Eleonora Escalante, MBA - MEng...THE CHEESECAKE FACTORY (CCF) Diverse menu – international and...

Eleonora Escalante, MBA - MEngStrategic Corporate Advisory Services

Creating Corporate Integral Value (CIV)

The Cheesecake Factory (III)

Uniqueness Analysis using the Value Chain

7 March 2018

Eleonora Escalante MBA-MEng, Strategic Corporate Advisory Services

© 2017 Eleonora Escalante-all rights reserved

When in Auckland: Uniqueness Analysis using the Value Chain

25March2018

Wh

o T

he

Real

Bu

yer

is?

Iden

tify

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e

bu

yer´

s va

lue

chain

an

d t

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firm

´s im

pact

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it.

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ked

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eri

a

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th

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xist

ing

an

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es

of

un

iqu

en

ess

in

a f

irm

´s

valu

e c

hain

Iden

tify

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ost

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Ch

oo

se t

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fig

ura

tio

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f va

lue

act

ivit

ies

that

create

s th

e m

ost

valu

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le d

iffe

ren

tiati

on

fo

r th

e b

uyer

rela

tive t

o c

ost

of

dif

fere

nti

ati

ng

.

Test

th

e c

ho

sen

dif

fere

nti

ati

on

str

ate

gy f

or

sust

ain

ab

ilit

y

Red

uce

co

st in

act

ivit

ies

that

do

no

t aff

ect

th

e

cho

sen

fo

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of

dif

fere

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ati

on

.

• Today we will cover steps 5 to 8. Please take your last set

of slides (steps 1 to 4) in your hands, because we will use

some of that information for today´s analysis.

Step 1

Step 3

Step 4

Step 5

Step 6

Step 7

Step 8

Step 2

Done previously!

https://support.office.com/es-ES/article/b89770f1-deb1-4a19-94ef-342aa15a4689

Value Chain

Analysis as a

tool for

Competitive

Advantage

1. Cost Analysis

and

Performance

Improvement

2. Competitive

Differentiation

Analysis


© 2017 Eleonora Escalante-all rights reserved 5 march 2018 3

Uniqueness Analysis

PROFIT = Price - Cost VALUE = Utility - Price

For the Firm,

we focus on

cost drivers

For the Customer,

we focus in utility

drivers

Maxi

miz

e

Pro

fit

Maxi

miz

e

Valu

e

Remember we will perform a Competitive Differentiation Analysis or Uniqueness Analysis:




© 2017 Eleonora Escalante-all rights reserved 6March2018 4

Uniqueness Analysis


Maxi

miz

e

Valu

e Buyer´s Value = Utility – Total Price

STEP 5. Identify the cost of existing and potential sources of differentiation

• In assessing the cost of differentiation, then, a firm must compare the cost of

being unique in an activity with the cost of being equal to competitors.Use Criteria

En

d B

uyer

• Diverse menu – with international

and local meals• Yummy and delicious offer• Finest cuisine with high quality• Over the top customer service• Freshness and Natural • Cheesecakes quality is over the top,

even as an indulgence

The use criteria “Freshness and Natural Ingredients” is related to five value

activities at the buyer´s value chain (The Millennial Household)

Inbound Logistics

(Inputs needed for having a home well)

•Food for consumption (groceries)

Operations

(What has to be done, or produced at home)

•Cooking for each meal time

•Cleaning and Washing dishes

Outbound Logistics (whatleaves home)

•Prepared dishes– take out food from home

Procurement Supplying management of every item needed at a home, Managing on-line accounts ,

Ensuring good deals for services and insurances, Subcontracting au pairs, or help for

home chores

Marg

in




Uniqueness Analysis



• CCF has decided to analyze the

attribute “Freshness and Natural” from

step 4.

• First question CCF has to ask to

themselves: Do we have “fresh and

natural look” dishes in our menu? How

many dishes look “fresh and natural”?

Just the salads, which appetizers, which

specialties, which desserts?

• Second: What do we have to do to offer

more “freshness and natural perception”

value to our “millennial mom”?

• Third: If the issue is lack of elements

which “look fresh and natural” in our

dishes, can we re-design existing meals,

or design new few dishes in each

category of the menu which can look

fresh and natural?

• Fourth: If all the dishes are fresh and

natural? Why does “the millennial

mom” perceive the menu with lack of

them?

