Burger Man

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BurgerMan’s Low-Cost Franchisee Model: Kiosks Lead the Way

Teaching Note

Prerequisite Conceptual Understanding

• To understand what makes a good strategy statement and the constituents of the same – Collis David J. and Rukstad Michael G., “Can You Say What Your Strategy Is?”, Harvard Business Review, April 2008 • To understand how a new business model can change the playing field for companies and bring in fortune for those who implement it – Johnson Mark W., et al., “Reinventing Your Business Model”, Harvard Business Review, December 2008 • To analyse the components of a good business design – Chaudhury Reuben, “Outlook for Telecommunications Equipment”, http://www.oliverwyman.com/ow/pdf_files/CMT-Telecom_Equipment_Outlook.pdf • To understand how a company can yield better returns over its peers and create competitive advantage – Ghemawat Pankaj, et al., “Creating Competitive Advantage”, Harvard Business School, December 20th 1999.

Synopsis of the Case Study

Set in 2010, the case study dwells upon the low-cost franchisee business model of BurgerMan Foods India Private Limited (BurgerMan Foods) and its pan-India scale-up plans. BurgerMan Foods, which began its operations in December 2006, in Chennai, expanded into three major cities of South India. Within a span of less than four years, i.e., by May 2010, the fast food chain had managed to open 105 outlets – Chennai (50), Bangalore (25) and Hyderabad (30). The company intends to open nearly 5,000 outlets in the next 5 years.

Since the commencement of business, BurgerMan Foods has altered its business model several times and adopted new practices, with the objective of creating a viable business model and making the brand customer-preferred. However, the company is challenged on a few fronts in its expansion process. Although the Indian fast food industry offers a huge opportunity for BurgerMan Foods to expand, it has to tide over organisational challenges, supply chain issues, franchisee matters and branding challenges. The biggest challenge however is going pan-India. Which and how many cities in North India should BurgerMan begin with? Should it follow its South Indian growth story format? Will the existing ‘hub-within-hub’ operating model work? What kind of changes have to be made to the supply chain to ensure timely delivery?

Pedagogical Objectives

• To understand the roots and efficacy of BurgerMan’s business model

• To understand the execution challenges of BurgerMan’s business and analyse how these challenges were dealt with by the company, in the light of fast food industry’s critical success factors

• To examine the economics of running a BurgerMan’s franchisee and to discuss the role of franchisees’ in BurgerMan’s growth

• To debate on the scaling-up challenges for BurgerMan.

Teaching Plan

Both the Teaching Note and the Structured Assignment follow a specific Teaching Plan [Annexure (TN)-I].

Assignment Questions

I. What triggered BurgerMan’s business plan? What insights can be drawn from the way BurgerMan took shape from a drawing board to the corporate board?

II. What are the constituents of BurgerMan’s business model? Which of these constituents were tweaked and improved upon during its 4-year growth trajectory and which of these constituents were left as originally planned? What does this analysis tell you about the emergence of a successful strategy – was it deliberate or did it emerge?

III. From the given case facts, how would you construct the economics of running a typical BurgerMan’s franchisee? What, according to you, are the prospects and perils of this model while BurgerMan wants to scale up and go pan-India?

IV. What are the plans of BurgerMan Foods and what can be the possible challenges for the company in the execution of its plans? How can the company overcome these challenges?

Case Analysis

I. Landscape of Global and Indian Fast Food...
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