Tag Archives: environmental scanning

by | Thursday, April 13, 2023 · 7:36 am

The Changing Face of Takeout Restaurants

America’s biggest chain fast-food restaurants are changing how they operate. Responding to the changing consumer behavior during the pandemic, stores are delivering food, but in a new way. Takeout food is now often ordered ahead via online and apps. To respond to the new ordering process, restaurants are eliminating seats and expanding drive-through service.

For example: A new McDonald’s restaurant in Texas has no seats or tables for customers. Instead, a conveyor belt sends food to drivers who have ordered ahead. And it’s not just McDonald’s, Chipotle Mexican Grill and Taco Bell are also considering new formats including a four-lane drive-through.

Why the new strategy? Building operations around large drive-through and digital orders can reduce staff and make the sites more profitable and efficient. America saw takeout foods rise during the pandemic. In 2022, 85% of all food orders as fast-food locales were taken to-go instead of eaten onsite.

Even Starbucks, long known for being a place to meet and linger, plans to add roughly 400 stores that offer delivery and pickup only. Why? Starbucks cafes are often jammed with orders for pick-up, drive-through, delivery, and in-café, leaving customers unsatisfied with the long lines.

What would you like for dinner tonight?

Group Activities and Discussion Questions:

  1. Discuss the changing takeout habits of the students. What do they like? Dislike?
  2. Poll students: Who has switched to mostly takeout? How do they place orders?
  3. Show video of new McDonald’s: https://youtu.be/S-uAsMf1__E
  4. Discuss the importance of environmental scanning: technology trends, social trends, laws and regulations, competitive trends, and economic trends.
  5. What trends are these restaurants responding to?
  6. Have students outline a promotional plan for communicating the value of the new concepts.
  7. Optional: Have students go to a fast-food restaurant (such as McDonald’s) and observe (a) how people order, and (b) how many people eat at the restaurant (versus leaving with the order).

Source:  Haddon H. (28 January 2023). Americans are gobbling up takeout food. Restaurants bet that won’t change. Wall Street Journal.

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by | Monday, November 21, 2022 · 7:33 am

The Bullwhip Effect Impact on Inventory

The bullwhip effect is in fine form these days. What is the bullwhip effect? In short, the bullwhip effect is when small changes in demand at the retail level can cause large changes in demand at the wholesale, distributor, and manufacturer levels. Think of how a bullwhip whistles through the air… The small motion of the whip base causes a big crack at the end of the whip, putting everything in disarray.

The result can either too much inventory (excess product) or too little inventory (unfulfilled need). Ideally, retailers want to have enough inventory to fill demand, but not too much waste storing extra inventory. It’s a fine balance. And of course, the balance was upset by the COVID pandemic when the supply chain was significantly disrupted globally. (Remember all those empty shelves for toilet paper?)

Retail spending for some categories trended upwards during the pandemic when (1) customers demanded more inventory, so (2) retailers ordered more product, followed by (3) wholesalers ordering more from (4) manufacturers, who in turn ordered more from (5) suppliers to meet demand. The cycle was exacerbated into a larger swing in orders. Excess inventory tends to be discounted so that the shelves clear. And then the cycle start again….

Bullwhips are tough to manage. It takes coordination throughout the supply chain to maintain balance. Technology can help, but it takes a continual evaluation of on-hand inventory, order timing, and pricing.

Go ahead, crack the whip and see what happens.

Group Activities and Discussion Questions:

  1. Poll students: What categories of items have been in short supply? What categories have more inventory than needed?
  2. Show video from WSJ: https://www.wsj.com/video/series/wsj-explains/why-everything-is-on-sale-the-bullwhip-effect/86086359-41FE-440C-9E66-A106E6D045A6
  3. How can the bullwhip effect be minimized?
  4. What should be done at each step of the supply chain?
  5. Is there a long-term effect?

Sources:  Wall Street Journal (5 October 2022). Why everything is on sale: The bullwhip effect. Video.

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by | Thursday, April 15, 2021 · 8:10 am

New Products for Snacks and More

It seems as if there is a proliferation of new food products hitting the market this spring. In just one week recently we found a number of new food products from Pillsbury, Kind, and Target. What’s going on? Are consumers hungrier than usual, or are they just hungry for change?

Well, it’s a little of both. Yes, consumers are hungry, but we are now at the one-year point in the Covid-19 pandemic and consumers have also made changes to their eating, cooking, and shopping habits. We eat out less and snack more.

In Target’s case, it is launching a new grocery brand named “Favorite Day” with more than 700 snacks and treats that are focused on consumers who want to indulge. The new line includes cookies, trail mix, ice cream, snacks, beverage mixers, frozen desserts, and more. Target’s research indicates that customers want to treat themselves as they juggle hectic schedules and stress. (The new Favorite Day private-label store brand replaces Archer Farms and Simply Balanced which generated more than $2 billion in sales last year.)

Pillsbury is launching its first-ever ready-to-eat cookies, after years of successfully selling frozen cookie dough. Why the switch to pre-made? Pillsbury’s research shows that consumers are tired of constantly cooking and cleaning and are looking for convenience and shortcuts in the kitchen. Pre-pandemic, the pre-made cookie category was only a single-digit growth market. But now the category has grown in sales by roughly 12% in the past year.

In Kind’s situation, the company has a new frozen smoothie bowl for breakfasts. Smoothie bowels have spiked in popularity, including new kitchen appliances focused on smoothies. And, when a year ago consumers might have eaten a breakfast at a restaurant, there has been a sharp decline in eating breakfast out and instead consumers have turned to granola, cereal, eggs, bagels, fruit, and pancakes. According to research company IRI, frozen breakfast foods increased by 7% last year to $3.7 billion.

Try them out. Will they make it into your regular shopping rotation?

Group Activities and Discussion Questions:

  1. This is a great example of introducing new products.
  2. Show Target’s new products: https://www.target.com/b/favorite-day/-/N-q643lewlzpu?lnk=snav_rd_favorite_day
  3. Show Pillsbury’s new cookies: https://www.pillsbury.com/products/already-baked-snacks/soft-baked-cookies/soft-baked-butterscotch-chocolate-chip-cookies
  4. View Kind snacks: https://www.kindsnacks.com/
  5. Discuss the steps of the product innovation process.
  6. Discuss the importance of environmental scanning. What are some of the factors that have led these companies to introduce new products?
  7. Finally, use these examples to discuss the various stages of the product life cycle. What are the marketing objectives in each stage?

Source: AdWeek; CNN News; Minneapolis Star Tribune; other news sources.

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