Rainforest Cafe Marketing Strategies - Research Paper Example

Introduction and Overall Strategy Environmental scanning is vital for the purpose of formulating business strategies of a firm. This is because business is largely influenced by economic, technological, political, socio-cultural, legal, natural and global factors. Therefore, environmental analysis is required to analyze the impact of the aforementioned factors on an organization. It should be noted that firms that carry out systematic analysis and diagnosis on the environment are more effective than those that do not analyze the environment (Jain, Trehan and Trehan 21). This study analyses the hospitality and tourism industry, particularly, the hotel industry of London. According to Ruddick, hotels in London are expected to face a weaker trading market this year because of the Olympics hangover. Furthermore, there is an expectation that tremendous growth will be recorded in the hotel industry of the U.K towards the end of the year, as they are expected to make improvements. The hotel market has been chosen for analysis because hotels represent an important element of London’s tourism industry, and the London hotel market is distinct (Cushman&WakefieldHospitality 4). Given that the London hotel market is distinct, this analysis aims at identifying the weakness and threats that face a specific restaurant. It also identifies the hotel’s strengths and opportunities. Further, the analysis provides recommendations on how the restaurant can improve and maintain its strengths, as well as, capitalize on opportunities. Information will be gathered from customer reviews, annual financial reports and hotel websites. In this analysis, an environmental scan of Rainforest Cafe, located in London will be carried out. The economic, technological, political, socio-cultural, legal, natural and global factors that influence the organization’s operations and success in the market will be analyzed. This will be done in comparison with the major competitors of Rainforest Cafe. First, the analysis will begin with an internal SWOT analysis of Rainforest Cafe to identify its strengths, and threats. Recommendations will be made on how the Cafe can improve on its weakness and maintain its strengths to ensure outstanding performance in the market now and in the future. Secondly, an external SWOT analysis will be carried out to identify the restaurant’s strengths, weaknesses, threats and opportunities. Finally, a competitive analysis for Rainforest cafe will be carried out to identify organizations that compete with the cafe in general and in terms of product form, product category and budget. Rainforest Cafe Rainforest Cafe is located found in 20 Shaftesbury Avenue, Piccadilly Circus in London (Porter) Par 13. The cafe is committed to supporting worthwhile environmental causes (Rainforest Cafe Par 1). The rainforest cafe works with a UK-based charity, World Land Trust, to try to save as much tropical forest as possible (Rainforest Cafe Par 3). The cafe is among the largest family restaurants in London. The restaurant is built in sucha way that it is jungle-like, and this jungle feel is enhanced by the roaring elephants and other special effects (Porter Par 1). It is themed as a tropical rainforest. Started in 1997, the cafe has been popular ever since The Rainforest Cafe uses information technology to support food services operations, with a remarkable and direct use of information technology. There are other branches across North America and other international locations. This group of hotels entered the industry, and is characterized by significant investments in the physical and operational infrastructures of food services to create a distinct atmosphere and unique theme-based experience for their clients. Apart from providing hotel services, the Rainforest Cafe sells merchandise to both adults and children related to the rainforest theme. The rainforest theme is intended to foster in adult and child customers a sense of excitement about nature, concern for survival in the tropical rainforest ecosystems and a strong loyalty to the firm’s food services and retail products. The table space in the restaurant is characterized with a rapid turnover, which results in a capacity utilization of retail space that has been significantly, higher than most of its competitors. Therefore, the firm’s sales per table and its ability to generate repeat customer visits have been quite high for its industry (Papp 31). Furthermore, the restaurant uses a point-of-sale system which enables its retail managers to track revenue generation easily. The point-of-sale system is user friendly. Further still, the hotel uses a two way two-way radio to facilitate communication between those who serve food, within the restaurant. Rainforest Cafe does not use pager technology as many of its competitors do (Papp 32). Instead, the servers remain in constant physical proximity to the customers. The restaurant uses customer relationship management software to track customer purchasing behavior and offer promotions that stimulate more customer visits during periods of diminished capacity utilization (Papp 33). SWOT Analysis Information about the strengths, weaknesses, opportunities and threats that surround the Rainforest Cafe has been analyzed to come up with a SWOT analysis. The information has been gathered from customer reviews, annual financial reports and hotel