White Castle Case Study

Running Head: WHITE CASTLE CASE STUDY

White Castle Case Study

Team B

MKT 551/Marketing Management

University of Phoenix (Online)

Bill Copeland

December 04, 2006

White Castle Case Study

"More than 80 years. More than 380 restaurants. More than 500,000,000 burgers sold last year alone" (White Castle, About Us). This is White Castle's mantra. Does this mantra mean that White Castle needs no marketing strategies? Of course not. Every company needs marketing strategies, no matter how well that company is doing in its industry. To maintain its market share or to increase that share, a strategic marketing plan is vital. "The restaurant industry and the fast food sector are highly competitive, and are affected by changes in customer tastes and preferences, location, demographic trends, pedestrian and motor traffic, consumer income, family structure, quality of food service and value of food service" (Nwogugu, 2004, 30). White Castle, thus, has to consider many issues when planning marketing strategy. To capture the market share it requires to do well in this industry, White Castle must look to the competition to ensure that White Castle is able to compete.

Strategic Planning

While doing well in its chosen niche, White Castle can do some things to improve the company's bottom line. Looking to the successes of other fast food establishments, Jack in the Box, which can be considered a direct competitor to White Castle, revamped its drive-thru service by installing new menu boards and an electronic confirmation system (Nwogugu, 2004). Making even small improvements such as this can increase a company's profits. White Castle must further increase its brand name recognition. Currently, White Castle operates in Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, New Jersey, New York, Ohio, Tennessee, and Wisconsin (White Castle (restaurant), Wikipedia). A similar fast-food chain, Krystal's, dominates the southern states. White Castle does not franchise, preferring to keep a home office to guide operations in all its locations (White Castle, About). Thus, one idea for increasing White Castle's sales is through franchising and opening restaurants in areas of the country in which it is not currently represented.

Answer to the Issue

White Castle does something that none of the other fast food restaurants offer, frozen food. The company needs to capitalize on this difference by creating a marketing plan specifically to market this product. As opposed to the small representation made by White Castle with its restaurants, the company's frozen food is available in 30 states across the United States (White Castle, Food). The company needs to, therefore, step up its marketing of its frozen products, which could bring new customers and sales to the company. Further, White Castle should review the technology it has in place to ensure maximum efficiency of service and quality of its foods. Finally, White Castle must market its brand to previously unserved markets, which will ultimately increase the company's bottom line.

Proof to Substantiate Response

For Jack in the Box, revamping its drive-thru service resulted in greater sales, as the drive-thru business represents 68% of its overall business (Nwogugu, 2004). Statistics also reveal that location is everything for a fast food restaurant. To the extent White Castle seeks to open new restaurants, the company should look for corner lots, which tend to attracts customers (Nwogugu, 2004). Franchising is also a lucrative arm of the fast-food business, and White Castle may benefit from considering franchising its restaurants. Franchising would allow White Castle to make an appearance in previously unserved markets, which will help to improve the company's profit margin. "There are two key areas of development for a brand, sustaining current products and markets (renovation), and developing new products and markets (innovation)" (Cocks, 2000, p. 42).

Situational Analysis

Industry Trends

Market and industry trends are continuously changing. The fast food industry has been experiencing slow growth, equating to a decrease in profits from increased competition, technology, and consumers that are changing their eating habits. Technology has played a large factor in revenue decline due to microwave ovens and a consumer's ability to purchase prepared foods of all varieties at their local supermarket. Evolution and adaptability are two critical variables for fast food vendors to consider for gaining a competitive advantage and market share. Another trend is establishing healthier eating habits through improved food choices which include eliminating red meat from the diet as well as a decrease in fat and salt intake.

Company

Headquartered out of Columbus, Ohio ,White Castle Systems Inc. is known as the original fast-food hamburger chain in America with revenues of $573.2 million in the fiscal year ended December 2004. This was an increase of 14.6% from the prior year. The first White Castle restaurant opened its doors in Witchita, Kansas, in 1921 and has since grown to operate more than 390 hamburger outlets in approximately a dozen states primarily in the Midwest regions as well as expanding internationally (White Castle System, Inc., 2006). Most of the restaurants are open 24 hours seven days a week. White Castle's stores are all company owned, and the company has not incorporated franchising as a means of company growth and expansion. The company has its own subsidiary, White Castle Distributions, located in Kentucky. The restaurant chain is known for its little square burgers that have picked up the nickname "sliders." The typical White Castle restaurant architecture features a white exterior with a tower at one corner to resemble a medieval castle.

Product Situation

White Castle operates three bakeries and meat-processing plants to supply quality products to its own restaurants. The chain uses pure beef from American grown beef, inspected and U.S. graded, to create its sliders. The company's products are hamburgers, cheeseburgers, double cheeseburgers,