Kudler Fine Foods: Case Analysis

Introduction

This report aims to identify the key problems and to prepare a strategic plan for Kudler Fine Foods to overcome these difficulties.

Background

After founding KFF in 1998, Kathy Kudler opened three shops out of which the Del Mar shop had difficulties in operation, the La Jolla shop is still expanding, and the Encinitas shop, although currently being opened, is having higher sales. Kathy appointed a manager, an assistant manager, and specialists for the shops and from the very beginning, she purchases raw materials in bulk for all the shops, saving money and time to communicate with consumers, ensuring premium quality products. Kathy aims to keep on supplying better-quality foodstuffs in the neighborhood, whilst intensifying and launching more shops in progression. However, KFF is committed to providing the best foods and wines to its clients and the vision of KFF is to be the premiere gourmet grocery store

Key problems or risk assessment of KFF

• It deals in perishable goods and always tries to keep the inventory fresh, so it has to throw away or donate to local charities;
• Many renowned gourmet stores like Zabar’s, Andros, and Louis are operating successfully from the very beginning, so, the perception that the gourmet store might fail is not a major risk for Kudler;
• One of the major risks of Kudler is that the economic condition of Southern California is not suitable for gourmet stores though many organizations successfully show their performance.
• Though it has no direct competitor there is a risk that new entrants can capture market share, however, KFF is not anxious in this issue as it has repeat consumers who are pleased with its service;
• Though Kathy’s health is great now many uncertain situations may arise, which will create hindrance to operate the business;
• The risk of earthquake in Southern California;
• It is well known that the supplier plays a crucial role to offer a lower price but sometimes bad weather dramatically affects crop yields and its suppliers rationally boost the price of perishable goods.

Mitigation Strategies of KKF

• Kathy plans to purchase or order the correct quantities to minimize risks;
• the perception of a gourmet store might be unsuccessful is not applicable for KFF as it has a wide range of customers as well as migrated customers from the East Coast, who like the diversified product of Kudler;
• However, to mitigate economic risks, KKF decided to monitor the financial condition and take initiatives considering the situation;
• KFF plans to install an electronic, automated operating system to track orders;
• Earthquake is an uncontrollable natural crisis but KFF can raise funds to overcome from natural crisis;
• Kudler can’t control the weather; however, the impact of bad weather is the same for the competitors.

Competitive problems

Rivalry among competing firms

Several KFF outlets are encircled by conventional superstores like Ralphs, Vons, Albertsons, etc. selling foodstuffs that KFF also offers to the customers; these shops have started advertising on specific sectors that produce organic food and varieties of mutton. Nevertheless, KFF targets specific consumers, such as people who feel like discerning gourmet, wishing for the finest foodstuffs, exceptional consumer service, and nice utensils rather than ‘mere organic food’; and therefore Kudler’s is not in direct rivalry with these conservative superstores.

Even though KFF does not have any direct rival, a few shops have started competing for a similar consumer base; for instance, Jonathan’s Market and The Kitchen Witch. The Kitchen Witch, although situated far from KFF, has an e-commerce site that takes orders from the entire area in which KFF operates. This technological adoption by rivals creates threats for Kudler’s.

The threat of substitute products

Many health-conscious shops, such as Trader Joe’s are situated next to KFF stores focusing on the organic nature of their foods, whilst, KFF focuses on the deliciousness of foods; therefore those products are not KFF’s direct substitutes. Kudler’s clients are more fascinated by the tasty food preparation and eating experience rather than the fitness awareness, and they are less concerned about high prices as well. A business offering the same product line as KFF is Jonathan’s. The key strength of Jonathan’s is that it concentrates on its café and wine division, and has a diversified wine range; it sometimes organizes wine tasting events and offers various beef and seafood recipes.

Threats of new entrants

The increasing population of Southern California has encouraged many new entrants to commence their businesses in this area featuring intercontinental foodstuffs, for example, Indian International Food and Balboa International Market. Although these entrants have a particular ingredient to offer, they lack the collections, utensils, proficiency, and service that KFF affords. However, as these stores prepare foreign foods, many customers are paying attention to those.

SWOT Analysis of Kudler Fine Foods

Strengths

• It has no direct competition;
• it offers many items considering customer choice;
• Exceptionally consumer-oriented;
• Low operating cost as it is small size company;
• IT integration and add e-commerce facilities
• The excellent location of the company;
• The owner of KFF maintain a good personal relationship with employees;
• Loyal consumers.

Weakness

• As it committed to offer fresh food and to deal in mostly perishable goods, it does not use any preservatives, as a consequence more than 12% of total goods rotated out;
• It cannot pay more than Butcher, baker, wine steward, etc.
• it has too many responsibilities but the management team is not large enough;
• The Del Mar place is not undertaking and expected;
• Geographic growth barriers as it is difficult for Kathy (Owner) to visit each store;
• Need more technological support for further development.

Opportunity

• It has the opportunity to expand its business throughout California;
• It will diversify its product range;
• It has the capability to add more product lines;
• It can donate 12% foods, which is still in good, but not an excellent condition;
• Opportunity to get a loan from banks;
• It has enough experience to sell franchises to expand its business outside of California;

Threats

• It has competition with gourmet shops;
• The global financial crisis changes the customer behavior to buying gourmet foods;
• Increasing demand for the products of the local grocery store.

Future Growth Plan

KFF is going to set up its sales outlets in more locations of Southern California, such as Carlsbad and other highway locations while the San Francisco area is in their next target. KFF has already done a market survey and competitor analysis in that area. After the success of this phase, KFF has the next target for Scottsdale, Arizona; Naples, while Florida; and Greenwich are in its further choice where KFF expects to employ its cash flow to get bigger in the market within the coming few years. To achieving these goals of future growth, KFF is applying the following promotional tools at its current operation-

• Website: KFF plans to use a fully automated website integrating all of its inventories and online order system and quick delivery without bothering the location
• New Locations: Rather than the present Del Mar location is not it has selected a new location in Carlsbad, CA to cover a heavy population and huge visitors without disturbing the service of existing customers from the new store.
• Telephone Directory Advertising: KFF is planning to advertise in the telephone directory to cover customers within a forty-minute drive up.
• Catering: Though this service is doing well, KFF is planning to add a Catering link on the fully automated website with necessary information on the service.
• Coffee & Tea: KFF plans to increase its variety of drinks category including fresh fruits and vegetables and its web presence.
• Fish Counter: KFF has the intention to add seafood and deli at its stores and allow the customers to collect the sample.

Recommendation

• Kudler Fine Foods should reduce the price of the product to sustain in bad economic conditions;
• KFF should adopt few strategies to bit the competition like celebrities endorsement;
• It should increase the number of employees as well as executives;
• In addition, KFF has the opportunity to diversify its product line by controlling the quality of the products and maintaining good relations with customers;
• It should develop a market research team;
• Moreover, it ought to increase the number of outlets outside of Southern California;
• Finally, it should follow the strategies of well-known gourmet stores.

Reference

KFF. (2003). Strategic Plan. Web.