PepsiCo’s Restaurants
Definition of Problem
Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of Colorado and California Pizza Kitchen – in order to expand the company’s restaurant business. If indeed PepsiCo decides to pursue the acquisition of one or both, they must decide how to align each of these business units in its historically decentralized management approach and how to forge relationships between the acquired business units and existing business units. In their evaluation, Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired business units, but must
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With the previous merger with the Frito-Lay Company, and acquisitions of Pizza Hut, Taco Bell, and Kentucky Fried Chicken, PepsiCo successfully ventured into different segments in the food services industry, but was also able to create synergies with its soft drink product. PepsiCo also attempted to integrate into trucking transportation and bottle manufacturing in the 1970s.
PepsiCo faces two very different companies in its most recent potential acquisition. Carts of Colorado is a designer, manufacturer, and merchandiser of mobile food carts – not directly in the food services industry, they do cater to a large corporate customer base along with PepsiCo that includes Coca-Cola, Burger King, Dunkin Donuts, and Mrs. Fields. Alternatively, California Pizza Kitchen is a casual dining restaurant with 25 locations in eight states, typically located in affluent areas.
Sales for Carts of Colorado in 1991 were $7,650,000 and EBITDA in 1991 was $945,187 or a 12% operating margin. The mobile food business has had success since it is estimated that the 20,000 units sold by Carts of Colorado are generating about $2 billion in foodservice sales annually (an average of $100,000 per cart). It is believed internally at PepsiCo that Carts of Colorado is 18 months ahead of its competition in engineering and design. Given that PepsiCo, through its Pizza Hut, Taco Bell, and
Foods Fantastic Company is a public company which mainly operating regional grocery store in Maryland. This Company relies on application programs, such as bar-code scanner, to entre sales to the system. The FFC majority depends on the computer system to run their business. Based on this situation, the Information General Controls review is necessary for this company as the reason that ITGC is the foundation of every categories of the internal control.
Darden Restaurants Inc., is a multi-brand restaurant operator headquartered in Orlando, Florida. Its founder, Bill Darden at the age of 19 opened his first restaurant called The Green Frog in 1938 in Waycross, Georgia. Bill Darden sold his company to General Mills in 1968 after the opening of the first Red Lobster Restaurant in Lakeland, Florida. By 1995 the two companies had split and Darden Restaurants Inc. was born as a publicly traded company on the New York Stock Exchange. Darden Restaurants Inc. has become a Fortune 500 company with over 2,100 restaurant locations and more than 200,000 employees. It is considered to be the world’s largest full-service restaurant company.
The Cone Zone is a mobile ice cream truck that will cater to a wide range of people from different economical standings and different geographical locations. Taking advantage of the popularity of food trucks as well as the brand recognition that Jeni’s ice cream has established will assist in getting the word out, cut down on marketing needs, and position The Cone Zone in an already growing market. Since our core product will be Jeni’s Ice Cream we will be conscious of where their brick and mortar stores are located to ensure a symbiotic relationship between the brick and mortar stores and The Cone Zone.There are only three locations currently within the greater Nashville area leaving a huge gap in the areas of Nashville and the surrounding areas that are currently not being tapped into. The Cone Zone intends to take full advantage of that gap. Currently the Jeni’s Ice Cream brick and mortar stores are
California Pizza Kitchen’s revenues have increased more than 16% despite the weakened profit percentages of the food industry, whereas, California Pizza Kitchen’s competitors have experienced feeble earnings growth and sales. As costs rose in every direction, California Pizza Kitchen decreased their labor costs by .3%, kept costs of food, beverage, and paper-supply constant at 24.5% (percentages based on second quarter 2006 to second quarter 2007). California Pizza Kitchen credited these strong performance numbers to the operational improvements and enhancements they had
consumer goods and services firm. PepsiCo, Inc. includes Pizza Hut, Inc., Taco Bell Corporation, Pepsi-Cola Company, Kentucky Fried Chicken, and PepsiCo foods international. PepsiCo, Inc. recorded net income of $ 1.077 billion on net sales of $ 17.8 billion in 1990.
