Case Analysis - The Red Crab Group - Camille A. Dela Cruz

ENTREP S20

Mr. Jorge Saguinsin

Case Analysis – The Red Crab Group

Camille A. Dela Cruz

I.               Situation Analysis (Relevant Facts)

·       The first restaurant established by Raymond Magdaluyo's mother and him in Mimosa Pampanga – Red Crab Seafood and Steaks, was very successful despite of no market/ research study.

·       The family of Raymond Magdaluyo adapted the same planning and execution (no market/research study) when they took the opportunity to open a restaurant in Malate.  

·       When the sales significantly declined in the Malate restaurant, it pushed Raymond to do a market research study both in the Alabang and Tomas Morato restaurant. This is to identify who are the customers the restaurant truly caters, to identify what is the real positioning of the restaurant  and to recalibrate his menu to follow his new positioning.

·       Raymond brought his new learning when he was given the opportunity to open a restaurant in Greenbelt 3 – do a market research study before entering into a new venture.

·       The Seafood Club success story was not only because of the food but also because of the experience that comes with it. The restaurant sold its crabs with all the complete paraphernalia.

·       Raymond was again given an opportunity to open a restaurant in Rockwell Power Plant Mall, and he again did a market research study and at the same time used his learning in The Seafood Club, which is not only to sell food but also sell the whole experience. He focused on these four experiences; liberating, enchanting, fulfilling and transformative.

·       His last seafood restaurant concept – The Blackbeard's Seafood Island, focused on the target market that was identified in the market/research study Raymond did.

·       All of Raymond's successful restaurants were due to all his learning from his past experiences but also from what he learned in AIM which focusing on a single product, multi concept approach. He focused on seafood but used different restaurant concepts and formats.

·       He also used his most enlightening marketing lesson in AIM, which is the importance of creating his own segment, and to own this segment, he had to define it in finer detail the elements in that segment. He adapted this learning by making all the elements of his restaurants work around the concept/position he has placed.

·       Raymond believed that change is inevitable so he opened up a different restaurant concept which is Heaven N' Eggs.

II.              Problem Analysis

I believe that the main problem of Raymond was he ventured into the Malate business without doing what was vital and important before starting a business – do a market/research study. The lack of the study reflected on the significant decline of the Red Crab Seafood and Steaks in the month of April. When he started to plan his execution and thoroughly did a market/research study it definitely turnaround the business in Malate, Alabang and Tomas Morato and eventually led to the success stories of his other restaurants. 

III.            Alternatives Generation

Of course there were several alternatives to be done to address the problem Raymond was encountering.

A.     First alternative, he can create a market research study to identify who are the customers the restaurant truly caters, to identify what is the real positioning of the restaurant and to recalibrate his menu to follow his new positioning.

B.     Another alternative is to create a different concept restaurant other than seafood. This concept could be more adaptable to the Malate target market.

IV.            Decision Analysis (Deciding on best alternatives)

In my opinion, it is important to do a market/research study before entering a business venture. The importance of a study is to identify all elements – goal, objectives, concept, positioning, target market, location, pricing strategy, promotion and advertising strategy and staff, needed to identify to create a business that will definitely work and live for a long time. Market/research study is equal to planning and planning is vital to make an execution work perfectly. Planning gives the person a view of the new business as a whole and prepares the entrepreneur for any possible failure. This view provides the entrepreneur to address the seen potential problems and gives him/her to avoid such.

V.              Action Analysis

The decision was definitely the best decision Raymond could have done. In the case, he took time to do a market/research study before his business would fail in Malate. The market researched helped him identify what was wrong in the business. He then created strategies that will help fix and solve the problems of the business, which eventually led to the turnaround of the business. He used the learning in the Malate case and started to plan and create a market study first before venturing into the opportunity presented to him. This led to the other success stories of his businesses.  

Red Crab Group - Case Analysis - Alvin Bilolo Spentrep

THE RED CRAB GROUP: Developing Multi-Brand Restaurant Concepts - Alvin Bilolo

Situation Analysis

It is thus very evident that the red crab group grew successfully as time goes by. From the small beginnings of a restaurant in Clark, Pampanga that caters food to high-end casino players and ‘high rollers,’ they are now conquering the market with different restaurant concepts lying in one goal and mission – to be known as a seafood restaurant. The concept and determination of Raymond Magdaluyo to be known as such and not just Filipino or Asian restaurant drives the group of company into a huge success. There are a lot of factors that contributes to where the company is right now and those factors are worth evaluating and studying for.

Problem Analysis

Like any other businesses, the Red Crab group undergoes a lot of challenges and difficulties while the operation of their business in on-going. They have started several restaurants without studying their market first. They haven’t position their business in the market. There is indeed a problem on positioning and knowing the target market. One factor that could contribute to their instant success in their early stage of development is that food industry is actually booming in the Philippines. Whenever there are new restaurants in town, a lot of people are willing to try it to see if it is good. The challenge is on how to retain your market and find ways to sustain and let your business fully grow.

Raymond himself acknowledges that he needs to position his restaurant first. It is indeed true for any businesses. There are a lot of things that should be considered while starting/opening and running a business. Raymond admits that he lacks market research and this somehow contributes to the decline in sales of his restaurant for a while. The good thing is that he was able to identify his lapses quickly and find alternatives and solutions to address them.

Alternative Generation

Raymond tried repositioning his restaurants. As an entrepreneur, it is true that we need to know first how we want to be branded in the market. In a simpler parlance, we must really know who we are first before we market ourselves. We need to know our vision and mission. In this case, they wanted to be branded as a ‘crab and seafood restaurant.’ This is a challenge for the company since they can easily be associated as a Filipino or Asian restaurant, but with their moves, they have proven and let the people see that they are a ‘crab and seafood restaurant.’

Another move that the company did is to give what their clients wanted. For the Greenbelt 3, they conceptualized a new seafood restaurant fitted with the place. For Rockwell, they made a mixture of Asian seafood cuisines since it is the demand of the place. This is a good strategy though they really need to do a sort of research to cater the need of the crowd. This greatly affects their success since they give what the market needs. In business, you should either give what your market needs or tempt them to like what you are offering them.

The restaurant also emphasize that they are not just selling crabs, rather they are selling experience. It is worthy to note that people patronize your restaurant not just because they love your products but also because they have a satisfying experience with what you are offering.

They also did an extensive product development and market research to create a great menu for each restaurant that they have. This is a very important thing to do when we are having our business. We should never stop innovation. There must always be something new for the market. Our customers should be surprised with what we can offer them – an extraordinary service for very valuable customers.

Another important thing is the price positioning. As we define our market, we must also evaluate the prices of our products/services fitted for our market. This is true for the Red Crab group since they have different concepts and different prices which depend on the market where their restaurants are situated.

Decision Analysis

All alternatives enumerated above are helpful for the growth and success of Red Crab group. But above all else, I believe that the key factor to success of their business, and any other businesses, is that everyone should know what their vision or mission is. Every owner and even employee should live and act within their vision and mission. They should be moving forward in one vision. They should know who they are and reposition their business based on this accordingly. If vision and mission is clear, I believe the rest of the strategies will follow.

Action Analysis

In this case, Raymond determines their vision and mission which is focused on being the crab and seafood restaurant chain. They have the vision of being the top crab and seafood restaurant chain in the country. This vision and mission drive them to achieve their goals. They improve their industry and set standards that will last for generations. All businesses should thus have a fuel that will push them to do beyond what is expected of them.

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