websites of both the Rainforest cafe and its competitors in the hotel market. The Rainforest Cafe’s strengths and weaknesses and the market’s opportunities and threats are tabulated below. Internal SWOT Analysis for the Rainforest Cafe The Restaurant’s ’s Strengths and Weaknesses Market’s Opportunities and Threats Operations Strength Innovation whereby the point of sale system is user friendly. The hotel uses a two way two way radio to facilitate communication between those who serve food, within the restaurant. The restaurant is characterized by flexibility in technological advances Economic Opportunity The restaurant can capitalize on its high asset leverage and obtain more capital from financial institutions for expansion purposes. Can engage in expansion programs such as takeovers and amalgamations with other restaurants to increase competitive edge (Los Angeles Times). Weakness Frequent loss of connection in the web based system that is used in the restaurant. There is low Research and development Threat There are high levels of uncertainty in financial markets, making raising money through debt difficulty (Earnest and Young). The restaurant has an overleveraged financial position, which is a threat to the restaurants capability of expansion. The restaurant’s engagement in research and development is low, compared to other restaurants. Fluctuations in exchange rates. Low cost competitors. Recommendation Efficient use of information technology by upgrading the internet based system of the restaurant. The restaurant should in robust research and development to enhance innovation and new market creation. Recommendation Engage in productive research and development programs to improve the restaurants performance in the hotel market by improving service quality and product quality. Reduce or avoid debt financing to improve the restaurant’s credit worthiness and facilitate easy external finance acquisition. Social, Cultural, Demographic Opportunity The restaurant’s format can be developed at the existing units and be utilizes in multiple, high traffic locations with favorable demographics such as malls and entertainment centers (SEC Par 6). Can capitalize on the many residents of London and visitors who like themed restaurants to generate more revenue by selling merchandise and food to both adult and child customers. Can capitalize of many social events held in London to make more revenue. Threat There is a likelihood of losing some clients to the restaurant’s competitors Recommendation The restaurant should offer incentives to clients to build and maintain loyalty Marketing Strength Offers adventure in iconic destination markets across the globe (World Franchise Associates Par 4). The use of online marketing in promoting and selling its services and products. Strong dominance on the market share, where the restaurant has market share leadership. Markets and sells unique products to both its adult and child clients. The restaurant uses a point of sale system to market and sell merchandise. The use of customer relationship management software to track customer purchasing behavior and offer promotions that stimulate more customer visits during periods of diminished capacity utilization (Papp 33). Political, Legal Opportunity Can capitalize on the environmental friendly requirements by advocating for rainforest conservation and practicing pollution free production or avoiding environmental degradation. Weakness Loss of connection due to the weaknesses in the web based system (Bernido). Threat Threat of being sued for poor garbage disposal that may lead to environmental degradation, against the legal requirements (SEC). International licensing requirements may bar the restaurant from making major strategic mergers and combinations. Recommendation The restaurant should carry out appropriate upgrades on its web based system by employing experts in Information technology Recommendation Use safe methods of production and engage in activities that reduce environmental pollution at all costs. Technology Opportunity Can capitalize on the use of information technology to increase customer base because most customers in the hotel industry are technology savvy (Buhalis Par 1). Can use innovation to conquer competitors. Can market products and services online, given that the market is made of information technology savvy clients. Threat Competitors have superior online presence, and thus pose a threat of snatching the market share Recommendation Develop a robust information system and enhance online presence Natural Opportunity Can use natural based themes to attract and maintain customer loyalty Threat Competitors have created and are using a distinct atmosphere and unique theme-based experience for clients. Recommendation Improve the features of the restaurant’s unique theme through diversification and continuous improvement to suit customer preferences Management Strength The Rainforest Restaurant has a strong Management team because of the cross training that the restaurant offers to its management staff to enhance confidence (Glassdoor Par 1). Weakness Management is not considerate and flexible with employees (Glassdoor Par 2). Recommendation Management should be considerate, flexible and inform employees who travel from far about low periods to help them save on costs. Management to be considerate and listen to the needs of staff members who have two jobs and those with baby care