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Food4U, Inc.: The Pizza Competition

Background
Food4U, Inc. is a food service company that provides food service at a medium-sized
private university in the Southeast. Food4U, Inc. is responsible for all three major
operations in campus. Given the isolated location of the campus, Food4U, Inc. basically
monopoly the food market segment in campus. As survey shows that students were not
satisfied with food service Food4U, Inc. provided and that they have other options other
than eating at the cafeteria, Reenee Kershaw, the manager of Food4U, Inc. food service
in campus decided to expand the menu at the grill to include pizza and also started
delivery service that covered the entire campus. Kershaws decision to offer pizza was
right, sales and profit have increased over the past 10 months. Nonetheless, success in
pizza making brought challenges. As demand for pizza increases, the need for space and
equipment also increases. They do not have the capacity to make pizza and deliver pizza
in time. This resulted into decrease in sales. To make things worse, a new food court will
be constructed in campus, which includes their main competitor, Pizza Hut.

Food4U, Inc. SWOT Analysis
Strengths:
Food4U is responsible for all three major operations in campus and they are under
contract to provide food service for entire campus of 6000 students and 3000 faculty,
staff and personnel. This is one of their strength as they have a stable amount of customer.
The success in pizza operations is also their strength as pizza operations contributed in
increase of sales and profit.

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Weaknesses:
Food4Us weakness is not having enough space, equipment and personnel to satisfy the
increasing demand of pizza and unable to deliver pizza on time. Offering only a limited
choice of pizza toppings is their weakness as they are unable to satisfy customers demand.

Opportunities:
The campuss location is somewhat isolated and access to the campus by car is limited,
with peripheral parking lots provided. Food4U is responsible for all three operations in
campus. This is an opportunity for Food4U to monopoly the entire market in campus.

Threats:
Food4Us main threat is the entrance of a new competitor in the same market and same
location. Construction of new food court accommodating food-service operations from
three private organizations especially Pizza Hut threaten their monopoly position in pizza
market segment.
Besides, students have other alternative to obtain food, for instance preparing food in
dorm room, having food delivered from off campus and consuming food off campus.
Food4Us market share will be taken by these alternatives, thus reducing their sales.

Question One
Does Food4U, Inc enjoy any competitive advantage or core competencies?
Competitive advantage is an advantage that a firm has over its competitors, allows it to
generate greater sales or margins and or retain more customers than its competition, and
ability of a company to win consistently over the long term in competitive situation.
There can be many types of competitive advantage including the firms cost structure,
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product offerings, distribution network and customer support. Core competencies are the
unique resources and strengths that an organization management takes into account when
formulating strategies. So there are many competitive advantages or core competencies
that Food4U enjoys and they are:
Specialization: Food4U is a specialized food service provider for universities and
colleges.
Close proximity: Close proximity to the students is critical for delivery as it allows
quicker delivery and lower delivery cost.
Brand name: This brand Food4U is familiar among students because is operated in the
university for many years.
Experiences: This is another competitive advantage that Food4U enjoys because they
had been serving in the university for 10 years until now, so Food4U is boosted with the
amount of experiences gain throughout the 10 years tenure as the universitys sole food
vendor. And they have knowledge relating to students preference and needs derived from
their experience in the market. They have full information and market knowledge.
Location: Existing facilities and service provided new entrants have to start from scratch
for location and delivery services in the university. And location is very important
competitive advantage. One way that a company can beat another company in getting
sales is by having a superior business location. Location is the critical factor in
consumers selection of a store, and Kershaw already has a good location. So we can say
Food4U enjoys good location as competitive advantage because it located in the campus
so can get easily customer.