• Fifth: Is it the menu design? Can we

add pictures of the dishes inside the

menu?

• Sixth: What do we have to do to

differentiate ourselves in our menu

by adding “freshness and natural”

attributes to our dishes.

• Seventh: How well can we fit with the

Buyer´s value chain of the “Millennial

Mother”? Is this new “fresh and

natural” offer a good enough option

to attract “the millennial mother” to

come more often to our CCF

restaurants?

• Eighth: Is this new “fresh and natural”

offer a good enough option to attract

her to use our sales online platforms?

Has she buy similar products with

competitors on line?

• Ninth: Can we help “the millennial

mom” in her cooking habits? Will she

buy our dishes if we deliver to her

house?

• Tenth: Using our own applications or

other third party internet platforms?

Which platform is the best?

• Eleventh: Once we have decided what

to do, it is time to analyze the cost of

differentiation for each of the

alternatives selected. After we have to

compare the costs with the

competitors similar offers.

The use criteria “Freshness and Natural Ingredients” is related to five value activities at the buyer´s value

chain (The Millennial Mom´s client Household)

Marg

in




Uniqueness Analysis



As CCF we wish to understand the existing and potential sources of uniqueness by understanding the client.

The use criteria “Freshness and Natural Ingredients” is related to five value activities at the buyer´s value

chain (The Millennial Mom´s client Household)

Marg

in

In addition CCF has gathered more detailed information about the Millennial

Mom at her Facebook and Instagram posts:

• The Millennial Mom loves pasta in all forms and flavors (she shares pasta

pictures in Facebook)

• She likes the Louisiana Chicken pasta served at CCF “very much”. In addition

she likes “this specific meal” because her mother prepared it often.

• She also likes to cook and can do it by herself for less than 4 dollars-meal for

her family.

• Nevertheless she is all the time busy with her internet business and taking

kids to school and different activities. She is a sporty lady who swims and

runs every day, with almost no time for doing grocery shopping and cooking.

• Why would she go to CCF to pay $16.95 plus TIP ($2.00)?

• Why would she visit CCF with her family, instead of cooking at home or

getting a home meal kit in advance which will reduce her cost per meal to

$9.99/serving with Home Fresh or Sun Basket or Plated or Blue Apron?Louisiana Chicken Pasta


Ware

housin

gR

edis

trib

ution




STEP 5. Identify the

cost of existing and

potential sources of

differentiation

• We need to understand which

items of the value chain drive

total cost of the favorite dish for

the Millennial Mommy.

• We have selected one typical dish

from the CCF: The Louisiana

Chicken Pasta because this is the

favorite of our Millennial Mom in

study.

Marg

in

100%

80%

60%

40%

20%

0%

Pe

rcen

t o

f To

tal

Others:

Spices,

onion,

veggies.

Alfredo

Sauce

Crunchy

breaded

Mushrooms

Pasta

Chicken

Other

Variable manufacturing

Depreciation

Maintenance

Labor

overhead

Direct

labor

Oth

er

Ba

gR

ecip

ien

t

Gro

up

ad

min

istr

atio

nR

&D

Div

isio

n a

dm

in.

HQ

and

sys

tem

s

$2.00 $4.00 $6.00Cost per

dish

$11.00

Price to

consumer

$16.95

Raw

Packaging to go

Overh

ead

Profit

Ou

tbo

un

d fre

igh

t to

re

sta

ura

nts

Period d

istr

ibution

Manufacturing

Lo

sse

s a

nd

bre

aka

ge

s

Dis

trib

utio

n

Allo

ca

tio

ns

Sale

s

TIP

S

Sa

les

Sp

oila

ge

Raw

In

pu

tsT

he

ft-

Mis

fire

s

Spoilage

Waste

Pre

op

en

ing

exp

en

se

s

$8.00

Re

nt-

lea

se

s

Insurances

Licensees

Utilities

Ta

xe

s

Bread and

butter

Oth

er

Op.

Costs

Oth

er

Pro

mo

tio

nC

on

su

me

r

Me

dia

TV

So

cia

l M

ed

iaM

ark

eting

Common

Area expenses


Ware

housin

gR

edis

trib

ution




STEP 5. Identify the

cost of existing and

potential sources of

differentiation

• In assessing the cost of

differentiation, then, a firm

must compare the cost of

being unique in an activity with

the cost of being equal to

competitors.

