1. A Case Study Winter 2011 BADM 470

2. Outline for Today Brief History of Ruth’s Chris Steak House
Where the company is today
Industry/Competition
Strategy
SWOT analysis
Strategic Options for growth
Chosen alternative
What the future holds

3. What is Ruth’s Chris Steak House?
Fine dining steak house which originated in New Orleans in 1976
Menu offerings:
USDA Prime Grade Steaks
Chicken
Seafood
Additional fine meats and sides
Company and Franchise owned locations worldwide
Currently over 130 locations (2010)

4. Original “Chris Steak House” opened in 1927 on same day Ruth Ann was born
Ruth Ann purchased this steakhouse in 1965
Restaurant burns down in 1976
Ruth buys new property for restaurant and names it “Ruth’s Chris Steak House”
Ruth begins offering Franchise opportunities
By 1985 it is a global company with franchises in 5 different Countries
In 2005 Ruth’s Chris goes public and sells 13,000,000 shares

5. The Ruth’s Chris Vision
To Serve high quality steaks with excellent customer service.
Vision is Focused on Continues revenue growth, brand recognition and commitment to quality.
“ If you’ve ever had a filet this good,
WELCOME BACK.”
Ruth Fertel

6. Current Industry Analysis
Broad demographic of customers in United States
Capitalized on large market share of population
Holds largest share of fine dining steak restaurants in USA
saw increased growth and net income
Recession caused drop in share prices and net income in
Highest brand and market penetration among competitors

7. COMPETITIVE POSITION Main competitors: Morton’s Fleming’s
Between the two they have more than 110 locations
High grade beef
Celebrity endorsements
80% of Morton’s business is from executive expense accounts!
This dependence was cause for severe decrease in business during recession
Closed 5 locations

8. Current Strategy Company was built on penetration strategy
More of the same restaurants in same market
This model has provided high level of brand recognition
Quality and customer service
Current markets becoming oversaturated with similar restaurants
Current economic position has put strain on potentials franchisees in the US
A new vision is necessary to continue growth in the company

9. SWOT ANALYSIS Strengths Strong brand name Highly experienced team
High quality food sources
Broad demographic customer base
Weaknesses
Prices are considered “fine dining”
Very strict franchisee criteria
Opportunities
Rise in quality conscious consumers
New technology and e-media advancements
Threats
Recession in USA
Loss of Ruth Fertel
Many other Steak House Chains

10. VALUE CHAIN Purchase of supplies from select wholesalers
Highest quality meats
High level of Service
Properly trained and qualified staff and management team
Value chain differs from most in that they do not rely on lowering their prices and finding less expensive manufacturing/logistics options

11. STRATEGIC OPTIONS
4 Strategic Options to continue to grow the Ruth’s Chris brand
Product Development
Diversification
Investment
International Market Development

12. OPTION 1 PRODUCT DEVELOPMENT
New kinds of Restaurants in existing markets
I.e.. Fast Food locations/ Family Restaurants
Issues include
Not wanting to compromise quality for lower prices
Focus and vision of company may become disoriented

13. DIVERSIFICATION OF PRODUCTS
OPTION 2
DIVERSIFICATION OF PRODUCTS
New types of Restaurants in New Markets
Issues Include
Too much risk
Saturation of national markets not desirable
Brand dilution/ brand confusion

14. VERTICAL INTEGRATION/ INVESTMENT
OPTION 3
VERTICAL INTEGRATION/ INVESTMENT
Cutting down costs
Cutting out certain suppliers/ producers
Investing Profits
Long term bonds
Higher risk stocks
Neither option is in line with the vision or the growth strategy of the company

15. INTERNATIONAL EXPANSION
OPTION 4
INTERNATIONAL EXPANSION
Expanding the current restaurant model to international location
Company owned
Franchisee owned
Current international locations have proved profitable

16. INTERNATIONAL CRITERIA
High level Meat (Beef) eaters
Legal to Import USDA Prime Beef
High urbanization rate
High disposable income
People go out to eat
Affinity for U.S. brands

17. BRAZIL Fifth largest country in the world
High level of urbanization (83%)
2 Largest Cities
Sao Paulo 11.2 Million
Rio de Janeiro 6.3 Million
High level of meat consumption (82.4kg)

18. ENTRY MODES Joint Venture Brazilian Supplier
Mix of company owned and franchisee owned locations
28 Meat wholesalers in Brazil
Bertin Ltd.
High quality beef
Family built company
Core vision and values align with Ruth’s Chris

19. ENTRY MODES opening in urbanized area Sao Paulo Rio de Janeiro
Sao Paulo would be first choice for the initial location
High profile neighbourhood
Good “buzz” generator

20. CONCLUSIONS Growing internationally provides:
Ability to continue to lead the fine dining steak industry
increased Shareholder Return
Increased company revenue and growth
Continue to differentiate and brand themselves against competitors