Pepsico Restaurants Case

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MGM 399 1:30-2:50
PepsiCo’s Restaurants

PepsiCo started off being a passive company, but later took a more aggressive stance into acquiring key figures like Frito Lay, Pizza Hut, and KFC. The mastermind CEO Calloway orchestrated unique mindsets within each business, and also learned through experience (buying a bakery that failed). Calloway has a lot of success but now faces another important decision: Should he acquire Carts of Colorado? I believe this decision does have some issues and some risk, however overall the benefits might outweigh the problems. If PepsiCo has the right managerial experience and finances Calloway might want to acquire or at least do business with COC.

As stated in the case PepsiCo has many competitors in the restaurant industry. The primary reason for acquiring COC is to give PepsiCo a larger advantage over their competitors and maintain sustainable growth. One way these carts can be of great value is their accessibility. Having a low cost mobile service has great benefits. An example of mobility might be in an amusement park, or a populated city. Another advantage towards acquiring COC might be backward integration. If the carts are doing well other companies might want to buy carts from PepsiCo. A costly venture within the carts is technology. Research and development might be costly in the beginning stages. Management has to be efficient and up to date just as it would be in a restaurant.

According to PepsiCo’s Foodservice Revenue of $250 billion 25% of that is from Quick Service. From the expertise with quick service, this should be implemented to increase revenue with the COC. From the case COC was technically bankrupt, and owed $1.25 million. Pizza Hut helped to keep COC in business. PepsiCo has the capabilities that COC did not have in order to achieve sustainability. PepsiCo analyzed COC as not being the lowest-cost cart and kiosk manufacturer. They also evaluated its engineering and design to be...
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