Opportunity. The company will build stronger ties with their customer base. Threat. Competitors have already exceeded the company in this respect (i.e. Panera)

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Marketing Strategy: The most appropriate marketing strategy for the Rhode Island Atlanta Bread Franchise is

to strive to be a product differentiator in the fast-casual and bakery café industry. By providing a

wide variety of high quality food and substantial customer service, the company can excel within

the competitive market. Because the franchise offers either a traditional or expanded menu, it is

important to consider the value of both options. With that in mind, the expanded menu is the best

option for this store because it will provide the product differentiation that the store will need to

set up a substantial competitive advantage here. Through this menu, the ABC franchise will

provide unique and global menu items. Combining this attribute with quality service and a warm

environment, the store will adhere to any consumer needs and gain the potential to become a

leader within the market.

Product Strategy: As mentioned before, the expanded menu will provide product differentiation for the

franchise. Although the traditional menu includes all of the regular and signature sandwiches,

soups, salads, paninis, and specialty drinks, EXHIBIT 1228 expresses the additional products

offered through the expanded menu.

28 Take Away Atlanta Bread Company Menu

24

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The additional breakfast items such as waffles, French toast, omelets, and breakfast

potatoes, make the restaurant’s menu selection unique in comparison to it’s more direct

competitors, Along with that, the larger menu offers a variety of brick oven pizzas and calzones,

as well as pasta dishes. With this product differentiation, the franchise will already have an

advantage over the direct competitors such as Panera and Bagelz, however it allows them to

compete significantly with the rest of the Emporium restaurants as well.

The campus-oriented location provides students and university employees a product other

than simply good food and drinks. The soothing atmosphere and comfortable seating

arrangements give this market an excellent location for study sessions, group projects, meetings,

or simple social hangouts. The fast service also gives them a place to grab a fast, good meal

between classes or other campus engagements as well.

Pricing Strategy: Atlanta Bread Company is committed to creating the best value for its customers, which

includes appropriate pricing. As part of a competitive market, it is vital to monitor the pricing

strategies of the competition in order to maintain a steady position within it. However, because

the location is so close to a college campus, value is created through lower pricing, as much of

the market consists of students with a tight budget. EXHIBIT 1329 represents an ideal pricing

schedule for menu items.

Breakfast (all items, excluding breakfast sandwiches and bagels come with toast and potatoes)

Bagel with Cream Cheese French Toast or Waffle Breakfast Sandwich Scrambled Eggs Omelet Morning Classic

$1.99 $3.59 $3.59 $4.69 $5.49 $7.09

29 Atlanta Bread Company Menu for the White Plains store. Retrieved from www.allmenus.com.

26

Pizzas All pizzas Calzone

$7.69 $7.69

Pasta Entrees Pasta Puttanesca, Asiago Cream, and Penne Pomodoro Basil Pesto Chicken Parmesan

$6.99 $8.79 $9.89

Salads Half Salad Full Salad With Chicken Fruit Salad

$3.59-$4.59 $5.29-$7.29 add $1 $3.69

Sandwiches (includes chips and a pickle)

Half Sandwich Full Sandwich

$4.09 $5.49-$6.59

Specialty Sandwiches and Paninis (includes chips and a pickle)

Sandwiches Paninis

$7.09 $7.29

Soup and Chili Soup Bowl Soup Bread Bowl Chili Bowl Chili Bread Bowl

$3.49 $4.89 $4.29 $5.49

Kids Menu (Includes drink and activity book)

Sandwich Pizza Pasta

$4.09 $4.39 $4.89

Beverages Bottled Drinks Fountain Drink Coffee

$1.79 $1.93-$2.15 $1.39-$2.79

Half and Half Combo Choice of two of the following: bowl of soup, ½ salad, or ½ sandwich

$7.49

Atlanta Bread Company also offers catering options to include numerous breakfast items,

sandwiches, salads, wraps, soups, bakery items, and beverages. Prices for these occasions will

vary depending on the amount of people being served and the types of products they are

ordering. There is a fee for delivery, should it be requested.

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Distribution Strategy: With a store conveniently close to the URI campus, customers can enjoy Atlanta Bread

Company with great ease. As they enter the store, they are given the opportunity to order bakery

items and drinks from one register, or full entrees from a separate register station. As they place

their order with the store’s employees, they are treated with prompt and friendly service. Bakery

items and drinks are handled directly by the corresponding cashier, while entrees are produced

behind the counter. These items should take no more than three to ten minutes, depending on the

meal itself and the amount of orders on hand. Customers also have the option to call ahead to

place orders for an even quicker in-store experience.

Promotion Strategy: Through the use of sales promotions and advertising, the new franchise will be able to

attract a new and stable customer base. By offering discounts through direct mail coupons, and

loyalty programs, the company will also be able to increase brand awareness and loyalty,

hopefully increasing overall sales and revenue.

As a whole, the franchise offers a loyalty program to customers that sign up to a mailing

list. In doing so, the customer receives an email each year entitling them to a free dessert for their

birthday. This concept will also be incorporated into the Rhode Island franchise.

