TABLE OF CONTENTS 1. EXTERNAL ANALYSIS 4 a) NATURE OF THE MARKET 4 b) FACTORS IMPACTING FUTURE MARKET GROWTH / MACRO-ENVIRONMENTAL ANALYSIS 5 c) NATURE OF COMPETITION 5 d) NATURE OF CUSTOMERS 6 2. INTERNAL ANALYSIS 6 a) HERITAGE 6 b) MISSION 7 c) VALUES 7 d) KEY LEADERSHIP 7 e) CULTURE 7 f) CORE CAPABILITIES 7 g) MARKETING MIX 7 3. BRAND’S STRATEGIC PLATFORM 8 a) BRAND PURPOSE 8 b) BRAND IDENTITY 8 APPENDIX 9 a) REFERENCES 9 b) DEPTH INTERVIEW 9 The competitive brand strategy analysis for Aroma Espresso Bar has been divided into three sections, which are: External Analysis Internal Analysis Brand’s Strategic Platform 1. EXTERNAL ANALYSIS The external analysis for Aroma Espresso Bar has been categorized into the following: Nature of the market Factors impacting future market growth Nature of competition Nature of customers a) NATURE OF THE MARKET food and beverage (F&B) market is where the Aroma Espresso Bar competes. It has strong competition in both its product markets, i.e. the food (mainly fresh food) market and the beverage (mainly coffee) market. The value of Toronto's food and beverage cluster in 2016 was $20.68 billion, and around 43% of that was spent exclusively in restuarants and eating from out activities, i.e. $8.89 billion. The F&B industry on an average grows by around 3.6% annually, but the fast casual grew by more than 10% in the past year. Categorization of eating from outside: Restaurants Take-outs Delivery Food trucks Categorization of restaurants: Fast Food Fast Casual Fine Dining Casual Dining Cafés Aroma Espresso Bar’s qualifying dimensions as a fast casual restaurant: Healthier and higher quality food compared to fast-food restaurants, This allows Aroma to charge higher prices than fast-food restaurants, Customers order their food at the counter and sit down at a table to eat their meals, Option to order food to go is also present, Specialized types of food or menu is present (all day breakfast, Shakshuka), Roasted chicken, vegetables, well done eggs, baked breads over fried chicken. A few characteristics of the fast-casual dining market: Demand for casual dining is driven by personal income, consumer tastes, and demographics, Profitability of individual companies depends on sales of high-margin items, The fast-casual dining market is highly fragmented and no signs of consolidation seem to be there, Switching costs and tastes of customers are very low and customer retention is an issue, Consumers currently like this market and respond positively to it, Going by emerging trends, this segment of restaurants should have the highest growth rate in 2017. Categorization of beverages: Alcoholic beverages, Non-alcoholic beverages Categorization of alcoholic beverages: Beer Wine Vodka Rum Liqueurs (Irish Cream) Whiskey Gin Tequila Brandy Shooters Champagne Cognac Flavored Spirits Baijiu Cordials Categorization of non-alcoholic beverages: Coffee Tea Chocolates (Cocoa) Cider (Apple) Blended Drinks (ice/cold) Chicken Broth Smoothies Fruit Juices Energy Drinks Milk Soda (pop) Ginger Ale Mocktails Ice Tea A few characteristics of this beverage market: The coffee market in Canada has monopolistic tendencies, with Tim Hortons (69.2%) and Starbucks (17.6%), The demand for smoothies and blended drinks is seasonal and quite less, Alcohol consuming customers prefer flexible options. b) FACTORS IMPACTING FUTURE MARKET GROWTH / MACRO-ENVIRONMENTAL ANALYSIS Some of the macro-environmental factors that may impact the F&B market are: Political Factors: level of government intervention in the economy, international trade agreements, levels of trade protection and regulations specific to the F&B industry, taxes and employment laws on F&B, labour laws, NFTA and CETA changes. Economic Factors: flat growth rates in developed markets, high disposable incomes with people, interest rates, inflation and taxation levels for individuals. Socio-Cultural Demographic Factors: New trends of people who influence the food industry are Foodies, Healthies, Greenies, Freshies, Organics and Vegans. Other social factors are population growth, age of population and their eating habits, changing work patterns, changing lifestyles, changing values and consumer preferences. 