Kenny Rogers Roasters

Kenny Rogers Roasters (KRR) International Corp. the franchisor of Kenny Rogers Roasters in the United States of America. KRR have awarded Malaysia, Singapore, China, Indonesia, The Philippines, Bangladesh and Brunei with the Master Franchisee award. KRR became entirely the subsidiary of Berjaya Corporation Berhad and was incorporated in 1994 for the Asia pacific region. KRR was first founded in 1991, it is in the Food and Beverage (F&B) industry. The main product produce is roasted chicken and they are considered a monopolistic competition company in the market structure. The product produced by KRR is normal good.

Table 1 Closest competitors of BRoasters

For a monopolistic competition company they face zero or no barrier to entry into the market, because it is unrestricted competition exists in the market. Although the products sold are differentiated there are still many close substitutes, e.g. since the main product produce is chicken they have competitors like Kentucky Fried Chicken, Nando’s, The Chicken Rice shop and Rasamas (refer Table 1). Such companies are price makers, each of them set the price level according to their target market, even so the pricing range are still close as they don't have complete pricing power. for example, setting prices much higher than a competitor will move customers to substitute to a cheaper product. FSRs licenced as franchise operators have little to almost no control in terms of pricing, as pricing is determined by the local franchisor. Competitors still vary as they are either full service restaurants (FSR), cafes & bars, small-to-medium independent food operators or fast food restaurants. KRR is parked under the FSR category and these are the companies that will offer dine in services. Moreover the differentiation of KRR to its competitors is that it differs itself through its sit-down-and-serve-service concept. This help enhance family dining experience.

KRR outlets in Malaysia

Location, FSRs tend to have higher patronage in areas that are outside of the capital, Kuala Lumpur. Locals in some Malaysian states (i.e Sarawak) tend to be more patriotic and decide on brands that they recognise as home-grown. As well as, there are locations in Malaysia where there are a growing number of foreign communities. Foreign communities tend to go for their own cuisine rather than the locals as there also are foreign cuisines located in the country. So, KRR has to choose a strategic location with high traffic so that there will be customers.

Productive efficiency (minimum average cost) can only be achieved by perfect competition companies. Monopolistic competition produces optimum output at decreasing average cost but not at minimum. Therefore, production efficiency is not achieved.

Graph 1

As KRR is in the F&B industry peoples taste tends to change as time passes, this will than cause a shift in the demand curve as price still remains constant, other possibility would be rise in personal income. If people dislike eating chicken than the demand curve will shift to the left from D0 to D2 same goes if the person’s income decreases (refer to table 2). The demand curve moves to the right from D0 to D1 when people favours chicken more during the particular time period or if the person’s income raises (refer to Graph 1). Since there is growing middle class population group in Malaysia it has prompted the development of Malaysian food industry. Having the increase in consumer expenditure power it has created the food industry as a whole, more profitable sector and this will help benefit the company in earning more future profit. With KRR having the “less fat less salt” slogan as their healthy life style promotion in eating habits, it attracts people, because in the current days people are more into the healthier lifestyle trend. In Malaysia there is a wide variety of multi-cultural environment, in addition, cheap and affordable food is in abundance within the country. However, a healthier food option are not available in a wide variety. So, this will benefit KRR as many food operators would only cater healthier options upon request of the customers asking for the reduction of oil in the food. How it benefits is that KRR have their food prepared steamed or grilled.

Graph 2 Elastic

 Graph 3 Inelastic

There is existence of both inelastic and elastic demand as it will affect the lower income earners and also the middle class earners in changes of price. When there is an increase in price, the lower income earners will have a higher movement of decrease in the demand curve as the price increases and it shows the demand is elastic, because a small change in price will lead to a higher change in the quantity demanded (shown in graph 2). Whereas, for the middle income earners when the price increases there is a slight decrease in the movement along the demand curve and this shows it is an inelastic demand (shown in graph 3). So, price setting will have to be considered depending on the amount of mid-range income earner to the lower range income earner. Due to substitute offering by competitors the demand would also be elastic as price increases people have the choice to change and the demand of the current offering of the company will decrease, provided prices set by the competitors are lower.