Question Two
Initially, how did Renee Kershaw choose to use her pizza operation to compete with
off campus eateries? What were her competitive priorities?
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Frist Kershaw began to conduct surveys to determine customer needs and market trends.
After analyzing the data she realized that students were not as satisfied as she first hoped.
She recognized that a large percentage of students were buying their food at off campus
eateries. She decided that she would expand the grills menu include pizza and she also
started a delivery service that covered the entire campus.
Kershaw decided to use her pizza operations to compete with off campus eateries based
on available resources based on time, location and staff available for Kershaw at that time,
Pizza operation is the most logical choice to be adopted in competing with off campus
eateries.
Pizza operations do not require much time to be set up. Furthermore she can run the
operation from one of the available eateries and a minimal amount of staff training is
required to run the pizza operations and also food variety by introducing pizza in the
menu.
Kershaw has somewhat addressed the problem of the lack of food variety by only
implementing minimal changes in her normal operations.
Competitive priorities
Competitive priorities are the critical dimensions that a process to satisfy its internal or
external customers both now and in the future. Kershaws competitive priorities when
choosing the pizza operations to compete with off campus eateries were:
Cost: Low cost of operating since pizza operations required minimal staff training and
delivery is done by bicycle. Limited combinations of toppings and a standard pizza
available enable Kershaw to keep cost down.
Flexibility: Through minimal changes, Kershaw is able to add a selection of pizza to her
menu as part of here effort to increase the variety of food offerings.
Time: The limited number of pizza that can be prepared and cooked would be able to
speed up preparation and delivery time since a standard pizza can be preassembled and
ready to cook as soon as quick when customers orders are received.
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Delivery: Speed delivery times were ensured by delivery through bicycles. Her new
process would get the pizzas to the students faster than the competitors as the travel
distance is a lot shorter.

Question Three
What impact will the new food court have on Kershaws pizza operations? What
competitive priorities might she choose to focus on now?

Negative impact Decrease in sale
The entrance of a new competitor (the new food court, especially Pizza Hut) will impact
positively and negatively on Kershaws pizza operations. The most significant negative
impact is decrease in sale which leads to decrease in profit. Whenever theres a newly
open store or restaurant, lines would be forming up in front of that store for the first
couple of weeks or even months. Imagine when Pizza Hut opens in campus, everyone
would be rushing to try the newly open Pizza Hut, even though they have already tried
Pizza Hut before. Consumers tend to get attracted by the term new. To them, new is
always the best. They would want to try out the new thing. Hot topic for everyone in the
college would be Have you try the new pizza? . Everyone would be talking about the
new pizza, everyone would want to try the new pizza. Kershaws pizza will be forgotten.
Kershaws pizza would experience significant loss in customers. Even though some
customers were frequent buyer of Kershaws Pizza, they could not resist the temptation
of trying out the new pizza in campus. This try-the-new-pizza effect could be short
term, but could also continue for a long time.
Even after the new pizza fever ends, consumers would still prefer Pizza Hut because
Pizza Hut is a famous pizza brand that has stores opened all around the world. Branding
is a good strategy for most industry. Consumer love branded things including food.
Mention fried chicken, they will think of KFC or McDonald, mention pizza, they will
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think of Pizza Hut or Dominos Pizza. Brands give them an assurance of food quality and
also a false impression that it must taste good as it is a branded food. Some consumers
might have brand loyalty for Pizza Hut from long time before Pizza Hut was introduced
in their campus. As brand loyalty isnt one of Kershaws pizzas competitive advantages
and they were not focusing on building brand loyalty, they could not retain their
customers.
Promotions are often associated with opening of a new store. Pizza Hut might offer
discount or other type of promotion. Kershaws Pizza didnt offer any promotions or
discount during usual day. Promotion is another thing that consumers love other than
new. Consumers wouldnt want to miss the opportunity to get something for less than
the original price. If the discounted price of Pizza Hut and original price of Kershaws
Pizza is the same, consumers would choose Pizza Hut over Kershaws Pizza because they
will think that Pizza Hut is worth more than Kershaws Pizza. To them, discounted price
means that they can get a better quality pizza at a lower price.

Negative impact Affect expansion of pizza-making operations
Kershaw was planning to expand her pizza-making operations on campus before she
found out about the new food court. Expansion of her operations would be successful and
profitable if the new food court wasnt introduced in campus. Since Pizza Hut will be a
new competitor situated in the same location competing for the same customer group,
Kershaws Pizza will lose their market share and their monopoly position in pizza market
segment in campus. Kershaw should reconsider about expansion of her pizza- making
operations because expanding her operations now would turn out to be an unprofitable
strategy as customer flow and sales increase are not guaranteed. Kershaws operation is
currently under contract to provide food services for entire campus. But their contract
might not be renewed if they are unable to maintain their performance.

Positive impact Regain capacity to meet customer demand
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On the other hand, the opening of Pizza Hut might also have positive impact on
Kershaws Pizza. During the period of Kershaws Pizzas success, they didnt have
enough equipment and space to make pizza and this resulted in increase in time of pizza
making process. They were also short of personnel to deliver pizza and resulted in
increase in delivery time. This resulted in their customers dissatisfaction but back then
customers didnt have another alternative. Now that Pizza Hut is open, part of Kershaws
Pizzas customer will move temporarily or permanently to Pizza Hut. When customers
are moving to Pizza Hut, Kershaws Pizza will experience customer loss initially. When
Kershaws Pizza has fewer customers than before, they will have enough time to serve
customers better. When the demand becomes low enough to be equilibrium with supply,
Kershaws Pizza will regain their capacity to make pizza faster and deliver pizza on time.
Customer would flow back to Kershaws Pizza. Sales and profit would then increase.

