Good Times Burgers Strategic Analysis

Good Times 1

Good Times Burgers Strategic Analysis

MGNT 903

Nasrin Rahi

Good Times 2

Executive Summary

In the given report I had discussed the strategic analysis of Good Times Burgers that is

operating in casual dining category in restaurant industry. The report includes contents

elucidating the background and description about the given history, the product and services it

offers and the financial indicators reflected in the financial statements. In the given report, I first

assessed the internal and external environment factors of the company that are highlighting its

strengths and weaknesses. By application of Michael Porter Five Forces Framework, I was able

to introspect the given restaurant industry in the region of North America and how Good Times

Burgers could chose to pursue strategic objectives by altering its strategies. Market

segmentation, product positioning map and potential pitfalls are also highlighted. The report also

includes financial projections and budget for coming years. The recommendations and evaluation

are basically the concluding part to the discussion, which are very critical part of this research

work.

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Table of Contents

Company Background..............................................................................................................5Vision Statement......................................................................................................................................................................... 6Mission Statement......................................................................................................................................................................6Objectives....................................................................................................................................................................................... 6Current Strategies...................................................................................................................................................................... 7

External Opportunities and Threats (Good Times Burgers)......................................................9PESTEL Analysis of Good Times Burgers.........................................................................................................................9Porter Five Forces Analysis.................................................................................................................................................10Threat of New Entrants.........................................................................................................................................................11Level of Competitive Rivalry...............................................................................................................................................11Threat of Substitutes.............................................................................................................................................................. 11Bargaining Power of Supplier.............................................................................................................................................12Bargaining Power of Buyer..................................................................................................................................................12

Internal Strengths and Weaknesses (Good Times Burger)......................................................17Value Chain of Good Times Burgers................................................................................................................................17Analyzing Functional Areas ……………………………………………………………………………………………………… 20Financial Ratio Analysis of Good Time Burgers.........................................................................................................22Horizontal Analysis of balance sheet-Good times burgers....................................................................................28Vertical Analysis of Income Statement...........................................................................................................................28Internal Factor Evaluation (IFE) Matrix........................................................................................................................30

Michael Porter Generic Strategies.........................................................................................31SWOT Matrix:............................................................................................................................................................................. 31Space Matrix of Good Times Burgers..............................................................................................................................33BCG Matrix for Good Times Burgers................................................................................................................................35IE MATRIX................................................................................................................................................................................... 36Grand Strategy Matrix............................................................................................................................................................37

Count Summary Analysis.......................................................................................................38Quantitative Strategic Planning Matrix..........................................................................................................................39

Market and New Product Development.................................................................................41Long Term Objectives............................................................................................................................................................ 42

R&D department...................................................................................................................................................................... 43Marketing department.......................................................................................................................................................... 43Finance Department............................................................................................................................................................... 43Human Resource Management Department............................................................................................................... 44Operation Department.......................................................................................................................................................... 44

Strategy Implementation.......................................................................................................44Company Policies..................................................................................................................................................................... 44Allocation of Resources …………………………………………………………………………………………………………. .. 45Managing Conflict ……………………………………………………………………………………………………………………. 46

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Matching structure and strategy.......................................................................................................................................46

Cost of Recommendations.....................................................................................................47Market Segmentation............................................................................................................................................................. 47Product Positioning Map .....................................................................................................................................................48Capital Requirements for Company.................................................................................................................................49Financial Projections and Budget table for Good Times Burger.........................................................................50

Implementation Strategy and Making Possible Strategies to counter adverse scenarios........51

Timeline of Action.................................................................................................................51

Evaluation of Strategy...........................................................................................................52Expected Unfavorable Scenario.........................................................................................................................................52Strategies in case of bad events occur............................................................................................................................52

References.............................................................................................................................54

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Good Times Burgers Strategic Analysis

Company Background

In 1987 in Boulder, Colorado Good times Restaurant commenced their operations. The

Company operates and owns restaurants at other places like Wyoming and North Dakota. At

earlier the company held a small subsidiary named Good Times Drive Thru Incorporation which

has engaged in the business of delivering high quality hamburgers through the drive thru

restaurants in the name of Good Times Burger and Frozen Custard. The use of such

terminologies such as “Good times, We, Us, Our” are key values that company wants to reflect

while carrying out its operations for its current and prospective Customers. The Company

Currently serves hamburgers, cheeseburgers, chicken sandwiches, fries, and onion rings.

Additionally, it provides custards, lemonades, and shakes. Good Times currently operates and

franchises 37 restaurants. They are currently 450 employees working in all the restaurants

operating in the Country. Good Times has been a public company since 1992 and is traded on

Nasdaq Smallcap GTIM (Sprague, 1987).

GTIM owns and operates Bad Daddy’s Burger Bar restaurants through its wholly owned

subsidiary, and will franchise Bad Daddy’s Burger Bar restaurants through its 48% ownership of

Bad Daddy’s Franchise Development LLC. Bad Daddy’s Burger Bar is a full service, upscale,

“small box” restaurant concept featuring a chef driven menu of gourmet signature burgers,

chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft

microbrew beers in a high energy atmosphere that appeals to a broad consumer base. Bad

Daddy’s burgers was recently named a top 25 burger in the U.S

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Vision Statement

We seek to establish a brand position in terms of quick service restaurants maintaining quality

and standards for our consumers at large.

Analysis: vision statement must be short, ambitious and ambiguous

this statement is a good statement but can be shorter. It is ambitions by saying “establishing

brand position”, which indicates their purposes. Provides ambiguity by mentioning “quick

service”, which leaves room for development.

Mission Statement

Good Times Burgers seek to promote all natural foods that specialize in made to order service

without any use of hormones, antibiotics in order to attract various customers across the globe.

Analysis: mission statement must declare organization reason of being and have certain

components.

This statement is fair but too short. Although it includes key components such as product and

services (all natural food- made to order service), customer, key market (across the globe), and

philosophy (without use of hormones and antibiotic), It lacks many factors such as competitive

advantage, concern for public image, employees, growth and profitability,

Objectives

The Company Objective was to initiate drive through experience for its customer by

delivering high quality food in shape of hamburgers of all variety and kinds incorporating

cheeseburgers, sliders, breakfast burritos, slides or drinks and custards etc. The core strategies of

Company are to maintain positive sales growth and improve the profitability. The Most

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important drivers of success used by Good Times Burgers are mainly its values, peoples and

excellent systems.

Current Strategies

Good Times Burgers have a good portfolio of products and menu contains all those fresh

products in different categories

Improving Customer Service under the caption of “Happiness Made to Order” to promote

friendliest service environment in terms of interaction between Employees and

Customers at the Point of Ordering.

They have introduced an online hiring system that seeks to curb the effects of employee

turnover rate.

The company owns 48% of Bad Daddy’s Franchise Development LLC. And opened its

first Bad Daddy’s burger bar restaurant recently.

The Company has made a unique system in rewarding employees who give timely

service and that service is measured in minutes.

In order to maintain the customer loyalty, the company is regularly updating its menu and

keep floor clean and clear to make a lasting impression on customers.

The company has strategic marketing policy and developing awareness for brand name of

Good Times Burgers and Frozen Custard.

The Company has developed Brand Equity by producing various tastes with premium

quality in category of hamburgers.

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The Company wants to further improve and refine their employee’s knowledge of the

various processes that enable the firm to operate at its optimum level. In this regard, there

are various programs which are grooming the skills of employees.