Licence

Subject to any laws and regulations applicable to it or the operations of the KRR restaurants in Malaysia, BRoasters shall comply with all mandatory specifications, standards and operating procedures.

As for advertising BRoasters shall not use any advertising, marketing and promotional materials and programmes unless have been approved by the RAPM.

Technology used

Technology advancement for operating a nationwide restaurant chain requires advance managerial systems and capabilities. It will help utilise operational programms and tools, including logistics management and restaurant operation information systems to provide the management team with timely access to financial and operating data as well as to reduce administrative time and expenses where necessary.

Upgrade in technlogical infrastructure will help support the business in expansion and development, such as the installation of the point-of-sale system (POS) in all its restaurant to provide real time data to it's central logistics centre. POS system enables the management team to better manage the business and operations in responds to market changes.

Fabrication of kitchen equipments to achieve greater space savings and to increase the work flow efficiency of the kitchen staff. Basic maintenance on all kitchen equipment are undertaken regularly by the respective restaurant managers who attend specific training programmes for this purpose. Furthurmore, maintenance and repairs are outsourced to maximise cost efficiency.

Future plans or strategies

Increased number of group-owned restaurants, the management aims in continuing the growth and expand the business as a mid-casual dining restaurant operator in Malaysia. In achieving this goal the group intends to increase the number of restaurants by expanding its restaurant network to achieve overall revenue growth. The expansion requires fund from internal generated funds; Continuous access to opportunities in the future as well as identifying and evaluating potential locations for its chain of restaurants. In doing so, the management is aiming to open its new chain of restaurants in high traffic volume areas.

Secondly, expanding product offerings, the franchisor will continue to come up with new menu dishes, including non-chicken range products, such as lamb which have been offered as a limited time meal, fish, seafood and beef products, this will help attract new and retain current customers to eat at the restaurant. Menus are regularly reviewed and updated to accommodate the change of peoples taste and the market trends and preferences of different geographical regions.

Next, promoting healthy eating lifestyle, having society now becoming more health conscious, the public are becoming more careful towards the choice of food they choose to consume. Hence KRR emphasises on preparing a wholesome, hearty and well-balanced meal which reflects today’s concern customers changing their attitude towards healthy eating lifestyle. Generally food consisting from steam, baked or roasted. Offerings such as this are more appealing especially towards younger generation and working adults who prefer dining in a comfortable environment which also serves quick and healthy at the same time tasty food.

Furthermore, delivery or catering service which was offered since February 2008, the service had been carried out on its own by the group and also via third-party service provider, namely Asian Room Service, which provides delivery services only. Part of the move in increasing the revenue contribution from delivery or catering the services, the group intends to use marketing campaigns to convey and inform or educate the customers and also the general public that such service is available for the customers convenient.

References

Berjaya Corporation Berhad, 2013. Berjaya. [Online] 

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Boundless, 2013. BOUNDLESS. [Online] 

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Entrepreneur, 2013. Entrepreneur. [Online] 

Available at: http://www.entrepreneur.com/encyclopedia/point-of-sale-pos-system

[Accessed 24 October 2013].

Euromonitor International, 2013. EUROMONITOR INTERNATIONAL. [Online] 

Available at: http://www.euromonitor.com/consumer-foodservice-in-malaysia/report

[Accessed 24 October 2013].

Government body, 2013. Department of Statistics Malaysia. [Online] 

Available at: http://www.statistics.gov.my/portal/index.php?option=com_content&view=article&id=1939%3Afindings-of-the-household-income-survey-2012-updated-02042013&catid=158%3Ahousehold-income-&Itemid=154&lang=en

[Accessed 24 October 2013].

Kenny Rogers Roasters, 2013. Kenny Rogers Roasters Delisiously Healthy. [Online] 

Available at: http://www.krr.com.my/v3/promotions.php

[Accessed 24 Ocober 2013].

Sloman, J., Wride, A. & Garratt, D., 2012. Economics. 8th ed. New Jersey: Pearson Education Limited.