Levendary Domestic Business

Issue:

1. Analysts were concerned that Levendary’s domestic business was nearly tapped out.

2. Given Foster's lack of previous international management experience, they were skeptical of her ability to build a multi-national brand

3.Stock were traded in discount

4. She was concerned by reports that recently opened China locations incorporated some dramatic departures from Levendary’s U.S. concept, particularly in store design and menu selection.

5. She was also frustrated by the apparent unwillingness of Louis Chen, Leventhal’s hand-picked president of Levendary China, to conform to the company's planning and reporting processes.

Facts:

1. Restaurant Industry: 600 billion, 30% are multi-unity restaurant→30%

-Specialty (Beverage, Snacks. E.g. Starbucks)

-Quick Service Restaurant

-Casual Dining

-Combination (Quick Casual)

2.Restaurant Cost Structure

-Occupancy: Rental/Maintenance →10% of Revenue

-Labor: 25-35% of Total Revenue

-Food: 28-32%, includes waste

-Supply: 1-4%

-Marketing: 2%-10%

-Overhead:5%-15% (depending on size)

3.Gross Margin 20%

Restaurants typically operated on razor-thin margins, with profitability a direct function of their ability to generate high traffic, execute consistently, and control costs. Traffic, in turn, was a function of the brand’s appeal, marketing effectiveness, real estate location, and store experience.

Strength:

1. Wholesome soups, salads, and sandwiches using high-quality ingredients, and a commitment to service in a comfortable, friendly environment.

2. To management’s delight, customers willingly paid the premium price, resulting in increased revenues and margins and a simultaneous boost in customer trust in the brand.

3.Strong operation structure→Tight control

Organization:

1.CCO (Food Development, MKTing, Tasty Fresh Goodness)

2.MKTing (outside advertising agencies)

3.Food (Fully Scaled Kitchen+ Food Science Lab)

4.Operation (1200 company-owned café→district managers→area directors→MKT vice president, OTL system)

5.3,500 (2/3) stores were franchised

6.Business Development (International expansion/Branded grocery items)

Strategy:

Culture: Delighting the customer, make them want to come back.

- Personalization/Accommodate customers (white collar profs + upper-middle-class women) needs→threatening standardization/speed of services VERY SUCCESSFUL

-Local Menu adaption/Updating Menu with in-trend healthy ingredients