Marketing presentation
sawtma999
RaisingCanesinTurkey.pptxRaising Cane’s chicken: The Turkey launch
Executive summary
Raising Cane’s should launch a restaurant in the Turkey market, specially focusing on Istanbul as the site for the initial launch.
The fast food industry have been growing at a constant rate of 7-8% annually since 2006, as the youth desire western tastes.
Kentucky Fried Chicken is the biggest competitor and market share holder with 42% of the Turkey and Istanbul market.
Turks are large consumers of chicken.
There’s a $20 Billion restaurant market in Turkey with Istanbul roughly accounting for 50% of the market’s success.
20% of the total restaurant industry is the fast food sector.
The Chick Chain Fast Food industry made up $560 Million of the fast food market at the end of 2014 (28%).
In an effort to share risk and enter the market quicker, we recommend a 10 year franchising agreement with our familiar partners the Alshaya Group, who we launched with at in Kuwait.
The Alshaya group has helped many brands Starbucks, H&M, and The Cheesecake Factory expand in the Middle East, Europe, Russia, North Africa, and Turkey.
Globally well-respected group that’s been in business since 1890, based out of Kuwait City, Kuwait.
The brand’s goal is to obtain around .5 to 1.5%% of the chicken market within a two year timeframe.
The ultimate goal is to obviously gain a recognizable share of the Istanbul market and throughout Turkey, but being expose to the European Union through Turkey’s eventually membership acceptance to the EU.
Raising Cane’s goal is to reach $2,800,000 to $8,400,000 in sales revenue the first year.
The Story: B- class project from an LSU professor that said the idea would never work. Raising Cane’s was established in 1996 in Baton Rouge, LA, right outside of the LSU north gate, with a vision sharing the company’s ONE LOVE, which is to serve the highest-quality chicken finger meals and do it better than anyone else.
Well-known for their chicken strips, catering, a simple menu of 4 meal options, and special Cane’s Sauce
Privately owned company declared 4th fastest-growing chain in the U.S. in 2015.
Ranked the #2 amongst the best fast-food chains in America, according to Business Insider with $600 million in U.S. Sales.
Over 265 restaurants (57 of those franchised) in over 20 different U.S. states and one internationally located in Kuwait (since May 2015), with 99% of its sales in the U.S.
Suppliers: OK Foods (poultry) + local producers dictated by restaurant location.
Headquarters is located in Baton Rouge, LA and Plano, Texas (Suburb of Dallas).
Doing business in
Turkey is located in both Asia and Europe and acts as a bridge between the two continents.
Istanbul is the hub of trade exchange between the West and Asia.
A launch in Istanbul could be the ideal opportunity needed for potential exposure to the European countries and set the stage for a later launch within the EU and more.
With the continuous adoption of European business regulations and standards and continued progress towards official membership of the European Union, Turkey (specifically Istanbul) is an ideal launch site for the long term.
Market Size
| Turkey | Istanbul | |
| Population | 80 Million | 14.7 Million |
| Labor Force Size | 41.4 Million | 7.61 Million |
| Labor Force Participation (Income to spend) | 51.8 % | |
| Tourism Travelers Income | 41.5 Million $37.4 Billion | 11.94 Million $13.46 Billion |
Chicken Consumption in
Production Forecast Based on 2006-2011 Historical Data:
Average Growth Rate: 9.61%
Future Value of 2016 Projected Chicken Consumption Measures:
1,991,523 Metric Tons of Chicken Consumption
Chicken Production in
Production Forecast Based on 2009-2013 Historical Data:
Average Growth Rate: 8.05%
Future Value of 2016 Projected Chicken Production Measures:
2,052,850 Metric Tons of Chicken Production
Benefits
Costs
Risks
Doing business in
Benefits
*Turkey’s average growth rate over the last five years has been 2.9% of their GDP.
*Turkey is ranked 18th among the top 20 Gross Domestic Product in the world.
*Turkey ranks #1 in comparison to Middle East countries in terms of Gross Domestic Product.
