It is vital to evaluate the aspects that enables a restaurant to stand out since they enhance its competitive edge. The key strategic challenge in Mr. Chip restaurant business is its inability to achieve a competitive advantage over the competing restaurants in the market. For instance, if the restaurant specializes in gluten-free pizza, there is a need to identify, within this niche, how the restaurant can differentiate from all others. With a unique competitive strategy, Mr. Chip will differentiate his firm clearly from its competitors, thus enhancing the company profile and attracting more customers. The cost and product differentiation are competitive strategies that enhance the competitive advantage of a business in the market.
Competitive advantage is considered as the benefit a business has over its competitors, which is gained by providing great value to customers either by offering greater benefits in service or friendly prices. Identifying competitive advantage requires a business to observe its customers buying patterns. It is vital for Mr. Chip to reflect upon why customers spend time in the restaurant as this will offer precise information relevant to gaining competitive advantage (Asamoah & Chovancová 2011). This is because there is a need to differentiate the fast-food brand thus offering the client a reason to choose it over the competitors.
Continually building a brand by listening to customers will lead to increased awareness and customer loyalty in Mr. Chip. Ideally, understanding the market and customers enables a firm to build a long-lasting relationship. Branding not only leads to the personality of the business but also shows how consumers perceive the business (Islami, Mustafa, & Latkovikj 2020). This can empower the restaurant to establish an effective differentiation strategy through product and cost differentiation.
Cost Leadership and Differentiation Strategy
Ideally, the relative position of a restaurant within the industry is determined by its profitability. Thus, there is a need for Mr. Chip to establish a strategic advantage to ensure a successful restaurant. This will be essential since cost leadership describes when the restaurant offers the same and similar services and products to the customers at a lower price compared to its competitors (Sidhu & Mather 2017). When Mr. Chip sets to be a low-cost provider, the source of cost advantage varies and depends on the structure of the business. This may include the proprietary of technology, pursuit of economies of scales as well as other factors such as access to raw materials. As a low-cost provider, Mr. Chip restaurant has to exploit the sources of cost advantage to sustain and achieve the overall cost leadership. The ability of the restaurant to offer similar services or products at a lower price than its competitors will offer a competitive edge (Frank 2012). Considerably, cost leadership will attract a large market share since a bigger number of potential customers will consider paying lower prices for acceptable quality.
From a critical point of view, Mr. Chip’s journey to becoming a cost leader demands for efficient daily operations to ensure that the overall costs are as low as possible. Through this, the restaurant store can be superior since it can serve food at a low cost and price (Genoveva & Siam 2017). Relatively to maintaining the cost leadership advantage, there is a need for adoption of a speedy ordering system in the restaurant. Thus, the process of preparation must be easy to execute. The workers should also learn to reduce the failure rate. For instance, rather than offering a sit-down service, the Mr. Chip can offer drive through operations only. This enables the restaurant to serve the customers efficiently rather than indoor seating. Constructing a drive through is cheaper since the utilities required are lower and require fewer employees. These savings enable the firm to provide burgers and pizzas at very low prices and still remain profitable.
In product differentiation, it is vital for Mr. Chip to strive for uniqueness among its competitors through widely valued dimensions from the customers’ viewpoint. This entails selecting several attributes that many customers within the industry consider important. Thus, the restaurant can uniquely position itself by meeting customer demands. To ensure an effective differentiation strategy, there is a need to have good research and development, effective marketing, and the ability to offer high-quality products and services (Kaur and France, 2018). In this case, the Mr. Chip can offer unique foods and services that are more attractive and outstanding as compared to that of other fast-food restaurants. Considerably, when consumers discover that food and services from Mr. Chip are different from those of their competitor, they are likely to pay more.
