RED CRAB GROUP: Developing Multi-Brand Restaurant Concepts
Situation
Analysis
The Red Crab Group started when Mr. Raymond
Magdaluyo’s mother was offered a commercial space at the Mimosa Leisure Estate
in 1998. The mother did not want to pay for expensive franchise fees so they
decided to develop a restaurant concept on their own. She started by concocting
their own crab recipes with the help of some friends and then hired consultants
to complete the rest of the menu. The main concept was vague; they were just
known to serve good local food. Raymond Magdaluyo’s involvement was mainly on
the marketing side after leaving his job as a researcher at the AIM.
Relevant Facts:
·
The first Red Crab restaurant
succeeded even without a specific identity.
·
Though Raymond Magdaluyo used to be a
research assistant at the AIM, there was no market research involved in the
initial stage of the Red Crab Group.
·
After a year, they decided to open a
Red Crab branch in Malate, Manila. Sales were good during the first 5 month and
then a 30% decline happened after that. This is when they realized that they
need to study and analyze the location and situation of their businesses.
·
In 2001, they opened two more branches
in Tomas Morato and Alabang.
·
During the process of opening the two
branches, Raymond Magdaluyo started to conduct market research.
·
In 2002, Greenbelt invited him to open
a restaurant in their new mall, Greenbelt 3. They required him to come up with new
and unique concept. He came up with the Seafood Club.
·
Likewise, in 2004, the new Power Plant
mall, also in Makati, invited him to establish a unique concept. He demanded
for a space in the ground floor where he established Crustasia, a high-end Asian-inspired
seafood bistro.
·
Unlike in his previous restaurants, he
conducted intensive market research and product development for Crustasia. He
even had consultants from abroad. They had 15 food tasting sessions covering
some 300 recipes.
·
Their business model is “single
product, multi-concept approach”
·
They believe that the product follows
the location; you should find a location first and from there you can study and
analyze the location to provide what the local market needs
·
For advertising, they believe having
influential people (celebrities) endorse their restaurant to have the best
impact.
·
Its first non-seafood concept, Heaven
n Eggs, did not take off like their sister brands did.
·
They also established Seafood Island,
a Filipino seafood restaurant, to cater to groups of friends and also families.
It has a more informal theme than the other concepts.
Problem Analysis
Having too many brands under your umbrella can
be quite challenging; it’s hard to manage varying missions and visions, menu
items and overall theme. However, high-end malls require restaurant operators
to come up with new concepts should they pursue the opportunity offered to
them. By the time Crustasia was established, Mr. Magdaluyo already knows how to
properly come up with a restaurant concept. Market research and intensive
product development provide then with information they needed to create a
concept that will succeed. The problem would be sustaining their expanding
array of brands as their company further develops.
Alternatives
Generation
Here are the alternatives I have thought of:
1.) 1.) Continue
with the strategy of product follows location. In their business, they do not
have full control of their decisions. Malls provide them with good opportunities
but with corresponding conditions. In their case, requiring them to create a
new concept is a prerequisite to leasing a prime mall space. How can you turn
an opportunity like that? You cannot force your existing brand to a mall that
required you to create a new one. Here are the alternatives should they
continue to respond to offers and invitations of malls and other property
management.
a. Since
they already have varying crab and seafood restaurant brands catering to
different markets, they can try to be more aggressive in looking for commercial
space. They have concepts for the upper and working classes. They can opt to
expand in CBDs (Ortigas, Makati, BGC), provinces (Sta. Rosa, Batangas, Laguna,
Davao, Cebu etc) and in places where seafood are best eaten (beaches – Boracay,
Subic, Davao, Cebu)
b. They
can also provide more tummy-filling menu items since seafood are not usually
filling. This will hopefully help gain them more market share. Many casual
dining restaurants offer cheaper and filling set meals during office lunch
times. They can follow this move and provide filling meals either during
lunchtime or all day long for those who aim for value-for-money. Seafood,
especially crabs, are very expensive and not even enough to fill our tummies
thus the vast majority of the population cannot afford to pay a thousand pesos
for a lunch that cannot even satisfy their appetite.
c. Venture
in non-seafood concepts even after the failure of Heaven n Eggs. Many new
non-seafood concepts are still thriving nowadays which proves that the market
is still lucrative.
d. Create
more themed seafood restaurants. They can look into American, South American, Chinese
or Singaporean cuisine to draw some possible concepts.
2.) 2.) Avoid
creating new concepts and stick to their current brands and build up on it.
This will allow them to better manage their brands and provide focus.
Decision and
Action Analysis (Deciding on best alternatives)
Given the prices of crabs, prawns,
shrimps and other seafood, the Red Crab group cannot further position itself
lower than its current Seafood Island concept. As a result, they can stay on
its current position as a leading seafood restaurant operator and further
strengthen its foothold on the market by following the first alternative.
As opposed to waiting and responding
to invites, they can aggressively look for prospective locations for their
current brands and even for future concepts. Currently, their strategy is to find a good
place and develop products the best suits the new location. They can also
implement the opposite and find locations for their existing brands. Good places
to penetrate are near tourist attractions like Boracay and Subic. Foreigners
love to eat seafood in the Philippines since we are known to have an abundant
source of it. They should take advantage of that specific market.
For people who have huge appetite, eating
seafood might not be the most practical choice since it is very expensive and
not enough to fill our tummies. I suggest they create set meals with meat and
seafood to achieve higher value-for-money. They can partner pork/beef/chicken
and fish since there are now inexpensive but quality fish products. This will
hopefully attract those people who always look for value-for-money options aside
from those seafood lovers.
Since they are already considered to
be veterans in the restaurant industry, they can now venture into non-seafood restaurants
provided that they do their marketing research homework. This move will further
capture more people and the market outside the seafood-lovers’ zone.
Submitted by: The Great White
