In 1994, Wingstop Restaurant has spearheaded the proliferation of tasty and ultimate Buffalo-style chicken wings. Since then, Wingstop have been a synonymous to chicken wings. Wingstop boasts of proprietary recipes to the delight of its customers. Furthermore, outstanding customer service and superb food have generated clamor and apparent demands, which only the Wingstop franchise can provide and satisfy. Wingstop CEO Jim Flynn, decalred that 80% of the company’s sales generate from the sales of their specialty chicken wings (Wingstop, 2008). Wingstop boasts of its nine proprietary wing flavors. The flavors are: Atomic, Original Hot, Cajun, Hawaiian Barbeque, Garlic Parmesan, Hickory Smoked BBQ, Mild, Teriyaki, and Lemon Pepper (Wingstop, 2008).
Wingstop ensures that the chicken wings are made fresh-to-order, and served steaming-hot. However, Wingstop promotes its specialty – the buffalo-style chicken wings as its main entrée. Wingstop focal point of the restaurant is its servings of buffalo-style chicken wings with a variety of flavors; lives up to its monicker “The Wing Experts”. (Wingstop, 2008). The plethora of flavors of its chicken wings also augments the broad market appeals of the Wingstop franchise. The restaurant also serves a wide-array of delicious sides. Customers are always looking forward to have their fresh-cut fries with sodas and beers. Even though the chicken wings are the meal itself, Wingstop also offers a bevy of sumptuous and delicious side dishes from such as Idaho potato french fries, classic potato salad, chilled carrot sticks, hot rolls, and bourbon double-baked beans. Thirst quenchers include a wide array of wine and beers (Wingstop, 2008).
Current Marketing Situation
In order to entice more customers, Wingstop incorporated a nostalgic and aviation-themed atmosphere in their restaurants. Eventually, Wingstop began franchising in 1997 in order to add more stores in the United States. The first franchised restaurant opened in 1998. Franchising is a significant part of the Wingstop’s growth. The appropriate location of a Wingstop restaurant is essential to a franchise owner’s success. Wingstop has proven that an appropriate location is one of the keys to success of the company. Wingstop’s professional real estate team ensures that aspects such as traffic patterns and flow, demographics of the area, types of development, and a number of other factors are considered and assessed in order to generate opportunities from a target location (Wingstop, 2008).
Wingstop has ascertained that they have a different market segment compared to KFC and Popeye’s, which sells individual meals and for families. On the other hand, Buffalo-style chicken wings tend to draw people with similar interests such as the Super Bowl and other sports events. A myriad of factors makes Wingstop an appealing prospect for franchisees. The menu itself is an enticing factor for people to inquire for a franchise. CEO Flyyn says that simplicity works bests for Wingstop. This suggests that the Wingstop marketing strategy is not difficult to manage for those who intend to avail a franchise, yet lack prior food service experience. Furthermore, restaurants with small menus tend to have lower labor costs compared to other restaurants.Today, Wingstop has grown from a small restaurant to one of the country’s vastly- proliferated specialty restaurants. Being the pioneer of the chicken wing restaurants, the company anticipates its development and progress for it to bolster revenues (Wingstop, 2008).
SWOT Analysis and Comparative Advantage
· Wingstop is the pioneer of Buffalo-styled chicken wing specialty restaurant.
· It is considered the Coke of chicken wing restaurants.
· Wingstop boasts a wide array of chicken wing recipes, which will cater to an eclectic group of customers.
· Wingstop is not only considered a family-oriented restaurant; it is actually host to groups who share the same interest like sports event ( Super Bowl).
· Since it’s strictly a chicken wing specialty restaurant, Wingstop is limiting its menu to chicken wings and a number of side dishes that some restaurants already have.
· Wingstop is only synonymous to chicken wings, which suggests that customers can be confused that it only serves chicken wings.
· Franchising could be considered a weakness as well, due to the fact that Wingstop cannot deliberately supervise a franchise outlet.
Wingstop has engaged in franchising and royalty transaction, which is aimed at promoting the restaurant.
Locations have proven that Wingstop can generate a myriad of opportunities like celebrity athlete endorsements that complements Wingstop’s advertising and promotion; NFL hall of famer Troy Aikman has been a solid endorser for Wingstop patrons who happen to be Super Bowl fanatics as well.
Wingstop incorporates an apt sense of franchising and catering services, which generates subsequent opportunities.