Competitive priority - Service
With the entrance of a new competitor in the same location, Kershaws Pizza loses their
location competitiveness. Kershaws Pizza and Pizza Hut both enjoy the advantage of
situated in a strategic location. To ensure that Kershaws Pizza can compete with Pizza
Hut and continues to generate revenue, she had to shift to focusing on other competitive
advantage. Service is an area that she could choose to focus on. Delivery service could be
Kershaws Pizzas new competitive priority as Pizza Hut does not provide phone orders
and delivery service in campus. Kershaws Pizza has already been providing delivery
service around campus but their delivery time was long. They could try to find ways to
improve their pizza delivery service.
Delivery is a service that customer perceive as value-added. Especially in a campus
where students are too lazy or busy to go out to eat or when the weather is bad, they
prefer to have food delivered to their dormitory. They appreciate the convenience of
having food delivered to them. Even if they were charged a certain amount of delivery
fees, they are willing to pay extra charges in exchange with convenience. Another service
that Kershaws Pizza could provide is setting a booth or van in certain hotspot around
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campus where crowds are expected during peak hours. Customers can buy pizza on their
way to dormitory or faculty. They dont have to walk all way to restaurant to buy pizza or
wait for the pizza to be delivered. This is a service that suits students that are always busy
and doesnt want to spend too much time queuing up to purchase food. Service quality
can be a sustainable competitive advantage provided that they are able to maintain or
improve their service quality over time. High service quality will bring high profitability
to Kershaws Pizza.

Competitive priority - Identifying consumer wants and needs
As informed by the grill supervisor, Mack Kenzie, Kershaw knew that request for pizza
toppings and combinations not on menu had steadily increased. This could be another
competitive priority that will increase their profit. Identifying consumer wants and needs
can be another competitive priority that she can choose to focus on. As Pizza Hut is also
offering a limited menu and providing a limited selection of pizzas, Kershaws Pizza and
Pizza Hut are both sacrificing this particular consumer want to gain advantage in other
area. Pizza Huts branding success gives them a competitive advantage but Kershaws
Pizza doesnt have that. So, to regain their market share, they have to try to satisfy their
customers need by providing a variety of pizza toppings and combinations. Consumer
usually like changes in food they consume. Kershaw Pizza can consider changing their
menu, giving customer more choices of pizza toppings or adding more side dishes.

Competitive priority Flexibility
Flexibility or ability to respond to changes could be a new competitive priority that she
can focus on. Students were complaining that their tight, erratic schedules did not always
fit with cafeteria serving hours. Operating hours of campus cafeteria is often limited to
lunch and dinner hours, usually from 12pm to 2pm and from 5pm to 7pm. Students were
having difficulties finding food to eat between lunch and dinner hour and after dinner
hour. Kershaw could extend their operations operating hours from 12pm till 10pm.
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During the off-peak hours, they could arrange a few workers in the restaurant to make
and sell pizza. They do not need to operate fully as operating fully will add increase labor
cost and other indirect costs. This alteration in service provided could be another
competitive priority that will increase their profit.

Question Four
If she were to change her competitive priority for pizza operation, what are the gaps
between the priority and capabilities of her process? How might that affect her
operation processes and capacity decisions?

