Ruth Chris Steak House Case

Ruth Chris Steak House

Recommendation:

Originally, we recommend that Ruth's Chris considers opening new franchises in France, Germany, UEA, Spain, and Italy for the best application of marketing development. Our reason being that Ruth Chris has good products in a small market. The company has enough experience both in franchising and in hospitality to expand in more adventures place. Thus, according to the four options by Ansoff Matrix, Ruth's Chris should definitely use Market Development. Ruth's Chris concentrates on protecting the brand, so there is little need for developing a new product (i.e. new kinds of restaurants). The company is also doing well in the existing market, and the unique characteristic of fine dining does not encourage a ubiquitous appearance.

Second, Ruth's Chris should adhere to the choice of franchises as mode of entry to new foreign markets. With the experience in effectively managing a huge system of restaurants, Ruth's Chris can minimize the risk (political and brand confusion) while getting to know the new business environment. Ruth's Chris can also avoid the problems in human resources (if it invests directly), researches in local markets and cultural adjustment. If Ruth's Chris wants to get involved more in these new markets, it can always use the franchises to "break the ice" and build the brand first, then Ruth's Chris can start their own company-owned restaurants.

Choosing the strategy for the company, we decided that we should use quantitative measurement in order to measure the potential of profitability. First, we define the six success factors in targeting a new market and decided on the weight ratio accordingly

- Beef-eaters [35%]: measured by the mean per capita of annual beef consumption

- Legal to import US beef: this can be change under specific circumstances, so will not be taken into calculations.

- High urbanization rates [25%]: measure by the urbanization rates. We use a different data "Potential Urban Consumers Index" to measure the potential of these markets in number of potential customers instead of percentage of urban population. We assume that 10% of urban population can afford going to our restaurants. The detailed calculations for this index are in Exhibit 1.

- High disposable income [15%]: we prefer using an index that shows the disposable income of the richest 10% of the population. However, due to lack of sufficient data, we use GDP per capita.

- Eating-out culture [15%]: there is no statistics on this specific question, so we choose the data of Service share of GDP.

- Affinity for U.S. brands [10%]: we choose the statistics of Ease of Doing Business.

After that, we come up with a Fit