• We can understand which value

activities drive the overall cost:

Raw Inputs, Manufacturing-

Operations and Operating

costs (Rent, insurances,

licensees, utilities, etc.)

• In addition we can identify new

value activities which can help

us to differentiate for this

specific client.

Marg

in

100%

80%

60%

40%

20%

0%

Pe

rcen

t o

f To

tal

Others:

Spices,

onion,

veggies.

Alfredo

Sauce

Crunchy

breaded

Mushrooms

Pasta

Chicken

Other

Variable manufacturing

Depreciation

Maintenance

Labor

overhead

Direct

labor

Oth

er

Ba

gR

ecip

ien

t

Gro

up

ad

min

istr

atio

nR

&D

Div

isio

n a

dm

in.

HQ

and

sys

tem

s

$2.00 $4.00 $6.00Cost per

dish

$11.00

Price to

consumer

$16.95

Raw

Packaging to go

Overh

ead

Profit

Ou

tbo

un

d fre

igh

t to

re

sta

ura

nts

Period d

istr

ibution

Manufacturing

Losse

s a

nd

bre

aka

ge

s

Dis

trib

utio

n

Allo

ca

tio

ns

Sale

s

TIP

S

Sa

les

Sp

oila

ge R

aw

In

pu

tsT

heft

-

Mis

fire

s

Spoilage

Waste

Pre

op

en

ing

exp

en

se

s

$8.00

Re

nt-

lea

se

s

Insurances

Licensees

Utilities

Ta

xe

s

Bread and

butter

Oth

er

Op.

Costs

Oth

er

Pro

mo

tio

nC

on

su

me

r

Me

dia

TV

So

cia

l M

ed

iaM

ark

eting

Common

Area expenses

❶❷❸


Marketing and Sales

Spoilage

Cost:

$11.0

per

Dish.

Allocations and others

Manufacturing

Raw Inputs

Distribution

$0.00

$2.00

$4.00

$6.00

$8.00

$100.0

$12.00

Co

st t

o s

erv

e a

Lo

uis

ian

a C

hic

ken

Past

a a

t a t

yp

ical

Ch

eese

cak

e F

acto

ry R

est

au

ran

t U

SA

. (d

oll

ars

)





• For the preferred dish of

the Millennial Mom:

Louisiana Chicken Pasta we

have to consolidate the

detailed cost analysis in the

following “cost tower” by

value activities in order to

find out which are value

activities that drive the

costs of producing this

meal: Raw Inputs,

Manufacturing and Other

Operational.

Marg

in

Other Operational

Activities(Rent-Insur-

Utilities,etc)

❶

❷

❸

Potential Sources of

Differentiation from

the “Cost Analysis

Stacked Column”

Location near to the

house

Emphasis in Social

Media

Advertising-fresh and

natural

Promotions to create

frequency visits to

restaurant

Reduce spoilage

Commodity markets

Pricing Inputs




Uniqueness Analysis


Ranked Buyer Purchase Criteria for The Cheesecake Factory Restaurants

Ch

an

nels

Use Criteria Signaling Criteria (subjective)

En

d B

uyer

• Appearance, design and architecture-

size of the restaurants

• Waiting time to be served is minimum

• Reputation or image

• Professionalism and personality of

restaurant employees

• Word of mouth

• Diverse menu – with international

and local meals• Yummy and delicious offer• Finest cuisine with high quality• Over the top customer service• Freshness and Natural • Cheesecakes quality is over the top,

even as an indulgence

• In Step 4 we created the

uniqueness criteria (use

and signaling) for the

Millennial Mom.

• Our Millennial Mom has

ranked her top purchase

criteria features in order of

importance for “HER”.

• Now it is time to

ensemble step 4 and step

5. See next slide

• Door dash and Harry&David is

available in my state• Reliable of service • Delivery available in my area• Speed of order processing

• Customer Internet friendly environment • Relative price to similar competitors• Take out• Delivery service by third parties • Online Ordering for to go sales

STEP 6. Choose the configuration of value activities that creates the most valuable

differentiation for the buyer relative to cost of differentiating.