20% Asian population in Toronto, introducing dishes they like would make sense. Technological Factors: Mechanization, use of IT in store, developments in agriculture and provision of internet for customers. Legal Factors (Regulatory Environment): Employment laws for staff, health & safety laws towards the use of certain food items, serving alcohol to appropriately aged customers only and franchise laws. Environmental Trends: Weather, climate change and seasonality will impact customer preferences, environmental disasters in countries that produce raw materials & coffee beans. c) NATURE OF COMPETITION DIRECT COMPETITOR: Tim Hortons exists in both product markets, with unparalleled reach as it has more than 4,700 restaurants (3,700 in Canada, 900 in USA) globally. It is expected to grow around 6% per year in the next 5 years and also could be the fastest growing fast food chain in USA. TH offers a large range of freshly prepared food & beverages (excluding alcoholic) to its customers. The acquisition by Burger King aided TH to improve its service times by 40 seconds per order, and helped in international expansion. The competitive advantage that TH has over Aroma is that it’s part of the Canadian culture and people associate themselves with the brand. TH dominates the coffee, pastry and fast-food market in Canada. Cost for two - $20. INDIRECT COMPETITOR: Second Cup (beverages, coffee) and Chipotle (food). Second Cup specializes in specialty coffee and is the largest retailer in Canada with more than 300 outlets. The brand is strongly associated with its core product, coffee, and takes pride in the quality that they serve. Second Cup has strong presence in the beverages category and scanty food options provided to its customers. The competitive advantage that SC has over Aroma is that people associate SC with beverages (coffee) and go to them just for their coffees, and not for food. The options that SC has in coffee and other beverages are far superior to Aroma. Cost for two - $20. Chipotle is a fast-casual restaurant that serves Mexican food. It has more than 30 outlets in and around Toronto. They serve a limited range of food items, that are prepared on order and the customers can even step inside the kitchen and see their orders being made. The competitive advantage that Chipotle has is a small and simple Mexican menu to choose from that is quick to make. It had 13 stores in 1998, and currently has more than 3,000 outlets in 2017. Cost for two - $30. d) NATURE OF CUSTOMERS Aroma espresso bar caters to low-medium to medium-high income level households. Critical success factors for Aroma from a customer’s standpoint are: Time and quality of service Taste and quality of the food Location and ambiance of the outlet Options of food items Cost of the food Brand Loyalty Program Segmenting broad product market for fast-causal restaurant guests in Toronto: Nickname of Product Market Need Dimensions (benefits sought) Customer-Related Characteristics Senior Executives Requisite comfort, internet, peaceful, calm & clean environment, quick service, healthy food, fresh food, adequate menu options, proximity to workplace. Busy working professionals, visiting during office hours for a quick bite, scarcity of time, easily irritable. Corporate Groups Requisite comfort, internet, peaceful, calm & clean environment, quick service, healthy food, fresh food, adequate food and beverage options, proximity to workplace. Busy working professionals, visiting during office hours for a quick bite, discussing something important or team building. Romantic Couples Requisite comfort, peaceful & calm environment, no disturbance from external sources, privacy, regular menu options, good music (not loud). People wanting to spend some quality time with each other without any external disturbance. Celebrating Groups Requisite comfort, internet, decent service, plentiful menu options, large tables, cakes & desserts, good music. People joined together to celebrate a special occasion. Family Requisite comfort, internet, decent service, plentiful menu options, budget/value meals, large tables, entertainment (board games) for children, good music. Adults accompanied with their children, adults looking to relax, children looking to eat and have fun, both wanting a change of environment. Readers Requisite comfort, internet, decent service, adequate menu options, calm environment, value for money prices. Relaxation, reading a book with a coffee or a light snack. Students Internet, plentiful menu options, budget/value meals, happy & clean ambiance, tasteful food, decent service. High-school / college students with friends or alone, to eat something quickly and relax themselves. 2. INTERNAL ANALYSIS a) HERITAGE When Anat Davidzon came to study at the University of Toronto in 2001, she began to miss her homeland coffeehouses and approached Aroma’s owners in Israel. Davidzon and Earl Gorman, a Toronto businessman, together purchased the Canadian rights to Aroma’s franchise in order to expanding into Canada. b) MISSION Aroma envisages its future to deliver fresh and nutritious meal options alongside superior coffee. At the same time, Aroma would like to maintain a ‘can-do’ outlook, embracing each new venture (Franchise) as a fun and challenging experience, with co-opting of ideas, designs and menu items. c) VALUES Aroma’s core values include providing freshly prepared, made to order, fast-casual, healthy food to its customers. They take pride in their coffee that is meticulously processed in Israel, and leverage friendly, efficient