Costs
| Political | Economic | Legal |
| Widespread corruption Public and private sectors Esp. public procurement, construction projects, and politics. Extortion, money laundering, abuse of office, bribing foreign officials, attempted corruption, and bribery (active and passive) Turbulent politics | Islamic Halal standard of publicly served food Firms must obtain Halal Certification to serve food to the public Government enforced decreased dependence on imports Regulations and tariffs Need local supplier that meets Raising Cane’s quality standards Imported poultry transporting timeframe may compromise quality and will be taxed with tariffs and other cost involved to meet the halal standard also. Facilitation Fees and Gift giving. | Anti-corruption authorities are ineffective and the anti-corruption laws are poorly enforced. Contradictory policies Regulation and Documentation requirements Unpredictable and volatile judicial, legal and regulatory framework areas Lack of transparency in regulation/legislation. Taxes: Agricultural Fund Tax on imports Sales Tax on imports (18% average) |
COSTS
Risk
| Political/ Economic | Frequent strikes by the upper middle class resulting from unsatisfactory legislation-agendas. Unofficial corruption and Bribery Norms. Even though it’s a democratic and free market economy and government, infrastructure, banks, and most utility companies are still state owned. The economy is primarily dependent on domestic consumption, which leaves the economy heavily dependent on consumer confidence. Inflation consistently remains the central bank’s targeted rate of 5%. Market access barriers. |
| Legal | Prevalent organized crime presence with drugs, extortion, and human trafficking and a suffering infrastructure suitable to properly govern. Regulation targeting by corrupted political entities. Lack of regulation transparency. Unreliable consistency within legislation. Weakened judicial system. |
Currency
*The Turkish Lira has been decreasing in value against the Dollar over the last five year. This would be a concern if it was not for the well-known effects of the recent strong Dollar on other countries and their currencies.
*When the U.S. gets back to healthy annual doses of inflation instead of the deflation it has experienced lately, the Turkish Lira will get stronger against the dollar.
2.93 TRY = $1 USD (as of 26 June 2016)
Trend shows some consistency as it has begun to level off in 2016
Why launch raising Cane’s in turkey?
Istanbul is the favorable launching site due to its 14.7 million residents.
Consistently growing economy.
Majority, and growing, upper middle class in Turkey.
Istanbul is the hub for exchange between the East and the West as Turkey’s strategic location acts as the Bridge between Asia and Europe and the country is in two different continents.
Opportunity to be exposed to Europe via its heavy affiliation with them.
Given a successful launch experience and Turkey’s ongoing application process and desires to enter the European Union, the future may present the opportunity to have grandfather-like rights to expand operations in the EU.
$9 Billion dollar restaurant industry in Turkey with Istanbul accounting for roughly 50% of the revenue.
Climbing fast food consumption rates.
$500 Million fast food industry in Istanbul.
Competitor & Market analysis
Kentucky Fried Chicken 42%
Popeye’s Chicken 27%
Tavuk Dunyasi 10%
BBQ Chicken 8%
Mudurnu Chicken 3%
Chicken Lovers 2.3%
Chicken Fast Food Chains in Turkey
Culturegram
Appearance in Turkey: Due to Turkey’s affiliate with the western nations, much of its business attire norms are similar to European and United States norms.
Men typically wear conservative suits and ties outside of the summer months, where lighter clothing is more the norm. Depending on the formality of the business being conducted, during this period men usually wear a shirt and trousers without jackets and ties.
Women are normally expected to also wear conservative suits with the pants or skirt option, but during the summer they also wear lighter clothes (no jacket) with a conscious notion to not wear too tight or revealing.
Hands in the pockets while acknowledging someone’s presence or talking with them and or crossing your arms under the same circumstances is impolite.
Behavior in Turkey: Punctuality is a very essential component considering just how traditional and formal the Turks are when conducting business. Meetings should be scheduled well in advance (no last minute meetings) as this is a sign of respect for your Turkish counterpart’s time and business. If you will be late call ahead to notify and reschedule. Be on time, they are often late but be patient.
Because of the Islamic influence in all walks of life in Turkey, do not schedule meetings around July, August or Ramadan because this is the annual holiday periods for the Turks. Be sure to organize meetings/appointments around their five daily prayer times.