Recommendations: As a new restaurant in the area, sufficient promotions and advertising efforts are crucial.

The first responsibility of the marketing campaign is to ensure that the target audience is aware

of the attraction that is soon to come. This can be done through numerous channels including

print advertisements, direct mail, and local TV commercials. Also, because this franchise is the

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first in the New England area, it is important to create a means of attracting non-consumers. Over

time, these efforts should also increase the frequency of customers and ensure brand loyalty.

There are various newspapers and newsletters that circulate the URI and general South

County area. These publications can be used to post general advertisements, current promotions,

and coupons. For instance, the South County Independent is a local newspaper that serves

Narragansett, South Kingstown, Charlestown, Kingston, Wakefield, and Peacedale. The paper is

published every Thursday and is distributed at various locations throughout the county. The

Independent offers various advertising options as well. The most appropriate for the Atlanta

Bread Company franchise is known as a Service Directory Special, which includes a 2x2

business card ad, however other sizes and pricing are available. The cost for these ads ranges by

the amount of weeks the ad is in the paper, with the options of 4, 13, 26, or 52 weeks.30 It would

be very useful to place an ad in the South County Independent starting a few weeks prior to the

opening of the store. Further timing and pricing of this will be explained in the market budget

and communications schedule below.

Because the Emporium is essentially on campus, it would be beneficial to advertise in the

campus newspaper, The Good 5¢ Cigar. This paper is easily accessible to students and campus

employees. It is also free, therefore students are more likely pick one up as they pass it. The

Cigar publishes Tuesday’s through Fridays, except for holidays and school vacations. The best

ad to place here is a display ad, where the price varies by the number of column inches it

consumes. The rate for such an ad is about $8 per column inch; therefore a 3x2 ad will run for

about $48 per advertisement.

It would also be beneficial to invest in a print advertising campaign that includes direct

advertising methods such as flyers, postcards, and things of that sort. Such a campaign can be 30 South County Independent Classified Ads Information. Retrieved from http://www.scindependent.com/about_us/.

29

used to reach consumers on a more direct level. For instance, flyers can be mailed to local

residencies, as well as being placed around campus and under dormitory doors. Vistaprint is an

online organization that specializes in printing these types of products at a very reasonable price.

It would be appropriate to utilize a post card sized flyer (5.47”x4.21”), with a base fee of

$164.98 for 1,500 flyers. There is also an additional cost of $172 for document proofing and

uploading the logo and photos per each bundle. With that, it would cost roughly $850 to produce

6,000 flyers.

Advertising through local TV advertisements may be helpful in the initial stages of the

restaurant as well. When selecting time slots for an advertisement, it is crucial to consider the

times and channels that the target audience is most prevalent. Most college students watch

network television during primetime (8pm-11pm), whereas older audiences are prone to start

with watching the news as well (usually at 5 or 6pm). With that in mind, it could be beneficial to

run a 30 second advertisement during both TV segments- around dinnertime and during

primetime. This ad will showcase the wide menu items and the restaurant’s warm company

culture.

Both the print and TV advertisements should be centralized around the Atlanta Bread

Company slogan: “Come for the food, stay for the culture.”31

As a restaurant, there are a wide variety of promotions that can attract non-users and

increase the frequency of current customers. In the beginning stages of operations, it could be

beneficial to provide discount coupons for consumers that bring in a flyer mentioned above.

These discounts can pertain to a free coffee or fountain drink, or a free bakery item under a $2

value, which typically consists of a cookie or muffin top. Another option is to expand on the

current customer loyalty program. For instance, a frequent buyer card could be used as an 31 Atlanta Bread Company. Advertisement. Widespread Creative. "Life Is Good", Austin, Texas, 27 Apr. 2011.

30

incentive for consumers to purchase more coffees. Every time a customer purchases a coffee of

any size, they receive a stamp on a coffee card, then for every ten coffees purchased, they receive

a free one.

As the franchiser, it is also important to take advantage of the minimal marketing benefits

provided by the Atlanta Bread Corporation. Once again, there are brand managers assigned to

each franchise to assist with the marketing strategy, planning, and execution. The franchisor also

offers sales-building materials for product promotion and product support, such as banners and

table-toppers.

Marketing Budget: Corporate Advertising Fee 2% of gross sales South County Independent 52 weeks - $25 per week

26 weeks - $28 per week 13 weeks - $32 per week 4 weeks- $36 per week $728

The Good 5¢ Cigar $48 per advertisement x 12 advertisements $576

Printing Flyers from Vistaprint $850 30 Second TV Advertisement on Local Network Channels

$100,000

Promotions and Loyalty Programs $5,000 Total Marketing Investment $107,154

Schedule of Implementation: 13 Weeks Prior to Store Opening:

• Begin advertising in the South County Independent

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• Run TV advertisements once a day on ABC, NBC, the CW, and CBS during the five or

six o’clock news.

1 Month Prior to Store Opening:

• Continue advertising in South County Independent

• Begin advertisements in The Good 5¢ Cigar, one per month.

• Increase TV spots to twice a day, now including a primetime spot on ABC, NBC, the

CW, and CBS.

• Begin distributing flyers and promotions across the campus and in the mail.