and professional service to its visitors. Aroma also aids people with special needs to secure jobs, provides employment to the needy over the better fit. Aroma is food conscious, aims not to waste any food at its outlets. d) KEY LEADERSHIP Aroma Espresso Bar’s chief leadership is hailed by Anat Davidzon and Earl Gorman. e) CULTURE Aroma has successfully replicated its product and environment in the cafés, as is present in Israel. With its expansion in Canada, Aroma wants to become an integral part of the Canadian leisure culture and is already receiving positive sentiment from the locals. Aroma emphasis on fresh, healthy and quick food options and distinguished coffee flavor. It hires people who need jobs, rather than people who would be able to do a better job, and then provide rigorous training to them. Aroma with JVS, has its feet deeply instilled in CSR activities where it provides in-kind donations and assists the specially abled to get employment. f) CORE CAPABILITIES ASSETS: Aroma has presence in more than 170 locations across 6 countries, with 10 outlets in USA and 33 outlets in Ontario. Aroma’s biggest asset is it’s loyal clientele and it’s ability to provide fresh healthy food along with distinguished coffee from Israel. COMPETENCIES: A major competency is the full operational kitchen in every store. Aroma prides itself on fast service and aims to get people their fresh & healthy meals within seven minutes of ordering. Food items are made from scratch once an order is placed. Aroma uses only fresh produce in their food that is delivered every morning to each of their locations from local suppliers. Wholesome meals are prepared on site and to order, ensuring high quality and optimal flavour. g) MARKETING MIX PRODUCT: Hot drinks (coffee & tea), pluck tea, cold drinks, blended drinks, alcoholic drinks (with Irish Cream, vodka or rum), beer, wine, fruit smoothies, fresh salads, a detailed breakfast menu that goes on all day, a kids menu, sandwiches that are made to order, soups and a few combos. The products aren’t consistent as the alcoholic drinks are not present across all the outlets. It has kept the vibrant atmosphere and striking modern décor consistent with Aroma in Israel, but has customised its menu and tweaked the tastes to cater to the local Canadian people. PRICING: Aroma prices itself strategically just below Tim Hortons, Starbucks and Second Cup. Aroma Espresso Second Cup Tim Hortons Starbucks Cappuccino 4.25 4.30 4.40 4.95 Turkey Sandwich 5.95 N/A 6.50 5.50 PLACE: Aroma chooses its locations strategically where the foot-fall is high and customers are likely to bring business, such as shopping arcades and malls, outlets’ close proximity to offices and business centres. The outlets do not have the same customer ratings and customer reviews are quite random, which isn’t great at all. PROMOTION: Aroma has emphatic presence over social media (Facebook, Twitter, Pinterest, Instagram) and it leverages its brand across the same very strategically. Aroma also has its own blog that is showcased prominently on the brand’s website, where engaging stories and articles are shared that interact with the customers. Aroma is a hybrid restaurant, does not advertise heavily but believes in word-of-mouth. It also has a loyalty card program, wherein the user can check his/her card balance online and recharge the same, if required. Additionally, it provides its loyal customers with coupons and price promotions as well. It attracts customers by leveraging the brand’s values and company ethos, also showcasing the importance it lays on food freshness, sustainability and social responsibility. PEOPLE: Aroma hires people who need jobs, instead of people who would be better at doing a job. People do not have to be from a F&B background to get hired. Post hiring, they train their employees rigorously so that they resonate with the company ethos, and providing stellar service while smiling and being friendly to customers. 3. BRAND’S STRATEGIC PLATFORM a) BRAND PURPOSE Aroma Espresso Bar exists to provide exceptional coffee & fresh healthy food to everyone. b) BRAND IDENTITY BRAND ESSENCE: CORE IDENTITY: The spirit of coffee – excellence developed in coffee with generations of experience Value for money – provide value throughout its menu, charge for the order – not the brand Israeli Essence – a fast-casual restaurant founded in Israel Service quality – stellar, quick, friendly and professional service delivered with a smile EXTENDED IDENTITY: Effervescent food – made to order healthy dishes, with fresh ingredients delivered daily, meals delivered within seven minutes of placing the order Rising Star – combating the established players with quality and freshness Socialistic approach – in-kind donations to charities, fundraisers and schools, helps specially abled people get employment, give jobs to the needy not