By creating ice-creams that are geared towards local preferences or “low calorie” versions, Ben and Jerry’s can expand into untapped, and potentially blue ocean, markets. Another problem that plagues Ben and Jerry’s ice cream is their inability to get their physical product to stores and customers. Since there are not many scoop shops compared to other industry giants, Ben and Jerry's could work to be more visible and increase profits by partnering with some of the new food logistics suppliers such as Amazon Fresh, or UberEATS By creating a way for the ice cream to be available directly to the client, Ben and Jerry’s could significantly amplify its diversification
This case presents a scenario where PepsiCo, a company known for its successful acquisitions of food chains to expand its business, has to weigh its options whether or not to acquire Carts of Colorado, a merchandiser of mobile food carts and kiosks and California Pizza Kitchen, a big name in the casual dining segment.
According to strategic planners of the company quick service restaurants would remain the largest segment over the following decade. Based on their analyses, quick service, casual dining and take out segments would be attractive. On the other hand, PepsiCo. invested to casual dining like Pizza Hut Café and experienced that their know-how for this segment is low. (Reinemund: “We needed people to come in and break the mold of our thinking. We knew enough to know what we didn’t) Additionally, Salsa Rio Grill which is also an investment for casual dining was a failure, but it has also mentioned it could be successful with a different setting. These are aspects that we have to think whether to acquire CPK. The case also mentions that PepsiCo. needed non-traditional program to increase points of distribution. That can be achieved with carts. The company also purchased carts from COC because they saw a potential future that the location of sales was really important.
Throughout its history, PepsiCo has developed its business with aggressive acquisitions & mergers with companies in different industries. It entered the snack food industry by acquiring Frito Lay in 1968 and the branded juice industry by acquiring Tropicana in 1998. Currently, the company is amongst the world leaders
In 1954 Ray Kroc became the first franchisee appointed by Mac and Dick McDonald in San
Remaining profitable in the restaurant industry is a requirement conceivably not considered as difficult for common chains like Taco Bell, Panera and Starbucks. Many factors impact the sustainability of cash flow for the restaurant industry when looking at changes in market trends for a product, menu pricing, and inventory management. Consistent to each of the parent companies for these restaurants however, is the need to ensure adequate and positive cash flow to satisfy the corporation’s stakeholders. An evaluation of these three parent companies to identify potential cash flow problems will consider each firm’s long-term profitability, offer observations on cash flows and potential risk from the potential investor’s perspective.
Starbuck’s strategy focused on three components; high-quality coffee, intimate service, and ambient atmosphere. Starbucks worked closely with growers in Africa, South and Central America, and Asia-Pacific regions to insure the quality of its product. Starbucks called all employees' "partners" and worked hard to train them with the skills necessary to best serve the customer. The atmosphere at Starbucks was crafted after the European-style espresso bar. The company goal was to create ambience through the Starbucks "experience" and by making the area comfortable, yet upscale.
Frito-Lay, a division of PepsiCo based in Plano, TX, is the world’s largest producer of salty snacks (Solomon, Marshall, & Stuart, 2012). The company brands include Fritos, Lay’s, Doritos, and Cheetos. C. E. Doolin purchased and began selling Fritos in San Antonio, TX in 1932. Herman W. Lay, a potato chip manufacturer began selling his product that same year in Nashville, TN. The two companies later merged in 1961 to become Frito- Lay, Inc. A final merger in 1965 with Pepsi-Cola Company, created the now recognized name of PepsiCo. PepsiCo has four divisions under its umbrella including Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International, and Quaker Foods North America. With a multitude of snack options and limited
1. Where did the original idea for the Starbucks format come from? What lesson for international business can be drawn from this?
PepsiCo Inc. is an American created international organization that caused from the merging of Frito-Lay and Pepsi cola. Its control center are in the United States and the main concentration of the business is to manufacturing the market and allocate beverages, snack foods and other products.