Initial meetings are formal and serious, but used to get to know each other.
Learn the proper pronunciation of the names of your counterparts along with their proper responsibilities, titles, positions, and significance within the management hierarchy prior to first meetings. Send this same information for your organization to them prior to meetings.
Ensure first contact is through a well-respected third party (trade shows, banks, embassies, and local partners) to help establish your credibility.
Trust, comfort and long term relationships are ideal and preferred by the turks, so decision making tends to be slow.
Turks hate feeling pressured and they don’t do well with deadlines. So the pressure tactics will work against you, since they will walk from a deal it doesn’t meet their comfort standards.
The more meetings you have with the Turks, the more they began to trust you and the closer you will get to meeting the key decision maker.
Culturegram
Communications in Turkey: Business people typically speak some English, German, and French, but ensure whether an interpreter is needed ahead of time.
Documentation should be in both Turkish and English. Business cards should also include Turkish and English.
Speaking slowing with clarity is preferred and maintaining eye contact during interaction is very important and a sign of respect and sincerity being paid to the receiver.
Turks tend to stand very closely when speaking as this is a demonstration of engagement, steps taken back to adjust for space is an unfriendly gesture.
Starring is very common among the Turkish, so avoid interpreting it as if you’re doing something wrong.
Typical greetings include firm handshakes or kissing on the cheeks.
Do not initiate conversation with a woman unless she initiates the interaction.
The praising of the country of Turkey’s favorable geographic location, natural resources, or your tourist experiences is favorable conversation during first impressions, while demonstration knowledge of their language and excitement for local foods is also favorable in an effort to make good first impressions.
“Saving face” is essential in the Turkish, so carefully avoid embarrassing another person.
Age is a sign of wisdom and the most senior managers act as father or mother figures for the well-being of their employees.
Personal relationships that include trust and likability translates to business partnerships. There isn’t much separation of the two in business as the Turkish business climate tends to be more family oriented.
Touching without any established intimate relationship is very common in the Turkish culture, while public gestures of affection is typically kept to a minimum.
Personal titles are highly regarded and essential in communicating with counterparts. Turkish professionals prefer to be called by their occupational title alone (ex. ‘Doctor’ or ‘Lawyer’) as it is viewed as an honorable respect-gesture.
Other honorable mentions
FDI Strategy
Greenfield Investment:
A greenfield investment in Turkey, specifically Istanbul, would be extremely costly and a huge risk for Raising Cane’s.
Raising Cane’s is a private company that doesn’t have the same capabilities of a public company to raise funds. A lack of capital and unfavorable risk are the key contributors that discourages this option.
Because the Turkish is a highly relational business climate, a greenfield investment without familiar, experienced local partners, the U.S. Commercial Service in Turkey, or some other form of familiar local representation will ensure a costly and time consuming process for market access.
This strategy type is far too expensive and counterproductive to be a potential successful launch.
FDI Strategy
Exporting:
Fast food should not be exported.
Agricultural fund taxes, sales taxes, and high tariffs will raise cost, raising operational cost.
Exported supplies would have to also be Halal certified before approval is given to serve food to the public. Added cost via certification cost and wasted time.
Potential spoilage during transit.
Added expedite costs in getting poultry to turkey in an effort to meet raising Raising Cane’s internal freshness standard.
It’s not practical to export supplies to international locations.
Local sources that meet halal standards are ideal.
FDI Strategy
Mergers and Acquisitions:
The area has a presence of two of our biggest competitors in Kentucky Fried Chicken (KFC) and Popeye’s Chicken.
These are two public companies with lots of capital, huge infrastructures, and local seniority that we do not have the resources to acquire or merge with.
This is not a potential option.
Alshaya group
Has been around since 1890 and is responsible for the expansion of brands like Starbucks, H&M, Mothercare, Debenhams, American Eagle Outfitters, P.F. Chang's, The Cheesecake Factory, Victoria's Secret, Boots, Pottery Barn and KidZania.