the greedy VALUE PROPOSITION: Functional Benefits – a value offering, with quick and high-quality food and beverages Emotional Benefits – solace in sipping top-notch coffee and eating healthy fresh food without paying a bomb, fun, good times Self-Expressive Benefits – willingness to go against the established names, to go to a different upcoming eatery BRAND RELATIONSHIP: Happiness delivered through coffee APPENDIX a) REFERENCES CSR Annual Report: www.iajvs.org/documents/IAJVS2012annualFINALtoPRINTER.pdf Market Segmentation: www.decisionanalyst.com/whitepapers/marketsegmentation Food and Beverage Services: www.opentextbc.ca/introtourism/chapter/chapter-4-food-and-beverage-services Aroma’s Aggressive Expansion (owner’s words): www.foodserviceandhospitality.com/aroma-espresso-bar-continues-its-aggressive-expansion-in-canada Talking with the Founders: www.franchiseinfo.ca/features/the-smell-of-success-talking-with-the-founders-of-aroma-espresso-bar Food and Beverage statistics: http://www1.toronto.ca/wps/portal/contentonly?vgnextoid=67c4c1b5c62ca310VgnVCM10000071d60f89RCRD&vgnextchannel=401132d0b6d1e310VgnVCM10000071d60f89RCRD Food and Beverage statistics, Casual Restaurants: www.hoovers.com/industry-facts.casual-restaurants.1443.html Critical success factors of the food service industry: www.tandfonline.com/doi/full/10.1080/08974430802589709?src=recsys Industry growth by restaurant chains: www.cnbc.com/2016/12/29/these-restaurant-chains-will-drive-the-industrys-growth-in-2017.html Types of restaurants: www.smallbusiness.chron.com/4-styles-service-restaurant-business-22923.html Aroma as a fast-casual restaurant: www.aroma.ca/about Aroma’s Blog: www.aroma.ca/blog Indirect competitor, Chipotle, Mexican grill: www.chipotle.com Indirect competitor, Secondcup: www.secondcup.com Direct competitor, Tim Hortons: www.timhortons.com/ca/en/index.php b) DEPTH INTERVIEW Depth interview conducted with Ms. Prachi, officiating outlet manager, Aroma Espresso Bar, Promenade Circle. Question: What do you specialize in? Answer: We are famous for our fast casual food and our coffee. Question: How do you differentiate yourself from Tim Hortons, Second Cup and Starbucks in terms of your coffee? Answer: All our coffee is imported from South America and Africa unlike others’ coffee, and is roasted in the facility in Israel. The coffee packs are sealed and packed under strict guidelines in order to retain the freshness of the coffee. Question: How do you differentiate yourself from Tim Hortons and Starbucks in terms of your food? Answer: Our food orders are always freshly prepared and made to order with fresh ingredients that are delivered every morning to our outlets from various suppliers. Our competition does not do that. Question: What do you think is your competitive advantage? Answer: We target to get our customers their fresh orders within 07 minutes of ordering. This is quite a challenge since all our outlets have a full-kitchen and we prepare all orders from scratch within 07 minutes. Question: What kind of customers do you receive in your outlet? Answer: We get more students and young people in our store than working professionals. This story is different for our other stores that are located in Downtown and near business areas, where the footfall of working professionals and executives is much higher than over here. They have entirely different tastes and requirements. Question: What are your core-values? Answer: We exist to provide our customers great service with a smile. Our motive is to provide freshly made healthy food to our customers. We help people with special needs to get employment, some of our staff also comprises of them. We also aim to waste no food at all at any of our outlets. Question: How do you hire your employees? Answer: Our hiring process is very simple and fairly straightforward. Once taken onboard, we have a comprehensive training program that ensures that our staff is able to provide distinguished and consistent service to all our customers. One more thing, we hire people who we feel need employment more than others. We prefer not to hire college interns or people looking for part time work. We like to hire full-time employees, for consistency of service. Question: How do you fire your employees? Answer: Sorry, I can’t comment on this right now. Question: What are your catering services like? Answer: The regular manager will be able to provide better information on this. I can only comment that the nearest outlet to you will provide catering services to you. Question: What are the CSR activities that you perform? Answer: We give a lot of in-kind donations such as food, beverages and gift coupons to charities, fundraisers and schools that need aid. We also help people with special needs to get employment. -------------------------------------------------------------------------------------------------------