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The Red Crab Group (A)
Situation Analysis
Red Crab Group has been very successful since its beginning. Aside from the new market segment it created, each of its seafood restaurants has a unique characteristic. Red Crab Pampanga has been patterned after the owner's mother and the market is for an older crowd. Red Crab Seafood and Steaks, fit a younger crowd and its main focus is on crab and seafood with a more international flavor while maintaining some of the favorite Filipino dishes. Seafood Club addressed the need for a happy, casual seafood place in Manila and provided the complete experience through the use of utensils and equipments. Crustasia has a whole new concept with its oriental theme and less focus on crabs. Blackbeard Seafood Island is also differently positioned because it already caters to the after-work, group of friends or barkada crowd and offers beer.
Its approach in coming up with business concepts is very unconventional. It literally followed the advice "Location, location, location!". It chooses a good location first and from there, it will develop a business concept – identifying the market, price positioning, distributing and promoting of brand.
Red Crab Group has also been consistently expanding and evolving from casual crab and seafood dining to non-seafood. After seven years of focusing on being the top crab and seafood restaurant chain in the country, it opened its first non-seafood restaurant, Heaven 'N Eggs. Although it is not aligned with the company's original product and service positioning, Heaven 'N Eggs was still successful and Raymund wanted the Red Crab Group to now be more than just a crab and seafood group. Unlike the rest though, this restaurant does not have a new concept that can set it apart from its competitors.
Problem Analysis
Red Crab Group does not perform a market research before it chooses a location or create a new restaurant concept. Instead of creating a business plan to study all aspects of the new business, it always start with the location and work from there. As Raymund put it, these are "accidental projects". It was mentioned in the case that it did not do any market research when it built the Red Crab Malate, Tomas Morato, Seafood Club, and Crustasia. In short, it always bases its business concepts on the available location. Although this flexibility has been proven successful since the beginning, it is a very risky move. It might choose a location that does not have a market that it can cater at all or the market is unprofitable.
In relation to this, since the expansion has already taken very different steps (seafood to non-seafood), Red Crab Group is already veering away from its original vision which is to be the top crab and seafood restaurant chain in the country. Heaven 'N Eggs was successful but it does not guarantee that the next non-seafood restaurant chains of Red Crab Group will be as successful. Red Crab Group has been successful in its seafood restaurant chains because it was able to create their own segment which is the casual crab and seafood dining segment. Heaven 'N Eggs and other similar business concepts in the future might not be as successful because there is still nothing new. Heaven 'N Eggs only offered a variety of breakfast food which can also be found in other breakfast restaurants. The F&B market is already congested with these types of food.
Alternatives Generation
Red Crab Group must address its current approach in creating new business concepts. It can continue with the tried-and-tested unconventional approach of literal "location, location, location" or it can use a more comprehensive approach by using an extensive market research before selecting a location and choosing a new restaurant concept. The first option has already brought huge success to the company. It has been able to use its locations to its advantage resulting to creative and fresh concepts. It was able to adapt well and work with its locations. The second option is more advisable if the concept will be very far from its expertise like Heaven 'N Eggs. The second option is also safer because the company will be able to look at all aspects of the new business however it entails more cost and time to implement because it would need resources to conduct the study.
Another decision that Red Crab Group must make is to stick with its original concept of crab and seafood restaurant chains or continue to expand to non-seafood restaurants like Heaven 'N Eggs. If Red Crab Group chooses the first option, it raises questions such as if can still improve its business given its wide success and already multiple business brand concepts and if the market for crab and seafood is already stagnant. If Red Crab Group can surpass these two issues, it would be better if it chooses this option because it is already the leader in this market and there are only still few restaurants with a similar concept. They can take advantage of it given its untarnished creativity and continuous flow of new ideas. Choosing to expand to non-seafood restaurants raises the question on how it will maintain its success. Non-seafood market is already congested in the country and many companies have already tried coming up with their own gimmicks to attract customers but only few stand out. If Red Crab Group will be able to find a unique product/service, it will definitely benefit the company since it will be getting the market share for non-seafood also.
Another alternative is to stick with the original concept of crab and seafood restaurant chains but instead of focusing in Philippines only, it will bring the restaurants to other countries also. Since Red Crab Group claims that it wants to become a house of world-class restaurants, its quality of products and services will definitely help achieve its success worldwide. Red Crab Group can also alter its recipes to better satisfy the tastes of the other countries.
Decision Analysis
Red Crab Group is still lacking enough research and expertise to proceed with the non-seafood market. Non-seafood market is also highly congested. These will make it difficult for Red Crab Group to succeed if it pushes through with the non-seafood market. In addition, it is still very successful in its crab and seafood restaurant chains and the market is not yet congested. If it chooses to focus on this alternative, it can also push through with the alternative of bringing its world-class restaurants to other countries, opening the company to more success.
With these reasons, in the short run, Red Crab Group should choose options one and three – stick with the original concept of crab and seafood restaurant chains and work on bringing the restaurants to other countries. To get the most out of the all the opportunities of the three alternatives, Red Crab Group can focus first on the crab and seafood market until it gets saturated. In the long run, Red Crab Group should go with option two and make itself distinct in the non-seafood market. It can use its company image to its advantage and have its customers from the crab and seafood market support them for the non-seafood restaurants as well.
Action Analysis
To evaluate the decisions, Red Crab Group should study if there is a positive response from other countries. It should also check if its crab and seafood market is still growing or if it already stagnates in one point despite the different attempts Red Crab Group will use to differentiate a business concept from another. Lastly, it has to regularly oversee its company image to its customers and ensure that its operations are always aligned to its vision and mission.