Trying to increase in guest counts and increase in average guest check by further

increasing restaurant sales. There was an increase of 3.1% in the year 2012 than previous

year. In 2013 by our comprehensive approach we want to push for more sales by

producing a better brand experience for our current and prospective customers.

Improving Operation Income through sales derived through short term capital investment

as they have experienced 35% to 50% in terms of incremental sales.

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External Opportunities and Threats (Good Times Burgers)

PESTEL Analysis of Good Times Burgers

PESTLE analysis is very helpful tool for conducting the external environment of the

company. the external environment of the company is not in the control, but it is largely affecting

the performance of the company. It encompasses Political, Economic, Social, Technological,

Environmental issues and Legal one that are confronted by the organization (Baron, 1995).

The Good Times Burger PESTEL Analysis is elucidated as mentioned below:

Political Factors: Includes factors that look into areas of concern such as tax policy,

labor law and political stability. Good Times Burgers restaurants are subject to

regulations at State and Federal in the areas of safety, health, sanitation and safety. The

Company is subject to Fair Labor Standards which oversees matter in terms of setting

wage rates and Americans with Disabilities Act which promotes use of restaurants to all

the customers whether they are physically able or handicapped must be provided with

equal intention and care while providing service (Bivolaru, 2009).

Economic Factors: Recession at Macroeconomic level which lowers consumer spending

can also affect the sale of Good Times Burger in general. The current economy and

current scene of capital markets may affect the restaurant ability to get debt or equity

financing for working capital in terms of building new restaurants and refinancing. New

regulation related to disclosures to add to expenses for Good Times Burgers.

Social Factors: The spread of various diseases such as bird flu or consumption of beef

products. In society, the products of Times Good are demanding and all people support

restaurants and Dines. However, if the news of any dangerous disease is aired then people

will definitely dislike the restaurants and food from it.

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Technological Factors: Finances and control of management is made sure through the

use of automated data and centralized management information systems. Essential Data

in terms of Sales, Labor and Cash Data is measured through point of sale transactions at

various restaurants. The process of order system at each Good Times Burgers Restaurants

is equipped with internal timing device that measure the time each order and the time to

deliver. The usage of secret shopper, telephone surveys, comments on phone and website

makes the company use technology in order to refine various procedures to sustain in

longer run,

Legal Factors: Good Times Burgers are subjected to various laws such Fair Labor Act

containing laws that see the procedure of equitable pay or pay based on the amount of

work done. Americans Disabilities Act ensure that restaurants caters the need of

physically handicapped by building systems and structures that eliminate any kind of

discrimination in terms of service as well.

Environmental Factors: Many different requirements of local governmental bodies

have emerged with respect to land use and zoning could delay further construction of new

restaurants at locations subject to approval.

Porter Five Forces Analysis

It is a framework for industry analysis and business strategy development. It draws upon

industrial organization (IO) economics to derive five forces that determine the competitive

intensity and therefore attractiveness of a market. Attractiveness in this context refers to the

overall industry profitability. It includes key areas such as threat of New Entrants, Threat of

Substitutes, level of competitive rivalry and bargaining power of suppliers and buyers.

http://en.wikipedia.org/wiki/Market

http://en.wikipedia.org/wiki/Industrial_organization

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Threat of New Entrants

The restaurant industry in America is highly competitive industry comprising many

giant companies such as McDonalds, KFC, and Burger King to name a few. Barriers to entry is

low, as a result threat of new entrance is high. Good Times Burgers competes with lot of other

restaurants that deliver hamburgers in the area that they basically have their operations. By

increasing same store sales and venturing to open new restaurants the company is adequately

lower threat of new entrants that enter market every now and then. They also have joint ventures

that are currently operating in Denver metropolitan Area.

Level of Competitive Rivalry

Since the Industry is quite big and contains many big companies in delivering great

service due to large finances and resources and strong brand equity than Good Times Burgers.

The Company has adopted differentiation strategy by promoting and delivering All Natural and

Handcrafted Foods with made to order results in appealing to customers in unique and offers

them a different value than usual competitors (Collis, 1993). Some of its competitors are

McDonalds, Burger King, Wendy’s,Jack in the Box, stake and shake and sonic.

Threat of Substitutes

Good Times Burgers do have a lot of substitutes in other food industry be it classy

restaurants to cafes or stands offering hot dogs or big supermarkets. By offering natural and

handcraft foods without any added amount of steroid or hormones they will be able to appeal to

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different customers across the areas they operate and they want to open they restaurants. It can

go through attracting various segments by increasing customer base (Porter, 1979).

Bargaining Power of Supplier

For Good Times Burger, the Bargaining Power of Supplier in industry is low since they

are many suppliers in the industry who provide food and paper supplies to many restaurants.

They basically rely on sole vendor i.e. Food Services of America will not hamper their supplies

since there are many suppliers in the market therefore they can maintain quantity of food and

paper supplies at premium level (Porter, 2008).

Bargaining Power of Buyer

Since there are large numbers of customers, they can easily switch to another restaurant

that provide them with lower cost. Bargaining leverage allow customer to set the price and it

doesn’t helps Good Times Burgers. However, Since many customers have come to know adverse

effects of hormones and steroid enabled produced meat they may avoid many restaurants which

helps the Company maintaining its base and by offering a healthy, Fresh and Handcraft Foods

fulfill customer expectations without any hassles related to many health implications that

recently capture the attention of many consumers across the country(Huselid,1995).

Rivarly among

existing competators

Threat of new

Entrance

Power of buyer

Power of

supplier

Threat of substitutes

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To conclude, the overall attractiveness of industry is low since most forces are high,

except for bargaining power of supplier, which is low and bargaining power of buyer, which is

medium to high. This is a very competitive industry and requires great strategy and plan before

entering the market.

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Competitive Profile Matrix (CPM)

Critical Success Factor

Weight

Rating Score Rating Score Rating Score1. Brand awareness 0.13 1 0.13 4 0.52 3 0.39

2. Financial Position 0.1 2 0.2 1 0.1 4 0.4

3. Global Expansion 0.15 1 0.15 4 0.6 2 0.3

4. Market Share 0.11 2 0.22 1 0.11 3 0.33

5. Product Quality 0.09 3 0.27 2 0.18 4 0.36

6. Consumer Demands

0.02 2 0.04 3 0.06 4 0.08

7. Product Price 0.08 2 0.16 4 0.32 3 0.24

8. Variety and Taste of Food

0.11 3 0.33 2 0.22 4 0.44

9. Cleanliness and Efficiency

0.11 4 0.44 2 0.22 3 0.33

10. Location 0.1 4 0.4 2 0.2 3 0.3

Total 1 2.34 2.53 3.17

The competitive profile matrix shows Sonic incorporation with ranking of 3.17

performing better than both Stake and shake, and Good times. In general, any company’s total

weighted score higher than 2.50 is considered a strong in position. Good Times received total

weighted Average of 2.34 in Competitive Profile Matrix. This indicates, Good Times is

performing the weakest between two competitors, since the company did not manage to stay

above 2.50 and be in a strong position. Stake and Shake with Score of 2.53 stayed slightly above

the average and is safe for now.

Based on CPM the key factors that helped company to get close to strong position are

product quality, variety and taste of food, cleanliness of environment, production efficiency and

convenient locations. In order to achieve competitive advantage and be in strong position in the

future, the company needs to build strong brand awareness and expand globally.

