Boston Market started out as one store, called Boston Chicken, with a couple of rotisserie units and a slicer in Boston, Massachusetts. With superior management and foresight, it grew to be a billion dollar industry in under ten years. The company renamed its lead stores, “Boston Market,” to indicate their more varied menu, and has developed other food service providers, under its corporate structure: Boston Chicken, Inc.Boston Market restaurants are food service stores that specialize in fresh, convenient meals featuring entrees, sandwiches, fresh vegetables, salads, and side dishes. Boston Market stores combine the freshness and quality of traditional home cooking with convenience and value, and offer innovative meal solutions to today’s consumers. They are in a highly competitive segment of the home meal replacement market, facing intense competition from grocery store take-out counters, and the fast-service, take-out type food providers. Other competitors that could be considered are the less expensive eat-in lower cost restaurants that have table service, such as Denny’s and Shoney’s.The leaders in the home meal replacement industry (HMR) are Kentucky Fried Chicken, McDonalds, Pizza Hut, Taco Bell and what is now considered the fifth spoke of the wheel, Boston Market (Papiernik, 1996).
Boston Market is a strategic business unit of Boston Chicken, Inc. which also holds Einstein/Noah Bagels and Progressive Food Concepts, Inc. (PFCI). Under PFCI, Boston Chicken has a controlling interest in Harry’s Farmers Market, Inc.- -an operator of retail food stores in the Atlanta area (Boston Chicken, Inc., 1997).
Chapter 1: Secondary and Primary Source DataConsumers in Potential Market and Buying HabitsAlthough many types of consumers frequent Boston Market food service stores, the majority of their patrons are between the ages of 29 to 50. The majority of these patrons earn an annual salary of $40,000. Since 60 percent of single people and 50 percent of households with children believe that eating out is a necessity and not a luxury, the potential market is extensive (USITO, 1998).Since working a full-time job results in less time for meal preparation, many parents find it infeasible to prepare a meal for the family.
In addition to lack of time, the parents prefer to spend time with their family instead of in the kitchen. Instead of purchasing fast food, many parents find it comforting to purchase home meal replacements, similar to those served at Boston Market. While the home meal replacements generally cost more to purchase, the nutrition content is greater if the full meal is selected, including salad and vegetables. The families with working parents regularly buy ready-made meals one to two times weekly (Harper, 1997).It is important to consumers to know that they can buy an individual meal for under $4.99 without having to worry about how much to purchase.
One survey showed that 51% of the consumers surveyed agreed that Boston Market is affordable (Harper, 1997).In 1997, Boston Market introduced a nationwide kids’ meal program, aimed at 3- to 8-year old children, with the advertising directed toward parents seeking more nutritional meals than traditional fast foods, with toys that are both entertaining and educational. The program was based on study it had commissioned that showed that mothers found fast-food meals not to be as good as what they served at home, and that they felt that kids’ meal toys did not have educational value. (Robertiello, 1997).Types of MarketBoston Market positions itself as the leader in the home-meal replacementindustry, unlike McDonald’s which is a vendor in the fast-food industry. The home meal replacement industry has sales over $65 billion annually.
The average annual revenue for Boston Market stores is over $200,000 annually; the average weekly store revenues amount to over $25,000 (Boston Chicken, Inc. 1997). The system-wide gross revenues for Boston Market were over $1 billion in 1996 (Boston Chicken, Inc. 1997)Growth Rate of the MarketRecent years have seen very low rates of inflation, with interest rates remaining low, and the stock market continuously soaring to record-breaking levels. The home meal replacement industry usually grows at approximately 8% annually. In 1996, much of the industry witnessed flat or declining revenues; however, Boston Market achieved an overall growth rate of 6.6%.CompetitionThe food industry is very competitive with respect to food quality, location, service and price.
There are many well-established food service competitors with greater financial resources and longer histories than Boston Chicken, Inc. The competitors vary from pizza restaurants, Chinese food restaurants and convenience dining establishments, to such chains as McDonald’s Kentucky Fried Chicken, Kenny Rogers Roasters, and others. Boston Chicken believes that its Boston Market stores compete in the factors of taste, the quality of food, convenience, customer service and value.The company’s other competitors are grocery store delis because they sell roasted chickens and accompanying side dishes for very inexpensive prices.Marketing and Financial Capabilities of the CompanyBoston Chicken, Inc. was operating 1,087 Boston Market stores in 1996 and hasplans to expand to 3,600 stores within the next seven years. The company has tremendous financial capabilities. Boston Chicken, Inc.
revenues increased from $20 million in 1992 to over $1 billion in 1996 (Kramer, 1997). A major share of its revenues comes from interest on large loans to its national network of franchisees (Schine, 1997).Other Relevant AspectsBoston Market has used differentiation to successfully separate itself from other industry competitors. It has accomplished this by offering selections of ‘quick-quality’ meals with a variety of side dishes for the consumer to choose.
