Question

Chapter 10

You are working for Texas Roadhouse (steak restaurant). Your supervisor, the marketing director, just asked you to develop some research on a few countries:

France

India

Japan

South Africa

Using the marketing knowledge developed in this class, come up with a chain ratio analysis for these countries (use meat consumption as one of your chain element, make sure to cite where you found all the data for your chain elements!), pros and cons for each country and any other trend you can see. In the end, provide your recommendation for which country should be selected for expansion (support your choice!).

Answer 1

Chain ratio calculation is a method of forecasting total market demand for a product in a particular country or a region. The calculation is often based on a number such as the total population of a country or the consumption pattern of people, etc. The chain ratio method uses percentages to multiply the base number of a population. Though the end figure is only an estimate of, it can give fairly accurate picture of the market. The market potential for a product can be known using chain ratio method.

Texas Roadhouse, Inc. is a casual dining food service chain, head quartered in the US. The dinning chain began in 1993 in Clarksville, Indiana, and now it owns and franchises about 500 outlets in the US and operating in six other countries outside US. The restaurant chain aspires to operate in cities and towns as a food service organization offering good quality food at affordable prices. In order to expand in four countries i.e. France, India, Japan and South Africa, the company is seeking information about the market potential in these countries.

Chain Ratio method is one of the ways to assess the potential of the market.

As per the bureau of census the population of the countries are as follows

India – 1.29 billion

Japan - .13 billion

France – .067 billion

South Africa - 0.055 billion

The meat consumption per year per person in these countries as per the FAO (Food and Agriculture Organiastion) is as follows.

India – 4.4 kg per person i.e. 5.67 billion kilograms per year

Japan – 45.9 kg per person i.e. 5.97 billion kilograms per year

France – 86 kg per person i.e. 5.76 billion kilograms per year

South Africa – 58.6 kg per person i.e. 3.22 billion kilograms per year

It is evident from the above information that maximum per capita consumption of meat is prevalent in France. The Texas roadhouse must focus in France as it has the highest potential market for meat based restaurants. India is the least potential for meat based restaurant as the meat eating population is very small. Probably, the company may look for pockets where high meat eating is present, and open shops in those areas. But the marketing efforts for the niche markets can be expensive.

Japan presents an encouraging scenario. It has a significant meat eating population and the country is small in geographical terms. The Texas Road House may open many outlets in Japan, and the management of the restaurants can be efficient as the outlets may be adjacent to each other.

South Africa market for meat based restaurants is fair, but the company must focus on France and Japan, before venturing in South Africa.