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External Factor Evaluation Matrix for Good Times Burgers

Opportunities Weight Rating Weighted ScoreConsistently growing same store sales as trend showed an increase of 3.1% in fiscal year 2012

.10 4 .40

Increasing the breakfast day part which will give international sales 6%

.02 3 .06

Competitors (BK & Wendy’s) lack Good Times like option double drive thru restaurant and 50% higher check ins

.03 3 .09

More areas and site for expansion due to 3.8% industry growth rate

.10 2 .20

Demand for Food that is all Natural and organic and Handcrafted Foods that contains no hormones or steroid

.15 3 .45

Closing low volume restaurants to increase operating margin and greater allocation for overhead cost

.05 4 .20

More demand for foods with low calorie count due to change in lifestyle

.01 3 .30

Joint venture with some restaurant in future due to increase of food-service establishments in the United States which almost doubled in the last three decades

.03 2 .06

Threats Weight Rating Weighted ScoreTrends in lowering dining due to increase in obesity rate and disease such as bird flu

.06 3 .18

Negative media campaigns highlighting potential adverse effect

.06 4 .24

Franchise could take action in cause loss to business

.03 2 .06

Rising cost of packaging and food items in year 2013

.05 2 .10

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Recession and Economical factors such as decrease in value of dollar and increase in price of fuel

.05 2 .10

The hamburger industry is highly competitive

.05 4 .20

Changing in consumer tastes and switching to generic brands

.10 3 .30

Labor shortages could slow business

.02 2 .04

Total 1.0 2.98

Above is overview of Good Times Burgers External Factor Evaluation Matrix (EFE) in

order to analyze the given set of opportunities and threats confronting the restaurants in longer

run The National Research consultants have predicted a 3.8 percent increase in restaurant sales

over 2012, to $660 billion. That would be the fourth consecutive year of sales growth for the

industry. The quick-service sector’s sales should jump 4.9 percent to $188.1 billion in

prospective year. The another offering is the introduction enticing customer towards lower

calorie items thus imparting lifestyles in customers with menus like 5280 lifestyle menu list like

Sweet Potatoes. Summer and Holiday Shakes, Hatch Valley New Mexico Green Chile Burritos,

Fresh Grilled, Honey Cured Bacon Burgers and Loaded Fries. Third

Key factor is Good Times Burgers initiative to close down the restaurants that are low

volume in order to have more allocation for overhead resources and improving operating margin.

Key Threats include negative media campaign that circle with respect to the consumption of beef

that have added preservatives that have adverse effects on consumers in publications. There has

been trend of recently low levels of dining in. The other key threat the size of various

competitors have large resources and there discounted prices could have severe impact on the

Good Times Burger Business. The ranking of 2.98 means that the company is responding

moderately to challenges, despite being in competitive market.

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Internal Strengths and Weaknesses (Good Times Burger)

Value Chain of Good Times Burgers

PROFIT MARGIN

PROFIT MARGIN

Firm Infrastructure: The Company has in total thirty-seven restaurants that cater in areas of

Colorado, Wyoming and North Dakota. Good Times Burgers signed with a company called the

Heathcote Capital LLC (“Heathcote”) to provide the Company with financial suggestions based

on possible strategic transactions which includes identifying and contacting potential acquisition

or to find various sources of financing in terms of future needs. They basically assist them in

financial aspects in terms of getting transactions on behalf of the Company (Collins, 1998).

Human Resource: Good Times Burgers holds approximately 430 employees as per recent date

taken from many credible sources. They believe in continuous improvement since they have

system that requires optimum efficiency. They seek to hire competent employees with Operating

Partners Program. They provide various benefits such medical insurance, incentives or bonuses

that are tied to Key Performance Indicators formulated by the Company (Kaplinsky, 2000).

FIRM INFRASTRUCTURE

HUMAN RESOURCE MANAGEMENT

TECHNOLOGICAL DEVELOPMENT

PROCUREEMENT

Outbound Logisitc

Operations

Marketing And Sales

ServiceInbound Logistic

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Technological Developments: In terms of technology the firm is technically and professionally

apt to withstand rigors that come with competing with Restaurant Industry. Basically, they have

implemented to measure time each order takes to be delivered by Taking Order Software that is

there for further to quickly address areas of concern and quickly increase efficiency. All the cash

transactions are measured by management back office system that gathers sale volume occurred

on point of sale transactions. All employees are imparted with training based on train, test,

certify and retrain in order to increase efficiency at all levels at the organization. The use of

having a library of video tools also elucidates the use of technology in order to strive for further

consistency and be sustainable in longer.

Procurement: All their supplies come from one vendor that is Food Services of America. All

that includes food and Paper supplies

Inbound Logistics: The source of all their supplies come from sole vendor i.e. Food Services of

America and that result in their smooth continuation on operational front. Product packing is

convenient to customers, for example Its fries will sit comfortably in the cup holder and its top is

adjusted with fries length.

Operations: The Company gives adequate training to employees in terms of generating quality

control. They inspect their manufacturers and then work closely with them to provide and map

specifications and quality checks. National Restaurant Association provides courses to the

employees on ways to maintain adequate hygiene and cleanliness within parameters of the

restaurants.

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Outbound Logistics: Since Good Times Burgers basically operates quick service restaurant or

drive thru one. It has software for order taking to set a particular benchmarks how much time or

measure time it takes to deliver a given order. The person that takes the order is responsible for

delivering that order to the customer as well.

Marketing and Sales: The Company basically serves its most expenditure in radio media and

they intend make focus on funds on store level and trade area campaigns with help of Social

Media. They also market new schemes of products through on site merchandizing in order to

attract and retain more customers.

After Sale Service: feedback and returns are considered to be an important factor. Good Times

accepts any complains and returns for exchange of an order. They use several sources of

customer feedback to evaluate each restaurant services and quality performance. Website

comments, telephone surveys, computerized secret shopping program are some examples.

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Analyzing Functional Areas Of Good Times Burgers

Management: Good Times continuously capitalizing on its management skills and trying

to improve weak areas by planning and organizing ahead of time. Recently, Good Times hired a

Vice President to be in charge of franchise development of their newly opened Bad Daddy’s

burger bar. Moreover, the company is planning to expand and open four more Bad Daddy’s

“small box” restaurants by the end of 2014. According to business week article, management

actually "walks the walk" when it comes to maximizing shareholder value, unlike a more visible

peer who continues to resist activist pressure.

Marketing: Good times marketing efforts on anticipating and fulfilling customer needs

is satisfying. The company was able to achieve successful result by commercials and image of

“happiness made to order”, with “Hand-Breaded” chicken tenders and “Freshly cut” fries. Also,

by using cartoon commercials the company targets different age groups from children, teenagers

to adults. Moreover, the company participates in local community events, and charitable

activities to supports neighbors during their time of need.

Finance/Accounting: Good times sales and profit are increasing, GTIM has a strong

balance sheet to support growth with a minimal amount of debt and ~$5.2 million in cash.

More details about Finance will be discussed during the next step

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Production/Operation: Good Times restaurants sales increased 14.1% for the month of

November on top of an 8.4% same store sales increase in the prior year. Good Times same-store

sales are increasing continually as a result of strong operation and production strategies. The

company is trying to be a low-cost and high quality products with great customer service

Moreover, the company put efforts into training the employees, process, and quality of how the

burgers are made. However, the company’s Inventory decisions are to be reconsidered. Last

years inventory turn over rate displayed poor performance in inventory system.

