


LEAD CREACTIVE - The Forum for Leadership Action Learning


LEAD CREACTIVE - The Forum for Leadership Action Learning

Disrupting the Competitive MidCap Restaurant Landscape
Case Zullee | Synopsis
The U.S. family restaurant market remains highly fragmented, with many regional, nationwide, and a few prominent global players competing in the same market space. The competitive landscape characterized by low customer loyalty, price sensitivity, and rapidly changing regional market dynamics is further challenged with the emergence of COVID-19 a few years ago. The pan epidemic has significantly accelerated unpredictability, cost of operations, and competition between small and medium-sized versus large and sometimes global players. Restaurants have introduced customized services like pick-up and 3rd party delivery models to secure market positions and retain high-value customers. The intense competition focuses on pricing strategy, product and delivery innovations, service, quality, healthiness, and variety of food on the menu.
Background and Ambition
Zullee's (formerly known as Kabob House) was established in 2009 with a modest 600-square-foot storefront and three employees in the beautiful valley community of Yakima, Washington.
Focusing on healthy dishes and supporting a growing and loyal client base, Zullee's today has 5 locations, totaling approximately 10,000 square feet across Eastern Washington and employing over 70 employees. The ambitious franchising-based growth strategy for the incoming years aims at several hundred restaurants and eventually expands into a nationwide chain with around 1,000 restaurant units.
The recent name change from Kabob House to Zullee Mediterranean Grill broadens the concept of offering delicious and health-conscious Mediterranean cuisine across rapidly growing locations. The expansion preparations are years in progress in close interaction with clients' and supporters' input.
The company leadership believes that as a concept, Zullee is now ready to scale and expand beyond Washington State to become a nationwide chain of restaurants during a major pan epidemic, labor shortage, fierce competition, and record-high inflation.
Is this credible, how to ensure this does not fall short?
The challenge is keeping up the momentum and attention to detail to make every unit just as successful when scaling up, especially when franchising away the concept. The growth plans are very ambitious. How well can the franchisees maintain all these little things and attention to detail that help achieve the initial success at scale? The executives at Zullee's count on their gut that healthy food and a genuinely welcoming atmosphere with excellent service and food experience will attract growing volumes of consumers and carefully screened franchisees for not just a few but across hundreds of Zullee's units around the country.
Imagine that Zullee's CEO and founder Ahmed Baqer is preparing for the most critical board meeting. Supported by Chairman and investor Mr. RJ Dourney, Ahmed asks the board to discuss how Zullee's can outsmart its existing competitors and fuel expansion into carefully selected new markets nationwide through franchising. Together they seek board approval for their ambitious growth plan to expand from 5 successful restaurants to a franchise-driven nationwide chain with closer to 1.000 units in less than ten years. Ahmed plans to address insights about the current special conditions in these pan epidemic and inflation-smitten markets, specific opportunities, and what steps the company needs to take to remain sustainable and prosperous in its expansion plans. Specifically, he will be outlining exciting plans to scale profitable and impactful new business opportunities in line with the market conditions and Zullee's intense drive to become a hyper-performer in the restaurant industry.
Consequently, you are asked to advise Zullee and help leverage Zullee's position and assets to continue developing profitable business in the selected markets.
Scope and Boundaries
Consider all three challenges: labor, cost, and competition, with appropriate comparisons to the U.S. and other market conditions. Plan to include a business proposal fully implemented by the 3rd quarter of 2023 and a short-term strategy and business case with relevant benchmarks. Business initiatives proposed must be implementable within a two-year timeframe, emphasizing realism and maximizing the market opportunity by thinking big and on growth.
Here are some supporting questions to consider as deemed helpful:
Drivers of Customer Innovation: How to establish a solid future focus as the consumer behavior and the restaurant industry is rapidly adjusting to changing realities? How to define the personality behind Zullee's brand so it best aligns with the intended target customer segments? How do you build solid and lasting customer relationships through branding, marketing, and competitive uniqueness? How to replicate a positive customer experience when growing from a few too many units in a nationwide chain? What role can digitalization and data analytics play as a backbone?
Drivers of Talent: How should Zullee organize for talent acquisition, talent development, and talent retention while engaging employees for increasingly challenging roles and responsibilities? How to prioritize talent development in the next 1 to 3 years, 3 to 5 years, and 5+ years to support the ambitious growth plans? How can Zullee and the franchised organization best foresee and mitigate challenges proactively or as they occur along the journey?
Drivers of Leadership: How to structure an organization for growth with multiple layers of leadership? How to lead and manage in a rapidly growing franchise organization? How and when to develop, train and enforce a new leadership structure to minimize challenges? How do we identify and address immediate fixes or improvements that are prerequisites for Zullee's growth strategy?
Drivers of Cooperation: How do select partnerships that could enhance and increase Zullee brand awareness to help increase profit? How do all Zullee departmental stakeholders align adherence, especially as the organization continues to grow through a network of franchising companies? How do link operations drive returns and the cost of goods through effective partnering and procurement? How to set priorities and define challenges related to franchise-driven growth in the next 1 to 3 years, 3 to 5 years, and 5+ years?
Drivers of Product Performance: How to continuously explore and experiment with product-related innovation with minimal distraction and maximal support of the ambitious growth plans? How to constantly align the product line with the organization's vision and change consumer and market behaviors? How do you refine the overall customer experience with viable go-to-market and expansion methods?
Drivers of Profit Modeling: How to leverage Zullee's existing core concepts (dine-in, catering, and takeout) and expand from a profitability perspective? How to develop the Zullee profit model further to help increase profits to support growth? How to select and prioritize profit models in the next 1 to 3 years, 3 to 5 years, and 5+ years?
What Success Looks Like
The best proposals will be strategically justified, competitively focused, and highly practical. Prepare individually and preferably discuss your findings with others. Confront your ambitious suggestion by considering its feasibility: New and bold is good, but so is immediate, tangible, and actionable.
Ultimately, a strong proposal will:
Show a good understanding of the total business potential across the drivers of customer innovation, talent, leadership, cooperation, product performance, and profit modeling.
Present fresh ideas on strategic approaches and potential partnerships.
Good stories that stick and travel yet are fact-based and conservative.
Showing you understand the unique challenges and drivers of success, feel free to reach out to literature and online sources, people in your network, and competitive benchmarking.
Video Case: Zullee’s Mediterranean Grill
Disrupting the Competitive MidCap Restaurant Landscape