Zoes Kitchen

ZoÐ"«s Kitchen began in 1995 as a family-run restaurant in Homewood, Alabama. The company’s owner, president & CEO, John Cassismus had turned his attention from his own business ventures to the family business, with desires to build a world-class company. Mostly frequented by mothers with small children and white-collar employees in the area, the restaurant catered to those consumers with a desire for healthy foods at comparatively lower prices. As of December 2005 there were 16 locations in five different states. The brand was strong and synonymous with freshness, home-style goodness and family recipes. The menu boasted healthy selections, mostly with a Greek influence which consumers could also purchase in larger quantities for take-home consumption.

The industry outlook was good for ZoÐ"«s Kitchen. The only expected growth in the now mature restaurant industry was expected to come from the fast-casual segment, and as a вЂ?member’ of this segment, ZoÐ"«s Kitchen was positioned well for growth opportunity. However, it also faced the inherent threat of fierce industry competition. The threat came from many directions; new players entering directly into the fast-casual market, as well as other large players already in the restaurant business looking to grab market share (i.e. fast-food restaurants offering healthier & fresher choices).

ZoÐ"«s Kitchen was operating on a focused differentiation strategy; aiming at securing competitive advantage by appealing to the specific needs and desires of a well-defined market of consumers. A marketing survey completed for ZoÐ"«s Kitchen showed that their loyal customer base placed the highest value on quality and service, not on price. This survey confirmed that a вЂ?low-cost’ strategy was not necessarily a good choice for the company. The broad differentiation strategy would not allow the time or attention on such a well-defined niche that John Cassismus would have desired. The company is striving to capitalize on a very specific niche; time-starved, health conscious, affluent individuals. As such, it was clear that John Cassismus has built ZoÐ"«s Kitchen into a well-positioned company, with an effective strategy well-matched to its market segment of the industry. The focused differentiation strategy largely depends on a buyer segment that seeks special product attributes (i.e. healthier food, lower comparative cost, quick service) and on the company’s ability to stand apart from its rivals. In its uniqueness, ZoÐ"«s Kitchen has the ability to be different and had no national rivals emulating its format or menu.

SWOT Analysis

Strengths

• It is clear that the major strength for ZoÐ"«s Kitchen is its people. John Cassismus himself is an asset worth discussing. John built the company from a single, family run restaurant into the existing 16 location operation. John fostered the business which was inspired from the kitchen of his very own mother, ZoÐ"«. He was described as being optimistic, sales oriented, an entrepreneur, a visionary and hard-working.

• Another critical strength for ZoÐ"«s Kitchen is the customer loyalty which had been carefully cultivated and expanded. With happy and satisfied customers, ZoÐ"«s Kitchen possessed the ability to rely heavily on вЂ?word-of-mouth’- advertising, as over 50 percent of survey respondents had discovered the store through family and friends.

Weaknesses

• One of the major weaknesses that ZoÐ"«s Kitchen is faced with is the lack of sales during over dinner time. The loss of dinner-time patrons represents a large portion of potential sales.

• ZoÐ"«s Kitchen also has to contend with the verity that the industry-segment (fast-casual) does not offer the lucrative profits that the fast-food segment can. The fact of the matter is, вЂ?offering fresh food instead of frozen, hiring talented employees and constructing restaurants with character’ has proven to be expensive. Negative difference in buying power would impact ZoÐ"«s Kitchen dramatically and be considered a great weakness for them.

Opportunities

• In mature industries, an attractive new market opportunity only emerges sporadically at best. The fast-casual market segment happens to be a part of this вЂ?new market opportunity’, and ZoÐ"«s Kitchen is вЂ?in’ this new market. This industry provided ZoÐ"«s Kitchen with an opportunity for growth and success.

• ZoÐ"«s Kitchen is well positioned because of a shift in society’s thoughts, behaviors & desires. Fast food is losing its appeal because of the non-nutritious connotation that is associated with these establishments, and our time-starved lifestyles are not accommodating to the casual sit-down restaurant, much less the white-tablecloth service. As such, the opportunity exists for the fast-casual industry (including ZoÐ"«s Kitchen) to grab the annual вЂ?dine-out’ budget of those people who will still dine-out, and yet are being more time & health conscious.

• Another attractive opportunity is franchising ZoÐ"«s Kitchen. Offering franchise opportunities for potential business investors would allow ZoÐ"«s Kitchen to expand the number of business units, in turn increasing prospective for growth. ZoÐ"«s Kitchen already has the strong internal systems in place to make this a successful and lucrative opportunity.

Threats

• For ZoÐ"«s Kitchen the single most critical threat is that of overall competition in the industry. In 2005, the mature restaurant industry included more than 870,000 restaurants which meant enormous competition for ZoÐ"«s Kitchen. The rivalry among industry participants is quite strong as each player fight for market share. Each fast-casual provider thus far has tried to differentiate themselves in order to be more appeasing to consumers. A further review of the some of the particular forces of competition is necessary to fully understand how вЂ?competition’ in the industry is truly affecting ZoÐ"«s Kitchen.

• The restaurant industry may be experiencing a moderate pressure from other food-related industries. ZoÐ"«s Kitchen may be experiencing competition from companies offering healthy alternatives to вЂ?dining-out’, with low-cost, low-fuss grocery store bought meals.

Potential New Entrants