Research and Development: Since the company should continuously develop new

products on the menu, research and development is a critical factor. The company nearly spends

1% of sale on research and development, but there is no relationship between R&D expenditure

and successful product line. Therefore, in developing new menu and product people’s

preferences and consumer research are important factors that should be considered.

Management Information system: Good Times is no different than its competitors in

managing information system and information technology. Financial and management control is

done through automated systems. Sales and cash are collected using restaurants back office

systems, which gathers data from point of sale. In order to stay ahead of competitors Good Times

should develop online ordering system and online inventory system to keep record of orders. A

new system can help managers to make better decision.

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Financial Ratio Analysis of Good Time Burgers

* For the purpose of project the ratios are calculated with given formula to observe the change from year 1 to 2 with accuracy of what item in formula has changed.

Liquidity Ratio: liquidity ratio measures how quickly a company’s asset can be

converted to cash. It also measures the company's ability to collect on debts and accounts owed

to them in order to purchase additional asset. A high number indicates that the company collects

cash more frequently which leads to a better liquidity position In this Category we have taken

current ratio and cash ratio are as follows

Financial Ratio Formulae 2011 2012Industry Avg

CompetitorSonic inc(2012)

current ratio =current assets 1.2 3.9 107.2current liabilities 1.7 3 80.5

0.7 1.3 1.10 1.33Source: Businessweek

Current ratio analysis represent Good Times Burger is 0.7% for 2011 and 1.3% for 2012. Since

firm current asset increased by 2.25% , current ratio of good times increased .This means is firm

is adequate in meeting its future obligations. But Sonic Restaurants have current ratio of 1.33%

which means it is better than the Good Times. Comparing both companies to industry average it

is clear both Good times and Sonic inc are doing well and slightly above the average.



Quick ratio =

Cash and cash equivalents +account receivables (total) 0.8+0.1=0.9 0.6+1.7=2.3 52.6+27.1=79.7Current liabilities 1.7 3 80.5


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Quick ratio is basically another measure of firm being able to meet its obligations in short term.

The Quick ratio for Good Times Burgers for Year 2011 is 0.52%% and 0.77% is 2012.If we

compare with industry analysis its way too behind. Current ratio of the Company is greater than

this ratio it means company current assets are dependent on inventory. Sonic Corporation has

greater quick ratio of 0.99 in comparison to latter in 2012.

Leverage Ratio: indicates the extend to which a firm has been financed by debt. In this

we shall take Debt to Equity and Debt to Capital ratio



Debt to equity ratio =

Total liabilities 4.5 3.8 621.5Total equity 2.5 3.3 59.2


Debt to Equity ratio for Good Times Burger is 1.8 in year 2011 and 1.15 in year 2012. Good

times equity increased by 0.32% during 2012, which is a good sign for the company. The

competitor Sonic corporation ratio is 10.49%. both companies are performing higher than

industry average which is a remarkable sign of progress.

Financial Ratio Formulae 2011 2012

Industry Avg


Debt to Capital ratio =

Total liabilities 4.5 3.8 621.5Total equity +total liabilities 2.5+4.5=7 3.3+3.8=7.1

59.2+621.5=680.7

0.64 0.53 0.86 0.91

Source: Businessweek

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Debt to Capital ratio for Good Times Burger is 0.64 in year 2011 and 0.53 in year 2012.The

competitor Sonic corporation ratio is 0.91. A higher debt to capital indicates a higher default risk

for the company. Good times has financial strength by having low cost of debt whereas Sonic inc

has higher cost of debt.

Activity Ratios: Measures how effectively firm is using its resources. I analyzed total

asset turnover and Account Receivable Turnover ratio



Total asset turnover =

Total Net Sales 20.6 19.71 543/7Total Assets 7 7.06 680.8


The asset turnover measures a firm's efficiency at using its assets in generating sales or revenue -

the higher the number the better for the company. The asset turn over was 2.94 in 2011 and 2.79

in 2012. the company’s asset turnover decreased by 0.051% during 2012. This is due to the fact

that the company’s total asset increased and gross profit margin decreased.

Whereas the competitors stand on 0.79 and the industry average is 1.39.

Financial Ratio Formulae 2011 2012Industry Avg:


Receivable turnover = Net Sales 20.6 19.71 543.7

Avg Receivable 0.1 0.1 14.8

206 197.1 28.8 36.73Source: Businessweek

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The account receivable turnover for Good Times Burgers is 206 in year 2011 and 197.1 in year

2012.The competitor has lower account receivable turnover of 36.73 which is quite better. Good

times burger has high account receivable it means it takes them a lot of time to get back their

receivables.

Profitability Ratio : profitability ratio gives us an idea of how likely it is that a

company will have a profit, as well as how that profit relates to other important information

about the company. Some of the profitability ratios that I have looked at are Gross Profit Margin

and Return on Assets



Return on Asset = Net Income -1.0 -0.8 36.1

Total Assets 7.0 7.1 680.8-.142 -.112 10.2 0.05

The Return on assets ratio for Good Times Burger is -14.2% and -11.2% in year 2011 and 2012

respectively. Its competitors have better returns on their assets than good times burger. Good

times is performing worst comparing to industry average and competitor.



Gross Profit Margin = Gross Profit 1.3 1.6 285.4

Revenue 20.6 19.7 543.70.06 0.812 34.22 0.524

Source: Businessweek

Gross profit margin of the company is .06 in 2011 and .812 in 2012.the competitor has .524

ratio. Gross Profit Margin is the percentage of gross profit for every dollar of revenue. In other

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words, the amount of gross profit generated for each dollar of revenue. The gross profit for 2012

was higher than in 2011 even though the sales revenue dropped in the current year. However, the

cost of sales also decreased in 2012 by 0.69%, which was the reason behind the increase of gross

profit margin in 2012.

Overall, two profitability ratios have increased. Since the company is facing rising expenses and

the competition in the market is increasing the change is not drastic. None of the companies are

close to industry average however; Sonic Inc is performing better than Good times.

Growth ratios:



Earnings per share =

Net earnings to common stockholder 1.04 0.07Number of shares 2.44 2.40

0.42 0.29 -0.4 0.32



Net income

Annual percentage in profits

%-1.25 -4.35 0.10 -.041

Analyzing financial ratios help us determine how efficient and effective the company is in

meeting its obligation. Effectiveness is the degree to which a purpose or goal is accomplished.

This is where problems are resolved and the intended or expected result is produced.

Effectiveness is determined without any reference to cost. In simpler terms, it is defined as

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“doing the right thing.” For example, a company is effective when it accomplishes its annual

sales target even if it incurred high costs in order to achieve the assigned target. It can be

determined by looking at receivable turnover, return on asset and inventory turn over. Good

times effectiveness is relatively decreasing. Even though ROA increased by 0.21% in 2012, both

receivable turnover and inventory turnover have been decreasing (inventory turn over was 98.69

in 2011, and 98.41 in 2012)

Efficiency refers to the ability to accomplish a job with a minimum expenditure of time and

effort. It is said to be efficient when resources are used in such a way that production of goods

and services are maximized. In simpler terms it is defined as “doing the thing right.” For

instance, continuing the example mentioned in the previous paragraph, a company would be

efficient when it achieves its annual sales target and minimized its costs. It can be determined by

looking at ROA, ROE, and gross profit margin. Return on Asset increased by 0.21%, ROA gives

an idea as to how efficient management is at using its assets to generate earnings. Return on

equity measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested it changed %-54.39 in 2011 to % -28.99

