Entrepreneurship Growth Plan: Healthy Food Business Strategy

Business Overview

The entrepreneur behind this venture has developed a unique and compelling value proposition for her consumers. She has created a range of food items distributed and sold through various channels, all incorporating the new trends emerging within the healthy eating movement that is sweeping the United States to a greater or lesser extent. Strategic management can be defined as the process of formulating and implementing company objectives and goals while accounting for available resources and the internal and external environment in which the company operates (David, 2005). Strategy, in turn, can be defined as the course of action a company develops through the optimum use of resources with the aim of achieving its long-term goals. The three businesses the entrepreneur has experience in all appear complementary, and there is an opportunity for each to create economies of scale within a broader diversification strategy.

There are also other developments in the food industry she has been able to capitalize on — most notably the rise of fast casual dining. Fast casual is an alternative to traditional fast food channels that have increasingly become targets for negative publicity. The fast casual option gives customers an alternative that is vastly healthier than what fast food chains can offer. Furthermore, the entrepreneur's strategy will undoubtedly incorporate a diversification approach, as the company is targeting similar consumer preferences across different market segments of the larger food industry.

There are two primary social drivers that have supported a great deal of the success businesses in these niches have experienced in recent years. The first is that consumers are generally becoming more health conscious and increasingly concerned about the processes and artificial additives that go into the foods they eat. Negative publicity reports about artificial ingredients and preservatives appear on a regular basis. This report recommends that the business continue with the diversification strategy and operate each individual business with distinct but complementary strategies as these trends continue to develop.

The three businesses under consideration are:

1) Restaurant — Grab-N-Go / Dine-In / Delivery (Chipotle Business Model)
2) Catering
3) Chips / E-Commerce

Restaurant: Fast-Casual and Local Market Strategy

Traditionally, the restaurant industry has consisted of two main sectors: full-service restaurants and fast-food restaurants. The fast-food sector typically serves hamburgers, chicken, sandwiches, pizza, Mexican dishes, and breakfast and snack items — generally served quickly but often considered unhealthy. However, other trends have recently emerged that blend elements of both divisions. Panera Bread and similar organizations helped pioneer this fast-casual service delivery method.

Spoon and Sprout has the potential to compete with other businesses in this market segment at the local level. Its core competency will be offering food specialties not commonly found in other restaurants, such as vegan items, organic items, and locally sourced products — all of which represent a growing area of consumer demand in the industry. Spoon and Sprout is therefore well positioned to be competitive within this specific market niche. It is recommended that Spoon and Sprout consider a tribal marketing approach to help develop the business in the local market.

Catering: Scalability and Niche Demand

The catering business also fills a specific consumer demand in a niche that is steadily growing. Demand for vegetarian, vegan, gluten-free, locally produced, and organic foods is steadily increasing in the marketplace. For example, the organic and natural food segment has been growing at an average rate of 8% to 10% per year, driven by increasing consumer demand for healthy and ethically produced food. There has also been growing consumer demand for a greater range and variety of organic food at local grocery stores as awareness continues to rise. It is therefore reasonable to expect that demand for such foods in the catering industry will grow in proportion to overall market demand.

Another important aspect of the catering business is its scalability. During periods of peak demand, temporary employees can be hired to meet additional service requirements. In this way, the catering business is complementary to the restaurant given its inherently scalable nature.

Conclusion and Strategic Recommendations

Of all three business ideas, the chips and e-commerce idea has the most potential for achieving the highest revenue generation, given the opportunity for mass marketing these items. However, it could also take the most time to develop and require the most resources to enter those markets and form strategic partnerships. At the same time, the other two local businesses — the restaurant and the catering business — could supplement this venture through its development stages. It is therefore recommended that the diversification strategy focus on the two local businesses first, then pursue mass-market distribution for the branded snack items after sufficient resources have been accumulated.

Although the potential for mass marketing is significant, it will require a small manufacturing operation to produce these goods in bulk. Nevertheless, the success of the restaurant and catering businesses could springboard the branded items into distribution channels capable of reaching a broad market.

References

David, F. (2005). Strategic Management. Saddle River, NJ: Pearson Prentice Hall.

Homburg, C., & Vollmayr, J. (2014). Firm value creation through major channel expansions: Evidence from an event study in the United States, Germany, and China. Journal of Marketing, 38–61.

MBA & Company. (n.d.). What are marketing channels? Retrieved from MBA & Company: http://blog.mbaco.com/what-are-marketing-channels/