Gaps between current capabilities and future competitive priority Service
Delivery service is one of the services that can continue to go as all the new food courts
that going to operate in campus do not provide delivery service especially Pizza Hut;
Food4U main competitor. Although delivery service is encouraged to maintain as Pizza
Hut only provide dine in service, but Food4U current capacities of existing equipment
and space allocated for making and cooking pizza now were not able to meet the huge
demand of pizza. Oven for baking pizza is not enough to occupy large amount of pizza at
a same time. Thus, the workers need to divide the baking for several sessions. Although
Kershaw has an intention to purchase a new oven to accommodate the large amount of
pizza demand, but the current space available to install a new oven is restricted her from
proceeding on her intention.
Other than that, they are facing shortage in manpower in the preparation and staging
stage of pizza making. Increase the amount of worker can solve the problem but the
kitchen will become much crowed and will cause lot of safety issue. There are no spaces
for their future expansion plan. Based on all the issues above, they couldnt deliver the
pizza on time and as a result, their pizza sales are being affected with the increasing
demand of pizza which they cant handle it well. Students start to complain for long
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waiting and they rather purchase a pizza from outside. All in all, Food4U is facing
another problem which is shortage of manpower in making, baking and delivering the
pizza to the entire campus.
In order to solve the problem, Kershaw need to settle the most important problem which
is the new location with bigger space for Food4U. Second, she can try to outsource the
raw material for preparing pizza instead of hire more workers to cut down the preparation
time of pizza. Other than that, old ovens need to be replaced with some new ovens with a
higher specification and capacity to accommodate current and future demand of pizza.
Hourly basic workers like students can be hired in delivering the pizza during peak period.
This is because the cost to hire hourly basic workers is lower than permanent workers.
Strategic location like middle of the campus for the new facility can reduce the
turnaround time for the delivery service. Other than phone order, Food4U can also allow
the student to order via electronic device like sms, whatapps or Facebook order. This can
not only reduce the issue of noting down a wrong address in phone it also shorten the
ordering process.

Gaps between current capabilities and future competitive priority - Identifying
consumer wants and needs
Limited menu and selection in Pizza Hut and Food4U had become another competitive
priority. Food4U will have more freely in improving the pizza menu and selection as they
are a small and medium type business. Pizza Hut is an international franchising business,
branches are not allowed to simply change the menu without notice the headquarter. The
gap between the priorities and capabilities is types, topping and combination of pizza that
can cater and attract students. Kershaw need to find out the new recipe of pizza which is
outstanding and can compete with Pizza Hut and meanwhile, the new pizza will not
increase their production cost too much and the process of making it cannot be too
complicated.
To solve the problem, Kershaw can have some studies on the new pizza recipe and the
ways of making the pizza. She has to make sure that the ingredient that used to produce
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the new pizza cannot be too expensive as their target customers are the university
students. Other than that, the new pizza processing method cannot be too much deviated
from the existing pizza as this will longer the processing time and also affected the
process of producing existing pizza.
Survey form can also distribute among the students and this will help Kershaw in narrow
down her new pizza recipe. Besides survey form, Kershaw can do a sensory test on few
types of pizza and find out which pizzas can cater the students taste. After interpret the
survey and sensory test, Kershaw can choose to add few more topping and combination
of pizza in her menu. In order to have a good publicity, Food4U can advertise the news
by posting it at the university Facebook page. This is the most effective and cheapest way
for publicity.

Gaps between current capabilities and future competitive priority - Flexibility
Longer the operating hour is another competitive priority. Food4U can extend their
operations operating hours from 12pm till 10pm. The gap between the priorities and
capabilities is whether their workers willing to work for extra time as long working hour
is very tiring. Other than that, not every worker is willing to work till late night.
Shift and rotating duty schedule can help Kershaw in solving this. Kershaw can divide
her worker into two batches and each batch will rotate for the night shift. Part time hourly
basic workers can be employed to the team. This will not only reduce the work load, it
also will not affect much of the pizza cost.