2012. This implies that profits are increasing by a large scale, which can result in the

shareholders confidence. Gross profit margin increased by 12.6%. Therefore, Good times

efficiency is relatively increasing

Good Times 28

Horizontal Analysis of balance sheet-Good times burgers

Currency inMillions of US Dollars

As of: Sep 302011

Sep 302012

IncreaseOrdecrease

%VERTICALANALYSIS2011 2012

Cash and Cash Equivalents

$847,000 $616,000 (231,000) (27.2) 70.6% 15.9%

Account receivable $111,000 $1,650,000 1539000 1386.4 9.25% 23.8%Inventory $191,000 159,000 (32,000) (16.75) 15,91% 2.25%Total Current Assets 1,200,000 3,860,000 2,660,000 216% 17.41% 54.67

Net property plant 5,720,000 3,080,000 (2,640,000) (46%) 81.71% 43.62

Total Assets 7,000,000 7,060,000 60,000 0.86% 1005

Account Payable 496,000 493,000 (3000) (0.60%) 7.08% 6.91%Total Current Liabilities

1,680,000 3,010,000 1,330,000 79.16% 24.0% 42.63%

Total Liabilities 4,480,000 3,800,000 (680,000) 15.17% 64.0% 53.82Total Equity 2,520,000 3,260,000 740,000 29.37% 36% 46.17Total Liabilities and Equity

7,000,000 7,060,0000 ---------- -----------

100%

Vertical Analysis of Income StatementCurrency inMillions of US Dollars

As of:

Sep 302010Reclassified

Sep 302011

Sep 302012

increase 4 YearTrend

Revenues 20.9 20.6 19.7 (0.9) due to closure of restaurants

Total revenues 20.9 20.6 19.7 (0.9) ↑Cost of Goods Sold 20.2 19.3 18.1 (1.2) menu-

reengineering result in lower cgs in 2012

Gross profit 0.7 1.3 1.6 0.3 ↑Selling general & admin expenses, total

1.5 1.3 1.4 0.1 ↑

Good Times 29

Depreciation & amortization, total 0.9 0.9 0.8 (0.1) ↑Other operating expenses, total 2.4 2.2 2.2 0 ↑Operating income (1.7) (0.8) (0.5 (0.3) due to

closure of low operating restaurants

Interest expense (0.6) (0.3) (0.2) (0.1) ─Interest and Investment Income 0.0 0.0 0.0 0.0 ─Net interest expense (0.6) (0.3) (0.2) (0.1) ↓Income (Loss) on Equity Investments

-- -- -- 0 ↓

Other non-operating income (expenses)

-- 0.0 0.0 0.0 ↓

Ebt, excluding unusual items (2.3) (1.1) (0.7) (0.4) ↓Gain (Loss) on Sale of Assets -0.2 0.2 0.1 0.0 ↓Ebt, including unusual items (2.5) (0.9) (0.7) (0.2) ↓Minority Interest in Earnings 0.2 (0.1) (0.1) 0.0 ↓Earnings from Continuing Operations

(2.5) (0.9) 0.7 (0.2) ↓

Earnings from discontinued operations

(0.6) -- -- --

Net income (2.90 (1.0) (0.8) (0.2) due to end of many partnership and franchise restaurant

Net income to common including extra items

(2.9) (1.0) (0.8) (0.2) ↓

Net income to common excluding extra items

(2.3) (1.0) (0.8) (0.2) ↓

Good Times 30

Good Times 31

Internal Factor Evaluation (IFE) Matrix

Strength Weight Factor Weighted Score

Early development of double drive through concept

.09 4 .36

Menu re-engineering to reduce the cost of sales

.07 3 .21

Excellent management and employee retention

.08 4 .32

Gain in demand due to providing natural handcraft foods without hormones or steroid

.06 3 .18

Increase in efficiency due to 12.5% increase in gross profit margin

.05 3 .15

Improvement income from operations due to close of four restaurants in 2012

.05 4 .20

Sales increase in 2 to 3 % gained through lower advertising expenditures

.08 4 .32

Increase in Same store sales of 3.1% in fiscal year 2012

.06 3 .18

Made to order concept reduces costs by 1.3% in terms of packaging cost

.05 5 .15

Operating partner program result in 25% of restaurant improvement in cash flow

.06 3 .18

Weaknesses Weight factor Weighted scoreGreater competition such as Wendy’s

.04 1 .04

Non-drive through generate more 50% average chick-in

.03 1 .03

Closure of few low operating restaurant

.03 2 .06

Lower resources and finances such as inventory turn over

.03 1 .03

Statured market and Competitors provide greater range

.03 2 .06

Limited to few areas like Colorado,Wyonming and North Dakota

.03 2 .06

Inflation could result in variability in food costs

.03 1 .03

New restaurants may not be profitable due to little diversification

.04 2 .08

Lack of finances to acquire new sites

.05 2 .10

Dependence on key management employees

.04 1 .04

Total 1.00 2.78

Good Times 32

Since the value of the firm comes at 2.78 means it has decent performance. A lower value than

2.50 makes a company position is weak.

Michael Porter Generic Strategies

Good Times Burger have adopted Differentiation Strategy with concept of drive thru

restaurants enabling customer to get served in no time rather usual large restaurants catering dine

in by promoting All Natural, Fresh and Handcraft Foods without any hormone or steroids or

growth substances that cater to diverse segment of Population. Their Prices are adequate enough

and does not have impact on customer check inns. Through Menu Reengineering the company

was able to reduce cost in terms of bettering their income and reducing cost of Sale.

SWOT Matrix: An analysis of an organization’s strengths and weaknesses alongside the opportunities

and threats present in the external environment

Internal Strengths

1.Early development of double drive through concept2.Menu re-engineering to reduce the cost of sales3.Excellent management and employee retention4.Gain in demand due to providing natural handcraft foods without hormones or steroid5.Increase in efficiency due to 12.5% increase in gross profit margin6.Improvement income from operations due to close of four restaurants in 20127.Sales increase in 2 to 3 % gained through lower advertising expenditures8.Increase in Same store sales of 3.1% in fiscal year 20129.Made to order concept reduces costs by 1.3% in terms of packaging cost

Internal Weaknesses

1.Greater competition such as Wendy’s2.Non-drive through generate more than 50% average chick-ins3.Closure of few low operating restaurant4.Lower resources and finances such as inventory turn over5.Statured market and Competitors provide greater range6.Limited to few areas like Colorado,Wyonming and North Dakota7.Inflation could result in variability in food costs8.New restaurants may not be profitable due to little diversification9.Lack of finances to acquire new sites10.Dependence on key management employees

Good Times 33

10.Operating partner program result in 25% of restaurant improvement in cash flow

External Opportunities

1.Consistently growing same store sales as trend showed an increase of 3.1% in fiscal year 20122.Increasing the breakfast day part which will give international sales 6%3.Competitors (BK & Wendy’s) lack Good Times like option double drive thru restaurant and 50% higher check ins4.More areas and site for expansion due to 3.8% industry growth rate5.Demand for Food that is all Natural, organic and Handcrafted Foods that contains no hormones or steroid6.Closing low volume restaurants to increase operating margin and greater allocation for overhead cost7.More demand for foods with low calorie count due to change in lifestyle8.Joint venture with some restaurant in future due to increase of food-service establishments in the United States which almost doubled in the last three decades

SO Strategies

1.By renovating same stores the company can drive for further sales.(S1, S2, O1,O3)

2.Producing more products in menu line that project healthy lifestyle indicating low nutrition count.(S2,S4,O5,O7)