Uniqueness Analysis


STEP 6. Choose the configuration of value activities that creates the most valuable

differentiation for the buyer relative to cost of differentiating.UNIQUENESS CRITERIA FOR THE MILLENNIAL MOM

USE CRITERIA SIGNALING CRITERIA

Value Activities OF

THE CHEESECAKE

FACTORY (CCF)

Diverse menu –

international

and local meals

Yummy

and

delicious

offer

Finest

cuisine

with high

quality

Over the

top

customer

service

Cheesecake

high quality

Appearance

design and

arch size of

restaurants

Subjective

PERCEPTION

time of

waiting to be

served

Attractiveness

of Facilities

Reputation

of Image

Personality

of

restaurant

employees

Word

of

Mouth

(social

media)

Inbound Logistics

Operations

Outbound Logistics

Marketing and Sales

After Sales Services

Procurement

Technology

Development

Human Resources

Management

Firm Infrastructure

Relationship of Value Activities of THE CHEESECAKE FACTORY with the Buyer Purchase Criteria




Uniqueness Analysis


STEP 6. Choose the configuration of value activities that creates the

most valuable differentiation for the buyer relative to cost of

differentiating.Value Activities of the CHEESE

CAKE FACTORY

Sources of Uniqueness or Differentiation from the BUYER VALUE CHAIN NEEDS (The millennial Mom)

Inbound Logistics Strategic alliance with local fresh

agriculture products companies

Consistent taste reachable always Commodity Market long

term contracts for inputs

Improve cost inputs

Operations Better and Consistent appearance by

adding an additional fresh garnishing

touch on top of the dishes

Reduce Spoilage Rapid Restocking in store

Display

Improve tasting – control

supervision

Outbound Logistics Delivery included in the price to

households located near the restaurant

Create a “daughter company” or a strategic alliance with a home-meal kit

company. Add the Cheesecake Factory desserts to a Home-meal kit company.

Marketing and Sales Advertising Theme: Reinforce quality

image and the attribute of “fresh and

natural”

Change of the MENU look and feel. The menu

must show pictures of some or many of their

meals. There is no one single picture of the meals

in the menu

Branding for Freshness and

natural beyond the name

Cheesecake.

Digital Strategy and Website-

Social Media Renewal

Digital Promotions to create

frequency visits to restaurant

After Sales Services Digital Follow up - Promotions Birthday at discount price-Club Cheesecake

Clients.

Change the “unsafe to eat

perception” to “fresh and

natural perception”

Use social media constantly

creating awareness of “fresh and

natural branding”.

Procurement Procurement of raw materials is made by each restaurant. Corporate Support can help them

to gain scale.

Technology Development Social Media Data Analysis Website look and feel improvement Social Media for marketing

and sales

Improve IT Systems

Human Resources Management Continuous Training in “CUSTOMER

SERVICE”

Train employees to keep the clients busy and happy when waiting to be served. Use Mobile Applications, cheesecake

factory menu crosswords or tablet cheesecake factory games for kids.

Firm Infrastructure Improve dark-poor ambiance by adding more

light to the restaurants. A new look. Natural

Enlighten!

Improvement of the restaurants design (fresh and natural and light

colors)

NOTE: Uniqueness differentiators originated

from the analysis of the Buyer´s value chain and

the Uniqueness Drivers of CCF Value Chain.




Uniqueness Analysis


The Company´s sources

of uniqueness involve

certain barriers or

exclusive advantages

such as patents, linkages,

interrelationships.

The Company has to

review cost advantage

in differentiating.

The sources of

differentiation are

multiple. The more

uniqueness drivers

applied to several

value activities, the

merrier.

The firm creates

switching costs at the

same time it

differentiates.

STEP 7. Test the chosen differentiation strategy for sustainability.

All what we have done in step 6 has to be reviewed

financially OVER TIME, using prototype models.

Never roll out without testing.




Uniqueness Analysis


STEP 8. Reduce cost in activities that do not affect the chosen forms of differentiation

or uniqueness.

Finally, we have to check the overall costs of our value chain, and try to

reduce the activities which do not affect the value activities of

uniqueness.

Marketing and Sales Advertising Theme: Reinforce quality

image and the attribute of “fresh and

natural”

• As an example, for the Value Activity: Marketing

and Sales, one of the uniqueness drivers

(differentiation) is to Reinforce the images and quality

of marketing with the attribute “Fresh and Natural”.

