Growth at King Burgers

1. Are the revenues lower or the costs higher in the new stores compared to the old stores?

Revenue: The number of customers is fewer compared to the old stores. The sales per customer are also lower.

Cost: Labor, real estate & facilities, and food inputs are the major costs. Costs are higher because the new stores are primarily in upscale malls; the older stores were in lower-income neighborhoods.

2. Customers: How are the customers segmented? Are all the stores serving the same segment?

Burger prices are the same across all the stores. The kind of customers that visit the mall is different than those who visit the older stores; the average income of the mall visitors is higher.

The candidate should now focus on the reason why the new stores are attracting fewer customers.

3. Product: Do all the stores serve the same type of burgers?

Yes, the food is the same. Different products sell better in the new/old stores.

4. Competition: Does King Burger face similar competition in all the locations?

No, the location of a store determines the competition it faces.

Location is the key to King Burgers' problem. Most of the new stores are in upscale malls where King Burgers is facing a lot of competition. Moreover, it is also suffering from its image as a low-price brand.