These meal choices, except for some Boston Market standards, are changed approximately every few weeks to maintain an interesting variety and simulate a home-cooked environment. This differentiation strategy has also put Boston Market into competition with their largest competitors, grocery stores (Scott Beck, 1997).The home meal replacement segment of the fast food industry is a relatively new concept within a much larger, and older business.
The fast food industry grew from a consumer (primarily teenagers) need in the late 50’s and early 60’s to socialize in a restaurant environment. Restaurants opened ‘car hop’ windows and services which led ultimately to the fast food industry. Those teenagers are now part of today’s babyboomer generation. Their wants and needs have brought the industry through many stages of development and ultimately back to a need for quick, nutritious meal replacement. This trend prompted the development of microwaves, frozen meals and other quick meal solutions. (##########).
The industry itself is growing at a rate faster than the GNP (########) but it has become subject to cyclicality. Industry sales have begun to level as the baby boomer generation ages. However, the younger baby “boomlets” have pushed the ever-expanding market into new directions. With the upcoming generations of consumers more conscious of health, nutrition and environmental issues the industry has responded by cutting fat, calories and the use of packaging materials detrimental to the environment.
This trend has led to the success of Boston Chicken, Inc. due to the belief that chicken is more nutritional, more natural and less in calories than the average burger and fries combo. Boston Chicken competes for the $800 billion Americans spend each year on quick meals, which include pizza, burgers, frozen foods and quick snacks (Saporito, 1995}This ultimately places the fast food industry in the maturity stage of development with some segments like home meal replacement still holding strongly in the growth stages. (Southwestern College Publishing,1997). This implies markets are approaching saturation and that products are typically oriented toward narrow market segments.
The HMR segment, still enjoys expanding volume and can orient its products toward multiple segments of the market. The few industry leaders in the 400,000 fast food stores, KFC, Pizza Hut, Taco Bell, and McDonalds, as well as Boston Market have relatively stable market shares with one major difference. Boston Market also competes with the 30,000 supermarkets, 13,000 discounters and 93,000 convenience stores selling food.
The industry is very difficult to penetrate for a new competitor.Boston Chicken, though a leader in the fast food industry, cannot consider itself to be dominant at this time. In the HMR industry it is the dominant leader and can influence the behavior and strategies of competitors. When supermarkets discovered their main competition for deli service was Boston Market’s priced by the meal’ policies they were quick to follow suit. Still supermarkets are unable to compete with the consumer’s perception of Boston Chicken’s freshness appeal.Chicken as a fast food product has been around almost since the first hamburger passed through McDonald’s door; rotisserie chicken is a more recent product. Though not the first to sell rotisserie chicken, Boston Market has been the first to expand sales to be able to handle fast-food type business nationally. Clearly rotisserie chicken falls into the growth stage of the product life cycle.
This is indicated by rapidly rising sales (8% annually), average cost per customer (McDonalds combo meals range from the upper three dollar range to the upper 4 dollar range; Boston Market compares or even is less in some lunch meal deals), and rising profits (as Boston Market gains economy of scale, costs continue to drop). Competitors are growing in the rotisserie chicken business as new supermarket delis focus on the growth of the market and decide to change the menus to offer meals at per person rather than per pound prices.Chapter 2: Problem DefinitionManagement Decision ProblemBoston Market’s goal as a leading provider of quick, quality meals for consumers across the United States is to maintain and increase their market share, and ultimately to become the worldwide leader in quick, quality meals. One of the areas the company feels offers a strong opportunity to grow is lunch-time sales.
The Management Decision Problem is to determine the actions Boston Chicken, Inc. can take in the near future to position its Boston Market franchise stores to strengthen its position in its target service market. The company wants to build revenue, expand its customer base, and maximize store operations. Key questions in this Management Decision Problem that could be considered are: How can Boston Market further enhance the position of its quick, quality meals as convenient solutions for time-pressed people? What actions will expand the customer base to different consumer segments? What actions will increase the numbers of repeat customers? How can Boston Market increase its sales during different periods of the day, without decreasing its traditional sales; i.e.
