Buffalo Wild Wings, Inc. Strategic Plan Case Solution

2. Technological Environment

KPMG (2013) conducted a survey in which it found that about 66% of USA food and restaurant industry executives were planning to acquire cloud computing technology. Approximately 45% reported that they are planning to shift their company’s business model drastically via cloud computing. The underlying reason for adoption of cloud computing was that it would increase transparency within the company. Furthermore, it was reported that most of the executives were adopting it as a measure of cost reduction.

Gould (2013) reported that food and restaurant industry has seen new opportunities in social media, online marketing, mobile, and cloud computing. Consumers in today’s world are rapidly getting acquainted and used to this technological advancement. Technology is reshaping company’s way of operating. Most importantly, it is redefining the way companies mitigate risk and identify opportunities. Technological gadgets have introduced a new way in which companies can redefine their strategies.

There are many large firms that have already adopted aforementioned technological changes. This gives them an edge over their rivals like Buffalo Wild Wings. Technology has provided consumers with virtual platforms to interact with each other. This has made them more aware of their surrounding than they were before.

3. Market Size

National Restaurant Association (2013) projected that in the year 2013, total sales made by restaurants in the United States of America would reach 660.5 billion dollars. The division of restaurants has been shown in the following table:

Buffalo Wild Wings falls under the category of “eating places”, which has the highest number of sales. The projected figure of 660.5 billion dollars is the equivalent of 4% of the United States gross domestic product. This shows that size of total restaurant industry in the United States of America; whereas, total revenues of Buffalo Wild Wings in the year 2012 were 1040 million dollars (Buffalo Wild Wings, 2012).

It was projected by National Restaurant Association (2013) that by the end of year 2013, the total number of people employed by the restaurant industry would reach 13.1 million. Following graph shows the projected employment rates:

About 13.1 million people represent about 10% of the total United States of America Workforce. Furthermore, it was also projected that within a decade, the restaurant industry would need to employee 1.3 million people to accommodate its growth. One of the most commendable aspect of the restaurant industry employment statistics is that it employees the greatest number of minorities than any other industry in the United States of America.

4. Stage of Life Cycle

IBIS World (2010) reported that the restaurant industry of the United States of America has reached its maturity. The red cross is shown in the figure below indicates the position of the restaurant industry by comparing to other related industries.

The following position is based on the fact that there are restaurants that are closing completely; whereas, some restaurants are closing their small scale operations. On the other hand, the rate of new restaurants opening in the USA has slowed down significantly. However, established restaurants have started to penetrate foreign markets like China and India, capitalizing on their high growth rates (Canadean, 2012). Due to the economic recession, consumers purchasing power has decreased significantly, and resturants are competing each other on the basis of price mainly. Most importantly, the major reason for declining stage of the restaurant industry is that company’s profit margins are decreasing due to the high cost of goods sold. Same concern was again highlighted by KPMG (2013) in its executive survey. It was predicted by IBIS World (2010) that the industry will start to decline at a slow rate. Its prediction holds true as currently the industry is facing declining operational margins and profit margins. Adding to the problem, consumers have become price sensitive and more aware of the obesity problem than they were before.

5. Growth Rate

National Restaurant Association (2013) reported sales of the restaurant industry since past four decades. Following table shows that growth rate of the industry based on sales:

Source: (National Restaurent Association, 2013)

There was a 79% decrease in sales from the year 1980 to 1990. This decreasing trend continued in the next decade of 1990-2000, as well. However, in the previous decade sales increased by 16% only. IBIS World (2010) reported that in the year 2010, the industry was at its maturity. It has seen a declining trend in overall sales as the pressure on cost of raw material increases.