Red Crab Group Analysis - Athens Cruz

From: Athens Cruz
Date: Tue, Mar 19, 2013 at 2:36 AM
Subject: Red Crab Group Analysis - Athens Cruz

Case Analysis: RED CRAB GROUP: Developing Multi-Brand Restaurant Concepts

I know Red Crab especially the one in Greenbelt, but I have never been there; and probably never will. Too many people are giving compliments to the restaurant for serving great food, but from the time that I was in Makati working, it never occurred to me to have a meal there. It was a little over my budget and I'd rather spend my money elsewhere.

Relevant Facts

·         From an "inspiration" from his mom, Raymond Magdaluyo was able to establish restaurants with different concepts under the Red Crab Group.

·         There was a paradigm shift for the group in terms of the concepts of their restaurants as it initially started "without a personality".

·         When the restaurant's operation went bad, the owner decided to reposition themselves by focusing on what defined the restaurant and its local followers. Wherein Raymond became confused as to what and how they should go about rebranding.

·         After the market research, Raymond knew the age bracket they cater to and adjust it accordingly.

·         Repositioning of the restaurant has led to the change in menu and understanding that more than becoming a Filipino restaurant, he wanted to be identified as a seafood restaurant. An international flavor.

·         It was a seafood restaurant, selling the experience with a festive atmosphere.

·         The Red Crab Group took a risk and was able to identify the market it wanted to tap. And created an opportunity for them to venture in. It segmented the market in three categories: micro-market; food type; and, motivational group or the influences it received. Along with the segmentation, it categorized the pricing strategy for each restaurant concept.

·         Just like other restaurants or companies it diversified the product line, which is big breakfast, something beyond the usual seafood restaurant conceptualized.

The story of Red Crab Group can be regarded as a success story, with a trend of an initial boom, then slowly decrease in the market share, and eventually reinvent itself and gain back what they have lost. This pattern has allowed owners to look for other means to increase profitability and gain advantage in market share.

Few of the strengths that were seen in the case were: the restaurant knew the direction it is heading and use that to its advantage. Second, the different concepts of the restaurants caters to different market or segments in the market.

The weakness of the company is that it placed itself too much of the high end side that some of the age bracket it targets would not normally spend money on food such as these. The price and location also intimidates new young professionals. I myself am intimidated going in.

Meanwhile, there are many possibilities of the concept they have with the restaurants. One concept they can create is to make a fast food shack of seafood that will cater to the busy life of the young professionals near them; I am considering the locations Alabang, Greenbelt and Tomas Morato. This can invite more seafood enthusiasts who were intimidated by the price and location of their restaurants.

On the other hand, because of the perception of "high-end" restaurant, it can drive away potential customers because there are a variety of choices left for the customer. On a lower price range but still satisfying. This is either a substitute of restaurant or product or a threat of new restaurants with almost the same concept.

Alternatives

Entering into a totally new business is a risk. And in any business you really need to take a bold step and not just test the waters but to really explore it more and more. Heaven 'n Eggs can help other new customers enjoy the typical type of foods eaten during breakfast.

·         Red Crab Group can open a new concept of a restaurant, in line with the seafood restaurant concept, but priced lower and will serve like the typical fast food.

·         Offer a different concept of restaurant but will also cater to foods offered at a lower price.

·         Attract young professionals, especially in the Makati area to boost the brand name. And make the brand really strong to increase profit.

Decision and Action

The decision of the top management will vary depending on the availability of resources and the potential market. There will always be a need for restaurants because food is a necessity more than a want. However, eating on a pricey restaurant is reserve on a special occasion. Although, Red Crab Group has already segmented their market in three categories, it needs to do it more specific. For example, one category can be the specific age brackets, they can also estimate the financial bracket of customers to identify the pricing strategy of the group, or do more promotional campaigns that could help other people understand what the brand is and what is expected from the brand.

With the new trends, Red Crab should be able to analyze and understand the market and compete side by side with any potential threats. The market research should be specific to their concepts.

Sincerely,

Athens S. Cruz
+63 916-7056719