Superior product and service quality
One of the most effective ways to differentiate a fast food restaurant is through emphasizing on superior product and service quality. Ideally, the success of fast-food brands entails differentiation in taste quality and effective advertising, which is backed by great service and product (Wei & Davis-Ngatai 2017). Food is the main method of differentiation; thus, the analysis of the current menu being used in Mr. Chip may be required. Discovering the high profit and high selling items as well as the low selling and low-profit items can shine a light on the demands of the customers. Relatively, high levels of demographic tailoring and meal customization in Mr. Chip, such as meeting the demands of a particular subset such as millennials, will be valued greatly by consumers. The company should focus on a specific target market, the millennials who show great interest in fast foods. Therefore, it should ensure that the type of food and service focus on the millennials.
Superior taste and food quality
Developing superior taste and quality is a good opportunity for differentiating with other competitors. The term fast in fast food restaurants is the root of differentiation for fast food brands. Efficient service experience is central to differentiation (Kharub, Mor & Sharma 2018). For instance, there would be a need for a restaurant to relocate from town streets to highway exits makes it efficient for customers (Wei & Davis-Ngatai 2017). Considerably, moving to highway exist will be less stressful area for the customers since there is less traffic on the road such as during the weekends.
Differentiation through customer service
Differentiation through customer service is a great challenge among many fast-food brands. Therefore, Mr. Chip can focus on better customer service for the millennials since most fast-food restaurants rely on gimmicky service rather than considering customized or personalized customer service. To foster effective customer services, the company should create a customer-first culture where the guest experiences are personalized (Hanaysha 2016). Ideally, a personalized service goes along with an attractive and memorable experience that leads to repeat guests.
Additionally, streamlining the wait times through the integration of modern technology may reduce the long waits. For instance, Mr. Chip can focus on home delivery or drive-in operations to boost the quality of service and differentiate itself from competitors. Additionally, a fast-food restaurant that encourages its customers to rely on technology is positioning itself as a more efficient, progressing, and more customer-friendly. Therefore, it will be vital for Mr. Chip to leverage customer satisfaction through superior customer service is essential in maintaining a good reputation for the guests.
Differentiation through health-conscious and superior nutritional value
Figure 1: A graphical representation of healthy food consumption; source, (Statista, 2019)
With reference to the graphical representation above (figure 1), there is an increased cultural trend towards more health-conscious eating patterns. Mr. Chip can focus on differentiation through health-conscious and superior nutritional value. The fast food company can compete effectively through a differentiating itself as a healthy option. As consumers are increasingly becoming health-conscious, fast food restaurants are launching products that are health conscious as well as drafting health-linked communications plans (Wei & Davis-Ngatai 2017). Mr. Chip should have health restaurant menu that will incorporate whole grains and vegetables as well as Limit sodium and calories. For instance, the burgers are the top menu item in the fast food restaurant. However, with the increased health consciousness, plant-based burgers should be offered in the restaurant. Mr. Chip needs to focus on plant-based offerings in their fast food offerings. Therefore, as the guest tastes are shifting to healthier meals, the company can differentiate itself from the long-standing reputation of fast-food restaurants as being unhealthy.
In summation, Mr. Chip will position itself better in the eyes of the consumers by creating a unique brand. Through analyzing detailed information offered by the customers and continued market research, the restaurant can acquire essential information to determine an effective marketing mix, which includes the restaurants visited, the prices consumers are willing to pay, and products that are well received in the market. To attract and maintain customers to the restaurant, there is a need to offer a good experience to the customers. There is always a need to create value for the customers through differentiation. Considerably, differentiation always gives the guests a reason to choose a restaurant over others. Through cost leadership and service differentiation strategy, the restaurant will have a good reputation and attract more customers. Understanding how to get an edge in the market through differentiation will enable the restaurant to attract and retain clients as well as build a strong brand in the market. Robust differentiation will help build a strong brand, thus creating a competitive advantage for the restaurant. Therefore, through a focus on a competitive strategy through greater differentiation on cost and service, as well as an excellent fast-food business model, Mr. Chip fast food Company will enhance its profile and attract more customers.
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Statista. (2019). Vast Majority of Americans Interested in Healthy Foods. Available at: https://www.statista.com/chart/16796/us-interest-in-healthy-food/
Wei, H., and Davis-Ngatai P.S., 2017. How to gain a competitive advantage in the healthy fast food industry?.