One of Wingstop’s threats is the emergence of take-out and delivery chicken wing specialty restaurants; these restaurants are apparently taking advantage of Wingstop’s success.
Wingstop is threatened by the emergence of chicken wing meals at Popeye and KFC.
Wingstop’s franchising can also experience a letdown in its franchising deal whenever a franchising outlet does not manage the outlet in an appropriate manner.
Marketing Strategy and Objectives
As a franchise owner for Wingstop, you should keep in mind that Wingstop’s marketing concept is brief and precise. Wingstop incorporates the concept of chickent wing flavor options that will entice diverse market segmentation. This generates revenues for Wingstop, which it owes a lot to its efficient and charisma. Wingstop’s marketing strategy has generated 90% of food sales from chicken wings and side dish of french fries. Though it may sound easy to moderate the supply and the orders; high volume of orders and variations of kitchen space have been crucial factors that Wingstop considers in its operations. It’s always a challenge whenever a customer orders 100 chicken wings. It’s a standard imperative that product and the service should be done in a perfect manner. This suggests that Wingstop’s marketing strategy with its narrow product offering. The focus of Wingstop’s marketing strategy is undoubtedly to proliferate its wide array of chicken wing variety to its diverse customer base. Furthermore, it is looking forward to existing multi-unit franchisees to complement its entrance to potential new markets. The initial invesment for a wingstop franchise is from $181,500 to $250,00, which includes a one-time franchise fee of $20,000. 5% of gross sales will constitute the current royalty (Zimmerman, 2008). Food and paper prices constitute 34% of operating costs. The price of chicken wings have catapulted to new heights, which will mean a consequent increase in prices. The increase in chicken wing price is beyond the company’s control due to the fact that chicken wings are a market-driven commodity. Wingstop’s marketing strategy is evident during Super Bowl season, where prices and revenues peaks up thend declines gradually (Zimmerman, 2008).
We chose to use the customary pricing strategy based on competition for our burrito business. With this pricing strategy, we will price our items within the range of our competitors. By pricing our items at or around the dollar amount of our competitors, we will not lose price-sensitive customers. This strategy will be the most effective for our target market- the Orlando community. Because Orlando residents spend on average $11-20 a week eating out, our prices must fit into this range. In order to do this, we will price our burritos at $6.00 for a burrito and $1.50 for a beverage. Our goal is to create a comfortable environment in which students wish to relax and “chill out”. Therefore, our prices must reflect this relaxed attitude and provide students with what they need at the prices they can afford. By using a set price, we add ease of payment and decision to the benefits of our customers. The use of the customary pricing strategy does not allow our competitors the advantage of price because we will be within their price range. Instead of attracting customers with a lower price, we will compete with other restaurants through the quality of our product. Our target market, the Orlando community, listed price as the main factor when deciding where to eat; however, quality was a close second. By offering higher quality than our competitors in the same price bracket, we plan to have the competitive edge. We also plan to offer a large menu variety. Yet, we will keep a standard of $6.00 for all items with an additional charge for extra ingredients or specialized items. While there are numerous quick service restaurants that offer a large variety, these restaurants price at varying amounts, as well. This factor will distinguish our business from our competitors who do not offer set pricing.
As previously stated we will charge $6.00 for all standard burritos. Standard burritos include pre-thought options and a build-your-own option. If customers wish to add extras, there will be a 50-cent charge. Drinks will also come at a standard size at $1.50 each.
The survey results to calculate the number of chicken wings sold. Our survey results suggest that 54% of the students surveyed ate out 1-3 times a week; so a conservative estimate for total population would be about 3-4 times a month, or once a week. Therefore we calculated that 5,000 (people) x 4 (times a month) = 20,000. Considering competition, we decided that our market base would be approximately half of that (20,000 / 2 = 10,000). Based on food and other costs we decided the appropriate price per burrito to be $6.00. Therefore we calculated the chicken wing revenue (10,000 x $6) to equal $60,000 per month in “seasonal” high times. We figured an appropriate approximation of this population would be 50% of our normal population. We then figured the chicken wing revenue in down times to equal $30,000/month (5,000 x $6). Projected total chicken wing revenue over a 12-month period we calculated to equal $600,000.