3. Growth or expansion may happen in other nearby places from Colorado.(S5,S8,O4,O8)

4. Focusing on achieve competitive advantage and economic of scale (S6, O5, O7)

WO Strategies

1.Training middle management with view of succession planning to avoid over dependence on key personnel at higher level.(W1,W10,O8)

2.Must try to cope with price vitality caused by recession and shortage of capital due market scenario (W4, W9, O1)

3. Develop presence in Asia and middle east. (W6, O1,O3,O4)

External Threats

1.Trends in lowering dining due to increase in obesity and disease such as bird flu2.Negative media campaigns highlighting potential adverse effect3.Franchise could take action in cause loss to business4.Rising cost of packaging and food items in year 20135. Recession and Economical factors such as decrease in value of dollar and increase in price of fuel6.The hamburger industry is highly competitive7.Changing in consumer tastes and switching to generic brands8. Labor shortages could slow business

ST strategies

1. Ensuring customer satisfaction by providing better services and operations compared to competitors. (S2, S3, T6, T7)

2. Providing positive image and building good reputation in how the food is prepared. (S4,S5, T1,T2)

3.Introdcuction of mobile and online restaurants might have better result (S5, S6, T8)

4.Control Costs through closure of low operating restaurants, menu reengineering, and reducing advertising (S2,S7,S9,T3,T4)

WT Strategies

1.Making better Product Lines or developing or adding range of complementary products might help in stemming the flow of competition. (W1, W2, W5, W6, T6, T7)

Good Times 34

Space Matrix of Good Times Burgers

SPACE Matrix Analysis: Variable Scores

Internal Strategic Position

External Strategic Position

Financial (FP)+6 best, +1 worst

+_1_ Return on investment+_2_ Leverage+_3_ Liquidity+__2 Working capital+_2_ Cash flow+_3_ Ease of exit from market+__4 Risk level of business+ __2.42_ average

Environmental (SP)-1 best, -6 worst

-3_ Stage of technological life cycle-1_ Rate of inflation - 2__ Demand variability-2__ Price range of competing offerings-1__ Barriers to entry into market-4__ Competitive pressure-3__ Price elasticity of demand-2.28___ average

__0.13__y-

coordinate(FP +SP)

Competitive (CP)-1 best, -6 worst

- 3__ Market share -2__ Price/quality ratio -3__ Product life cycle -2__ Customer loyalty -1__ Competition's capacity utilization- 2__ Technological know-how-1__ Location-2.00____ average

Industry (IP)+6 best, +1 worst

+3__ Stage of industry/alliance evolution+3__ Growth potential+4__ Profit potential+4__ Financial stability+4__ Technological know-how+4__ Resource utilization+3__ Capital intensity+3.57___ average

__1.57__x-

coordinate(CP + IP)

Good Times 35

SPACE Matrix Analysis: Graph FP

CP

ConservativeIntensive

Related diversification+6+5+4

+3

+2+1

0

AggressiveIntensive,Integrationdiversification

IP-6 -5 -4 -3 -2 -1 0

RetrenchmentLiquidationDivestation -1

-2

-3Defensive

-4

-5

-6

+1 +2 +3 +4 +5 +6Integration,Intensive

Competitive

ES

Since we came with the coordinates of x-axis =1.57 and y-axis =o.13 the company should go for

an aggressive strategy either to go for market development or product development in terms of

introducing low calorie value count menu.

Good Times 36

BCG Matrix for Good Times Burgers

According to NRA (national restaurant association). The industry growth rate is 3.8%

(Ruggless, 2014)

Good times burger relative market share is: Brand’s Market Share/sales ( ÷ Largest competitor’s

market share/sales) 22.89M/542.59M=0.042186

High +20

Industry

Growth

Rate

0

-20Low 1.0 .50 0.0 High Low Relative Position (Market Share)

Since Good times falls under question mark, the suggested strategies are, market penetration, market development, product development and divestiture. Companies under question mark category generate low cash; therefore, Good Times must strengths their business by perusing intensive strategy.

?

Good Times 37

IE MATRIX

Internal-External Matrix

IFF Score(2.78)

Strong4.0 - 3.0

Average3.0 - 2.0

Weak2.0 - 1.0

4.0 3.0 2.0 1.0

EFE Score(2.98)

Strong 4.0 - 3.0

4.0

3.0

2.0

1.0

Average 3.0

- 2.0

Weak 2.0 - 1.0

Good Times should maintain and hold their position by using two strategies: market penetration

and product development.

Good Times 38

Grand Strategy Matrix

Grand Strategy Matrix Analysis

Rapid Market Growth

Weak Competitive

Position

Quadrant II

Market development Market penetration Product development Horizontal integration Divestiture

Quadrant I

Market development Market penetration Product development Forward integration Backward integration Horizontal integration Related diversification

Strong Competitive

Position

Quadrant III

Retrenchment Related diversification Unrelated diversification Divestiture Liquidation

Quadrant IV

Related diversification Unrelated diversification Joint venture

Slow Market Growth

The Grand Strategy Matrix is based on two evaluative measures, competitive position

and market growth. Good Times Burgers is the strong in areas of Colorado when it comes to the

food industry, and the food processing industry is growing both domestically and internationally.

When we were making the Grand Strategy Matrix we found that because of the market growth

and Good Times Burgers belongs in quadrant 1. The strategies that they could use from being in

that quadrant are market development, market penetration, product development.

Good Times 39

Count Summary Analysis

Strategies SWOT IE SPACE Grand BCG CountFwd integration X X 2Back integration X X 2Horizontal integration X X X 3Market penetration X X X X 4Market development X X X X 4Product development X X X X X 5Concentric diversification X X X 3Conglomerate diversificationJ.V. X 1RetrenchDivest X 1LiquidateOther

The first strategy that is clear for company to do is product development. Between Market

penetration and Market development I believe the company should seek market development. By

choosing this factor the company can create brand recognition worldwide and not only in

Colorado, Dakota and Wyoming. they could try to target new segments such as customers who

are more health conscious and intend to lead healthy lifestyle. Market Development and Product

Development are appropriate one since considering the size of industry. Moreover, based on ST

strategies the company tried to lower advertising expenditure and focus on increasing sale.

Therefore, market penetration can create internal conflict comparing to what company trying to

achieve.

Quantitative Strategic Planning Matrix

QSPM DEVELOP NEW

Good Times 40

ENTER NEW Markets such as Middle east and Asia where people prefer foreign products and Burger dining is trending.

PRODUCTS on the menu that can attract customers with different taste and regional preferences such as Pizza Burger, and 70 calorie Lettuce Burger.