• We have to calculate the costs of doing this.

• Once we calculate them, let´s check how this

incremental cost do not affect the rest of

differentiation sources in other activities.

• We will have to do this over each of the value

activities.




Uniqueness Analysis


STEP 8. Reduce cost in activities that do not

affect the chosen forms of differentiation or

uniqueness.

• For the sake of time, I won´t do the cost calculations.

Nevertheless it is easy to do them.

• What requires a lot of observation and multidisciplinary

coordination is to find out which sub-value activities of the

company are related to other internal activities, and check if

by reducing other activities costs, we will not alter our desire

to differentiate from our competitors.

• For the Cheesecake Factory, companies such as Plated, Blue

Apron, Green Chef, Hello Fresh, Home Chef and Sun Basket

have to be included as competitors too.

• If the Millennial Mom of 100K income household, from our

study doesn´t like to cook, or doesn´t have time for it, she will

always choose to eat out at restaurants or ask for “on-

demand restaurant delivery”. In consequence, everything

depends of our “BUYER purchase criteria”.

Graph Source:

http://www.goodwatercap.com/thesis/understanding-blue-apron




Uniqueness Analysis


STEP 8. Reduce cost in activities that do not

affect the chosen forms of differentiation or

uniqueness.• In addition, The Cheesecake Factory has evolved beyond their name.

The company has more than 250 meals-items in their menu. And

only 70 of them are related to the word “CHEESECAKE”, and the

cheesecake desserts represent the 28% of the menu. The rest of the

items are really fresh and natural, but the company has to “show

it” and coin a reputation and image at the top of mind of the

Millennials.

• Maybe some little changes to the design of the restaurants will

benefit to reinforce the “fresh and natural” menu.

• In addition some dish pictures to the menu won´t hurt it either.

• Fresh and Natural is also linked to a serene and sophisticated

ambiance. At the moment it seems CCF has a bit darker ambiance

for those Millennial clients which do not go to the Cheesecake

Factory.

• The company doesn´t have to make a “brutal design” change, but

can adjust their format design a bit (some little changes), test the

prototype FIRST, and once tested and confirmed, roll it out, to make

it more appealing to the new generations of clients.

The Sketch,

London

Kettle

Black,

LA

11th Madison Park NY

Blue Hills Stone

Barns, NY.




Uniqueness Analysis


We have finished today with steps

5 to 8. Thank you!W

ho

Th

e

Real

Bu

yer

is?

Iden

tify

th

e

bu

yer´

s va

lue

chain

an

d t

he

firm

´s im

pact

on

it.

Dete

rmin

e r

an

ked

bu

yer

pu

rch

asi

ng

crit

eri

a

Ass

ess

th

e e

xist

ing

an

d

po

ten

tial so

urc

es

of

un

iqu

en

ess

in

a f

irm

´s

valu

e c

hain

Iden

tify

th

e c

ost

of

exi

stin

g a

nd

po

ten

tial so

urc

es

of

dif

fere

nti

ati

on

Ch

oo

se t

he c

on

fig

ura

tio

n o

f va

lue

act

ivit

ies

that

create

s th

e m

ost

valu

ab

le d

iffe

ren

tiati

on

fo

r th

e b

uyer

rela

tive t

o c

ost

of

dif

fere

nti

ati

ng

.

Test

th

e c

ho

sen

dif

fere

nti

ati

on

str

ate

gy f

or

sust

ain

ab

ilit

y

Red

uce

co

st in

act

ivit

ies

that

do

no

t aff

ect

th

e

cho

sen

fo

rms

of

dif

fere

nti

ati

on

.

Step 1

Step 3

Step 4

Step 5

Step 6

Step 7

Step 2

Done!

Step 8

Done!



© 2017 Eleonora Escalante-all rights reserved


187March2018

In my next post we do a summary of this example, and finally we will answer why the

Cheesecake Factory is more than cheesecake…

The Cheesecake Factory has a unique and

highly differentiation strategy:

1. Leader in menu innovation

2. Ambiance, Service and Hospitality

3. Best in Class operational Execution

4. Integrated Bakery

Why do you think the company say this?

We will finally find out in our next post.

Thank you!


Eleonora Escalante, MBA - MEng...THE CHEESECAKE FACTORY (CCF) Diverse menu – international and...

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