responsibilities. Finance/Accounting Strength Participation of the CEO and CFO in the evaluation and designing of controls over financial reporting that have no material weaknesses. Therefore, the controls are designed appropriately, and are working effectively. Weakness Controls can only provide reasonable financial control and not absolute financial control because they have not been changed. Recommendation Involve the CFO and CEO to design and develop robust Financial Controls that can ensure absolute financial controls. Customers Strength The Cafe focuses on customer satisfaction (SEC Par 9). Serves meals and sells merchandise to both adults and children, related to the rainforest theme. Uses the rainforest theme to foster in adult and child customers a sense of excitement about nature, concern for survival in the tropical rainforest ecosystems and a strong loyalty to the firm’s food services and retail products The restaurant’s food servers remain in constant physical proximity to the customers. The restaurant uses customer relationship management software to track customer purchasing behavior and offer promotions that stimulate more customer visits during periods of diminished capacity utilization (Papp 33). Weakness Offers no diversification in the services it offers and the merchandise that it sells to both its adult and child clients. Recommendation The Rainforest Cafe should seek to diversify its hotel services in terms of foods served and products in terms of merchandise sold to both adult and child clients to reduce monotony. Suppliers Strength Has contracted various suppliers including Sofa cafe suppliers, chair cafe suppliers, internet cafe suppliers, cheesecake factory suppliers and decoration suppliers to ensure success (Alibaba). Suppliers supply merchandise at cheap prices because the restaurant has excellent supplier relationships. Weakness Lack of supplier relationship management software to track supplier selling behavior. Recommendation The restaurant should create and develop supplier relationship management software to track supplier selling behavior. Distribution Channels Strength The restaurant is innovative, as it uses a web based channels to operate multiple subsidiaries opened at various international places. Use of information technology whereby a web based system is used to manage the supply chain appropriately. Weakness The restaurant is negatively affected by diseconomies of scale that arise from distribution. Recommendation The restaurant should carry out joint promotion of both its merchandise and services. The restaurant should carry out joint distribution of its merchandise. Competition Analysis The Rainforest Cafe competes in the hotel industry, which is full of competitors. The main determinants of success in this industry are price, quality of service, food quality and interior restaurant theme. The main competitors of the Rainforest Cafe compete in general, product form, product category and budget. Planet Hollywood is a general competitor of Rainforest Cafe. It is headquartered in57-60 Haymarket, London (Planet Hollywood). Its annual sales of 2012 were $70 million, with over 70,000 employees. Its product line hotel and food services and people who love food, and entertainment purchase the hotel’s products. This restaurant also competes with the Rainforest Cafe product form, and budget. Another competitor that competes with the Rainforest Cafe generally, on the product form and category and on budget is the Hard-Rock Cafe. The Hard Rock is situated in 150, Old Park Lane, London. It has over 20,000 staff members. Its annual sales for 2012 were $417 million (SEC). The Cafe’s product line is food service and entertainment, and its main clients are people who like dining and having great times, especially enjoying music. These competitors affect the Rainforest Cafe by commanding a share of the Cafe’s clients. Consequently, the sales revenues will decrease drastically. Works Cited Alibaba. "Rainforest Cafe." 2013. Web. 20 October 2013. Bernido, Joezel. "Rainforest Cafe Case Study." 4 January 2013. Web. 20 October 2013. Buhalis, Dimitrios. "Strategic use of Information Technologies in the Tourism Industry." 2013. Web. 20 October 2013. Cushman & Wakefield Hospitality. "Market Strategy and Policy: Advice for New Hotel Development in the City of London." June 2009. Web.20 October 2013. Earnest and Young. "Global Hospitality Insights:Top thoughts for 2013." 2013. Web. 20 October 2013. Glassdoor. "Landry's." 23 November 2009. Web.20 October 2013. Jain, T R, Mukesh Trehan and Ranju Trehan. Business Environment. New Delhi: V.K India Press, 2010: 19-23. Print. Los Angeles Times. "Rainforest Cafe owner Landry's to buy McCormick & Schmick's." 8 November 2011. 20 October 2013. Papp, Raymond. Strategic Information Technology: Opportunities for Competitive Advantage. Hershey: Idea Group Publishers, 2001:31-33. Planet Hollywood. "Planet Hollywood ." 2013. Web.20 October 2013. Porter, Laura. "Rainforest Cafe London." 2013. Web.20 October 2013. Rainforest Cafe. "Rainforest Cafe." 2013. Web. 20 )ctober 2013. Ruddick, Petr. "Weaker 2013 Predicted for London Hotel Market but Edinburgh Bounce Back Expected." 15 January 2013. Web. 20 October 2013. SEC. "Annual Report 2012." 2013. Web. 20 October 2013. SEC. "The Rainforest Concept and Strategy ." 2013. Web. 20 October 2013. World Franchise Associates. "Rainforest Cafe." 2012. Web. 20 October 2013. Read More