Opportunities Weight AS TAS AS TAS

Consistently growing same store sales as trend showed an increase of 3.1% in fiscal year 2012

0.1 4 0.4 3 0.3

Increasing the breakfast day part which will give international sales 6%

0.021 0.02 3 0.06

Competitors (BK & Wendy’s) lack Good Times like option double drive thru restaurant and 50% higher check ins

0.03 - - - -

More areas and site for expansion due to 3.8% industry growth rate

0.1 4 0.4 2 0.2

Demand for Food that is all Natural, organic and Handcrafted Foods that contains no hormones or steroid

0.15 2 0.3 4 0.6

Closing low volume restaurants to increase operating margin and greater allocation for overhead cost

0.05 3 0.15 1 0.05

More demand for foods with low calorie count due to change in lifestyle

0.12 0.2 4 0.4

Joint venture with some restaurant in future due to increase of food-service establishments in the United States which almost doubled in the last three decades

0.03 3 0.09 1 0.03

Threats

Trends in lowering dining due to increase in obesity and disease such as bird flu

0.063 0.18 4 0.24

Negative media campaigns highlighting potential adverse effect

0.063 0.18 4 0.24

Franchise could take action in cause loss to business

0.03 4 0.12 1 0.03

Rising cost of packaging and food items in year 2013

0.05 - - - -

Recession and Economical factors such as decrease in value of dollar and increase in price of fuel

0.05 - - - -

Good Times 41

The hamburger industry is highly competitive

0.05 4 0.2 3 0.15

Changing in consumer tastes and switching to generic brands

0.1 2 0.2 4 0.4

Labor shortages could slow business

0.02 - - - -

1 2.44 2.7

Strengths

Early development of double drive through concept

0.09 3 0.27 2 0.18

Menu re-engineering to reduce the cost of sales

0.07 1 0.07 4 0.28

Excellent management and employee retention

0.08 3 0.24 2 0.16

Gain in demand due to providing natural handcraft foods without hormones or steroid

0.06 2 0.12 4 0.24

Increase in efficiency due to 12.5% increase in gross profit margin

0.05 4 0.2 3 0.15

Improvement income from operations due to close of four restaurants in 2012

0.05 - - - -

Sales increase in 2 to 3 % gained through lower advertising expenditures

0.08 - - - -

Increase in Same store sales of 3.1% in fiscal year 2012

0.06 4 0.24 3 0.18

Made to order concept reduces costs by 1.3% in terms of packaging cost

0.05 - - - -

Operating partner program result in 25% of restaurant improvement in cash flow

0.06 - - - -

Weaknesses

Greater competition such as Wendy’s

0.04 2 0.08 4 0.16

Non-drive through generate more than 50% average chick-ins

0.03 - - - -

Closure of few low operating restaurant

0.03 4 0.12 3 0.09

Lower resources and finances such as inventory turn over

0.03 2 0.06 3 0.09

Statured market and Competitors provide greater range

0.03 4 0.12 3 0.09

Limited to few areas like Colorado,Wyonming and North Dakota

0.03 4 0.12 1 0.03

Inflation could result in variability in food costs

0.03 - - - -

New restaurants may not be profitable due to little

0.04 3 0.12 2 0.08

Good Times 42

diversificationLack of finances to acquire new sites

0.05 4 0.2 1 0.05

Dependence on key management employees

0.04 - - - -

1 1.96 1.78

TOTAL 4.40 4.48

The above analysis of QSPM indicates product development is the way forward for goodtime

than market development

Market and New Product Development

Advantages:

- New to the market and fresh opportunities can help the company to be a leader

- Competitors may have reached a declining phase, giving your product an advantage

- Customer satisfaction and loyalty

- Knowing the existing competitors and their overall market share and strategy's

Disadvantages:

- Competitors can copy your strategy that compensate the short comings

- Loosing control over the market such as suppliers and shipping.

- Risks on failing to achieve sales and the product being unsuccessful (Sprague, 1987).

Long Term Objectives

Increase revenue by 20% in coming three years by launching new product consists of low calorie count menu.

Good Times 43

Operations objectives

Reduce losses from operating income

Increase in same store sales by 4% in coming years

Human resource objectives

Seeking to hire more restaurant managers and operating partners

Marketing objectives

More stress on advertising by having presence in social media by launching new product lines

Finance objectives

Mastering finances and obtaining $500,000 for strategies related to new product and market dev.

R AND D objectives

Introducing new Pos system and menu re-engineering to reduce cost and other increase

Annual objectives

Provide training to new managerGive training to employees in order to maintain efficient

Annual objectives

Intensifying promotional campaigns and also increase focus on site merchandizing

Annual objectives

Ensuring better cash generation in order to curb losses

Annual objectives

Develop low calorie count menu

Good Times 44

The long term Objectives of Good Times Burgers have given importance in

R&D department

1. The introduction of new system in terms of new Point of Sale system to further improve

recording of transactions.

2. Initiating techniques like menu reengineering in order to curb the rising cost of food

prices.

3. Constantly finding to reinvent and improve processes of quality and service.

4. Launch of new product such as lifestyle 5280 menu

Marketing department

1. It tends to give more importance of social media in gathering more customers and

conducting trade fair (Sprague, 1987).

2. Promoting the new product developed in low calorie category in the most extensive way

3. Increase more on site mechanizing

Finance Department

1. They want to improve their operating margin by managing our incremental sales growth.

2. Reducing cost of sales and better reduces their overhead cost.

Good Times 45

Human Resource Management Department

1. We want to train more employees for higher roles.

2. To emphasize upon succession planning in order to be not so dependent on some key

management figures.

3. They want to hire apt candidates and operating partners to generate and improve

standards by providing them with effective remuneration packages

4. The implementation of online screening and hiring those results in reduction of employee

turnover rate of 50%.

Operation Department

1. They want to same store sales in 2013 since 2012 saw increase from 2011.

2. Aggressively ensuring sales of the new product developed in low calorie category.

Strategy Implementation

The phase is crucial since its alignment of resources with company strengths and opportunities

Company Policies

Increase in Revenue though same store sales, menu-reengineering and minimize losses.

Following are some important policies elements that are necessary for the company;

1. It is imperative for Finance Division to make efforts to reduce additional costs incurred in

form of expenses

2. Operations division must try for the year 2013 to continue same store sales as there was

increase of 3.1 percent in previous year 2012.

Good Times 46

3. Operation division must aggressively work with marketing department to make sure the

new product developed turns out to be successful through on site merchandizing to

increase check in the coming months.

4. By the introducing the low calorie menu, they must try much more other products in

order to increase since current customers trends have seen a decrease in the consumption

of high calorie menu due to adverse effects of health in USA.

5. Must try to improve their supplier strategy, since they are relying on sole vendor might

provide hindrance in the objectives they trying to pursue tin terms product development

strategy in terms of introducing a variety of low calorie menu for its customers

6. Ensuring quicker and better working resources by testing new point of sale system

therefore engaging employees with better training methodologies in order to cope with

rigors of ever increasing demands.

7. Closing non performing restaurants in future might help in generating additional finances

as per information being given by financial figures in the company

8. Implementation of better advertising campaigns in areas of the restaurant in order to

increase customer counts and to make themselves more prominent

9. Conducting market research and frequently conducted feedbacks might depict o tell

whether the strategy is going in right direction or not.

10. The company must keep with control over its finances when it comes to financing various

restaurants with they have done dual branding.

Resource Allocation

Good Times Burgers should require allocating resources by prioritizing them in terms of

developing new products. Large part of resources shall be required on operational front since it

Good Times 47

shall require large amount of resources to launch a new product with additional marketing

expenses in terms advertising.

Managing Conflict

Establishing new strategies will definitely create disagreement between two or more

parties in the organization. Changing menu and adding new items to the menu can create conflict

between chief and managers on whether to restructure or reengineer the menu. Moreover,

implementing strategies such as market development create trade-offs between managers

whether to seek growth or stability or whether to emphasize on profit margin or market share.