To calculate beverage revenue, we further assumed that 75% of our population will order a beverage (different from water) along with a chicken wing (10,000 x .75 = 7,500) and, again, approximating 50% of total in down times (7,500 / 2 = 3,750). We figured an appropriate price per beverage was $1.50, based on costs and our competition’s pricing. Therefore I projected total beverage revenue, over a 12-month period, to equal $112,500.
With a monthly total of 10,000 customers, we expect to see anywhere from 83-220 customers on any given day. I further predict to have two main “peak times” during the day; lunch and dinner in which we forecast 40-110 people within those three hour periods. I believe that our capacity to provide our product will meet the needs of our consumers based on our target prep time. With multiple orders being prepped simultaneously, we estimate being able to serve up to a max of 40 people an hour, and based on our survey, about 50% of those people will be eating inside the restaurant. Based on the size of our restaurant, and this statistic, we will be able to meet our capacity of take-ins versus to-go; about 80 people inside the restaurant per hour.
Action Plan for Wingstop Orlando
Our product will be positioned ahead of competition in the mind of our customers in Orlando through concepts of food variety and a socially inviting ambiance. The slogan will be, “Chicken Wings for All.” The slogan is important because this is what people will remember and what will be imprinted their mind when choosing a restaurant. The sales promotion will communicate to our target market our unconventional chicken wing restaurant. The advertising message will utilize our slogan as well distinctive features and benefits of our restaurant. The message will say what we are- a chicken wing restaurant, what separates us from our competitors- our variety and atmosphere, our location, and our hours of operation. The hours of operation will be made bold on flyers and to go menus because our weekend is a feature and benefit of Wingstop. Our overall message in each type of sales promotion conducted will convey what our restaurant is all about and let potential customers know what to expect by providing a who, what, why, when, and where. For our direct marketing, I will have designed flyers for our restaurant to post around the community. The flyers that are going to be posted in Orlando will be round with our logo in the center, and it will cost $200 to produce 200 of them. The flyers will all have the same information: our name, Wingstop, with the sub-heading of “The Chicken Experts”, our location and hours, logo, and features and benefits. By posting flyers the potential target market will become familiar with our restaurant name and logo and be provided with all the information they need to gain awareness, interest and evaluation to prepare for trial and hopefully adoption. The sales promotions we will use consist of sampling, coupons, and continuity programs. I will use these methods because we believe they will not only build clientele, but also keep customers coming back for more. I will know how effective coupons are because customers who want to use them will be bringing them in. I can total how many are returned versus how many are given out and find out if they are worth the time and money. Sales promotions will be run at the beginning, middle, and end of the school year. Extra specials and coupons will be utilized during the summer when business is slow.
Budgets and Variables
Wingstop Orlando is projected to be in a strong financial position. Start-up costs are projected at $272,344 for the first year. Sales revenue for the first year is projected at $712,500. This shows that there is the ability to cover start-up costs with marginal profit to cover all other operational related expenses. The break-even point will occur within the first year. Based on the industry averages for major corporations in this industry with net profit margins of 3%-15% our business has a strong position with an estimated 30% net profit margin. This estimate is significantly higher compared to major corporations because as a small business we have much lower costs to manage.
As for first year cost, the total will be $272,344; these costs mainly include depreciation of equipment, utilities with deposits, promotional cost, and inventory for the first year. These costs are known cost for establishing the business, but do not include many operational costs. Break-even, as stated before, will occur within the first year. Fixed costs are $150,456, and contribution to profit per unit is 5.1%, this will result in breakeven at the 29,502nd unit. Based on this, break-even will occur on the third month. Projected revenue for the first year will be $712,500 with a net income of $217,182. This results in a net profit margin of 30%. The revenue is derived from the sales projection of 10,000 units for the months of January through May, and September through November based on survey results. The remaining months are projected with 5,000 unit sales. We estimate that 75% of the sales will be accompanied with a beverage in addition to a burrito, so total revenue is estimated including this projection which is based on survey results.
Wingstop’s Buffalo-style chicken wings will be irresistible to all. Whether our customers are craving an Atomic Chicken Wing, an basket of Idaho french fries, or a Chinese chicken salad, we plan to offer the Orlando community a wide range of satisfying menu selections by “Chicken Wings for All”. Customers will come to our restaurant to gratify any craving he or she may have and will stay to enjoy our unique and comfortable ambiance. Our endless variety of chicken wings at affordable prices combined with our quick service all located at the convenience within the Orlando area will lead to a successful endeavor in the franchise chicken wing business.