, how can the revenue at lunchtime be increased, without accompanying losses of business in the evening trade?Thus, the focus for the Marketing Research Problem will be on the Management Decision Problem related to increasing lunch-time revenues: What actions can Boston Chicken, Inc. implement to increase lunch-time revenues at its domestic Boston Market franchise stores?Marketing Research ProblemThe Marketing Research Problem will seek information to evaluate methods of increasing lunch revenues without adversely affecting dinner revenues.The research should collect information to help managers determine which products and service mechanisms will best suit the needs of the target market. Will people accept a different, less expensive, lunch menu in addition to the traditional dinner menu, rather than in place of, the more expensive dinner menu? Will adding additional family-targeted services increase the number of customers and overall revenue? Will changes that result in more efficiency and faster service time, such as the availability of fewer menu choices and a less-confusing ordering system, increase or decrease the number of new customers and repeat customers?Therefore, the Marketing Research Problem is to determine the factors that influence consumers selection of lunch-time meals: What product and service alternatives will lead to an increase in lunch revenues at Boston Market, without adversely affecting dinner revenues?The specific components of this research problem that will be investigated are the following:What are the demographics of current and potential Boston Market customers?What are the advantages and disadvantages of offering sandwiches on the lunch menu?What factors influence the consumers’ decision in selecting a lunch-time food-service store?Do accompanying children influence the adult’s decision about which restaurant to select for lunch, and, if so, do toys influence the children to make their choice?Chapter 3: Problem ApproachThe Research Design includes incorporating existing secondary data that Boston Chicken, Inc.
has gathered in recent years to determine the demographics and customer interests of the consumers in the target market for its various enterprises, as summarized in Chapter One. Additional exploratory research using a focus group approach has been used to help in the development of the survey instrument that will be administered to address the specific components of the Research Questions and Hypotheses. Since the topic area is not of a sensitive nature, a direct approach to qualitative research was appropriate and it would not be necessary to use projective techniques.The focus group design was to collect information from our potential consumer base. A discussion using a trained moderator was planned to elicit ideas relating to our initial hypotheses to see if they should be changed or expanded.
The advantages of using focus groups include allowing the free-flow of ideas that build upon each other with a great deal of flexibility. Focus groups would be conducted in a random sample of cities where Boston Market has located franchise stores to determine if there are enough similarities to proceed with a national survey.The specific components of the Research Questions to be discussed at focus groups are:1. What are consumers looking for when deciding where to eat lunch?* Is price important?* How important is taste* Does atmosphere play a role in deciding?* Are value/combo meals a factor?* Is the availability of sandwiches important?* How much variety of menu selections is important?2. Would simplifying the menu lead to shorter overall time spent in the restaurant?* Would separate lunch and dinner menus minimize confusion?* Would a logical 1, 2, 3 step process simplify ordering?* Where are consumers spending most of their time in the store?* Will having separate lower-priced lunch menus decrease dinner revenues?3. Would offering toys to promote meals for kids increase overall lunch revenues?* Would licensing a popular movie-related toy persuade children to influence their parents to choose Boston Market for lunch?* Which toys are most effective, or best suited, for our target market consumers?HypothesesThree hypotheses were developed to be investigated on a national basis:1. Consumers are most interested in sandwiches for lunch, because of quicker service, and lower expense than dinner entrï¿½e items.2.
Simplifying the menu through the use of a logical step process will reduce ordering time and reduce confusion among customers.3. Using toys as part of the promotion for childrens’ meals will attract more children and their parents to Boston Market stores for lunch.MethodologyThe methodology for gathering information to test these hypotheses will be a two-fold descriptive research design. We will use an interviewing method for Hypothesis 1 and 3, and observational methods, to collect data for Hypothesis 2.Chapter 4: Research DesignInterviewing Method and Data Collection Methods.
The interviewing method that will be used to collect consumer data relating to the factors that affect lunch-time restaurant selection is Computer-Assisted Telephone Interviewing (CATI). Additional data relating to reducing the ordering and serving time in the stores will be collected by mechanical observation, before and after implementing changes in store operations.For Hypotheses 1 and 3, the interview will be a standardized survey form, enabling structured data collection with its advantages of simple coding, analysis and interpretation of data.
The interviews will be conducted by a nationally known firm, such as Roper, to increase the likelihood of the respondents’ recognizing that this is an informational survey, and not a telemarketing effort. The technique will be Computer-Assisted Telephone Interviews (CATI), which simplifies the coding and analysis processes. While this technique is more expensive than a mail survey, it gives better sample control, and is faster. The high cost of using a personal interview method to collect national data is not warranted for the type of information needed.To collect information for Hypothesis 2, a combination of personal and mechanical observation will be used in a sample of Boston Market restaurants across the country.
The observations will be recorded for a random-sample of lunch-times during one month before and after implementing the techniques that are proposed to reduce the ordering and service time. The mechanical method will be to program the cash register to collect data on the number of customers, meals ordered, and amount of sales during the designated data collection times. This will be accompanied by personal observations to be recorded on a structured survey form that will document the actual behavior observed.The observer will visually “follow” the patron from the front door to their completing the ordering and service process, noting the time from start to finish, the time at each stage, their apparent role in the party, and observable characteristics.
The observer will record observations made of every tenth person who enters the restaurant.Studying the information gained from these two methods, should enable the decision-makers at Boston Market’s parent company, Boston Chicken, Inc. to evaluate the alternatives that they may want to implement in order to increase lunch-time revenues.