One of the most successful and sustainable retailers in the Middle East region and is well-known for successfully launching brands in the Middle East, North Africa, Europe, Russia, and Turkey.
Holds more than 70 brand partnerships, operates over 2,800 stores and employs over 44,000 people in a variety of industries including food, real estate, construction, hotels, automotive and general trading.
Acts primarily as a retail franchiser for brands with international expansion ambitions.
They have the marketing knowledge, regional expertise, and superior infrastructure will act as an essential partnership for the Raising Cane’s successful launch into Istanbul and other regions of Turkey and later Europe.
Raising Cane’s recently partnered with the Alshaya Group in Kuwait City, Kuwait with the opening of its first two international locations.
The Alshaya Group understands the Halal Certification process and guidelines for food preparations and standards that need to be met before qualifying to be served to the public.
The Alshaya Group also has relationships with the poultry production suppliers within the region, familiarity the legal processes and barriers international businesses face within the initial launching stages in the region.
The Alshaya Group’s marketing expertise would be used to position our brand for the most exposure (high traffic areas suitable for our business) and success in the region.
Franchising (Licensing) Agreement
The senior team will get training at one of our training centers for 12-16 week on operations and quality standards.
The Alshaya Group will pay and a franchise fee of $50,000 to become a Raising Cane’s franchise owner.
$1.2 -$2.5 Million in startup cost or initial fees which includes construction, advertisements, and equipment, and furniture/restaurant designs.
15% of gross sales: 10% in royalty fees, 4.5% community reinvestment and .5% in advertising.
Upon Agreement Raising Cane’s grants the Alshaya Group the revocable right to use our logos, trademarks, systems and system property specified in the details of the contract.
*KFC’s international initial investments for franchising details was used in the development of the RC licensing agreement just presented due to the propriety nature of the Raising Cane’s operation details
The Alshaya Group plans to place the Raising Cane’s Franchise in the Istanbul Cevahir shopping mall located in the Sisli District in Istanbul.
Istanbul Cevahir is the second largest shopping mall in the world and the largest in the Europe.
Istanbul Cevahir has 6,673,625 Sq. Ft. 280 shops, 34 fast food restaurants and 14 exclusive restaurants.
The Trump Tower Mall in Istanbul was relieved from consideration, primarily due to his current campaign controversy.
*KFC’s international initial investments for franchising details was used in the development of the RC licensing agreement just presented due to the propriety nature of the Raising Cane’s operation details.
The dining industry grows at a rate of 2 to 3 percent annually
Raising Cane’s is familiar with Islamic Halal standards due to its current partnership/operational launch in Kuwait City, Kuwait. There’s an existing familiarity with food code standards.
There is a well-known presence of American fast food and restaurant chains in Turkey, with majority of them being in Istanbul.
Consumers favor U.S. products due to belief that it’s of higher quality.
In Turkey there is a young and consumption driven population that eats out more often than prior generations.
The young Turkish population is more prone and receptive to western products and new tastes.
Already-existing relationship with the Alshaya Group that’s very familiar with the market and launching process.
Shared expansion risk with franchising partnership with the Alshaya Group.
$9 Billion restaurant industry in Turkey.
$1 Billion fast food industry in Turkey.
$500 Million fast food sector in Istanbul.
High production of poultry in Turkey.
Local poultry sources produce their poultry to abide by the halal certification standards already.
Turkey’s potential membership of the EU could act as a gateway to expand the Raising Cane’s brand throughout Europe. Turkey’s geographic location (being in two different continents) makes this a favorable possibility.
If licensing is a success, Raising Cane’s and the Alshaya group will seek more location openings opportunities in Istanbul and other Turkish cities/markets.
Large and growing consumer base.
Reform program agenda is transforming many state-owned companies to privatized companies, ingredients for economic prosperity.
KFC and Popeye’s has an established presence in the country and city of Istanbul.
Raising Cane’s dog mascot will have to not be included in advertising in the store and via commercials due to the negative notion Islam have with the uncleanliness of dogs.
Limited variety of menu options may not account for more sophisticated consumers taste.