First Period of Operation (months 0-4):

• Continue advertising plan in South County Independent, The Good 5¢ Cigar, and TV

advertisements.

• Promote coffee rewards program and email list to receive more promotions.

Second Period of Operation (months 5-8):

• Reduce TV spots to once a day, varying between the local news and primetime spots.

• Continue advertisements in The Good 5¢ Cigar.

• Promotions for college students to encourage a good study and work place. (i.e. coffee

and pastries promotions).

• Continue to promote coffee loyalty program and email list serve.

• Begin sending monthly coupons via direct mail to campus mailboxes and local

residencies.

Third Period of Operation (months 9-12):

• Continue advertisements in The Good 5¢ Cigar.

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• Arrange advertising spot in South County Independent and The Good 5¢ Cigar for the

next year.

• Continue promoting coffee loyalty program and the email list promotion.

• Continue monthly coupons.

Performance Metrics There are many performance metrics that can be analyzed to determine how well the

Atlanta Bread Company franchise is competing within the market and as a business. First, it is

important to measure the growth of the business. This can be analyzed through the total sales

made throughout the year. Calculating the sales will help to evaluate how profitable the franchise

was in the first year. It also helps to forecast sales for the upcoming year as well. However,

because this is the first year of operation, it can be expected that the store generate a very little

profit, due to the expenses involved with opening the franchise and attracting the initial customer

base. Because of this, a sufficient sign of success is that the company is able to complete one of

the objectives of breaking even in revenue.

With that in mind, the overall profitability of the franchise is determined by both the

return on marketing investments and the total return on investments. Calculating and evaluating

these aspects will show whether or not the marketing strategy was successful at bringing in a

sufficient clientele. This information can also be used to understand how the store is performing

as a new competitor in the Rhode Island market.

Another performance measure is customer satisfaction. This can be determined by

various factors other than total sales. For instance, how many people have joined the email list

serve or through the use of filled up coffee loyalty cards. One way to gain a more direct spectrum

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of customer satisfaction is to provide consumers with the option to fill out comment cards or

feedback surveys. It is also useful to keep track of customer complaints, should they exist.

Lastly, in order to measure the innovativeness of the store, it is important to compare our

products to those of the competitors. Because the marketing strategy relies on a unique product

line, the store needs to ensure that other competitors aren’t adapting to the same range of menu

items. Looking at the success of sales promotions, special offers, and discounts is a means of

measuring innovativeness as well.

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Works Cited “153. Atlanta Bread Company Identity.” One Page Magazine. 4 Mar. 2008. Pg 153. Aaker, David A. Strategic Marketing Management. 9th ed. Hoboken, NJ: John Wiley & Sons, 2011. Pg. 59. Atlanta Bread Company. Advertisement. Widespread Creative. "Life Is Good", Austin, Texas, 27 Apr. 2011. “Atlanta Bread Company: Franchisor Background.” World Franchising. 2012. http://www.worldfranchising.com/franchises/Atlanta-Bread-Company.html. “Atlanta Bread Company International, Inc.” Funding Universe. 2012. “Atlanta Bread Company Int’l, Inc.” Retrieved from http://www.entrepreneur.com/franchises/atlantabreadcointlinc/282104-0.html “Atlanta Bread Tops in Healthy Options, Facilities.” QSR Magazine. 3 Sept. 2010. Burger Shack Website. Retrieved from http://www.uriemporium.com/directory/burgershack.html

“Franchise Opportunities.” Atlanta Bread Company Website. Retrieved from http://www.atlantabread.com/franchise.php?sec=2. Grantham, Russel. "Atlanta Bread Company Franchisees Among Worst-Performing SBA Borrowers." Atlanta Journal-Constitution [Atlanta] 24 Oct. 2011 Hembree, Ryan. “Meet the Bread Man from Down Under.” Underconsideration: Brand New. 26 June, 2008. Interview with Jeanne Temple, manager at Atlanta Bread Company in Lawton, Ok. Kaufman, Miller & Forman, P.C. Business and Commercial Law. Georgia Bread Franchise Retreats to "Rise" Above the Competition. Atlanta: Kaufman, Miller & Forman, P.C., 2011. “Kingston, CDP, Rhode Island.” U.S. Census Bureau. 2012. “News” Atlanta Bread Company Website. Retrieved from http://www.atlantabread.com/news.php?sec=2. 2012. Noone, Patrick. The Bakery Cafe Consumer Trend Report. Chicago: Technomic, 2011. Pernicone, Brian. “Record Number of Students Apply for Admission to URI.” University of Rhode Island. [Kingston] 14 Mar. 2012. Stemle, Cary. “Bakery Cafés Lead Segment Growth.” Fast Casual. 24 Jan. 2010.

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Take Away Atlanta Bread Company Menu "Technomic: Strong Growth Continues for Bakery Cafes." Fast Casual. 10 Oct. 2011: Pg. 30-31. “URI Campus Housing” College Prowler. Retrieved from http://collegeprowler.com/university-of-rhode-island/campus-housing/ . URI Emporium Website. Retrieved from http://www.uriemporium.com/.