Question Five
What would be a good service strategy for Kershaws operations on campus to meet
the food court competition?
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A new food court will be opening soon in campus, and it is definitely threatening the
position of Kershaws operation in university. Therefore, Kershaw has to come out with
some strategy to overcome this problem. University students are the main target of
Kershaws restaurant and students have low purchasing power as they have no income
yet. There are several possible reasons that would affect the sales of pizza in university.
Firstly, the serving of a pizza is not sufficient to man, especially sports man. Secondly,
the price of one pizza is equivalent to two serving of rice sold at food court. Therefore,
Kershaw should make modifications based on these two problems. For instance, Kershaw
has to set some new main dishes other than pizza in the menu. As the targeted group is
student, she should provide new dishes such as rice, noodle, spaghetti rather than just
pizza in the new operation.
Furthermore, Kershaw should make adjustment on the price of pizza. To capture student
market, the price of foods should be set at an acceptable level as students will make
comparison amongst the available foods. In fact, Kershaw has to do market survey on the
pricing of fast food to get know the purchasing power of university students. Kershaw
has to ensure that the price of pizza is affordable and reasonable as students are very
sensitive on pricing. Apart from doing market survey, Kershaw can carry out investment
in research and development for new or improved products and services plus the need to
adapt operations and supply processes to suit new products and services. Nowadays,
research and development is one of the most useful tools to find out the customers
preferences and latest trend. Then, business person will innovate and come out with new
product to meet customers demand.
In addition, there are many ways to expand Kershaws pizza business. First of all,
Kershaw should get a list of society and clubs which are actively organizing events in
university throughout the year. After that, Kershaw has to contact them by issuing free
pizza vouchers to the society and clubs for promotion purpose. The vouchers could be in
several types such as RM5 discount for regular pizza, RM10 discount for two large pizza
and so forth so on. By practicing this strategy, Kershaw not only can do promotion but
also build a strong foundation at the beginning stage. Since the pizza operation is a new
started business, so students might have no awareness of the new restaurant. Therefore,
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promotion is extremely needed to attract as much as customers at the beginning stage.
Kershaw can work hand in hand with student clubs and association by giving discount or
promotion to them.
From promotion perspective, Kershaw can stress on the media such as university
magazine and college magazine. By inserting brochure of pizza, students have a chance
to know the existence of new restaurant in campus. Students like to test new taste, thus,
students will stick on the pizza as long as the quality is assured by Kershaw.
Apart from that, Kershaw can apply permission of setting booth to sell pizzas during big
event days in the university. There would be a crowd of people on the event day, so it is a
good chance for Kershaw to promote her pizza business and boost up the sales as well.
As we know, different people have different preferences especially in food selection.
Kershaw should introduce combo packages into pizza operation. For example, when
customers purchase or dine-in pizza during lunch hour from 12pm 3.00 pm special
combo packages should be introduced to attract the customers. Special combo package
with lower price and with additional add-ons will be a good strategy to meet the food
court competition.
Moreover, special combo package also can be included when customer purchase a
regular pizza, free drinks will be given without any additional charges. When a drink is
given free, it make the customer feel satisfy to buy the pizza and this will make them
come again and again.
Besides that, promotion on day basis will also increase the demand for pizza and this will
be a good service strategy to meet the food court competition. For example, two days in a
week is allocated for promotion and on this two days of promotion customer will not only
enjoy special price for their dine-in pizza but they will also be given a mystery gift. The
two day promotion can be done in weekdays which are on Monday and Thursday. And
this promotion is only for those who dine-in.
Besides focusing on price to meet the food court competition, services providing is also
playing a major role in food court competition. Kershaw main competitor does not
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provide phone orders and delivery service. Website order can be introduced and those
ordering via website for take away are entitled to get a special gift. Since there is no
delivery services provided by the competitor, students order through website should
collect their food on their own.
The fact that cannot be denied is good dining environment is definitely one of the ways to
attract customer as they manage to find their comfort zone at the restaurant. They are
willing to spend money and time in the restaurant. Good service together with nice
environment and ambience has to be taken into consideration by every restaurant operator.
Comfortable chair, clean floor and table, free wireless connection and customer friendly
workers are some of the example of good services that should be met.
In addition to good services, tables which with compartments will also attract more
customers. This is because customers may need privacy when talking with their colleague
or friends. And also tables are separated by compartments will make them feel more
comfortable and enjoyable.
Moreover, Kershaw can also sell the pizza in a crowded area using vehicle such as
minivan. This service can also be a good service strategy to meet the food court
competition. Kershaw dont need to apply this strategy every day, but she can implement
this if there are any events held which will attract more customers.
Finally, workers or staff work in Kershaws pizza business is also one of the important
factors to consider as a good service strategy. Besides the delicious and hygienic pizza,
the staff or worker who are presently providing service is playing vital role in attracting
the customer. The tone of the voice, manner together with the level of maturity, good
communication skill and body language should be good enough to satisfy the customer
and make them appreciate and feel more welcome as well as value them as a proper
customer is a very good service strategy to be implement. In this case, Kershaw should
make sure the workers are well trained and prepared to face all type of customers. Also,
the staffs or workers should be given a uniform or t-shirt so that it will be easier to
identify the staffs and it looks systematic.

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Conclusion

In order to survive and continue to generate income, Food4U should definitely make
some changes. As Food4U will lose their competitive advantage of location after the
construction of new food court, they should shift their competitive priorities from
location to service to enhance their core competencies. As competitors especially Pizza
Hut are about to take away their market share, investment in pizza operations service area
is a way to regain their market share. Facing external as well as internal challenges,
Food4U should focus on shaping a sustainable competitive advantage so that they can
continue to compete with competitors.