Possible shipments from the U.S. would indeed take much longer than sourcing locally and some items would need extra preservation measures taken in an effort to maintain internal freshness quality standards.
Growing pains of our brand properly acclimating to the cultural differences.
Financial risk assigned to the brand being launched Turkey.
Excessive bureaucracy
Slow judicial system
High and sometimes inconsistently applied taxes
Weaknesses in corporate governance
Sometimes unpredictable decisions made at the local government level
Frequent changes in the legal and regulatory environment.
KFC plans currently has 100 restaurants in the country a plans to open up another 400 by 2018.
Lengthy procedures and lack of transparency within regulation creates major difficulties in importing food efforts.
High tariffs rates makes it too costly to import special ingredients and products.
SWOT
Strengths
Threats
Weaknesses
Opportunities
Strategic Plan
High
International
High
Low
Low
Localization
Transnational
Global Standardization
Pressures for cost reduction
Pressures for local responsiveness
Choosing a Strategy
Global Standardization strategy seems to best suit our products due to its lack of variety and very limited differentiality type format.
Our brand does not offer much customization opportunity or adjustment, so standardization (while never compromising our standards) is our best course of action against Porter’s other strategies.
The Product
The products Raising Canes offer is a limited menu include 4 different combination meals of High Quality chicken strips.
It is extremely important that a partnership is created with a local poultry source to help maintain our standards of freshness and quality, something that might be jeopardized via importing supplies.
Raising Cane’s quality assurance team with meet with the local source to screen their facilities and ensure that meet our internal quality standards for product and partnership prior to any establishing of a partner relationship with local sources.
Local sourcing would reduce cost.
Promotion
Outside of the occasional store posters and promotional SOPs, billboards, television and radio ads we at Cane’s tend to do promotion a little differently.
Most of these advertisements will be located around the exits near the mall, banners and posters on the exterior of the mall’s campus and throughout the mall. (the advertisements will be in Turkish and English)
Of the 15% royalty fee we charge our licensees, it’s a condition of the contract that the store reinvest 4.5% of its gross sales back into the local community. This will
Our reinvestment activities typically include the following activities to carry out our “Active Community Involvement Agenda”.
Education: Due our birth routing from our LSU first location. Education is important to us so we support education facilities supporting the youth’s potential.
Feeding the Hungry: Fighting hunger via local food banks and other organizations that support the homeless being fed.
Active Lifestyles: Hosting running and walking events, building recreation centers for fitness, constructing walking trails, sports teams and physical fitness programs.
Business Development & Entrepreneurship: Supporting entrepreneurs to build small businesses.
Pricing
The Box Combo (4 Chicken Fingers, Fries, Coleslaw, Cane's Sauce, Texas Toast & Regular Drink - 22 oz.) $6.98 USD = 20.44 TRY
The 3 Finger Combo (3 Chicken Fingers, Fries, Cane's Sauce, Texas Toast & Regular Drink - 22 oz.) $6.38 = 18.68 TRY
The Caniac Combo (6 Chicken Fingers, Fries, Coleslaw, 2 Cane's Sauces, Texas Toast & Large Drink - 32 oz.) $9.98 = 29.23 TRY
The Sandwich Combo (3 Chicken Fingers, Cane's Sauce, Lettuce, Kaiser Roll, Fries & Regular Drink - 22 oz.) $5.98 = 17.51 TRY
The Kids Combo (2 Chicken Fingers, Fries, Cane's Sauce, Kid's Drink - 12 oz. & Activity) $4.58 = 13.41 TRY
*Because of the 6.4% annual rate of inflation, we will base the prices off the USD and remain vigilant of the loses we will incur due to currency fluctuations.
Sourcing plans
We are currently assessing a network of chicken suppliers, but Chicken House LTD has the best quality so far.
Cane’s main concern is their freezing of the halal chicken.
We don’t believe in freezing our meat so we plan to work out an delivery schedule that doesn’t include the chicken being frozen.
They are the favorite for our business at the moment.
Our Canes Sauce recipe and ingredients is proprietary information and will be shipped in big portions (dry format for mixing) until local sourcing can be carefully sort out the details.
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