Matching structure and strategy

A divisional structure by geographical location shall be most suitable since it caters to

having strategies prepared according to needs of customers in different geographic area. For

example in this case Good Times Burgers are based its restaurants in Colorado, Denver and

Wyoming. This should always allow the local management at any restaurant the leverage to

make decision in better way. Human resource concerns might arise due to increasing demands of

the business they have to train employee to follow procedures in compliance but the various

budgetary constraints might curtail such endeavors. Re-engineering menu is subjected to change

in processes that might affect staff efficiency. The resistance might come from chefs who have

make adjustments in accordance with company vision. Operation concern will be to see that no

there is additional expense incurred during the time of implementation stage.

Good Times 48

Cost of Recommendations

Market segmentation

Segmentation is important variable to determine customer preferences and taste to be able

to increase sale. Segmenting markets help managers to determine consumer needs and to match

supply and demand and therefore it is easier to control what types of product and services to

provide. In order to go for product and market development the company must go for mixture of

geographical segmentation since it centers its base around three cities or more with 39

restaurants there in every locale of the cities. The Behavioral Segmentation shall be to attract

more consumers who perceived to be more health conscious and want to lead fitter lifestyle than

the people. The segment has its potential to bring renewed vigor for Good Times Burger in terms

of its financial Prospects and future.

VARIABLES Market Segmentation

Geographic

Region

Density

Colorado, Wyoming and North Dakota

Rural, urban and suburbs

Age

Gender

Family size

Education

Race

Nationality

Demographic

Mostly from 20 to 30

Male and female

2+

Christian and Protestants and Jewish

White, Caucasian and Hispanic ,African American

Americans

Social class

Personality

Psychographic

Middle upper and middle lower class

Trendy and progressive

Use occasion

Usage rate

Behavioral

Regular

Medium

Good Times 49

Benefits sought

Attitude readiness

Fresh high quality food and service

Positive

Product Positioning Map (Before)

High consumer demand

Low Brand awareness High brand awareness

Low Consumer demand

Product Positioning Map (After)

High Consumer Demands

Low Brand Awareness High Brand awareness

Low Consumer Demands

GOODTIMES

SONIC

STAKE ANS

STAKE ANS

SONIC GOODTIMES

Good Times 50

As you can observe in the diagrams, the key criteria that have been chosen for product

positioning map are Consumer demand and Brand awareness that are chosen from the CPM

table. After implementing the product development and market development these two areas will

increase significantly leaving company in a very good position.

Capital Requirements for Company

The company has one with long term debt financing in terms of acquiring money from

Wells Fargo Bank. The company entered into contract with PFGI II LLC with net proceeds of

$1,380,000.The deal with SII II also result in SII ownership in 51.3 % of company outstanding

common shares. The company basically is doing 50/50 debt equity financing as elucidate in the

above lines.

Input data the number how determined

Amount of capital requirement

EBIT Range Around 2 million Since net loss did decrease to

($668,000) for the year 2012 from

($895,000) in 2011

Interest rate 5 percent No taxes incurred .

Stock price $2.87

Shares outstanding 2,272,614 outstanding

Good Times 51

Projected Income statement and Budget table for Good Times BurgerITEMS YEAR Rationale for Projection

2012 (amount in dollars) 2013 2014

Restaurant Sales 19,274 21,000 22,000Restaurant sales might take initial low after new product launch

Franchise Fee and Royalty 432 500 515

franchise fee increase due to more acquisitions

Total net Revenues 19,706 21,350 23,450 Revenue to increase 20%Restaurant operating Cost 6,592 7,100 7,800

Operating cost shall increase due to on site marketing and advert.

Food and Packaging Cost 6,691 7,000 7,400

Food and packaging cost will increase due to new product launch

Payroll and employees cost 3,939 3,500 3,200

payroll will decrease as large part of allocation shall go to

occupancy and operating cost other expensesPre-opening costdepreciation and amortization 795 650 590

might decrease due to closure of more joint venture restaurants

Total Restaurant operating Cost 18,017 18,250 19,000

will increase due to new product launch and various other activities

Selling and Administrative 2,154 3,000 increaseFranchise cost -51income from operations (474) (450) (340)

income from operations in negative as the previous year 2012

Although company had its strengths in terms of year 2012 by increase in same store sale

and reduce cost of sale through menu-reengineering. The restaurant basically has restaurants in

three areas and there it has been able to being in advantageous position since being first one to

framework the idea of drive thru restaurants. since the hamburger market is competitive for the

last five years. They had to change their strategy. Although they have introduced various menus

with quality service, it was still seen that normal casual dining restaurants had higher check inns.

Good Times 52

The trend now is consumers have shifted towards occupying a health conscious lifestyle which

promotes one to indulge in healthy low calorie count menus due to various campaigns being in

media because of consumption of high calorie foods could cause serious issues for consumer’s.

Since the company had adopted a differentiation strategy because it provides different menus

with ample amount of variety.

Implementation Strategy and Making Possible Strategies to counter adverse scenarios

The implementation strategy can be executed to plans as well unless if there is raising

cost of food prices or inflation reasons to consider. They can gain competitive advantage though

geographical segmentation because most of their restaurants are in three areas so they should

maximize their chances to increase their revenues in coming year. They should go for

franchising and acquisitions in much more conservative way since they had to close many

restaurants due to low operating volumes.

Timeline of Action

Launch of New Product launched in the three respective areas of business. June 2014

Aggressive marketing on site and through social media or digital networks. June-Aug 2014

See the performance of Product in its initial months through customer

feedbacks.

Sep 2014

Overseeing the resources and allocation in right areas so that expenses are

managed

Sep-Dec 2014

Refining processes in terms of service and quality of employees in order to

produce optimum efficiency.

Dec 2014

Good Times 53

Evaluation of Strategy

Expected Unfavorable Scenario

The first and most important factor that every firm in the food industry is expecting is the

Recession or poor economic performance of the country. It has been observed that when there is

recession, there is low demand of restaurant items in the market (Dorfman, 2013). Many people

prefer to stay at home and prepare own food that is economical and healthy. The professional or

job doing people are also the loyal customers of Good times Burger and they are also poorly

responding in times of recessions. The second expected unfavorable scene may be the failure of

marketing strategy. It must also be kept in mind that in modern times, the advertising campaigns

are less penetrating, because there is floor of advertising in every sphere of life. At the time of

formulating marketing strategy, all the parameters must be kept on the table, particularly modern

tools e.g. social media, smart phones and direct marketing (Ferrell & Hartline, 2012). The third

is the expansion strategy of the company, as company is largely focusing on the franchises.

Many large food companies have signed strategic contracts with other companies to formulate

the convergences in order to get advantage from each other’s specialization. The fourth is the

increasing number of products in the portfolio. It must be kept in mind that failure of any product

might negative impact the performance of whole organization.

Strategies in case of bad events occur

Some events might curtail their approach because they will need some additional

financing. If they do not get appropriate capital since due to prevailing recession the strategy

they want to implement might get stalled and the rising cost of food prices might add to woes in

case they do launch a new product in the market. Negative Publicity might also hamper their

Good Times 54

progress to fully exhibit their activities to launch the product. They might just need individuals to

be trained for the launch in order to execute plans in accordance of the pre-planned strategy.

In order to deal with such situation they must try to keep resources or additional gains

they get due to closures or reduction in production cost. They can further reduce their advertising

to social media so that they don’t have to spend a substantial amount. Good Times Burgers must

not go for more franchising since it hasn’t worked to their advantage as previous events has seen

the closure of low operating volume. They should focus on their product since that serves them

as a source of strength in terms of offering differentiated and unique value in terms of menu

ranging to hamburgers, custards, 5280 lifestyle menu or other low calorie count foods.

Good Times 55

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Good Times Burgers Strategic Analysis